STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") dated as of April
22, 1997 is by and among Xxxxxx X. Xxxxxxxx ("Xxxxxxxx") and the other
individuals who have signed this Agreement (collectively with Xxxxxxxx, the
"Shareholders" and individually, each a "Shareholder"), Rheochem,
Incorporated, a New Jersey corporation (the "Holding Company"), Rheochem
Technologies, Inc., a Delaware corporation ("Rheochem"), and Astor
Corporation, a Delaware corporation ("Buyer").
R E C I T A L S
WHEREAS, Rheochem is engaged in the development, production and sale
of paraffin lubricants, waxes, synthetic stearates and other lubricating
systems used in the extrusion of polyvinyl chloride products (the
"Business");
WHEREAS, Buyer and Holding Company each own a 50% equity interest in
Rheochem, and Buyer wishes to acquire control of the 50% interest now owned
by Holding Company;
WHEREAS, Shareholders of Holding Company are willing to sell to
Buyer all the outstanding stock of Holding Company in order to enable Buyer
to acquire control of Holding Company's 50% interest in Rheochem;
WHEREAS, each Shareholder owns the number of the issued and
outstanding shares (collectively, the "Shares") of Holding Company's common
stock, no par value per share, (the " Holding Company Common Stock"), set
forth opposite such Shareholder's name on EXHIBIT A hereto, which Shares in
the aggregate represent all of the issued and outstanding shares of Holding
Company's capital stock; and
WHEREAS, Buyer desires to purchase and Shareholders desire to sell
the Shares on the terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows.
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. The following terms, as used herein, have the
following meanings; other terms are defined elsewhere in this Agreement:
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person. Without limiting the generality of the
foregoing, after the Closing Date the Affiliates of Buyer shall include
Holding Company and Rheochem.
"APPLICABLE LAW" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, policy, guidance,
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order, writ, injunction, directive, judgment, decree or other requirement of
any Governmental Authority (including any Environmental Law) applicable to
such Person or any of its Affiliates or Plan Affiliates or any of their
respective properties, assets, officers, directors, employees, consultants or
agents (in connection with such officer's, director's, employee's,
consultant's or agent's activities on behalf of such Person or any of its
Affiliates or Plan Affiliates).
"ASSOCIATE" or "ASSOCIATED WITH" means, when used to indicate a
relationship with any Person, (a) any other Person of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent or more of any class of equity securities issued by such other
Person, (b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity, and (c) any relative or spouse of such Person, or
any relative of such spouse who has the same home as such Person or who is a
director or officer of such Person or any Affiliate thereof.
"BENEFIT ARRANGEMENT" means any material benefit arrangement that is
not an Employee Benefit Plan, including, without limitation, (i) each
material employment or consulting agreement, (ii) each arrangement providing
for material insurance coverage for employees, (iii) each material incentive
bonus or deferred bonus arrangement, (iv) each arrangement providing material
termination allowance, severance or similar benefits, (v) each material
equity compensation plan, (vi) each material deferred compensation plan and
(vii) each material compensation policy and practice maintained by Holding
Company or Rheochem or any ERISA Affiliate of either of them covering
employees, former employees, directors and former directors and the
beneficiaries of any of them.
"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or
required by law to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" means all contracts, agreements, options, leases,
licenses, sales and purchase orders, commitments and other instruments of any
kind, whether written or oral, to which Holding Company or Rheochem, as the
case may be, is a party on the Closing Date, including the Scheduled
Contracts and the Subsequent Material Contracts.
"DAMAGES" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments,
awards, fines, sanctions, penalties, charges and amounts paid in settlement
net of insurance proceeds actually received, including without limitation (i)
interest on cash disbursements in respect of any of the foregoing at the
Reference Rate in effect from time to time, compounded quarterly, from the
date each such cash disbursement is made until the Person incurring the same
shall have been indemnified in respect thereof and (ii) reasonable costs,
fees and expenses of attorneys, accountants and other agents of such Person.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined
in Section 3(3) of ERISA, that is sponsored or contributed to by Holding
Company, Rheochem or any ERISA Affiliate thereof covering employees or former
employees.
"EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of
ERISA, including a Multiemployer Plan.
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"ENVIRONMENTAL LAWS" means all Applicable Laws relating to Hazardous
Substances, toxic torts, occupational health and safety, or protection of the
environment, including, without limitation, (i) all Applicable Laws
pertaining to reporting, licensing, permitting, controlling, investigating or
remediating emissions, discharges, releases or threatened releases of
Hazardous Substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature,
into the air, surface water, groundwater or land, (ii) all Applicable Laws
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, chemical
substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature; and (iii) the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Clean Air Act, the
Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance
Control Act ("TSCA") and all requirements promulgated pursuant to any of
these or analogous state or local statutes.
"ENVIRONMENTAL LIABILITIES" means Liabilities of a Person that arise
under any Environmental Law and that relate to facts, circumstances, events
or conditions in existence as of, or occurring on or before, the Closing Date.
"ENVIRONMENTAL REPORT" means the environmental site assessment of
Rheochem's facility in Columbia, Missouri conducted by ENSR Environmental
Consultants in connection with this Agreement.
"EQUIPMENT" means all machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property (and interests in any of
the foregoing) of Rheochem.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was
or is required to be treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"GROUP HEALTH PLAN" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"HAZARDOUS SUBSTANCE" means any substance or material: (i) the
presence of which in, at or about the air, surface water, groundwater, soil,
land, or any facility requires investigation or remediation under any
Environmental Law; or (ii) that is defined as a "hazardous waste" or
"hazardous substance" under any Environmental Law; or (iii) that is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic or otherwise hazardous and is regulated by any Governmental
Authority having or asserting legal, regulatory, judicial, administrative or
other authority
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over Holding Company or Rheochem; or (iv) the presence of which causes a
nuisance or other tortious condition under any Applicable Law or any
Environmental Law or poses a hazard to the health or safety of Persons; or
(v) the presence of which on adjacent properties constitutes a trespass or
other tortious condition by Holding Company or Rheochem; or (vi) without
limitation, that contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
"INDEMNIFYING PARTY" means: (1) Shareholders when any Buyer
Indemnitee is asserting a claim under Sections 9.01(a) or 11.11 or (2) Buyer
when any Shareholder Indemnitee is asserting a claim under Sections 9.01(b)
or 11.11.
"INDEMNITEE" means: (1) each of Buyer and its Affiliates with
respect to any claim for which any Shareholder is an Indemnifying Party under
Sections 9.01(a) or 11.11; or (2) Shareholders and their Affiliates with
respect to claims for which Buyer is an Indemnifying Party under Sections
9.01(b) or 11.11.
"INVENTORY" means all items of inventory notwithstanding how
classified in the financial records of Rheochem, including all raw materials,
work-in-process, finished goods, and supplies of Rheochem.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to any individual, all things which
are actually known to such individual and, with respect to any corporation,
all things which are actually known to the executive officers of such
corporation.
"LIABILITY" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, whether
or not the same is required to be accrued on the financial statements of such
Person and whether or not the same is disclosed on any schedule to this
Agreement.
"LIEN" means, with respect to any asset, any mortgage, title defect
or objection, lien, pledge, security interest, hypothecation, restriction,
encumbrance or charge of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of Rheochem or the Business
that results in a material adverse effect on, or a material adverse change
in, the Business taken as a whole.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"PERMITTED LIENS" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for
Taxes the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other
Liens imposed by Applicable Law incurred in the ordinary course of business
for sums not yet delinquent or being contested in good faith; (iii) Liens
relating to deposits made in the ordinary course of business in
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connection with workers' compensation, unemployment insurance and other types
of social security or to secure the performance of leases, trade contracts or
other similar agreements; (iv) Liens and Encumbrances specifically identified
in the Financial Statements (as hereinafter defined), (v) Liens securing
executory obligations under any Lease that constitutes an "operating lease"
under GAAP; and (vi) other Liens set forth on SCHEDULE 1.01(a) hereto;
PROVIDED, HOWEVER, that, with respect to each of clauses (i) through (v), to
the extent that any such Encumbrance or Lien arose prior to the date of the
1996 Rheochem Balance Sheet and relates to, or secures the payment of, a
Liability that is required to be accrued under GAAP, such Encumbrance or Lien
shall not be a Permitted Lien unless adequate accruals for such Liability
have been established therefor on such Balance Sheet in conformity with GAAP.
