STOCK PURCHASE AGREEMENT
AMONG
MATRIX SERVICE COMPANY,
GENERAL SERVICE CORPORATION,
XXXXX X. XXXXXXX,
XXXXX X. XXXXXXX, AS TRUSTEE,
XXXXXXX X. XXXXXXX,
XXXXXXXX X. XXXXXXX
AND
XXXXXXX X. XXXXXXX
Dated: June 17, 1997
TABLE OF CONTENTS
STOCK PURCHASE AGREEMENT
Page
ARTICLE I GENERAL ----
Section 1.1 Definitions 1
Section 1.2 Agreement to Purchase and Sell 7
Section 1.3 Purchase Price 7
Section 1.4 Payment of Purchase Price 7
Section 1.5 Earnout Procedures 9
Section 1.6 Delivery of Certificates Representing the Shares 10
Section 1.7 Employment and Non-Competition Agreements 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Sellers 11
Section 2.2 Representations and Warranties of Purchaser 30
ARTICLE III
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
Section 3.1 Access to Records and Properties; Confidentiality 32
Section 3.2 Operation of Seller Corp. 33
Section 3.3 Consents 34
Section 3.4 No Public Announcements or Negotiation with Others 34
Section 3.5 Best Efforts to Satisfy Conditions 34
Section 3.6 Antitrust Law Compliance 35
Section 3.7 Update Sellers' Disclosure Letter 35
Section 3.8 Tax Matters 35
Section 3.9 Personal Guarantees 36
ARTICLE IV
CONDITIONS OF CLOSING
Section 4.1 Conditions of Obligations of Purchaser 36
Section 4.2 Conditions of Obligations of Sellers 37
Section 4.3 HSR Act Approval 38
Section 4.4 Opportunity to Cure 38
ARTICLE V
CLOSING DATE AND TERMINATION OF AGREEMENT
Section 5.1 Closing Date 39
Section 5.2 Termination of Agreement 39
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnity 40
Section 6.2 Notice, Participation and Duration 40
Section 6.3 Indemnification if Negligence of Indemnitee 41
Section 6.4 Reimbursement 41
Section 6.5 Offset 41
Section 6.6 No Third Party Beneficiaries 41
Section 6.7 Limitations on Indemnification 42
ARTICLE VII
MISCELLANEOUS
Section 7.1 Further Actions 42
Section 7.2 No Broker 42
Section 7.3 Expenses 42
Section 7.4 Entire Agreement 43
Section 7.5 Descriptive Headings 43
Section 7.6 Notices 43
Section 7.7 Governing Law 44
Section 7.8 Assignability 44
Section 7.9 Waivers and Amendments 44
Section 7.10 Third Party Rights 44
Section 7.11 Illegalities 45
Section 7.12 Counterparts 45
Section 7.13 Survival; Exclusivity of Remedies 45
Section 7.14Representations and Warranties of Sellers 45
Section 7.15 Alternative Dispute Resolution 45
ANNEXES
Annex A Sellers' Disclosure Letter
Appendix 1.1(a) Backlog Orders
Appendix 1.1(b) Bank Debt
Appendix 1.1(c) Equipment
Appendix 1.1(d) Intangible Assets
Appendix 1.1(e) Permitted Encumbrances
Appendix 1.1(f) Scheduled Contracts
Appendix 1.1(g) Vehicles
Appendix 2.1(a) Organization and Good Standing of Seller Corp. and Subsidiaries
Appendix 2.1(b) Consents
Appendix 2.1(c) Capitalization
Appendix 2.1(d)-1 Financial Statements
Appendix 2.1(d)-2 Liabilities
Appendix 2.1(e) Bank Accounts
Appendix 2.1(f) Insurance
Appendix 2.1(g) Litigation
Appendix 2.1(i) Intangible Assets
Appendix 2.1(j) Instruments in Full Force
Appendix 2.1(k)-1 Employee Plans
Appendix 2.1(k)-2 Plan Payments
Appendix 2.1(k)-3 Termination of Plans
Appendix 2.1(l)-1 Labor Agreements
Appendix 2.1(l)-2 Union Organizing Activities
Appendix 2.1(l)-3 Strikes
Appendix 2.1(l)-4 Grievances
Appendix 2.1(l)-5 Employee Litigation
Appendix 2.1(n) Absence of Certain Changes
Appendix 2.1(o) Subsidiaries
Appendix 2.1(p) Material Contracts
Appendix 2.1(q) Licenses and Permits
Appendix 2.1(r) Environmental Matters
Appendix 2.1(v) Competing Lines of Business
Appendix 3.2(g) Indebtedness of Sellers
Appendix 7.2 Xxxxx-Xxxxx, Ltd. Fees and Expenses
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 17th day of June, 1997 by and among MATRIX SERVICE COMPANY, a
Delaware corporation ("Purchaser"), XXXXX X. XXXXXXX, XXXXX X. XXXXXXX, as
Trustee under a Voting Trust Agreement dated February 1, 0000, XXXXXXX X.
XXXXXXX, XXXXXXXX X. XXXXXXX and XXXXXXX X. XXXXXXX (the "Sellers"), and
GENERAL SERVICE CORPORATION, a Delaware corporation ("Seller Corp.").
WHEREAS, Seller Corp. is engaged in the business of (i) the construction,
repair and maintenance of above ground storage tanks ("ASTs"), (ii) the
fabrication and installation of liners for ASTs, and (iii) the design,
fabrication, installation, repair and maintenance of aluminum roof products
for ASTs (the "Business"); and
WHEREAS, the Sellers own, or as of the Closing Date will own, all of the
issued and outstanding shares of capital stock of Seller Corp. (together
with all shares of the capital stock of Seller Corp. issued from the date
hereof through the Closing Date (as defined herein), the "Shares"); and
WHEREAS, Purchaser desires to purchase the Shares from the Sellers, and the
Sellers desire to sell the Shares to Purchaser, in each case upon the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to be derived and
the representations and warranties, conditions and promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
GENERAL
Section 1.1 Definitions. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings (the following
definitions to be equally applicable to both the singular and plural forms
of any of the terms herein defined):
"Accounts": All accounts receivable of Seller Corp. and all other rights
of Seller Corp. to payment for goods sold or leased or for services
rendered, including without limitation those which are not evidenced by
instruments or chattel paper, whether or not they have been earned by
performance or have been written off or reserved against as a bad debt or
doubtful account in any Financial Statements; together with all instruments
and all documents of title representing any of the foregoing, all rights in
any merchandise or goods which any of the same represent, and all rights,
title, security and guaranties in favor of Seller Corp. with respect to any
of the foregoing, including, without limitation, any right of stoppage in
transit.
"Affiliate": Any Person that, directly or indirectly, controls, or is
controlled by or under common control with, another Person. For the
purposes of this definition, "control" (including the terms "controlled by"
and "under common control with"), as used with respect to any Person, means
the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities or by contract or otherwise.
"Agreement": As defined in the first paragraph hereof.
"Assets": The Vehicles, the Equipment, the Permits, the Intangible Assets,
the Scheduled Contracts, the Inventories, the Backlog Orders, the Accounts,
Seller Corp.'s cash, bank accounts, marketable securities and other cash
equivalents, the Records and all other assets of Seller Corp.
"Audited Balance Sheet": As defined in Section 2.1(d)(1).
"Audited Financial Statements": As defined in Section 2.1(d)(1).
"Backlog Orders": All of Seller Corp.'s backlog of orders for products
manufactured or sold by Seller Corp., which are (i) accepted by Seller
Corp. in the ordinary course of business as of the Closing or (ii) listed
in Appendix 1.1(a) to the Sellers' Disclosure Letter and, in each case, not
invoiced or shipped or canceled as of the Closing.
"Balance Sheets": As defined in Section 2.1(d).
"Bank Debt": The indebtedness of Seller Corp. to PNC Bank, Delaware
described on Appendix 1.1(b) to the Sellers' Disclosure Letter.
"Business": As defined in the recitals of this Agreement.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
"Claim": As defined in Section 6.2(a).
"Closing": As defined in Section 5.1(a).
"Closing Date": As defined in Section 5.1(a).
"Code": The Internal Revenue Code of 1986, as amended.
"Customer Data": All of Seller Corp's customer lists, sales records and
other customer data (including credit data) relating to the Business.
"Damages": As defined in Section 6.1(a).
"Defined Benefit Plan": As defined in Section 2.1(k)(1).
"Department": As defined in Section 3.6.
"Earnout": As defined in Section 1.4(c).
"Earnout Companies": As defined in Section 1.4(c).
"EBIT": As defined in Section 1.4(c).
"Employees": As defined in Section 2.1(k)(1).
"Employment and Non-Competition Agreements": As defined in Section 1.6.
"Environmental Event": As defined in Section 2.1(r).
"Environmental Laws": As defined in Section 2.1(r).
"Environmental Material": As defined in Section 2.1(r).
"Equipment": All of Seller Corp.'s furniture, equipment, machinery,
apparatus, tools, dies, appliances, vehicles, implements, spare parts,
supplies and all other tangible personal property of every kind and
description (other than the Vehicles and the Inventories) insofar as any of
the foregoing relates to the Business. The Equipment includes, without
limitation, all of the items listed in Appendix 1.1(c) to the Sellers'
Disclosure Letter.
"ERISA": Employee Retirement Income Security Act of 1974, as amended.
"Financial Statements": As defined in Section 2.1(d).
"FTC": As defined in Section 3.6.
"GAAP": As defined in Section 2.1(d).
"Governmental Approval": As defined in Section 2.1(r).
"Governmental Authority": As defined in Section 2.1(r).
"Governmental Body": Any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"HSR Act": As defined in Section 3.6.
"Indemnitee": As defined in Section 6.2(a).
"Indemnitor": As defined in Section 6.2(a).
"Instruments": As defined in Section 2.1(j).
"Intangible Assets": All right, title and interest of Seller Corp. in, to
and under all patents, trademarks, technology, know-how, data, copyrights,
tradenames, servicemarks, licenses, covenants by others not to compete,
rights and privileges used in the conduct of the Business and the right to
recover for infringement thereon and all goodwill associated with the
Business in connection with which the marks are used. The Intangible
Assets include, without limitation, all of the items listed in
Appendix 1.1(d) to the Sellers' Disclosure Letter.
"Inventories": All of Seller Corp.'s inventories insofar as any of the
foregoing relates to the Business, including, without limitation, finished
goods, work-in-progress, raw materials, supply inventories, and other
inventories.
"IRS": The Internal Revenue Service.
"Lien": All mortgages, deeds of trust, liens, security interests, pledges,
leases, conditional sale contracts, claims, rights of first refusal,
options, charges, liabilities, obligations, agreements, privileges,
liberties, easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind.
"Material Adverse Effect": (a) Any change, development or effect
(individually or in the aggregate) in the general affairs, management,
business, results of operations, condition (financial or otherwise), assets
or liabilities that would be material and adverse to Seller Corp. and
Subsidiary, taken as whole, after giving effect to the Transaction, or (b)
any fact or development that would (individually or in the aggregate),
after giving effect to the Transaction, impair Seller Corp.'s ability or
obligations to perform on a timely basis all material obligations it has
under this Agreement; provided, however, that if the result thereof is
covered by insurance, such insurance shall be taken into account.
"Maximum Earnout Payment": As defined in Section 1.4(c).
"Multi-Employer Plan": As defined in Section 2.1(k)(1).
"Notes": As defined in Section 1.4(b).
"Operative Documents": This Agreement and all other agreements,
instruments, documents, and certificates executed and delivered by or on
behalf of Seller Corp., Sellers, or Purchaser at or before the Closing
pursuant to this Agreement.
"Order": Any order, writ, injunction, decree, judgment, award or
determination of any Governmental Body.
"PBGC": The Pension Benefit Guaranty Corporation.
"Permits": All permits, authorizations, certificates, approvals,
registrations, variances, exemptions, rights-of-way, franchises,
privileges, immunities, grants, ordinances, licenses and other rights of
every kind and character (a) under any (1) federal, state, local or foreign
statute, ordinance or regulation, (2) Order or (3) contract with any
Governmental Body or (b) granted by any Governmental Body.
"Permitted Encumbrances": (a) The Liens described or referred to in
Appendix 1.1(e) to the Sellers' Disclosure Letter, (b) Liens for current
Taxes and assessments not yet due and payable, including, but not limited
to, Liens for nondelinquent ad valorem Taxes, nondelinquent statutory Liens
arising other than by reason of any default on the part of Seller Corp. or
Subsidiary, (c) purchase money Liens if incurred in the ordinary course of
business, and (d) such liens, minor imperfections of title, or easements on
real property, leasehold estates, or personalty as do not in any material
respect detract from the value thereof and do not interfere with the
present use of the property subject thereto.
"Person": An individual, partnership, joint venture, corporation, bank,
trust, unincorporated organization or a Governmental Body.
"Plan": As defined in Section 2.1(k).
"Products": All products manufactured, produced, marketed or distributed
by Seller Corp.
"Purchase Price": As defined in Section 1.3.
"Purchaser": As defined in the opening paragraph of this Agreement.
"Purchaser Indemnitees": As defined in Section 6.1(a).
