STOCK PURCHASE AGREEMENT
Agreement entered into as of June 8, 1994, by and between ABI Corporation,
a Delaware corporation (the "BUYER") and Concorde Industries, Inc., a Colorado
corporation (the "SELLER"). The Buyer and the Seller are sometimes hereinafter
referred to collectively herein as the "PARTIES".
The Seller owns Five Hundred and Fifty (550) shares of the issued and
outstanding Class A common stock of Rheochem Manufacturing Co., Inc., a Colorado
corporation (the "Target"), which shares represent fifty percent (50%) of the
total outstanding shares of all classes of Target's capital stock.
This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller, and the Seller will sell to the Buyer, all Five Hundred and
Fifty shares of the outstanding Class A common stock of the Target owned by
Seller in return for cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorney's fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Sec. 1504 [or any similar group defined under a similar provision of state,
local or foreign law].
"APPLICABLE RATE" means the corporate base rate of interest announced from
time to time by Integra Bank.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
Page 1
"BUYER" has the meaning set forth in the preface above.
"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Target that is not already generally available to the public
or does not hereafter become generally available to the public without breach of
this Agreement by Seller or an Affiliate of Seller.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth in Code
Sec. 1563.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4 below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder to the extent they have statutory force) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution,
Page 2
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
as applicable to the properties of Target.
"ERISA" means the Employer Retirement Income Security Act of 1974, as
amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3 (21) .
"FINANCIAL STATEMENT" has the meaning set forth in Section 4 (g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together will all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together will all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means actual knowledge after reasonable investigation.
Page 3
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g)
below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 4 (g)
below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4 (g)
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"OTHER BUYER OBLIGATIONS" means any contractual obligations of Buyer, an
Affiliate of the Buyer, or the Target to provide quantifiable economic benefits
to the Seller or an Affiliate of the Seller, whether pursuant to this Agreement
or other written contracts to be executed pursuant to this Agreement between the
Buyer, an Affiliate of the Buyer, or the Target on one hand, and the Seller or
an Affiliate of the Seller on the other hand.
"PARTY OR PARTIES" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Sec. 406 and
Code SEC. 4975.
"PURCHASE PRICE" has the meaning set forth in Section 2 (b) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
Page 4
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, OTHER THAN (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SELLER'S TARGET SHARES" means all of the Target Shares owned by the Seller as
of the date of this Agreement as identified on the Disclosure Schedule.
"SUBSIDIARY" means any corporation with respect to which a specified Person (or
Subsidiary thereof) owns a majority of the common stock or has the power to vote
or direct the voting of sufficient securities to elect a majority of the
directors.
"SURVEY" has the meaning set forth in Section 5 (i) below.
"TARGET" has the meaning set forth in the preface above.
"TARGET SHARE" means any share of any class of the Common Stock without par
value of the Target. "Target Shares" means any of the shares of any class of
the Common Stock without par value of the Target.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Page 5
"THIRD PARTY CLAIM" has the meaning set forth in Section 8 (d) below.
2. PURCHASE AND SALE OF SELLER'S TARGET SHARES.
(a) BASIC TRANSACTION. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, all of its Seller's Target Shares for the consideration
specified below in Section 2(b).
(b) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the Closing
$2,150,000 (the "PURCHASE PRICE") by delivery of cash in an amount equal to the
Purchase Price payable by wire transfer or delivery of other immediately
available funds.
(c) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall be accomplished by use of an expedited mail
service such as Federal Express or other overnight courier service on the third
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Buyer and Seller may mutually
determine (the "CLOSING DATE"); provided, however, that the Closing Date shall
be no later than June 30, 1994.
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will deliver
to the Buyer the various certificates, instruments, and documents referred to in
Section 7(a) below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 7(b) below,
(iii) the Seller will deliver to the Buyer stock certificates representing all
of the Seller's Target Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (iv) the Buyer will deliver to the Seller the
consideration specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this Section
3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)) with respect to itself.
Page 6
(i) ORGANIZATION. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) AUTHORIZATION OF TRANSACTION. The Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance with
its terms and conditions. The Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Except as expressly described in Section
4(e) of the Disclosure Schedule, neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Seller is
subject or any provision of the Seller's charter or bylaws, or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets are subject.
(iv) BROKERS' FEES. The Seller does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
(v) SELLER'S TARGET SHARES. The Seller holds of record and owns
beneficially the number of Target Shares set forth next its name in Section
4(b) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. The Seller
is not a party to any option, warranty, purchase right, or other contract
or commitment that could require the Seller to sell, transfer, or otherwise
dispose of any capital stock of the Target (other than this Agreement).
The Seller is not a party to any
Page 7
voting trust, proxy, or other agreement or understanding with respect to
the voting of any capital stock of the Target.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)), except as set forth in Annex I attached hereto.
(i) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) AUTHORIZATION OF TRANSACTION. The Buyer has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in accordance with its
terms and conditions. Except as set forth in the following sentence, the
Buyer need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement. The Buyer shall make all filings with the U.S. Department of
Commerce, Bureau of Economic Analysis, on Form BE-13 or otherwise, which
may be required to be filed before Closing.
(iii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Buyer is
subject or any provision of its charter or bylaws or (B) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is subject.
(iv) BROKER'S FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions
Page 8
contemplated by this Agreement for which the Seller could become liable or
obligated.
