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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of April 27,
1998, by and between Xxxxxx Industrial Group, Inc., a Georgia corporation
("Buyer"); Xxxxxxx X. Xxxxxxx an individual resident of Des Moines, Iowa
("Xxxxxxx"); Xxxxxxx X. Xxxxxxx an individual resident of Des Moines, Iowa
("Dee"); and Xxxxxxx X. Xxxxxxx, an individual resident of LaJolla, California
("Xxxxxxx"). Xxxxxxx, Xxx and Xxxxxxx are collectively referred to herein as
("Sellers").
RECITALS
Sellers own that number of shares of Mid-Central Plastics, Inc., an Iowa
corporation (the "Company"), set opposite their respective names on Exhibit A
attached. Such shares are referred to herein as the "Shares," and constitute all
of the issued and outstanding shares of capital stock of Company. Sellers desire
to sell, and Buyer desires to purchase, the Shares for the consideration and on
the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING
1.1 SHARES. Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell and transfer to Buyer, and Buyer will purchase from
Sellers, the Shares.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares will be the aggregate amount set forth in Exhibit A reduced by any
negative Adjustment Amount.
1.3 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at Husch &
Eppenberger, LLC, 000 X.X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, at
10:00 a.m. (local time) on the later of (i) May 29, 1998, and (ii) the last
business day of the month in which the termination of the applicable waiting
period under the HSR Act occurs, or at such other time and place as the parties
may mutually agree. Subject to the provisions of Section 9, failure to
consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 1.3 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
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(a) Sellers will deliver to Buyer:
(i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer;
(ii) Release in the form of Exhibit 1.4(a)(ii) executed by Sellers
(collectively, "Sellers' Release");
(iii) Noncompetition agreements in the form of Exhibit 1.4(a)(iii),
executed by Sellers (collectively, the "Noncompetition Agreements");
(iv) A certificate executed by Sellers representing and warranting to
Buyer that each of Sellers' representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Schedules that were delivered by Sellers to
Buyer prior to the Closing Date in accordance with Section 4.5);
(v) The legal opinion required by Section 7.4 hereof;
(vi) Their resignations as officers and/or directors of the Company;
and
(vii) Any amounts paid or incurred prior to the Closing Date by the
Company on account of expenses or assessments in connection with the Tax Audit
(the "Tax Audit Credit"), payable by the reduction of the escrow amount set
forth in Exhibit A.
(b) Buyer will deliver to Sellers:
(i) The Purchase Price set forth opposite such Seller's name on
Exhibit A minus the escrow amount set forth therein by bank cashier's or
certified check or by wire transfer to accounts specified by Xxxxxxx, Xxx and
Xxxxxxx, respectively;
(ii) The sum of the escrow amount set forth in Exhibit A (reduced by
the Tax Audit Credit) to the escrow agent referred to in Section 1.4(c) by bank
cashier's or certified check;
(iii) A certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date; and
(iv) The legal opinion required by Section 8.4 hereof.
(c) Buyer and Sellers will enter into an escrow agreement in the form of
Exhibit 1.4(c) (the "Escrow Agreement") with South Side
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Trust & Savings Bank of Peoria, Illinois or other escrow agent mutually
acceptable to the parties.
1.5 ADJUSTMENT AMOUNT. The Adjustment Amount, but only if negative, will be
equal to (a) the stockholders' equity of the Company as of the Closing Date
determined in accordance with GAAP, minus (b) the stockholders' equity of the
Company as of December 31, 1997 as set forth in the Balance Sheet.
1.6 ADJUSTMENT PROCEDURE.
(a) Sellers shall prepare and cause Northrup, Haines, Kaduce, Schmid,
Marklin, P.C., the Company's certified public accountants, at Sellers' expense,
to audit, within sixty (60) days following the Closing Date, financial
statements ("Closing Financial Statements") of the Company as of the Closing
Date and for the period from the date of the Balance Sheet through the Closing
Date, including a computation of stockholders' equity as of the Closing Date. If
within thirty (30) days following delivery of the Closing Financial Statements,
Buyer has not given Sellers notice of its objection to the Closing Financial
Statements (such notice must contain a statement of the basis of Buyer's
objection), then the stockholders' equity reflected in the Closing Financial
Statements will be used in computing the Adjustment Amount. If Buyer gives such
notice of objection, then the issues in dispute will be submitted to McGladrey &
Xxxxxx LLP, certified public accountants (the "Accountants"), for resolution. If
issues in dispute are submitted to the Accountants for resolution, (i) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants, (ii)
the determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties, and
(iii) Buyer and Sellers will each bear 50% of the fees of the Accountants for
such determination.
(b) On the tenth (10th) business day following the final determination of
the Adjustment Amount, if the Purchase Price is less than the aggregate of the
payments made pursuant to Sections 1.4(b)(i) and 1.4(b)(ii) Sellers will pay the
difference to Buyer. All payments will be made together with interest at the
rate of 10% per annum beginning on the Closing Date and ending on the date of
payment.
1.7 EMPLOYMENT AGREEMENTS. Immediately following the Closing, Buyer shall
cause the Company to offer Employment Agreements to certain of its key managers
in the form of the Agreements attached hereto as Exhibit 1.7.
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2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING.
(a) Schedule 2.1 contains a complete and accurate list of the Company's
jurisdiction of incorporation, other jurisdictions in which it is authorized to
do business, and its capitalization (including the identity of each stockholder
and the number of shares held by each). The Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, and where the failure to so qualify would have a material adverse
effect on the Company.
(b) Sellers have delivered to Buyer copies of the Organizational Documents
of the Company, as currently in effect.
(c) The Company has no Subsidiaries.
2.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of the Escrow Agreement, the Sellers'
Releases, and the Noncompetition Agreements (collectively, the "Sellers' Closing
Documents"), the Sellers' Closing Documents will constitute the legal, valid,
and binding obligations of Sellers, enforceable against Sellers in accordance
with their respective terms. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Sellers' Closing Documents and to perform their obligations under this Agreement
and the Sellers' Closing Documents.
(b) Except as set forth in Schedule 2.2, neither the execution and delivery
of this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) Contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Company, or (B) any resolution
adopted by the board of directors or the stockholders of the Company;
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(ii) Contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Company or either Seller, or any
of the assets owned or used by the Company, may be subject;
(iii) Contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the business of, or any
of the assets owned or used by, the Company;
(iv) To the Knowledge of Sellers based on current tax law, cause Buyer
or the Company to become subject to, or to become liable for the payment of, any
Tax;
(v) Contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(vi) Result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Company.
Except as set forth in Schedule 2.2, no Seller or the Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
2.3 CAPITALIZATION. The authorized equity securities of the Company
consists of 200,000 shares of Class A stock, par value $10.00 per share, and
200,000 shares of Class B stock, par value $10.00 per share. Of the authorized
shares, the number of issued and outstanding shares are as set forth in Schedule
2.3. Sellers are and will be on the Closing Date the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances. Each of
the Sellers owns the number of Shares set forth opposite his name on Exhibit A.
All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. None of the outstanding equity securities or
other securities of the Company were issued in violation of the Securities Act
or any other Legal Requirement. The Company does not own, or have any Contract
to acquire, any equity securities or other securities of any Person or any
direct or indirect equity or ownership interest in any other business.
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2.4 FINANCIAL STATEMENTS. Sellers have delivered to Buyer: (a) audited
balance sheets of the Company as at December 31 in each of the years 1993
through 1996, and the related audited statements of income, retained earnings
and cash flow for each of the fiscal years then ended, together with the report
thereon of Northrup, Haines, Xxxxxx, Schmid, Macklin, P.C., independent
certified public accountants, (b) an unaudited balance sheet of the Company as
at December 31, 1997 (the "Balance Sheet"), and the related unaudited statements
of income, retained earnings and cash flow for the fiscal year then ended
attached hereto as Schedule 2.4, together with the report thereon of Northrup,
Haines, Xxxxxx, Schmid, Macklin, P.C., independent certified public accountants,
and (c) an unaudited balance sheet of the Company as at April 4, 1998 (the
"Interim Balance Sheet") and the related unaudited statement of income, retained
earnings, and cash flow for the period then ended. Such financial statements and
notes fairly present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Company as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of the 1997 and
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that if presented would not differ materially
from those included in the Balance Sheet); the financial statements referred to
in this Section 2.4 reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements. No financial statements of any Person other than the
Company are required by GAAP to be included in the financial statements of the
Company.
