EXHIBIT 10
PURCHASE AND SALE AGREEMENT
BETWEEN
SUN COAST INDUSTRIES, INC.,
SUN COAST HOLDINGS, INC.
AND
PLASTICS MANUFACTURING COMPANY
(SELLERS)
AND
XXXXXX CHEMICAL, INC.
(BUYER)
DATED: December 22, 1997
TABLE OF CONTENTS
1. Sale of Assets........................................ 1
2. Excluded Assets....................................... 3
3. Purchase Price........................................ 4
4. Payment............................................... 4
5. Accounts Receivable................................... 4
6. Inventories........................................... 5
7. Closing Balance Sheet/Adjustments..................... 6
8. Closing............................................... 8
9. Representations and Warranties of the Sellers......... 11
(a) Organization; Corporate Power; Qualification.. 11
(b) Authorization................................. 11
(c) Financial Statements.......................... 12
(d) Absence of Certain Changes.................... 13
(e) Title to Properties........................... 14
(f) Real Property; Machinery; Equipment........... 14
(g) Environmental and Regulatory Affairs.......... 15
(h) Contracts; Leases............................. 17
(i) Employees..................................... 19
(j) Labor Relations............................... 22
(k) Accounts Receivable........................... 23
(l) Inventories................................... 23
(m) Customers..................................... 23
(n) Licenses; Permits............................. 24
(o) Intellectual Property Rights.................. 24
(p) Litigation.................................... 25
(q) Insurance..................................... 26
(r) No Brokers.................................... 26
(s) Taxes......................................... 26
(t) Complete Assets............................... 27
(u) Affiliated Transactions....................... 27
10. Representations and Warranties of the Buyer........... 27
(a) Organization; Corporate Power................. 27
(b) Authorization................................. 28
(c) No Brokers.................................... 28
(d) Financing..................................... 28
(e) Independent Investigation..................... 28
TABLE OF CONTENTS (Continued)
11. Access to Information/HSR Filing...................... 29
12. Title Insurance; Surveys.............................. 31
13. Conduct of the Business Pending the Closing........... 32
14. Conditions Precedent to Obligation of the Buyer....... 32
15. Conditions Precedent to Obligation of the Sellers..... 33
16. The Buyer's Assumption of Liabilities................. 34
17. Liabilities Not Assumed by the Buyer.................. 35
18. The Sellers' Indemnity................................ 37
19. The Buyer's Indemnity................................. 38
20. Remedies.............................................. 39
21. Survival of Representations and Warranties............ 41
22. Employees............................................. 41
23. Prorations............................................ 46
24. Expenses.............................................. 46
25. Termination........................................... 46
26. Use of The Sellers' Name.............................. 47
27. Transitional Services................................. 47
28. Removal of Excluded Equipment......................... 49
29. Notices............................................... 49
30. Headings.............................................. 49
31. Schedules............................................. 50
32. Entire Agreement...................................... 50
33. Governing Law......................................... 50
34. Binding Effect........................................ 50
35. Public Announcement................................... 50
SCHEDULES
REAL PROPERTY............................................... A
REAL PROPERTY LEASES........................................ B
MACHINERY AND EQUIPMENT..................................... C
CONTRACTS................................................... D
CLAIMS AND RIGHTS........................................... E
INVENTORIES................................................. F
PATENTS/LICENSES............................................ G
TRADEMARKS.................................................. H
PREPAID EXPENSES............................................ I
BALANCE SHEET............................................... J
DEED FORM................................................... K
XXXX OF SALE FORM........................................... L
ASSIGNMENT FORM............................................. M
NON-COMPETE AGREEMENT....................................... N
ABSENCE OF CHANGE........................................... O
LIENS....................................................... P
VIOLATIONS OF LAW/ENVIRONMENTAL MATTERS..................... Q
EMPLOYEES................................................... R
LICENSES AND PERMITS........................................ S
LITIGATION.................................................. T
INSURANCE................................................... U
CLAIMS NOT ASSUMED.......................................... V
TRADEMARK LICENSE AGREEMENT................................. W
EXCLUDED EQUIPMENT.......................................... X
PURCHASE AND SALE AGREEMENT
AGREEMENT made December 22, 1997, between SUN COAST INDUSTRIES, INC., a
Delaware corporation ("Sun Coast"), PLASTICS MANUFACTURING COMPANY, a Nevada
corporation ("PMC") and SUN COAST HOLDINGS, INC., a Nevada corporation ("Sun
Coast Holdings") (Sun Coast, PMC and Sun Coast Holdings are hereinafter
collectively referred to as "Sellers") and XXXXXX CHEMICAL, INC., a Delaware
corporation (the "Buyer").
WHEREAS, PMC owns and operates a Chemical Division which is engaged in the
manufacture and marketing of melamine and urea resins and compounds (the
"Business"); and
WHEREAS, PMC is a wholly-owned subsidiary of Sun Coast Holdings and Sun
Coast Holdings is a wholly-owned subsidiary of Sun Coast; and
WHEREAS, the Sellers desire to sell, and Buyer desires to purchase, all the
assets and properties used or held by the Sellers in connection with the
Business, upon the terms and conditions hereinafter set forth:
NOW, THEREFORE, it is agreed as follows:
1. Sale of Assets.
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Sellers shall sell, transfer, assign, convey, and deliver to Buyer,
and Buyer shall purchase, acquire, and accept from the Sellers, on the Closing
Date (as defined in Paragraph 8), all of the assets and properties used or held
in connection with the Business, of every kind, nature, and description, and
wherever located, tangible and intangible, including the following:
(a) the land, plants, facilities, and buildings described in Schedule
A, attached hereto, including all appurtenances, licenses, and permits;
(b) the claims, rights and benefits under the real property leases
described in Schedule B, attached hereto;
(c) the machinery, equipment, tools, parts, furniture, fixtures and
vehicles described in Schedule C, attached hereto;
(d) the claims, rights, and benefits under the sales and purchase
contracts, distributor and sales agency agreements, purchase orders,
construction contracts, collective bargaining agreements, consulting agreements,
employment and secrecy agreements, personal property leases and other contracts
and agreements described in Schedules D and R, attached hereto, or which were
entered into in the ordinary course of the Business and are not required to be
listed in Schedule D due to the materiality criteria in Paragraph 9(h)(iv) or
(vii);
(e) the accounts and notes receivable of the Business and other claims
and rights described in Schedule E, attached hereto;
(f) the supplies, raw materials, work-in-process, finished goods, and
other inventories of the Business, the major categories of which are described
in Schedule F, attached hereto;
(g) the claims, rights, and benefits under the patents, patent
applications, patent licenses, copyrights, copyright licenses and know how and
technology licenses described in Schedule G, attached hereto, and all existing
inventions, technology, trade secrets, processes, know-how and formulae, whether
patentable or unpatentable, and similar rights that relate to or are used in the
Business;
(h) the trade name, trademarks, trademark applications, trademark
licenses, and logos described in Schedule H, attached hereto;
(i) the prepaid expenses, employee advances, and construction-in-
process described in Schedule I, attached hereto;
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(j) the books of account, records, files, invoices, customer lists,
supplier lists, health, safety and environmental records and other similar data
used in connection with the Business;
(k) all other assets and properties of the Sellers reflected on the
balance sheet of the Business as of September 30, 1997 (the "Balance Sheet"), a
copy of which is attached hereto as Schedule J, and all of the properties
thereafter acquired by the Sellers in respect of the Business prior to the
Closing Date; except inventories sold, used, consumed, or otherwise disposed of
prior to the Closing Date in the ordinary course of business; and
(l) all other assets and properties used or held by Sellers in
connection with the Business.
Such sales, transfers, assignments, and deliveries shall be made free
and clear of all liabilities, obligations, liens, mortgages, deeds of trust,
security interests, charges, and other encumbrances, except those certain
liabilities and obligations which are to be assumed by the Buyer in accordance
with the provisions of Paragraph 15.
The assets and properties being sold, transferred, assigned, and
delivered under this Agreement are hereinafter called the "Acquired Assets."
2. Excluded Assets.
---------------
Buyer shall not acquire cash on hand or on deposit, or any other
assets shown as eliminations on Schedule J, nor any assets or liabilities of Sun
Coast Closures, Inc., or the excluded equipment described in Section 28. Except
as provided in the Trademark License Agreement between Sellers and Buyer
attached as Schedule W hereto, Buyer shall acquire no right to the name "Sun
Coast", or any derivation thereof.
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3. Purchase Price.
--------------
The Purchase Price (herein so called) for the Acquired Assets shall be
Thirteen Million Eight Hundred Twenty-Four Thousand Dollars ($13,824,000), plus
or minus the adjustments to be made as provided in Paragraph 7; and the Buyer
shall assume and agree to pay or discharge those certain liabilities and
obligations of the Sellers as provided in Paragraph 16.
4. Payment.
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(a) At the Closing the Buyer shall pay the Sellers, by wire transfer
of immediately available funds to the Sellers' account number 08805 144 258 at
Texas Commerce Bank (ABA # 113 000 609) (the "Sellers' Account"), the sum of
Thirteen Million Eight Hundred Twenty-Four Thousand Dollars ($13,824,000).
(b) The purchase price shall be allocated according to the book values
of the Acquired Assets as reflected on the Closing Balance Sheet:
5. Accounts Receivable.
-------------------
At the Closing the Sellers shall furnish to the Buyer a true and
complete list of the accounts and notes receivable of the Business and other
claims referred to in Schedule E as of the Closing, including the amount of each
such receivable and claim, and the amount of any reserve against such
receivables and claims as reflected in the Closing Balance Sheet (as hereinafter
defined).
If any receivables or claims have not been collected in full by the
Buyer within ninety (90) days after the Closing Date, the Sellers shall
immediately pay the uncollected amount to the Buyer, less any reserves or
credits reflected in the Closing Balance Sheet, provided the Buyer has not acted
in any way to impair collectibility. Upon such payment by the Sellers to the
Buyer, the Buyer shall reassign the unpaid receivables or claim to the Seller.