"Records": All of Seller Corp's books, records, papers and instruments of
whatever nature and wherever located that relate to the Business or the
Assets or which are required or necessary in order for Purchaser to conduct
the Business from and as of the Closing in the manner in which it is
presently being conducted, including, without limitation, corporate minute
books and stock records, blueprints, specifications, plats, maps, surveys,
building and machinery diagrams, accounting and financial records,
maintenance and production records, personnel and labor relations records,
environmental records and reports, income, sales and property Tax records
and returns, sales records, the Customer Data and the Supplier Data.
"Scheduled Contracts": All right, title and interest of Seller Corp. in,
to and under the contracts and agreements described in Appendix 1.1(f) to
the Sellers' Disclosure Letter and all rights (including rights of refund
and offset), privileges, deposits, claims, causes of action and options
relating or pertaining to the Scheduled Contracts or any thereof.
"Seller Corp.": As defined in the opening paragraph of this Agreement.
"Seller Corp. Sites": As defined in Section 2.1(r)(1).
"Seller Indemnitees": As defined in Section 6.1(b).
"Sellers": As defined in the opening paragraph of this Agreement.
"Sellers' Disclosure Letter": The disclosure letter delivered by Sellers
to Purchaser prior to the execution and delivery of this Agreement, and a
"Supplement" thereto means a supplemental disclosure letter delivered
pursuant to Section 3.7.
"Shares": As defined in the recitals of this Agreement.
"Subsidiary": As defined in Section 2.1(o).
"Supplement": As defined in Section 3.7.
"Supplier Data": All of Seller Corp.'s supplier lists and other supplier
data relating to the purchase of raw materials, utilities and other
supplies used in connection with the Business.
"Tax Returns": As defined in Section 2.1(h)(1).
"Taxes": Any federal, state, local, foreign or other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
customs, duties, or other taxes, fees, assessments or charges of any nature
whatsoever (including without limitation interest, penalties, additions to
tax, or additional amounts with respect thereto) imposed by any law, rule
or regulation which are attributable or relating to the Assets or the
business of Seller Corp. for any periods ending on or as of the Closing.
"Territory": All states that are located north of Tennessee and North
Carolina and east of Minnesota, Iowa and Missouri,
"Transaction": The sale and purchase of the Shares and performance of
covenants, in each case as contemplated by this Agreement.
"U.S.": The United States of America.
"Unaudited Balance Sheet": As defined in Section 2.1(d)(2).
"Unaudited Financial Statements": As defined in Section 2.1(d)(2).
"Vehicles": All the trucks, trailers and other certificated vehicles
described in Appendix 1.1(g) to the Sellers' Disclosure Letter.
Section 1.2 Agreement to Purchase and Sell. On the Closing Date and upon
the terms and subject to the conditions set forth in this Agreement, the
Sellers shall sell, assign, transfer, convey and deliver the Shares to
Purchaser, free and clear of all Liens, and Purchaser shall purchase and
accept the Shares from the Sellers.
Section 1.3 Purchase Price. The aggregate purchase price for the Shares
(the "Purchase Price") shall be up to $6,258,927 payable as set forth in
Section 1.4.
Section 1.4 Payment of Purchase Price. The Purchase Price shall be
allocated pro rata among the Sellers in proportion to the number of Shares
beneficially owned by each Seller as of the Closing Date as set forth on
Appendix 2.1(c) to the Sellers' Disclosure Letter and shall be payable to
the Sellers as follows:
(a) At the Closing Purchaser shall deliver to the Sellers $3,889,259 in
cash, to be paid by certified or cashier's checks.
(b) At the Closing Purchaser shall deliver to the Sellers promissory notes
in the aggregate principal amount of $197,472 (the "Notes") in the form of
Exhibit 1.4 hereto.
(c) Sellers shall also be entitled to receive from Purchaser an aggregate
amount of cash (the "Earnout") equal to 50% of the amount, if any, by which
the earnings before taxes and interest expense (the "EBIT") of Seller
Corp., the Michigan Regional Operations of Matrix Service Mid Continent,
Inc. and the New Jersey Regional Operations of Matrix Service Mid
Continent, Inc. and to the extent not included in any of the foregoing (i)
all earnings before taxes and interest from the aluminum roof operations of
the Purchaser and Seller Corp., both domestic and international, including
future aluminum product introductions by the Purchaser and Seller Corp.
such as, but not limited to, geodesic dome products, but not including any
such aluminum roof operations and aluminum products of companies,
businesses or assets acquired by the Purchaser after the Closing; (ii) all
earnings before taxes and interest from the field erection portion of
elevated water tanks constructed by the Earnout Companies (excluding the
estimating, contracting, design, purchasing and shop fabrication of such
projects performed by Xxxxx Steel) and (iii) all earnings before taxes and
interest from the flat bottom new tanks constructed by merit shop
operations of Purchaser inside the Territory (collectively, the "Earnout
Companies"), combined in the fiscal years set forth below exceeds the
amount indicated below as the Earnout threshold for that year. In no event
shall the cumulative amount of all cash payments made pursuant to this
subparagraph (c) exceed $2,172,196 (the "Maximum Earnout Payment").
Fiscal Year Earnout
Ending May 31 Threshold
------------- ---------
1998 2,000,000
1999 2,250,000
2000 2,500,000
2001 2,500,000
2002 2,500,000
2003 2,500,000
2004 2,500,000
For purposes of calculating EBIT, the EBIT from the Michigan Regional
Operations will be the greater of (a) $1,209,000 or (b) the EBIT from the
Michigan Regional Operations for the fiscal year in which the Earnout is to
be calculated.
For purposes of calculating EBIT, no reduction shall be made for (1)
interest charges on any indebtedness, (2) costs attributable to the
acquisition of Seller Corp., (3) any federal, state or local income taxes,
(4) any management fees charged by Purchaser to the Earnout Companies that
are not normal and customary, (5) adjustments related to the business and
activities of the Earnout Companies that under GAAP should have been made
in fiscal years prior to fiscal year 1998 or (6) payments made to the
holders of the stock appreciation rights relating to the shares of Seller
Corp. Common Stock. In addition, the parties agree that earnings shall be
equivalent to "operating income" as that term is defined and calculated
pursuant to GAAP.
The Earnout Companies shall have a right of first refusal on (i) all tank
maintenance, repair and seal jobs located in the Territory and (ii) all
jobs in the facilities currently owned and operated by British Petroleum,
Ashland Oil, IMTT, Mobil Team East, Citgo and Colonial Pipe Line.
In the event (i) that the Purchaser merges with or is acquired by another
company that is not an Affiliate of Purchaser or (ii) of the divestiture of
a material portion of the assets of the Earnout Companies, whether directly
or indirectly (through a transfer of such assets, a sale of stock, a merger
or otherwise), so as to, in the reasonable judgment of Sellers, have an
adverse effect on their receipt of the Maximum Earnout Payment (a "Change
in Control"), each Seller may, at such Seller's option, either:
(a) continue the Earnout as outlined in Section 1.4(c), or
(b) receive, at the time of a Change in Control, an amount equal to 70% of
the sum of (a) such Seller's pro rata portion of the Maximum Earnout
Payment less (b) all prior Earnout Payments paid by the Purchaser to such
Seller.
The amount, if any, payable in respect of each of the fiscal years set
forth shall be payable, without interest, as soon as practicable after the
completion of the audit for such fiscal year, but in any event within 120
days following the end of such fiscal year.
Section 1.5 Earnout Procedures. (a) Purchaser agrees to maintain
accounting records sufficient to allow the computation and verification of
the computation of the payments by the Purchaser to the Sellers under
Section 1.4(c) (each, an "Earnout Payment").
(b) In connection with the making of each Earnout Payment the Purchaser
shall deliver to the Sellers a copy of the audited consolidated financial
statements of Matrix Service Company, together with certain supplemental
income data of the Earnout Companies, a schedule setting forth the
computation of such payment and a copy of any other financial information
used in making such computation. The Sellers shall have the right
following their receipt of an Earnout Payment to cause an accounting firm
chosen by the Sellers (the "Sellers' Accountants") to conduct an accounting
audit of the Earnout Companies at Sellers' expense (except as provided
below) solely for the purpose of determining the amount of such Earnout
Payment, provided that such audit shall be conducted upon reasonable
advance notice at Matrix Service Company at 00000 Xxxx Xxx Xxxxxx, Xxxxx,
Xxxxxxxx 00000, during normal business hours and in a manner which does not
unduly interfere with the business operations of the Earnout Companies.
The Sellers shall give the Purchaser written notice of such an accounting
audit within twenty days following Sellers' receipt of the Earnout Payment
and the accompanying required schedule and financial information (the
"Delivery Date"). The Purchaser's computation of any Earnout Payment shall
be conclusive and binding upon the parties hereto unless, within twenty
days following the Delivery Date or, if Sellers have elected to have an
accounting audit conducted, within ten days of Sellers' receipt of the
report from Sellers' Accountants regarding the Earnout Payment, any Seller
notifies the Purchaser in writing (the "Seller's Notice") that such Seller,
either individually or on behalf of such Seller and the other Sellers
identified in the Seller's Notice (individually or collectively, as the
case may be, the "Notifying Seller"), disagrees with the Purchaser's
computation of the Earnout Payment. The Seller's Notice shall include a
schedule setting forth the Notifying Seller's computation of the Earnout
Payment, together with a copy of any financial information, other than that
previously supplied by the Purchaser to the Sellers, used in making the
Notifying Seller's computation. The Notifying Seller shall send a copy of
the Seller's Notice to each Seller who is not a Notifying Seller.
The Notifying Seller's computation of the Earnout Payment under this
Section 1.5(b) shall be conclusive and binding upon the parties hereto
unless, within twenty days following the Purchaser's receipt of the
Seller's Notice, the Purchaser notifies the Sellers in writing that it
disagrees with the Notifying Seller's computation of the Earnout Payment.
If the Purchaser disagrees with the Notifying Seller's computation of the
Earnout Payment, the Purchaser and the Notifying Seller shall request a
national firm of independent certified public accountants mutually
agreeable to the Purchaser and the Notifying Seller to compute the amount
of the Earnout Payment as promptly as possible, which computation shall be
conclusive and binding upon the Purchaser and the Notifying Seller. In the
event that the Purchaser and the Notifying Seller cannot agree on such a
national firm of independent certified public accountants, then the names
of the national accounting firms, exclusive of any such firm which is
rendering or has within the past three years rendered services to the
Purchaser or the Notifying Seller or their Affiliates, shall be selected by
lottery until one such firm is willing to compute the disputed payment for
purposes of this Agreement. The expenses of any computation by any such
national accounting firm selected by the Purchaser and the Notifying Seller
to resolve computational disputes hereunder shall be borne half by the
Purchaser and half by the Notifying Seller.
In the event the amount of Earnout Payment to be paid by the Purchaser to
the Sellers in accordance with Section 1.4(c) is recomputed in accordance
with this Section 1.5, the adjustment to the amount of the Earnout Payment
shall be paid by the Purchaser to the Notifying Sellers within ten business
days after the date of final recomputation of such payment. If any final
determination of the Earnout Payment shall exceed the Purchaser's original
computation of such Earnout Payment by more than ten percent (10%), then
the Earnout Payment shall also include interest on such difference from the
date upon which the original computation was delivered by the Purchaser to
the Sellers to the date of payment of the Earnout Payment, at a per annum
rate equal to the rate of the Note and the Purchaser shall reimburse the
Notifying Sellers or pay directly for the fees and expenses of Sellers'
accountants.
Sellers who are not Notifying Sellers may become Notifying Sellers by
delivering a written request to be treated as such to the Notifying Seller
and the Purchaser within ten days of receipt of the Seller's Notice given
by the Notifying Seller, whereupon such Seller shall be deemed to have been
a Notifying Seller identified in the Seller's Notice, with all rights and
obligations of a Notifying Seller provided in this Section 1.5.
Each of the Sellers hereby appoints Xxxxx X. Xxxxxxx to serve as the
Notifying Seller on his or her behalf with full power and authority to make
the determinations and to take or refrain from taking the actions within
the authority of the Notifying Seller. Each Seller shall have the right to
withdraw said appointment upon written notice to the Purchaser and each of
the other Sellers.
Section 1.6 Delivery of Certificates Representing the Shares. At the
Closing, the Sellers shall deliver to Purchaser stock certificates
representing the Shares, duly endorsed in blank for transfer or accompanied
by appropriate stock powers duly executed in blank with all taxes, direct
or indirect, attributable to the transfer of such Shares paid or provided
for.
Section 1.7 Employment and Non-Competition Agreements. At the Closing,
Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx, Tor X. Xxxxxx, and Xxxxxxx X. Xxx shall
enter into employment and non-competition agreements (the "Employment and
Non-Competition Agreements") with Purchaser in the form of Exhibit 1.7
hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Sellers. Sellers severally
represent and warrant to Purchaser that the following are true and correct
on and as of the date of this Agreement and will be true and correct in all
material respects as of the Closing as if made on and as of that date:
(a) Organization and Good Standing of Seller Corp. Seller Corp. and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to
transact business and is in good standing as a foreign corporation in the
jurisdictions (which are listed in Appendix 2.1(a) to the Sellers'
Disclosure Letter) where it is required to qualify in order to conduct its
businesses as presently conducted. Seller Corp. and each Subsidiary has
the corporate power and authority to own, lease or operate all properties
and Assets now owned, leased or operated by it and to carry on its
businesses as now conducted except where the failure to be qualified would
not have a Material Adverse Effect. Seller Corp. and each Subsidiary has
heretofore delivered to Purchaser complete and correct copies of its
Certificate of Incorporation and Bylaws, as amended and in effect on the
date hereof.
