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Exhibit 10.23
STOCK PURCHASE AGREEMENT
between
GREAT LAKES ENVIRONMENTAL, INC.
and
XXXXX X. XXXX
CONCERNING THE ACQUISITION OF
ALL THE OUTSTANDING SHARES OF
LANCO ENVIRONMENTAL PRODUCTS, INC.
April 14, 1997
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TABLE OF CONTENTS
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ARTICLE I PURCHASE PRICE OF SHARES: MANNER
OF PAYMENT.................................................................................1
1.1 Purchase Price of Shares.....................................................1
1.2 Manner of Payment............................................................1
ARTICLE II REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF SELLER.......................................................................2
2.1 Organization and Standing....................................................2
2.2 Conflicts; Consents..........................................................2
2.3 Capital Stock................................................................3
2.4 Title to Shares; Investments of the Corporation..............................3
2.5 Outstanding Options and Warrants.............................................3
2.6 Business Relations...........................................................3
2.7 Real Property................................................................3
2.8 Title to and Condition of Assets.............................................5
2.9 Financial Statements.........................................................5
2.10 Absence of Certain Changes...................................................5
2.11 Absence of Undisclosed Liabilities...........................................7
2.12 Taxes........................................................................7
2.13 Indebtedness to Officers, Directors and Shareholders.........................8
2.14 Articles of Incorporation and Bylaws........................................8
2.15 Corporate Minutes............................................................9
2.16 Brokerage and Finder's Fees..................................................9
2.17 Accounts Receivable..........................................................9
2.18 Employment Matters...........................................................9
2.19 No Defaults.................................................................10
2.20 Material Contracts..........................................................10
2.21 Purchase Orders.............................................................11
2.22 Indebtedness................................................................11
2.23 Litigation..................................................................11
2.24 Insurance...................................................................11
2.25 Transactions with Officers, Etc.............................................12
2.26 Employees...................................................................12
2.27 Trademarks, Copyrights and Similar Matters..................................12
2.28 Employee Benefit Plans and Other Plans......................................13
2.29 Environmental Matters.......................................................16
2.30 Bank Accounts...............................................................17
2.31 Compliance with Laws........................................................17
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2.32 Powers of Attorney..........................................................17
2.33 Licenses and Rights.........................................................17
2.34 Schedule of Government Reports..............................................18
2.35 Products....................................................................18
2.36 Casualty Occurrences........................................................18
2.37 Inventory...................................................................18
2.38 Capital Expenditure Plans...................................................19
2.39 Material Misstatements or Omissions.........................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
PURCHASER.................................................................................19
3.1 Organization and Good Standing of Purchaser.................................19
3.2 Authority of Purchaser......................................................19
3.3 Investment Purpose..........................................................19
ARTICLE IV CONDITIONS PRECEDENT TO OBLIGATIONS
OF PURCHASER..............................................................................20
4.1 Representations True........................................................20
4.2 All Consents Obtained.......................................................20
4.3 Performance and Obligations.................................................20
4.4 Receipt of Documents by Purchaser...........................................20
4.5 No Litigation...............................................................22
4.6 Employment Agreement........................................................22
4.7 Delivery of Books and Records...............................................22
4.8 Absence of Changes..........................................................22
4.9 Real Property Lease.........................................................22
4.10 Escrow Agreement............................................................22
4.11 Purchaser's Review..........................................................22
4.12 Trade Name Assignment.......................................................22
4.13 Equipment Lease.............................................................23
4.14 Management Agreement........................................................23
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER.................................................................................23
5.1 Representations True........................................................23
5.2 Receipt of Documents by Seller..............................................23
5.3 No Litigation...............................................................24
5.4 Real Property Lease.........................................................24
5.5 Agreements Regarding Sales Commissions and
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Used Equipment..............................................................24
5.6 Escrow Agreement............................................................24
5.7 License Agreement...........................................................24
ARTICLE VI CLOSING...................................................................................24
ARTICLE VII TERMINATION OF AGREEMENT..................................................................25
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND
WARRANTIES: INDEMNIFICATION: DISPUTES...................................................26
8.1 Survival of Representations and Warranties..................................26
8.2 Seller's Indemnification....................................................26
8.3 Defense of Claim............................................................26
8.4 Purchaser's Indemnification.................................................27
8.5 Indemnification Basket......................................................27
8.6 Limitation on Indemnification...............................................27
ARTICLE IX CONDUCT PRIOR TO CLOSING DATE.............................................................28
9.1 Continuation of Business....................................................28
9.2 Preservation of Business....................................................29
9.3 Consents and Approvals......................................................29
ARTICLE X ASSIGNMENT, THIRD PARTIES, BINDING EFFECT.................................................30
ARTICLE XI EXPENSES..................................................................................30
ARTICLE XII NOTICES...................................................................................30
ARTICLE XIII REMEDIES NOT EXCLUSIVE....................................................................31
ARTICLE XIV NON-COMPETITION...........................................................................31
14.1 Non-Competition Agreement...................................................31
14.2 Disclosure of Confidential Information......................................32
ARTICLE XV MISCELLANEOUS.............................................................................33
15.1 Counterparts................................................................33
15.2 Captions and Section Headings...............................................33
15.3 Waivers.....................................................................33
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15.4 Right of Inspection.........................................................33
15.5 Amendments, Supplements or Modifications....................................33
15.6 Entire Agreement............................................................33
15.7 Governing Laws..............................................................33
15.8 Knowledge...................................................................33
15.9 Press Releases..............................................................34
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 14th day of
April, 1997, between Great Lakes Environmental, Inc., a Delaware corporation
("Purchaser") and Xxxxx X. Xxxx ("Seller") the sole shareholder of Lanco
Environmental Products, Inc., a Michigan corporation (the "Corporation").
R E C I T A L S:
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A. Seller owns all the issued and outstanding shares of capital stock
of the Corporation.
B. On the terms and subject to the conditions of this Agreement, and
subject to the performance by the parties of their respective obligations under
this Agreement, Seller desires to sell, and Purchaser desires to purchase, all
of the issued and outstanding shares of capital stock of the Corporation at the
"Closing" (as hereinafter defined) for the purchase price described in Article I
of this Agreement.
NOW, THEREFORE, Purchaser and Seller, intending to be legally bound,
agree as follows:
ARTICLE I
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PURCHASE PRICE OF SHARES: MANNER OF PAYMENT
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1.1 PURCHASE PRICE OF SHARES. On the terms and subject to the
conditions of this Agreement, Seller shall, with all transfer taxes of any kind
prepaid, convey, assign and transfer to Purchaser at the Closing all the Shares
(as defined in Section 2.3), free and clear of all liens, charges, security
interests, adverse claims, pledges, encumbrances and demands whatsoever.
Purchaser shall purchase all the Shares for a purchase price of Two Million Two
Hundred Thousand Dollars ($2,200,000.00) (the "Purchase Price").
1.2 MANNER OF PAYMENT. The Purchase Price will be paid as follows:
(a) One Hundred Thousand Dollars ($100,000.00) deposit which
has been paid and received by Seller upon the execution and delivery of
this Agreement (the "Deposit").
(b) Two Million Dollars ($2,000,000.00) payable to Seller at
the Closing by certified or official bank check in immediately
available funds or by wire transfer to an account designated by Seller.
(c) One Hundred Thousand Dollars ($100,000.00) by certified or
bank check in immediately available funds or by wire transfer to a bank
chosen by Seller that is reasonably satisfactory to Purchaser, as
escrow agent in connection with an interest bearing escrow fund
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established pursuant to an Escrow Agreement in substantially the form
attached to this Agreement as EXHIBIT "A" (the "Escrow Agreement").
ARTICLE II
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
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Seller, represents and warrants to, and agrees with, Purchaser as
follows:
2.1 ORGANIZATION AND STANDING.
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan.
The Corporation has full power and authority to carry on its business
as and where now conducted and to own or lease and operate its
properties at and where now owned or leased and operated by it, and is
duly qualified to do business and is in good standing in every
jurisdiction in which the property owned, leased or operated by it, or
the nature of the business conducted by it, makes such qualification
necessary.
(b) Set forth on Schedule 2.1 is a true and correct list of
all jurisdictions in which the Corporation is qualified to do business
as a foreign corporation and each jurisdiction where the Corporation
does business or owns or leases property.
2.2 CONFLICTS; CONSENTS.
(a) The execution, delivery and consummation of this Agreement
by Seller (i) does not now and will not, with the passage of time, the
giving of notice or otherwise, result in a violation or breach of, or
constitute a default under, any term or provision of any indenture,
mortgage, deed of trust, lease, instrument, order, judgment, decree,
rule, regulation, law, contract, agreement or any other restriction to
which Seller or the Corporation is a party or to which Seller or any of
Seller's assets is subject or bound or to which the Corporation or any
of its assets is subject or bound, (ii) will not result in the creation
of any lien or other charge upon any assets of the Corporation, and
(iii) will not result in any acceleration or termination of any loan or
security interest agreement to which the Corporation is a party or to
which the Corporation or any of its assets is subject or bound.
(b) Except as may be listed on Schedule 2.2, no approval or
consent of any person, firm or other entity or governmental body is or
was required to be obtained by Seller for the authorization of this
Agreement or the consummation by Seller of the transactions
contemplated by this Agreement. Seller is authorized to enter into this
Agreement and consummate the transaction contemplated hereby and upon
the execution hereof, this Agreement will constitute the legal, valid
and binding obligation of Seller enforceable against Seller in
accordance with its terms.
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2.3 CAPITAL STOCK. The Corporation is authorized to issue 60,000 Common
Shares without par value of which 1,000 shares are issued and outstanding (the
"Shares"). All the Shares are duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of preemptive or any other
rights, including any rights under any federal or state securities laws, of any
shareholder.
2.4 TITLE TO SHARES; INVESTMENTS OF THE CORPORATION.
(a) All the Shares are owned by Seller of record and
beneficially with good and marketable title thereto, free and clear of
all liens, charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever.