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If, at any time after the Closing Date, the Sellers receive any
payment on account of any account or claim assigned to the Buyer, the Sellers
shall hold such payment in trust for the benefit of the Buyer, and shall pay
over the amount of such payment to the Buyer within three (3) days after the
Sellers' receipt of such payment.
Any payment received by the Buyer on account of any account or claim
reassigned to the Sellers shall be held in trust by the Buyer for the benefit of
the Sellers, and the Buyer shall pay over the amount of such payment to the
Seller within three (3) days after the Buyer's receipt thereof
All payments received by the Buyer or the Sellers shall be applied to
the customer's oldest account first, in the absence of a designation by the
customer.
6. Inventories.
-----------
On or within five (5) days prior to the Closing Date the Sellers
shall, in the presence of the Buyer's representatives, conduct a physical count
of the inventories of the Business, and the Sellers shall deliver true and
complete copies of the work papers used to tabulate such count to the Buyer.
Such count shall thereupon be adjusted to account for shipments and
other transactions made between the physical count and the Closing Date and then
multiplied by the prices which generally reflect the values of the items
involved at the lower of actual cost or net realizable value (after allowance of
historic margins) in accordance with generally accepted accounting principles,
and the aggregate sum so calculated, less the inventory reserve, shall be the
net book value of the inventories as of the Closing Date for purposes of the
Closing Balance Sheet. The inventory reserve shall remain constant at $531,000,
except that missing, off-specification, defective, substandard, obsolete or slow
moving inventory will be charged against the reserve, but only to the extent
that the reserve is not thereby reduced below $100,000.
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Notwithstanding the foregoing, the cost of all off- specification,
defective substandard, obsolete, or slow moving items shall be written down to
net realizeable value in the ordinary course of business allowing for ordinary
margins. For purposes of this Agreement, the term "slow moving" shall refer to
items of finished product which were not sold within 180 days after their date
of manufacture, or if raw materials or work-in-process, items which have not
been converted into finished products within 180 days after they were placed in
inventory.
7. Closing Balance Sheet / Adjustments.
-----------------------------------
(a) (i) Within 30 days after the Closing Date, Buyer shall prepare and
deliver to Sellers a balance sheet for the Business as of the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting principles, consistent with the
preparation of the Balance Sheet (except it may be prepared on the basis of
month-end numbers and rolled forward to the Closing Date), and shall present
fairly the financial condition of the Business as of the Closing Date. Buyer
shall also deliver to Sellers copies of all work papers used in connection with
the preparation of the Closing Balance Sheet as well as a description of all of
the procedures used or followed.
(ii) If the Sellers shall notify Buyer, within 21 days after the
receipt of the Closing Balance Sheet, that it disputes any matter with respect
to the Closing Balance Sheet, Sellers and Buyer will negotiate in good faith in
an effort to resolve such dispute. If the Buyer and the Sellers are unable to
resolve such dispute within 30 days after Buyer's notice, then the dispute shall
be submitted to the Dallas, Texas office of the national accounting firm of
Xxxxxx Xxxxxxxx, LLP for a resolution of the dispute. The determination of such
accounting firm shall be a final and binding determination as to the matters in
dispute. The parties shall share equally in the cost of the accounting firm.
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(b) If the Net Working Capital of the Business (as hereinafter
defined), as reflected on the Closing Balance Sheet, exceeds the Net Working
Capital as reflected on the Balance Sheet, then the Buyer, as an adjustment to
the Purchase Price, shall pay the Sellers the amount of such excess within seven
(7) business days after the Net Working Capital of the Business has been so
determined.
If the Net Working Capital of the Business, as reflected on the
Closing Balance Sheet, is less than the Net Working Capital as reflected on the
Balance Sheet, then the Sellers, as an adjustment to the Purchase Price, shall
pay the Buyer the amount of such difference within seven (7) business days after
the Net Working Capital of the Business has been so determined.
For purposes of this Paragraph 7, the Net Working Capital of the
Business is defined as (A) the sum of the (i) net book value of the inventories
and accounts receivable of the business, (ii) plus the prepaid expenses of the
----
Business, (B) minus the trade payables of the Business and other current
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liabilities to be assumed by Buyer according to the provisions of Paragraph 16.
(c) If the Closing Balance Sheet reflects net additions or deletions
(including depreciation) occurring in the ordinary course of business to the
plant, property and equipment ("Fixed Assets") of the Business as listed on the
Balance Sheet, or changes in any long term liabilities, including, but not
limited to capital leases, which Buyer is assuming according to the provisions
of Paragraph 16, then, as an additional adjustment to the Purchase Price, Buyer
shall pay Sellers for any net additions in Fixed Assets or reductions in such
liabilities, or Sellers shall pay Buyer for any net deletions in Fixed Assets or
increases in such liabilities within seven (7) business days after the final
Closing Balance Sheet has been established; provided, however, that in no event
shall Buyer be required to pay more than Three Hundred Thousand Dollars
($300,000) for net additions to the Fixed Assets of the Business.
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(d) Any amount payable by the Sellers or the Buyer after the Closing
Date in accordance with the provisions of this Paragraph 7 shall bear interest
from the Closing Date to the date of payment at an annual rate of interest equal
to the prime rate quoted by the Chase Manhattan Bank on the Closing Date.
8. Closing.
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(a) The Closing (herein so called) of this Agreement shall be held at
the offices of Xxxxxxxx & Xxxxxx, P.C. at 10 A.M. (local time) on January
15, 1998, or at such other place and time as the Sellers and the Buyer may agree
upon in writing (the "Closing Date"). The Closing will be effective as of 12:01
a.m. on the Closing Date.
(b) At the Closing, the Sellers shall deliver to the Buyer:
(i) special warranty deeds, bills of sale, and assignments, in
the forms attached hereto as Schedules K, L, and M; and such other documents of
transfer or assignment as may be necessary or appropriate to vest in Buyer good
and indefeasible title to the Acquired Assets; and
(ii) certified copies of the proceedings of the Sellers' Boards
of Directors with respect to the approval and authorization of the transactions
contemplated by this Agreement; and
(iii) consents to the assignment and transfer of all of the rights
of the Sellers in and to those leases, permits, licenses, contracts, agreements,
and commitments included in the Acquired Assets and listed on Schedules A, B, D,
G, H, and R, the absence of which consent would reasonably be expected to have a
Material Adverse Effect (as hereinafter defined); and
(iv) an officer's certificate signed by an officer of each of
Sellers, whereby such officer(s) certifies that all representatives and
warranties of Sellers in this Agreement remain true and correct on the Closing
Date; and
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(v) an opinion of Xxxxxxxx & Knight, P.C., legal counsel for
Sellers, in form and substance reasonably satisfactory to Buyer, to the effect
that (A) this Agreement has been duly authorized by PMC and Sun Coast Holdings
by all necessary corporate proceedings (including any appropriate action by the
stockholders and directors of such Sellers) and is valid and enforceable against
such Sellers in accordance with its terms (except for effect of bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting
creditors' rights generally), (B) PMC and Sun Coast Holdings have full corporate
power and authority to consummate the transactions contemplated by this
Agreement, (C) this Agreement has been duly authorized by Sun Coast by all
necessary action by the directors of Sun Coast and, assuming stockholder
authorization is not necessary, is valid and enforceable against Sun Coast in
accordance with its terms (except for effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditor's rights
generally) and (D) assuming stockholder authorization is not necessary, Sun
Coast has full corporate authority to consummate the transactions contemplated
by this Agreement; and
(vi) an opinion of Xxxxxxxx, Xxxxxx & Finger, Delaware legal
counsel for Sellers, to the effect that approval of the stockholders of Sun
Coast would not be necessary; and
(vii) releases of any liens, deeds of trust, mortgages or security
interests arising pursuant to the financing agreement with the CIT
Group/Business Credit, Inc.
(c) The Buyer shall deliver to the Sellers:
(i) a wire transfer in accordance with the provisions of
Paragraph 4; and
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(ii) certified copies of the proceedings of the Buyers Board of
Directors with respect to the approval and authorization of the transactions
contemplated by this Agreement; and
(iii) an officer's certificate signed by an officer of Buyer,
whereby such officer certifies that all representations and warranties of Buyer
in this Agreement remain true and correct on the Closing Date; and
(iv) an opinion of legal counsel for Buyer, in form and substance
reasonably satisfactory to Sellers, to the effect that (A) this Agreement has
been duly authorized by Buyer by all necessary corporate proceedings (including
any appropriate action by the stockholders and directors of Buyer) and is valid
and enforceable against Buyer in accordance with its terms (except for effect of
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting creditors' rights generally) and (B) Buyer has full corporate power
and authority to consummate the transactions contemplated by this Agreement.
(d) The Sellers shall deliver to the Buyer a Non-Compete Agreement
in the form attached hereto as Schedule N.
(e) From time to time, at the Buyer's request, whether at or after
the Closing, and without further consideration, the Sellers shall execute and
deliver such further instruments of conveyance, assignment, or transfer, and
take such other action, as the Buyer may reasonably require, to convey,
transfer, or assign any of the Acquired Assets to the Buyer, including but not
limited to, any further conveyances, assignments and transfers as may be
necessary to transfer to Buyer all of Sellers' right, title and interest in and
to the technology used or held by them in connection with the operation of the
Business and such actions as may be necessary to put Buyer in possession of all
documents in Sellers' possession which embody such technology.
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(f) The Sellers and the Buyer shall each pay one half all sales,
use, stamp, transfer, and documentary taxes, if any, payable in connection with
the transactions contemplated by this Agreement.
9. Representations and Warranties of the Sellers.
---------------------------------------------
The Sellers represent and warrant to the Buyer as follows:
(a) Organization; Corporate Power; Qualification. PMC and Sun Coast
--------------------------------------------
Holdings are corporations duly organized, validly existing, and in good standing
under the laws of Nevada, and Sun Coast is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. Each of Sellers has
all requisite corporate power and authority to own, lease, and operate its
assets and properties, and to conduct any aspect of the Business as it is now
being conducted by it, and each of the Sellers has all requisite corporate power
and authority to enter into this Agreement, and to consummate the transactions'
contemplated by it.