2.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer at the Company's offices, or will be made so available to Buyer within
ten (10) days of the date of this Agreement, are complete and correct and have
been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. To the Knowledge of
Sellers, the minute books of the Company contain materially accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
2.6 TITLE TO PROPERTIES; ENCUMBRANCES. Schedule 2.6 contains a complete
and accurate list of all real property, leaseholds, or other interests therein
owned by the Company. Sellers have delivered or made available to Buyer at the
Company's
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offices (or will deliver or make so available to Buyer within ten (10)
days of the date of this Agreement), copies of the deeds and other instruments
(as recorded) by which the Company acquired such real property and interests,
and copies of all title insurance policies, opinions, abstracts, and surveys in
the possession of Sellers or the Company and relating to such property or
interests. The Company owns (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in the facilities owned or
operated by the Company or reflected as owned in the books and records of the
Company, including all of the properties and assets reflected in the Balance
Sheet and the Interim Balance Sheet (except for assets held under capitalized
leases disclosed or not required to be disclosed in Schedule 2.6 and personal
property sold since the date of the Balance Sheet and the Interim Balance Sheet,
as the case may be, in the Ordinary Course of Business), and all of the
properties and assets purchased or otherwise acquired by the Company since the
date of the Balance Sheet (except for personal property acquired and sold since
the date of the Balance Sheet in the Ordinary Course of Business and consistent
with past practice). All material properties and assets reflected in the Balance
Sheet and the Interim Balance Sheet are free and clear of all Encumbrances and
are not, in the case of real property, subject to any rights of way, building
use restrictions, exceptions, variances, reservations, or limitations of any
nature except, with respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet or the Interim Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the Interim Balance Sheet
(such mortgages and security interests being limited to the property or assets
so acquired), with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (c) liens for current
taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company, and (ii) zoning laws and
other land use restrictions that do not impair the present or anticipated use of
the property subject thereto. All buildings, plants, and structures owned by the
Company lie wholly within the boundaries of the real property owned by the
Company and do not encroach upon the property of, or otherwise conflict with the
property rights of, any other Person.
2.7 CONDITION AND SUFFICIENCY OF ASSETS. To the Knowledge of Sellers, the
buildings, plants, structures, and equipment of the Company are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put,
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and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. To the Knowledge of Sellers, the building,
plants, structures, and equipment of the Company are sufficient for the
continued conduct of the Company's businesses after the Closing in substantially
the same manner as conducted prior to the Closing.
2.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company that are
reflected on the Balance Sheet or the Interim Balance Sheet or on the accounting
records of the Company as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectible net of the respective reserves shown
on the Balance Sheet or the Interim Balance Sheet or on the accounting records
of the Company as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Interim
Balance Sheet represented of the Account Receivable reflected therein and will
not represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any set-off,
within ninety (90) days after the day on which it first becomes due and payable.
There is no contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any debtor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Schedule 2.8 contains a complete and accurate list of all Accounts Receivable as
of the date of the Interim Balance Sheet, which list sets forth the aging of
such Accounts Receivable.
2.9 INVENTORY. All inventory of the Company, whether or not reflected in
the Balance Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Company as of the
Closing Date, as the case may be. All inventories not written off have been
priced at the lower of cost or market on a first in, first out basis. The
quantities of each item of inventory (whether raw materials, work-in-process, or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Company.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 2.10, the
Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued,
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contingent, or otherwise) except for liabilities or obligations reflected
or reserved against in the Balance Sheet or the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
2.11 TAXES.
(a) The Company has filed or caused to be filed (on a timely basis since
January 1, 1990) all Tax Returns that are or were required to be filed by or
with respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Sellers have delivered
or made available to Buyer at the Company's offices (or will deliver or make so
available to Buyer within ten (10) days of the date of this Agreement) copies
of, and Schedule 2.11 contains a complete and accurate list of, all such Tax
Returns relating to income or franchise taxes filed since January 1, 1994. The
Company has paid, or made provision for the payment of, all Taxes that have or
may have become due pursuant to those Tax Returns or otherwise, or pursuant to
any assessment received by Sellers or the Company, except such Taxes, if any, as
are listed in Schedule 2.11 and are being contested in good faith and as to
which adequate reserves (determined in accordance with GAAP) have been provided
in the Balance Sheet and the Interim Balance Sheet.
(b) The United States federal and state income Tax Returns of the Company
subject to such Taxes have been audited by the IRS or relevant state tax
authorities or are closed by the applicable statute of limitations for all
taxable years through December 31, 1994. Schedule 2.11 contains a complete and
accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Schedule 2.11, are being contested in good faith by
appropriate proceedings. Schedule 2.11 describes all adjustments to the United
States federal income Tax Returns filed by the Company or any group of
corporations including the Company for all taxable years since January 1, 1990,
and the resulting deficiencies proposed by the IRS. Except as described in
Schedule 2.11, no Seller or the Company has given or been requested to give
waivers or extensions (or is or would be subject to a waiver or extension given
by any other Person) or any statute of limitations relating to the payment of
Taxes of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company are adequate (determined in accordance with
GAAP) and are at least equal to the Company's liability for Taxes. There exists
no proposed tax assessment against the Company except as disclosed in the
Balance Sheet or in Schedule 2.11. No consent to the application of Section
341(f)(2) of the Code has been filed with respect to any property or assets
held, acquired, or to be acquired by the
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Company. All Taxes that the Company is or was required by Legal
Requirements to withhold or collect have been fully withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by (or that include on a consolidated basis) the
Company are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Company after the date of this Agreement.
2.12 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance Sheet, there
has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
2.13 EMPLOYEE BENEFITS.
(a) As used in this Section 2.13, the following terms have the meanings set
forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans of which the Company or an ERISA Affiliate
of the Company is or was a Plan Sponsor, or to which the Company or an ERISA
Affiliate of the Company otherwise contributes or has contributed, or in which
the Company or an ERISA Affiliate of the Company otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the Company
or any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under
Code Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning
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of Code Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements or Code Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under Code
Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Schedule 2.13(i) contains a complete and accurate list of all
Company Plans, Company Other Benefit Obligations, and Company VEBAs, and
identifies as such all Company Plans that are (A) defined benefit Pension Plans,
(B) Qualified Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Schedule 2.13(ii) contains a complete and accurate list of (A)
all ERISA Affiliates of the Company, and (B) all Plans of which any such ERISA
Affiliate is or was a Plan Sponsor, in which any such ERISA Affiliate
participates or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(iii) Schedule 2.13(iii) sets forth, for each Multi-Employer Plan, as
of its last valuation date, the amount of potential withdrawal liability of the
Company and the Company's other ERISA Affiliates, calculated according to
information made available pursuant to ERISA Section 4221(e).
(iv) Schedule 2.13(iv) sets forth a calculation of the liability of
the Company for post-retirement benefits other than pensions, made in accordance
with Financial Accounting Statement 106 of the Financial Accounting Standards
Board, regardless of whether the Company is required by this Statement to
disclose such information.
(v) Schedule 2.13(v) sets forth the financial cost of all obligations
owed under any Company Plan or Company Other Benefit Obligation that is not
subject to the disclosure and
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reporting requirements of ERISA.
(c) Sellers have delivered to Buyer, or will deliver to Buyer within
ten (10) days of the date of this Agreement:
(i) All documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Company
Plans for which Sellers or the Company is required to prepare, file, and
distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans, Company Other Benefit Obligations, and Company VEBAs for which a
plan description or summary plan description is not required;
(ii) All personnel, payroll, and employment manuals and policies;
(iii) All collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare benefits) by the Company and the ERISA Affiliates of the Company, and
all collective bargaining agreements pursuant to which contributions are being
made or obligations are owed by such entities;
(iv) A written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) All registration statements filed with respect to any Company
Plan;
(vi) All insurance policies purchased by or to provide benefits under
any Company Plan;
(vii) All contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that relate
to any Company Plan, Company Other Benefit Obligation, or Company VEBA;
(viii) All reports submitted within the four (4) years preceding the
date of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) All notifications to employees of their rights under ERISA
Section 601 et seq. and Code Section 4980B;
(x) The Form 5500 filed in each of the most recent three (3) plan
years with respect to each Company Plan, including all schedules thereto and the
opinions of independent accountants;
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(xi) All notices that were given by the Company or any ERISA Affiliate
of the Company or any Company Plan to the IRS, the PBGC, or any participant or
beneficiary, pursuant to statute, within the four (4) years preceding the date
of this Agreement, including notices that are expressly mentioned elsewhere in
this Section 2.13;
(xii) All notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or any
Company Plan within the four (4) years preceding the date of this Agreement;
(xiii) With respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Company that is a Qualified plan; and
(xiv) With respect to Title IV Plans, the Form PBGC-1 filed for each
of the three (3) most recent plan years.
