CONFORMED COPY
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STOCK PURCHASE AGREEMENT
by and between
KINARK CORPORATION
and
NAWC HOLDING COMPANY, INC.
As of June 23, 2000
TABLE OF CONTENTS
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ARTICLE 1 PURCHASE AND SALE OF STOCK 1
Section 1.1 Purchase and Sale 1
Section 1.2 Consideration 1
Section 1.3 Accounts Receivable Adjustment and
Accounts Payable Adjustment. 2
Section 1.4 Closing 4
Section 1.5 Deliveries by Seller 4
Section 1.6 Deliveries by Buyer 5
ARTICLE 2 RELATED MATTERS 5
Section 2.1 Use of Seller's Names and Logos 5
Section 2.2 No Ongoing or Transition Services 6
Section 2.3 Post-Closing Insurance Coverages. 6
Section 2.4 Intercompany Accounts 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER 7
Section 3.1 Organization 7
Section 3.2 Authorization 8
Section 3.3 Capital Stock 8
Section 3.4 Ownership of the Common Stock 9
Section 3.5 Consents and Approvals; No Violations 9
Section 3.6 Financial Statements 10
Section 3.7 Absence of Material Adverse Effect 10
Section 3.8 Title, Ownership and Related Matters 10
Section 3.9 Leases 11
Section 3.10 Intellectual Property 11
Section 3.11 Environmental Matters 12
Section 3.12 Litigation 13
Section 3.13 Compliance with Applicable Law 13
Section 3.14 Certain Contracts and Arrangements 13
Section 3.15 Employee Benefit Plans; ERISA 14
Section 3.16 Labor Matters 16
Section 3.17 Taxes 16
Section 3.18 Certain Fees 18
Section 3.19 Subsidiaries 18
Section 3.20 Insurance 18
Section 3.21 Undisclosed Liabilities 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER 19
Section 4.1 Organization and Authority of Buyer 19
Section 4.2 Consents and Approvals; No Violations 19
Section 4.3 Availability of Funds 20
Section 4.4 Litigation 20
Section 4.5 Investigation by Buyer 20
Section 4.6 Certain Fees 20
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Section 4.7 Investment Representations 21
ARTICLE 5 COVENANTS 21
Section 5.1 Conduct of the NAWC Business 21
Section 5.2 Access to Information 22
Section 5.3 Consents 23
Section 5.4 Reasonable Best Efforts 23
Section 5.5 Public Announcements 23
Section 5.6 Covenant to Satisfy Conditions 24
Section 5.7 Employees; Employee Benefits 24
Section 5.8 Certain Tax Matters 25
Section 5.9 Prior Knowledge 32
Section 5.10 Supplemental Disclosure 32
Section 5.11 Inquiries and Negotiations 33
Section 5.12 Post-Closing Insurance Coverages. 33
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE PARTIES 34
Section 6.1 Conditions to Each Party's Obligation 34
Section 6.2 Conditions to Obligations of Seller 34
Section 6.3 Conditions to Obligations of Buyer 35
ARTICLE 7 TERMINATION 36
Section 7.1 Termination 36
Section 7.2 Procedure and Effect of Termination 37
ARTICLE 8 SURVIVAL OF REPRESENTATIONS 38
Section 8.1 Survival of Representations, Warranties
and Agreements 38
ARTICLE 9 MISCELLANEOUS 38
Section 9.1 Fees and Expenses 38
Section 9.2 Further Assurances 39
Section 9.3 Notices 39
Section 9.4 Severability 40
Section 9.5 Binding Effect; Assignment 41
Section 9.6 No Third Party Beneficiaries 41
Section 9.7 Interpretation 41
Section 9.8 Jurisdiction and Consent to Service 42
Section 9.9 Entire Agreement 42
Section 9.10 Governing Law 42
Section 9.11 Specific Performance 42
Section 9.12 Counterparts 43
Section 9.13 Amendment, Modification and Waiver 43
Section 9.14 Knowledge 43
Section 9.15 Schedules and Exhibits 43
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT, dated June 23, 2000 (this
"Agreement"), by and between Kinark Corporation, a Delaware
corporation ("Seller"), and NAWC Holding Company, Inc., an
Illinois corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns all of the issued and outstanding
shares of common stock (the "Shares") of North American
Warehousing Company, an Illinois corporation, which conducts the
"NAWC Business" of Seller (the "Company"); and
WHEREAS, pursuant to the terms and conditions of this
Agreement, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Shares.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants, agreements
and conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
Section 1.1 Purchase and Sale. Subject to the terms
and conditions set forth in this Agreement, at the closing
provided for in Section 1.4 hereof (the "Closing"), Seller agrees
to sell, transfer and deliver to Buyer, and Buyer agrees to
purchase, acquire and accept from Seller, the Shares, free and
clear of all liens, claims, options, security interests or other
encumbrances.
Section 1.2 Consideration. Subject to the terms and
conditions of this Agreement and subject to adjustment of the
Purchase Price as provided for herein, in consideration of the
aforesaid sale, transfer and delivery of the Shares, Buyer will
deliver or cause to be delivered to Seller at the Closing
$166,000 (the "Purchase Price") by wire transfer of immediately
available federal funds to such bank account as shall be
designated in writing by Seller to Buyer prior to such execution
or at least three days prior to the Closing, as the case may be.
Such Purchase Price shall be subject to adjustment as set forth
in Section 1.3 hereof.
Section 1.3 Accounts Receivable Adjustment and
Accounts Payable Adjustment.
(a) Adjustment.
(i) If the gross accounts receivable of the
Company as reflected on the Accounts Receivable and Accounts
Payable Statement (as defined in Section 1.3(b)) (the "Closing
Accounts Receivable") is less than $172,000 (the "Target Accounts
Receivable"), the Purchase Price shall be reduced by the amount
that the Target Accounts Receivable exceeds the Closing Accounts
Receivable (the "Accounts Receivable Deficit"). The amount of
any Accounts Receivable Deficit shall be payable by Seller to
Buyer pursuant to Section 1.3(a)(iv).
(ii) If the Closing Accounts Receivable is
greater than $222,500, the Purchase Price shall be increased by
the amount that the Closing Accounts Receivable exceeds $222,500
(the "Accounts Receivable Surplus"). The amount of any Accounts
Receivable Surplus shall be payable by Buyer to Seller pursuant
to Section 1.3(a)(iv).
(iii) If the accounts payable of the
Company on the Closing Date (as prepared consistently with prior
periods) (such accounts payable totaled $50,524 on the Financial
Statements, as defined in Section 3.6) exceed $57,500, the
Purchase Price shall be reduced by the amount, if any, that the
accounts payable exceeds $57,500 (the "Accounts Payable
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Deficit"). The amount of any Accounts Payable Deficit shall be
payable by Seller to Buyer pursuant to Section 1.3(a)(iv).
(iv) Any amounts payable made pursuant to
this Section 1.3(a) shall first offset the Purchase Price at the
Closing, if applicable and if determined as of the Closing, and
second, to the extent such amounts are not used to offset the
Purchase Price, be payable within three business days of the date
of determination thereof by wire transfer of immediately
available federal funds and shall include simple interest
calculated at the "Federal Funds Rate" (as reported in the "Money
Rates" table of The Wall Street Journal on the Closing Date (as
defined in Section 1.4)) from the Closing Date to the date of
payment.
(b) Accounts Receivable and Accounts Payable
Statement.
(i) Within ten (10) days after the Closing
Date, Buyer shall deliver to Seller an accounts receivable and
accounts payable statement (the "Proposed Accounts Receivable and
Accounts Payable Statement") for the Company which shall specify
the gross accounts receivable and accounts payable for the
Company as of the Closing Date.
(ii) If Seller disagrees with the Proposed
Accounts Receivable and Accounts Payable Statement, it shall,
within ten (10) days after receipt of the Proposed Accounts
Receivable and Accounts Payable Statement, give written notice to
Buyer setting forth the basis of Seller's objection in reasonable
detail and, to the extent practicable, the adjustments to the
Proposed Accounts Receivable and Accounts Payable Statement which
Seller believes should be made. Failure to so notify Buyer shall
constitute acceptance and approval of the Proposed Accounts
Receivable and Accounts Payable Statement. If Buyer agrees that
any change proposed by Seller is appropriate, the change shall be
made to the Proposed Accounts Receivable and Accounts Payable
Statement. If the proposed change is in dispute by Buyer, then
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Seller and Buyer shall negotiate in good faith to resolve such
dispute as expeditiously as possible.