(b) The Corporation has no direct or indirect equity, debt or
other interest in any entity, corporate or otherwise, or any right,
warrant or option to acquire any such interest.
2.5 OUTSTANDING OPTIONS AND WARRANTS. There are no subscriptions,
options, warrants, rights, puts, calls, commitments or agreements (respecting
issuance, redemption, repurchase, voting or otherwise) relating to, nor any
outstanding securities convertible into, any shares of capital stock or other
equity interest of the Corporation, or into any such convertible securities, and
neither Seller nor the Corporation has agreed to issue, purchase, sell or
transfer any of same, except as provided in this Agreement.
2.6 BUSINESS RELATIONS. Other than as set forth on Schedule 2.6(a), the
Corporation is not required, in the ordinary course of business, to provide any
bonding or any other financial security arrangements in connection with any
transactions with any customers or suppliers. Neither Seller nor the Corporation
has received any notice of any disruption (including, without limitation,
delayed deliveries or allocations by suppliers) in the availability of any
materials or products used in the Corporation's business and has no reason to
believe that any such disruption will occur. There are no sole source suppliers
of goods, equipment or services used by the Corporation (other than public
utilities) with respect to which practical alternative sources of supply are
unavailable. Other than as set forth on Schedule 2.6(b), no single customer of
the Corporation accounted for greater than five percent (5%) of the
Corporation's gross revenues for either the most recently completed fiscal year
or the portion of the current fiscal year ended February 28, 1997.
2.7 REAL PROPERTY.
(a) Schedule 2.7(a) is a true and complete list of (i) all
real property leases to which the Corporation is a party and (ii) all
options, deeds of trust, deeds of declaration, mortgages and land
contracts pursuant to or in which the Corporation has any interest
(collectively, the "Real Property"). Seller has furnished to Purchaser
or its counsel true and complete copies of each written contract and a
written description of each oral contract relating to the list set
forth on Schedule 2.7(a). The Corporation owns no real property.
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(b) With respect to the leased property comprising the Real
Property including all leasehold improvements (collectively, the
"Leased Property"), except as set forth on Schedule 2.7(b):
(i) All leases are in writing and are duly executed
and, where required, witnessed, acknowledged and recorded to
make them valid and binding and in full force and effect for
their full term, and none have been modified, amended, sublet
or assigned;
(ii) The rental set forth in each such lease is the
actual rental being paid, and there are no separate agreements
or understandings with respect to the same not set forth on
Schedule 2.7(b);
(iii) Where the Corporation is the lessee, the lessee
under each such lease has the full right to exercise any
renewal option and on due exercise will be entitled to enjoy
the use of the leased premises for the full term of such
renewal option, and such renewal option does not terminate on
assignment of such lease;
(iv) There is no default by the Corporation or any other
party which affects the Leased Property;
(v) Where the Corporation is the lessee, on performance
by the lessee of the terms of each lease (all of which terms
have been fully performed by the lessee as of the date of this
Agreement and will have been fully performed as of the Closing
Date), the lessee has the full right to enjoy the use of the
premises demised for the full term of the lease without
disturbance by any other party, and there are no written or
oral contracts between the Corporation and any third party
relating to any claim by such third party of any right to all
or any part of the interest of the Corporation in any
leasehold estate or otherwise relating to the use and
occupancy by the Corporation of such estate;
(vi) Except as set forth on Schedule 2.7(b), all
security deposits required by such leases have been made and
have not been refunded or returned, or their forfeiture
claimed, in whole or in part, by any lessor;
(vii) Where the Corporation is the lessee, all leasehold
improvements are in good operating or working condition and
repair, after taking into account ordinary wear and tear, and
are adequate for the operation of the business of the
Corporation as presently conducted. All contributions required
to have been paid by any lessor of property in respect of any
leasehold improvements have been paid;
(c) The Corporation will obtain from all lessors of any
leasehold interests comprising the Real Property a so-called "estoppel
certificate" (the "Estoppel Certificates") in the form attached as
EXHIBIT "B" to this Agreement.
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2.8 TITLE TO AND CONDITION OF ASSETS. Except as set forth on Schedule
2.8, the Corporation owns and possesses all right, title and interest in and to
its assets, including, without limitation (i) valid and subsisting leasehold
interests in all leasehold estates comprising the Real Property, and (ii) good
and merchantable title to all properties and assets other than the Real
Property, in each case free and clear of all conveyances, conditions, easements,
liens, charges, security interests, adverse claims, encumbrances, encroachments,
reservations, easements, limitations, servitudes, other title defects or
restrictions of any nature. All tangible assets of the Corporation are in the
Corporation's possession or under its control, and to the best of Seller's
knowledge, information and belief, all equipment used by the Corporation is in
good operating condition and repair, subject only to routine maintenance, and is
fit and adequate for the purposes intended. The Corporation enjoys peaceful and
quiet possession of its assets pursuant to or by all of the deeds, bills of
sale, leases, licenses and other agreements under which it is operating its
business and such assets constitute all of the property or assets necessary to
conduct the business of the Corporation as now conducted.
2.9 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Seller
has provided Purchaser with the financial statements of the Corporation listed
below (the "Financial Statements") and will provide to Purchaser monthly
financial statements for the months after December 31, 1996 (the "New Monthly
Financial Statements") as soon as practicable after the end of each month:
(a) Audited Balance Sheets at December 31, 1995 and 1996; and
(b) Audited Statement of Operations for the years ended
December 31, 1995 and 1996.
The Financial Statements (and, with respect to the New Monthly
Financial Statements, when delivered, will or will be as the content may
require) (i) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods, (ii) present fairly
in all material respects, the Corporation's financial position, results of its
operations and changes in stockholder's equity and cash flows at and for the
periods therein specified, (iii) are true and complete, and (iv) are consistent
with the books and records of the Corporation.
2.10 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, the
Corporation has actively conducted its business in the ordinary and regular
course consistent with past practice. Since such date, there has not been any
material adverse change in the business, condition (financial or otherwise),
assets, liabilities, results of operations or prospects of the Corporation. To
Seller's knowledge, there has not occurred any event or governmental regulation
or order which could cause such a change, nor, to Seller's knowledge, is the
occurrence of any such event, regulation or order threatened. Except as set
forth on Schedule 2.10, without limiting the generality of the foregoing, since
December 31, 1996, there has not been:
(a) Any increase made or promised in the compensation or other
remuneration payable or to become payable by the Corporation to any of
its employees, agents or partners;
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(b) Any mortgage or pledge of, or any other lien, charge or
encumbrance of any kind, on any of the assets, tangible or intangible,
of the Corporation;
(c) Any sale or transfer of any assets, except for sales of
inventory in the ordinary course of business, or settlement,
cancellation or release of any indebtedness owing to the Corporation or
of any other claims of the Corporation;
(d) Any sale, license, assignment or transfer by the
Corporation of any patents, trademarks, trade names or other similar
intangible assets;
(e) Any amendments or termination of any material contract,
agreement or license to which the Corporation is a party or to which
the Corporation or any of its assets are subject or bound;
(f) Any commitment made (through negotiations or otherwise) or
any liability incurred to any labor organization by the Corporation;
(g) Any payment, declaration or setting aside by the
Corporation of dividends or a return of capital or any distribution by
the Corporation of any cash or other assets to any shareholder in
redemption of or as the purchase price for any of the Corporation's
capital stock or equity or in discharge or cancellation in whole or in
part of any indebtedness owing (whether in payment of principal,
interest or otherwise) to any shareholder;
(h) Any discharge or satisfaction by the Corporation of any
lien, encumbrance, obligation or liability (accrued, absolute, fixed or
contingent), other than those shown on the February 28, 1997 balance
sheet of the New Monthly Financial Statements that have been discharged
or satisfied in the ordinary course without acceleration and other than
those incurred and discharged in the ordinary course of business
consistent with past practice;
(i) Any material transaction entered into by the Corporation
other than in the ordinary course of business consistent with past
practice;
(j) Any institution by the Corporation of a bonus, stock
option, profit-sharing, pension plan or similar arrangement or any
changes in any such existing plans;
(k) Any incurrence by the Corporation (whether discharged or
not) of any obligation or liability (whether accrued, absolute, fixed
or contingent) other than current liabilities incurred, and obligations
entered into, in the ordinary course of business consistent with past
practice;
(l) Any adverse change in collection loss experience;
(m) Any material loss, damage or destruction to any of the
Corporation's properties (whether or not covered by insurance) or any
labor trouble;
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(n) Any payments in cash or otherwise by the Corporation to
Seller or any affiliate pursuant to a tax sharing arrangement or any
other type of intercompany agreement; or
(o) Any change in accounting principles or practices from
those utilized in the preparation of the Financial Statements.
2.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
December 31, 1996 balance sheet of the New Monthly Financial Statements, or on
Schedule 2.11, the Corporation is not obligated for, nor are any of its assets
or properties subject to, any liabilities or adverse claims or obligations,
absolute or contingent, except those incurred in the ordinary course of business
since December 31, 1996, and the Corporation is not in default with respect to
any terms or conditions of any material liability or obligation. There are no
facts known to Seller that might reasonably serve as a basis, in whole or in
part, for any material liabilities or obligations not disclosed in this
Agreement, in the Financial Statements, in the New Monthly Financial Statements
or in the Schedules attached hereto.
2.12 TAXES.
(a) The Corporation, has filed, and will file, on a timely
basis, all income, franchise, sales and other tax returns and reports
of every nature required to be filed by it (including any consolidated
or combined return required to be filed by it and any affiliated person
or entity) accurately reflecting all taxes owing to the United States
or any other government or any government subdivision, state or local,
or any other taxing authority ("Tax Returns"), and has paid in full or
made adequate provision in the Financial Statements and the New Monthly
Financial Statements for the payment of all taxes (including penalties,
additions to tax and interest) for which it has or may have liability.
All such Tax Returns are true, correct and complete in all respects.