(b) Consents, Authorizations and Binding Effect.
(1) Sellers and Seller Corp. may execute, deliver and perform this
Agreement (including without limitation execution, delivery and performance
of the Operative Documents to which each of them is a party) without the
necessity of any of Sellers or Seller Corp. obtaining any consent,
approval, authorization or waiver or giving any notice or otherwise, except
for such consents, approvals, authorizations, waivers and notices which (i)
have been, or prior to Closing will be, obtained and are unconditional and
are in full force and effect and such notices which have been given; (ii)
are described on Appendix 2.1(b) to the Sellers' Disclosure Letter; or
(iii) the failure to have will not have a Material Adverse Effect.
(2) Seller Corp. has the corporate power and authority to enter into this
Agreement and the Operative Documents to which it is a party and to carry
out its obligations hereunder and thereunder. Sellers have the power,
authority and capacity to enter into this Agreement and the Operative
Documents to which they are a party and to carry out their obligations
hereunder and thereunder. This Agreement has been duly authorized,
executed and delivered by Seller Corp. and each Seller and constitutes the
legal, valid and binding obligation of Seller Corp. and each Seller,
enforceable against each of them in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, reorganization,
fraudulent conveyance, insolvency and similar laws of general application
relating to or affecting the enforcement of rights of creditors or general
principles of equity.
(3) The execution, delivery and performance of this Agreement by Seller
Corp. and Sellers do not and will not:
(i) constitute a violation of the Certificate of Incorporation, as amended,
or Bylaws, as amended, of Seller Corp.;
(ii) result in any Lien against the Shares or the Assets;
(iii) constitute a violation of any statute, judgment, order, decree or
regulation or rule of any Governmental Body applicable or relating to
Seller Corp., any of Sellers, the Assets or the business of Seller Corp. or
the Shares; or
(iv) conflict with, or constitute a breach or default under, or give rise
to any right of termination, cancellation or acceleration under, any term
or provision of any contract, agreement, lease, mortgage, deed of trust,
commitment, license, franchise, Permit, authorization or any other
instrument or obligation to which Seller Corp. or any of Sellers is a party
or by which their respective assets are bound, or an event which with
notice, lapse of time, or both, would result in any such conflict, breach,
default or right, except as are described on Appendix 2.1(b) to the
Seller's Disclosure Letter or as would not, singly or in the aggregate,
have a Material Adverse Effect.
(4) Without limiting the foregoing, the execution, delivery and performance
of the Operative Documents to which Seller Corp is a party, and
consummation of the transactions contemplated thereby, have been duly
authorized and approved by the Board of Directors and stockholders of
Seller Corp. without dissent.
(c) Capitalization of Seller Corp.; Title to the Shares. The authorized
capital stock of Seller Corp. consists of 120,000 shares of common stock,
no par value, of which 6,000 shares are issued and outstanding; and the
capital stock listed on Appendix 2.1(c) to the Sellers' Disclosure Letter
will constitute all of the issued and outstanding capital stock of Seller
Corp. as of the Closing Date and is held of record and beneficially by the
Persons identified thereon. All of the issued and outstanding shares of
capital stock of the Subsidiaries are held of record and beneficially by
Seller Corp. The Shares and the outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable, and no personal liability attaches to the ownership
thereof. Except for this Agreement and as set forth in Appendix 2.1(c) to
the Sellers' Disclosure Letter, there are no outstanding options, warrants,
rights, agreements, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any of the Shares, any
unissued or treasury shares of capital stock of Seller Corp. or any shares
of capital stock of any Subsidiary. Appendix 2.1(c) to the Sellers'
Disclosure Letter contains a true, correct and complete list of all holders
of stock appreciation rights, the number of performance units held by each
such holder and the payments which each such holder is entitled to as a
result of the consummation of the transactions contemplated by this
Agreement. The Sellers have, and will have at the Closing, valid and
marketable title to all the Shares, free and clear of any Liens.
(d) Financial Statements, Etc. The following audited and draft unaudited
financial statements of Seller Corp. have been delivered to Purchaser and
are attached as Appendix 2.1(d)-l to the Sellers' Disclosure Letter:
(1)the audited consolidated balance sheets of Seller Corp. as of March 31,
1996 (the "Audited Balance Sheet") and 1995 and the related audited
statements of operations, of stockholder's equity and of cash flows for the
three-year period ended March 31, 1996 (together with related notes and
schedules), which financial statements contain a report of independent
auditors, reporting thereon (such balance sheets, the related statements of
operations, of stockholder's equity and of cash flows, and the related
notes and schedules being hereinafter together referred to as the "Audited
Financial Statements"); and
(2) the draft unaudited consolidated balance sheet of Seller Corp. as of
March 31, 1997 (the "Unaudited Balance Sheet") and the related draft
unaudited statement of operations, of stockholder's equity and of cash
flows for the twelve-month period then ended (together with related notes
and schedules) (such draft balance sheet, the related statement of
operations, of stockholder's equity and of cash flows, and the related
notes and schedules being hereinafter together referred to as the
"Unaudited Financial Statements").
The Audited Financial Statements and the Unaudited Financial Statements
(collectively, the "Financial Statements"), including the related notes and
schedules, have been prepared from the books and records of Seller Corp. in
conformity with generally accepted accounting principles applied on a basis
consistent with preceding years and throughout the periods involved
("GAAP") and present fairly the financial position of Seller Corp. as of
the dates of such statements, subject to year-end adjustments made
consistent with GAAP with respect to the Unaudited Financial Statements.
The trade accounts and other receivables of Seller Corp. which are
classified as current assets on the Audited Balance Sheet, the Unaudited
Balance Sheet (collectively, the "Balance Sheets") or the accounting
records of Seller Corp. as of Closing are bona fide receivables, were
acquired in the ordinary course of business, are stated in accordance with
GAAP and, subject to the reserve for doubtful accounts, need not be written
off as uncollectible.
The inventories of Seller Corp. reflected on the Balance Sheets have been
valued in accordance with GAAP, and the value of obsolete materials and
materials of below standard quality has been written down or reserved
against in accordance with GAAP. There have been no write-ups of
inventories or other assets.
Seller Corp. has no liabilities other than:
(i) those set forth or reserved against in the Unaudited Balance Sheet;
(ii) those incurred since the date of the Unaudited Balance Sheet in the
ordinary course of business; and
(iii) those disclosed on Appendix 2.1(d)-2 to the Sellers' Disclosure
Letter.
As of the Closing the aggregate amount of receivables of Seller Corp. owed
by Affiliates of Seller Corp. will not exceed the amount thereof shown in
the Unaudited Balance Sheet.
Seller Corp.'s books of account have been kept accurately in all material
respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of Seller Corp. have been properly recorded in such
books in all material respects.
(e) Title and Condition of Assets. Seller Corp. has good and marketable
title to the tangible and intangible personal property owned by it that
comprise the Assets, free and clear of Liens, other than:
(1) Permitted Encumbrances; or
(2) Liens which will be released or discharged at or as of the Closing.
No improvement or structure on any real property leased by Seller Corp.
encroaches on any adjacent property. No improvement or structure on any
real property leased by Seller Corp. has been damaged by any casualty or
act of God, or been subject to any condemnation proceedings which, singly
or in the aggregate, would have a Material Adverse Effect.
The Equipment (i) is in good operating condition, order and repair, subject
to ordinary wear and tear, (ii) is capable of being used in the Business as
presently being conducted without present need for repair or replacement
except in the ordinary course of the Business, (iii) conforms in all
material respects with all applicable legal requirements, and (iv) in the
aggregate provides the capacity to enable Seller Corp. to engage in
commercial operation on a continuous basis (subject to normal maintenance
and repair outages in the ordinary course).
Since the date of the Unaudited Balance Sheet, Seller Corp. has not sold,
transferred, leased, distributed or otherwise disposed of any of its
Assets, or agreed to do so except for the disposition of Assets in the
ordinary course of business or which in the reasonable judgment of
management are not necessary or advisable to the efficient operations of
Seller Corp.
All items of raw materials, work-in-process and finished goods included in
the Inventories are in such condition that they can be readily converted
into merchantable finished goods by industry standard processing procedures
currently used by Seller Corp., all items of finished goods are of good
standard and merchantable quality, and none of the items is obsolete or
defective, except in each case for items which have been written off and so
reflected on the Unaudited Balance Sheet. The quantities of each category
and type of the Inventories not written off or reserved against are
reasonable and warranted in the present circumstances of Seller Corp. and
are not excessive. The Assets constitute all material assets and
properties, real, personal, tangible and intangible, that are necessary for
the continued conduct of the Business as presently being conducted.
Appendix 2.1(e) to the Sellers' Disclosure Letter contains a true and
correct list of the names of each bank, savings and loan or other financial
institution in which Seller Corp. or Subsidiary has an account, including
cash contribution accounts, safe deposit boxes and lock box arrangements,
and the names of all Persons authorized to draw thereon or to have access
thereto.
All temporary cash investments reflected in the Unaudited Balance Sheet
constitute time deposits or checking accounts with PNC Bank, Delaware.
(f) Insurance. Appendix 2.1(f) to the Sellers' Disclosure Letter contains
a list of all policies of insurance maintained as of the date of this
Agreement by Seller Corp., or maintained by Sellers in respect of the
business and Assets of Seller Corp., including without limitation insurance
providing benefits for employees, in effect as of the date of this
Agreement. No Seller has received notice from any insurance carrier of the
intention of such carrier to discontinue any insurance coverage afforded to
Seller Corp.
(g) Litigation and Compliance With Laws, Etc. There are no claims,
actions, suits or proceedings, whether in equity or at law, or governmental
or administrative investigations pending or, to the knowledge of any
Seller, threatened against Seller Corp. or any Asset, except: (1) as
described on Appendix 2.1(g) to the Sellers' Disclosure Letter, or as may
arise with respect to any of the matters described thereon; (2) for any
claims, actions, suits or proceedings which pertain to routine claims by
Persons other than Governmental Bodies that are covered by insurance
(subject to the applicable insurance deductibles); (3) for minor product or
service warranty claims arising in the usual and ordinary course of
business for repair of products manufactured by Seller Corp. which in the
aggregate may be satisfied at nominal cost to Seller Corp.; and (4) for any
other claims, actions, suits or proceedings which, singly or in the
aggregate, would not have a Material Adverse Effect.
Except as described on Appendix 2.1(g) to the Sellers' Disclosure Letter,
as of the date of this Agreement:
(1) Seller Corp. is in compliance in all material respects with, has
conducted for the past two years and does conduct its business and
operations in compliance in all material respects with, and is not in
default or violation in any respect under any law, regulation, writ,
injunction, decree or order applicable to Seller Corp. or its Assets,
including without limitation all safety and health, antitrust, consumer
protection, labor, equal opportunity or discrimination laws, rules and
regulations;
(2) there are no judgments outstanding and unsatisfied against Seller Corp.
or its Assets; and
(3) to its knowledge, there is no valid claim against or liability of
Seller Corp. on account of product or service warranties or with respect to
the manufacture or sale of defective products or the sale of services
(other than minor claims arising in the usual and ordinary course of
business which may be satisfied at nominal cost to Seller Corp.); provided
that Seller Corp. and Purchaser acknowledge that the business of Seller
Corp. regularly involves dealings with customers' claims in a manner that
takes into account the importance of preserving longer term business
relationships.
(h) Taxes.
(1) Sellers have properly completed and filed when due all Tax reports,
returns, declarations, statements, and other documents required to be filed
in respect of Taxes (collectively "Tax Returns") in connection with and in
respect of Seller Corp.'s business, Assets, and employees. All such Tax
Returns were correct and complete in all respects. All Taxes owed by
Seller Corp. (whether or not shown on any Tax Return) have been paid. An
extension of time within which to file a Tax Return that has not been filed
has not been requested or granted. No claim has ever been made by an
authority in a jurisdiction where Seller Corp. does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. Sellers
have made available to Purchaser, all Tax Returns of Seller Corp. for the
six most recent periods ending prior to the date hereof.
(2) With respect to all amounts in respect of Taxes imposed on Seller Corp.
or for which Seller Corp. is liable, whether to taxing authorities (as, for
example, under local law) or to other persons or entities (as, for example,
under tax allocation agreements), with respect to all taxable periods or
portions of periods ending on or before the Closing Date, all applicable
tax laws and agreements have been fully complied with, and all such amounts
required to be paid by Sellers in respect of Seller Corp. to taxing
authorities or others on or before the date hereof have been paid.
(3) No issues have been raised (and are currently pending) by any taxing
authority in connection with any of the Tax Returns. No waivers of
statutes of limitation have been given by or requested from Seller Corp.
All deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are fully reflected as a liability in
the financial statements of Seller Corp., or are being contested and an
adequate reserve therefor has been established and is fully reflected in
the Financial Statements.
(4) There are no Liens for Taxes on the Assets of Seller Corp.
(5) None of the Assets is property that is required to be treated as being
owned by any other person pursuant to the "safe harbor lease" provisions of
former Section 168(f)(8) of the Code.
(6) None of the Assets directly or indirectly secures any debt the interest
on which is tax-exempt under Section 103(a) of the Code.
(7) None of the Assets is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
(8) Seller Corp. is not a person other than a U.S. person within the
meaning of the Code.
(9) The transaction contemplated by this Agreement is not subject to the
tax withholding provisions of Section 3406 of the Code or of any other
provision of law.
(10) Seller Corp. has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. Seller Corp. has not made any
payments, is not obligated to make any payments, nor is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code.
Seller Corp. has not been a U.S. real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. Seller Corp. has
disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code. Seller Corp. has not
entered into any Tax allocation or sharing agreement. Seller Corp. (A) has
not been a member of an affiliated group, within the meaning of Section
1504(a) of the Code, filing a consolidated federal income Tax Return (other
than a group the common parent of which was Seller Corp.) and (B) does not
have any liability for the Taxes of any person or entity (other than of
Seller Corp. and Subsidiary) under Treasury Regulation section 1.1502-6 (or
any similar provision of state, local, or foreign law), as transferee or
successor, by contract, or otherwise.
Consummation of the transactions herein contemplated will not result in the
imposition or creation of any Tax liabilities on Seller Corp. or the
Assets, except for: (1) Tax liabilities which remain the liability of
Sellers; or (2) Tax liabilities resulting from any Tax election made by
Purchaser as of the Closing.
(i) Intangible Assets. Appendix 2.1(i) to the Sellers' Disclosure Letter
sets forth
(1) all patents, patent applications, trademarks, trademark registrations,
applications for trademark registrations, trade names and copyrights (i)
which Seller Corp. or any Subsidiary owns, or (ii) which are used by Seller
Corp. or any Subsidiary in any way in, or are necessary for the conduct by
Seller Corp. or any Subsidiary of, the Business; and
(2) all license agreements with respect to any of the foregoing as to which
Seller Corp. is licensor or licensee.
Except as set forth in Appendix 2.1(i) to Sellers' Disclosure Letter, (i)
there are no pending or, to the knowledge of Sellers, threatened
infringement claims against Seller Corp. by any Person with respect to any
of the items listed on Appendix 2.1(i) to the Sellers' Disclosure Letter,
nor has any such item been declared invalid or been limited by any court or
agreement; (ii) the Intangible Assets will afford Seller Corp. at all times
as of the Closing the rights to use all patents, technology, proprietary
information, know-how, data, designs, inventions, trademarks, copyrights,
tradenames and servicemarks owned by Seller Corp. or others necessary for
the conduct of the Business as presently being conducted; and (iii) the use
of the Intangible Assets will not and, the conduct of the Business as
presently conducted does not, infringe on the rights of any other Person.
(j) Instruments in Full Force and Effect; Possession under Leases. The
Scheduled Contracts and other material commitments, agreements and
obligations (including without limitation licenses, royalties, assignments
and similar agreements with respect to the Intangible Assets) constituting
a part of the Assets ("Instruments") are valid, binding and in full force
and effect, except as the enforceability thereof may be limited by
bankruptcy, reorganization, fraudulent conveyance, insolvency and similar
laws of general application relating to or affecting the enforcement of
rights of creditors and general principles of equity, and have not been
amended or supplemented in any manner or respect except as disclosed on
Appendix 2.1(j) to the Sellers' Disclosure Letter and are enforceable by
Seller Corp. in accordance with their respective terms. There are no
defaults by Seller Corp. thereunder and Seller Corp. knows of no defaults
thereunder by any other party thereto, and Sellers know of no event that
has occurred that with the lapse of time or action or inaction by any party
thereto would result in a violation thereof or a default thereunder.
Except for the need to obtain the consents contemplated by Section 2.1(b),
none of the rights under the Instruments will be impaired by the
consummation of the transactions contemplated by this Agreement, and all
such rights will inure to and be enforceable by Seller Corp. as of the
Closing without the authorization, consent, approval, permit or licenses
of, or filing with, any other Person. Seller Corp. enjoys peaceful and
undisturbed possession under all leases included in the Scheduled
Contracts.
(k)Employee Plans and Agreements.
(1) Appendix 2.1(k)-1 to the Sellers' Disclosure Letter (i) lists all of
the pension plans, all of the profit sharing plans, and all of the
retirement, stock option, stock purchase, incentive, bonus, life, medical,
vision, health, disability or accident plans, deferred compensation plans,
and other employee compensation or benefit plans, agreements, policies,
contracts, arrangements or commitments, including without limitation
severance agreements, holiday, vacation or other similar matters, other
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA),
"employee pension benefit plans" (as defined in Section 3(2) of ERISA and
not exempted under Sections 4(b) or 201 of ERISA) and labor union
agreements, relating to officers or employees (including former officers or
employees) of Seller Corp. or any of its affiliates who perform services
to, in the name of or for the benefit of the Business ("Employees")
(collectively the "Plans" and individually a "Plan"), (ii) identifies each
Plan which is a defined benefit plan as defined in Section 3(35) of ERISA
(a "Defined Benefit Plan") or is a multi-employer plan within the meaning
of Section 3(37) of ERISA (a "Multi-Employer Plan"), (iii) identifies each
of the Plans which purports to be a tax qualified plan under Section 401(a)
of the Code and identifies any trust funding any of such plans which
purports to be a tax exempt trust under Section 501(c)(9) of the Code, and
(iv) in the case of each Multi-Employer Plan, sets forth the Seller Corp.
contributions made to such Plan for the last plan year ending prior to the
date of this Agreement. Seller Corp. has delivered, or will deliver prior
to the Closing, to Purchaser the following documents as in effect on the
date hereof: (A) true, correct and complete copies of each Plan, including
all amendments thereto, which is an employee pension benefit or welfare
benefit plan (within the meaning of Sections 3(1) or 3(2) of ERISA), and in
the case of any unwritten Plans, descriptions thereof, (B) with respect to
any Plans or Plan amendments described in the foregoing clause (A), (i) the
most recent determination letter issued by the IRS after September 1, 1974,
if any, (ii) all trust agreements or other funding agreements, including
insurance contracts, (iii) with respect to each Defined Benefit Plan, all
notices of intent to terminate any such Employee Plan and all notices of
reportable events with respect to any such Employee Plan as to which the
PBGC has not waived the thirty (30) day notice requirement, (iv) the most
recent actuarial valuations, annual reports, summary plan descriptions,
summaries of material modifications and summary annual reports, if any, and
(v) with respect to any Multi-Employer Plan, a schedule of the amount of
potential withdrawal liability if Seller Corp. incurred a partial or
complete withdrawal (as defined in Sections 4205 and 4203 of ERISA,
respectively) as of the Closing Date, calculated according to the
information made available under Section 4221(e) of ERISA.
(2) Each of the Plans that purports to be qualified under Section 401(a) of
the Code is qualified and any trusts under such Plans are exempt from
federal income Tax under Section 501(a) of the Code. The retroactive cure
period with respect to any Plan amendments not yet submitted to the IRS has
not expired. The Plans each comply in all material respects with all other
applicable laws (including, without limitation, ERISA, the Age
Discriminations in Employment Act, the Omnibus Budget Reconciliation Act of
1986, the Consolidated Budget Reconciliation Act of 1986, and the Omnibus
Budget Reconciliation Act of 1987) of the United States and any applicable
collective bargaining agreement. Each of the trusts that purports to be a
tax exempt trust under Section 501(c)(9) of the Code has received a
favorable ruling or determination letter as to its tax-exempt status.
Other than claims for benefits submitted by participants or beneficiaries
or appeals from denial thereof, there is no litigation, legal action, suit,
investigation, claim, counterclaim or proceeding pending or, to Sellers'
knowledge, threatened against any Employee Plan.
(3) With respect to any Plan, no prohibited transaction (within the meaning
of Section 406 of ERISA and/or Section 4975 of the Code) exists which could
subject Seller Corp. or Purchaser to any material liability or civil
penalty assessed pursuant to Section 502(i) of ERISA or a material Tax
imposed by Section 4975 of the Code. Neither Seller Corp., nor any of its
respective Affiliates, nor any administrator or fiduciary of any Plan (or
agent of any administrator or fiduciary of any Plan (or agent of any of the
foregoing) has engaged in any transaction or acted or failed to act in a
manner which is likely to subject Seller Corp. to any liability for a
breach of fiduciary or other duty under ERISA or any other applicable law.
The transactions contemplated by the Operative Documents will not be, or
cause any, prohibited transaction.
(4) No Defined Benefit Plan has been terminated or partially terminated
after September 1, 1974.
(5) No plan termination liability to the PBGC or to any other person or
withdrawal liability to any Multi-Employer Plan has been or is expected to
be incurred with respect to any Plan or with respect to any employee
benefit plan sponsored by any entity under common control (within the
meaning of Section 414 of the Code) with Seller Corp. by reason of any
action taken by any Seller, or any of their respective affiliates prior to
the Closing Date. The PBGC has not instituted, and is not expected to
institute, any proceedings to terminate any Plan. As of the Closing, each
Defined Benefit Plan (other than a Multi-Employer Plan) to which Title IV
of ERISA applies could be terminated in a standard termination under
Section 4041(b) of ERISA. There has been no "reportable event" (within the
meaning of Section 4043(b) or ERISA and the regulations thereunder) with
respect to any Plan, and there exists no condition or set of circumstances
which makes the termination of any Plan by the PBGC likely. Seller Corp.
has not received any written notice that any Multi-Employer Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in Plan benefits or the imposition of any excise tax or that the
plan is or may become insolvent. Seller Corp. has paid all premiums (and
interest charges and penalties for late payment, if applicable) due to the
PBGC with respect to any Plan. No amendment to any Plan has occurred which
has required or could require the provision of security to any such Plan
under Section 401(a)(29) of the Code.
(6) All filings required by ERISA and the Code as to each Plan have been
timely filed and all notices and disclosures to participants required by
ERISA or the Code have been timely provided.
(7) Except as indicated in Appendix 2.1(k)-2 to the Sellers' Disclosure
Letter, Seller Corp. has made full and timely payment of all amounts
required under the terms of each of the Plans that are employee pension
benefit plans, including the Multi-Employer Plans, to have been paid as
contributions to such plans for the last plan year ended prior to the date
of this Agreement and all prior plan years. All installment contributions
required pursuant to Section 412(m) of the Code with respect to any Plan
have been paid by Seller Corp. on or before the due date for such
contributions. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Plan as of the end of such plan year. Further, Seller
Corp. has made or shall make full and timely payment of or has accrued or
shall accrue all amounts which are required under the terms of the Plans to
be paid as a contribution to each such Plan with respect to the period from
the end of the last plan year ending before the date of this Agreement to
the Closing Date.
(8) All contributions made to or accrued with respect to all Plans are
deductible under Section 404 or 162 of the Code. No amounts, nor any
assets or any Plan are subject to Tax as unrelated business taxable income
under Section 511, 512, or 419A of the Code.
(9) Seller Corp. can unilaterally terminate all Plans other than the Plans
identified on Appendix 2.1(k)-3 to the Sellers' Disclosure Letter without
incurring any material liability.
(10) No Plan provides (or has any obligation or commitment to provide)
health, medical, disability, life or other similar benefits with respect to
any current or former employees (or beneficiary thereof) of Seller Corp.
beyond their retirement or other termination of service (other than
coverage mandated by Title I, Subtitle B, Part 6 of ERISA, which coverage
is fully paid by the former employee or his dependents).
(l) Labor and Employee Relations.
(1) Except as listed in Appendix 2.1(l)-1 to the Seller's Disclosure
Letter, there exists no collective bargaining agreement or other labor
union contract applicable to any employee of Seller Corp. and no such
agreement or contract has been requested by any employee or group of
employees of Seller Corp., nor has there been any discussion with respect
thereto by management of Seller Corp. or Subsidiary with any employees of
Seller Corp. Neither Seller Corp. nor Subsidiary has received any written
notification of any unfair labor practice charges or complaints currently
pending before any agency having jurisdiction thereof nor are there any
current union representation claims involving any of the employees of
Seller Corp. Further, Sellers are not aware of any such threatened charges
or claims.
(2) Except as set forth in Appendix 2.1(l)-2 to the Seller's Disclosure
Letter, Sellers are not aware of any union organizing activities or
proceedings involving, or any pending petitions for recognition of, a labor
union or association as the exclusive bargaining agent for, or where the
purpose is to organize, any group or groups of employees of Seller Corp.
There is not currently pending, with regard to any of its facilities, any
proceeding before the National Labor Relations Board, wherein any labor
organization is seeking representation of any employees of Seller Corp.
(3) Except as set forth in Appendix 2.1(l)-3 to the Sellers' Disclosure
Letter, Sellers are not aware of any strikes, work stoppages, work
slowdowns or lockouts nor of any threats thereof, by or with respect to any
of the employees of Seller Corp. Since January 1, 1988 there have been no
labor disputes, strikes, slowdowns, work stoppages, lockouts or similar
matters involving employees of Seller Corp.