(iii) If, after a period of 15 days
following the date on which Seller gives Buyer notice of any
proposed change, any such proposed change still remains disputed,
then Deloitte & Touche, or such accounting firm as selected by
Buyer and accepted in writing by Seller, such acceptance not to
be unreasonably withheld (the "Accounting Firm"), shall be
engaged to resolve any remaining disputes. The Accounting Firm
shall determine, based solely on independent review of material
it deems appropriate, only those issues still in dispute. The
Accounting Firm's determination shall be made within 30 days
following the date on which the dispute is submitted and shall be
final, binding and conclusive. The fees and any expenses of the
Accounting Firm shall be shared equally by Seller and Buyer.
(iv) The final "Accounts Receivable and
Accounts Payable Statement" shall be the Proposed Accounts
Receivable and Accounts Payable Statement as agreed upon by the
parties pursuant to Section 1.3(b)(ii) or as determined by the
Accounting Firm pursuant to Section 1.3(b)(iii).
Section 1.4 Closing. The Closing of the
transactions contemplated by this Agreement shall take place no
later than June 30, 2000, at 11:00 a.m., local time, at the
offices of the Company, or on such other date and at such other
time or place as the parties may agree. The date of the Closing
is sometimes referred to herein as the "Closing Date."
Section 1.5 Deliveries by Seller. At the Closing,
Seller will deliver or cause to be delivered to Buyer (unless
delivered previously) the following:
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(a) The stock certificate or certificates (or
similar evidence of ownership) representing all of the Shares,
duly endorsed in blank or accompanied by stock or similar powers
duly executed in blank;
(b) The resignations of all members of the Board
of Directors of the Company; and
(c) All other documents (including a good
standing certificate for the Company from the Secretary of State
of the State of Illinois), instruments and writings (which shall
include an opinion letter from King & Spalding concerning the
organization, authority and capital stock of the Company and the
organization and authority of Seller) required or reasonably
requested by Buyer to be delivered by Seller at or prior to the
Closing pursuant to this Agreement or otherwise reasonably
required in connection herewith.
Section 1.6 Deliveries by Buyer. At the Closing,
Buyer will deliver or cause to be delivered to Seller (unless
previously delivered) the following:
(a) the Purchase Price in accordance with Section
1.2 hereof; and
(b) all other documents (including a good
standing certificate for Buyer from the Secretary of State of the
State of Illinois), instruments and writings (which shall include
an opinion letter from Xxxxxxxx & Xxxxxxx concerning the
organization and authority of Buyer) required or reasonably
requested by Seller to be delivered by the Buyer at or prior to
the Closing pursuant to this Agreement or otherwise reasonably
required in connection herewith.
ARTICLE 2
RELATED MATTERS
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Section 2.1 Use of Seller's Names and Logos. It is
expressly agreed that Buyer is not purchasing, acquiring or
otherwise obtaining any right, title or interest in the name
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"Kinark Corporation", or any tradenames, trademarks, identifying
logos or service marks related thereto or employing the word
"Kinark," or any part or variation of any of the foregoing or any
confusingly similar tradename, trademark or logo (collectively,
the "Seller Trademarks and Logos"). Buyer agrees that, neither
it nor any of its Affiliates (as hereinafter defined) shall make
any use of the Seller Trademarks and Logos from and after the
Closing Date.
Section 2.2 No Ongoing or Transition Services.
Except as otherwise agreed to in writing by Seller and Buyer, at
the Closing, all data processing, accounting, insurance (other as
described in Section 2.3 below), banking, personnel, legal,
communications and other products or services provided to the
Company by Seller or any Affiliate of such Seller, including any
agreements or understandings (written or oral) with respect
thereto, will terminate. Schedule 2.2 attached hereto sets forth
all services provided by Seller or any Affiliate of Seller to the
Company and required for the conduct by the Company of its
business.
Section 2.3 Post-Closing Insurance Coverages.
Except as otherwise specified on Schedule 3.20, Seller shall pay
the premiums for policies for the insurance coverages for the
Company described on Schedule 3.20 through December 31, 2000, all
such policies to be reasonably similar, in cost and coverage, to
the policies in effect for the Company prior to the Closing Date.
In addition, Seller shall, at Seller's sole cost and expense, pay
(and indemnify, defend and hold the Buyer and the Company
harmless from) all loss, cost and expense arising out of or
related to any workers compensation claims made against the
Company before the Closing; the Company shall be responsible for
(and Buyer shall indemnify, defend and hold Seller harmless from)
all loss, cost and expense arising out of or related to any
workers compensation claims first made against the Company after
the Closing.
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Section 2.4 Intercompany Accounts. On or prior to
the Closing Date, all intercompany accounts between the Company,
on the one hand, and the Seller or any of its Affiliates, on the
other hand, shall be canceled. No adjustment shall be made to
the Purchase Price as a result of any such cancellation. The
parties agree that all funds deposited in the Company's Lockbox
No. 77-52465 at First American National Bank on or prior to the
Closing Date shall be paid to the Seller.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants to Buyer as of
the date hereof and as of the Closing Date as follows:
Section 3.1 Organization. The Company is a
corporation, duly organized, validly existing and in good
standing under the laws of the State of Illinois, and has all
requisite power and authority to own, lease and operate its
properties and assets and to carry on its operations as now being
conducted. Schedule 3.1 sets forth all governmental permits and
licenses held by the Company with respect to the conduct of the
NAWC Business. The Company is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the
property or assets owned, leased or operated by the Company or
the nature of the business conducted by the Company makes such
qualification necessary, except where the failure to be so duly
qualified or licensed and in good standing would not individually
or in the aggregate have a Company Material Adverse Effect (as
hereinafter defined). Schedule 3.1 sets forth each state in
which the Company is currently qualified to do business. As used
herein, a "Company Material Adverse Effect" shall mean any event,
change or effect, individually or in the aggregate, with such
other events, changes or effects, that has occurred which has a
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material adverse effect upon the financial condition or business
of the Company. Attached hereto are complete and correct copies
of the articles of incorporation, including all amendments
thereto, and by-laws of the Company, as currently in effect.
Section 3.2 Authorization. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has the corporate power
and authority to execute and deliver this Agreement and perform
its obligations hereunder. The execution and delivery of this
Agreement and the performance by Seller of its covenants and
agreements hereunder have been duly and validly authorized by the
Board of Directors of Seller and no other corporate proceedings
on the part of Seller are necessary to authorize the execution,
delivery and performance of this Agreement or the consummation of
the transactions so contemplated. This Agreement has been duly
executed and delivered by Seller and constitutes a valid and
binding agreement of Seller, enforceable against Seller in
accordance with its terms, except that (a) such enforcement may
be subject to any bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought.
Section 3.3 Capital Stock. Schedule 3.3 sets forth
the authorized, issued and outstanding capital stock of all
classes of the Company. The Shares constitute all of the issued
and outstanding shares of common stock of the Company. The
Shares have been validly issued and are fully paid and non-
assessable. There are not any outstanding securities convertible
into, exchangeable for, or carrying the right to acquire, equity
securities of the Company, nor are there any subscriptions,
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warrants, options, rights or other arrangements or commitments
(other than this Agreement) which could obligate the Company to
issue any shares of its capital stock.
Section 3.4 Ownership of the Common Stock. Seller
is the sole owner of the Shares. Except as set forth on
Schedule 3.4, Seller has good title to the Shares, free and clear
of all liens, claims, options, security interests or other
encumbrances. At the Closing, the exceptions set forth in
Schedule 3.4 shall be discharged and shall no longer encumber the
Shares. Seller is not a party to any option, warrant, right,
call, put, or other agreement or commitment of any kind relating
to the Shares or to any voting trust, proxy or other similar
agreement relating to the Shares.
Section 3.5 Consents and Approvals; No Violations.
Except as set forth in Schedule 3.5, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with or result
in any breach of any provision of the articles of incorporation
or by-laws of the Company or of Seller; (b) require any filing
with, or the obtaining of any permit, authorization, consent or
approval of, any governmental or regulatory authority; (c)
violate, conflict with, require consent under or result in a
default (or any event which, with notice or lapse of time or
both, would constitute a default) under, or give rise to any
right of termination, cancellation or acceleration under, any of
the terms, conditions or provisions of any note, mortgage, other
evidence of indebtedness, guarantee, license, agreement, lease or
other contract, instrument or obligation to which the Company or
Seller is a party or by which the Company or Seller or any of
their respective assets may be bound; or (d) violate any order,
injunction, decree, statute, rule or regulation applicable to the
Company or Seller, excluding from the foregoing clauses (b), (c)
and (d) such requirements, violations, conflicts, defaults or
rights (i) which would not have a Company Material Adverse Effect
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and would not adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement or the
ability of the Company to conduct the NAWC Business as currently
conducted, or (ii) which become applicable as a result of the
business or activities in which Buyer is or proposes to be
engaged or as a result of any acts or omissions by, or the status
of or any facts pertaining to, Buyer.