Seller has no knowledge of any unassessed tax deficiency proposed or
threatened against the Corporation as a result of the operation of its
business. There are no liens on the Corporation's assets as a result of
any tax liabilities except for taxes not yet due and payable. There
are, and after the date of this Agreement will be, no tax deficiencies
(including penalties, additions to tax and interest) of any kind
assessed against or relating to the Corporation with respect to any
taxable period ending on or before the Closing Date. There are, and
after the date of this Agreement, will be no federal income tax
deficiencies assessed against the Corporation pursuant to Treasury
Regulations Section 1.1502-6. There are, and after the date of this
Agreement, will be no other tax deficiencies relating to Tax Returns
which include the Corporation for periods ending on or before the
Closing Date. As to all tax periods, or portions thereof, which end
prior to, or include, the Closing Date for which no Tax Returns are yet
due, the liability of the Corporation for taxes allocable to periods
(or portions thereof) ending on or before the Closing Date does not
exceed the amount accrued on the Financial Statements for such taxes.
The liability of the Corporation for taxes has not increased since
December 31, 1996, except in the ordinary course of business.
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(b) The Corporation is not a party to any action or proceeding
by any governmental authority for the assessment or collection of
taxes, nor has any such event been asserted or threatened. The
Corporation has not filed any consent of the type described under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), nor is it subject to any accumulated earnings penalties. The
Corporation has not made any payments, is not obligated to make any
payments, or is not a party to any agreement that under certain
circumstances could oblige it to make any payments that would not be
deductible under Section 280G of the Code. The Corporation was never a
member of any unitary group for purposes of any state income or
franchise tax laws. The Corporation has not been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(c) Except as set forth on Schedule 2.12, there are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local, or foreign Tax
Return of the Corporation for any period. Neither the Internal Revenue
Service nor any state, local or foreign taxing authority has audited
any tax return or report filed by the Corporation.
(d) The Corporation has furnished to Purchaser complete and
correct copies of all Tax Returns filed by the Corporation for all
taxable years beginning after December 31, 1994.
(e) Seller has furnished to Purchaser complete and correct
copies of all audit reports (or portions thereof) received by Seller
from the U.S. Treasury Department which relate to the Corporation for
any taxable period beginning after December 31, 1991. Seller has
furnished to Purchaser complete and correct copies of all audit reports
(or portions thereof) received by Seller or the Corporation from any
state, local or foreign taxing authority, which relate to the
Corporation for any taxable period beginning after December 31, 1991.
(f) Schedule 2.12 sets forth all tax elections made by the
Corporation, all adjustments under Section 481(a) of the Code which
will affect the taxes of Purchaser for all taxable years which end on
or after the Closing Date and all tax rulings or closing agreements to
which the Corporation is a party. Schedule 2.12 sets forth all
jurisdictions in which the Corporation has filed or will file state
income or franchise tax returns for each taxable period, or portion
thereof, ending on or before the Closing Date.
(g) There are no tax liens currently in existence with respect
to the Corporation. There are no tax sharing agreements or similar
arrangements in effect that include the Corporation.
2.13 INDEBTEDNESS TO OFFICERS, DIRECTORS AND SHAREHOLDERS. Except as
set forth on Schedule 2.13, the Corporation is not indebted to any of its
shareholders, officers or directors (or to members
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of their immediate families) in any amount whatsoever other than for salaries
payable or for expenses incurred on behalf of the Corporation in the ordinary
course of business.
2.14 ARTICLES OF INCORPORATION AND BYLAWS. True, accurate and complete
copies of the Articles of Incorporation and Bylaws of the Corporation, together
with all amendments thereto, have been delivered to Purchaser or its counsel.
2.15 CORPORATE MINUTES. Seller has furnished or made available to
Purchaser and its counsel the corporate record books of the Corporation and the
same are accurate and complete and reflect all resolutions adopted and all
actions taken, authorized or ratified by the shareholders and directors of the
Corporation. Copies of all corporate minutes of meetings held and of all written
actions taken after the date of this Agreement will be furnished to Purchaser
promptly, and in all events, prior to the Closing Date.
2.16 BROKERAGE AND FINDER'S FEES. Neither Seller nor any officer,
director or agent of the Corporation has incurred any liability to any broker,
finder or agent for any brokerage fees, finder's fees, or commissions with
respect to the transactions contemplated by this Agreement.
2.17 ACCOUNTS RECEIVABLE.
(a) Seller has previously delivered to Purchaser an aging
schedule as of a date not more than thirty (30) days prior to the date
of this Agreement, which is true, correct and complete, of the accounts
receivables, both trade and non-trade, of the Corporation as of that
date. Seller will update the list as of a date not more than five (5)
days prior to the Closing Date. The reserves for doubtful receivables
and uncollectible accounts that will be reflected on the books of the
Corporation as of the Closing Date will not exceed the greater of (i)
five percent (5%) of the then aggregate accounts receivable, or (ii)
Twenty-five Thousand Dollars ($25,000.00), and will be sufficient to
provide for any losses that may arise in connection with the collection
of the accounts receivable. The accounts receivable as reflected on the
books of the Corporation as of the Closing Date, net of such reserves,
will be fully collectible in the ordinary course of business within
ninety (90) days after the Closing Date or such other period of time
per the payment terms related to such account receivable, if different,
as set forth on such aging schedule, without resort to legal
proceedings. All of such accounts receivable will represent valid
claims that have arisen in the ordinary course of business.
(b) Unless an invoice is delivered to the Corporation with a
payment indicating otherwise, all payments received by Purchaser will
be applied to a customer's oldest outstanding accounts receivable.
(c) In the event that Seller indemnifies Purchaser pursuant to
Section 8.2 of this Agreement by reason of Seller's breach of the
representations and warranties contained in this Section 2.17,
Purchaser will cause the corporation to assign to Seller all the
Corporation's right, title and interest in and to the uncollected
accounts receivable giving rise
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to said breach, and any other documentation related thereto that is
necessary for Seller's collection of same.
2.18 EMPLOYMENT MATTERS.
(a) Except as set forth on Schedule 2.18, the Corporation is
not a party to, participant in, or bound by, any collective bargaining
agreement, union contract or employment, bonus, deferred compensation,
insurance, pension, profit sharing or similar personnel arrangement,
any stock purchase, stock option or other stock plans or programs or
any employee termination or severance arrangement.
(b) Except as set forth on Schedule 2.18, the employment by
the Corporation of any person (whether or not there is a written
employment agreement) may be terminated for any reason whatsoever not
inconsistent with current law, without penalty or liability of any kind
other than accrued vacation pay.
(c) Except as set forth on Schedule 2.18, there are no active,
pending or, to the best of Seller's knowledge, threatened
administrative or judicial proceedings under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Fair
Labor Standards Act, the Occupational Safety and Health Act, the
National Labor Relations Act or any other foreign, federal, state or
local law (including common law), ordinance or regulation relating to
employees of the Corporation. For purposes of this subsection (c),
Seller's knowledge means the actual knowledge of Seller after
reasonable inquiry is made to Xxxxxxx Xxxxx ("Xxxxx").
(d) There are no pending or, to the best of Seller's
knowledge, threatened, labor difficulties.
2.19 NO DEFAULTS. The Corporation is not in default (nor is any such
default alleged to exist) under the terms of any material written or oral
contract, agreement, lease, license, mortgage, deed of trust, note, guaranty,
instrument or understanding (collectively, "Contracts") to which it is a party
or to which any of its assets, business or operations is subject, nor, to the
best of Seller's knowledge, is any condition or event threatened, which, after
notice or the passage of time, or both, would constitute a default under any
Contract. To Seller's knowledge, no such default, condition or event exists or
is alleged to exist with respect to the performance of any obligation of any
other party to any of such Contracts. For purposes of this Section 2.19,
Seller's knowledge means the actual knowledge of Seller after reasonable inquiry
is made to Xxxxx.
2.20 MATERIAL CONTRACTS.
(a) Schedule 2.20(a) is a true and correct list of each
Contract to which the Corporation is a party or by which any of its
assets, businesses or operations is bound or affected. Schedule 2.20(a)
includes a description of any consents or approvals required of third
parties under the terms of such Contracts for the consummation of the
transactions
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contemplated by this Agreement. Schedule 2.20(a) excludes any Contract
that (i) may be canceled by the Corporation on thirty (30) days' notice
or less without incurring a liability or obligation on the part of the
Corporation for such cancellation, or (ii) involves or is reasonably
expected to involve the payment of consideration having an aggregate
value of less than Fifteen Thousand Dollars ($15,000.00). A true,
correct and complete copy of each written, and a description of each
oral, Contract, so listed has been delivered to Purchaser or its
counsel.
(b) Schedule 2.20(b) is a true and correct list of each
Contract with a customer of the Corporation that contains provisions
(i) providing for payment terms to the Corporation of forty-five (45)
days or greater, (ii) permitting the customer to retain any portion of
the purchase price for the products or services to be provided thereby
as security for warranty claims or for any other purpose, or (iii)
providing for liquidated or stipulated damages.
2.21 PURCHASE ORDERS. Schedule 2.21 is a true and complete list of all
purchase orders under which the Corporation is or will become obligated to pay
any particular vendor an aggregate sum in excess of Ten Thousand Dollars
($10,000.00).
2.22 INDEBTEDNESS. Schedule 2.22 is a true and complete list of all
indebtedness, including, without limitation, trade accounts payable owed or to
be owed by the Corporation, including a description of the terms of payment,
and, if such indebtedness is secured, a description of all properties or other
assets pledged, mortgaged or otherwise hypothecated (voluntarily or
involuntarily) as security.
2.23 LITIGATION. Schedule 2.23 is a true and complete list of all
administrative or judicial proceedings to which the Corporation is a party or,
to the knowledge of Seller, to which it is threatened to be made a party which
relate, directly or indirectly, to any of the Corporation's assets, including,
without limitation, proceedings that could affect title to or interests in the
assets. There is no action, suit, claim, demand, arbitration or other proceeding
or investigation, administrative or judicial, pending or threatened against or
affecting the Corporation or any of its assets, including, without limitation,
any relating to so-called product liability, which, if adversely determined or
resolved, would have an adverse effect on the business, assets, condition
(financial or otherwise), results of operations or prospects of the Corporation,
or any provisions of, or the validity of, or rights under, any leases or other
operating agreements, licenses, permits or grants of authority of the
Corporation. Neither Seller nor the Corporation has received notice that the
Corporation is the subject of any governmental investigation and the Corporation
is not subject to, nor is it or has it been in default with respect to, any
order, writ, injunction or decree of any court, or of any federal, state, local
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. Schedule 2.23 indicates which of the
matters listed are covered by valid insurance and the extent of such coverage.