(4) Except as set forth in Appendix 2.1(l)-4 to the Sellers' Disclosure
Letter, there are not pending any grievances filed by employees of Seller
Corp. within any collective bargaining unit or by representatives of
employees within any collective bargaining unit. Further, there are no
arbitration decisions, settlement agreements, injunctions, consent decrees
or conciliation agreements which affect the operation of the Business other
than those specifically listed in Appendix 2.1(l) to the Sellers'
Disclosure Letter.
(5) Except as set forth in Appendix 2.1(l)-5 to the Sellers' Disclosure
Letter, there exists (i) no charges of discrimination or lawsuits involving
alleged violations of any fair employment law, wage payment law, or
occupational safety and health law, (ii) no threatened or pending
litigation arising out of employment relationships, or other
employment-related law, whether federal, state or local, and (iii) no
threatened or pending litigation arising out of employment relationships,
presently threatened or pending, by any employee or former employee of
Seller Corp. or any representative of any such Person or Persons. No
charges or claims involving any of the facilities or employees of Seller
Corp. are pending before any administrative agency, local, state or
federal, and no lawsuits involving any of such facilities or employees are
pending with respect to equal employment opportunity, age discrimination,
occupational safety, or any other form of alleged employment practice or
unfair labor practice.
(6) Seller Corp. and Subsidiary comply in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including, but without limitation, those relating to wages, hours,
concerted activity, non-discrimination, occupational health and safety and
the payment and withholding of Taxes, and Seller Corp. has no accrued
liability for any arrears of wages or any Taxes or penalties for failure to
comply with any of the foregoing.
(7) The only labor union or labor organization or association which has
been certified to represent any of the employees of Seller Corp., or which
Seller Corp. now recognizes, or in the past two (2) years has recognized,
as representing any of the employees of Seller Corp. is (i) The
International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers, (ii) International Union of Operating Engineers, AFL-
CIO, Local 542 and (iii) Laborers' International Union of North America,
AFL-CIO. Appendix 2.1(l)-1 to the Sellers' Disclosure Letter contains an
accurate description of the applicable union agreements.
(m) Real Property.
(1) Seller Corp. owns no real property.
(n) Absence of Certain Changes, Etc. Except as disclosed in the Interim
Financial Statements or on Appendix 2.1(n) to the Sellers' Disclosure
Letter, since March 31, 1996, there has been no material adverse change in
the business, financial condition or results of operations of Seller Corp.
from that reflected in the Audited Financial Statements.
Since March 31, 1996 and except as disclosed on Appendix 2.1(n) to the
Sellers' Disclosure Letter, Seller Corp. has
(1) conducted its operations in the ordinary course;
(2) not entered into any material transaction or contract, or amended or
terminated any material transaction or contract, except normal transactions
or contracts consistent in nature and scope with prior practices and
entered into in the ordinary course of business, and except for
transactions or contracts not exceeding $25,000;
(3) not mortgaged, sold, transferred, distributed or otherwise disposed of
any of its material Assets, except in the ordinary course of business and
except for transactions or contracts not exceeding $25,000, or acquired a
material amount of the assets or capital stock of another Person;
(4)not experienced any damage, destruction or loss to or of any of its
material Assets except (i) in the ordinary course of business, (ii) Assets
not exceeding $25,000 in the aggregate, (iii) to the extent that any Asset
damaged, destroyed or lost has been repaired or replaced and (iv) where the
failure to repair or replace any Asset damaged would not result in a
Material Adverse Effect;
(5) not made or agreed to make any capital expenditures for additions to
property, plant or equipment, except for vehicle leases and expenditures
and commitments not exceeding $25,000 in the aggregate;
(6)not made or agreed to make any change in the compensation payable to any
employee, except for increases in compensation in the ordinary course of
business substantially consistent with past practices of Seller Corp.;
(7) not declared or paid any dividends or distributions to, or redeemed
stock from, its stockholders;
(8) not reduced its cash or short-term investments, other than to meet cash
needs arising in the ordinary course of business;
(9) not made any change in its accounting methods or practices;
(10) except for short-term bank borrowings in the ordinary course of
business and drawdowns on an equipment line to finance the purchase of
certain Vehicles, not incurred indebtedness for borrowed money;
(11) not granted credit to any material customer or distributor on terms
materially more favorable than the terms on which credit has been extended
to such customer or distributor in the past nor materially changed the
terms of any credit previously extended; or
(12) not accepted any order that involves a customer that is more than 120
days delinquent in an account receivable of Seller Corp.
(o) Subsidiaries.
(1) Except for Maintenance Services, Inc. and Mainserv-Allentech, Inc.,
each a Delaware corporation (collectively "Subsidiary"), there is no
corporation, partnership, joint venture, business trust or other legal
entity in which Seller Corp., either directly or indirectly through one or
more intermediaries, owns or holds beneficial or record ownership of at
least a majority of the outstanding voting shares.
(2) Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware (the jurisdiction of
its incorporation) and has full corporate power and authority to carry on
its business as it is now being conducted, to own or hold under lease the
assets which it owns or holds under lease and to perform all its agreements
and instruments to which it is a party or by which it is bound.
(3) Except as set forth in Appendix 2.1(o) to the Sellers' Disclosure
Letter, the representations set forth elsewhere in this Section 2.1 are
hereby restated herein by this reference as to Subsidiary and are true and
correct as to Subsidiary, but are subject to the same qualifications and
conditions as are applicable to Seller Corp.
(p) Material Contracts, Etc. Appendix 2.1(p) to the Sellers' Disclosure
Letter lists all contracts, leases, agreements and instruments material to
the Business or requiring the performance by Seller Corp. of any material
obligations of Seller Corp. after the date hereof, except the following:
(1) employment agreements terminable at will and contracts for
miscellaneous services terminable at will without the payment of any
penalty (except that all employment agreements with executive officers of
Seller Corp. are listed on Appendix 2.1(p) to Sellers' Disclosure Letter);
(2) purchase orders and contracts with suppliers and customers entered into
in the ordinary course of business; and
(3) miscellaneous contracts, leases, agreements and instruments (with
Persons unaffiliated with Sellers) involving liabilities under all such
contracts, leases, agreements and instruments of not more than $25,000 each
in the aggregate.
Sellers have heretofore delivered or made available to Purchaser or its
counsel complete copies of all contracts, leases, agreements and
instruments listed on Appendix 2.1(p) to the Sellers' Disclosure Letter.
There are no existing defaults by Seller Corp., or to the knowledge of any
Seller, other parties, under any of the contracts, leases, agreements and
instruments listed on Appendix 2.1(p) to the Sellers' Disclosure Letter
which would, singly or in the aggregate, cause a Material Adverse Effect.
Except as set forth in Appendix 2.1(p) to the Sellers' Disclosure Letter,
Seller Corp. is not a party to any agreement, contract or covenant limiting
the freedom of Seller Corp. or any party contracting with Seller Corp. from
competing in any line of business or with any Person in any geographic
area.
(q) Licenses and Permits. Seller Corp. and certain employees of Seller
Corp. possess all the Permits listed in Appendix 2.1(q) to the Sellers'
Disclosure Letter, copies of all of which have been delivered to Purchaser.
Such Permits constitute all the Permits necessary under law or otherwise
for Seller Corp. to conduct the Business as now being conducted and to
construct, own, operate, maintain and use the Assets in the manner in which
they are now being constructed, operated, maintained and used, except for
those Permits that failure to have does not have a Material Adverse Effect.
Each of such Permits and Seller Corp.'s rights with respect thereto (1) is
valid and subsisting, in full force and effect, and enforceable by Seller
Corp., and (2) following consummation of the transactions contemplated
hereby, will continue to be valid and subsisting in full force and effect,
and enforceable by Seller Corp. without any consent or approval of any
Governmental Body or third party; or, in lieu of such existing Permits,
replacement or substitute Permits, except as set forth in Appendix 2.1(q)
to the Sellers' Disclosure Letter, will be available to or obtainable by
Seller Corp. Seller Corp. is in compliance in all material respects with
the terms of such Permits. None of such Permits have been, or to the
knowledge of Sellers, are threatened to be, revoked, canceled, suspended or
modified.
(r) Environmental Matters. Except as set forth in Appendix 2.1(r) to the
Sellers' Disclosure Letter:
(1) There have been no circumstances or events arising from or caused by
the business of Seller Corp. or on real property, equipment and fixtures
presently or formerly owned, leased or operated by Seller Corp. ("Seller
Corp. Sites") while owned, leased or operated by Seller Corp. which caused
any Environmental Event with respect to the Seller Corp. Sites, any nearby
properties or off-site treatment, storage, recycling, reclaiming or
disposal sites;
(2) No Environmental Materials have migrated or threatened to migrate from
other properties upon, about or beneath a Seller Corp. Site;
(3) There is no proceeding pending, no notice, notification, demand,
request for information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no
investigation or review is pending or threatened by any Governmental
Authority or other person:
(i) with respect to any violation of any Environmental Law in connection
with the Assets of the Seller Corp., or operations or conduct of the
business of Seller Corp.;
(ii) with respect to any failure of Seller Corp. or any Subsidiary to have
any required Governmental Approval relating to Environmental Materials or
Environmental Events; or
(iii) with respect to any generation, treatment, storage, recycling,
reclaiming, transportation, or disposal of any Environmental Material that
could cause an Environmental Event, generated by the operations or business
of Seller Corp. or located on Assets of Seller Corp., or any Seller Corp.
Site;
(4) No Person has placed, held, located or released any Environmental
Material on any Assets of Seller Corp. or Seller Corp. Site, equipment or
fixtures so as to cause an Environmental Event;
(5) The Seller Corp. Sites, equipment and fixtures have been operated in
material compliance with all Environmental Laws;
(6) There are no underground or aboveground storage tanks, pits, sumps or
impoundments, active or abandoned, situated on any Seller Corp. Site;
(7) Neither the Seller Corp. nor any Subsidiary has transported or arranged
for the transportation, storage, and/or disposal (directly or indirectly)
of any Environmental Material to or at any location that is listed or
proposed for listing on the CERCLA National Priority List or any comparable
state list, or that is the subject of an Environmental Event;
(8) There are no environmental liens on the Assets of Seller Corp. and
Seller has not received any written notice of any actions taken by any
Governmental Authority that could subject any of the Assets of Seller Corp.
to an environmental lien under any Environmental Law.
(9) All notices required by all Environmental Laws have been given to the
required agencies and/or authorities except such notices the failure to
give would not result in a Material Adverse Effect;
(10) Seller Corp. holds, is and has been in compliance with all necessary
environmental Governmental Approvals, there is no condition that is
reasonably likely to prevent or materially interfere in the near future
with compliance with the Governmental Approvals by Seller Corp. on the
Closing Date, and all permit fees are paid and current; and
(11) All financial assurances required by Environmental Laws are properly
in place and are fully funded to the extent presently required by
Environmental Laws.
As used in this Agreement,
(A) "Environmental Event" shall mean the spilling, discharging, leaking,
pumping, draining, pouring, interring, emitting, emptying, injecting,
escaping, dumping, disposing, abandoning, migration or other release of any
kind of Environmental Materials (whether legal or illegal at the time)
which may results in a violation of any Environmental Laws. "Environmental
Event" shall also include (i) the occurrence of any judicial, quasi-
judicial or administrative proceedings pursuant to any Environmental Laws;
and (ii) any claims, demands, actions, causes of actions, remedial and/or
abatement response, remedial investigations/feasibility studies, ecological
studies, screening level studies, risk assessments, facility studies,
environmental studies, natural resource damage claims, damages, judgments,
or settlements instituted by a Governmental Authority in accordance with
Environmental Law.
(B) "Environmental Laws" means any and all laws (including, but not limited
to, the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA) and corresponding state acts), statutes, ordinances, rules,
regulations, memoranda of understanding, orders, licenses, judicial
decrees, or administrative orders, treaties or permit conditions of any
Governmental Authority pertaining to the workplace and/or health or the
environment in effect in the jurisdiction in which the Seller Corp. Sites
and/or the Seller Corp. are located, and all statutory and common law
environmental theories, including but not limited to negligence, strict
liability, nuisance and trespass.
(C) "Environmental Material" shall include all substances whatsoever which
could cause the occurrence of an Environmental Event.
(D) "Governmental Approval" means any authorizations, consents, approvals,
waivers, exemptions, variances, franchises, permits and licenses issued by
any Governmental Authority.
(E) "Governmental Authority" means any federal, state, local, or foreign
government, or political subdivision thereof, exercising competent
jurisdiction.
(F) "On" or "in", when used with respect to real property means "on, in,
under, above or about."
(s) Absence of Certain Business Practices. Neither Seller Corp. nor any
officer, employee or agent of Seller Corp., nor any other Person acting on
its behalf, has, directly or indirectly, within the past five years, given
or agreed to give any gift or similar benefit to any customer, supplier,
government employee or other Person who is or may be in a position to help
or hinder the business of Seller Corp. (or to assist Seller Corp. in
connection with any actual or proposed transaction) which (1) might subject
Seller Corp. to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (2) if not given in the past, might
have had a Material Adverse Effect on the assets, business or operations of
Seller Corp. as reflected in the Audited Financial Statements, or (3) if
not continued in the future, might materially adversely effect the Assets,
business operations or prospects of Seller Corp. or which might subject
Seller Corp. to suit or penalty in a private or governmental litigation or
proceeding.