The Sellers are duly qualified and in good standing to do business as
foreign corporations in every jurisdiction in which the ownership of the
Acquired Assets or the conduct of the Business require such qualification, and
none of the Sellers are subject to any non-compete agreement, or other contract
or commitment, which restricts or prohibits, or may restrict or prohibit, the
conduct of the Business in any jurisdiction or location.
(b) Authorization. This Agreement, and the transactions contemplated
-------------
by it, have been duly approved and authorized by the Sellers' shareholders,
where necessary and Boards of Directors. According to Sun Coast's Articles of
Incorporation and By-Laws, and Delaware law, the execution of this Agreement and
the consummation of the transactions contemplated hereunder by Sun Coast do not
require the vote, approval or ratification of the shareholders of Sun Coast.
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This Agreement has been duly and validly executed and delivered by the
Sellers, and constitutes the valid, binding, and enforceable obligation of the
Sellers.
The execution and delivery of this Agreement by the Sellers, and the
consummation of the transactions contemplated by it, do not, and will not:
(i) subject to compliance with the HSR Act, as hereinafter
defined, violate, or conflict with, any law, rule, regulation, judgment, order,
injunction, or decree applicable to the Sellers other than violations or
conflicts that do not and would not reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
a material adverse effect on the value or operation of the Acquired Assets or
the Business;
(ii) violate, or conflict with, any of the provisions of any
of the Sellers' Articles of Incorporation or By-Laws;
(iii) violate, conflict with, result in a breach of, or
constitute a default under, or give to any other party any right of termination
or cancellation of, or accelerate the performance required by, or maturity of,
any promissory note, bond, indenture, mortgage, contract, agreement, lease,
lien, or other instrument to which any of the Sellers is a party, or by which
they are bound other than those violations, conflicts, breaches, defaults,
creations or impositions that do not and would not reasonably be expected to
have a Material Adverse Effect;
(iv) result in the creation or imposition of any material
claim, lien, charge, or other encumbrance on or against, or loss of any material
rights with respect to, any of the Acquired Assets; or
(v) accelerate the maturity of any material liability which
Buyer is assuming hereunder.
(c) Financial Statements. The Sellers have delivered to the Buyer true
--------------------
and complete copies of the financial statements for the Business and for Sellers
for
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each of their two (2) most recent fiscal years and the three (3) months ended
September 30,1997, including the September 30, 1997 Balance Sheet attached
hereto as Schedule J.
Such financial statements, including the Balance Sheet, are in
accordance with the books and records of the Sellers; were prepared in
accordance with generally accepted accounting principles, consistently applied,
except as stated on Schedule J; and present fairly in all material respects the
financial condition of Sellers and the Business at the dates stated, and the
results of operations for the periods then ended. In the preparation of the
financial statements for the Business and the Balance Sheet adequate provision
was made for common costs shared by more than one operating company. These costs
were allocated to the financial statements in such a manner as to estimate the
actual usage of resources by the Business. Assumptions used in allocating common
costs were consistently applied across all periods for which financial
statements of the Business were carried out of the financial statements of Sun
Coast.
(d) Absence of Certain Changes. Since the date of the Balance Sheet,
--------------------------
except as disclosed in Schedule O, there has not been:
(i) any change in the financial condition, assets, properties,
liabilities, operations, or affairs of the Business, other than changes in the
ordinary course of business, none of which individually, or in the aggregate,
has been materially adverse to the Business;
(ii) any damage, destruction, or loss, whether or not covered by
insurance, which might materially and adversely affect the Acquired Assets or
the Business;
(iii) any increase in the compensation payable, or to become
payable, to any of the officers, employees, or agents of the Business, or any
bonus
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payment or arrangement made to, or with, any of them, except salary adjustments
and bonus payments made in accordance with normal and customary past practices
which in the aggregate are not material to the Business; or
(iv) any other event or condition of any character which might
materially and adversely affect the Acquired Assets or the Business.
(e) Title to Properties. Except as disclosed in Schedule P, the
-------------------
Sellers own outright and are vested with good and indefeasible title to all of
the Acquired Assets shown as being owned by Sellers, free and clear of any
liens, mortgages, security interests, claims, charges, restrictions, easements,
or other encumbrances, or any other restrictions on sale or transfer, including
any conditional sale or other title retention agreement, except for:
(i) easements, servitudes, and rights-of-way of record, none of
which have a Material Adverse Effect;
(ii) rights of the public in any portion of the real properties
which may fall within any public street, way, or alley;
(iii) covenants, conditions, and restrictions of record, none of
which materially and adversely affect the present use or value of the Acquired
Assets, individually or in the aggregate, or the operation of the Business;
(iv) liens for current taxes not yet payable; and
(v) any minor imperfections of title which do not have a Material
Adverse Effect.
(f) Real Property; Machinery; Equipment. Schedule A contains an
-----------------------------------
accurate and complete legal description of all of the land owned and used in
connection with the Business, together with a brief description of all of the
plants, facilities, and buildings located on each such property.
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Schedule B contains an accurate and complete list of all of the land
leased and used in connection with the Business, together with a brief
description of all of the plants, facilities, and buildings located on each such
property, and a summary of the principal terms of the lease applicable to each
such property. True and complete copies of each such lease have been delivered
to Buyer.
Schedule C contains an accurate and complete list of all of the
machinery, equipment, tools, parts, furniture, and vehicles owned and used in
connection with the Business.
Except as set forth in A, B, or C, all of the plants, facilities,
buildings, machinery, and equipment listed in Schedules A, B, and C, and all
equipment leased pursuant to the leases listed in Schedule D, are in good
operating condition and repair, ordinary wear and tear excepted.
There are no parties in possession of any portion of any of the land,
plants, facilities, or buildings listed in Schedules A and B as leases, tenants
at sufferance, or trespassers, except as disclosed in Schedule P.
Except as disclosed in Schedule Q, to the Sellers' knowledge the land,
plants, facilities, buildings, machinery, and equipment listed in Schedules A,
B, C and D, and the Sellers' use and operation of such land, plants, facilities,
buildings, machinery, and equipment, do not violate any deed restriction,
restrictive covenant, building or fire code, zoning ordinance (whether or not
permitted due to prior non-conforming use), or any other law, regulation,
ordinance, or code applicable to such land, plants, facilities, machinery, or
equipment.
(g) Environmental and Regulatory Affairs. To the Sellers' knowledge,
------------------------------------
the Sellers' use and operation of the Acquired Assets, and the Sellers' conduct
of the Business are in substantial compliance with all environmental, pollution,
health, or
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safety laws, rules, or regulations, the enforcement of which would have a
Material Adverse Affect.
Except as disclosed in Schedule Q, no inspection or investigation by
the Environmental Protection Agency (EPA), the Occupational Safety and Health
Administration (OSHA), or any other federal, state, or local governmental body
or agency during the past five (5) years has resulted in a citation, complaint,
notice of violation, or letter demanding cleanup of hazardous substances or
waste, pursuant to any law, rule, regulation, ordinance, judgment, decree,
order, injunction, or decision of any court or governmental authority in regard
to the Acquired Assets or the Business and no such citation, complaint, notice,
or demand letter is pending, or, to the Sellers' knowledge, threatened; nor have
the Sellers failed to remedy any such previously existing citation, complaint,
notice, or demand letter.
Except as disclosed in Schedule Q, the Sellers are not aware of any
solid, liquid, or gaseous materials present at the surface or subsurface levels
of the land, plants, facilities, and buildings listed in Schedules A and B, or
present in the air above, or the water on or under, or the air and water
immediately surrounding such land, plants, facilities, and buildings, which is
in excess of any concentration levels or standards prescribed or permitted by
any applicable law, rule, regulation, ordinance, judgment, decree, order,
injunction, or decision of any court or governmental authority; nor are the
Sellers, except as disclosed in Schedule Q, aware of any condition or state of
affairs existing on or about such land, plants, facilities, and buildings that
would now or in the future require corrective action or closure under the
provisions of the Resource Conservation and Recovery Act, or remedial or other
action under the provisions of the Comprehensive Environmental Response,
Compensation, and Liability Act, or the regulations promulgated under such Acts,
or that would require
16
remedial action, corrective action or closure under the laws of the states in
which such land, plants, facilities, and buildings are located.
Except as disclosed in Schedule Q, to the Sellers' knowledge there are
no PCBs or asbestos containing materials located on, in, or about such land,
plants, facilities, and buildings. To the Sellers' knowledge all underground
storage tanks located on, in, or about such land, plants, facilities, and
buildings are listed on Schedule Q. All such tanks that are required to be
registered have been properly registered with or reported to the appropriate
governmental agencies, and all such tanks and associated piping are in sound
condition and no leaks have occurred from them.
Except as described in Schedule Q, the products manufactured by the
Sellers and all chemical substances which are contained in such finished
products which are required to be on the Inventory List promulgated under the
United States Toxic Substances Control Act, were and are on such Inventory List,
or are the subject of a Premanufacturing Notice filed with the EPA under such
Act, and, to the Sellers' knowledge, the Sellers have not filed, and have not
been under a duty to file, any reports required by Section 8(e) of such Act with
respect to substantial risks involving such products. Except as described in
Schedule Q, to the Sellers' knowledge none of the products of the Business are
subject to an order under Section 5(e), a testing rule under Section 4 or
regulation under Section 6(a) of such Act.
(h) Contracts: Leases. Schedule D consists of a listing of certain oral
-----------------
and written contracts and agreements relating to the Business. Except only as to
contracts and agreements listed in Schedule D, or listed in Schedule B with
respect to real property leases, or Schedule G or H with respect to licenses, or
Schedule R with respect to employment or labor relations matters, the Sellers
are not parties to and the Business is not bound by any:
17
(i) contracts, not made in the ordinary course of business;
(ii) employment, employment termination or severance, consulting,
noncompetition, or secrecy agreements;
(iii) collective bargaining agreements;
(iv) leases with respect to any real or personal property, whether as
lessor or lessee, except personal property leases terminable without penalty
upon one month's notice or less or involving total commitments of less than
$10,000;
(v) dealer's, manufacturer's representative, distributor or agent's
agreements;
(vi) contracts or commitments for capital expenditures or
construction;
(vii) contracts or series of contracts for purchase or sale of
products, materials, supplies or services involving revenues or expenditures
greater than $25,000;
(viii) partnership or joint venture agreements; or
(ix) agreements, contracts or commitments containing covenants
limiting in any fashion the freedom and ability of Sellers or the Business to
compete or of the Sellers or the Business to manufacture or market the products
of the Business or to use or employ the technology of the Business.