(d) Except as set forth in Schedule 2.13(vi):
(i) The Company has performed all of its obligations under the Company
Plans, Company Other Benefit Obligations, and Company VEBAs. The Company has
made appropriate entries in its financial records and statements for all
obligations and liabilities under such Plan, VEBAs, an Other Benefit Obligations
that have accrued but are not due.
(ii) No statement, either written or oral, has been made by the
Company to any Person with regard to any Plan or Other Benefit Obligation that
was not in accordance with the Plan or Other Benefit Obligation and that could
have an adverse economic consequence to the Company or to Buyer.
(iii) The Company, with respect to all Company Plans, Company Other
Benefits Obligations, and Company VEBAs, are, and each Company Plan, Company
Other Benefit Obligation, and Company VEBA is, in full compliance with ERISA,
the Code, and other applicable Laws including the provisions of such Laws
expressly mentioned in this Section 2.13, and with any applicable collective
bargaining agreement.
(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under Code Section 4975(c) have occurred with respect
to any Company Plan.
(B) No Seller or acquired Company has any liability to the IRS
with respect to any Plan, including any liability imposed by Chapter 43 of the
Code.
(C) No Seller or Company has any liability to the PBGC with
respect to any Plan or has any liability under ERISA Section 502 or Section
4071.
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(D) All filings required by ERISA and the Code as to each Plan
have been timely filed, and all notices and disclosures to participants required
by either ERISA or the Code have been timely provided.
(E) All contributions and payments made or accrued with respect
to all Company Plans, Company Other Benefit Obligations, and Company VEBAs are
deductible under Code Section 162 or Section 404. No amount, or any asset of
any Company Plan or Company VEBA, is subject to tax as unrelated business
taxable income.
(iv) Each Company Plan can be terminated within thirty (30) days,
without payment of any additional contribution or amount and without the vesting
or acceleration of any benefits promised by such Plan.
(v) Since January 1, 1998, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could result in
a material increase in premium costs of Company Plans and Company Other Benefit
Obligations that are insured, or a material increase in benefit costs of such
Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
Sellers' Knowledge, is threatened.
(viii) No Company Plan is a stock bonus, pension, or profit-sharing
plan within the meaning of Code Section 401(a).
(ix) Each Qualified Plan of the Company is qualified in form and
operation under Code Section 401(a); each trust for each such Plan is exempt
from federal income tax under Code Section 501(a). Each Company VEBA is exempt
from federal income tax. No event has occurred or circumstance exists that
will or could give rise to disqualification or loss of tax-exempt status of
any such Plan or trust.
(x) Each Company and each ERISA Affiliate of the Company has met the
minimum funding standard, and has made all contributions required, under ERISA
Section 302 and Code Section 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Company has paid all amounts due to PBGC pursuant to ERISA
Section 4007.
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15
(xiii) No Company or any ERISA Affiliate of the Company has ceased
operations of any facility or has withdrawn from any Title IV Plan in a manner
that would subject to any entity or Sellers to liability under ERISA Section
4062(e), Section 4063, or Section 4064.
(xiv) No Company or any ERISA Affiliate of the Company has filed a
notice of intent to terminate any Plan or has adopted any amendment to treat a
Plan as terminated. The PBGC has not instituted proceedings to treat any Company
Plan as terminated. No event has occurred or circumstance exists that may
constitute grounds under ERISA Section 4042 for the termination of, or the
appointment of a trustee to administer, any Company Plan.
(xv) No amendment has been made, or is reasonably expected to be made,
to any Plan that has required or could require the provision of security under
ERISA Section 307 or Code Section 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not waived, exists
with respect to any Company Plan; no event has occurred or circumstance exists
that may result in an accumulated funding deficiency as of the last day of the
current plan year of any such Plan.
(xvii) The actuarial report for each Pension Plan of the Company and
each ERISA Affiliate of the Company fairly presents the financial condition and
the results of operations of each such Plan in accordance with GAAP.
(xviii) Since the last valuation date for each Pension Plan of the
Company and each ERISA Affiliate of the Company, no event has occurred or
circumstance exists that would increase the amount of benefits under any such
Plan or that would cause the excess of Plan assets over benefit liabilities (as
defined in ERISA Section 4001) to decrease, or the amount by which benefit
liabilities exceed assets to increase.
(xix) No reportable event (as defined in ERISA Section 4043) and in
regulations issued thereunder) has occurred.
(xx) No Seller or Company has Knowledge of any facts or circumstances
that may give rise to any liability of any Seller, any Company, or Buyer to the
PBGC under Title IV of ERISA.
(xxi) No Company or any ERISA Affiliate of the Company has ever
established, maintained, or contributed to or otherwise participated in, or had
an obligation to maintain, contribute to, or otherwise participate in, any
Multi-Employer Plan.
(xxii) No Company or any ERISA Affiliate of the Company has withdrawn
from any Multi-Employer Plan with respect to which there is any outstanding
liability as of the date of this
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Agreement. No event has occurred or circumstance exists that presents a risk of
the occurrence of any withdrawal from, or the participation, termination,
reorganization, or insolvency of, any Multi-Employer Plan that could result in
any liability of either any acquired Company or Buyer to a Multi-Employer Plan.
(xxiii) No Company or any ERISA Affiliate of the Company has received
notice from any Multi-Employer Plan that it is in reorganization or is
insolvent, that increased contributions may be required to avoid a reduction in
plan benefits or the imposition of any excise tax, or that such Plan intends to
terminate or has terminated.
(xxiv) No Multi-Employer Plan to which the Company or any ERISA
Affiliate of the Company contributes or has contributed is a party to any
pending merger or asset or liability transfer or is subject to any proceeding
brought by the PBGC.
(xxv) Except to the extent required under ERISA Section 601 et seq.
and Code Section 4980B, no Company provides health or welfare benefits for any
retired or former employee or is obligated to provide health or welfare
benefits to any active employee following such employee's retirement or other
termination of service.
(xxvi) The Company has the right to modify and terminate benefits to
retirees (other than pensions) with respect to both retired and active
employees.
(xxvii) Sellers and the Company have complied with the provisions of
ERISA Section 601 et seq. and Code Section 4980B.
(xxviii) No payment that is owed or may become due to any director,
officer, employee, or agent of the Company will be non-deductible to the Company
or subject to tax under Code Section 280G or Section 4999; nor will the Company
be required to "gross up" or otherwise compensate any such person because of
the imposition of any excise tax on a payment to such person.
(xxix) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Schedule 2.14:
(i) To the Knowledge of Sellers, the Company is, and at all times
since January 1, 1990 has been, in full compliance with each Legal Requirement
that is or was applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets;
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(ii) To the Knowledge of Sellers, no event has occurred or
circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by the Company of, or a failure on the part
of the Company to comply with, any Legal Requirement, or (B) may give rise to
any obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) The Company has not received, at any time since January 1, 1990,
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation on
the part of the Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(b) Schedule 2.14 contains a complete and accurate list of each
Governmental Authorization that is held by the Company or that otherwise relates
to the business of, or to any of the assets owned or used by, the Company. Each
Governmental Authorization listed or required to be listed in Schedule 2.14 is
valid and in full force and effect. Except as set forth in Schedule 2.14:
(i) The Company is, and at all times since January 1, 1990 has been,
in full compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Schedule 2.14;
(ii) No event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or indirectly
in a violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 2.14, or
(B) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Schedule 2.14;
(iii) The Company has not received, at any time since January 1, 1990,
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) All applications required to have been filed for the renewal of
the Governmental Authorizations listed or required to be listed in Schedule 2.14
have been duly filed on a timely basis with the appropriate Governmental Bodies,
and all other
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filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Schedule 2.14 collectively constitute
all of the Governmental Authorizations necessary to permit the Company to
lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit the Company to own and use its assets
in the manner in which it currently owns and uses such assets.