(v) INVESTMENT. The Buyer understands that the Seller's Target
Shares have not been registered under the Securities Act, or any state
securities laws, in reliance upon exemptions. The exemption upon which
there is reliance under the Securities Act is for what may be called a
private placement. The Buyer is not acquiring the Seller's Target Shares
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act. With respect to the Securities
Act, the Buyer has had and continues to have (A) effective access to, and
the opportunity to examine, all books, records, files, financial
statements, financial reports, plans, sales data, cost data, copies of
contracts, licenses, and other instruments to which the Target is a party
or by which its properties or interests are affected, (B) the opportunity
to question, and to receive information from, the President and all other
officers of the Target and the independent certified public accountants of
the Target concerning the Target, and (C) the opportunity to obtain any and
all additional information necessary to verify the accuracy of the
information furnished to it or any other supplemental information which the
Buyer deems relevant to make an informed investment decision as to
acquisition of the Seller's Target Shares. The Buyer, its officers and
advisors, have sufficient knowledge and experience in business and
financial matters in general, and are capable of utilizing the information
available to them, to evaluate the risks involved in acquiring the Seller's
Target Shares. The Buyer is capable of hearing all the economic risks
involved in ownership of the Seller's Target Shares. The Buyer understands
that it must hear the economic risk of the investment for an indefinite
period because the Seller's Target Shares have not been registered under
the Securities Act and, therefore, are subject to restrictions upon
transfer such that they may not be sold or otherwise transferred unless
they are registered under the Securities Act or an exemption from such
registration is available. The Buyer shall not assign, sell or make any
other disposition of any shares in the Target in the absence of an
effective registration statement, qualification, or other authorization
relating thereto under the Securities Act, or an opinion of qualified
counsel reasonably satisfactory to the Target to the effect that such
registration, qualification or other authorization is not required in
connection with the proposed assignment, sale or other disposition. Any
certificates which are issued representing the Seller's Target Shares shall
be endorsed with a legend to this effect. Notwithstanding the foregoing,
the Seller expressly acknowledges and agrees that
Page 9
the provisions of this Section 3(b)(v) in no way diminish Buyer's reliance
upon the Seller's representations, warranties, covenants and
indemnification obligations contained in this Agreement as a material
inducement to acquire Seller's Target Shares.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET.
The Seller represents and warrants to the Buyer that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 4, except as set forth in the disclosure
schedule delivered by the Seller to the Buyer on the date hereof and
initialed by the Parties (the "DISCLOSURE SCHEDULE"). Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with particularity and describes the
relevant facts in detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall
not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized
to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required and where failure to
qualify would have a material adverse effect on the Target. The Target has
full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged
and in which it presently proposes to engage and to own and use the
properties owned and used by it. Section 4(a) of the Disclosure Schedule
lists the directors and officers of The Target. The Seller has delivered to
the Buyer correct and complete copies of the charter, bylaws, minute books,
stock certificate books, and stock record books of the Target (as amended to
date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Target are correct and complete. The Target is not in default under or in
violation of any provision of its charter or bylaws.
Page 10
(b) CAPITALIZATION. The entire authorized capital stock of the Target
consists of 50,000 shares of Class A common stock without par value, of which
550 shares are outstanding, and 50,000 shares of Class B common stock without
par value, of which 550 shares are outstanding and no Target Shares are held in
treasury. All of the issued and outstanding Target Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Seller and Rheochem as set forth in Section 4(b) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Target to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Target.
(c) NONCONTRAVENTION. Except as expressly described in Section 4(e) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which the Target is subject or any provision of the charter
or bylaws of any of the Target or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Target is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). The Target does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) BROKER'S FEES. The Target does not have any Liability or obligation to
pay any fees or commissions to any broker, finder, or agency with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. Except as expressly described in Section 4 (e) of
the Disclosure Schedule, the Target has good and marketable title to, or a
valid leasehold interest in the properties and assets used by it, located on
Target's premises, or shown on the Most Recent Balance Sheet or acquired
after the date thereof, free and
Page 11
clear of all Security Interests, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance Sheet.
(f) FINANCIAL STATEMENTS. Attached hereto as Exhibit A are the following
financial statements (collectively the "FINANCIAL STATEMENTS"): (i) audited
balance sheet as of November 30, 1990 and audited balance sheet, statement of
income, changes in stockholders equity and cash flow as of and for the financial
years ended December 31, 1991, 1992, and for the financial year end December 31,
1993 (the "MOST RECENT FISCAL YEAR END") for the Target; and (ii) unaudited
consolidated and consolidating balance sheets and statements of income, changes
in stockholders' equity, and cash flow (the "MOST RECENT FINANCIAL STATEMENTS")
as of and for the four months ended April 30, 1994 (the "MOST RECENT FISCAL
MONTH END") for the Target. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of the Target as of such dates and the results of operations of the
Target for such periods, are correct and complete, and are consistent with the
books and records of the Target (which books and records are correct and
complete).
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, to the Knowledge of the Seller, there has not been any
adverse change in the business, financial condition, operations, results of
operations, or future prospects of the Target taken as a whole. Without
limiting the generality of the foregoing, since that date:
(i) the Target has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, outside the Ordinary Course of
Business;
(ii) to the Knowledge of the Seller, the Target has not entered
into any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside the Ordinary Course of
Business;
(iii) no party (including the Target) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving
more than $5,000 to which the Target is a party or by which it is bound;
(iv) except as expressly described in Section 4(e) of the
Disclosure Schedule, the Target has not imposed any Security Interest upon
any of its assets, tangible or intangible;
Page 12
(v) except as expressly described in Section 4(g)(v) of the
Disclosure Schedule, the Target has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of
Business;
(vi) the Target has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $5,000 or outside the Ordinary Course of Business;
(vii) the Target has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than
$5,000 singly or $10,000 in the aggregate;
(viii) the Target has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) the Target has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(x) the Target has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the charter
or bylaws of the Target;
(xii) the Target has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(xiii) the Target has not declared, set aside, or paid any dividend
or made any distributions with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock; provided, however, that effective February 23, 1994, the
Target declared a dividend in the amount of $227.50 per Target Share
payable no later than October 31, 1994 to holders of record of the Target
Shares on February 23, 1994, which the Buyer acknowledges the Target is
obligated to pay to the extent that payment does not result in a breach of
Section 4(g)(xxii), or would not have resulted in a breach of Section
4(g)(xxii) if made on the Closing Date and not before.