(t) Corporate Name. The use of the corporate name of Mainserv-Allentech,
Inc. does not infringe the right of any third party nor is it confusingly
similar with the corporate name of any third party. After the Closing
Date, no Person or business entity other than Purchaser will be authorized
directly or indirectly to use the corporate name of Seller Corp. or any
name deceptively or confusingly similar thereto.
(u) Customers and Suppliers. Sellers have delivered to Purchaser prior to
the date hereof (1) a true and correct list of (i) the ten (10) largest
customers of Seller Corp. in terms of sales during the fiscal year ended
March 31, 1996, and (ii) the ten (10) largest customers of Seller Corp. in
terms of sales during the nine months ended December 31, 1996, showing the
approximate total sales to each such customer during each of such periods;
(2) a true and correct list of (x) the ten (10) largest suppliers of Seller
Corp. in terms of purchases during the fiscal year ended March 31, 1996 and
(y) the ten (10) largest suppliers of Seller Corp. in terms of purchases
during the nine months ended December 31, 1996, showing the approximate
total purchases from each such supplier during such respective periods.
Except to the extent set forth in such list, there has not been any
material adverse change in the business relationship of Seller Corp. with
any customer or supplier so named in the Sellers' Disclosure Letter.
Except for the customers and suppliers identified in such list, Seller
Corp. has not had any customer which accounted for more than 5% of its
sales during the period from March 31, 1995 through and including the date
hereof, or any supplier from whom it purchased more than 5% of the total
goods or services purchased by it during such period.
(v) Competing Lines of Business. Except as set forth in Appendix 2.1(v) to
the Sellers' Disclosure Letter, no Affiliate of Seller Corp. owns, directly
or indirectly, any interest in (excepting not more than a 5% holding for
investment purposes in securities of publicly held and traded companies),
or is an officer, director, employer or consultant of or otherwise receives
remuneration from, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, customer or supplier of Seller Corp. Seller
Corp. does not have, and no officer or director or stockholder of Seller
Corp. or any Affiliate of Seller Corp. has nor, during the period beginning
January 1, 1993 through, to and including the date hereof, had any interest
in any property, real or personal, tangible or intangible, used in or
pertaining to the Business. None of the Sellers has any claim against
Seller Corp. except as set forth in Appendix 2.1(v) to the Sellers'
Disclosure Letter.
(w) Disclosure.
(1) No representation or warranty of Sellers contained in this Agreement or
statement in the Sellers' Disclosure Letter omits to state a material fact
necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
(2) No supplement to the Sellers' Disclosure Letter made pursuant to
Section 3.8 will omit to state a material fact necessary in order to make
the statements therein or in this Agreement, in light of the circumstances
under which they were made, not misleading.
(3) Notwithstanding paragraphs (1) and (2) above, neither Sellers nor
Seller Corp. make any representation or warranty concerning the accuracy of
any financial projections delivered to Purchaser or the likelihood that
Seller Corp. will perform as stated therein.
(4) There is no particular fact known to any Seller which has specific
application to any Seller, Seller Corp. or the Business (other than general
economic or industry conditions) and which materially adversely affects or
materially threatens, the Assets, business, financial condition or results
of operations of Seller Corp. considered as a whole which has not been set
forth in this Agreement or the Sellers' Disclosure Letter.
Section 2.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Sellers that the following are true and correct
on and as of the date of this Agreement and will be true and correct as of
the Closing as if made on and as of that date:
(a) Organization and Good Standing of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware and is qualified to transact business and is
in good standing as a foreign corporation in the jurisdictions where it is
required to qualify in order to conduct its businesses as presently
conducted. Purchaser has the corporate power and authority to own, lease
or operate all properties and assets now owned, leased or operated by it
and to carry on its businesses as now conducted.
(b) Consents, Authorizations and Binding Effect.
(1) Purchaser may execute, deliver and perform this Agreement without the
necessity of Purchaser obtaining any consent, approval, authorization or
waiver or giving any notice or otherwise, except for such consents,
approvals, authorizations, waivers and notices which have been obtained and
are unconditional and are in full force and effect and such notices which
have been given.
(2) Purchaser has the corporate power and authority to enter into this
Agreement and the Operative Documents to which it is a party and to carry
out its obligations hereunder and thereunder. This Agreement has been duly
authorized, executed and delivered by Purchaser. This Agreement
constitutes the legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency and similar laws of general
application relating to or affecting the enforcement of rights of
creditors.
(3) The execution, delivery and performance of this Agreement do not and
will not
(i) constitute a violation of the Certificate of Incorporation, as amended,
or the Bylaws, as amended, of Purchaser;
(ii) constitute a violation of any statute, judgment, order, decree or
regulation or rule of any Governmental Body applicable or relating to
Purchaser or the business of Purchaser;
(iii) conflict with, or constitute a breach or default under, or give rise
to any right of termination, cancellation or acceleration under, any term
or provision of any contract, agreement, lease, mortgage, deed of trust,
commitment, license, franchise, Permit, authorization or any other
instrument or obligation to which Purchaser is a party or by which its
assets are bound, or an event which with notice, lapse of time, or both,
would result in any such conflict, breach, default or right, except as
would not, singly or in the aggregate, have a Material Adverse Effect on
Purchaser.
(c) Financial Statements. The audited and unaudited financial statements
(the "Financial Statements") of Purchaser included in the Purchaser's Form
10-K for the fiscal year ended May 31, 1996 and the Purchaser's Form 10-Q
for the quarterly period ended February 28, 1997 have been delivered to
Sellers. The Financial Statements have been prepared from the books of
Purchaser in conformity with GAAP and present fairly the financial position
of Purchaser as of the dates of such statements. Since the date of the
most recent Financial Statements, there has not been any material adverse
change in the financial condition of the Purchaser. The financial
information delivered to Sellers regarding the Michigan and New Jersey
operations of Purchaser is true and correct in all material respects.
(d) Financing. Purchaser has the financing necessary to fulfill its
obligation to pay the Purchase Price.
ARTICLE III
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
Section 3.1 Access to Records and Properties; Confidentiality.
(a) Between the date of this Agreement and as of the Closing, Sellers shall
cause Seller Corp. to give, and Seller Corp. shall give, to Purchaser and
its advisors such access to the premises, books and records of Seller
Corp., and to cause the officers, employees and accountants of Seller Corp.
to furnish such financial and operating data and other information with
respect to Seller Corp. as Purchaser shall from time to time reasonably
request. Without limiting the generality of the foregoing, Sellers shall
cause Seller Corp. to give, and Seller Corp. shall give, to Purchaser and
its representatives access during normal business hours to the facilities
and operations of Seller Corp. so that Purchaser may (1) obtain evaluations
of the Assets and (2) perform any and all assessing, testing, monitoring
and investigating that Purchaser deems necessary in its sole discretion
with respect to environmental matters concerning Seller Corp., its Assets
and the operation of the Business. Any investigation pursuant to this
Section 3.1 shall be conducted in such manner as not to interfere
unreasonably with the business and operations of Seller Corp.
(b)In connection with the transactions contemplated by this Agreement, in
addition to, and not by way of limitation of, any other obligations of
Purchaser under or pursuant to any other agreement, whether written or
oral, with any Seller or any other obligations of Purchaser at law or in
equity, all information furnished to a party will be kept confidential by
such party and its associates, Affiliates, agents, employees, consultants
and advisors prior to the Closing Date, or in the event the Closing does
not occur at all times, and will not be used in any manner adverse to the
furnishing party. During such time, each party will hold and will cause
its associates, Affiliates, agents, employees, consultants and advisors to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning another party
furnished to it by such other party or its representatives in connection
with the transactions contemplated by this Agreement (except to the extent
that such information can be shown to have been (1) previously available to
the party to which it was furnished on a non-confidential basis prior to
its disclosure, (2) in the public domain or (3) available on a
non-confidential basis from a Person other than a Person not bound by any
confidentiality agreement). Purchaser may release or disclose such
information to its associates, Affiliates, agents, employees, consultants
and advisors in connection with this Agreement prior to the Closing Date or
in the event the Closing does not occur only if such associates,
Affiliates, agents, employees, consultants and advisors are informed of the
confidential nature of such information and they agree to such confidential
treatment of all such information. If the transactions contemplated by
this Agreement are not consummated, Purchaser agrees to remain bound by the
Nonsolicitation and Confidentiality Agreement previously executed by
Purchaser, a copy of which is attached hereto as Exhibit 3.1-1 and
incorporated herein for all purposes. Notwithstanding the foregoing, if a
party has been requested or is required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any information, the
party so being required will promptly notify the other parties so that such
other parties may seek an appropriate protective order. Each party
warrants that it will cooperate fully with the other parties in seeking
such a protective order.
Section 3.2 Operation of Seller Corp. Between the date hereof and as of
the Closing, except as contemplated herein or except with the prior consent
of Purchaser, Sellers shall:
(a) cause Seller Corp. to operate the Business as presently operated, only
in the ordinary course, and in material compliance with all laws,
regulations, writs, injunctions, decrees or orders applicable to Seller
Corp. or its Assets, including without limitation all environmental, safety
and health, antitrust, consumer protection, labor, equal opportunity or
discrimination laws, rules and regulations;
(b) cause the tangible Assets to be maintained and repaired in accordance
with past practices of Seller Corp.;
(c) not dispose of, or commit to dispose of, any Assets other than in the
ordinary course of business, including without limitation, the liquidation
of Accounts and the sale and delivery of Inventory and products covered by
Backlog Orders, all in the ordinary and customary course of Seller Corp's
business;
(d) actively market the Products and services of Seller Corp. in accordance
with its usual practices;
(e) continue in effect as of the Closing all present insurance coverage
with respect to the Assets, the Business and the Employees;
(f) not take any of the actions identified in Section 2.1(n); and
(g) repay in full any indebtedness to Seller Corp. set forth in Appendix
3.2(g) to Sellers' Disclosure Letter.
Sellers shall not effect any amendment to the Certificate of Incorporation
or the Bylaws of Seller Corp. and shall not cause or permit the issuance of
any additional shares of the capital stock or equity interests (or options,
warrants or other rights to acquire capital stock or equity securities) of
Seller Corp.
Sellers shall use best efforts to operate and maintain, or to cause to be
operated and maintained, the Business and the Assets in such a manner so
that the representations and warranties of Sellers contained herein shall
continue to be true and correct in all material respects on and as of the
Closing as if made on and as of the Closing.
Section 3.3 Consents. Sellers shall use their respective best efforts to
obtain any consents of Governmental Bodies, suppliers, distributors, and
other Persons required in order for Sellers to sell and transfer the Shares
pursuant to this Agreement. Purchaser shall use its best efforts to assist
Sellers in obtaining such consents.
Section 3.4 No Public Announcements or Negotiation with Others.
(a) Except as required by law, the parties hereto shall not issue any press
release or make any public statement regarding the transactions
contemplated by this Agreement without obtaining the prior consent of the
other party, which consent shall not be unreasonably withheld. In the
event a press release or a public statement regarding the transactions is
required by law, the party required to make such statement shall permit the
other party to review and comment upon such statement.
(b) Unless and until this Agreement shall have been terminated by Purchaser
or Sellers pursuant to Section 5.2, neither Sellers, Seller Corp. nor any
of the officers or directors of Seller Corp., nor any Affiliates of any of
them whom they are able to influence shall:
(1) directly or indirectly, encourage, solicit, initiate or participate in
any negotiations with any corporation, partnership, Person or other entity
or group (other than to Purchaser or an Affiliate or an associate of
Purchaser) concerning any merger, sale of substantial assets, business
combination, sale of shares of capital stock or similar transactions
involving the business of Seller Corp. or any Asset, whether by providing
non-public information or otherwise (an "Acquisition Proposal"); or
(2) disclose, directly or indirectly, any information not customarily
disclosed to any Person concerning their business and properties, afford to
any other Person access to their properties, books or records or otherwise
assist or encourage any Person in connection with any of the foregoing;
provided, however, that in response to an unsolicited Acquisition Proposal,
Seller Corp. may furnish or cause to be furnished information concerning
itself and any Subsidiary and its business, properties or assets to a third
party and engage in discussions or negotiations with such third party
regarding such Acquisition Proposal to the extent that the Board of
Directors of Seller Corp. shall determine on the basis of the advice of
counsel that the fiduciary duties of the Board of Directors require such
action.
In the event Sellers shall receive any offer for a transaction of the type
referred to in this Section 3.4, Sellers shall promptly inform Purchaser as
to any such offer.
Section 3.5 Best Efforts to Satisfy Conditions. Sellers and Seller Corp.
shall use their respective reasonable best efforts to cause the conditions
to the obligations of Purchaser contained in Section 4.1 to be satisfied to
the extent that the satisfaction of such conditions is in the control of
Sellers or Seller Corp., and Purchaser shall use its reasonable best
efforts to cause the conditions to the obligations of Sellers contained in
Section 4.2 to be satisfied to the extent that the satisfaction of such
conditions is in the control of Purchaser.