2.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 2.15, there is no pending Proceeding:
(i) That has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, the Company; or
(ii) That challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Sellers
have delivered to Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Schedule 2.15.
The Proceedings listed in Schedule 2.15 will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
the Company.
(b) Except as set forth in Schedule 2.15:
(i) There is no Order to which any of the Company, or any of the
assets owned or used by the Company, is subject;
(ii) None of Sellers is subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company; and
(iii) To the Knowledge of Sellers and the Company, no officer,
director, agent, or employee of the Company is subject to any Order that
prohibits such officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of the
Company.
(c) Except as set forth in Schedule 2.15:
(i) The Company is, and at all times since January 1,
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1990 has been, in full compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) No event has occurred or circumstance exists that may constitute
or result in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which the Company, or any
of the assets owned or used by the Company, is subject; and
(iii) The Company, to the Knowledge of Sellers, has not received, at
any time since January 1, 1990, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to comply with, any
term or requirement of any Order to which the Company, or any of the assets
owned or used by the Company, is or has been subject.
2.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Schedule
2.16, since the date of the Balance Sheet, the Company has conducted its
business only in the Ordinary Course of Business and there has not been any:
(a) Change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock;
(b) Amendment to the Organizational Documents of the Company;
(c) Payment or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entry into any employment, severance, or similar
Contract with any director, officer, or employee;
(d) Adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(e) Damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of the
Company, taken as a whole;
(f) Entry into, termination of, or receipt of notice of
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termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by the Company of
at least $50,000;
(g) Sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) Cancellation or waiver of any claims or rights with a value to the
Company in excess of $50,000;
(i) Material change in the accounting methods used by the Company; or
(j) Agreement, whether oral or written, by the Company to do any of
the foregoing.
2.17 CONTRACTS; NO DEFAULTS.
(a) Schedule 2.17(a) contains a complete and accurate list, and Sellers
have delivered to Buyer (or will deliver to Buyer within ten (10) days of the
date of this Agreement) true and complete copies, of:
(i) Each Applicable Contract that involves performance of services or
delivery of goods or materials by the Company of an amount or value in excess of
$50,000;
(ii) Each Applicable Contract that involves performance of services or
delivery of goods or materials to the Company of an amount or value in excess of
$50,000;
(iii) Each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of the
Company in excess of $50,000;
(iv) Each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $50,000 and with terms of less than one (1)
year);
(v) Each licensing agreement or other Applicable Contract with respect
to patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation
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or the non-disclosure of any of the Intellectual Property Assets;
(vi) Each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees relating to wages, hours, and other conditions of employment;
(vii) Each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
the Company with any other Person;
(viii) Each Applicable Contract containing covenants that in any way
purport to restrict the Company's business activity or limit the freedom of the
Company to engage in any line of business or to compete with any Person;
(ix) Each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(x) Each power of attorney that is currently effective and
outstanding;
(xi) Each Applicable Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express undertaking by the
Company to be responsible for consequential damages;
(xii) Each Applicable Contract for capital expenditures in excess of
$50,000;
(xiii) Each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by the Company
other than in the Ordinary Course of Business; and
(xiv) Each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
Schedule 2.17(a) sets forth reasonably complete details concerning such
Contracts, including the parties to the Contracts, the amount of the remaining
commitment of the Company under the Contracts, and the Company's office where
details relating to the Contracts are located.
(b) Except as set forth in Schedule 2.17(b):
(i) Neither Seller has or may acquire any rights under, and neither
Seller has or may become subject to any obligation or liability under, any
Contract that relates to the business of, or any of the assets owned or used by,
the Company; and
(ii) To the Knowledge of Sellers and the Company, no
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officer, director, agent, employee, consultant, or contractor of the
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of the
Company, or (B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Schedule 2.17(c):
(i) Each Contract identified or required to be identified in Schedule
2.17(a) is in full force and effect and is valid and enforceable in accordance
with its terms; and
(ii) No Contract identified or required to be identified in Schedule
2.17(a) contains, in the opinion of Sellers, any term or requirement that is
unreasonable, extraordinary, or not customary in the industries in which the
Company operates.
(d) Except as set forth in Schedule 2.17(d):
(i) The Company is, and at all times since January 1, 1990 has been,
in full compliance with all applicable terms and requirements of each Contract
under which such Company has or had any obligation or liability or by which such
Company or any of the assets owned or sued by such Company is or was bound;
(ii) Each other Person that has or had any obligation or liability
under any Contract under which the Company has or had any rights is, and at all
times since January 1, 1990 has been, in full compliance with all applicable
terms and requirements of such Contract;
(iii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give the Company or other Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) The Company has not given to or received from any other Person,
at any time since January 1, 1990, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential violation
or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or outstanding
rights to renegotiate any material amounts paid or payable to the Company under
current or completed Contracts with any Person having the contractual or
statutory right to demand or require such renegotiation and, to the Knowledge of
Sellers and the Company, no such Person has made written demand for such
renegotiation.
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(f) The Contracts relating to the sale, design, manufacture, or provision
of products or services by the Company has been entered into in the Ordinary
Course of Business and has been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in violation of any Legal Requirement.
2.18 INSURANCE.
(a) Sellers have delivered to Buyer (or will deliver to Buyer within ten
(10) days of the date of this Agreement):
(i) True and complete copies of all policies of insurance to which the
Company is a party or under which the Company, or any director of the Company,
is or has been covered at any time within the three (3) years preceding the date
of this Agreement;
(ii) True and complete copies of all pending applications for policies
of insurance; and
(iii) Any statement by the auditor of the Company's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Schedule 2.18(b) describes:
(i) Any self-insurance arrangement by or affecting the Company,
including any reserves established thereunder;
(ii) Any contract or arrangement, other than a policy of insurance,
for the transfer or sharing of any risk by the Company; and
(iii) All obligations of the Company to provide coverage to third
parties (for example, under leases or service agreements) and identifies the
policy under which such coverage is provided.
(c) Schedule 2.18(c) sets forth, by year, for the current policy year and
each of the three (3) preceding policy years:
(i) A summary of the loss experience under each policy;
(ii) A statement describing each claim under an insurance policy for
an amount in excess of $50,000, which sets forth:
(A) The name of the claimant;
(B) A description of the policy by insurer, type of insurance,
and period of coverage; and
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(C) The amount and a brief description of the claim; and
(iii) A statement describing the loss experience for all claims that
were self-insured, including the number and aggregate cost of such claims.
(d) Except as set forth on Schedule 2.18(d):
(i) All policies to which the Company is a party or that provide
coverage to the Company or director thereof:
(A) Are valid, outstanding, and enforceable;
(B) Are issued by an insurer that is financially sound and
reputable;
(C) Taken together, provide adequate insurance coverage for the
assets and the operations of the Company for all risks normally insured against
by a Person carrying on the same business or businesses as the Company;
(D) Are sufficient for compliance with all Legal Requirements and
Contracts to which the Company is a party or by which it is bound; and
(E) To the Knowledge of Sellers, will continue in full force and
effect following the consummation of the Contemplated Transactions.
(ii) No Seller or the Company has received (A) any refusal of coverage
or any notice that a defense will be afforded with reservation of rights, or (B)
any notice of cancellation or any other indication that any insurance policy is
no longer in full force or effect or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(iii) The Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which the
Company is a party or that provides coverage to the Company or director thereof.
(iv) The Company has given notice to the insurer of all claims that
may be insured thereby.
2.19 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.19:
(a) The Company is, and at all times prior to the date hereof has been,
in full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. No Seller or the Company has any basis to expect,
nor has any of them
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25
or any other Person for whose conduct they are or may be
held to be responsible received, any actual or threatened order, notice, or
other communication from (i) any Governmental Body orcitizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or the Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Sellers, the Company, or any other Person for whose conduct they are or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the Company,
threatened claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health, and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which Sellers or the Company has or had an interest.