Page 13
(xiv) the Target has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) the Target has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) except as expressly described in Section 4(g)
(xvi) of the Disclosure Schedule, the Target has not entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement (such representation and
warranty by the Seller, as to employment agreements being limited to the
Knowledge of the Seller);
(xvii) except as expressly described in Section 4(g) (xvii) of the
Disclosure Schedule, the Target has not granted any increase in the base
compensation of any of its directors, officers, and management employees
outside the Ordinary Course of Business;
(xviii) except as expressly described in Section 4(w) of the
Disclosure Schedule, the Target 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, officers,
and employees (or taken any such action with respect to any other Employee
Benefit Plan);
(xix) the Target has not made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xx) the Target has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Target, which has or will result in any adverse
change in the business, financial condition, results of operations, or
future prospects of the Target taken as a whole;
(xxii) the Target has not taken any action(s) which has caused the
Shareholder's equity of the Target to be less than $2,000,000; and
Page 14
(xxiii) the Target has not committed to any of the foregoing.
(h) UNDISCLOSED LIABILITIES. The Target has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Target giving rise to
any Liability) required to be disclosed on the Most Recent Balance Sheet in
accordance with GAAP, except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (including any notes thereto) and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law.)
(i) LEGAL COMPLIANCE. The Target, and its predecessors and Affiliates have
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply, except where the failure to comply would not have an
adverse effect on the business, financial condition, operations, results of
operations, or future prospects of the Target.
(j) TAX MATTERS.
(i) The Target has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Target (whether or not shown on any Tax Return) have been
paid. The Target currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Target does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Target that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) The Target has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(iii) No Seller or director or officer (or employee responsible
for Tax matters) of the Target expects any authority to assess any
additional Taxes for any period for
Page 15
which Tax Returns have been filed. There is no dispute or claim concerning
any Tax Liability of the Target either (a) claimed or raised by any
authority in writing or (b) as to which any of the Seller and the directors
and officers (and employees responsible for Tax matters) of the Target has
Knowledge based upon personal contact with any agent of such authority.
Section 4(j) of the Disclosure Schedule lists all federal, state, local,
and foreign income Tax Returns filed with respect to the Target for taxable
periods ended on or after December 31, 1988, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are
the subject of audit. The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Target
since December 31, 1988.
(iv) The Target has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Target has not filed a consent under Code Sec.
341(f) concerning collapsible corporations. The Target has not made
any payments, nor is obligated to make any payments, nor is a party
to any agreement that under certain circumstances could obligate it
to make any payments that will not he deductible under Code Sec.
280G. The Target has not been a United States real property holding
corporation within the meaning of Code Sec. 897(C)(2) during the
applicable period specified in Code Sec. 897(C)(1)(A)(ii). The
Target has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Sec. 6662. The Target
is not a party to any Tax allocation or sharing agreement. The
Target (a) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return or (b) has any Liability for
the Taxes of any Person (other than of the Target) under Treas. Reg.
Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(vi) Section 4(j) of the Disclosure Schedule sets forth the
following information with respect to the Target as of the most recent
practicable date (as well as on an estimated pro forma basis as of the
Closing giving effect to the consummation of the transactions contemplated
hereby): (a) the basis of the Target in its assets; (b) the amount of any
net operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution of the Target.
Page 16
(vii) The unpaid Taxes of the Target (a) did not, as of the Most
Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (b) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Target in filing its
Tax Returns.
(k) REAL PROPERTY.
(i) Section 4(k)(i) of the Disclosure Schedule lists and
describes briefly all real property that the Target owns. With respect to
each such parcel of owned real property:
(A) Since April 1, 1993, the effective date of that certain
Chicago Title Insurance Company Owner's Policy of title insurance
issued to Target, Policy Number 26013460000849, there have been no
changes with respect to or affecting Target's title to the property,
including by way of illustration but not limitation, Security
Interests, easements, covenants or other restrictions;
(B) there are no pending or, to the Knowledge of the Seller,
threatened condemnation proceedings, lawsuits, or administrative
actions relating to the property or other matters affecting and
adversely the current use, occupancy, or value thereof;
(C) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the properties
or buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which may burden
the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have net been obtained;
Page 17
(D) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable laws, rules and regulations;
(E) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties
the right of use or occupancy of any portion of the parcel or real
property;
(F) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or
interest therein;
(G) there are no parties (other than the Target) in possession
of the parcel of real property;
(H) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation
of such facilities, including gas, electricity, water, telephone,
(with the exceptions noted in Section 4(o) of the Disclosure Schedule
pertaining to the agreement between the Seller and the Target for
supply of wastewater treatment services and the projected requirement
for the Target to arrange for municipal wastewater treatment
services) sanitary sewer, and storm sewer, all of which services are
adequate in accordance with all applicable laws, ordinances, rules,
and regulations and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcel of real
property; and
(I) each parcel of real property abuts on and has direct
vehicular access to a public road, or has access to a public road via
a permanent, irrevocable, appurtenant easement benefitting the parcel
of real property, and access to the property is provided by paved
public right-of-way with adequate curb cuts available.
(ii) No real property is either leased or subleased to the
Target.
(l) INTELLECTUAL PROPERTY.