Notwithstanding the foregoing, no Lien arising under the Code or ERISA with
respect to the operation, termination, restoration or funding of any Benefit
Plan sponsored by, maintained by or contributed to by Holding Company,
Rheochem or any of their ERISA Affiliates or arising in connection with any
excise tax or penalty tax with respect to such Benefit Plan shall be a
Permitted Lien.
"PERSON" means an individual, corporation, partnership, association,
trust, estate or other entity or organization, including a Governmental
Authority.
"PLAN AFFILIATE" means, with respect to any Person, any Benefit Plan
sponsored by, maintained by or contributed to by such Person, and with
respect to any Benefit Plan, any Person sponsoring, maintaining or
contributing to such Benefit Plan.
"PROHIBITED TRANSACTION" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"PURCHASE PRICE" means $14,100,000.
"REFERENCE RATE" means the per annum rate of interest publicly
announced from time to time by The Chase Manhattan Bank as its prime rate (or
reference rate). Any change in the Reference Rate shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation
as to which more than 10% of the outstanding stock having ordinary voting
rights or power (and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency occurs and such
rights may be exercised) is owned or controlled, directly or indirectly, by
such Person and/or by one or more of such Person's Subsidiaries, and (ii) any
partnership, joint venture or other similar relationship between such Person
(or any Subsidiary thereof) and any other Person (whether pursuant to a
written agreement or otherwise).
"TAX" means all taxes imposed of any nature including federal,
state, local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority responsible for the imposition of any such tax.
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"TAX RETURN" means all returns, reports, forms or other information
required to be filed with respect to any Tax.
ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE OF SHARES FROM SHAREHOLDERS. On the terms and
subject to the conditions set forth herein, at the Closing (as hereinafter
defined) each Shareholder shall sell, transfer, convey, assign and deliver to
Buyer, free and clear of all Share Encumbrances (as hereinafter defined), and
Buyer shall purchase, acquire and accept from each Shareholder, all the
Shares owned by such Shareholder. At the Closing, each Shareholder shall
deliver to Buyer certificates evidencing the Shares owned by such Shareholder
duly endorsed for transfer together with such other instruments as may be
reasonably requested by Buyer to transfer full legal and beneficial ownership
of the Shares to Buyer, free and clear of all Share Encumbrances. Buyer
shall pay the Purchase Price for the Shares in accordance with the terms of
Section 2.02(b) of this Agreement.
2.02 CLOSING.
(a) The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Xxxxxxx
Breed Xxxxxx & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 on the
later of April 30, 1997, or the date on which the last of the conditions to
Closing set forth in Sections 8.01 and 8.02 have been satisfied or waived by
the party or parties entitled to waive the same or on such other date as to
which the parties may agree (the "Closing Date"); PROVIDED, HOWEVER, that, as
provided in Section 10.01(f), Xxxxxxxx as representative of all Shareholders
or Buyer may terminate this Agreement if the Closing shall not have been
consummated by the Outside Date (as hereinafter defined).
(b) At the Closing, Buyer shall pay the Purchase Price to
Shareholders in cash by wire transfer of immediately available funds to a
bank account or bank accounts designated in writing by Xxxxxxxx as
representative of all Shareholders. The payment shall be allocated among
Shareholders as set forth in EXHIBIT A.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS, HOLDING
COMPANY AND RHEOCHEM
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Shareholders jointly and
severally represent and warrant to Buyer as set forth in Section 3.01 and
Holding Company, Rheochem and Xxxxxxxx jointly and severally represent to
Buyer as set forth in Sections 3.02 through 3.27:
3.01 REPRESENTATIONS REGARDING THE SHARES AND SHAREHOLDERS.
(a) Each Shareholder has good and marketable title to the
Shares which are to be transferred to Buyer by such Shareholder pursuant
hereto as set forth in EXHIBIT A free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, rights of first refusal,
options, Liens and adverse claims or rights whatsoever (collectively, "Share
Encumbrances"); and on the Closing
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Date, each Shareholder will have, and will deliver to Buyer, good and
marketable title to the Shares free and clear of any and all Share
Encumbrances.