(c) No Seller or the Company has Knowledge of any basis to expect, nor has
any of them or any other Person for whose conduct they are or may be held
responsible, received, any Order, notice, communications, inquiry, warning,
citation, summons, directive, or any other indication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Sellers or the
Company had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by Sellers, the Company, or any other Person for whose
conduct they are or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) No Seller or the Company, or any other Person for whose conduct they
are or may be held responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or to the Knowledge of Sellers and
the Company, with respect to any other properties and assets (whether real,
personal, or mixed) in which Sellers or the Company (or any predecessor), has or
had an interest, or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
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(e) There are no Hazardous Materials present on or in the Environment at
the Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. No
Seller, the Company, any other Person for whose conduct they are or may be held
responsible, or to the Knowledge of Sellers and the Company, any other Person,
has permitted or conducted, or is aware of, any Hazardous Activity conducted
with respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or the Company has or had an interest
except in full compliance with all applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Sellers and the
Company, threat of Release, of any Hazardous Materials at or from the Facilities
or at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which Sellers or the Company has or had an
interest, or to the Knowledge of Sellers and the Company any geologically or
hydrologically adjoining property, whether by Sellers, the Company, or any other
Person.
(g) Sellers have delivered to Buyer true and complete copies and results of
any reports, studies, analyses, tests, or monitoring possessed or initiated by
Sellers or the Company pertaining to Hazardous Materials or Hazardous Activities
in, on, or under the Facilities, or concerning compliance by Sellers, the
Company, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
2.20 EMPLOYEES.
(a) Schedule 2.20 contains a complete and accurate list of the following
information for each employee or director of the Company, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since January 1,
1998; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
(b) No former or current employee or current or former
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director of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement, between such employee or director and any other
entity or person other than the Company ("Proprietary Rights Agreement") that in
any way adversely affected, affects, or will affect (i) the performance of his
duties as an employee or director of the Company, or (ii) the ability of the
Company to conduct its business, including any Proprietary Rights Agreement with
Sellers or the Company by any such employee or director. To Sellers' Knowledge,
no director, officer, or other key employee of the Company intends to terminate
his employment with the Company.
(c) Schedule 2.20 also contains a complete and accurate list of the
following information for each retired employee or director of the Company, or
their dependents, receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.
2.21 LABOR DISPUTES; COMPLIANCE. Since January 1, 1990, the Company has not
been or is not a party to any collective bargaining or other labor Contract.
Since January 1, 1990, there has not been, there is not presently pending or
existing, and to Sellers' Knowledge there is not threatened any strike,
slowdown, picketing, work stoppage, labor arbitration or proceeding in respect
of the grievance of any employee, application or complaint filed by an employee
or union with the National Labor Relations Board or any comparable Governmental
Body, organizational activity, or other labor dispute against or affecting any
of the Company or its premises, and no application for certification of a
collective bargaining agent is pending or to Sellers' Knowledge is threatened.
To Sellers' Knowledge no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by the Company, and no such action is contemplated by
the Company. The Company has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.
2.22 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets -- The term "Intellectual Property Assets"
includes:
(i) The name Mid Central Plastics, Inc., all fictional business names,
trading names, registered and unregistered trademarks, service marks, and
applications (collectively,
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28
"Marks");
(ii) All patents and patent applications (collectively, "Patents");
(iii) All copyrights in both published works and unpublished works
that are material to the Company's businesses (collectively, "Copyrights");
(iv) All rights in mask works (collectively, "Rights in Mask Works");
and
(v) All know-how, trade secrets, confidential information, software,
technical information, process technology, plans, drawings, and blueprints
(collectively, "Trade Secrets"); owned, used, or licensed by the Company as
licensee or licensor.
(b) Agreements -- Schedule 2.22(b) contains a complete and accurate list
and summary description, including any royalties paid or received by the
Company, of all agreements relating to the Intellectual Property Assets to which
the Company is a party or by which the Company is bound, except for any license
implied by the sale of a product and common software programs with a value of
less than $50,000. There are no outstanding and, to Sellers' Knowledge, no
threatened disputes or disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business -- Except as otherwise disclosed in
Schedule 2.22(c):
(i) The Intellectual Property Assets are all those necessary for the
operation of the Company's business as it is currently conducted or as reflected
in the business plan given to Buyer. The Company is the owner of all right,
title, and interest in and to each of the Intellectual Property Assets, free and
clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims, and has the right to use without payment to a third party
all of the Intellectual Property Assets.
(ii) All employees of the Company have executed written agreements
with the Company that assign to the Company all rights to any inventions,
improvements, discoveries, or information relating to the business of the
Company. No employee of the Company has entered into any agreement that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the Company.
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(d) Patents
(i) Schedule 2.22(d) contains a complete and accurate list and summary
description of all Patents. The Company is the owner of all right, title, and
interest in and to each of the Patents, free and clear of all liens, security
interests, charges, encumbrances, entities, and other adverse claims.
(ii) All of the Patents are currently in compliance with formal legal
requirements (including payment of filing, examination, and maintenance fees and
proofs of working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposing proceeding. To Sellers' Knowledge, there is
no potentially interfering patent or patent application of any third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the products manufactured and sold,
nor any process or know-how used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any other Person.
(e) Trademarks
(i) Schedule 2.22(e) contains a complete and accurate list and summary
description of all Marks. The Company is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as otherwise set forth in Schedule 2.22(e), all Marks have
been registered with the United States Patent and Trademark Office and are
currently in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the Closing
Date.
(iii) No Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such action is
threatened with respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) No Xxxx is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the Marks used
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30
by the Company infringe or is alleged to infringe any trade name, trademark,
or service xxxx of any third party.
(f) Copyrights
(i) Schedule 2.22(f) contains a complete and accurate list and summary
description of all Copyrights. The Company is the owner of all right, title, and
interest in and to each of the Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) Except as otherwise disclosed in Schedule 2.22(f), all Copyrights
have been registered and are currently in compliance with formal legal
requirements, are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the date of
Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the subject matter of any of the
Copyrights infringes or is alleged to infringe any copyright of any third party.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation relating to
such Trade Secret is current, accurate, and sufficient in detail and content to
identify and explain it and to allow its full and proper use without reliance on
the special knowledge or memory of others.
(ii) Sellers and the Company have taken all reasonable precautions to
protect the secrecy, confidentiality, and value of their Trade Secrets.
(iii) The Company has good title and an absolute (but not necessarily
exclusive) right to use the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature, and, to Sellers' Knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person (other than the
Company) or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
2.23 CERTAIN PAYMENTS. Since January 1, 1990, no director, officer, agent,
or employee of the Company, or to Sellers' Knowledge any other Person associated
with or acting for or on behalf of the Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person,or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, or (iii) to obtain
special concessions or for special concessions already obtained, for or in
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31
respect of the Company or any affiliate of the Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
2.24 DISCLOSURE.
(a) To the Knowledge of Sellers, no representation or warranty of Sellers
in this Agreement and no statement in the Schedules omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 4.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact known to any Seller that has specific application to
any Seller or the Company (other than general economic or industry conditions)
and that materially adversely affects or, as far as either Seller can reasonably
foresee, materially threatens, the assets, business, prospects, financial
condition, or results of operations of the Company (on a consolidated basis)
that has not been set forth in this Agreement or the Schedules.
2.25 RELATIONSHIPS WITH RELATED PERSONS. Except as otherwise disclosed in
Schedule 2.25, no Seller or any Related Person of Sellers or of the Company has,
or since the first day of the next to last completed fiscal year of the Company
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Company's
business. No Seller or any Related Person of Sellers or of the Company owns, or
since the first day of the next to last completed fiscal year of the Company has
owned, of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (i) had business dealings or
a material financial interest in any transaction with the Company other than
business dealings or transactions conducted in the Ordinary Course of Business
with the Company at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with the Company with
respect to any line of the products or services of the Company (a "Competing
Business") in any market presently served by the Company except for less than
one percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Except as set forth in Schedule 2.25, no Seller or any Related Person of Sellers
or of the Company is a party to any Contract with, or has any claim or right
against, the Company.