(i) The Target owns or has the right to use pursuant to license,
sublicense, agreement, permission, or otherwise all Intellectual Property
necessary for the operation of the
Page 18
businesses of the Target as presently conducted and as presently proposed
to be conducted. Each item of Intellectual Property owned or used by the
Target immediately prior to the Closing hereunder will be owned or
available for use by the Target on identical terms and conditions
immediately subsequent to the Closing hereunder. The Intellectual Property
owned or used by the Target in its business consists (in addition to
certain computer software which it uses under licenses) of certain
nonpatented information of the type described generally in clause (e) of
the definition of Intellectual Property, above, the principal components of
which are proprietary process technology and formulae generally described
in Section 4(l)(i) of the Disclosure Schedule. The Target has not granted
to any third party any license or other rights with respect to any of its
proprietary technology. The Target holds no patents and has not applied
for any patents. To the Seller's Knowledge, the Target has taken those
steps which are reasonable and customary in the industry to maintain and
protect such proprietary technology.
(ii) The Target has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties and neither the Seller nor, to the
Knowledge of the Seller, the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Target has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Target must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Seller, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of the
Target.
(iii) Section 4(l)(i) of the Disclosure Schedule identifies each
trade name or unregistered trademark used by the Target in connection with
any of its businesses. With respect to each item of Intellectual Property
identified in Section 4(l)(i) of the Disclosure Schedule:
(A) to Seller's Knowledge, the Target possesses all right,
title, and interest in and to the item, free and clear of any Security
Interest (other than the Security Interest securing the line of credit
from Lakeshore National Bank described in Section 4(o) of the
Disclosure Schedule, license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
Page 19
(C) to the Seller's Knowledge no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending
or is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Target has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iv) The Target does not use pursuant to license, sublicense,
agreement, or permission any Intellectual Property owned by any third party
other than computer software programs, which Target has a valid license to
use.
(v) To the Knowledge of any of the Seller and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Target, the continued operation of the Target's business as
presently conducted and as presently proposed to he conducted will not
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties.
(vi) The Seller does not have Knowledge of any new products,
inventions, procedures, or methods of manufacturing or processing that any
competitors or other third parties have developed which reasonably could
be expected to supersede or make obsolete any product or process of any of
the Target.
(m) TANGIBLE ASSETS. The Target owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted and as presently proposed to he conducted. Such tangible
assets, taken as a whole, have been maintained in accordance with normal
industry practice, are in good operating condition and repair (subject to normal
wear and tear), and are suitable for the purposes for which they are presently
used.
(n) INVENTORY. The inventory of the Target consists of raw materials and
supplies, manufactured and purchased parts, goods 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 writedown set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Target.
Page 20
(o) CONTRACTS. Section 4(o) of the Disclosure Schedule lists following
written contracts and agreements and oral contracts and agreements to which the
Target is a party of which the Seller Knowledge:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $5,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year and
involve consideration of more than $10,000, or result in a loss to the
Target, or involve consideration, in excess of $20,000;
(iii) any agreement concerning participation by the Target in a
partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $5,000 or
under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with the Seller and/or its Affiliates;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $20,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a adverse effect on the
Page 21
business, financial condition, operations, results of operations, or future
prospects of the Target; or
(xii) any other agreement (or group of related agreements) outside
the Ordinary Course of Business the performance of which involves
consideration in excess of $20,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 4(o) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 4(o) of the Disclosure
Schedule. With respect to each such agreement, except as may be expressly
disclosed in Section 4(o) of the Disclosure Schedule: (A) the agreement is
presently in full force and effect; (B) the agreement will continue to be in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) to the Knowledge of the Seller, no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or petit termination,
modification, or acceleration, under the agreement; and (D) to the Knowledge
of the Seller, no party has repudiated any provision of the agreement.
(p) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of
the Target are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Target.
(q) POWER OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Target.
(r) INSURANCE. Section 4(r) of the Disclosure Schedule
contains a listing of each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which the Target has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years, and a written description of any retroactive premium adjustments or other
loss-sharing arrangements pertaining thereto. Copies of (I) each of those
policies which are currently in effect and (II) each of the other policies
listed (except for the property insurance) in Section 4(r) of
the Disclosure Schedule have been furnished to the Buyer.
Page 22
With respect to each insurance policy referred to in clause (I) above: (A) the
policy is presently in full force and effect; (B) the policy will continue to be
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither the Target nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Section 4(r) of the
Disclosure Schedule describes any self-insurance arrangements affecting the
Target.
(s) LITIGATION. Section 4(s) of the Disclosure Schedule sets forth each
instance in which the Target (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is, to the
Knowledge of the Seller, threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4(s) of the Disclosure
Schedule will result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Target. Based on
its Knowledge, the Seller has no reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against the
Target.
(t) PRODUCT WARRANTY. Substantially all of the products manufactured,
sold, leased, or delivered by the Target have been in conformity with all
applicable contractual commitments and all express and implied warranties, and
the Target has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Target. No product manufactured, sold, leased, or delivered by the Target is
subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Section 4(t) of the Disclosure
Schedule includes copies of the standard teams and conditions of sale or lease
for each of the Target (containing applicable guaranty, warranty, and indemnity
provisions).
Page 23
(u) PRODUCT LIABILITY. To the Seller's Knowledge, the Target does not have
any Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by the Target.
(v) EMPLOYEES. To the Knowledge of the Seller, no executive, key employee,
or group of employees has any plans to terminate employment with the Target.
The Target is not a party to or bound by any collective bargaining agreement,
nor has it experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. To the Seller's Knowledge,
the Target has not committed any unfair labor practice. To the Seller's
Knowledge, there is no organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the Target.
(w) EMPLOYEE BENEFITS.
(i) Section 4(w) of the Disclosure Schedule lists each Employee
Benefit Plan that the Target maintains or to which the Target contributes.