Section 3.6 Financial Statements. Attached hereto
is the unaudited balance sheet and income statement of the
Company as of May 31, 2000. The foregoing unaudited balance
sheet and income statement of the Company are hereinafter
referred to as the "Financial Statements". Except as disclosed
in the Financial Statements, the Financial Statements have been
prepared from, and are in accordance with, the books and records
of the Company and have been prepared consistently with prior
periods and present fairly, in all material respects, the
financial position and results of operation of the Company as of
the date indicated subject to normal year-end audit adjustments.
Section 3.7 Absence of Material Adverse Effect.
Except as otherwise contemplated by this Agreement, since May 31,
2000, there has not been any Company Material Adverse Effect.
Section 3.8 Title, Ownership and Related Matters.
(a) As of the date hereof, the Company has
interests in real property as set forth on Schedule 3.8(a).
(b) Except as set forth on Schedule 3.8(b), the
Company has, or as of the Closing will have, good title to (free
and clear of all liens, claims, options, security interests, or
other encumbrances), or rights by license, lease or other
agreement to use all properties and assets (or rights thereto)
necessary to permit the Company to conduct the NAWC Business as
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currently conducted, except where the failure to have such title
or rights would not have a Company Material Adverse Effect.
Section 3.9 Leases. Attached hereto are true and
complete copies of all real property leases and subleases for
space occupied by the Company and material personal property
leases (collectively, the "Leases") and all written amendments
and agreements relating thereto. All of the Leases are valid,
binding and enforceable in accordance with their terms, and the
Company is not, nor, to the Knowledge of Seller (as hereinafter
defined), is the other party to any Lease, in default under such
Lease and the Company has received no notices of default which,
with the passage of time, would result in such a default where
such default would have a Company Material Adverse Effect.
Schedule 3.9 lists all leases not set forth on Schedule 3.8(b).
Section 3.10 Intellectual Property.
(a) Except as would not have a Company Material
Adverse Effect, (i) the conduct of the NAWC Business does not
infringe upon any intellectual property right of any third party
and (ii) there are no pending, or to the Knowledge of Seller
threatened, proceedings or litigation or other adverse claims by
any Person (as hereinafter defined) against the use by the
Company of any trademarks, trade names, service marks, service
names, logos, assumed names, copyrights, patents or registrations
and applications therefor which are owned by the Company and are
necessary for the operation of the Company's business as
currently conducted (collectively, the "Intellectual Property").
(b) The Company owns or has valid licenses or
other rights to use the Intellectual Property necessary to permit
the Company to conduct its operations as currently conducted,
except where the failure to have such ownership, licenses or
rights would not have a Company Material Adverse Effect. All of
the Intellectual Property owned by the Company is listed on
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Schedule 3.10(b). To the Knowledge of Seller, no person has
interfered with, infringed upon, misappropriated or violated the
Company's Intellectual Property rights.
Section 3.11 Environmental Matters. To the Knowledge
of Seller, other than as would not have a Company Material
Adverse Effect, there are no past or present events or
circumstances which may interfere in any material respect with
the conduct of the NAWC Business, result in a material breach of
any of the Leases, prevent the Company's continued compliance
with any law, or which may give rise to any liability, or
otherwise form the basis of any claim, proceeding or
investigation, based on or related to the use, storage or
disposal, or the release into the environment (including without
limitation soil, groundwater, air, indoor air and indoor
surfaces), of any pollutant or hazardous material with respect to
the Company. As used in this Section 3.11, the term "hazardous
material" means any waste, pollutant, hazardous substances,
toxic, ignitable, reactive or corrosive substance, hazardous
waste, special waste, industrial substance, by-product, process
intermediate product or waste, petroleum or petroleum-derived
substance or waste, chemical liquids or solids, liquid or gaseous
products, or any constituent of any such substance or waste, the
use, handling or disposal of which by the Company is in any way
governed by or subject to any applicable law, rule or regulation
of any governmental or regulatory authority. The Company has not
received any charge, complaint, action, suit, arbitration,
proceeding or claim asserting violation of or failure to comply
with any federal statute or local law (including rules or
regulations thereto) concerning the environment or the use,
generation, storage, manufacture, disposition, discharge, leak,
emission, escape or release of any hazardous material and the
Company has received no notices which, with the passage of time,
would result in such a violation of or failure to comply with
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such statute or law.
Section 3.12 Litigation. Except as set forth in
Schedule 3.12, there is no claim, action, suit, arbitration,
proceeding or governmental investigation pending or, to the
Knowledge of Seller, threatened against the Company, by or before
any court, governmental or regulatory authority or by any third
party.
Section 3.13 Compliance with Applicable Law. To the
Knowledge of Seller, the Company is in compliance, in all
material respects, with all and have not received any notices of
material violations of any applicable laws, ordinances, rules and
regulations of any federal, state, local or foreign governmental
authority applicable to the Company or its operations, except as
set forth on Schedule 3.13 or in this Agreement.
Section 3.14 Certain Contracts and Arrangements.
Except as set forth in Schedule 3.14, as of the date hereof, the
Company is not a party to any (a) written employment agreement;
(b) indenture, mortgage, note, installment obligation, agreement
or other instrument relating to the borrowing of money by the
Company (other than intercompany accounts which shall be governed
by Section 2.3 hereof), or the guaranty by the Company of any
obligation for the borrowing of money; or (c) other agreement,
including without limitation, purchase orders, or any enforceable
oral agreement, which individually involves the receipt or
payment after the Closing of more than $10,000 or which is not
terminable upon 90 days prior written notice (together with those
contracts, agreements and understandings described in clauses (a)
and (b), the "Contracts"). Attached hereto are copies of all
such Contracts. All such Contracts are valid, binding and
enforceable in accordance with their terms and, to the Knowledge
of Seller, the Company is not nor is any other party thereto in
default under any of the aforesaid Contracts, other than such
defaults, if any, which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
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Section 3.15 Employee Benefit Plans; ERISA.
(a) Except as listed on Schedule 3.15, there are
no "employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained for the benefit of employees of the Company
or other employee benefit, bonus or fringe benefit plans
maintained for the benefit of the employees of the Company to
which, or with respect to which, the Company has a liability for
its payment of benefits or makes contributions annually (the
"Plans"). Schedule 3.15 sets forth all Plans offered to
employees of the Company or to which the Company contributes.
Seller has provided to Buyer copies of each of the Plans,
including all amendments adopted to date, copies of all related
trust agreements, insurance and annuity contracts, administration
contracts, investment management, subscription or participation
agreements, and record keeping agreements, each as in effect on
the date hereof. There are no Plans which are not in written
form. True and correct copies of the most recent annual report,
actuarial report, summary plan description, and determination
letter from the Internal Revenue Service or other governmental
authority, with respect to each Plan (to the extent applicable),
have been provided to Buyer and there has been no material
adverse change in the financial condition of any Plan from the
date stated in the annual reports and actuarial reports provided
to the Buyer.
(b) Each of the Plans (and each related trust, if
applicable) complies in form and in operation in all material
respects with the applicable requirements of ERISA and the Code
and to the knowledge of Seller no event has occurred which will
or reasonably could cause any Plan to fail to comply with such
requirements.
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(c) All required reports and descriptions
(including Form 5500, Annual Reports, summary Annual Reports, and
Summary Plan Descriptions) have been filed or distributed in a
timely manner with respect to each Plan (to the extent
applicable).
(d) All contributions (including all employer
contributions and employee salary reduction contributions) which
are due have been paid to each Plan and all contributions for any
period ending on or before the Closing Date which are not yet due
have been paid to each Plan or accrued in accordance with the
past custom and practice and will be paid in the ordinary course
after the Closing Date.
(e) Each Plan intended to meet the requirements
of a "qualified plan" under Code Section 401(a) has received a
favorable determination letter from the Internal Revenue Service
with respect to all amendments required to be made to such Plan
for which the remedial amendment period provided under Section
401(b) has expired.
(f) No Plan has been completely or partially
terminated or has been the subject of a Reportable Event as to
which notices would be required to be filed with the Pension
Benefit Guaranty Corporation (the "PBGC"). No proceeding by the
PBGC to terminate any Plan has been instituted or threatened.
(g) To the knowledge of Seller, there have been
no Prohibited Transactions with respect to any Plan. No charge,
complaint, action, suit, proceeding, hearing, investigation,
claim, demand, tax or other assessment, fine or penalty (each an
"Action") with respect to the qualification or administration of
any Plan (other than routine claims for benefits) is pending. To
the Seller's knowledge, other than routine claims for benefits,
(i) no Action with respect to any Plan is threatened, and (ii) no
facts exist which reasonably could give rise to an Action (other
than routine claims for benefits) with respect to any Plan.