2.26 BROKERS OR FINDERS. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for
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32
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Georgia.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Escrow Agreement and the Noncompetition
Agreements (collectively, the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and the Buyer's Closing Documents and to perform its obligations
under this Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 3.2, neither the execution and delivery
of this Agreement by Buyer nor the consummation or performance of any of the
Contemplated Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) Any provision of Buyer's Organizational Documents;
(ii) Any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) Any Legal Requirement or Order to which Buyer may be subject; or
(iv) Any Contract to which Buyer is a party or by which Buyer may be
bound.
Except as set forth in Schedule 3.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of Section 2(11) of
the Securities Act or the Securities Laws of the State of Iowa.
3.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may
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33
have the effect of preventing, delaying, making illegal, or otherwise
interfering with,, any of the Contemplated Transactions. To Buyer's Knowledge,
no such Proceeding has been threatened.
3.5 BROKERS OR FINDERS. Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by and through Buyer as a result of the action of Buyer or its
officers or agents.
4. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and the
Closing Date, Sellers will, and will cause the Company and its Representatives
to, (a) afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer's Advisors") reasonable access to the
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data at reasonable times so as not to
unreasonably interfere with the business of the Company, (b) furnish Buyer and
Buyer's Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and Buyer's Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
4.2 OPERATION OF THE BUSINESS OF THE COMPANY. Between the date of this
Agreement and the Closing Date, Sellers will, and will cause the Company to:
(a) Conduct the business of the Company only in the Ordinary Course of
Business;
(b) Use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees and agents of the Company, and maintain the relations and
goodwill with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with the Company;
(c) Confer with Buyer concerning operational matters of a material nature;
and
(d) Otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company.
4.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Company not to, without the prior consent of Buyer, take
any affirmative
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34
action, or fail to take any reasonable action within their or its control, as
a result of which any of the changes or events listed in Section 2.16 is likely
to occur.
4.4 REQUIRED APPROVALS. As promptly as practicable after the date of this
Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions (including all filings under the HSR Act). Between the
date of this Agreement and the Closing Date, Sellers will, and will cause the
Company to, (a) cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in connection with
the Contemplated Transactions, and (b) cooperate with Buyer in obtaining all
consents identified in Schedule 3.2 (including taking all actions requested by
Buyer to cause early termination of any applicable waiting period under the HSR
Act).
4.5 NOTIFICATION. Between the date of this Agreement and the Closing Date,
each Seller will promptly notify Buyer in writing if such Seller or the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any of Sellers' representations and warranties as of the date of this Agreement,
or if such Seller or the Company becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules if the Schedules were
dated the date of the occurrence or discovery of any such fact or condition,
Sellers will promptly deliver to Buyer a supplement to the Schedules specifying
such change. During the same period, each Seller will promptly notify Buyer of
the occurrence of any Breach of any covenant of Sellers in this Section 4 or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible or unlikely.
4.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, Sellers will cause all indebtedness of any Related
Person to the Company to be paid in full at or prior to Closing.
4.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause the Company
and each of their Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of the Company, or any of the capital stock of
the Company, or any
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35
merger, consolidation, business combination, or similar transaction involving
the Company.
4.8 BEST EFFORTS. Between the date of this Agreement and the Closing Date,
Sellers will use their Best Efforts to cause the conditions in Sections 7 and 8
to be satisfied.
4.9 1997 AUDITED FINANCIAL STATEMENTS. On or before May 19, 1998, Sellers
shall deliver to Buyer the balance sheet of the Company as at December 31, 1997
and the related statements of income, retained earnings and cash flow for the
fiscal year then ended, together with the report thereon of Northrup, Haines,
Xxxxxx, Schmid, Macklin, P.C., independent certified public accountants, which
report shall state that the financial statements were audited by the firm in
accordance with generally accepted auditing standards and that, in the opinion
of Northrup, Haines, Xxxxxx, Schmid, Macklin, P.C., such financial statements
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997, and the results of its operations and its cash flow for
the year then ended, in conformity with GAAP.
5. COVENANTS OF BUYER PRIOR TO CLOSING DATE
5.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after the
date of this Agreement, Buyer will, and will cause each of its Related Persons
to, make all filings required by Legal Requirements to be made by them to
consummate the Contemplated Transactions (including all filings under the HSR
Act). Between the date of this Agreement and the Closing Date, Buyer will, and
will cause each Related Person to, cooperate with Sellers with respect to all
filings that Sellers are required by Legal Requirements to make in connection
with the Contemplated Transactions, and (ii) cooperate with Sellers in obtaining
all consents identified in Schedule 2.2; provided that this Agreement will not
require Buyer to dispose of or make any change in any portion of its business or
to incur any other burden to obtain a Governmental Authorization.
5.2 BEST EFFORTS. Except as set forth in the proviso to Section 5.1,
between the date of this Agreement and the Closing Date, Buyer will use its Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
specified or referred to in this Section 6.
"Adjustment Amount" -- As defined in Section 1.5.
"Applicable Contract" -- Any Contract (a) under which the Company has or
may acquire any rights, (b) under which the Company has or may become subject to
any obligation or liability, or (c) by
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36
which the Company or any of the assets owned or used by the Company is or may
become bound.
"Balance Sheet" -- As defined in Section 2.4.
"Best Efforts" -- The efforts that a prudent person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible.
"Breach" -- A "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by a Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer" -- As defined in the first paragraph of this Agreement.
"Cap" -- As defined in Section 10.6.
"Closing" -- As defined in Section 1.3.
"Closing Date" -- The date and time as of which the Closing actually takes
place.
"Code" -- The Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code of
1986, as amended, or any successor law.
"Company" -- As defined in the second paragraph of this Agreement.
"Consent" -- Any approval, consent, ratification, waiver, or other
authorization (including any governmental Authorization).
"Contemplated Transactions" -- All of the transactions contemplated by this
Agreement, including without limitation: (a) the sale of the Shares by Sellers
to Buyer; (b) the execution, delivery, and performance of the Noncompetition
Agreements, the Sellers' Releases, and the Escrow Agreement; (c) the performance
by Buyer and Sellers of their respective covenants and obligations under this
Agreement; and (d) Buyer's acquisition and ownership of the Shares and exercise
of control over the Company.
"Contract" -- Any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or
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37
implied) that is legally binding.
"Damages" -- As defined in Section 10.2.
"Encumbrances" -- Any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting (in the case of any security), transfer, receipt of income, or exercise
of any other attribute of ownership.
"Environment" -- Soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwater, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- Any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and relating to:
(a) Any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) Fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) Financial responsibility under Environmental Law or Occupational Safety
and Health Law for cleanup costs or corrective action, including any cleanup,
removal, containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law of Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by an Governmental
Body or any other Person) and for any natural resource damages; or
(d) Any other compliance, corrective, or remedial measures required under
Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" will include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"Environmental Law" -- Any Legal Requirement designed:
(a) To advise appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous
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38
substances or materials, violations or discharge limits, or other
prohibitions and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the Environment;
(b) To prevent or acceptably minimize the release of pollutants or
hazardous substances or materials into the Environment;
(c) To reduce the quantities, prevent the release, and minimize the
hazardous characteristics of wastes that are generated;
(d) To assure that products are designed, formulated, packaged, or used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) To protect resources, species, or ecological amenities;
(f) To acceptably minimize the risks inherent in transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) To clean up pollutants that have been released, prevent the threat of
release, or pay the costs of such clean up or prevention; or
(h) To make responsible parties payparties, or groups of them, for damages
done to their health or Environment, or to permit self-appointed representatives
of the public interest to recover for injuries done to public assets.
"ERISA" -- The Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agreement" -- As defined in Section 1.4.
"Facilities" -- Any real property, leaseholds, or other interests currently
or formerly owned or operated by the Company (or any predecessor Person) and any
buildings, plants, structures, or equipment currently or formerly owned, leased,
or operated by the Company (or any predecessor Person).
"GAAP" -- Generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 2.4(b) were prepared.