(A) Each such Employee Benefit (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA, the Code, and
other applicable laws.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part
6 of Subtitle B of Title I of ERISA and of Code Sec. 4980B have been
met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of the Target. All premiums or
Page 24
other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit plan which
is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code
Sec. 401(a) and has received, within the last two years, a favorable
determination letter from the Internal Revenue Service.
(E) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in accordance with
PBGC methods, factors, and assumptions applicable to an employee
Pension Benefit Plan terminating on the date for determination.
(F) The Seller has delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue
Service, the most recant Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that any of the
Target and the Controlled Group of Corporations which includes the Target
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is in Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a Reportable Event as
to which notices would he required to he filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted or
threatened.
(B) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with
Page 25
respect to the administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims for benefits) is
pending or threatened. None of the Seller and the directors and
officers (and employees with responsibility for employee benefits
matters) of the Target has any Knowledge of any Basis for any such
action, suit, proceeding, hearing, or investigation.
(C) The Target has not incurred, and none of the Seller and the
directors and officers (and employees with responsibility for employee
benefits matters) of the Target has any reason to expect that the
Target will incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan.
(iii) None of the Target and the other members of the Controlled
Group of Corporations that includes the Target contributes to, ever has
contributed to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal Liability)
under any Multiemployer Plan.
(iv) The Target does not maintain or never has maintained or
contributes, ever has contributed, or ever has been required to contribute
to any Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Sec. 4980B).
(x) GUARANTIES. The Target is not a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person.
(y) ENVIRONMENT, HEALTH, AND SAFETY.
(i) Except as disclosed in the report of the "Level I Assessment of
the Concorde Industries Properties," dated November 15, 1990, prepared by
ERM -- New England, Inc., a copy of which has previously been provided to
the Buyer, to the Knowledge of the Seller: each of the Target and its
respective predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed
or commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, each of
Page 26
the Target and its respective predecessors and Affiliates has obtained and
been in compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which
are contained in, all Environmental, Health, and Safety Laws.
(ii) The Target does not have any Liability (and none of the
Target and its respective predecessors and Affiliates has handled or
disposed of any substances, arranged for the disposal of any substances,
exposed any employee or other individual to any substance or condition, or
owned or operated any property or facility in any manner that could form
the Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Target
giving rise to any Liability) for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
(iii) All properties and equipment used in the business of the
Target and its respective predecessors and Affiliates have been free of
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibensofurans, and Extremely Hazardous
Substances.
(a) CERTAIN BUSINESS RELATIONSHIPS WITH THE TARGET. Except as expressly
disclosed in Section 4(o) of the Disclosure Schedule, none of the Seller and its
Affiliates has been involved in any business arrangement or relationship with
the Target within the past 12 months, and none of the Seller and its Affiliates
owns any asset, tangible or intangible, which is used in the business of any of
the Target.
(aa) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
(ab) NO SUBSIDIARIES. The Target does not have any Subsidiaries or
ownership interest of any kind in any other business entity.
(ac) LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Except as expressly set
forth in this Section 4 and in Section 3(a), the Seller makes no representations
or warranties, express or implied, with respect to any matter.
Page 27
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its good faith reasonable efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
(b) NOTICES AND CONSENTS. The Seller will cause the Target to, give any
notices to third parties and use its good faith, reasonable efforts to obtain
any third-party consents, that the Buyer may reasonably request in connection
with the matters referred to in Section 4(c) above. Each of the Parties will
(and the Seller will cause the Target to) give any notices to, make any filings
with, and use its best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with the
matters referred to in Section 3(a)(ii), Section 3(b)(ii), and Section 4(c)
above.
(c) OPERATION OF BUSINESS. The Seller will not cause or permit, to the
extent reasonably within its control, the Target to, engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Seller will not
cause or permit, to the extent reasonably within its control, the Target to, (i)
declare, set aside, or pay any dividend or make any distribution with respect to
its capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, except as otherwise contemplated in Section 4(g)(xiii), or (ii) otherwise
engage in any practice, take any action, or enter into any transaction of the
sort described in Section 4(g) above.
(d) PRESERVATION OF BUSINESS. The seller will, to the extent reasonably
within its control, cause the Target to, keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
(e) FULL ACCESS. The Seller will, to the extent reasonably within its
control, cause the Target to permit, representatives of the Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Target, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Target.
Page 28
(f) NOTICE OF DEVELOPMENTS. The Seller will give prompt written notice to
the Buyer of any adverse development of which it has actual knowledge causing a
breach of any of the representations and warranties in Section 4 above. Each
Party will give prompt written notice to the others of any adverse development
of which it has actual knowledge causing a breach of any of its own
representations and warranties in Section 3 above. If the Buyer has actual
knowledge of any breach of any representation or warranty of the Seller, the
Buyer will immediately provide the Seller with a detailed notice of such breach.
No disclosure by any Party pursuant to this Section 5(f), however, shall be
deemed to amend or supplement, Annex I, or the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. The Seller will not (and the Seller will not cause or
permit the Target to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets of,
the Target (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) 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. The Seller shall not vote its Target Shares in favor of
any such acquisition structured as a merger, consolidation, or share exchange.
(h) EFFORT TO RELEASE THE SELLER FROM ITS GUARANTEE OF CERTAIN
INDEBTEDNESS OF THE TARGET. Commencing promptly after the execution of this
Agreement, the Seller and the Buyer will cooperate in an attempt to obtain the
release of the Seller, effective on the Closing Date, from each of its
guarantees of obligations of the Target, as described in Section 4(o) of the
Disclosure Schedule. The Buyer will use good faith, reasonable efforts to
ensure that the Seller is so released including, without limitation, arranging
for the Buyer to undertake the guarantee in the place and stead of the Seller
effective on the Closing Date. After the Closing Date, the Seller may terminate
its guarantees at any time allowable under the provisions of the instruments of
guarantee or applicable law.