Neither the Sellers, nor, to the Sellers' knowledge, any other party,
is in material default, nor, to the Sellers' knowledge, has any event occurred,
which, through the passage of time or the giving of notice, or both, would
constitute a material default, under any sale or purchase contract, distributor
or sales agency agreement, purchase order, lease, construction contract,
collective bargaining agreement, consulting agreement, employment or secrecy
agreement, license or other contract or agreement listed in Schedules B, D, G, H
or R.
18
Except as disclosed in Schedules B, D, G, H or R, all such scheduled
sale or purchase contracts, distributor or sales agency agreements, purchase
orders, leases, construction contracts, collective bargaining agreements,
consulting agreement, employment or secrecy agreements, loan agreements,
licenses, and other contract and agreements may be assigned to, or assumed by,
the Buyer, without first obtaining the consent of the other party or parties to
it.
The Sellers shall use their best efforts to procure consents to the
assignment of the sale or purchase contracts, distributor or sales agency
agreements, purchase orders, leases, construction contracts, collective
bargaining agreements, consulting agreement, employment and secrecy agreements,
licenses and other contracts and agreements described in Schedules B, D, G, H or
R, as requiring such consent.
If any such consent is not obtained, the Sellers shall cooperate with
the Buyer in any reasonable arrangement designed to provide for the Buyer the
benefit of any rights the Sellers may have against the other party or parties to
any such sale or purchase contract, distributor or sales agency agreement,
purchase order, lease, construction contract, consulting agreement, collective
bargaining agreement, employment or secrecy agreement, license, or other
contracts or agreements, including, but not limited to, any right of
enforcement, or any right arising out of a breach or cancellation by such other
party or parties.
(i) Employees. As of the date of this Agreement Schedule R, part 1
---------
contains an accurate and complete list of (i) all of the employees of the
Business ("Employees"), including each such Employees' area of employment,
salary or hourly rate and annual bonuses, (ii) any employment contract or
special arrangement with any Employee and (iii) all personnel policies, manuals,
employee handbooks, summary plan descriptions and similar materials pertaining
to the Business. Except as set forth
19
on Schedule R, part 1, there are no other material forms of compensation paid to
any Employee.
Except as specifically described in Schedule R, part 2, all Employees
are actively at work and no Employee is currently on a leave of absence, layoff,
suspension, sick leave, workers compensation, short or long term disability,
family leave, military leave, or otherwise not actively performing his or her
work during all normally scheduled business hours.
With respect to the Business, the Sellers has no Employee Benefit
Plan, and no employee of the Sellers is covered by any Employee Benefit Plan,
other than those listed on Schedule R, part 3. For purposes of this Agreement,
the term "Employee Benefit Plan" shall mean any written or oral plan, contract,
or other arrangement of benefit or advantage to any officers or employees of the
Sellers, including, but not limited to, stock option, profit sharing, and
pension plans; deferred compensation; retirement, medical, disability, life, and
other insurance; income protection arrangements; and severance and termination
plans. The Sellers have furnished to the Buyer copies of summary plan
descriptions, Employee eligibility and enrollment lists, Employee handbooks and
any other documents describing terms or conditions of employment or work related
to the Business. All such documents are also listed in Schedule R, part 3.
No changes in any Employee Benefit Plan applicable to any such
Employee of the Seller, and no new Employee Benefit Plan or Plans with respect
to such Employees are contemplated or have been communicated to any Employee as
being contemplated.
There are no actions or claims existing or pending (other than routine
claims for benefits) or threatened with respect to any Employee Benefit Plan
that would have a material effect on this transaction, and neither Sellers nor
any other ERISA
20
Affiliate has been notified of any audit or investigation of an Employee Benefit
Plan by any governmental entity that would have a material effect on this
transaction. "ERISA Affiliate" means any entity trade or business that would be
treated as under common control with Sellers or as a member of a controlled
group including any of the Sellers within the meaning of Section 414 of the U.S.
Internal Revenue Code (the "Code") or Section 4001 of the Employees Retirement
Income Security Act as from time to time amended ("ERISA").
There are no multi-employer plans (as defined in ERISA Section
4001(a)(3)) to which Sellers are or have been required to make a contribution or
other payment.
Sellers have paid and discharged promptly when due all liabilities and
obligations arising under ERISA or the Code of a character which if unpaid or
unperformed might result in the imposition of a lien against any of the assets
of the Business.
Except as set forth in Schedule R, part 4, or as otherwise provided in
this Agreement, no Seller has promised or has any liability for providing health
care or other welfare benefits to any Employee or any former employee of the
Business following the termination of such individual's employment in the
Business.
Sellers are in substantial compliance with the Immigration Reform and
Control Act of 1986, as amended, and have ready for transfer as part of the
assets of the Business any and all Employment Eligibility Verification Forms (I-
9) for Employees hired by Sellers since November 6, 1986, employed in the
Business on or after June 1, 1987, and hired by Buyer at or after Closing
pursuant to the terms of this Agreement.
Except as described on Schedule R, part 5, or as otherwise provided in
this Agreement, assuming that all Employees remain in the employment of the
Business immediately after the Closing (regardless of whether such employment is
21
thereafter continued), the sale of assets contemplated by this Agreement in
itself will not: (i) entitle any Employee to severance pay, unemployment
compensation or similar payment from Buyer; (ii) increase the amount of
compensation payable by Buyer to any Employee or (iii) entitle any Employee to
an "excess parachute payment" within the meaning of Section 280G of the Code.
There has not been in respect of the Business any plant closing or mass
layoff of employees as those terms are defined in the Worker Adjustment
Retraining and Notification ("WARN") Act of 1988, as amended, or any similar
state or local law or regulation within the one hundred twenty (120) days prior
to the execution of this Agreement, and Sellers, within the ninety (90) day
period prior to the Closing, has not laid off or terminated more than ten (10)
employees at any location subject to this Agreement.
(j) Labor Relations. Except as set forth in Schedule R, part 6, no
---------------
Employees are or have been subject to any collective bargaining agreement or
other labor contract in respect of the Business. Except as set forth in Schedule
R, part 6 during the past five years, the Business has not been subject to and
there is no existing, or to the knowledge of the Sellers threatened; (i) strike,
slowdown, picketing or work stoppage; (ii) proceeding relating to alleged
violation of any legal requirement pertaining to labor relations, employment or
employee benefit matters, including any charge or complaint filed by an employee
or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, Department of Labor, the Occupational Health and Safety
Administration, the Pension Benefit Guaranty Corporation, or any similar local,
state or federal governmental authority; (iii) union organizational or
representation activity, or (iv) application for certification as a collective
bargaining agent in respect of the Business.
22
(k) Accounts Receivable. The accounts receivable of the Business
-------------------
reflected on the Balance Sheet, or thereafter acquired in connection with the
operation of the Business, have been collected, or are current and collectible
within ninety (90) days after the Closing Date, without any legal action,
defenses, set-offs, or other deductions, except returns and allowances in the
ordinary course of business, at the aggregate amounts recorded for such
receivables on the Sellers' books.
Sellers have not received any notice or threat that any products
previously shipped in connection with the Business are to be returned to the
Sellers for any reason, other than returns in the ordinary course of Business,
and the Sellers have no knowledge or reason to believe that unusual returns will
occur.
(l) Inventories. The inventories of the Business reflected on the
-----------
Balance Sheet, or thereafter acquired in connection with the operation of the
Business, consist of items of a quantity and quality usable or salable in the
ordinary course of business, and have been valued at the lower of actual cost or
net realizable value on the Sellers' books, consistent with prior practices, and
can be sold, used, or consumed in the ordinary course of business.
Since the date of the Balance Sheet, the inventories of the Business
have been maintained at levels consistent with past practices, and the Sellers
have not caused the inventories of the Business to be increased or decreased,
except in the ordinary course of business.
(m) Customers. To Sellers' knowledge, no customer, or group of
---------
customers under common control, accounting for more than five (5%) percent in
aggregate volume of gross sales of the Business during any one of the past two
(2) years, has ceased, or indicated an intention to cease, purchasing products
from the Business, nor has any such customer requested or threatened any
material modification or change in its business relationship with the Business.
23
(n) Licenses; Permits. Schedule S contains an accurate and complete
-----------------
list of all of the licenses, franchises, approvals, certificates, consents,
permits, or authorizations of governmental and regulatory bodies required to
conduct the Business as it is now being conducted and the termination or absence
of which would have a Material Adverse Effect, all of which are in full force
and effect and readily transferable or assignable to the Buyer, except as
disclosed in Schedule S. No action or claim is pending or, to the knowledge of
the Sellers, threatened, to revoke, terminate, or limit any such license,
franchise, approval, certificate, consent, permit, or authorization except as
disclosed in Schedule S.
The Sellers have delivered to the Buyer copies of all of the licenses
and permits described in the attached Schedule S, and will deliver, on or before
the Closing Date, copies of all of the background data, drawings, and other
information in the Sellers' possession which formed the basis for the
applications filed for, or the granting of, such permits.
(o) Intellectual Property Rights. Schedules G and H contain accurate
----------------------------
and complete lists and summary descriptions of all of the unexpired patents,
patent applications, patent licenses, registered copyrights, copyright licenses,
trademarks, trademark applications, trademark licenses, and trade names, used,
owned, held, or controlled by the Sellers in connection with the operation of
the Business, or governing its products or processes; and, except for such
intellectual property the absence of which does not and will not have a Material
Adverse Effect, no other patents, patent licenses, copyrights, copyright
licenses, trademarks, trademark licenses, or trade names, are used, or required,
to conduct the Business as it is now being conducted.