"Governmental Authorization" -- Any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
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39
"Governmental Body" -- Any:
(a) Xxxxxx, xxxxx, xxxxxx, xxxx, xxxx, xxxxxxx, xxxxxxxx, or other
jurisdiction of any nature;
(b) Federal, state, local, municipal, foreign, or other government;
(c) Governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) Multi-national organization or body; or
(e) Body exercising, or entitled or purporting to exercise any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity" -- The distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of hazardous materials in, or under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials" -- Includes any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14), (33) of CERCLA
or the regulations designated pursuant to Section 102 of CERCLA and found at 40
C.F.R. Section 302), including any element, compound, mixture, solution, or
substance that is or may be designated pursuant to Section 102 of CERCLA; (ii)
substance that is or may be designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act, as amended (33 U.S.C. Sections 1251,
1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, 6921)
("RCRA") or having characteristics that may subsequently be considered under
RCRA to constitute a hazardous waste; (iv) substance containing petroleum, as
that term is defined in Section 9001(8) of RCRA; (v) toxic pollutant that
is or may be listed under Section 307(a) of FWPCA; (vi) hazardous air pollutant
that is or may be listed under Section 112 of the Clean Air Act, as amended (42
U.S.C. Sections 7401, 7412); (vii) imminently hazardous chemical substance or
mixture with respect to which action has been or may be taken pursuant to
Section 7 of the Toxic Substances Control Act, as amended (15 U.S.C. Sections
2601, 2606); (viii) source, special nuclear, or by-product material as defined
by the Atomic
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40
Energy Act of 1954, as amended (42 U.S.C. Section 2001 et seq.); (ix) asbestos,
asbestos-containing material, or urea formaldehyde or material that contains it;
(x) waste oil and other petroleum products; and (xi) any other toxic materials,
contaminants, or hazardous substances or wastes pursuant to any Environmental
Law.
"HSR Act" -- The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Indemnified Persons" -- As defined in Section 10.2.
"Intellectual Property Assets" -- As defined in Section 2.22.
"Interim Balance Sheet" -- As defined in Section 2.4.
"IRS" -- The United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- An individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) Such individual is actually aware of such fact or other matter; or
(b) A prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement" -- Any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance, principle
of common law, regulation, statute, or treaty.
"Noncompetition Agreements" -- As defined in Section 1.4(a)(iii).
"Occupational Safety and Health Law" -- Any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or(such as those
promulgated or sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
"Order" -- Any award, decision, injunction, judgment, order,
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41
ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- An action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) Such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) Such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority) and does not require any other separate or special authorization of
any nature; and
(c) Such action is similar in nature and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the by-laws of the corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person" -- Any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- As defined in Section 2.13.
"Proceeding" -- Any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person" -- With respect to a particular individual:
(a) Each other member of such individual's Family;
(b) Any Person that is directly or indirectly controlled by any one or more
members of such individual's Family;
(c) Any Person in which members of such individual's Family
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hold (individually or in the aggregate) a Material Interest; and
(d) Any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a) Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) Any Person that holds a Material Interest in such specified Person;
(c) Each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) Any Person in which such specified Person holds a Material Interest;
and
(e) Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"Release" -- Any spilling, leading, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"Representative" -- With respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Schedules" -- The schedules delivered by Sellers to Buyer concurrently
with the execution and delivery of this Agreement.
"Securities Act" -- The Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that
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Act or any successor law.
"Sellers" -- As defined in the first paragraph of this Agreement.
"Sellers' Release" -- As defined in Section 1.4.
"Shares" -- As defined in the second paragraph of this Agreement.
"Subsidiary" -- With respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax" -- Any tax (including any income tax, capital gains tax, value-added
tax, sales tax, property tax, gift tax, or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency, or other fee, and any
related charge or amount (including any fine, penalty, interest, or addition to
tax), imposed, assessed, or collected by or under the authority of any
Governmental Body.
"Tax Audit" -- The pending IRS tax audit of the Company as disclosed in
Schedule 2.11.
"Tax Audit Credit" -- As defined in Section 1.4.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part).
7.1 ACCURACY OF REPRESENTATION.
(a) All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Schedules.
(b) Each of Sellers' representations and warranties in
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sections 2.3, 2.4, 2.12, and 2.24 must have been accurate in all respects
as of the date of this Agreement, and must be accurate in all respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Schedules.
7.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each Seller must have delivered each of the documents required to be
delivered by such Seller pursuant to Section 1.4, and each of the other
covenants and obligations in Sections 4.4 and 4.8 must have been performed and
complied with in all respects.
7.3 CONSENTS. Each of the Consents identified in Schedule 2.2 or Schedule
3.2 must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS. Sellers must have caused the following documents
to be delivered to Buyer:
(a) An opinion of Smith, Schneider, Stiles, Hudson, Serangeli, Xxxxxxxx &
Xxxxxxxx, P.C. dated the Closing Date, in the form of Exhibit 7.4(a);
(b) Such other documents as Buyer may reasonably request for the purpose of
(i) enabling its counsel to provide the opinion referred to in Section 8.4(a),
(ii) evidencing the accuracy of any of Sellers' representations and warranties,
(iii) evidencing the performance by either Seller of, or the compliance by
either Seller with, any covenant or obligation required to be performed or
complied with by such Seller, (iv) evidencing the satisfaction of any condition
referred to in this Section 7, or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must not have
been commenced or threatened against Buyer, or against any Person affiliated
with Buyer, an Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There must not
have been made or threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial
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ownership of, any stock of, or any other voting, equity, or ownership interest
in, the Company or (b) is entitled to all or any portion of the Purchase Price
payable for the Shares.
7.7 NO PROHIBITION. Neither the consummation nor the performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
Governmental Body. Buyer represents to Sellers that it has no Knowledge of any
prohibition under any such Legal Requirement or Order except as otherwise set
forth in Schedule 3.2.
7.8 FINANCING. Buyer shall have obtained a commitment or commitments for
financing the acquisition of the Shares upon such terms and conditions as Buyer
deems satisfactory. Buyer shall make a diligent effort to obtain such financing
commitments on or before May 29, 1998. If Buyer, after such diligent effort, is
unable to obtain such a commitment or commitments and serves written notice of
termination upon the Sellers on or before May 29, 1998 citing such an inability,
then this Agreement shall be deemed terminated.
7.9 DUE DILIGENCE RESULTS. Buyer shall have completed such environmental
audits or site assessments with respect to the Company's assets and business as
are deemed necessary or advisable by the Buyer (with the results thereof being
satisfactory to the Buyer in its sole and absolute discretion). Buyer's due
diligence investigation provided for in Section 4.1 of this Agreement shall have
been completed to the satisfaction of the Buyer, and the results of such
investigation shall be satisfactory to the Buyer in its sole and absolute
discretion.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2 BUYER'S PERFORMANCE.
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(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 1.4 and must have made the cash payments
required to be made by Buyer pursuant to Sections 1.4(b)(i) and 1.4(b)(ii).
8.3 CONSENTS. Each of the Consents identified in Schedule 2.2 must have
been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following documents to
be delivered to Sellers:
(a) An opinion of Husch & Eppenberger, LLC dated the Closing Date, in the
form of Exhibit 8.4; and
(b) Such other documents as Sellers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in Section
7.4(a), (ii) evidencing the accuracy of any representation or warranty of Buyer,
(iii) evidencing the performance by Buyer with, any covenant or obligation
required to be performed or complied with by Buyer, (iv) evidencing the
satisfaction of any condition referred to in this Section 8, or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
8.5 NO INJUNCTION. There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Sellers
to Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) By either Buyer or Sellers if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has not
been waived;
(b) (i) By Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or
(ii) By Sellers, if any of the conditions in Section 8
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has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date;
(c) By mutual consent of Buyer and Sellers; or
(d) By either Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before July 31, 1998, or
such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination under Section
9.1 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Section 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL. All representations, warranties, covenants, and obligations
in this Agreement, the Schedules, the supplements to the Schedules, the
certificate delivered pursuant to Section 1.4, and any other certificate or
document delivered pursuant to this Agreement will survive the Closing; the
right to indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) about the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver of
any condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS -- GENERALLY. Sellers,
jointly and severally, will indemnify and hold harmless Buyer, the Company, and
their respective Representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons"), and will reimburse the
Indemnified
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Persons, for any loss, liability, claim, damage, expense (including
costs of investigation and defense and reasonable attorneys' fees) or diminution
of value, whether or not involving a third-party claim (collectively,
"Damages"), arising from or in connection with:
(a) Any Breach of any representation or warranty made by Sellers in this
Agreement, giving effect to any supplement to the Schedules, the certificate
delivered pursuant to Section 1.4(a)(iv), or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) Any breach by any Seller of any covenant or obligation of such Seller
in this Agreement;
(c) Any product shipped or manufactured by, or any services provided by,
the Company prior to the Closing Date;
(d) Any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with either Seller or the Company (or any Person
acting on their behalf) in connection with any of the Contemplated Transactions;
or
(e) Damages incurred in connection with Tax Audit.