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(h) As to all Plans:
(i) none of the assets of any Plan is
invested in employer securities or employer real property as
defined in Section 407(d) of ERISA;
(ii) the Company has no liability or
contingent liability under any Plan for providing post-retirement
or post-termination medical or life insurance benefits (whether
insured or uninsured), other than statutory liability for
providing group health plan continuation coverage under Part 6 of
Title I of ERISA and Section 4980B (or any predecessor section
thereto) of the Code or other coverage mandated by Law; and
(iii) there has been no act or omission
occurring prior to the Closing date that would impair the right
or ability of the Company to unilaterally amend or terminate any
Plan which it has the right or ability to unilaterally amend or
terminate.
Section 3.16 Labor Matters. There are no
controversies pending or, to the Knowledge of the Seller,
threatened, between the Company and any of its employees, which
controversies have had or are reasonably likely to have a Company
Material Adverse Effect. The Company is not a party to any
collective bargaining agreement or other labor union contract
applicable to individuals employed by the Company and there are
no grievances outstanding against the Company under any such
agreement or contract which are reasonably likely to have a
Company Material Adverse Effect. There are no unfair labor
practice complaints pending against the Company before the
National Labor Relations Board. To the Knowledge of Seller,
there are no strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of the
Company which are reasonably likely to have a Company Material
Adverse Effect.
Section 3.17 Taxes.
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(a) Seller or the Company (i) has timely filed or
caused to be filed on a timely basis with the appropriate taxing
authorities all material Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Company, and
(ii) has paid or made adequate provision for the payment of all
Taxes (as hereinafter defined) shown to be due on such Tax
Returns. Such Tax Returns are true, correct and complete in all
material respects.
(b) (i) There are no liens for Taxes with respect
to the assets of the Company except for statutory liens for
current taxes not yet delinquent and no material claims with
respect to Taxes are being asserted by any taxing authority in
writing that would have a Company Material Adverse Effect; (ii)
none of the Tax Returns applicable to the Company is currently
being audited or examined by any taxing authority; (iii) there is
no material unpaid tax deficiency, determination or assessment
currently outstanding against the Company; (iv) there are no
outstanding agreements or waivers extending the statute of
limitations relating to the assessment of Taxes applicable to the
Company; and (v) neither the Company nor Seller on behalf of the
Company has filed a consent pursuant to Section 341(f) of the
Code.
(c) As used in this Agreement:
(i) "Taxes" shall mean all taxes, levies,
charges or fees including income, corporation, advance
corporation, gross receipts, transfer, excise, property, sales,
use, value-added, license, payroll, pay-as-you-earn, withholding,
social security and franchise or other governmental taxes or
charges, imposed by the United States or any state, county, local
or foreign government, and such term shall include any interest,
penalties or additions to tax attributable to such taxes.
(ii) "Tax Return" shall mean any report,
return or statement required to be supplied to a taxing authority
in connection with Taxes.
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Section 3.18 Certain Fees. Neither Seller nor the
Company or any of their respective Affiliates has employed any
financial advisor, broker or finder or incurred any liability for
any financial advisory, broker's or finder's fees in connection
with this Agreement or the transactions contemplated hereby.
Section 3.19 Subsidiaries. The Company does not own
any subsidiary corporation in whole or in part or any ownership
or equity interest in any other Person.
Section 3.20 Insurance. Schedule 3.20 sets forth a
description of all insurance policies and fidelity bonds relating
to the NAWC Business including (i) type of coverage, (ii)
identity of insurer and policy number, (iii) coverage term, (iv)
and other material insuring provisions. Except as set forth in
Schedule 3.20, there is no claim by the Company pending under any
of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such
policies or bonds or in respect of which such underwriters have
reserved their rights. All premiums payable under all such
policies and bonds have been paid timely and the Company has
otherwise complied fully with the terms and conditions of all
such policies and bonds. Such policies of insurance and bonds
remain in full force and effect. Seller and the Company do not
know of any threatened termination of, premium increase with
respect to, or material alteration of coverage under, any of such
policies or bonds.
Section 3.21 Undisclosed Liabilities. The Company
has no liability (and to the knowledge of Seller, there is no
basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand against the
Company, giving rise to any liability) which is not reflected in
the Financial Statements or in this Agreement, except for
liabilities arising in the ordinary course of business.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as
follows:
Section 4.1 Organization and Authority of Buyer.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Illinois. Buyer has
the corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution
and delivery of this Agreement and the performance by Buyer of
its covenants and agreements hereunder have been duly and validly
authorized by the Board of Directors of Buyer and no other
corporate proceedings on the part of Buyer are necessary to
authorize the execution, delivery and performance of this
Agreement or the consummation of the transactions so
contemplated. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding agreement
of Buyer, enforceable against Buyer in accordance with its terms,
except that (i) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to
or limiting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
Section 4.2 Consents and Approvals; No Violations.
Except as set forth on Schedule 4.2, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with or result
in any breach of any provision of the articles of incorporation
or by-laws of Buyer; (b) require any filing with, or the
obtaining of any permit, authorization, consent or approval of,
any governmental or regulatory authority; (c) violate, conflict
with or result in a default (or any event which, with notice or
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lapse of time or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other contract, instrument or obligation to
which Buyer is a party or by which Buyer or any of its assets may
be bound; or (d) violate any order, injunction, decree, statute,
rule or regulation applicable to Buyer, excluding from the
foregoing clauses (b), (c) and (d) such requirements, violations,
conflicts, defaults or rights (i) which would not adversely
affect the ability of Buyer to consummate the transactions
contemplated by this Agreement or (ii) which become applicable as
a result of any acts or omissions by, or the status of or any
facts pertaining to, the Company or Seller.
Section 4.3 Availability of Funds. Buyer will have
at the Closing Date sufficient immediately available funds to pay
the Purchase Price.
Section 4.4 Litigation. Except as set forth on
Schedule 4.4, there is no claim, action, suit, proceeding or
governmental investigation pending or, to the Knowledge of Buyer
(as hereinafter defined), threatened against Buyer, by or before
any court, governmental or regulatory authority or by any third
party which challenges the validity of this Agreement or which
would be reasonably likely to adversely affect or restrict
Buyer's ability to consummate the transactions contemplated
hereby.
Section 4.5 Investigation by Buyer. Buyer will
conduct its own independent review and analysis of the business,
operations, technology, assets, liabilities, results of
operations, financial condition and prospects of the Company.
Section 4.6 Certain Fees. Neither Buyer nor any of
its Affiliates has employed any financial advisor, broker or
finder or incurred any liability for any financial advisory,
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broker's or finders' fees in connection with this Agreement or
the transactions contemplated hereby.
Section 4.7 Investment Representations. Buyer is
acquiring the Shares solely for the purpose of investment and not
with a view to, or for offer or sale in connection with, any
distribution thereof.
ARTICLE 5
COVENANTS
---------
Section 5.1 Conduct of the NAWC Business. Seller
agrees that, during the period from the date of this Agreement to
the Closing, except as otherwise contemplated by this Agreement
or consented to by Buyer in writing:
(a) Seller shall cause the Company to use its
reasonable best efforts to conduct its business operations in the
ordinary course consistent with past practice;
(b) Seller shall cause the Company to use its
reasonable best efforts to (i) maintain and preserve its business
operations, (ii) retain the services of its employees, except for
attrition of such employees in the ordinary course of business,
and (iii) maintain, preserve and retain relationships with its
suppliers and customers; and
(c) Seller shall cause the Company not to sell or
dispose of any material business assets, except in the ordinary
course of business.
Buyer recognizes that Buyer Executives (as defined in
Section 9.14) are currently employees of the Company and shall
cause such Buyer Executives to use their reasonable best efforts
in such capacities to comply with the agreements set forth in
this Section.
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Section 5.2 Access to Information.
(a) Between the date of this Agreement and the
Closing, Seller shall (i) give Buyer and its authorized
representatives reasonable access to all books, records, offices
and other facilities and properties of the Company and to the
Company Executives (as hereinafter defined); (ii) permit Buyer to
make such inspections thereof as Buyer may reasonably request;
and (iii) cause the officers of the Company to furnish Buyer with
such financial and operating data and other information with
respect to the business and properties of the Company as Buyer
may from time to time reasonably request; provided, however, that
any such investigation shall be conducted during normal business
hours under the supervision of Seller's personnel and in such a
manner as to maintain the confidentiality of this Agreement and
the transactions contemplated hereby and not interfere
unreasonably with the business operations of Seller or the
Company.