(b) Each Shareholder has the full right, power and authority
to enter into this Agreement and to transfer, convey and sell to Buyer at the
Closing the Shares to be sold to Buyer by such Shareholder hereunder, and
upon consummation of the purchase contemplated hereby, Buyer will acquire
from such Shareholder good and marketable title to the Shares to be sold to
Buyer by such Shareholder, free and clear of all Share Encumbrances.
(c) No Shareholder is a party to, subject to or bound by any
judgment, order, writ, prohibition, injunction or decree of any court or
other governmental body, or any agreement, which would prevent the execution
or delivery of this Agreement by such Shareholder to Buyer or the transfer,
conveyance and sale of the Shares to be sold by such Shareholder to Buyer
pursuant to the terms hereof.
(d) The execution, delivery and performance by Shareholders
of this Agreement and the consummation thereby of the transactions
contemplated hereby are within each of Shareholders' powers. This Agreement
has been duly and validly executed by Shareholders and constitutes the legal,
valid and binding agreement of Shareholders, enforceable against each of them
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors rights generally and subject to general principles of equity.
3.02 CORPORATE EXISTENCE AND POWER OF HOLDING COMPANY. Holding
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has all corporate
power and authority to carry on its business as now conducted and to own its
assets as now owned. Holding Company is not required to be qualified to do
business in any state other than New Jersey.
3.03 CORPORATE EXISTENCE AND POWER OF RHEOCHEM. Rheochem is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to
carry on the Business as now conducted and to own and operate its assets as
now owned and operated. Rheochem is not required to be qualified to conduct
the Business in any state other than the State of Missouri, where Rheochem is
duly qualified to do business and in good standing.
3.04 AUTHORIZATION. The execution, delivery and performance by
Holding Company and Rheochem of this Agreement and the consummation thereby
of the transactions contemplated hereby are within each of Holding Company's
and Rheochem's powers and have been duly authorized by all necessary
corporate action on the part of Holding Company and Rheochem. This Agreement
has been duly and validly executed by Holding Company and Rheochem and
constitutes the legal, valid and binding agreement of Holding Company and
Rheochem, enforceable against each of them in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and subject to general principles of equity.
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3.05 SUBSIDIARIES. Holding Company has no Subsidiaries except
Rheochem, and Rheochem has no Subsidiaries.
3.06 CAPITAL STOCK.
(a) The authorized capital stock of Holding Company consists
solely of 2,500 shares of common stock, no par value, 1,900 shares of which
are issued and outstanding on the date hereof.
(b) All such issued and outstanding shares of Holding Company
Common Stock have been duly authorized and validly issued and are fully paid
and nonassessable. The Shares represent all of the issued and outstanding
shares of Holding Company's capital stock and are held as set forth on
EXHIBIT A. Holding Company does not hold any of the issued and outstanding
shares of Holding Company Common Stock in treasury, and there are not, and on
the Closing Date there will not be, outstanding (i) any options, warrants or
other rights to purchase from Holding Company or any of the Shareholders any
capital stock of Holding Company, (ii) any securities convertible into or
exchangeable for shares of such stock or (iii) any other commitments of any
kind for the issuance of additional shares of capital stock or options,
warrants or other securities of Holding Company.
(c) The authorized capital stock of Rheochem consists solely
of (i) 50,000 shares of Class A Common Stock, $1.00 par value, ("Class A
Common Stock"), 550 shares of which are issued and outstanding on the date
hereof, and (ii) 50,000 shares of Class B Common Stock, $1.00 par value,
("Class B Common Stock", and collectively with Class A Common Stock,
"Rheochem Common Stock"), 550 shares of which are issued and outstanding on
the date hereof.