Section 3.6 Antitrust Law Compliance. Sellers and Purchaser shall prepare
and file with the United States Department of Justice (the "Department")
and the Federal Trade Commission (the "FTC") the notification and report
form with respect to the transactions contemplated by this Agreement as
required pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Sellers, Seller Corp. and Purchaser
shall each cooperate with the other in preparation of such filings and
shall promptly comply with any reasonable request by the Department or the
FTC for supplemental information and shall use their best efforts to obtain
early termination of the waiting period under the HSR Act.
Section 3.7 Update Sellers' Disclosure Letter. Sellers shall advise
Purchaser promptly in writing of any condition or circumstance, known to
any Seller, occurring from the date hereof up to and as of the Closing that
would cause the respective representations and warranties of Sellers
contained herein to become untrue in any material respect. Sellers shall
deliver to Purchaser a Supplement to the Sellers' Disclosure Letter (a
"Supplement") promptly after any Seller becomes aware of any event which
changes in any material respect any representation or warranty made by
Sellers in this Agreement or any statement made in the Sellers' Disclosure
Letter or in any Supplement.
Section 3.8 Tax Matters. (a) Sellers promise and covenant the following
with respect to Tax matters:
(1)No new elections with respect to Taxes or any changes in current
elections with respect to Taxes affecting the Assets shall be made after
the date of this Agreement without the prior written consent of Purchaser.
(2) As a condition precedent to the consummation of the transactions
contemplated by this Agreement, Sellers shall provide Purchaser with a
clearance certificate or similar document(s) that may be required by any
state taxing authority in order to relieve Purchaser of any obligation to
withhold any portion of the Purchase Price.
(3) Sellers shall furnish Purchaser an affidavit, stating, under penalty of
perjury, the transferor's United States taxpayer identification number and
that the transferor is not a foreign person, pursuant to Section 1445(b)(2)
of the Code.
(b) Purchaser shall not make an election under Section 338 of the Code with
respect to the Transaction.
Section 3.9 Personal Guarantees. The Purchaser, with the assistance of
Seller Corp. and Xxxxx X. Xxxxxxx, shall cause the personal guarantees of
Xxxxx X. Xxxxxxx and Xxxxxxxxx X. Xxxxxxx described on Exhibit 3.10 to be
fully released within five business days of the Closing.
ARTICLE IV
CONDITIONS OF CLOSING
Section 4.1 Conditions of Obligations of Purchaser. The obligations of
Purchaser to consummate the purchase and sale under this Agreement are
subject to the satisfaction of the following conditions, each of which may
be waived in writing by Purchaser:
(a) Representations and Warranties; Performance of Obligations.
(1) The representations and warranties of Sellers set forth in Section 2.1
hereof and in each certificate, agreement, document or instrument delivered
pursuant hereto on or before the Closing Date or in connection with the
transactions contemplated hereby on the Closing Date shall have been and
shall be true and correct in all material respects on and as of the date of
this Agreement and shall be true and correct in all material respects on
and as of the Closing Date, as though made on and as of the Closing Date.
(2) Sellers shall have performed in all material respects the covenants,
agreements and obligations required to be performed by them under this
Agreement prior to and on the Closing Date.
(3) Sellers shall have delivered to Purchaser their certificate confirming
the satisfaction of the conditions set forth in subparagraphs (1) and (2)
above and such other matters that Purchaser may reasonably request.
(b) Delivery of Instruments. Sellers shall have delivered to Purchaser the
duly endorsed certificates representing the Shares, and such other
documents that Purchaser may reasonably request to effect the transfer and
conveyance of the Shares to Purchaser.
(c) Opinion of Counsel to Sellers. Purchaser shall have received the
opinion of Sellers' counsel, dated the Closing Date, in form reasonably
acceptable to Purchaser.
(d) Environmental Review Reports. Purchaser shall have received, at
Purchaser's expense, an environmental review report from a Person
satisfactory to Purchaser as to the absence of any Environmental Event that
could materially affect the Business or Assets to be acquired.
Additionally, at least thirty (30) days prior to the Closing, Seller shall
have provided to Purchaser all environmental reports regarding the business
and operations of Seller Corp., the Assets of Seller Corp. and all Seller
Corp. Sites. Environmental reports shall include all consultants'
assessments and reports, internal company audits and memoranda and
correspondence with any Governmental Body regarding any Environmental
Event.
(e) Consents, Notices and Approvals. All consents and approvals of all
Persons necessary for the consummation of the Transaction under Seller
Corp.'s certificate of incorporation or bylaws or any agreement, permit,
law or regulation shall have been received and delivered to Purchaser, and
all notices to any Person required by any of the foregoing to be given in
respect of the Transaction prior to the Closing shall have been duly given.
(f) Purchaser's Investigation. The investigations by Purchaser and its
representatives in connection with the proposed transactions shall not have
caused Purchaser or its representatives to become aware of any facts or
circumstances relating to the business, operations, Assets, properties,
liabilities, financial condition, results of operations or affairs of
Seller Corp., any of the Seller Corp. Sites or any of its other Assets,
that, in the sole judgment of Purchaser, make it inadvisable for Purchaser
to proceed with the transactions contemplated by this Agreement.
(g) Employment and Non-Competition Agreements. Xxxxx X. Xxxxxxx, Xxxxx X.
Xxxxxx, Tor X. Xxxxxx, and Xxxxxxx X. Xxx shall have delivered the duly
authorized and executed Employment and Non-Competition Agreements pursuant
to Section 1.6.
(h) Stock Appreciation Rights. Seller Corp. shall have paid the amounts
due as of the Closing Date to the holders of Seller Corp. stock
appreciation rights as a result of the change of control of Seller Corp.
(i) Other Matters. Sellers shall have delivered to Purchaser, in form and
substance reasonably satisfactory to counsel for Purchaser, such
certificates and other evidence as Purchaser may reasonably request as to
the satisfaction of the conditions contained in this Section 4.1.
Section 4.2 Conditions of Obligations of Sellers. The obligations of
Sellers to consummate the sale and purchase under this Agreement are
subject to the satisfaction of the following conditions, each of which may
be waived in writing by Sellers:
(a) Representations and Warranties; Performance of Obligations. (1) The
representations and warranties of Purchaser set forth in Section 2.2 hereof
and in each certificate, agreement, document or instrument delivered
pursuant hereto on or before the Closing Date or in connection with the
transactions contemplated hereby on the Closing Date shall have been and be
true and correct in all material respects on and as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date.
(2) Purchaser shall have performed in all material respects the covenants,
agreements and obligations necessary to be performed by it under this
Agreement prior to the Closing Date.
(3) Purchaser shall have delivered to Sellers its certificate confirming
the satisfaction of the conditions set forth in subparagraphs (1) and (2)
above and such other matters that Sellers may reasonably request.
(b) Purchase Price and Other Payments. Purchaser shall have delivered to
Sellers the Purchase Price required to be made as of the Closing Date
pursuant to Article I hereof.
(c) Consents, Notices and Approvals. All consents and approvals of all
Persons necessary for the consummation of the Transaction under Purchaser's
certificate of incorporation or bylaws or any agreement, permit, law or
regulation shall have been received and delivered to Sellers, and all
notices to any Person required by any of the foregoing to be given in
respect of the Transaction prior to the Closing shall have been duly given.
(d) Employment and Non-Competition Agreements. Purchaser shall have
delivered the duly authorized and executed Employment and Non-Competition
Agreements pursuant to Section 1.6.
(e) Opinion of Counsel to Purchaser. Sellers shall have received the
opinion of Purchaser's counsel, dated the Closing Date, in form reasonably
acceptable to Sellers.
(f) Other Matters. Purchaser shall have delivered to Sellers, in form and
substance reasonably satisfactory to Sellers' counsel, such certificates
and other evidence as Sellers may reasonably request as to the satisfaction
of the conditions contained in this Section 4.2.
Section 4.3 HSR Act Approval. The respective obligations of all
of the parties hereto to consummate the purchase and sale under this
Agreement are subject to the expiration or earlier termination of the
waiting period (including any extensions) under the HSR Act.
Section 4.4 Opportunity to Cure. In the event that Purchaser shall notify
Sellers, or Sellers shall notify Purchaser, of its decision not to
consummate the sale and purchase of the Shares hereunder due to the failure
of any of the conditions contained in Sections 4.1, 4.2 or 4.3 hereof to be
satisfied, Sellers, or Purchaser, as the case may be, shall have the
opportunity for a reasonable period of time to take such actions as may be
necessary to remedy the circumstances which have resulted in the failure of
such conditions to be satisfied.
ARTICLE V
CLOSING DATE AND TERMINATION OF AGREEMENT
Section 5.1 Closing Date. Subject to the right of (1) Sellers and (2)
Purchaser to terminate this Agreement pursuant to Section 5.2 hereof, the
closing for the consummation of the purchase and sale contemplated by this
Agreement (the "Closing") shall, unless another date or place is agreed to
in writing by Sellers and Purchaser, take place at the offices of Xxxxxxxx,
Xxxxxx & Finger, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, at 2:00 p.m.,
time on June 17, 1997, or such other date as the parties may agree upon
(the "Closing Date").
Section 5.2 Termination of Agreement.
(a) This Agreement may, by written notice given at or prior to the Closing
in the manner hereinafter provided, be terminated or abandoned:
(1) in the event that the Closing shall not have occurred on or before
June 30, 1997, by Sellers or by Purchaser;
(2) by Purchaser if a material default or breach shall be made by Sellers
with respect to the due and timely performance of any of their covenants
and agreements contained herein, or with respect to the correctness of or
due compliance with any of their representations and warranties contained
in Article II hereof, and such default cannot be cured as provided in
Section 4.4 and has not been waived;
(3) by Sellers if a material default or breach shall be made by Purchaser
with respect to the due and timely performance of any of its covenants and
agreements contained herein, or with respect to the correctness of or due
compliance with any of its representations and warranties contained in
Article II hereof, and such default cannot be cured as provided in Section
4.4 and has not been waived;
(4)by mutual written consent of Sellers and Purchaser; or
(5) by Purchaser if any Supplement to the Sellers' Disclosure Letter
contains disclosures of any fact or condition which makes untrue, or shows
to have been untrue, in any material respect any representation or warranty
by Sellers in this Agreement or any statement made in the Sellers'
Disclosure Letter, unless concurrently with the delivery of the Supplement
Sellers represent and warrant that the disclosed fact or condition can and
will be corrected at Sellers' expense prior to the Closing.
(b) No termination of this Agreement, whether pursuant to this Section 5.2
(other than a termination by mutual written consent of Sellers and
Purchaser pursuant to Section 5.2(a)(4)) or otherwise, shall terminate or
impair any claim by Sellers or by Purchaser against the other based upon
any breach of Section 3.5 hereof, nor shall it terminate any obligations of
any party to the other with respect to confidentiality under Section 3.1(b)
hereof.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnity.
(a) Sellers, jointly and severally, agree to indemnify and hold Purchaser
and Purchaser's officers, directors, stockholders, Affiliates, employees,
agents and employee plan fiduciaries ("Purchaser Indemnitees") harmless
from any and all damages, losses (which shall include any diminution in
value), shortages, liabilities (joint or several), payments, obligations,
penalties, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses (including without
limitation, the reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors and of expert witnesses and
costs of investigation and preparation) of any kind or nature whatsoever
(collectively "Damages"), to the extent directly or indirectly resulting
from, relating to or arising out of:
(1) any breach of or inaccuracy in any representation or warranty of
Sellers made in such person's capacity as a Seller and not otherwise,
contained in Section 2.1 or in any other Operative Document; and
(2) any breach or non-performance, partial or total, by any Seller of any
covenant or agreement of Sellers made in such person's capacity as a Seller
and not otherwise contained in this Agreement or in any other Operative
Document.
(b) Purchaser shall indemnify and hold Sellers and Seller Corp.'s officers,
directors and stockholders ("Seller Indemnitees") harmless from, any and
all Damages resulting from or arising out of:
(1) any breach of or inaccuracy in any representation or warranty of
Purchaser contained in Section 2.2 or in any Operative Document; and
(2) any breach or non-performance, partial or total, of any covenant or
agreement of Purchaser contained in this Agreement, any Operative Document
or any instrument or agreement delivered pursuant to this Agreement.
Section 6.2 Notice, Participation and Duration.
(a) If a claim by a third party is made against a party indemnified
pursuant to this Article VI ("Indemnitee"), and if such Indemnitee intends
to seek indemnity with respect thereto under this Article VI, the
Indemnitee shall promptly, and in any event within 60 days of the assertion
of any claim or the discovery of any fact upon which Indemnitee intends to
base a claim for indemnification under this Agreement ("Claim"), notify the
party or parties from whom indemnification is sought ("Indemnitor") of such
Claim. In the event of any Claim, Indemnitor, at its option, may assume
(with legal counsel reasonably acceptable to the Indemnitee) the defense of
any claim, demand, lawsuit or other proceeding in connection with the
Indemnitee's Claim, and may assert any defense of Indemnitee or Indemnitor;
provided that Indemnitee shall have the right at its own expense to
participate jointly with Indemnitor in the defense of any claim, demand,
lawsuit or other proceeding in connection with the Indemnitee's Claim. In
the event that Indemnitor elects to undertake the defense of any Claim
hereunder, Indemnitee shall cooperate with Indemnitor to the fullest extent
possible in regard to all matters relating to the Claim (including, without
limitation, corrective actions required by applicable law, assertion of
defenses and the determination, mitigation, negotiation and settlement of
all amounts, costs, actions, penalties, damages and the like related
thereto) so as to permit Indemnitor's management of same with regard to the
amount of Damages payable by the Indemnitor hereunder. Neither Purchaser
nor any Seller shall be entitled to settle any Claim without the prior
written consent of the other, which consent shall not unreasonably be
withheld.