For purposes of this Section 2.23, Seller's knowledge means the actual knowledge
of Seller after reasonable inquiry is made to Xxxxx.
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2.24 INSURANCE. Schedule 2.24 is a true and correct list of all the
policies of insurance covering the business, properties and assets of the
Corporation presently in force (including as to each (i) risk insured against,
(ii) name of carrier, (iii) policy number, (iv) amount of coverage, (v) amount
of premium, (vi) expiration date and (vii) the property, if any, insured),
indicating as to each whether it insures on an "occurrence" or a "claims made"
basis. All of the insurance policies set forth on Schedule 2.24 are in full
force and effect and all premiums, retention amounts and other related expenses
due have been paid, and the Corporation has not received any notice of
cancellations with respect to any of the policies. The Corporation has not been
refused any insurance by any insurance carrier to which it has applied for
insurance during the last five (5) years. There are no circumstances existing
which would enable any insurer to avoid liability under any of the Corporation's
policies.
2.25 TRANSACTIONS WITH OFFICERS, ETC.
(a) Schedule 2.25(a) is a true and correct list of the
ownership of the Corporation in any entity that has any existing
contractual relationship, oral or written, or other business
relationship with Seller.
(b) Schedule 2.25(b) is a true and correct list of all
Contracts (oral or written), including, but not limited to, any loans
(other than those set forth on Schedule 2.13 of this Agreement or not
required to be set forth thereon) or leases, to which the Corporation
is a party and to which any of the officers, directors or other
employees or shareholders of the Corporation, or members of their
immediate families or other corporations, partnerships or other
entities in which any of them has a material interest, is also a party.
Schedule 2.25(b) includes a list of indebtedness of any such person or
entity to the Corporation.
(c) Except as set forth on Schedule 2.25(c), none of the
Corporation or any officer, director, employee or shareholder of the
Corporation, or members of their immediate families or other
corporations, partnerships or other entities in which any of them has a
material interest, has any direct or indirect interest in any
competitor, supplier or customer of the Corporation or in any person,
firm or entity from whom or to whom the Corporation leases any
property, or in any other person, firm or entity with whom the
Corporation transacts business of any nature.
2.26 EMPLOYEES. Schedule 2.26 is a true and correct list of all
employees of the Corporation, their accrued vacation and sick pay, the nature of
their duties and the date and amount of their last increase in compensation. A
true, correct and complete copy of each written employment contract and a
description of each oral employment agreement with any employee has been
delivered to Purchaser or its counsel. As used in this Agreement, the term
"employees" includes employees, salesmen, agents, sales representatives and all
other persons associated with the Corporation.
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2.27 TRADEMARKS, COPYRIGHTS AND SIMILAR MATTERS.
(a) The Corporation has never been charged with infringement
or violation of any patent, trademark, service xxxx, trade name or
copyright. The Corporation is not using or has not in any way made use
of any patentable or unpatentable invention, or any confidential
information or trade secret, of any former employer of any present or
past employee of the Corporation. All patents, trademarks, service
marks, trade names and copyrights (the "Specified Items"), and all
applications or registrations (including those whose use is limited to
one or more states of the United States), owned or used by the
Corporation are listed on Schedule 2.27 and, to the extent indicated,
have been duly registered in, filed in or issued by the United States
Patent Office or the corresponding agency or office of each of such
states. Except as indicated on Schedule 2.27, the Corporation is the
sole and exclusive owner of, or has the sole and exclusive right to
use, the Specified Items, except for the rights of licensees (whose
names and addresses are listed on Schedule 2.27). Except as set forth
on Schedule 2.27, the Corporation does not use any of the Specified
Items by consent of any other party and the same are free and clear of
any attachments, liens, claims, encumbrances or agreements. Except as
listed on Schedule 2.27, there are no claims or demands of any other
person, firm or corporation pertaining to any of the Specified Items,
and no proceedings have been instituted, are pending or, to the
knowledge of Seller, are threatened which challenge the right of the
Corporation in respect of any of the Specified Items. None of the
Specified Items infringes on, or, to the knowledge of Seller, is being
infringed on by others, and none of the Specified Items is subject to
any outstanding order, decree, judgment, stipulation or agreement
restricting the scope of its use.
(b) The Corporation has valid rights to use its corporate
name. The Corporation does not use such name by consent of any other
person or entity, and uses such name free and clear of any attachments,
liens, claims, encumbrances or agreements. There are no claims or
demands of any other person or entity pertaining to the use of the name
and no proceedings have been instituted or, to the knowledge of Seller,
are threatened, which challenge the right of the Corporation in respect
of such name; and the use of such name by the Corporation does not
infringe on or, to the knowledge of Seller, is not being infringed on
by others, and is not subject to any outstanding order, decree,
judgment, stipulation or agreement restricting the scope of its use.
(c) True, correct and complete copies of all patents,
trademarks, service marks, trade names and copyrights, and of all
related applications or registrations, that are listed on Schedule 2.27
have been delivered to Purchaser or its counsel.
2.28 EMPLOYEE BENEFIT PLANS AND OTHER PLANS. Except for the plans or
arrangements listed on Schedule 2.28 (hereinafter referred collectively to as
the "Plans" and individually as the "Plan"), the Corporation does not, directly
or indirectly, maintain, sponsor or have an obligation or liability with respect
to, any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), executive
compensation or incentive plan, bonus or severance arrangement, employment
contract, collective bargaining agreement, union
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contract, deferred compensation agreement, stock purchase or incentive plan or
arrangement, or other employee benefit plan or arrangement. For the purposes of
this Agreement, "Controlled Group" shall mean the Seller, the Corporation and
any trade or business, whether or not incorporated, which is treated together
with Seller or the Corporation under Section 4001(b)(1) of ERISA or Sections
414(b), (c), (m) or (o) of the Code. With respect to each Plan identified on
Schedule 2.28:
(a) All applicable ERISA and Code requirements with respect to
such Plan as to the filing of reports, documents and notices with the
Secretary of Labor, the Pension Benefit Guaranty Corporation, and the
Secretary of the Treasury, or the furnishing of such documents to
participants or beneficiaries, have been complied with in all respects
by such Plan or its administrators;
(b) No member of the Controlled Group, Plan, fiduciary of such
Plan or administrator of such Plan, has taken any action, or failed to
take any action, which action or failure could subject the Corporation,
or any employee of the Corporation to any liability for breach of any
fiduciary duty, or for any prohibited transaction (as defined in
Section 4975 of the Code), with respect to or in connection with such
Plan;
(c) There are no actions, suits or claims pending (other than
routine claims for benefits) or threatened against such Plan, the
Corporation, Seller, or against any fiduciary of such Plan;
(d) Such Plan, the fiduciaries of such Plan, Controlled Group
members and administrators of such Plan have at all times complied with
applicable requirements of ERISA, the Code, and any other applicable
law (including the Health Maintenance Organization Act of 1973, as
amended) governing such Plan, and such Plan has at all times been
properly administered in accordance with all such requirements of law
and in accordance with its terms to the extent consistent with all such
requirements of law;
(e) The Plan is not a "multiemployer plan" as described in
Section 3(37) of ERISA or Section 414(f) of the Code, nor is it subject
to Title IV of ERISA;
(f) All bonding required by applicable provisions of ERISA
with respect to the Plan has been obtained and is in full force and
effect;
(g) No trust associated with the Plan has earned any
"unrelated business taxable income" (as such term is defined in Section
512 of the Code and the regulations thereunder) or "unrelated debt
financed income" (as such term is defined in Section 514 of the Code
and regulations thereunder);
(h) If the Plan is an "employee pension benefit plan" (as
defined in ERISA Section 3(2)), the Plan and its associated trust
complies with the applicable provisions of the Code (including, but not
limited to, Code Sections 401(a), 401(a)(4), 410(b), 401(a)(26) and
501(a)), has received a favorable determination letter from the
Internal Revenue Service
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stating that the Plan qualifies under Section 401(a) and that the
associated trust, if any, qualifies under Section 501(a), has been
timely amended (and the amendment has been submitted to the Internal
Revenue Service for a favorable determination letter) with respect to
changes required by the Tax Equity and Fiscal Responsibility Act of
1982, the Retirement Equity Act of 1984 and the Tax Reform Act of 1984
and is being maintained in accordance with the changes required by the
previously described Acts, the Tax Reform Act of 1986 and the Omnibus
Budget Reconciliation Act of 1987, and subsequent legislation and
regulations;
(i) The Plan has not incurred any "accumulated funding
deficiency," as defined in Section 301(a)(2) of ERISA whether or not
waived;
(j) The Plan does not (i) provide for non-terminable or
non-alterable medical benefits for employees, dependents or retirees or
(ii) provide any benefits for any person upon or following retirement
or termination of employment except as otherwise required by Part 6 of
Subtitle B of Title I of ERISA or Section 4980B of the Code (herein
collectively referred to as "COBRA"), and then only to the extent the
person pays the "applicable premium" (as defined in Code Section
4980B(f)(4)) for such coverage;
(k) No events or changes have occurred or are expected to
occur with respect to the Plan that would cause an increase in the cost
of providing the benefits under the Plan;
(l) Full payment has been made of all amounts which Seller,
the Corporation or other member of the Controlled Group, is required,
under applicable law or under the Plan, to have paid as a contribution
or a benefit for the plan years of the Plan ended prior to the date
hereof. All contributions required to be made by, and all other
liability of, the Corporation with respect to the Plan for the periods
covered by the Financial Statements shall have been set forth on the
appropriate Financial Statement in accordance with generally accepted
accounting principles. Benefits under the Plan are as represented and
have not been increased subsequent to the date as of which documents
have been provided;
(m) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or
officer of the Corporation to severance pay, unemployment compensation
or any other payment, (ii) accelerate the time of payment or vesting
under the Plan, (iii) increase the amount of compensation due any such
employee or officer, (iv) except as specifically set forth herein,
directly or indirectly cause the Corporation to transfer or set aside
any assets to fund or otherwise provide for the benefits under the Plan
for any current or former employee, officer or director, or (v) result
in any non-exempt prohibited transaction described in ERISA Section 406
or Code Section 4975;
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(n) Seller has delivered or caused to be delivered to
Purchaser or Purchaser's counsel true and correct copies of the
following with respect to the Plan:
(i) A copy of the Plan and amendments thereto to the
date hereof;
(ii) A copy of each trust agreement and insurance
contract pertaining to the investment of the assets, if any,
of the Plan or the payment of benefits thereunder, including
all amendments to such documents to the date hereof;
(iii) The most recent determination letter issued by the
Internal Revenue Service with respect to the Plan for which a
determination letter has been issued and any pending
determination letter request with respect to the Plan;
(iv) The three (3) most recent Internal Revenue Service
Form 5500 series annual return/reports, including all
applicable Schedules and audited financial statements, filed
with respect to the Plan; and
(v) A copy of the latest summary plan description
(within the meaning of Section 10(a)(1) of ERISA) for the Plan
and each summary of material modifications (within the meaning
of Section 101(b)(2) of ERISA) thereto, each of which has been
provided to employees and filed with the Department of Labor.