All of the patents, patent applications, copyrights, trademarks,
trademark applications, and trade names listed on Schedules G and H are valid,
in good standing, and in full force and effect; and, to the Sellers' knowledge,
none of such patents, patent
24
applications, copyrights, trademarks, trademark applications, and trade names is
being infringed by any other person.
Except as disclosed in Schedules G, H or T, there are no actions,
suits or proceedings pending and no claim has been made, nor, to the Sellers'
knowledge, is one threatened, to the effect that, nor do the Sellers have
knowledge that, the operation of the Business, or the manufacture or sale of any
of its products, or the use of any technology that it employs, infringes upon
any patent, copyright, trademark, trademark application, trade name, trade
dress, trade secret or other proprietary right, owned or claimed by any other
party or that Sellers are in breach of any obligation owed with respect to such
intellectual property to any third party.
Except as disclosed in Schedules G or H, the Sellers are not required
to pay any royalty, license fee, or similar type of compensation in connection
with the current or prior conduct of the Business.
For purposes of this Agreement, "technology" means all technical
information and know-how, confidential and non-confidential, which is owned or
used by or on behalf of the Sellers in connection with the Business, including,
without limitation, all patterns, plans, designs, research data, inventions,
trade secrets, know-how, formulae, recipes, manufacturing processes, operating
manuals, drawings, equipment and parts lists (with related description and
instructions), manuals, records, procedures, product packaging instructions,
product specifications, analytical methods, sources and specifications for raw
materials, toxicity and general health and safety information, research and
development records and reports, and other documents relating to the foregoing.
(p) Litigation. Schedule T contains an accurate and complete list and
----------
summary description of all of the claims, actions, suits, proceedings, and
investigations pending, and all of the orders, injunctions, decrees, judgments,
and decisions
25
outstanding, in courts, or before governmental authorities, or before
arbitrators or mediators, by or against the Sellers, with respect to the
Acquired Assets or the Business.
Except as disclosed in Schedules T or Q, there are no claims, actions,
suits, or proceedings pending in any court, or before any governmental
authority, or before any arbitrator or mediator, by or against the Sellers, or,
to the Sellers' knowledge, threatened, which, if adversely determined, would
have a Material Adverse Effect, or which would prevent or restrict the
consummation of the transactions contemplated by this Agreement, or declare such
transactions unlawful, or cause their rescission.
(q) Insurance. Schedule U contains a complete and accurate list of
---------
all insurance policies in force with respect to the Acquired Assets or the
Business as of the date of this Agreement.
The Sellers have previously provided to the Buyer a loss history for
the three (3) years prior to the date of this Agreement with respect to all of
the insurance policies applicable to the Acquired Assets or the Business during
such period of time including, but not limited to, fire and casualty, workers
compensation, product liability, and general liability insurance.
(r) No Brokers. No finder's fee, brokerage, commission, or other
----------
payment is payable by the Sellers to any other party in connection with the
origination or negotiation of this Agreement, or the consummation of the
transactions contemplated by it.
(s) Taxes. All taxes, including without limitation, income, property,
-----
sales, use, franchise, added value, payroll, employees' income withholding and
social security taxes, imposed by the United States or any foreign country or
any state, municipality, subdivision or instrumentality thereof or any other
taxing authority, which
26
are due and payable by Sellers related to the Business, and all interest and
penalties thereon, whether disputed or not, for periods up to the Closing Date
have been or will be paid in full by Sellers and all tax returns required to be
filled in connection therewith have been or will be accurately prepared and duly
and timely filed by Sellers. Sellers are not delinquent in the payment of any
tax related to the Business and has no tax deficiency or claim outstanding
proposed or assessed against it related to the Acquired Assets or the Business.
This representation and warranty shall not be considered breached by Sellers if
through inadvertence Sellers have failed to pay when due taxes in a cumulative
amount which is not substantial; provided, however, Buyer shall be entitled to
withhold from the Purchase Price an amount equal to any past due taxes which
could, if not paid, become a lien against the Acquired Assets or the Business,
until Sellers deliver proof of payment to Buyer. For purposes of this paragraph
an amount of taxes which is not substantial shall be a cumulative amount of less
than $10,000.
(t) Complete Assets. The Acquired Assets comprise all of the assets
---------------
used in, or held by Sellers for use in, the Business, or required for the
conduct of the Business as it is presently being operated.
(u) Affiliated Transactions - Except as set forth in Schedule D, the
-----------------------
Business is not bound by, nor does it receive any rights or benefits under any
contracts or agreements with any party that is directly or indirectly through
one or more intermediaries, controlled by or under common control with Sun
Coast.
10. Representations and Warranties of the Buyer.
-------------------------------------------
The Buyer represents and warrants to the Sellers as follows:
(a) Organization: Corporate Power. The Buyer is a corporation duly
-----------------------------
organized, validly existing, and in good standing under the laws of Delaware,
and has
27
all requisite corporate power and authority to enter into this Agreement, and to
consummate the transactions contemplated by it.
(b) Authorization. This Agreement has been duly and validly executed
-------------
and delivered by the Buyer and constitutes the valid, binding, and enforceable
obligation of the Buyer.
The execution and delivery of this Agreement by the Buyer, and the
consummation of the transactions contemplated by it, do not, and will not:
(i) subject to compliance with the HSR Act, violate, or conflict
with, any law, rule, regulation, judgment, order, injunction, or decree
applicable to the Buyer;
(ii) violate, or conflict with, any of the provisions of the
Buyer's Articles of Incorporation or By-Laws; or
(iii) violate, conflict with, result in a breach of, or
constitute a default under, or give to any other party any right of termination
or cancellation of, or accelerate the performance required by, or maturity of,
any promissory note, bond, indenture, mortgage, contract, agreement, lease,
lien, or other instrument to which the Buyer is a party, or by which it is
bound.
(c) No Brokers. No finder's fee, brokerage, commission, or other
----------
payment is payable by the Buyer to any other party in connection with the
origination or negotiation of this Agreement, or the consummation of the
transactions contemplated by it.
(d) Financing. Buyer has, and at the Closing will have, sufficient
---------
cash, available lines of credit, or other sources of immediately available funds
to enable it to pay the Purchase Price to Seller at the Closing.
(e) Independent Investigation. Buyer hereby acknowledges and affirms
-------------------------
that it has completed its own independent investigation, analysis, and
evaluation of Sellers, the Acquired Assets, and the Business, that it has made
all such
28
reviews and inspections of the Acquired Assets and the Business as it has deemed
necessary or appropriate, and that in making its decision to enter into this
Agreement and to consummate the transactions contemplated hereby it has relied
solely on (i) its own independent investigation, analysis, and evaluation of
Sellers, the Acquired Assets, and the Business and (ii) the covenants,
agreements, representations and warranties contained in this Agreement.
11. Access to Information/HSR Filing.
--------------------------------
(a) During the period between the date of this Agreement and the
Closing Date, the Buyer and its counsel, accountants, and other representatives
may make, or cause to be made, such investigation of the financial condition,
assets, properties, liabilities, operations, or affairs of the Business as the
Buyer deems necessary or advisable for its own purposes; and the Sellers shall
give to the Buyer, or any of its representatives, full access during normal
business hours to all the properties, books, records, files, and other
information of the Business, and shall furnish to the Buyer, or any of its
representatives, all such documents and copies of documents and information
concerning the Business, as the Buyer may reasonably request for such purposes.
In addition, at the request of Buyer, Seller shall arrange and participate in
interviews, at mutually convenient times and locations, with customers of the
business selected by Buyer. The Buyer acknowledges and agrees that the
Confidentiality Agreement dated August 27, 1997 between Sun Coast and the Buyer
shall remain in effect as provided therein.
(b) Between the date of this Agreement and the Closing Date, the
Buyer shall be entitled to conduct such tests, either directly or by an
independent contractor, as may be necessary to determine the existence of: (i)
any soil or groundwater contamination at, on, about, or under, the land, plants,
facilities, and buildings listed in Schedules A and B, including, but not
limited to, integrity tests of all
29
underground storage tanks and associated piping, soil borings and ground water
sampling and (ii) any asbestos and PCBs at, in, about, or under such property;
provided such tests shall be conducted in consultation with Sellers and in a
manner to minimize physical damage to the Assets. Buyer shall defend, indemnify
and hold harmless Sellers from and against any such physical damage.
Upon Sellers' request, the results of such tests shall be shared
promptly with the Sellers by the Buyer, but shall be treated by the Buyer and
the Sellers as confidential, and shall not be disclosed to any third party
without the other party's prior written consent, which consent shall not be
withheld in any case where such information is required by law, rule,
regulation, or ordinance, to be disclosed.
Promptly following the execution of this Agreement, Sellers shall make
their files supporting PMC's application to TNRCC for its air permit renewal,
including the results of any modeling done on its behalf available for review by
Buyer or its representatives. Sellers will also provide Buyer with samples of
wastewater taken as directed by representatives of Buyer.
No inspections, tests, or studies conducted by Buyer, or failure to
conduct inspections, tests or studies, will be deemed to constitute a waiver or
relinquishment on the part of Buyer of its rights to rely upon the covenants,
representations, or warranties made by the Sellers in this Agreement.
(c) Sellers and Buyer shall prior to the Closing Date, file with the
Federal Trade commission and the Department of Justice the notification and
report form required for the transactions contemplated hereby under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR Act"). Sellers and Buyer
shall cooperate with each other in submitting any supplemental information that
may reasonably be required in connection with their HSR Act filing and in
obtaining the expiration or
30
termination of the waiting period required under HSR Act. Buyer shall pay the
filing fees payable in connection with the filings by the parties required by
the HSR Act.
12. Title Insurance; Surveys.
------------------------
The Sellers, at their own expense, shall deliver, or cause to be
delivered to the Buyer, not less than ten (10) days prior to the Closing Date,
Commitments for Title Insurance (the "Title Binders") issued by First American
Title Insurance Company (the "Title Company"), showing good and indefeasible
title in Sellers to each of the real properties described in Schedule A, and
committing to issue owner's title insurance policies to the Buyer, subject only
to the standard printed exceptions and matters included within the exceptions
stated in Paragraph 9(e), including any matters specifically disclosed on
Schedule A.