(d) All such issued and outstanding shares of Class B Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable and are held by Holding Company free and clear of any and all
Share Encumbrances. Rheochem does not hold any shares of Rheochem Common
Stock in treasury, and there are not, and on the Closing Date there will not
be, outstanding (i) any options, warrants or other rights to purchase from
Rheochem or Holding Company any Rheochem Common Stock, (ii) any securities
convertible into or exchangeable for shares of such stock or (iii) any other
commitments of any kind for the issuance of additional shares of Rheochem
Common Stock or options, warrants or other securities of Rheochem.
3.07 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Holding Company, Rheochem and Shareholders of this Agreement
require no action by, consent or approval of, or filing with, any
Governmental Authority.
3.08 NON-CONTRAVENTION. The execution, delivery and performance by
Holding Company, Rheochem and Shareholders of this Agreement do not and will
not (a) contravene or conflict with the Articles of Incorporation or Bylaws
of Holding Company and Rheochem, (b) contravene or conflict with or
constitute a violation of any provision of any Applicable Law binding upon or
applicable to Holding Company, Rheochem, Shareholders, the Business or the
Shares, (c) , to the Knowledge of Xxxxxxxx, constitute a default under or
give rise to any right of termination, cancellation or acceleration of, or to
a loss of any benefit to which Holding Company and Rheochem are entitled,
under any material Contract or any Permit or similar authorization relating
to Holding Company, Rheochem, the Business or the Shares or by which Holding
Company, Rheochem, the Business or the Shares may be bound, or (d) , to the
Knowledge of Xxxxxxxx, result in the creation or imposition of any Lien on
any assets of Holding Company or Rheochem, other than Permitted Liens, or any
Share Encumbrance.
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3.09 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) True and complete copies of the audited balance sheets,
and unaudited related statements of income and retained earnings, and cash
flows of Holding Company for the years ended October 31, 1994, 1995 and 1996,
accompanied by the report thereon of Xxxxxx, Xxxxx & Xxxxx, certified public
accountants of Holding Company, have previously been delivered to Buyer. The
October 31, 1996 balance sheet is referred to herein as the 1996 Holding
Company Balance Sheet. Each of these financial statements has been prepared
based on the books and records of Holding Company in accordance with GAAP and
Holding Company's normal accounting practices, consistent with past practice
and with each other, and present fairly the financial condition and results
of operations of Holding Company as of the dates or for the periods
indicated.
(b) True and complete copies of the audited balance sheets
and related statements of operations and retained earnings, and cash flows of
Rheochem for the years ended December 31, 1994, 1995 and 1996, accompanied by
the report thereon of Ernst & Young LLP, certified public accountants of
Rheochem, (the "Annual Statements"), and the unaudited balance sheets and
statements of operations for each month of 1997 ending on or before March 31,
1997 (collectively, the "Interim Statements" and, together with the Annual
Statements, the "Financial Statements") have previously been delivered to
Buyer. The December 31, 1996 balance sheet is referred to herein as the "1996
Rheochem Balance Sheet." Each of the Financial Statements has been prepared
based on the books and records of Rheochem in accordance with GAAP (except
for the omission of footnote disclosure required by GAAP in the case of
Interim Financials and except that the Interim Financials omit and are
subject to normal year-end accruals) and Rheochem's normal accounting
practices, consistent with past practice and with each other, and present
fairly the financial condition and results of operations of Rheochem as of
the dates or for the periods indicated.
(c) There are no Liabilities of Holding Company or Rheochem
except (a) to the extent reflected in the 1996 Holding Company Balance Sheet
and the 1996 Rheochem Balance Sheet, (b) Liabilities described in this
Agreement and the Schedules hereto, (c) those Liabilities of Holding Company
and Rheochem incurred in the ordinary course of business since October 31,
1996 and December 31, 1996, respectively, (d) those Liabilities of Holding
Company and Rheochem not required under GAAP to be reflected in the financial
statements and that would not, individually or in the aggregate, have a
Material Adverse Effect and (e) Liabilities related to this Agreement and the
transactions contemplated hereby.