(i) CONFIDENTIALITY. The Confidential Disclosure Agreement entered into
by the Target and an Affiliate of the Buyer on August 6, 1993 shall survive the
execution of this Agreement.
6. POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
Page 29
(a) GENERAL. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
The Seller acknowledges and agree that from and after the Closing the Buyer and
Rheochem will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
the Target; provided, however, that no such materials shall be destroyed for a
period of three years after the Closing Date.
(b) LITIGATION SUPPORT. In the event and for so long as any Party actively
is 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 on or prior to the Closing Date
involving the Target, each of the Parties will cooperate with the other and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to its documents, books, records (including Tax
Records), agreements, and financial data of any sort, all relating in any way to
the Target to the extent it was in existence prior to the Closing Date, 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 below).
(c) TRANSITION. The Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Target from maintaining the same
business relationships with the Target after the Closing as it maintained with
the Target prior to the Closing. The Seller will refer all customer inquiries
relating to the businesses of the Target to the Buyer and Rheochem from and
after the Closing.
(d) CONFIDENTIALITY. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
Rheochem or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his or
its possession. In the event that the Seller
Page 30
is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of this Section 6(d). If, in the
absence of a protective order or the receipt of a waiver hereunder, the
Seller is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, the Seller may
disclose the Confidential Information to the tribunal; PROVIDED, HOWEVER,
that the Seller shall use its best efforts to obtain, at the request of the
Buyer, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall not
apply to any Confidential Information which is generally available to the
public immediately prior to the time of disclosure.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a) and
Section 4 above shall be true and correct in all respects at and as of the
Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) the Seller shall have, and shall have caused the
Target to have, procured all of the third party consents specified in Section
5(b) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (C) affect adversely the right of
the Buyer to own the Seller's Target Shares and, together with Rheochem,
Inc., a New Jersey corporation, to control the Target, or (D) affect
adversely the right of the
Page 31
Target to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in Section 7(a)(i)-(iv)
is satisfied in all respects;
(vi) the Seller shall have caused the termination with prejudice of
that certain Shareholders' Agreement of Rheochem Manufacturing Company,
Inc. dated August 27, 1985 by and among Concorde Industries, Inc.,
Rheochem, Inc. and Rheochem Manufacturing Co., Inc., said termination
agreement to be in form and substance as set forth in Exhibit B attached
hereto;
(vii) the relevant parties shall have entered into side agreements in
form and substance as set forth in Exhibits C-1 through C-4 attached hereto
and the same shall be in full force and effect;
(viii) the Buyer shall have received from counsel to the Seller an
opinion in form and substance as set forth in Exhibit D attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(ix) the Buyer shall have received the resignations, effective as of
the Closing, of each director and officer of the Target other than those
whom the Buyer shall have specified in writing at least five business days
prior to the Closing;
(x) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance
to the Buyer; and
(xi) the relevant parties shall have entered into that certain
Amended and Restated Service Agreement For Wastewater Use and that certain
Amended and Restated Rail Sidinq Agreement in form and substance as set
forth in Exhibits E and F, respectively, attached hereto and the same shall
be in full force and effect.
(xii) on or before June 30, 1994, Buyer shall have obtained from
Rheochem, Inc., a New Jersey corporation ("Rheochem"), such documents,
written agreements and/or other assurances which resolve, to the reasonable
Page 32
satisfaction of Buyer, any and all outstanding business issues or other
matters of concern (the "Business Issues") relating to the Target
Corporation which presently exist between Buyer and Rheochem. If Buyer, in
its sole and absolute discretion, determines that all such Business Issues
have been resolved to the Buyer's satisfaction, then Buyer shall, on or
before June 24, 1994 (the "Notice Date"), so notify Seller of the same and
this condition precedent shall be satisfied. If Buyer, in its sole and
absolute discretion, determines that all Business Issues have not been
resolved to the Buyer's satisfaction, then Buyer shall, on or before the
Notice Date, so notify Seller of the same and this condition precedent
shall have failed and thereafter this Agreement shall terminate and be null
and void and of no further force or effect, and neither Buyer or Seller
shall have any further duties, liabilities or obligations to the other
party hereunder. If Buyer fails to notify Seller on or before the Notice
Date that either the Business Issues have been resolved or have not been
resolved, Buyer shall be deemed to have notified the Seller on or before
the Notice Date that said Business Issues have not been resolved and
thereafter this Agreement shall terminate and be null and void and of no
further force or effect, and neither Buyer or Seller shall have any further
duties, liabilities or obligations to the other party hereunder.
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall he true and correct in all respects at and as of the Closing
Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all respects through the Closing;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction,
Page 33
judgment, order, decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified in Section 7(b)(i)-(iii)
is satisfied in all respects;
(v) the relevant parties shall have entered into side agreements in
form and substance as set forth in Exhibits C-1, C-2, and G and the same
shall be in full force and effect;
(vi) the Seller shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit H attached hereto,
addressed to the Seller, and dated as of the Closing Date; and
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
(viii) Unless, prior to the Closing Date, the Seller is released from
the guarantees of indebtedness of the Target referred to in Section 5(j)
above, the Seller shall have received an Indemnity Agreement in the form of
Exhibit I attached hereto, executed and delivered by Buyer, indemnifying
the Seller from any and all payments, liabilities, costs and
expenses,including reasonable attorneys fees, which may be incurred by the
Seller by reason of any claim or demand being made against the Seller after
the Closing under the guarantees of indebtedness of the Target referred to
in Section 5(j) above.
The Seller may waive any condition specified in this Section 7(b) if it executes
a writing so stating at or prior to the Closing.
B. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller contained in Section 4(a)-(i) and
Section 4(k)-(ab), together with all of the representations of the parties
contained in Section 3, shall survive the Closing hereunder (even if the damaged
party knew or had reason to know of any misrepresentation or breach of warranty
at the time of Closing) and continue in full force and effect for a period of
three years thereafter. All of the other representations and warranties of the
Parties contained in this Agreement (including the representations and
warranties of the
Page 34
Seller contained in Section 4(3) above) shall survive the Closing (even if the
damaged Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached) any
of its representations, warranties, and covenants contained herein (other
than the covenants in Section 2(a) above and the representations and
warranties in Section 3(a) above), and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that the Buyer makes a
written claim for indemnification against the Seller pursuant to Section
10(h) below within such survival period, then the Seller agrees, subject to
the limitation of 8(b)(iv), below, to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach).
(ii) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached) any
of its covenants in Section 2(a) above or any of their representations and
warranties in Section 3(a) above, and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that the Buyer makes a
written claim for indemnification against the Seller pursuant to Section
10(h) below within such survival period, then the Seller agrees, subject to
the limitation of 5 8(b)(iv), below, that the breaching (or alleged
breaching) Party shall indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Buyer
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(iii) The Seller agrees, subject to the limitation of Section
8(b)(iv), below, to indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer resulting from, arising out
of, relating to, in the nature of, or caused by any Liability of the Target
for the unpaid Taxes of any Person (other than the Target) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state,
Page 35
local, or foreign law), as a transferee or successor, by contract, or otherwise.
(iv) The Seller's obligation to indemnify the Buyer pursuant to
Section 8(b)(i,ii, and iii) and Section 8(g) from and against any and all
Adverse Consequences shall not exceed $2,000,000, including any and all
court costs and attorney fees incurred by Buyer in prosecuting a claim for
indemnification.
(v) the Seller shall have no obligation under Section 8(b)(i,ii, or
iii) of this Agreement to indemnify the Buyer from and against any Adverse
Consequences unless and until the Buyer has suffered Adverse Consequences
in excess of a $200,000 aggregate threshold (at which time the Seller will
be obligated to indemnify the Buyer from and against all such Adverse
Consequences relating back to the first dollar).
(vi) The Buyer shall not be entitled to make any claim for
indemnification Section 8(b)(i,ii,iii) of this Agreement to the extent that
the matter to which it relates:
(A) has been or is made good or is otherwise compensated for
without cost to the Buyer or the Target;
(B) is made good or is otherwise compensated by insurance (or
would have been compensated under the terms of any of the Target's
claims based insurance coverage in effect as of the date of Closinq)
to the Buyer or the Target;
(C) is an alleged loss (other than one that would not have
arisen but for any matter or thing done, or omitted to be done, by
Seller on or before Closing) in respect of lost goodwill or possible
business consequential loss as a result of this Agreement or the
transactions effected by it;
(D) arises wholly or partly from an omission to act by the
Buyer required by law after the Closing;
(E) arises as result of the passing or amendment of any
legislation after the Closing Date with retrospective effect;
(F) would not have arisen b[cad 170]ut for a voluntary act which:
Page 36
(I) is carried out by the Buyer (or persons deriving title
from the Buyer) after Closing otherwise than in the Ordinary
Course of Business;
(II) is carried out at the request of or with the approval,
concurrence or assistance of the Buyer.
For purposes of this Section 8(b)(vi)(E), "voluntary" shall mean an
act other than any act which is required to be taken by law or which,
if taken, would constitute prudent business practice, including but
not limited to the execution and delivery of affidavits, certificates
and other representations.
(vii) The Seller agrees to indemnify the Buyer from and against the
entirety of any and all claims, losses, damages, liabilities, costs or
expenses including, without limitation, any interest, fines, penalties,
criminal or civil judgments or authorized settlements, court costs,
reasonable attorneys' and expert witnesses' fees, reasonable accountant's
fees, disbursements and expenses, and any indemnification or similar
payments required to be made, that the Target may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Target with respect to those certain conditions disclosed in
Sections 6.1 and 13 in that certain report of the "Level I Assessment of
Three Concorde Industries Properties", dated November 15, 1990, prepared by
ERN--New England, Inc. Other than the foregoing, Buyer acknowledges and
agrees that Seller shall have no obligation to indemnify Buyer with respect
to any conditions disclosed in the above referenced report.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the
event the Buyer breaches (or in the event any third party alleges facts
that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained herein, and, if there
is an applicable survival period pursuant to Section 8(a) above, provided
that the Seller makes a written claim for indemnification against the Buyer
pursuant to Section 10(h) below within such survival period, then the Buyer
agrees to indemnify the Seller from and against the entirety of any Adverse
Consequences the Seller may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
Page 37
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may give
rise to a claim for indemnification against any other Party or Parties (the
"INDEMNIFYING PARTY OR PARTIES") under this Section 8, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party or
Parties from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party or Parties thereby is(are) prejudiced.
(ii) The Indemnifying Party or Parties(together) will have the right
to defend the Indemnified Party against the Third Party Claim with counsel
of its choice satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party or Parties notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party or Parties will indemnify the
Indemnified Party from and against the entirety of any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party or Parties provides the Indemnified Party with evidence
acceptable to the Indemnified Party that the Indemnifying Party or Parties
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified Party, and
(E) the Indemnifying Party or Parties conducts the defense of the Third
Party Claim actively and diligently.
(iii) So long as the Indemnifying Party or Parties is(are) conducting
the defense of the Third Party Claim in accordance with Section 8(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party or Parties, and (C) the
Indemnifying Party or Parties will not consent to the entry of any
Page 38
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party.