The Sellers, at their own expense, shall also deliver, or cause to be
delivered, to the Buyer, not less than ten (10) days prior to the Closing Date,
current surveys (the "Surveys") of each of the real properties described in
Schedule A showing that there are no survey conditions which constitute
exceptions to or deficiencies in title, except as provided in paragraphs 9(e)
and 9(f). The Surveys shall be performed and certified by licensed surveyors
acceptable to the Title Company and shall contain all detail necessary for the
Title Company to amend or eliminate the survey exceptions in the Title Binders.
Promptly after the Closing Date, the Sellers shall pay for and shall
cause the Title Company to deliver to the Buyer owner's title insurance policies
issued by the Title Company in the amount of the purchase price applicable to
each such property and insuring that the Buyer owns indefeasible fee simple
title to each such property, subject to no exceptions other than those permitted
under this Paragraph 12.
31
13. Conduct of the Business Pending the Closing.
-------------------------------------------
During the period between the date of this Agreement and the Closing
Date, except as otherwise permitted by the prior written consent of the Buyer:
(a) the Seller shall conduct the Business only in the ordinary
course, as established by past practices, and in such manner as to avoid any
breach of any of the representations and warranties made by the Sellers in this
Agreement; provided, however, that the Sellers shall not sell, lease, grant
rights to, or otherwise dispose of, any of the Acquired Assets, except for the
sale, use, consumption, or other disposal of inventories in the ordinary course
of business; and
(b) the Sellers shall use their best efforts to preserve the
organization of the Business intact; to keep available the services of the
present officers and employees of the Business, and to maintain and preserve the
goodwill of its suppliers and customers.
14. Conditions Precedent to Obligation of the Buyer.
-----------------------------------------------
The obligation of the Buyer to close, as provided in Paragraph 8, is
subject, at the option of the Buyer, to the fulfillment, on, or prior to, the
Closing Date, of each of the following conditions:
(a) all representations and warranties of the Sellers contained in
Paragraph 9 shall be true and correct in all material respects on the Closing
Date, with the same effect as though such representations and warranties had
been made on such date;
(b) in its review of PMC's application for its air permit renewal and
the modeling conducted for PMC, Buyer shall not have learned of any facts or
circumstances which reasonably lead Buyer to conclude that the permit will not
be
32
issued or will be issued under circumstances which will require significant
capital investments to bring the Dallas plant into compliance; and
(c) since the date of this Agreement, no material adverse change in
the Business shall have occurred and Buyer shall have received a certificate
signed by the chief executive officer of PMC to such effect; and
(d) the Sellers shall have duly performed and complied with all
obligations, covenants, terms, and conditions to be performed or complied with
by it under this Agreement prior to, or on, the Closing Date, including, but not
limited to, its obligations under the provisions of Paragraphs 8, 11, 12 and 13;
and
(e) the waiting period under the HSR Act shall have expired or been
terminated and there shall not be any actual or threatened action, proceeding,
or investigation by any governmental agency or authority which is directed
toward challenging, restraining, prohibiting, or invalidating the transactions
contemplated by this Agreement, or which, in the reasonable judgment of the
Buyer's counsel, might materially and adversely affect the right of the Buyer,
after the Closing, (i) to own, operate, or control any of the Acquired Assets,
or (ii) to continue the Business in the same manner in which it is now being
conducted.
15. Conditions Precedent to Obligation of the Sellers.
-------------------------------------------------
The obligation of the Sellers to close, as provided in Paragraph 7, is
subject, at the option of the Sellers, to the fulfillment, on, or prior to, the
Closing Date, of each of the following conditions:
(a) all representations and warranties of the Buyer contained in
Paragraph 10 shall be true and correct on the Closing Date, with the same effect
as though such representations and warranties had been made on such date;
(b) the Buyer shall have duly performed and complied with all
obligations, covenants, terms, and conditions to be performed or complied with
by it
33
under this Agreement prior to, or on, the Closing Date, including, but not
limited to, its obligations under the provisions of Paragraph 7; and
(c) the waiting period under the HSR Act shall have expired or been
terminated and there shall not be any active or threatened action, proceeding,
or investigation by any governmental agency or authority which is directed
toward challenging, restraining, prohibiting, or invalidating the transactions
contemplated by this Agreement.
16. The Buyer's Assumption of Liabilities.
-------------------------------------
The Buyer agrees to assume and pay or discharge the following
liabilities and obligations of the Seller:
(a) all the trade payables and current liabilities of the Business
reflected on the Closing Balance Sheet;
(b) all liabilities and obligations of the Sellers which are to be
performed or paid or accrue, on or after the Closing Date under the licenses,
franchises, approvals, certificates, consents, permits or authorizations listed
on Schedule S and under the sales and purchase contracts, distributor and sales
agency agreements, purchase orders, construction contracts, leases, consulting
agreement, secrecy agreements, licenses and other contracts and agreements
described in Schedules B, D, G, and H, and under all other sales and purchase
contracts and purchase orders entered into in the ordinary course of business
between the date of this Agreement and the Closing Date, except for: (i) any
liability or obligation arising from a breach of or violation of any such sale
or purchase contract, distributor or sales agency agreement, purchase order,
lease, construction contract, consulting agreement, secrecy agreement, license
or other contract or agreement, or of any such licenses, franchises, approvals,
certificates, consents, permits or authorization, on the Sellers'
34
part prior to the Closing Date, and (ii) any liability or obligation arising
from a breach of the representations and warranties contained in Paragraph 9(h),
9(n) and 9(o); and
(c) all liabilities and obligations of the Sellers on account of
product liability or warranty claims for personal injury or property damage
arising from products shipped or delivered by the Buyer after the Closing Date;
and
(d) all liabilities and obligations of the Sellers which the Buyer is
assuming under Paragraph 22; and
(e) all liabilities and obligations of the Sellers which arise on
account of the Buyer's use of the Sellers' name after the Closing Date pursuant
to Paragraph 26; and
(f) all other liabilities resulting from Buyers operation of the
Business and the Acquired Assets on and after the Closing Date; and
(g) PMC's guarantee to Xxxxxx Xxxxxxxxx of payment under the real
estate lease for property located at 000 Xxxxxx Xxxx, Xxxxxxxxxxxx, XX, but only
to the extent of the rent remaining to be paid during the remaining term ending
February 8, 1999.
17. Liabilities Not Assumed by the Buyer.
------------------------------------
Notwithstanding anything to the contrary in this Agreement or in the
attached Schedules, it is expressly agreed that the Buyer shall not assume, pay,
perform, or discharge, nor shall it for any purpose be deemed to have assumed,
any debts, obligations, or liabilities of the Sellers, except as expressly
assumed in Paragraph 16. Without limiting the generality of the foregoing, the
Buyer shall not assume, pay, perform, or discharge any of the following debts,
obligations, or liabilities of the Sellers:
(a) any liability or obligation for federal, state, or local income,
property, franchise, sales, use, value added, payroll, social security, or other
taxes or
35
fees payable in respect of any transaction which occurred prior to the Closing
Date, or which is contemplated by this Agreement, or any taxes which the Sellers
are expressly obligated to pay under this Agreement;
(b) any liability or obligation arising out of any sale or purchase
contract, distributor or sales agency agreement, purchase order, lease,
collective bargaining agreement, consulting agreement, employment or secrecy
agreement, loan agreement, promissory note, indenture, license, or any other
commitment not assigned and transferred to the Buyer under this Agreement, and
not expressly assumed by the Buyer pursuant to the provisions of Paragraph 16;
(c) any liability or obligation on account of any product liability
or warranty claim, action, or suit for personal injury or property damage
arising from any product shipped or delivered by the Sellers, or by any prior
owner or operator of the Business, prior to the Closing Date, or any liability
for death or injury to persons or damage to property arising from the operation
of the Business prior to the Closing Data
(d) any liability or obligation on account of any of the claims,
actions, suits, proceedings, investigations, citations, complaints, notices,
demand letters, or conditions described in Schedule V, attached hereto; or any
other liability or obligation on account of any claim, action, suit, proceeding,
citation, complaint, notice, or demand letter arising from a violation of any
environmental law, rule, regulation, code, or ordinance at, on, or about the
land, plants, facilities, and buildings listed in Schedules A and B prior to the
Closing Date, or at, on, or about any other land, plants, or facilities
previously owned or operated by the Sellers or any other owner or operator of
all or any part of the Business;
(e) any liability or obligation on account of any claim, action,
suit, proceeding, citation, complaint, notice, or demand letter arising from the
transport,
36
treatment, recycling, storage, or disposal, or arrangements therefor, at, on, or
about any land, plant or facility owned or operated by any other party, of any
material or waste generated by the Sellers or any other owner or operator of all
or any part of the Business, and transported off-site from any land, plant, or
facility listed in Schedules A or B prior to the Closing Date or from any other
land, plant, or facility previously owned or operated by the Sellers or any
prior owner or operator of all or any part of the Business; and
(f) any liability or obligation:
(i) to provide life insurance coverage; or health and welfare
benefits, for employees of the Sellers during any period before the Closing
Date, including coverage for claims incurred but not reported as of the closing,
or to provide such coverage or benefits after the Closing Date to former
employees of the Sellers who retired from employment with the Sellers prior to
the Closing Date;
(ii) to pay severance pay due to the termination of employees of
the Sellers prior to the Closing Date, or due to the transactions contemplated
by this Agreement, except as otherwise provided in Schedule R, part 7;
(iii) to provide relocation expenses, reimbursements, or
assistance to any employee of the Sellers for relocations which occurred prior
to the Closing Date;
(iv) to pay or provide benefits of any kind for any periods of
time for employees of the Sellers who are disabled on the Closing Date; and
(v) to pay fees due under any consulting agreements between the
Sellers and former employees of the Sellers.
18. The Sellers' Indemnity.
----------------------
The Sellers shall defend, indemnify, and hold the Buyer harmless from
and against:
37
(a) any and all liabilities, obligations, losses, and damages
resulting from, or attributable to: (i) any breach of any representation or
warranty made by the Sellers in this Agreement, or (ii) any breach or default in
the performance by the Sellers of any of the covenants or agreements made by the
Sellers in this Agreement; and
(b) any and all liabilities, obligations, losses, and damages
incurred by the Buyer as a result of the Sellers' non-compliance with any bulk
sales law; and
(c) any and all liabilities and obligations of the Sellers not
expressly assumed by the Buyer pursuant to the provisions of Paragraphs 16 and
17; and
(d) any and all costs and expenses. including reasonable attorneys
fees, relating to the foregoing, (collectively "Buyer Claims").