(b) Buyer (i) shall treat and hold as
confidential any Confidential Information (as hereinafter
defined), (ii) shall not use any of the Confidential Information
except in connection with this Agreement, and (iii) if this
Agreement is terminated for any reason whatsoever, shall return
to Seller all tangible embodiments (and all copies) which are in
its possession.
(c) "Confidential Information" means any
confidential or proprietary information of Seller or its
subsidiaries (including the Company) that is furnished in writing
to Buyer in connection with this Agreement; provided, however,
that it shall not include any information which (i) at the time
of disclosure, is available publicly, or (ii) after disclosure,
becomes available publicly through no fault of Buyer.
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Section 5.3 Consents. (a) Each of Seller and Buyer
shall cooperate, and use its reasonable best efforts, to make all
filings and obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental
authorities and other third parties necessary to consummate the
transactions contemplated by this Agreement. In addition to the
foregoing, Buyer agrees to provide such assurances as to
financial capability, resources and creditworthiness as may be
reasonably requested by any third party whose consent or approval
is sought in connection with the transactions contemplated
hereby.
(b) With respect to any agreements for which any
required consent or approval is not obtained prior to the
Closing, each of Seller and Buyer shall each use its reasonable
best efforts to obtain any such consent or approval after the
Closing Date until such consent or approval has been obtained.
Section 5.4 Reasonable Best Efforts. Each of Seller
and Buyer shall cooperate, and use its reasonable best efforts to
take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated
by this Agreement. After the Closing, Buyer shall cooperate, and
use its reasonable best efforts to provide Seller reasonable
access to all books and records (including tax) of the Company,
as reasonably necessary, concerning any legal matter involving
the Seller.
Section 5.5 Public Announcements. Prior to the
Closing, the parties shall not issue any report, statement or
press release or otherwise make any public statements with
respect to this Agreement and the transactions contemplated
hereby, except as in the reasonable judgment of Seller may be
required by law or in the reasonable interests of Seller in
connection with the obligations of Seller, as a publicly-held,
exchange-listed company (specifically, the issuance of a press
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release by Seller upon execution of this Agreement or later shall
not be a violation of this provision). Upon the Closing, Seller
will consult with Buyer with respect to the issuance of a joint
report, statement or press release with respect to this Agreement
and the transactions contemplated hereby.
Section 5.6 Covenant to Satisfy Conditions. Seller
will use its reasonable best efforts to ensure that the
conditions set forth in Article 6 hereof are satisfied, insofar
as such matters are within the control of Seller, and Buyer will
use its reasonable best efforts to ensure that the conditions set
forth in Article 6 hereof are satisfied, insofar as such matters
are within the control of Buyer. Seller and Buyer further
covenant and agree, with respect to a threatened or pending
preliminary or permanent injunction or other order, decree or
ruling or statute, rule, regulation or executive order that would
adversely affect the ability of the parties hereto to consummate
the transactions contemplated hereby, to use all reasonable
efforts to prevent or lift the entry, enactment or promulgation
thereof, as the case may be.
Section 5.7 Employees; Employee Benefits. (a)
After the Closing Date, Buyer shall treat all service completed
by each employee of the Company ("Employee") with the Company or
any Affiliate thereof, and any predecessor thereto, the same as
service completed with Buyer for all purposes, including waiting
periods relating to preexisting conditions under medical plans,
vacations, severance pay, eligibility to participate in, vesting
or payment of benefits under, and eligibility for early
retirement or any subsidized benefit provided for under any
employee benefit plan (including, but not limited to, any
?employee benefit plan? as defined in Section 3(3) of ERISA)
maintained by Buyer on or after the Closing Date except for
purposes of computing benefits under the actual benefit formula
in a defined benefit plan (as defined in Section 3(35) of ERISA).
For purposes of computing deductible amounts (or like adjustments
-24-
or limitations on coverage) under any employee welfare benefit
plan (including, without limitation, any "employee welfare
benefit plan" as defined in Section 3(l) of ERISA), expenses and
claims previously recognized for similar purposes under the
applicable welfare benefit plan of the Company or any Affiliate
shall be credited or recognized under the comparable plan
maintained after the Closing Date by Buyer.
(b) After the Closing Date, Buyer shall be
responsible for, and shall indemnify and hold harmless Seller and
its Affiliates and their officers, directors, employees,
Affiliates and agents and the fiduciaries (including plan
administrators) of the Plans, from and against, any and all
claims, losses, damages, costs and expenses (including, without
limitation, attorneys' fees and expenses) and other liabilities
and obligations relating to or arising out of (i) all salaries,
bonuses, commissions, vacation entitlements and other benefits
accrued but unpaid as of the Closing and reflected on the balance
sheets of the Company on the Closing Date, (ii) the employee
benefit liabilities assumed by Buyer under this Agreement or any
failure by Buyer to comply with the provisions of this Agreement
and (iii) any claims of, or damages or penalties sought by, any
Employee, or any governmental entity on behalf of or concerning
any Employee, with respect to any act or failure to act by Buyer
to the extent arising from the employment, discharge, layoff or
termination of any Employee.
(c) After the Closing Date, Buyer shall not
require Seller to make any additional contributions to any Plan
(including the defined benefit pension plan described in Section
3.15(a)) and agrees that the Company shall be responsible for
funding all Plans through the applicable maturity date.
Section 5.8 Certain Tax Matters
(a) Certain Definitions. As used in this
Agreement:
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(i) "Independent Accountants" means the
Accounting Firm (as defined in Section 1.3(b)(iii)).
(ii) "Pre-Closing Period" means any taxable
period, including that portion of any Straddle Period, which ends
on or before the Closing Date.
(iii) "Straddle Period" means any taxable
period that includes (but does not end on) the Closing Date.
(b) Return Filing, Refunds, Credits and Transfer
Taxes.
(i) Except with regard to Tax Returns for
Straddle Periods, Seller shall prepare, or cause to be prepared,
and file, or cause to be filed, on a timely basis all Tax Returns
of or including the Company for all Pre-Closing Periods,
including the taxable period which ends on December 31, 1999 (the
"Pre-Closing Period Returns"). Seller shall pay, or cause to be
paid, all Taxes with respect to the Company shown to be due on
the Pre-Closing Period Returns.
(ii) Buyer shall prepare, or cause to be
prepared, and shall file, or cause to be filed, on a timely basis
all Tax Returns (other than the Pre-Closing Period Returns) with
respect to the Company, including Tax Returns, if any, covering
periods after the Closing Date for the Straddle Period (the
"Straddle Period Returns"). Buyer shall pay, or cause to be
paid, all Taxes shown to be due on such Tax Returns.
(iii) Buyer shall provide Seller with
copies of any Straddle Period Returns at least thirty business
days prior to the due date thereof (giving effect to any
extensions thereto), accompanied by a statement calculating in
reasonable detail Seller's indemnification obligation pursuant to
Section 5.8(d) hereof (the "Indemnification Statement"). Seller
shall have the right to review such Straddle Period Returns and
-26-
Indemnification Statement prior to the filing of such Straddle
Period Returns. If Seller disputes any amounts shown due on such
Tax Returns or the amount calculated in the Indemnification
Statement, Seller and Buyer shall consult and resolve in good
faith any issues arising as a result of the review of such
Straddle Period Return and Indemnification Statement. If Seller
agrees to the Indemnification Statement amount, Seller shall pay
to Buyer an amount equal to the Taxes shown on the
Indemnification Statement less any amounts paid by Seller or the
Company on or before the Closing Date with respect to estimated
taxes not later than three business days before the due date
(including any extensions thereof) for payment of Taxes with
respect to such Straddle Period Return. If the parties are
unable to resolve any dispute within fifteen business days after
Seller?s receipt of such Straddle Period Return and
Indemnification Statement, such dispute shall be resolved by the
Independent Accountants, which shall resolve any issue in dispute
as promptly as practicable. If the Independent Accountants are
unable to make a determination with respect to any disputed issue
prior to the due date (including any extensions) for the filing
of the Straddle Period Return in question, (A) Buyer shall file,
or shall cause to be filed, such Straddle Period Return without
such determination having been made and (B) Seller shall pay to
Buyer, not later than three days before the due date (including
any extensions thereof) for the payment of Taxes with respect to
such Straddle Period Return, an amount determined by Seller as
the proper amount chargeable to Seller pursuant to this Section
5.8. Upon delivery to Seller and Buyer by the Independent
Accountants of its determination, appropriate adjustments shall
be made to the amount paid by Seller in accordance with the
immediately preceding sentence in order to reflect the decision
of the Independent Accountants. The determination by the
Independent Accountants shall be final, conclusive and binding on
-27-
the parties. The fees and any expenses of the Independent
Accountants incurred pursuant to this Section 5.8(b)(iii) shall
be shared equally by Seller and Buyer.