2.29 ENVIRONMENTAL MATTERS.
(a) Definitions. For purposes of this Section:
(i) "Contaminant" means any substance or waste
containing hazardous substances, pollutants or contaminants as
those terms are defined in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section
U.S.C. 9601 ET SEQ., and any other substance similarly
defined or identified in any other federal, state or local
laws, rules or regulations governing the manufacture, import,
use, handling, storage, processing, release or disposal of
substances or wastes deemed hazardous, toxic, dangerous or
injurious to public health or to the environment. This
definition includes asbestos-containing material and
petroleum or petroleum-based products.
(ii) "Requirements of Law" means any federal, state or
local law, rule, regulation, permit, agreement, order or other
binding determination of any governmental authority relating
to the environment, public health or safety.
(iii) "Release" has the same meaning as in the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section U.S.C. 9601 ET SEQ.
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(b) Except as set forth on Schedule 2.29(b):
(i) with the exception of the storage of paint and
paint related thinners, solvents and the like used in the
ordinary course of business, the Corporation has not caused or
allowed any Contaminant to be used, manufactured, stored,
placed, processed or released on or off-site of any of the
Real Property listed on Schedule 2.7(a);
(ii) the Real Property is in compliance with all
applicable Requirements of Law;
(iii) neither the Corporation, nor the Real Property, nor
any real property owned or leased by the Corporation in the
past or in which the Corporation has had any interest in the
past, are the subject of any notice, order or agreement
regarding any remedial action or the Release, threatened
Release or presence of a Contaminant; and
(iv) neither the Corporation, nor the Real Property are
subject to any contingent liability in connection with the
Release, threatened Release, or presence of any Contaminants
on or off-site of the Real Property.
(c) Except as set forth on Schedule 2.29(c):
(i) the Corporation has obtained all environmental,
health and safety permits necessary, and made all
notifications necessary, for the current use of its assets;
(ii) all such permits and notifications are in good
standing and the Corporation has made timely application for
renewal of such permits where necessary;
(iii) the Corporation is in compliance with all terms
and conditions of such permits and notifications; and
(iv) the Corporation's assets are in compliance with all
applicable Requirements of Law and are subject to no
contingent liability in connection with the Release,
threatened Release or presence of any Contaminants on or
off-site of such assets.
(d) There is not now on or in the Corporation's assets,
including but not limited to, the Real Property:
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(i) any treatment, storage, recycling, disposal or
arrangement therefor, of any hazardous waste as that term is
defined under 40 CFR Part 261 or any state equivalent;
(ii) any underground storage tanks, in use or abandoned;
(iii) any asbestos-containing material;
(iv) any polychlorinated biphenyls (PCBs) in any
hydraulic oils, transformers, capacitors or other electrical
equipment.
2.30 BANK ACCOUNTS. Schedule 2.30 is a true and correct list of the
name of each bank, savings and loan, or other financial institution in which the
Corporation has an account or safe deposit box, the names of all persons
authorized to draw on each account or to have access to each box, the number of
signatures required to be given for a withdrawal and a description of the type
of account.
2.31 COMPLIANCE WITH LAWS. The Corporation has complied with all laws,
regulations, rules and orders of any governmental department or agency or any
other commission, board, agency or instrumentality, federal, state or local, or
other requirements of law affecting its business and operations and is not in
default under or in violation of any provision of any federal, state or local
law, regulation, rule or order.
2.32 POWERS OF ATTORNEY. The Corporation has not given any power of
attorney (irrevocable or otherwise) that is presently in effect to any person or
entity for any purpose.
2.33 LICENSES AND RIGHTS. The Corporation possesses all franchises,
licenses, easements, permits and other authorizations from governmental or
regulatory authorities and from all other persons or entities that are necessary
to permit it to engage in its business as presently conducted in and at all
locations and places where it is presently operating. Such franchises, licenses,
permits and other authorizations are listed on Schedule 2.33.
2.34 SCHEDULE OF GOVERNMENT REPORTS. Schedule 2.34 is a true and
correct list, and Seller has furnished to Purchaser or its counsel complete
copies of all reports, if any, filed since December 31, 1993, by the Corporation
with the Department of Labor, Equal Employment Opportunity Commission, Federal
Trade Commission, Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns and standard
forms relating to compensation or remuneration of employees), Environmental
Protection Agency, Securities and Exchange Commission or Pension Benefit
Guarantee Corporation, or any similar state agency.
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2.35 PRODUCTS.
(a) The products sold by the Corporation conform to and meet
or exceed the standards required by all applicable laws, ordinances and
regulations now in effect and, to Sellers' knowledge, there is no
pending legislation, ordinance or regulation which if adopted or
enacted would have a material adverse effect on such products or the
Corporation's business.
(b) Schedule 2.35 contains a written statement accurately
describing the Corporation's warranties and customer service policies
and any recurring warranty problems. The Corporation has no outstanding
contracts or proposals that depart from the warranty and customer
service policy and practice described in such Schedule. Except as may
be listed on Schedule 2.35, no claims of customers or others based on
an alleged or admitted defect of material, workmanship or design or
otherwise in or in respect of any of the Corporation's products are
presently pending or, to the knowledge of Seller, threatened other than
product warranty claims in the aggregate not in excess of Twenty
Thousand Dollars ($20,000.00). For purposes of this subsection (b),
Seller's knowledge means the actual knowledge of Seller after
reasonable inquiry is made to Xxxxx.
2.36 CASUALTY OCCURRENCES. Schedule 2.36 is a true and correct list of
occurrences during the last five (5) years of damages to persons or property
involving any defects or alleged defects in any of the Corporation's products or
their respective designs. All such occurrences are fully and adequately covered
by paid-for insurance.
2.37 INVENTORY. Except as set forth on Schedule 2.37, the inventories
of the Corporation consist only of items of a quality and quantity usable and
saleable in the ordinary course of business, consistent with past practice,
within the Corporation's and the Subsidiaries' normal inventory "turn"
experience and do not include any item of inventory which has previously been
written off by the Corporation. Items of below-standard quality and items not
previously readily saleable in the ordinary course of business have been written
down in value in accordance with generally accepted accounting principles to
estimated net realizable market values. The value at which the inventories are
carried on the Corporation's books reflects the lower of cost (on a FIFO basis)
or estimated net realizable market value, and is based on quantities determined
by physical count.
2.38 CAPITAL EXPENDITURE PLANS. Schedule 2.38 sets forth a description
of each capital expenditure program of the Corporation involving the expenditure
of at least Ten Thousand Dollars ($10,000.00) as to which the expenditure of
funds is incomplete, setting forth (i) the budgeted expenditures and (ii) the
actual amounts expended, if any.
2.39 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by Seller in this Agreement or the Schedules hereto
(collectively, the "Documents"), contain or will contain any untrue statement of
a material fact, or omit or will omit to state a material fact necessary to make
the statements of fact contained therein not misleading. All statements of fact
made and data presented by Seller in any Document are deemed to be
representations and warranties made
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under this Agreement by Seller. References in any Document, or in any Contract,
a copy of which has been provided to Purchaser or its counsel, to any other
Document or Contract as to which Seller prior to the date of this Agreement has
not provided to Purchaser or its counsel a true copy or, if oral, a written
summary, will not be deemed for any purposes of this Agreement to be a
disclosure of any term, provision or statement of fact of, or relating to, such
other Document or Contract.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser warrants and represents to, and agrees with, Seller as
follows:
3.1 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, has full power and authority to carry on its business
as and where now conducted and to own or lease and operate its properties at and
where now owned or leased and operated by it, and is duly qualified to do
business and is in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by it,
makes such qualification necessary.
3.2 AUTHORITY OF PURCHASER. The execution, delivery and consummation of
this Agreement by Purchaser has been duly authorized by the board of directors
of Purchaser in accordance with all applicable laws and the Certificate of
Incorporation and By-Laws of Purchaser, and at the Closing Date no further
corporate action will be necessary on the part of Purchaser to make this
Agreement valid and binding on Purchaser and enforceable against Purchaser in
accordance with its terms.
3.3 INVESTMENT PURPOSE. The shares of capital stock of the Corporation
purchased pursuant to this Agreement will be acquired for investment and not
with a view toward the resale or distribution thereof.
ARTICLE IV
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing
Date:
4.1 REPRESENTATIONS TRUE. The representations and warranties of Seller
contained in this Agreement are true, complete and accurate in all material
respects on and as of the Closing Date to the same extent and with the same
force and effect as if made on such date, except as affected by the transactions
contemplated under this Agreement.