19. The Buyer's Indemnity.
---------------------
The Buyer shall defend, indemnify, and hold the Sellers harmless from
and against:
(a) any and all liabilities, obligations, losses, and damages
resulting from, or attributable to: (i) any breach of any representation or
warranty made by the Buyer in this Agreement, or (ii) any breach or default in
the performance by the Buyer of any of the covenants or agreements made by the
Buyer in this Agreement; and
(b) any and all liabilities or obligations expressly assumed by Buyer
in Paragraphs 16 and 17 of this Agreement; and
(c) any and all liabilities, obligations, losses, and damages,
resulting from, or attributable to the ownership, management or use by the Buyer
of the Acquired Assets from and after the Closing Date, except to the extent the
Buyer is indemnified by the Sellers pursuant to Paragraph 18; and
(d) any and all costs and expenses, including reasonable attorneys
fees, relating to the foregoing,
38
(collectively "Seller Claims").
20. Remedies.
--------
(a) No indemnification shall be required to be made by Sellers
pursuant to Paragraph 18 (a)(i) except to the extent the aggregate amount of
Buyer Claims established under paragraph 18(a)(i) exceeds $100,000.
(b) No indemnification shall be required to be made by Buyer pursuant
to Paragraph 19 (a)(i) except to the extent the aggregate amount of Seller
Claims established under Paragraph 19(a)(i) exceeds $100,000.
(c) The amount required to be paid by any party to indemnify any
other party pursuant to Paragraph 18 or 19 as a result of any Seller Claim or
any Buyer Claim shall be reduced to the extent of any amounts actually received
by such other party after the Closing Date pursuant to the terms of the
insurance policies (if any) covering such claim.
(d) Any indemnity payments owed by any party to any other party
pursuant to this Paragraph 18 or 19 shall be reduced by any tax benefits to the
party claiming indemnity under thereunder and increased by any tax detriments to
the party claiming indemnity thereunder.
(e) No indemnification shall be required to be made by Sellers
pursuant to Paragraph 18 with respect to any Buyer Claims to the extent that the
aggregate amount of Buyer Claims incurred by Buyer with respect to all Buyer
Claims exceed the Purchase Price.
(f) No indemnification shall be required to be made by Buyer pursuant
to Paragraph 19 with respect to any Seller Claims to the extent that the
aggregate amount of Seller Claims incurred by Seller with respect to all Seller
Claims exceeds an amount equal to the Purchase Price.
39
(g) The parties hereto agree that, in relation to any breach,
default, or nonperformance of any representation, warranty, covenant, or
agreement made or entered into by a party hereto, the only relief and remedy
available to the other party hereto in respect of said breach, default, or
nonperformance shall be:
(i) termination, but only if said termination is expressly
permitted under the provisions of Paragraph 25; or
(ii) damages, but only the extent properly claimable under
Paragraphs 18 or 19 and as limited pursuant to this Paragraph 20 or otherwise
hereunder; or
(iii) specific performance if a court of competent jurisdiction
in its discretion grants the same; or
(iv) injunctive or declamatory relief if a court of competent
jurisdiction in its discretion grants the same.
The parties hereto also agree that no action for rescission, or
claiming repudiation, of this Agreement may be brought or maintained by either
party against the other following the Closing no matter how severe, grave, or
fundamental any such breach, default, or nonperformance may be by one party.
Accordingly, the parties hereby expressly waive and forego any and all rights
they may possess to bring any such action.
(h) In order to invoke the indemnifying party's duty to defend,
indemnify and hold harmless under either this Paragraph 18 or Paragraph 19 (each
an "indemnification obligation" and collectively the "indemnification
obligations"), the indemnified party shall promptly but not later than 30 days
after becoming aware of a liability, obligation, loss or damages for which an
indemnification obligation may exist, give written notice to the indemnifying
party. Upon receipt of such notice, the indemnifying party shall, at its option,
promptly take over the defense and resolution of
40
such liability, obligation, loss or damages or such portion thereof that may be
subject to an indemnification obligation.
21. Survival of Representations and Warranties.
------------------------------------------
All of the representations and warranties made by the Buyer and the
Sellers in this Agreement shall be continuing and shall survive the closing for
a period of two (2) years, regardless of any investigation made at any time by
either party; and no claim, action, suit, or other proceeding may be brought on
any such warranty or representation after the expiration of such two (2) year
period. All the indemnification obligations provided for in Paragraphs 18 (a)(i)
and 19(a)(i) shall terminate on the second anniversary of the Closing Date. All
other indemnification obligations shall terminate on the fifth anniversary of
the Closing Date.
22. Employees.
---------
(a) The Buyer shall offer employment, as of the Closing Date, to all
active Employees listed on Schedule R, part 1, at the same salary or hourly rate
and in the same or comparable position that the Employee held on the day before
the Closing Date as listed in Schedule R, part 1.
(b) The Buyer will offer employment at the same salary or hourly rate
in the same or comparable position previously held by them in the Business if
available, to any Employee listed in Schedule R, part 2, who on the Closing Date
is disabled and receiving short term or long term disability benefits including
worker's compensation and who is released to return to work within six (6)
months of the Closing Date and who applies for employment within two (2) weeks
of such release.
(c) The employee benefit plans offered by Buyer to Employees hired by
the Buyer shall be the same as Xxxxxx Chemical, Inc. provides its similarly
situated employees and shall recognize (or be amended to recognize) the service
of Employees for periods of employment by the Sellers for purposes of
eligibility, participation, vesting
41
and for purposes of vacation determining the amount of a benefit, provided,
however that any plan for retiree medical and death benefits will be based upon
service with the Buyer on or after the Closing Date, and that any benefit
accrual under any savings or pension plan will be for service on or after the
Closing Date. Employees hired by Buyer shall be immediately eligible to
participate in Buyers savings plans and, except as otherwise provided herein,
employee welfare benefit plans and programs. Effective as of the Closing,
Sellers shall take all necessary and appropriate action to amend the savings
plans in which Employees participate to provide (i) the Employees hired by Buyer
receive full and immediate vesting in any employee derived benefits accrued
under such plans; (ii) that any such Employees with an outstanding loan will not
be in default on such loans unless and until such Employee receives a
distribution from such plan or fails to make a timely payment on such loan;
(iii) that such Employees will be deemed employed on the last day of the plan
year in which the Closing occurs solely for purposes of sharing in any
applicable discretionary matching contributions promised to Employees prior to
the Closing Date pursuant to Section 3.2 of the Sun Coast Industries, Inc.
Savings and Profit Sharing Plan, and (iv) such Employees may receive a
distribution of their accrued benefits under the applicable Seller savings plan
as soon as administratively feasible after the Closing, provided that such
distribution would be in accordance with the requirements of Section 401 (k)(10)
of the Code. To the extent eligible under Section 402 of the Code, the Buyer's
savings plans shall permit the Employees hired by Buyer to directly roll over
any distributions from any Sellers savings plans including any then outstanding
unpaid loans.
In addition, with respect to employee benefit plan coverage provided
to any Employee in accordance with this paragraph (c), each such Employee shall
be given credit for any deductible or co-payment amounts paid under employee
benefit plans maintained by the Sellers in respect of the plan year in which the
Closing occurs
42
and Buyer shall cause its employee benefit plans to waive any and all
preexisting condition limitations with respect to such Employees. Such employee
benefit plan coverage shall be provided in a manner that will avoid any gap in
coverage for the Employees following the Closing.
(d) Sellers currently maintain defined benefit pension plans
("Sellers Pension Plans") which provide certain retirement benefits for certain
eligible Employees. Sellers will remain solely responsible for making all
contributions to and the payment of all benefits under the Sellers Pension Plans
and Buyer will have no obligation or liability in respect of Sellers Pension
Plans. Effective as of the Closing, Sellers will take all necessary and
appropriate action to cause the Sellers Pension Plans to expressly provide that
benefits accrued as of the Closing Date will be fully vested.
(e) Buyer shall have the right to dismiss any of the Employees it
hires at any time, with or without cause, and to change the terms and conditions
of employment of such Employees.
(f) The Buyer will assume the liability for any earned and unused
vacation time for any Employees of the Sellers hired by the Buyer to the extent
that such liability is reflected on Schedule R and is included as an accrued
liability on the Balance Sheet or arises in the ordinary course of business from
employment between the date of this Agreement and the Closing Date and is
included as an accrued liability on the Closing Balance Sheet.
(g) Welfare benefit plans established by the Sellers applicable to
Employees hired by Buyer shall be responsible for all claims incurred under
those plans prior to the Closing Date, including all claims incurred but
unreported as of that time. Employees receiving disability benefits as of the
Closing Date shall continue to receive benefits from the Sellers' sponsored
plans while the disability continues or until
43
their eligibility otherwise expires as provided in those plans. The Buyer shall
have no obligation to pay any medical, life, or disability benefits to any
Employee who does not actively work for the Buyer after the Closing.
(h) The rights and benefits under all non-compete, confidentiality
and non-disclosure agreements with the Employees of the Sellers hired by Buyer
shall be assigned to the Buyer.
(i) Effective as of the Closing, Buyer shall assume until their
scheduled expiration date(s) the collective bargaining agreements listed on
Schedule R, part 6, and shall be solely responsible for discharging all
liabilities arising thereunder on and after the Closing, subject to Buyer's
right to negotiate in good faith with recognized collective bargaining agents of
the Employees regarding the substitution, as of the Closing Date, of Buyer's
employee benefit plans for the Employee Benefit Plans specified in the
applicable collective bargaining agreements.