(b) No claim for indemnification under this Section 6.2 may be made after
the third anniversary of the Closing, except that claims for
indemnification in respect of breaches of the representations and
warranties contained in Sections 2.1(c), (h) and (r) hereof may be made so
long as any claim may be made in respect of such matters under any
applicable statute of limitations; provided, however, that the foregoing
shall not affect any Claim made in accordance with this Article VI and in
good faith prior to the date of such expiration.
Section 6.3 Indemnification if Negligence of Indemnitee. The
indemnification provided in this Article VI shall be applicable whether or
not negligence of the Indemnitee is alleged or proven. The parties
acknowledge that any arbitrators appointed pursuant to Section 7.15 of this
Agreement may consider such negligence in arbitrating any disputes among
the parties.
Section 6.4 Reimbursement. In the event that the Indemnitor shall
undertake, conduct or control the defense or settlement of any Claim and it
is later determined that such Claim was not a Claim for which the
Indemnitor is required to indemnify the Indemnitee under this Article VI,
the Indemnitee shall reimburse the Indemnitor for all its costs and
expenses with respect to such settlement or defense, including reasonable
attorneys' fees and disbursements.
Section 6.5 Offset. Purchaser shall have the right to offset any amounts
for which it is entitled to indemnification under this Article VI against
any amounts payable by Purchaser to Sellers in their capacity as such,
pursuant to any Operative Document. Sellers shall have the right to offset
any amounts for which they are entitled to indemnification under this
Article VI against any amounts payable by Sellers pursuant to any Operative
Documents.
Section 6.6 No Third Party Beneficiaries. The foregoing indemnification is
given solely for the purpose of protecting the parties to this Agreement,
the Purchaser Indemnitees and the Seller Indemnitees and shall not be
deemed extended to, or interpreted in a manner to confer any benefit, right
or cause of action upon, any other Person.
Section 6.7 Limitations on Indemnification. The indemnification provided
for in Section 6.1 shall be subject to the following:
(1) Sellers shall not be obligated to pay any amounts for indemnification
under Section 6.1 until the aggregate amount of Damages actually incurred
by the Purchaser Indemnitees, measured in the chronological order of their
incurrence, exceeds $25,000, whereupon Sellers shall be obligated to pay
all Damages actually incurred by the Purchaser Indemnitees including such
$25,000;
(2) Sellers' obligation for indemnification under Section 6.1 shall be
limited to payment of the Purchase Price for the Shares.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Further Actions. From time to time, as and when requested by
Purchaser, Sellers shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be
taken, such further or other actions as may be reasonably necessary to
transfer, assign and deliver to Purchaser or its permitted assigns the
Business (or to evidence the foregoing) and to consummate and to effect the
other transactions expressly required to be performed by Sellers hereunder.
Section 7.2 No Broker. Each of Sellers and Purchaser represent and warrant
to the other that they have no obligation or liability to any broker or
finder by reason of the transactions which are the subject of this
Agreement except that Sellers have retained the services of Xxxxx-Xxxxx,
Ltd. for which the Sellers and not Seller Corp. shall be responsible. Set
forth on Appendix 7.2 to the Sellers' Disclosure Letter is an accurate and
complete list of all fees and expenses that have been paid by Seller Corp.
to Xxxxx-Xxxxx, Ltd. from May, 1996 to April, 1997 for its services as
advisor to Seller Corp. on matters unrelated to the transactions
contemplated by this Agreement. Sellers represent and warrant to Purchaser
that no other fees or expenses have been paid by Seller Corp. to Xxxxx-
Xxxxx, Ltd. Each of (a) Sellers and (b) Purchaser agree to indemnify the
other against, and to hold the others harmless from, at all times after the
date hereof, any and all liabilities and expenses (including without
limitation legal fees) resulting from, related to or arising out of any
claim by any Person for brokerage commissions or finder's fees, or rights
to similar compensation, on account of services purportedly rendered on
behalf of Sellers or Purchaser, as the case may be, in connection with this
Agreement or the transactions contemplated hereby.
Section 7.3 Expenses. Except as otherwise specifically provided herein,
Sellers and Purchaser shall each bear their own legal fees, accounting fees
and other costs and expenses with respect to the negotiation, execution and
the delivery of this Agreement and the consummation of the transactions
hereunder.
Section 7.4Entire Agreement. This Agreement, the Exhibits hereto
(including without limitation the Nonsolicitation and Confidentiality
Agreement referred to in Section 3.1(b)), the Sellers' Disclosure Letter
and any Supplement thereto contain, and are intended by the parties as a
final expression of, the entire agreement between Sellers and Purchaser
with respect to the transactions contemplated by this Agreement and, except
as provided in Section 3.1(b), supersedes all prior oral or written
agreements, arrangements or understandings with respect thereto.
Section 7.5 Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement.
Section 7.6 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and shall be delivered
either personally or by telegram, telex, telecopy or similar facsimile
means, by registered or certified mail (postage prepaid and return receipt
requested), or by express courier or delivery service, addressed as
follows:
If to Sellers:
Xxxxx X. Xxxxxxx
X.X. Xxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Xxxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx
668 Alanon
Xxxxxxxxx, Xxx Xxxxxx 00000
With a copy to:
Xxxxxxxx, Xxxxxx & Finger
One Xxxxxx Square
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
If to Purchaser:
Matrix Service Company
00000 Xxxx Xxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
With copies to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
or at such other address and number as either party shall have previously
designated by written notice given to the other party in the manner
hereinabove set forth. Notices shall be deemed given when received, if
sent by telegram, telex, telecopy or similar facsimile means (confirmation
of such receipt by confirmed facsimile transmission being deemed receipt of
communications sent by telex, telecopy or other facsimile means); and when
delivered and receipted for (or upon the date of attempted delivery where
delivery is refused), if hand-delivered, sent by express courier or
delivery service, or sent by certified or registered mail.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than
the choice of law principles thereof).
Section 7.8 Assignability. This Agreement shall not be assignable
otherwise than by operation of law by any party without the prior written
consent of the other parties, and any purported assignment by any party
without the prior written consent of the other parties shall be void.
Section 7.9 Waivers and Amendments. Any waiver of any term or condition of
this Agreement, or any amendment or supplementation of this Agreement,
shall be effective only if in writing. A waiver of any breach or failure
to enforce any of the terms or conditions of this Agreement shall not in
any way affect, limit or waive a party's rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of this
Agreement.
Section 7.10 Third Party Rights. Notwithstanding any other provision of
this Agreement, this Agreement shall not create benefits on behalf of any
Person who is not a party to this Agreement (including without limitation
any broker or finder, notwithstanding the provisions of Section 7.2
hereof), and this Agreement shall be effective only as between the parties
hereto, their successors and permitted assigns; provided, however, that
Purchaser Indemnitees and Seller Indemnitees are intended third party
beneficiaries hereof to the extent provided in Sections 6.1 and 6.6.
Section 7.11 Illegalities. In the event that any provision contained in
this Agreement shall be determined to be invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and the remaining provisions of
this Agreement shall not, at the election of the party for whose benefit
the provision exists, be in any way impaired.
Section 7.12 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one Agreement.
Section 7.13 Survival; Exclusivity of Remedies. The representations and
warranties, covenants and agreements of the parties hereto shall survive
the Closing, and the indemnification provided by Section 6.1 shall not be
the exclusive remedy available to the parties hereto.
Section 7.14 Representations and Warranties of Sellers. Except with
respect to Sections 2.1(a), (b)(1) and (2), (c), (f), (h), (m), and (o)(1)
and (2), (a) the representations and warranties of the Sellers are given
based solely on the actual knowledge of such Sellers, (b) the Sellers,
other than Xxxxx X. Xxxxxxx, have made no investigation in preparation for
making such representations and warranties, and (c) Xxxxx X. Xxxxxxx has
consulted with Xxxxx Xxxxxx, Tor Xxxxxx and Xxxxxxx Xxx in connection with
making such representations and warranties and his actual knowledge
consists of his own actual knowledge and the content of such discussions.
Section 7.15 Alternative Dispute Resolution. The parties hereto agree that
any disputes under this Agreement which are not resolved by discussions,
shall be submitted to binding arbitration upon the service of a Notice of
Demand for Arbitration to the other party. Any such arbitration shall be
conducted under the Commercial Arbitration Rules of the American
Arbitration Association by a committee of three arbitrators (one appointed
by the Sellers, one appointed by the Purchaser and one appointed by the
other two so appointed). Each party shall notify the other party of their
appointed arbitrator within 10 days of the receipt of the Notice of Demand
for Arbitration. The third arbitrator shall be appointed within 20 days of
the receipt of the Notice of Demand for Arbitration. Any disputes as to
the arbitrability of any matter or the manner of such arbitration shall be
determined in such arbitration. Such arbitration shall be held at a
neutral site to be agreed by the parties. The hearing shall be completed
within 30 days of the appointment of the third arbitrator. The decision of
the arbitrators shall be made within 20 days after completion of the
hearing on the arbitration. The parties shall each pay one half of the
arbitrators' expenses and fees. Each party shall otherwise be responsible
for all other expenses incurred by it in connection with the arbitration,
including counsel fees.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
PURCHASER:
MATRIX SERVICE COMPANY
By: /s/Xxxx X. Xxxx
---------------
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
SELLERS:
/s/Xxxxx X. Xxxxxxx
-------------------
XXXXX X. XXXXXXX
/s/Xxxxx X. Xxxxxxx
-------------------
XXXXX X. XXXXXXX, as Trustee under that
certain Voting Trust Agreement dated
February 1, 1991
/s/Xxxxxxx X. Xxxxxxx
---------------------
XXXXXXX X. XXXXXXX
/s/Xxxxxxxx X. Xxxxxxx
----------------------
XXXXXXXX X. XXXXXXX
/s/Xxxxxxx X. Xxxxxxx
---------------------
XXXXXXX X. XXXXXXX
GENERAL SERVICE CORPORATION
By: /s/Xxxxx X. Xxxxxxx
-------------------
Name: XXXXX X. XXXXXXX
Title: President
Annex A
SELLERS' DISCLOSURE LETTER
June 17, 1997
Matrix Service Company
00000 Xxxx Xxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Gentlemen:
We refer to the Stock Purchase Agreement (the "Purchase Agreement") to be
entered into today among Matrix Service Company, General Service
Corporation, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, as Trustee under that
certain Voting Trust Agreement dated February 1, 0000, Xxxxxxx X. Xxxxxxx,
Xxxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx pursuant to which Sellers have
agreed to sell to Purchaser, and Purchaser has agreed to purchase from
Sellers, all of the outstanding capital stock of Seller Corp. described
therein on the terms and conditions set forth therein.
Terms defined in the Purchase Agreement are used with the same meaning in
this Sellers' Disclosure Letter. References herein to Appendices are to
the Appendices to this Sellers' Disclosure Letter.
This letter constitutes the Sellers' Disclosure Letter referred to in
Section 1.1 of the Purchase Agreement. The representations and warranties
of Sellers in Article II of the Purchase Agreement are made and given
subject to the disclosures in this Sellers' Disclosure Letter. The
disclosures in this Sellers' Disclosure Letter are to be taken as relating
to the representations and warranties in the Section of the Purchase
Agreement to which they expressly relate and to no other representation or
warranty in the Purchase Agreement.
By reference to Article I and Article II of the Purchase Agreement, the
following matters are disclosed (with the Appendix and subsection
designations used herein corresponding to the specific Section or
subsection of the Purchase Agreement to which such disclosure relates):
Very truly yours,
SELLERS:
/s/Xxxxx X. Xxxxxxx
-------------------
XXXXX X. XXXXXXX
/s/Xxxxx X. Xxxxxxx
-------------------
XXXXX X. XXXXXXX, as Trustee under that
certain Voting Trust Agreement dated
February 1, 1991
/s/ Xxxxxxx X. Xxxxxxx
----------------------
XXXXXXX X. XXXXXXX
----------------------
/s/Xxxxxxxx X. Xxxxxxx
XXXXXXXX X. XXXXXXX
---------------------
/s/Xxxxxxx X. Xxxxxxx
XXXXXXX X. XXXXXXX
We acknowledge receipt of the Sellers' Disclosure Letter of which this is a
duplicate (including the Appendices referred to therein).
Dated: June 17, 1997
MATRIX SERVICE COMPANY
By: /s/C. Xxxxxxx Xxx
-----------------
Name: C. Xxxxxxx Xxx
Title: Vice President-Finance