(iv) Seller and Buyer shall reasonably
cooperate, and shall cause their respective Affiliates, officers,
employees, agents, lawyers, auditors and representatives
reasonably to cooperate, in preparing and filing all Tax Returns
(including amended returns and claims for refund), including
maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes
and audits with respect to all taxable periods relating to Taxes.
Buyer and Seller recognize that Seller will need access, from
time to time, after the Closing Date, to certain accounting and
tax records and information held by the Company to the extent
such records and information pertain to events occurring prior to
the Closing Date; therefore, Buyer agrees that from and after the
Closing Date, Buyer shall, and shall cause the Company to, (A)
retain and maintain such records for six (6) years and (B) allow
Seller and its agents and representatives (and agents and
representatives of its Affiliates) to inspect, review and make
copies of such records as Seller may deem necessary or
appropriate from time to time during such period. Buyer shall
indemnify Seller from and against any penalties, additions to tax
or interest imposed on Seller as a result of any failure of Buyer
to make tax records or other information available to Seller in a
timely manner.
(v) Buyer and Seller shall not, and shall
cause the Company not to, dispose of or destroy any of the
business records and files of the Company relating to Taxes in
existence on the Closing Date without first offering to turn over
possession thereof to the other party by written notice to such
party at least thirty days prior to the proposed date of such
disposition or destruction.
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(vi) Any refunds and credits of Taxes of the
Company or similar benefit (including any interest or similar
benefit) received from or credited thereon by the applicable tax
authority with respect to (A) any taxable period ending on or
before the Closing Date or (B) Taxes for which the Seller has
indemnified the Buyer under the Agreement, shall be for the
account of Seller, and if received or utilized by Buyer or the
Company, shall be paid to Seller within five business days after
Buyer or the Company receives such refund or utilizes such
credit. Except as provided in the next sentence, any refunds or
credits of the Company with respect to any Straddle Period that
are payable to Seller pursuant to the preceding sentence shall be
apportioned between Seller, on the one hand, and Buyer, on the
other hand, on the basis of an interim closing of the books. In
the case of any such refund or credit attributable to any Taxes
that are imposed on a periodic basis and are attributable to the
Straddle Period, other than Taxes based upon or related to gross
or net income or receipts, the refund or credit of such Taxes of
the Company for the Pre-Closing Period shall be deemed to be the
amount of such refund or credit for the Straddle Period
multiplied by a fraction the numerator of which is the number of
days in the Straddle Period ending on the Closing Date and the
denominator of which is the number of days in the Straddle
Period.
(vii) Notwithstanding any other
provisions of this Agreement to the contrary, all sales, use,
transfer, stamp, duties, recording and similar Taxes incurred in
connection with the transactions contemplated by this Agreement
shall be timely paid by the party responsible for such Taxes and
such responsible party shall accurately file or cause to be filed
all necessary Tax Returns and other documentation with respect to
such Taxes.
(c) Elections. Buyer shall not, and shall cause
the Company not to, make, amend or revoke any Tax election if
such action would adversely affect Seller or any Person (other
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than the Company) as to whom or with whom Seller has filed a
consolidated return with respect to any taxable period ending on
or before the Closing Date or for the Pre-Closing Period or any
Tax refund with respect thereto.
(d) Tax Indemnification.
(i) Buyer shall indemnify, defend and hold
harmless Seller and its Affiliates, at any time after the
Closing, from and against any liability for Taxes of the Company
for any taxable period ending after the Closing Date (except for
Straddle Periods, in which case Buyer?s indemnity will cover all
such Taxes other than taxes based upon or related to gross or net
income, in which case, Buyer's indemnity will cover only that
portion of such income Taxes that is not attributable to the Pre-
Closing Period).
(ii) Seller shall indemnify, defend and hold
harmless Buyer and its Affiliates, at any time after the Closing,
from and against any liability for Taxes based upon or related to
gross or net income of the Company for the Pre-Closing Period
(including the portion of any Straddle Period ending on the
Closing Date).
(iii) In determining the responsibility
of Seller and Buyer for Taxes based upon or related to gross or
net income attributable to any Straddle Period, such income Taxes
shall be apportioned on the basis of an interim closing of the
books as of the Closing Date.
(iv) If a claim for Taxes shall be made by
any taxing authority in writing, which, if successful, might
result in an indemnity payment pursuant to this Section 5.8, the
party seeking indemnification (the "Tax Indemnified Party") shall
promptly notify the other party (the "Tax Indemnifying Party") in
writing of such claim (a "Tax Claim") within a reasonably
sufficient period of time to allow the Tax Indemnifying Party
-30-
effectively to contest such Tax Claim, and in reasonable detail
to apprise the Tax Indemnifying Party of the nature of the Tax
Claim, and provide copies of all correspondence and documents
received by it from the relevant taxing authority. Failure to
give prompt notice of a Tax Claim hereunder shall affect the Tax
Indemnifying Party's obligation under this Section 5.8(d) to the
extent that the Tax Indemnifying Party is prejudiced by such
failure to give prompt notice.
(v) With respect to any Tax Claim which
might result in an indemnity payment to Buyer pursuant to this
Section 5.8(d) (including, without limitation, income Taxes of
the Company for a Straddle Period), Seller shall control all
proceedings taken in connection with such Tax Claim and, without
limiting the foregoing, may in its sole discretion and at its
sole expense pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority
with respect thereto, and may, in its sole discretion, either pay
the Tax claimed and xxx for a refund where applicable law permits
such refund suits or contest such Tax Claim. Buyer shall not
under any circumstances settle or otherwise compromise any Tax
Claim referred to in the preceding sentence without Seller's
prior written consent. In connection with any proceeding taken
in connection with such Tax Claim, (A) Seller shall keep Buyer
informed of all material developments and events relating to such
Tax Claim if involving a material liability for Taxes and (B)
Buyer shall have the right, at its sole expense, to participate
in any such proceedings. Buyer shall cooperate in a commercially
reasonable manner with Seller in contesting such Tax Claim
(without charge to Seller), which cooperation shall include,
without limitation, the retention and the provision to Seller of
records and information which are reasonably relevant to such Tax
Claim, and making employees reasonably available to Seller to
provide additional information or explanation of any material
-31-
provided hereunder or to testify at proceedings relating to such
Tax Claim, provided that no charges shall be incurred by Seller
for the services of such employees.
(vi) With respect to any Tax Claim not
described in Section 5.8(d)(v) hereof which might result in an
indemnity payment to Seller pursuant hereto, Buyer shall control
all proceedings in accordance with provisions that are parallel
to those in Section 5.8(d)(v) hereof.
Section 5.9 Prior Knowledge. If at any time on or
before the Closing Date, Buyer obtains any knowledge (whether
through investigation or otherwise) of any material fact which
causes Buyer to reasonably believe that any of the
representations, warranties, covenants or agreements of any
Seller contained herein are untrue or inaccurate in any respect,
then Buyer shall inform Seller of such material fact promptly
following Buyer's obtaining knowledge thereof. In the event
Buyer fails to inform Seller of such material fact as provided
herein, such failure will constitute a waiver and release by
Buyer of any rights it may have under this Agreement to delay the
Closing or terminate this Agreement or otherwise as a result of
such representation, warranty, covenant or agreement being untrue
or inaccurate because of such material fact.
Section 5.10 Supplemental Disclosure. Seller shall
have the right from time to time prior to the Closing to
supplement or amend its schedules and exhibits with respect to
any matter required to be set forth or described in such
schedules and exhibits; provided that if the matter giving rise
to such supplement or amendment to the schedules and exhibits has
a Company Material Adverse Effect, Buyer shall have the right,
prior to the Closing, within five business days of receipt by
Buyer of such supplemental or amended disclosure, to terminate
the Agreement pursuant to Section 7.1(d) by written notice to
Seller.
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Section 5.11 Inquiries and Negotiations. From the
date hereof until the termination of this Agreement pursuant to
Section 7.1, Seller, the Company and its respective officers,
directors, employees, representatives and other agents will not,
directly or indirectly, solicit or initiate any discussions,
submissions of proposals or offers or negotiations with or
continue or participate in any negotiations or discussions with,
or provide any information or data of any nature whatsoever to,
or otherwise cooperate in any other way with, any Person other
than Buyer and its officers, directors, employees,
representatives and agents in connection with any proposed
merger, consolidation, sale of all or substantially all of the
assets of the Company, sale of shares of capital stock or other
equity securities, tender or exchange offer, recapitalization,
debt restructuring or similar transaction involving the Company
Section 5.12 Post-Closing Insurance Coverages.