10.3 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS -- ENVIRONMENTAL MATTERS.
In addition to the provisions of Section 10.2, Sellers, jointly and severally,
will indemnify and hold harmless Buyer, the Company, and the other Indemnified
Persons, and will reimburse Buyer, the Company, and any other Indemnified
Person, for any Damages (including costs of cleanup, containment, or other
remediation) arising from or in connection with:
(a) Any Environmental, Health, and Safety Liabilities arising out of or
relating to: (i)(A) the ownership, operation, or condition at any time on or
prior to the Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Sellers or the Company has or had an interest, or (B) any Hazardous Materials or
other contaminants that were present on the Facilities or such other properties
and assets at any time on or prior to the Closing Date; or (ii)(A) any Hazardous
Materials or other contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise handled by
Sellers or the Company or by any other Person for whose conduct they are or may
be held responsible at any time on or prior to the Closing Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by Sellers or the
Company or by any other Person for whose conduct they are or may be held
responsible; or
(b) Any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was
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49
incurred, or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction, and deprivation of the use of
real property), or other damage of or to any Person, including any employee or
former employee of Sellers or the Company or any other Person for whose conduct
they are or may be held responsible, in any way arising from or allegedly
arising from any Hazardous Activity conducted or allegedly conducted with
respect to the Facilities or the operation of the Company prior to the Closing
Date, or from Hazardous Material that was (i) present or suspected to be present
on or before the Closing Date on or at the Facilities (or present or suspected
to be present on any other property, if such Hazardous Material emanated or
allegedly emanated from any of the Facilities and was present or suspected to be
present on any of the Facilities on or prior to the Closing Date) or (ii)
Released or allegedly Released by Sellers or the Company or any other Person for
whose conduct they are or may be held responsible, at any time on or prior to
the Closing Date.
Buyer will be entitled to control any Cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.9 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer will indemnify and
hold harmless Sellers, and will reimburse Sellers, for any Damages arising from
or in connection with (a) any Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 TIME LIMITATIONS. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 2.3, 2.11, 2.13, and 2.19,
unless on or before three (3) years after the Closing Date Sellers are given
notice of claim specifying the factual basis of that claim in reasonable detail
to the extent then known by Buyer; a claim with respect to Section 2.3, 2.11,
2.13, or 2.19, or a claim for indemnification or reimbursement not based upon
any representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time subject to any
applicable statute of limitations. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, unless on or
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before three (3) years after the Closing Date Buyer is given notice of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Sellers.
10.6 LIMITATIONS ON AMOUNT -- SELLERS. Sellers will have no liability (for
indemnification or otherwise) with respect to the matters described in clauses
(a) or (c) or, to the extent relating to any failure to perform or comply prior
to the Closing Date, clause (b) of Section 10.2 until the total of all Damages
with respect to such matters exceeds $50,000, and then only for the amount by
which such Damages exceed $50,000, up to an aggregate maximum of $750,000 (the
"Cap"). In addition, Damages on account of any Breach of a covenant, obligation,
representation, or warranty regarding Taxes or Environmental, Health, and Safety
Liabilities shall not be limited by the Cap or applied in computing the amount
paid in satisfaction of the Cap. However, this Section 10.6 will not apply to
any Breach of any of Sellers' representa-tions and warranties of which either
Seller had Knowledge at any time prior to the date on which such representation
and warranty is made or any intentional Breach by either Seller of any covenant
or obligation, and Sellers will be jointly and severally liable for all Damages
with respect to such Breaches.
10.7 LIMITATIONS ON AMOUNT -- BUYER. Buyer will have no liability (for
indemnification or otherwise) with respect to the matters described in clause
(a) or (b) of Section 10.4 until the total of all Damages with respect to such
matters exceeds $50,000, and then only for the amount by which such Damages
exceed $50,000, up to an aggregate maximum of $750,000. However, this Section
10.7 will not apply to any Breach of any of Buyer's representations and
warranties of which Buyer had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional Breach by Buyer of
any covenant or obligation, and Buyer will be liable for all Damages with
respect to such Breaches.
10.8 ESCROW. Upon notice to Sellers specifying in reasonable detail the
basis for such set-off, Buyer may give notice of a Claim in such amount under
the Escrow Agreement. Neither the exercise of nor the failure to give a notice
of a Claim under the Escrow Agreement will constitute an election of remedies or
limit Buyer in any manner in the enforcement of any other remedies that may be
available to it.
10.9 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS; TAX AUDIT.
(a) Promptly after receipt by an indemnified party under Section 10.2,
10.4, or (to the extent provided in the last sentence of Section 10.3) Section
10.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
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51
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any Proceeding referred to in Section 10.9(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnifying party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and indemnifying party does not, within ten (10)
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it other than as a result of monetary damages for which it
would be entitled to indemnification under this Agreement, the indemnified party
may, by notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party
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will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court
in which a Proceeding is brought against any Indemnified Person for purposes of
any claim that an Indemnified Person may have under this Agreement with respect
to such Proceeding or the matters alleged therein, and agree that process may be
served on Sellers with respect to such claim anywhere in the world.
(e) Notwithstanding the foregoing, Sellers shall assume the defense of the
Tax Audit after the Closing and shall be free to enter into any compromise or
settlement of it without the consent of the Company or the Buyer so long as the
Company or Buyer has no liability arising out of the same. Buyer will reasonably
cooperate in the defense. Funds from the escrow account created pursuant to the
Escrow Agreement may be used to defend and resolve the Tax Audit.
10.10 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Buyer will pay one-half and Sellers
will pay one-half of the HSR Act filing fee. Sellers will cause the Company not
to incur any out-of-pocket expenses in excess of $5,000.00 in connection with
this Agreement. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Sellers shall, and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Sellers and Buyer will consult with each other concerning the means by which the
Company's employees, customers, and suppliers and others having dealings with
the Company will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
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11.3 CONFIDENTIALITY. Between the date of this Agreement and the Closing
Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, any written, oral, or other information obtained in
confidence from another party or the Company in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyer's request cause the Company to waive, any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information of the Company except for the
intentional competitive misuse by Buyer of such trade secrets or confidential
information.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by first class mail, postage prepaid, or (c) when received by the
addressee, if sent by a national recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
Sellers: Mid-Central Plastics, Inc.
0000 Xxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No. (000) 000-0000
With Copy To: Xxxxxxx X. Xxxxxx, Esq.
Smith, Schneider, Stiles, Hudson,
Serangeli, Xxxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxxxx
Xxx Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
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Buyer: Xxxxxx Industrial Group, Inc.
0000 Xxxx Xxxxxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
Telecopy No.: (000) 000-0000
With Copy To: Xxxx X. Xxxxxxxx, Esq.
Husch & Eppenberger, LLC
000 X.X. Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
11.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.6 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instances for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including the
letter of intent between Buyer and Sellers dated March 4, 1998 and agreed to on
March 6, 1998, and the Confidentiality Agreement between the Company and the
Buyer dated April 17, 1998) and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
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11.8 SCHEDULES. The Schedules and Exhibits attached hereto are hereby
incorporated as a part of this Agreement.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party may
assign any of its rights under this Agreement without the prior consent of the
other parties, which will not be unreasonably withheld, except that Buyer may
assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this agreement and their successors and assigns.
11.10 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 SECTION HEADINGS; CONSTRUCTION. The headings of sections of this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Sections" refer to the corresponding
sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
11.12 TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
11.13 GOVERNING LAW. This Agreement will be governed by and construed under
the laws of the State of Illinois without regard to conflicts of laws
principles.
11.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Buyer: Sellers:
XXXXXX INDUSTRIAL GROUP, INC.
By:/S/Xxxxxxx X. Xxxxxx /S/Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, President Xxxxxxx X. Xxxxxxx
/S/Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
/S/Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
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