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4.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Seller have been obtained from all local, state and federal
departments and agencies, from all other commissions, boards, agencies and from
any other person or entity whose approval or consent is necessary to consummate
the transactions contemplated under this Agreement including, without
limitation, such consents as may be listed or required to be listed on Schedule
2.2.
4.3 PERFORMANCE AND OBLIGATIONS. Seller has duly performed all
obligations, covenants and agreements undertaken by Seller in this Agreement and
have complied with all terms and conditions applicable to Seller under this
Agreement to be performed and complied with on or before the Closing Date.
4.4 RECEIPT OF DOCUMENTS BY PURCHASER. Purchaser has received:
(a) a certificate executed by Seller certifying as to the
fulfillment of the matters contained in Sections 4.1, 4.2, 4.3 and 4.5
of this Article;
(b) a true and correct copy of the Corporation's Articles of
Incorporation, certified by the Secretary of State of Michigan as of a
date not more than seven (7) days prior to the Closing Date, and a true
and correct copy of the Corporation's Bylaws certified by the Secretary
of the Corporation as of the Closing Date;
(c) a written opinion from counsel for Seller (who must be
satisfactory to Purchaser and its counsel), dated as of the Closing
Date, addressed to Purchaser, satisfactory to Purchaser and its counsel
in form and substance, to the effect that:
(i) The Corporation is duly incorporated, validly
existing and is in good standing under the laws of the state
of Michigan, has full corporate power and authority to carry
on its business as and where now conducted, and to own or
lease and operate its properties at and where now owned or
leased and operated by it, and is qualified to do business as
a foreign corporation and is in good standing in every
jurisdiction in which the property owned, leased or operated
by it, or the nature of the business conducted by it, makes
such qualification necessary;
(ii) The Corporation is authorized to issue 60,000
shares of common stock, without par value, of which 1,000
shares are duly and validly issued and outstanding, fully paid
and nonassessable and were not issued in violation of any
preemptive or any other rights, including any rights under
any federal or state securities laws. There are no other
shares of stock, convertible or other securities or rights,
warrants or options with respect to any shares of stock or
securities of the Corporation authorized, issued or
outstanding;
(iii) Seller is the record and beneficial owner of all
the Shares and has full right and lawful authority to convey,
transfer and assign the Shares to Purchaser as provided in
this Agreement. Seller has good and marketable title to the
Shares free
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and clear of any lien, claim, charge, option, security
interest, restriction on transfer, encumbrances or other
defect in title. On the consummation of the transactions
contemplated by the Agreement, Purchaser will acquire good and
marketable title to the Shares free and clear of any lien,
claim, charge, option, security interest, restriction on
transfer, encumbrance or other defect in title;
(iv) This Agreement constitutes the legal, valid and
binding obligation of Seller, and is enforceable against
Seller in accordance with its terms;
(v) Except as set forth in this Agreement or in any
Schedule, the execution and delivery of this Agreement and the
consummation of the transactions contemplated under this
Agreement by Seller (a) are not in conflict with the Articles
of Incorporation or Bylaws of the Corporation, (b) do not
(with or without notice or the passage of time or both)
constitute a default under, and are not in conflict with, any
Contract known to such counsel to which the Corporation is a
party or to which any of its assets are subject, (c) do not
violate any order, judgment or decree or any rule, regulation
or law, or any other restriction known to such counsel to
which the Corporation is a party or to which any of their
respective assets are subject, and (d) will not (with or
without notice or the passage of time or both) result in the
creation of any lien or any charge on or any loss of any
assets of the Corporation or in the acceleration or
termination of any loan, security interest or other agreement
known to such counsel to which the Corporation is a party or
to which any of its assets are subject;
(vi) Except with respect to those matters as may be
disclosed in any Schedule, such counsel has no knowledge of
any action, suit, claim, demand, arbitration or other
proceeding or investigation, administrative or judicial,
pending or threatened against or affecting the Corporation or
any of its assets at law or in equity, or before or by any
federal, state, municipal or other governmental department or
by any other commission, board, agency or instrumentality,
domestic or foreign, that can reasonably be expected to have
any adverse effect on the business, assets, condition
(financial or otherwise), results of operations or prospects
of the Corporation; and
(vii) Such other material matters which Purchaser or
its counsel reasonably requests.
(d) the resignations of such officers and directors of the
Corporation as may be requested by Purchaser;
(e) certificates representing all of the Shares, with stock
powers covering such shares duly endorsed in blank; and
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(f) a general release of all claims of Seller against the
Corporation, in the form of EXHIBIT "C" to this Agreement.
4.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain material damages or relief in
connection with this Agreement or the consummation of this Agreement, or which
is likely to materially and adversely affect the value of the business or assets
of the Corporation.
4.6 EMPLOYMENT AGREEMENT. Xxxxx has entered into an Employment
Agreement in the form of EXHIBIT "D" to this Agreement, and by his signature on
this Agreement, Xxxxx has agreed to enter into such Employment Agreement on or
prior to the Closing.
4.7 DELIVERY OF BOOKS AND RECORDS. Seller has delivered or made
available to Purchaser all books and records of the Corporation relating to or
reasonably required for the operation of the business of the Corporation,
including, without limitation, copies of all Contracts, financial and accounting
records, files and records relating to employees, and all related
correspondence.
4.8 ABSENCE OF CHANGES. There has been no material adverse change in
the business (financial or otherwise), assets, liabilities, results of
operations or prospects of the Corporation since the date of this Agreement.
4.9 REAL PROPERTY LEASE. The Xxxxx X. Xxxx Restated Trust U/A/D 6/8/83
has entered into a Real Property Lease in substantially the form of EXHIBIT "E"
to this Agreement (the "Lease").
4.10 ESCROW AGREEMENT. Seller has entered into the Escrow Agreement.
4.11 PURCHASER'S REVIEW. Purchaser has conducted a review of the
business, assets, books and records of the Corporation and has found the results
of such review to be satisfactory to Purchaser, in its sole discretion.
4.12 TRADE NAME ASSIGNMENT. Seller, Lanco Corporation and any of its
parents, subsidiaries or affiliates have executed a Trademark and Trade Name
Assignment in substantially the form of EXHIBIT "F" to this Agreement, whereby
all rights to the names "Lanco" and "Lanco Environmental Products" are assigned
to Purchaser.
4.13 EQUIPMENT LEASE. The Corporation has been released from any and
all of its obligations under the Equipment Lease dated July 1, 1995, as it
relates to any aircraft.
4.14 MANAGEMENT AGREEMENT. Any management agreement between the
Corporation and Lanco Corporation or Seller has been terminated, and the
Corporation has received a release from any and all obligations under same.
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ARTICLE V
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller under this Agreement are, at the option of
Seller subject to satisfaction of the following conditions at or prior to the
Closing Date:
5.1 REPRESENTATIONS TRUE. The representations and warranties of
Purchaser contained in this Agreement are true, complete and accurate in all
material respects on and as of the Closing Date to the same extent and with the
same force and effect as if made on such date, except as affected by the
transactions contemplated under this Agreement.
5.2 RECEIPT OF DOCUMENTS BY SELLER. Seller has received:
(a) the Purchase Price as provided in Section 1.1;
(b) a certificate executed by the President and Secretary or
Treasurer of Purchaser certifying as to the fulfillment of the matters
contained in Section 5.1 of this Article;
(c) a written opinion from counsel for Purchaser, dated as of
the Closing Date, addressed to Seller, satisfactory to Seller and its
counsel in form and substance, to the effect that:
(i) Purchaser is duly incorporated, validly existing
and is in good standing under the laws of the State of
Delaware, has full corporate power and authority to carry on
its business as and where now conducted, and to own or lease
and operate its properties at and where now owned or leased
and operated by it;
(ii) Purchaser has all requisite corporate power to
execute, deliver and carry out its obligations under this
Agreement and the execution, delivery and performance of this
Agreement by Purchaser have been duly authorized by all
requisite corporate action;
(iii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated under this
Agreement by Purchaser are not in conflict with the
Certificate of Incorporation or By-Laws of Purchaser; and
(iv) This Agreement constitutes the legal, valid, and
binding obligation of Purchaser, and is enforceable against
Purchaser in accordance with its terms.
(d) certified copies of resolutions duly adopted by the Board
of Directors of Purchaser approving this Agreement and the transactions
contemplated under it.
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5.3 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to obtain material damages from Seller in connection with this Agreement
or the consummation of this Agreement.
5.4 REAL PROPERTY LEASE. Purchaser has entered into the Lease.
5.5 AGREEMENTS REGARDING SALES COMMISSIONS AND USED EQUIPMENT.
Purchaser has entered into two letter agreements in substantially the forms of
EXHIBITS "G" AND "H" to this Agreement.
5.6 ESCROW AGREEMENT. Purchaser has entered into the Escrow Agreement.
5.7 LICENSE AGREEMENT. Purchaser has entered into a Trademark and Trade
Name License Agreement with Seller in substantially the form of EXHIBIT "I" to
this Agreement, whereby Seller receives rights to use the name "Lanco."
ARTICLE VI
----------
CLOSING
-------
The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Benesch, Friedlander, Xxxxxx &
Xxxxxxx LLP on the date that Waterlink, Inc., the parent corporation of
Purchaser, closes its contemplated initial public offering at 10:00 A.M.
Cleveland Time, or on such other date mutually agreeable to the parties (the
"Closing Date"). If the Closing has not taken place by such date by reason of
failure of fulfillment of any condition or conditions contained in this
Agreement, then the non-fulfilling party may, by written notice to the other
party, extend the Closing Date for a period of fourteen (14) days to permit
fulfillment of such condition or conditions. Unless the parties otherwise agree
in writing, if the Closing has not occurred within [90] days from execution of
this Agreement, then this Agreement will be deemed to have been terminated and
abandoned, subject to the legal rights and remedies of either party arising out
of the other party's breach of any of the provisions of this Agreement. The
parties will in good faith use all reasonable efforts to achieve the Closing.