Except as otherwise specified on Schedule 3.20, Seller shall pay
the premiums for policies for the insurance coverages for the
Company described on Schedule 3.20 through December 31, 2000, all
such policies to be reasonably similar, in cost and coverage, to
the policies in effect for the Company prior to the Closing Date.
In addition, Seller shall, at Seller's sole cost and expense, pay
(and indemnify, defend and hold the Buyer and the Company
harmless from) all loss, cost and expense arising out of or
related to any workers compensation claims made against the
Company before the Closing; the Company shall be responsible for
(and Buyer shall indemnify, defend and hold Seller harmless from)
all loss, cost and expense arising out of or related to any
workers compensation claims first made against the Company after
the Closing.
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ARTICLE 6
CONDITIONS TO OBLIGATIONS OF THE PARTIES
----------------------------------------
Section 6.1 Conditions to Each Party's Obligation.
The respective obligation of each party to consummate the
transactions contemplated herein is subject to the satisfaction
at or prior to the Closing of the following conditions:
(a) No statute, rule or regulation shall have
been enacted, promulgated or enforced by any court or
governmental authority which prohibits or restricts the
consummation of the transactions contemplated hereby;
(b) There shall not be in effect any judgment,
order, injunction or decree of any court of competent
jurisdiction enjoining the consummation of the transactions
contemplated hereby;
(c) There shall not be any suit, action,
investigation, inquiry or other proceeding instituted, pending or
threatened by any governmental or other regulatory or
administrative agency or commission which seeks to enjoin or
otherwise prevent consummation of the transactions contemplated
hereby; and
(d) The transactions contemplated by another
Stock Purchase Agreement, dated the date hereof, by and between
Seller and LRT Holding Company, Inc., an Illinois corporation,
shall have been consummated prior to the Closing.
Section 6.2 Conditions to Obligations of Seller.
The obligations of Seller to consummate the transactions
contemplated hereby are further subject to the satisfaction (or
written waiver) at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Buyer
contained in Article 4 of this Agreement shall be true and
correct in all material respects at the date hereof and as of the
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Closing as if made at and as of such time, except for changes
permitted or contemplated hereby and except for representations
and warranties which are as of a specific date;
(b) Buyer shall have performed in all material
respects its obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms
hereof;
(c) Buyer shall have delivered to Seller or its
Affiliates those items set forth in Section 1.6 hereof; and
(d) The Company and Seller shall have executed a
document canceling all intercompany accounts between such parties
as of the Closing.
Section 6.3 Conditions to Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated
hereby are further subject to the satisfaction (or written
waiver) at or prior to the Closing of the following conditions:
(a) The representations and warranties of Seller
contained in Article 3 of this Agreement shall be true and
correct in all material respects at the date hereof and as of the
Closing as if made at and as of such time, except for changes
permitted or contemplated hereby and except for representations
and warranties which are as of a specific date;
(b) Seller shall have performed in all material
respects its obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms
hereof;
(c) Seller shall have delivered to Buyer those
items set forth in Section 1.5 hereof; and
(d) Seller shall have delivered to Buyer an
executed document of Bank One, Oklahoma, N.A. consenting to the
transaction described herein, releasing the Company as a
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guarantor under the Credit Agreement dated September 24, 1999
between Seller and Bank One and releasing the Shares as
collateral to such agreement (all related Bank One liens on
assets of the Company shall have been terminated as well).
ARTICLE 7
TERMINATION
-----------
Section 7.1 Termination. This Agreement may be
terminated and the transactions contemplated hereby may be
abandoned:
(a) at any time, by mutual written consent of
Seller and Buyer;
(b) if the transactions contemplated hereby shall
have been permanently enjoined by a court of competent
jurisdiction, provided that no party hereto who brought or is
affiliated with the party who brought the action seeking the
permanent enjoinment of the transactions contemplated hereby may
seek termination of this Agreement pursuant to this Section
7.1(b);
(c) if the transactions contemplated hereby or
any of the conditions to Closing hereunder become impossible to
perform or obtain, as applicable, provided that no party hereto
who caused or is affiliated with any Person who caused such
impossibility, may seek termination of this Agreement pursuant to
this Section 7.1(c);
(d) by Buyer, following receipt of any supplement
or amendment to the schedules and exhibits to be provided by
Seller under this Agreement, by written notice to Seller if (i)
the matter which gives rise to such supplement or amendment has a
Company Material Adverse Effect and (ii) the notice of
termination pursuant to this Section 7.1(d) is given by Buyer to
Seller prior to Closing and within five business days of Buyer's
-36-
receipt of the supplement or amendment to the schedules and
exhibits to be provided by Seller under this Agreement; or
(e) at any time after June 30, 2000, by Seller,
on the one hand, or Buyer, on the other hand, if the Closing
shall not have occurred on or prior to such date.
Section 7.2 Procedure and Effect of Termination. In
the event of the termination of this Agreement and the
abandonment of the transactions contemplated hereby pursuant to
Section 7.1 hereof, written notice thereof shall forthwith be
given by Seller, on the one hand, or Buyer, on the other hand, so
terminating to the other party and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned,
without further action by Seller, on the one hand, or Buyer, on
the other hand. If this Agreement is terminated pursuant to
Section 7.1 hereof:
(a) each party shall redeliver all documents,
work papers and other materials of the other parties relating to
the transactions contemplated hereby, whether so obtained before
or after the execution hereof, to the party furnishing the same
or, upon prior written notice to such party, shall destroy all
such documents, work papers and other materials and deliver
notice to the parties seeking destruction of such documents that
such destruction has been completed, and all confidential
information received by any party hereto with respect to the
other party shall be treated in accordance with Section 5.2(b)
hereof;
(b) all filings, applications and other
submissions made pursuant hereto shall, at the option of Seller,
and to the extent practicable, be withdrawn from the agency or
other Person to which made; and
(c) there shall be no liability or obligation
hereunder on the part of Seller or Buyer or any of their
respective directors, officers, employees, Affiliates,
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controlling Persons, agents or representatives, except that
Seller or Buyer, as the case may be, shall have liability to the
other party if the basis of termination is a material breach by
Seller or Buyer, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations
provided for in this Section 7.2 and Section 9.1 hereof shall
survive any such termination.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS
---------------------------
Section 8.1 Survival of Representations, Warranties
and Agreements. No representations, warranties and agreements of
Seller and Buyer shall survive the Closing except those made in
Sections 3.1, 3.2, 3.3, 3.4, 3.18, 4.1, 4.6, 4.7, 5.4, 5.7, 5.8,
7.2 and 9.1, respectively, shall survive the Closing for a period
of one (1) year. Any covenant or agreement of any party
contained herein which by its terms shall survive the Closing
shall survive until fully performed; and provided, further, that
this Section 8.1 is not intended in any way to limit any covenant
or agreement of the parties which contemplates performance after
the Closing.
ARTICLE 9
MISCELLANEOUS
-------------
Section 9.1 Fees and Expenses. Except as set forth
in this Section 9.1 and Section 5.8(b)(vii), whether or not the
transactions contemplated herein are consummated pursuant hereto,
Seller, on the one hand, and Buyer, on the other hand, shall pay
all fees and expenses incurred by, or on behalf of, Seller or
Buyer, respectively, in connection with, or in anticipation of,
this Agreement and the consummation of the transactions
contemplated hereby. Seller, on the one hand, and Buyer, on the
other hand, shall indemnify and hold harmless the other from and
against any and all claims or liabilities for financial advisory
-38-
and finders' fees incurred by reason of any action taken by such
party or otherwise arising out of the transactions contemplated
by this Agreement by any Person claiming to have been engaged by
such party.
Section 9.2 Further Assurances. From time to time
after the Closing Date, at the reasonable request of the other
party hereto and at the expense of the party so requesting, each
of the parties hereto shall execute and deliver to such
requesting party such documents and take such other action as
such requesting party may reasonably request in order to
consummate more effectively the transactions contemplated hereby.
Section 9.3 Notices. All notices, requests,
demands, waivers and other communications required or permitted
to be given under this Agreement shall be in writing and may be
given by any of the following methods: (a) personal delivery; (b)
facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its
address or facsimile number given below (or at such other address
or facsimile number for such party as shall be specified by
notice given hereunder):
If to Buyer, to:
NAWC Holding Company, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
Attention: A. Xxx Xxxxxxxx, President
with a copy to:
Xxxxxxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
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If to Seller, to:
Kinark Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000-0000
Fax No. (000) 000-0000
Attention: Xxxxxx X. Xxxxx, President and Chief
Executive Officer
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Fax No. (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
All such notices, requests, demands, waivers and communications
shall be deemed received upon (i) actual receipt thereof by the
addressee, (ii) actual delivery thereof to the appropriate
address or (iii) in the case of a facsimile transmissions upon
transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of
pages constituting the notice have been transmitted without
error. In the case of notices sent by facsimile transmission,
the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such
mailing shall in no way alter the time at which the facsimile
notice is deemed received.