(iv) In the event any of the conditions in Section 8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party or Parties will reimburse the Indemnified Party promptly
and periodically for the costs of defending against the Third Party Claim
(including attorneys' fees and expenses), and (C) the Indemnifying Party or
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 8.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 8. All
indemnification payments under this Section 8 shall be deemed adjustments to the
Purchase Price.
(f) RECOUPMENT UNDER OTHER BUYER OBLIGATIONS. Once the aggregate threshold
of Adverse Consequences suffered by Buyer is reached pursuant to Section
8(b)(v) hereof, the Buyer shall have the option of recouping all or any part of
any Adverse Consequences it may suffer (in lieu of seeking any indemnification
to which it is entitled under this Section 8) by notifying the Seller that the
Buyer, its Affiliate, or the Target, as the case may be, is reducing the
principal amount outstanding to Seller under any Other Buyer Obligations. This
reduction shall affect the timing and amount of payments or other direct or
indirect monetary obligations required under the Other Buyer Obligations in the
same manner as if the Buyer, its Affiliate, or the Target had made a permitted
prepayment (without premium or penalty) or had fulfilled a direct or indirect
monetary obligation thereunder. Subsequent to Buyer's notification to Seller of
its intent to exercise its rights pursuant to this Section 8 (f), any and all
reductions in the principal amount of any Other Buyer Obligation(s) shall be
effected (and thereafter determined) by depositing in escrow with the Escrow
Agent pursuant to the terms and conditions of that certain Escrow Agreement
attached hereto as Exhibit J, to be executed on the Closing Date by the parties
thereto, any and all amounts then or thereafter becoming due to Seller as a
result of the Other Buyer Obligations.
Page 39
(g) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant. The Seller hereby agrees it will not make any claim for
indemnification against the Target by reason of the fact that any individual
associated with the Seller was a director, officer, employee, or agent of the
Seller or was serving at the request of the Seller as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim or demand brought by the Buyer
against the Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement as
provided below:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (A) in the event the Seller
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the Closing shall
not have occurred on or before May 31, 1994, by reason of the failure of
any condition precedent under Section 7(a) hereof (unless the failure
results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement);
(iii) the Buyer may terminate this Agreement in accordance with terms
and conditions of Section 7(a) (xii) hereof;
(iv) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller has notified the
Buyer of the breach, and the breach has continued without cure for a period
of 30 days after the notice of
Page 40
breach or (B) if the Closing shall not have occurred on or before June 30,
1994, by reason of the failure of any condition precedent under Section
7(b) hereof (unless the failure results primarily from any of the Seller
itself breaching any representation, warranty, or covenant contained in
this Agreement);
(v) if, prior to Closing, the Buyer notifies the Seller, in
accordance with Section 5(f), that it has, other than by reason of any
matter or condition described, disclosed or set forth in this Agreement or
in the Disclosure Schedule, acquired actual knowledge of any breach of any
representation or warranty by the Seller, the Seller, may, at its option,
(A) cure the breach, to the extent that it is possible to do so, either
before or after the Closing Date; (B) proceed with Closing, subject to the
Seller's obligation of indemnification pursuant to Section 8 ; or (C) if
the Adverse Consequences of all such breaches are reasonably likely to
aggregate more than $$50,000, terminate this Agreement.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other
Party (except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Buyer and
the Seller; PROVIDED, HOWEVER, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
tradinq agreement concerning its publicly-traded securities (in which case
the disclosing Party will use its best efforts to advise the other Parties
prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
Page 41
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the Buyer and the Seller; PROVIDED, HOWEVER,
that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more
of its Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall he deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
IF TO THE SELLER. COPY TO:
Concorde Industries, Inc. O.Y. Uponor, Ab.
0000 Xxxxx Xxxxxx Kimmeltic 3
Suite 1710 Fin -- 02110 Espoo
Xxxxxx, Xxxxxxxx 00000 Attention:Corporate
Attention: Xxxxxxxx X. Xxxxxxx Counsel
and to:
H. Xxxxxxx Xxxxxx, Esq.
Holland & Xxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Page 42
IF TO THE BUYER: COPY TO:
ABI Corporation Xxxxx X. Xxxxxx
000 Xxxxxx Xxxxxx 000 Xxxxxxxx Xxxx., XX
Xxxxx 000 Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000 Atlanta, Georgia
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to he delivered by giving the other Parties
notice in the manner herein set forth.
(i) GOVERNNG LAW. This Agreement shall he governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Aqreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(1) EXPENSES. Each of the Parties (excluding the Target) will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Seller agrees
that the Target has not borne or will bear any of the Seller's costs and
expenses (including any of their legal fees and expenses) in
Page 43
connection with this Agreement or any of the transactions contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity), which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. THE EXHIBITS,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction ever the
Parties and the matter (subject to the provisions set forth in Section 10(p)
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
(p) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Wilmington, Delaware, or
Denver, Colorado in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relatinq to this Agreement in any
other court. Each of the Parties waives any
Page 44
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives, any bond, surety, or other security that might be required
of any other Party with respect thereto. Any Party may make service on any
other Party by sending or delivering a copy of the process to the Party to be
served at the address and in the manner provided for the giving of notices in
Section 10(h) above. Nothing in this Section 10(p), however, shall affect the
right of any Party to serve legal process in any other manner permitted by law
or at equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may he enforced by suit on the
judgment or in any other manner provided by law or at equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
"BUYER":
ABI Corporation
Attest:
By:
/s/Illegible /s/Illegible
----------------------- -----------------------
Secretary Title: President
--------------------
(CORPORATE SEAL)
"SELLER":
Concorde Industries, Inc.
Attest:
By: /s/Illegible
-----------------------
Secretary: /s/Illegible
------------------------- Title: President
--------------------
(CORPORATE SEAL)
Page 45