ARTICLE VII
-----------
TERMINATION OF AGREEMENT
------------------------
This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing Date (unless otherwise
specified below):
(a) by mutual consent in writing of Purchaser and Seller;
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(b) by Purchaser if there has been a material
misrepresentation or breach of warranty in the representation and
warranties of Seller made under this Agreement;
(c) by Purchaser if all or a material portion of the
Corporation's assets have been materially damaged or destroyed before
the Closing;
(d) by Purchaser if any of the Real Property has been taken,
in whole or in part, by eminent domain or by conveyance in lieu of
eminent domain;
(e) by Purchaser, if any of the conditions contained in
Article IV, or by Seller, if any of the conditions contained in Article
V, respectively, have not been fulfilled in all respects in each case
at or prior to the Closing Date.
Any termination pursuant to this Article VII will not affect the
obligations of the parties under Article XI or Section 15.4 below, and will be
without prejudice to the terminating party's legal rights and remedies by reason
of any breach of this Agreement occurring prior to such termination. In the
event this Agreement is terminated by Purchaser pursuant to Sections (b), (c),
(d) or (e) of this Article VII, (other than a termination pursuant to Section
(e) above solely as a result of the conditions contained in Section 4.11 of
Article IV not being fulfilled, in which case Purchaser shall forfeit, and
Seller shall retain, the Deposit), Seller will return to Purchaser the Deposit
within three (3) days of such termination. In the event of any other termination
of this Agreement, Seller shall retain the Deposit. Notwithstanding anything in
this Agreement to the contrary, if, on the Closing Date, Purchaser (i) has
complied with all of the conditions to Closing contained in Article V, (ii) has
notified Seller of its intention to consummate the transactions contemplated
under this Agreement, and (iii) is ready and able to pay Seller the Purchase
Price and furnishes evidence to that effect to Seller, and if the Closing does
not then occur due to the refusal of Seller to so consummate the transactions
contemplated under this Agreement, Purchaser will be entitled to specifically
enforce the terms of this Agreement in a court of competent jurisdiction, it
being acknowledged that monetary damages due Purchaser in such case cannot be
adequately determined at law.
ARTICLE VIII
------------
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES: INDEMNIFICATION: DISPUTES
-----------------------------------------
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding the
Closing of the transactions contemplated under this Agreement, or any
investigation made by or on behalf of Seller or Purchaser, the representations
and warranties of Seller and Purchaser contained in this Agreement or in any
certificate, Schedule, chart, list, letter, compilation or other document
furnished or to be furnished pursuant to this Agreement, will survive the
Closing for a period of eighteen (18) months, except that the representations
and warranties of Seller contained in Sections 2.4, 2.12, 2.28 and 2.29 with
respect to title to Shares, tax matters, employee benefit matters and
environmental matters will survive for so long as any applicable statute of
limitations has not expired, been suspended or been waived or extended, and for
thirty (30) days thereafter. However, as to any breach of, or
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misstatement in, any such representation or warranty as to which Purchaser has
given notice to Seller on or prior to the expiration of the applicable period,
as above set forth, the same will continue to survive beyond said period, but
only as to the matters contained in such notice.
8.2 SELLER'S INDEMNIFICATION. Seller will indemnify and save harmless
Purchaser and its subsidiaries, shareholders, directors, officers, employees and
agents from any and all costs, expenses, losses, damages and liabilities
incurred or suffered, directly or indirectly, by any of them (including, without
limitation, reasonable legal fees and expenses) resulting from or attributable
to (a) the breach of, or misstatement in, any one or more of the representations
or warranties of Sellers made in or pursuant to this Agreement, (b) any claims,
demands, suits, investigations, proceedings or actions by any third party
containing or relating to allegations that, if true, would constitute a breach
of, or misstatement in, any one or more of the representations or warranties of
Sellers made in or pursuant to this Agreement, (c) the Corporation's treatment,
transport, recycling, storage or disposal, or any arrangement for any of same,
done or made prior to the Closing, of any Contaminant generated and transported
off-site from any facility owned or operated by the Corporation or any of its
predecessors, or (d) any defect in any product manufactured, shipped or
installed by the Corporation prior to the Closing.
8.3 DEFENSE OF CLAIM. If Purchaser has received actual notice of any
claim asserted or any action or administrative or other proceeding commenced in
respect of which claim, action or proceeding indemnity properly may be sought
against Seller pursuant to this Agreement, Purchaser will give notice in writing
to Seller. Within fifteen (15) days after the earlier of (i) receipt of such
notice or (ii) receipt of actual notice by Seller from sources other than
Purchaser, Seller may give Purchaser written notice of their election to conduct
the defense of such claim, action or proceeding at its own expense. If Seller
has given Purchaser such notice of election to conduct the defense, Seller may
conduct the defense at its expense, but Purchaser will nevertheless have the
right to participate in the defense, but such participation will be solely at
the expense of Purchaser, without a right of further reimbursement. If Seller
has not so notified Purchaser in writing (within the time above provided) of its
election to conduct the defense of such claim, action or proceeding, Purchaser
may (but need not) conduct (at Seller's expense) the defense of such claim,
action or proceeding. Purchaser may at any time notify Seller of Purchaser's
intention to settle, compromise or satisfy any such claim, action or proceeding
(the defense of which Seller has not previously elected to conduct) and may make
such settlement, compromise or satisfaction (at Seller's expense) unless Seller
notifies Purchaser in writing (within seven (7) days after receipt of such
notice of intention to settle, compromise or satisfy) of its election to assume
(at its sole expense) the defense of any such claim, action or proceeding and
promptly take appropriate action to implement such defense. Any settlement,
compromise or satisfaction made by Purchaser, or any such final judgment or
decree entered in, any claim, action or proceeding defended only by Purchaser,
regardless of the amount or terms, will be deemed to have been consented to by,
and will be binding on, Seller as fully as though they alone had assumed the
defense and a final judgment or decree had been entered in such proceeding or
action by a court of competent jurisdiction in the amount of such settlement,
compromise, satisfaction, judgment or decree. If Seller has elected under this
Section 8.3 to conduct the defense of any claim, action or proceeding, then
Seller will be obligated to pay the amount of any adverse final judgment or
decree rendered with respect to such claim, action or proceeding. If Seller
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elects to settle, compromise or satisfy any claim, action or proceeding defended
by them, the cost of any such settlement, compromise or satisfaction will be
borne entirely by Seller and may be made only with the consent of Purchaser,
such consent not to be unreasonably withheld. Purchaser and Seller will use all
reasonable efforts to cooperate fully with respect to the defense of any claim,
action or proceeding covered by this Section 8.3. Notwithstanding anything to
the contrary herein, Seller shall not have the right to assume the defense of
any claim, action or proceeding relating to a breach of Section 2.12 hereof, but
shall have the right to elect to jointly participate with Purchaser in the
defense of any such claim, action or proceeding by giving written notice of such
election within the time limits described in the second sentence of this Section
8.3.
8.4 PURCHASER'S INDEMNIFICATION. Purchaser covenants and agrees to
indemnify and save harmless Seller from any and all costs, expenses, losses,
damages and liabilities incurred or suffered by Seller (including reasonable
legal fees and costs) resulting from or attributable to the breach of, or
misstatement in, any one or more of the representations or warranties of
Purchaser made in or pursuant to this Agreement to the same extent as provided
in Clauses (a) and (b) of Section 8.2, and in the same manner as provided in
Section 8.3, of this Article VIII.
8.5 INDEMNIFICATION BASKET.
(a) Any of the foregoing notwithstanding, no party will have
any right to indemnification unless and until the aggregate damages
indemnifiable by the indemnifying party exceed Fifty Thousand Dollars
($50,000.00) and thereafter will be entitled to the full extent of the
damages including the first Fifty Thousand Dollars ($50,000.00).
(b) Any liability arising from Seller's breach of Section 2.12
hereof shall not be subject to this Fifty Thousand Dollar ($50,000.00)
limitation, and shall be recoverable from the First Dollar.
8.6 LIMITATION ON INDEMNIFICATION. Any of the foregoing
notwithstanding, in no event will the aggregate indemnification obligation of
either party pursuant to this Article VIII exceed the Purchase Price.
Notwithstanding the foregoing, the limitation on indemnification shall not apply
to any obligation of Seller to indemnify Purchaser as a result of a breach of
Section 2.12, for which there shall be no limitation on Seller's indemnification
obligation.
ARTICLE IX
----------
CONDUCT PRIOR TO CLOSING DATE
-----------------------------
9.1 CONTINUATION OF BUSINESS. Until the Closing Date, Seller will cause
the Corporation to continue to conduct its business in the ordinary and usual
course consistent with past practice, and, without limiting the generality of
this undertaking, Seller will not, and will cause the Corporation
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not to, do or suffer to be done any of the following, whether or not in the
ordinary and usual course, without the prior written consent of Purchaser:
(a) Dispose or contract to dispose of, or acquire or contract
to acquire, any Real Property or other assets (except for inventory
disposed of or acquired in the ordinary course of business), or any
interest in any Real Property or other capital assets;
(b) Borrow any money;
(c) Enter into any lease;
(d) Encumber any assets;
(e) Enter into any contract, commitment or arrangement of the
type required by Section 2.20 above to be listed on Schedule 2.20;
(f) Declare or pay any dividend or declare or make any other
distribution to shareholders;
(g) Purchase or redeem any shares, notes or other securities;
(h) Increase the rate or amount of compensation or the amount
or type of other remuneration to any of its directors, officers,
employees, agents or other representatives, or agree to do so;
(i) Form or cause to be formed, or dispose or contract to
dispose of, any subsidiary, or any interest in any subsidiary or
acquire any stock or equity interest in any corporation or other
entity;
(j) Reclassify, split or combine its shares, or issue, sell,
distribute or dispose of any shares, notes or other securities, or
issue or make any changes to any options, warrants or rights with
respect to its shares, or commit itself to do so;
(k) Make any new commitments or agree to make commitments for
capital improvements or significantly alter standing commitments for
capital improvements;
(l) Make any single expenditure or agree to make any single
expenditure, or series of expenditures in excess of Twenty Thousand
Dollars ($20,000.00) in the aggregate, except expenditures for raw
materials and supplies purchased in the ordinary course of business and
consistent with past practices;
(m) Negotiate with anyone other than Purchaser for, or
participate with anyone other than Purchaser in, the acquisition of the
Shares;
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(n) Amend, or permit to be amended, in any way, its Articles
of Incorporation or Bylaws or merge or consolidate with any other
corporation or other entity or change the character of its business; or
(o) Make any material change in accounting methods.