Section 9.4 Severability. Should any provision of
this Agreement for any reason be declared invalid or
unenforceable, such decision shall not affect the validity or
enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect
and the application of such invalid or unenforceable provision to
Persons or circumstances other than those as to which it is held
invalid or unenforceable shall be valid and enforced to the
fullest extent permitted by law.
-40-
Section 9.5 Binding Effect; Assignment. This
Agreement and all of the provisions hereof shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, including,
without limitation, by operation of law, by any party hereto
without the prior written consent of the other parties hereto.
Section 9.6 No Third Party Beneficiaries. This
Agreement is solely for the benefit of Seller, and its successors
and permitted assigns, with respect to the obligations of Buyer
under this Agreement, and for the benefit of Buyer, and its
respective successors and permitted assigns, with respect to the
obligations of Seller, under this Agreement, and for the benefit
of the Employees with respect to the obligations of Buyer under
Section 5.7 of this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any
remedy, claim, liability, reimbursement, cause of action or other
right.
Section 9.7 Interpretation.
(a) The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement.
(b) As used in this Agreement, the term "Person"
shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.
(c) As used in this Agreement, the term
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended.
-41-
Section 9.8 Jurisdiction and Consent to Service.
Without limiting the jurisdiction or venue of any other court,
each of Seller and Buyer (a) agrees that any suit, action or
proceeding arising out of or relating to this Agreement may be
brought solely in the state or federal courts of Illinois; (b)
consents to the exclusive jurisdiction of each such court in any
suit, action or proceeding relating to or arising out of this
Agreement; (c) waives any objection which it may have to the
laying of venue in any such suit, action or proceeding in any
such court; and (d) agrees that service of any court paper may be
made in such manner as may be provided under applicable laws or
court rules governing service of process.
Section 9.9 Entire Agreement. This Agreement and
other documents referred to herein or delivered pursuant hereto,
including but not limited to the schedules and exhibits, which
form a part hereof constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede
all other prior agreements and understandings, both written and
oral, between the parties or any of them with respect to the
subject matter hereof.
Section 9.10 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Illinois (regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof)
as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
Section 9.11 Specific Performance. The parties
acknowledge and agree that any breach of the terms of this
Agreement would give rise to irreparable harm for which money
damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall
be entitled to enforce the terms of this Agreement by a decree of
specific performance without the necessity of proving the
inadequacy of money damages as a remedy.
-42-
Section 9.12 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement. The parties agree that faxed signature pages shall
constitute valid original signatures when attached to this
Agreement.
Section 9.13 Amendment, Modification and Waiver.
This Agreement may be amended, modified or supplemented at any
time by written agreement of Seller and Buyer. Any failure of
Seller or Buyer to comply with any term or provision of this
Agreement may be waived, with respect to Buyer, by Seller and,
with respect to Seller, by Buyer, by an instrument in writing
signed by or on behalf of the appropriate party, but such waiver
or failure to insist upon strict compliance with such term or
provision shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply.
Section 9.14 Knowledge. "To the Knowledge of Seller"
or any similar phrase contained in this Agreement shall mean the
actual knowledge of the Company Executives. For purposes hereof,
the "Company Executives" shall consist of: Xxxxxx X. Xxxxx and
Xxxx X. Xxxxxxxx. "To the Knowledge of Buyer" or any similar
phrase contained in this Agreement shall mean the actual
knowledge of the Buyer Executives. For purposes hereof, the
"Buyer Executives" shall consist of: A. Xxx Xxxxxxxx.
Section 9.15 Schedules and Exhibits. The schedules,
attachments and all exhibits hereto are hereby incorporated into
this Agreement and are hereby made a party hereof as if set out
in full in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
KINARK CORPORATION
By: /s/Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
NAWC HOLDING COMPANY, INC.
By: /s/A. Xxx Xxxxxxxx
--------------------
Name: A. Xxx Xxxxxxxx
Title: President
Schedule 2.2
Services Provided by Seller to the Company
------------------------------------------
1. Negotiates and places property and liability insurance
coverages. Makes premium payments.
2. Schedules review of financial records by independent
auditing firm.
3. Negotiates bank credit agreements and designates operating
bank accounts.
4. Maintains the minute books, stock ledgers and corporate
seals.
5. Engages independent accountants to prepare Illinois state
income tax returns.
6. Engages legal counsel.
Schedule 3.1
Governmental Permits and Licenses & States Authorized to Conduct Business
-------------------------------------------------------------------------
1. Company is authorized to conduct business in Illinois.
2. Governmental Permits:
Village of Bedford Park Renewal Certificate
State of Illinois Warehouse License for Bedford Park Warehouse
Illinois Business Registration NUC-1 (Resale Certificate
Application) for North American Warehousing Company
Schedule 3.3
Common Stock
------------
North American Warehousing Company
----------------------------------
Number of shares authorized -- 10,000
Number of shares issued and outstanding -- 1,000
Number of shares of Preferred Series A Stock authorized,
issued and outstanding -- One (1)
Schedule 3.4
Ownership of Common Stock
-------------------------
All of the outstanding common stock of the Company is
pledged as collateral to the Credit Agreement dated September 24,
1999 between Seller and Bank One, Oklahoma, N.A.
Schedule 3.5
Consents and Approvals
----------------------
1. Pursuant to Section 7.1.6 of the Credit Agreement dated
September 24, 1999 between Seller and Bank One, Oklahoma,
N.A., Seller's divestiture of the Company requires the prior
consent of Bank One. Further, Bank One acknowledges in such
agreement that it will cooperate with Seller to accommodate
such divestiture.
Schedule 3.8(a)
Interest in Real Property
-------------------------
1. North American Warehousing Company has an option to
purchase a 200,808 square foot warehouse located at 0000
X. 00xx Xxxxxx xx Xxxxxxx Xxxx, Xxxxxxxx for a purchase
price of $5,250,000.00, under the terms of the Ninth
Lease Amendment dated June 1, 1999 to the Lease dated
June 14, 1979 between Company and Landlord. The Company
has the right to exercise the purchase option at any time
prior to expiration of the amended lease on December 31,
2001, provided Company has paid the Purchase Option Fee
when due each month. Failure to pay the Purchase Option
Fee when due shall cause the Purchase Option to terminate
unconditionally and irrevocably. Refer to Paragraphs 4
and 5 of the Ninth Lease Amendment, copy attached.
Schedule 3.8(b)
Title and Ownership
-------------------
Exceptions to Good Title -- None
Schedule 3.9
Leases - Other
--------------
See Schedule 3.8(a)
Schedule 3.10(b)
Intellectual Property
---------------------
None
Schedule 3.12
Litigation
----------
None.
Schedule 3.13
Compliance With Applicable Law
------------------------------
Exceptions -- None
Schedule 3.14
Contracts and Arrangements
--------------------------
1. The Company is guarantor under the Credit Agreement dated
September 24, 1999 between Seller and Bank One, Oklahoma, N.A.
2. See Schedule 3.8(a).
3. Management Agreement with Lake River Corporation.
Schedule 3.15
Employee Benefit Plans
----------------------
None.
Schedule 3.20
INSURANCE
Coverage Annual
Coverage Agent/Carrier Policy No. Term Premium
----------------- ------------------ -------------- ------------- ---------
General Liability Xxxxx & XxXxxxxx 2855853-01 12/31/99 - 00 $12,660
(M&M)/ Steadfast
Insurance (Xxx.Xxx.)
Zurich American 285261401 12/31/99 - 00 10,392
Umbrella/Excess M&M/National Union BE 7391742 12/31/99 - 00 25,169
Fire
Property Insurance M&M/Reliance PA NZB0133193 12/31/99 - 00 24,301
& Business Inter-
ruption
D&O Liability (A) M&M/Continental 132024383 12/14/99 - ---
Casualty Closing
Boiler & M&M/Hartford FBP-HN-4914483-01 12/31/99 - 00 2,166
Machinery Steam
Comprehensive M&M/Gulf Insurance GA05835957 6/26/00 - 01 ---
Crime
Fiduciary L&W/National Union 4857845 6/22/00 - 01 ---
Fire
Group Travel L&W/Hartford ETB-19158 8/01/97 - ---
Closing
*Seller's policy number
(A) These policies are exceptions to Seller's transfer and premium payments, as
per Sections 2.3 and 3.20.
Schedule 4.2
None.
Schedule 4.4
None.