(j) Buyer shall have sole responsibility for "continuation coverage"
benefits provided on and after the Closing under Buyer's group health plans to
all Employees hired by Buyer and "qualified beneficiaries" of such Employees,
for whom a "qualifying event" has occurred on or after the Closing Date. Sellers
shall have sole responsibility for "continuation coverage" benefits provided
under Sellers' group health plans to all current Employees of Sellers hired by
Buyer and "qualified beneficiaries" of such Employees of Sellers, for whom a
"qualifying event" has occurred prior to the Closing Date. The terms
"continuation coverage", "qualified beneficiaries" and "qualifying event" shall
have the meaning ascribed to thereunder Section 4980B of the Code and Sections
601 through 608 of ERISA and the regulations thereunder.
(k) Sellers and Buyer agree that pursuant to the "Alternative
Procedures" provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753,
in respect of filing and furnishing Internal Revenue Service forms W-2, W-3 and
941,
44
respectively: (i) Sellers and Buyer shall report on a "predecessor-successor"
basis as set forth therein, (ii) Sellers shall be relieved from furnishing forms
W-2 to Employees who accept employment with Buyer to whom Seller would have been
obligated to furnish such forms and (iii) Buyer shall assume Seller's obligation
to furnish such forms to all such employees for the full calendar year of the
Closing. Upon Buyer's request, Seller will promptly provide Buyer with the
information relating to periods ending at the Closing necessary for Buyer to
prepare and distribute forms W-2 to Employees hired by Buyer, which forms W-2
will include all remuneration earned from both Seller and Buyer during the
calendar year of the Closing.
(l) The Seller and Buyer agree that Buyer's offer of employment to
all active Employees as stated in Paragraph 22 (a) above will result in no loss
of employment for any Employee who accepts Buyer's offer and that in reliance on
Buyer's agreement to employ Seller's Employees, Seller shall not be required to
give notice to Employees under the Worker Adjustment and Retraining Notification
Act ("WARN"), 29 U.S.C. (S) 2101 et seq. Buyer hereby agrees to indemnify and
defend Seller against and hold Seller harmless from any and all losses,
liabilities, expenses (including costs and attorney's fees) and claims for
damages or loss of any nature whatsoever, both direct and indirect, and
specifically including any costs, fees, expenses, damages or other liabilities
relating to or arising out of any obligations of Seller under WARN in connection
with this transaction which Seller may incur, suffer or become liable for, or
which may be asserted against Seller under WARN.
(m) Within 30 days after the Closing Sellers will pay to the
Employees hired by Buyer the incentive compensation and bonuses that would have
been paid to such Employees under Sellers' incentive and bonus plans or programs
had such Employees been employed by Sellers at the end of its 1998 fiscal year,
pro rated as to goals and incentives based on the time elapsed from the
beginning of the incentive
45
year to the Closing Date. The accrual for incentives and bonuses shall be
excluded from both the Balance Sheet and Closing Balance Sheet, and Buyer shall
assume no liability under Sellers' plans or programs for paying incentives and
bonuses to the Employees.
(n) This Section 22 is not intended to, and does not create any rights
or obligations to or for the benefit of anyone other than Buyer or Sellers.
23. Prorations.
----------
Water and other utility charges, fuels, real estate taxes, and other
like items shall be adjusted ratably as of the Closing Date. If the amount of
the current real estate taxes is not then ascertainable, the adjustment for such
taxes shall be based on the last amount then ascertainable. The Sellers shall
pay all special assessments which are a lien on the Closing Date.
24. Expenses.
--------
Except as otherwise provided in this Agreement, the Sellers and the
Buyer shall each bear and pay its own legal and other costs and expenses
incident to the execution of this Agreement and the consummation of the
transactions contemplated by it, whether or not such transactions are
consummated.
25. Termination.
-----------
This Agreement can be terminated:
(a) by the mutual agreement of the Buyer and the Sellers, provided
such termination is agreed to in a writing executed by both parties;
(b) by the Buyer, if any of the conditions stated in Paragraph 14 have
not been satisfied or fulfilled on or before February 15,1998, and shall not
have been waived by the Buyer; and
46
(c) by the Sellers, if any of the conditions stated in Paragraph 15
shall not have been satisfied or fulfilled on or before February 15, 1998, and
shall not have been waived by the Sellers.
Any termination pursuant to this Paragraph 25 shall be effective
immediately upon the giving of notice in writing by the terminating party to the
other party. In the event of the termination of this Agreement pursuant to this
Paragraph by Sellers or Buyer, written notice thereof shall forthwith be given
by specifying the provision hereof pursuant to which such termination is made,
and this Agreement shall become void and have no effect, except that the
agreements contained in this Paragraph and Paragraphs 24 and 34 shall survive
the termination hereof. Nothing contained in this Paragraph shall relieve any
party from liability for any breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties pursuant to the
confidentiality agreement referred to in Paragraph 11(a).
26. Use of The Sellers' Name.
------------------------
Pursuant to Trademark License Agreement between Sellers and Buyer
attached hereto as Schedule W, the Sellers shall grant to the Buyer a royalty-
free license to continue to use the "Sun Coast" tradename, style and logo on
existing supplies of packaging, literature, advertising, stationery, etc., until
such supplies have been exhausted or until one (1) year following the Closing,
if earlier. Immediately following the Closing, the Sellers will cause PMC to
change its corporate name to a name other than Plastics Manufacturing Company or
any name similar to or confusing with Plastics Manufacturing Company, and
Sellers will discontinue the use of Plastics Manufacturing Company as a trade
name.
27. Transitional Services.
---------------------
(a) For a period of six (6) months following the Closing Date Sellers
will be entitled to continue to use the offices currently occupied by Xxxxx
Xxxxx and
47
Xxxxxxx Xxxxxx at the Dallas, Texas plant, for administrative and accounting
functions connected with the wind-up of Sellers' participation in the Business.
Sellers will reimburse Buyer on a fair and equitable basis for variable costs
associated with the use of this space such as telephone, janitorial,
maintenance, utilities, etc. Also during a period of up to six (6) months
following the Closing, Sellers shall be entitled, to the extent such systems are
still functional and access is practical, to continued access to the
computerized accounting system of the Business for the purpose of preparing tax
returns and securities filings, etc.; provided, however, that appropriate
security measures must be in place to safeguard both Buyer's and Sellers'
information and Sellers shall pay Buyer an equitable and fair share of the cost
of maintaining the system. If Buyer discontinues the use of the computerized
accounting system before the expiration of six (6) months following the Closing,
Buyer shall cooperate with Sellers in making reasonable arrangements to preserve
and transfer Sellers' information.
(b) With respect to the files, records and other documents
constituting part of the Acquired Assets, for a period of five (5) years after
the Closing Date, Buyer will give Sellers access to such files, records and
other documents acquired from Sellers as part of the Acquired Assets and will
make its personnel reasonably available for the purpose of providing Sellers,
upon Sellers' reasonable request, with assistance in locating information from
such records, providing appropriate verifications of documents and information,
developing information, reports, submissions and the like relating to Sellers'
operation of the Business prior to the Closing, or otherwise providing
reasonable assistance which the parties mutually deem appropriate, provided,
however, that Buyer shall be under no obligation to retain any such files,
records and other documents beyond the periods of time applicable under Buyer's
records retention policies and procedures, and shall be under no obligation to
retain employees not
48
otherwise needed for the operation of the Business. The reasonable hourly cost
to Buyer of personnel engaged in activities for Sellers shall be reimbursed by
Sellers to Buyer.
28. Removal of Excluded Equipment.
-----------------------------
The equipment described in Schedule X, belonging to Sellers'
dinnerware operations, is excluded from the Acquired Assets. It shall be removed
by Sellers at their cost from the Dallas plant within ninety (90) days after the
Closing and Sellers shall repair any damage done to the Dallas plant by the
removal of this equipment.
29. Notices.
-------
All notices and other communications made pursuant to this Agreement
shall be in writing and shall be deemed to have been given if delivered by hand
(including delivery by private courier service), mailed by registered or
certified mail, or sent by fax, as follows:
If to the Buyer: Xxxxxx Chemical, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Chief Operating Officer
Fax: 000-000-0000
If to the Seller: Sun Coast Industries, Inc.
2700 5. Xxxxxxxxxxxx Xxx.
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Pres. and CEO
Fax: 000-000-0000
30. Headings.
--------
The headings in this Agreement are intended solely for the convenience
of reference, and shall be given no effect in the construction or interpretation
of this Agreement.
49
31. Schedules.
---------
All of the schedules to this Agreement constitute an integral part of
this Agreement as if fully written within it.
32. Entire Agreement.
----------------
This Agreement, and the documents to be delivered under it, constitute
the entire understanding and agreement between the Buyer and the Sellers
concerning the subject matter covered by it, and this Agreement may not be
modified or amended, except by a writing signed by the parties.
33. Governing Law.
-------------
This Agreement shall be construed and enforced in accordance with, and
governed by, the laws of the State of Ohio, except for real estate matters which
shall be governed by the laws of the State where the particular real estate is
located.
34. Binding Effect.
--------------
This Agreement shall be binding upon, and inure to the benefit of, the
Buyer and the Seller, and their respective successors and assigns; provided,
however, that this Agreement may not be assigned by either party without the
prior written consent of the other, except that Buyer may assign its rights
under this Agreement to a wholly owned subsidiary of the Buyer. In the event
that at any time during the five (5) years immediately following the Closing,
Sun Coast (including any surviving corporation into which Sun Coast may be
merged) elects to voluntarily dissolve or liquidate, Sun Coast shall give Buyer
not less than thirty (30) days advance written notice before entering into any
agreement or plan of liquidation or dissolution or otherwise taking any steps to
effectuate such liquidation or dissolution.
35. Public Announcement. No party, without the consent of the others,
-------------------
shall make any public announcement or issue any press release prior to the
Closing,
50
concerning this Agreement or the transactions contemplated hereby, except as may
be required in the opinion of counsel to comply with law or the rules of any
securities exchange.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers on the day and year first above written.
XXXXXX CHEMICAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Exec. VP & Chief Financial
Officer
SUN COAST INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Pres. & CEO
SUN COAST HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Chairman
PLASTICS MANUFACTURING COMPANY
By: /s/ Xxxxx X. Xxxxx
------------------------------
Pres. & CEO