9.2 PRESERVATION OF BUSINESS. Seller will cause the Corporation to (i)
preserve intact its present business organization and personnel, (ii) preserve
its business, actual and potential, and its advantageous relationships with all
persons having business dealings with it, and (iii) preserve and maintain in
force all its licenses, certificates, leases, contracts, permits, registrations,
franchises, confidential information, patents, trademarks, trade names, service
marks and copyrights, and applications for any of the same, and other similar
rights. Seller will cause the Corporation to maintain in force all property,
casualty, crime, life, directors, officers and other forms of insurance and
bonds which it presently carries.
9.3 CONSENTS AND APPROVALS. Seller will use all reasonable efforts to
obtain all necessary consents and approvals of all persons, firms, entities and
governmental authorities to the consummation of the transactions contemplated by
this Agreement.
ARTICLE X
---------
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
-----------------------------------------
The rights under this Agreement are not assignable nor are the duties
delegable by a party without the written consent of the other party first having
been obtained, and any attempted assignment or delegation without such consent
will be null and void. Nothing contained in this Agreement is intended to convey
upon any person or entity, other than the parties hereto and their successors in
interest and permitted assigns, any rights or remedies under or by reason of
this Agreement unless expressly stated. All covenants, agreements,
representations and warranties of the parties contained in this Agreement are
binding on and will inure to the benefit of Purchaser, on the one hand and
Seller, on the other, and their respective successors and permitted assigns.
ARTICLE XI
----------
EXPENSES
--------
Purchaser, on the one hand, and Seller, on the other, will bear their
own respective expenses, including, without limitation, counsel and accountants'
fees, in connection with the preparation and negotiation of, and transactions
contemplated under, this Agreement, provided, however, that the Corporation may
bear and pay up to a maximum of Fifteen Thousand Dollars ($15,000.00) of such
expenses of Seller. Notwithstanding the foregoing, Purchaser agrees to bear the
costs of the audit
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of the Corporation's Financial Statements required to have been conducted in
connection with Seller's representation and warranty contained in Section 2.9 of
this Agreement.
ARTICLE XII
-----------
NOTICES
-------
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary in this Agreement, (i) when personally
delivered, (ii) upon receipt of a telephonic facsimile transmission with a
confirmed telephonic transmission answer back, (iii) three (3) days after having
been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (iv) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
To Purchaser: c/o Waterlink, Inc.
------------ 0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx, Chairman
With a copy to: Benesch, Friedlander,
Xxxxxx & Aronoff LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxx X. Xxxxxx
To Seller: Xxxxx X. Xxxx
---------- c/o Lanco Corporation
000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
With a copy to: Borre, Peterson, Xxxxxx & Reens
44 Lafayette, N.E.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Facsimile No.:(000) 000-0000
Attention: Xxxx X. Xxxxx
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ARTICLE XIII
------------
REMEDIES NOT EXCLUSIVE
----------------------
No remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy will
be cumulative and will be in addition to every remedy given under this Agreement
or now or subsequently existing, at law or in equity, by statute or otherwise.
The election of any one or more remedies by Purchaser or Seller will not
constitute a waiver of the right to pursue other available remedies.
ARTICLE XIV
-----------
NON-COMPETITION
---------------
14.1 NON-COMPETITION AGREEMENT.
(a) For a period of five (5) years from and after the Closing
Date, but as to clauses (iv) and (v) at any time after the Closing
Date, Seller will not, directly or indirectly:
(i) engage in, carry on, be employed by or have any
interest in a business substantially similar to the business
as carried on by the Corporation on the Closing Date;
(ii) enter into, engage in, or be employed by or consult
with any business in competition with the Corporation on
matters substantially similar to the business as carried on by
the Corporation on the Closing Date;
(iii) employ, assist in employing or otherwise associate
in business with any present, former or future employee of the
Corporation now or subsequently existing until a period of at
least two (2) years has expired since such employee was
employed by the Corporation;
(iv) induce any person who is a present or future
employee, officer, agent, affiliate or customer of the
Corporation now or subsequently existing to terminate the
relationship; and
(v) induce any customer, supplier or any other party
with whom the Corporation does business to refuse to do
business with the Corporation on as favorable terms as
previously done with the Corporation.
The prohibitions in clauses (i) and (ii) will apply only to any place or
location set forth on EXHIBIT "J" to this Agreement. Seller acknowledges that
the length of time and geographic restriction pertaining to all prohibitions in
this Subsection (a) both are reasonable and necessary for the legitimate
protection of Purchaser's business and interests.
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(b) Seller expressly agrees and understands that the remedy at
law for any breach by Seller of this Article XIV will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Seller's violation of this Article XIV,
Purchaser will be entitled, among other remedies, to immediate
injunctive relief and may obtain a temporary restraining order
restraining any threatened or further breach. Nothing in this
subsection (b) will be deemed to limit Purchaser's remedies at law or
in equity for any breach by Seller of any of the provisions of this
Agreement which may be pursued or availed of by Purchaser.
(c) In the event any court of competent jurisdiction
determines that the specified time period or geographical area set
forth in this Section 14.1 is unreasonable, arbitrary or against public
policy, then a lesser time period or geographical area that is
determined by the court to be reasonable, non-arbitrary and not against
public policy may be enforced.
(d) In the event Seller violates any legally enforceable
provision of this Section 14.1 as to which there is a specific time
period during which Seller is prohibited from taking certain actions or
engaging in certain activities, then, in such event the violation will
toll the running of the time period from the date of the violation
until the violation ceases.
(e) Notwithstanding the restrictions contained in Paragraph
14.1(a)(i) and (ii), Seller is expressly permitted to continue to
purchase, sell and recondition used equipment, whether or not of the
type manufactured or sold by the Corporation. Seller, however, shall
not knowingly interfere with any ongoing relationships between the
Corporation and any of its customers regarding the sales of new
equipment, or knowingly or intentionally injure or damage the ongoing
business operations of the Corporation. This language shall not be
construed as preventing Seller from making a competing bid to any
customer regarding used equipment
14.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required
by law or necessary in connection with any dealings with any public agency or
authority, from and after the Closing Date, Seller will not disclose,
disseminate, divulge, discuss, copy or otherwise use or suffer to be used, in
competition with, or harmful to the interests of, the Corporation, any
information (written or oral), documents, lists or other data of or respecting
any aspect of the business being acquired by Purchaser from Seller under this
Agreement.
ARTICLE XV
----------
MISCELLANEOUS
-------------
15.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same
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document.
15.2 CAPTIONS AND SECTION HEADINGS. Captions and section headings are
for convenience only, are not a part of this Agreement and may not be used in
construing it.
15.3 WAIVERS. Any failure by any of the parties to comply with any of
the obligations, agreements or conditions set forth in this Agreement may be
waived by the other party or parties, but any such waiver will not be deemed a
waiver of any other obligation, agreement or condition contained herein.
15.4 RIGHT OF INSPECTION. From and after the date of this Agreement to
the Closing Date, Seller will give to Purchaser and its counsel, accountants and
other representatives, full access during normal business hours to the offices,
properties, agreements, records and affairs of the Corporation, and will furnish
copies of all Contracts and other instruments as Purchaser or its counsel may
reasonably request. Such investigation will not affect the warranties and
representations of Seller under this Agreement. All such information will be
treated confidentially and will be used only for the purposes intended. If the
transactions contemplated under this Agreement do not take place, all documents
and other property of the Corporation or Seller will be returned and all
disclosures and information given to Purchaser as contemplated under this
Agreement will be treated as confidential and not disclosed to others unless
disclosed publicly by Seller or other third parties without fault on the part of
Purchaser, or unless otherwise required by law.
15.5 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS. Each of the parties
agrees to cooperate in the effectuation of the transactions contemplated under
this Agreement and to execute any and all additional documents and to take such
additional action as is reasonably necessary or appropriate for such purposes.
15.6 ENTIRE AGREEMENT. This Agreement, including any certificate,
schedule, exhibit or other document delivered pursuant to its terms, constitutes
the entire agreement between the parties. There are no verbal agreements,
representations, warranties, undertakings or agreements between the parties, and
this Agreement may not be amended or modified in any respect, except by a
written instrument signed by the parties to this Agreement.
15.7 GOVERNING LAWS. This Agreement is to governed by and construed in
accordance with the internal laws of the State of Ohio.
15.8 KNOWLEDGE. All references to "knowledge" or "best knowledge" of a
party, or "known to" a party means the actual knowledge of a party.
15.9 PRESS RELEASES. Prior to the Closing, neither party will issue or
cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated under this Agreement
without the prior consent of the other party first obtained; provided, however,
that nothing in this Agreement will prohibit either party from issuing or
causing publication of any press release or public announcement to the extent
that such party determines, on
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advice of counsel, that such action is required by law, in which case the party
making such determination will, if practicable under the circumstances, use
reasonable efforts to allow the other party reasonable time to comment on such
release or announcement in advance of its issuance.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
GREAT LAKES ENVIRONMENTAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
"PURCHASER"
/s/ Xxxxx X. Xxxx
--------------------------------
Xxxxx X. Xxxx
"SELLER"
The undersigned hereby agrees to enter into an Employment Agreement in
the form of the attached as EXHIBIT "D" upon the closing of the transactions
evidenced by the above Agreement.
/s/ Xxxxxxx Xxxxx
--------------------------------
XXXXXXX XXXXX
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EXHIBIT J
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LOCATION FOR NON-COMPETITION PROVISIONS
---------------------------------------
CONTAINED IN ARTICLE XIV
------------------------
The continental United States.