3.10 ABSENCE OF CERTAIN CHANGES. Except as previously disclosed in
writing to Buyer, approved by Holding Company and Buyer or contemplated by
this Agreement, since the date of the 1996 Holding Company Balance Sheet or
the 1996 Rheochem Balance Sheet, as the case may be, the Business has been
conducted in the ordinary course, and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts or change in Holding Company, Rheochem or the Business
(including any damage, destruction or other casualty loss, but excluding any
event, occurrence, development or state of circumstances or facts or change
resulting from changes in general economic conditions) affecting Holding
Company, Rheochem or the Business that has had or that may be reasonably
expected to have, either alone or together with all such events, occurrences,
developments, states of circumstances or facts or changes, a Material Adverse
Effect;
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(b) (i) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by Holding Company or Rheochem, (ii) any
incurrence of any Liability relating to a documentary or standby letter of
credit by Holding Company or Rheochem, (iii) any change in any Liability
other than in the ordinary course of business, or (iv) any incurrence of any
other Liability by Holding Company or Rheochem, other than in the ordinary
course of business;
(c) any creation, assumption or sufferance of the existence
of any Lien on any assets of Holding Company or Rheochem, other than
Permitted Liens;
(d) any transaction or commitment made, or any Contract
entered into, by Holding Company or Rheochem, or any waiver, amendment,
termination or cancellation of any Contract by Holding Company or Rheochem,
or any relinquishment of any rights thereunder by Holding Company or
Rheochem, or of any other right or debt owed to Holding Company or Rheochem,
other than in each such case actions taken in the ordinary course of business
consistent with past practice;
(e) except for actions taken in the ordinary course of
business consistent with the past practice of Holding Company or Rheochem
that are not, in the aggregate, material, any (i) grant of any severance,
continuation or termination pay to any director, officer, stockholder or
employee of Holding Company or Rheochem or any Associate of any of the
foregoing, (ii) entering into of any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
with any director, officer, stockholder or employee of Holding Company or
Rheochem or any Associate of any of the foregoing, (iii) increase in benefits
payable or potentially payable under any severance, continuation or
termination pay policies or employment agreements with any director, officer,
stockholder or employee of Holding Company or Rheochem or any Associate of
any of the foregoing, (iv) except as required by Applicable Law, increase in
compensation, bonus or other benefits payable or potentially payable to
directors, officers, stockholders or employees of Holding Company or Rheochem
or any Associate of any of the foregoing, (v) except as required by
Applicable Law, change in the terms of any bonus, pension, insurance, health
or other Benefit Plan of Holding Company or Rheochem, or (vi) representation
of Holding Company or Rheochem to any employee or former employee of Holding
Company or Rheochem that Buyer would assume, continue to maintain or
implement any Benefit Plan after the Closing Date;
(f) any loan to or guarantee or assumption of any loan or
obligation on behalf of any stockholder, director, officer or employee of
Holding Company or Rheochem or to any Associate of any of the foregoing,
except travel advances occurring in the ordinary course of business
consistent with past practice;
(g) any material change by Holding Company or Rheochem in its
accounting principles, methods or practices or in the manner it keeps its
books and records or any material change by Holding Company or Rheochem of
its current practices with regards to sales, receivables, payables or accrued
expenses that would affect the timing of collection of receivables or the
payment of payables;
(h) any distribution, dividend, bonus or other payment by
Holding Company or Rheochem to any officer, director, stockholder or
Affiliate of Holding Company or Rheochem or any of their respective
Affiliates or Associates (collectively, "Distributions");
10
(i) the entering into of any Contract or other arrangement between
Holding Company or Rheochem and any officer, director, stockholder or
Affiliate of Holding Company or Rheochem or any of their respective
Affiliates or Associates; or
(j) any payment, discharge or satisfaction of any Liabilities of
Holding Company or Rheochem, other than payments, discharges or satisfactions
in the ordinary course of business.
3.11 PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Neither Holding Company nor Rheochem owns any real property or
has a leasehold interest in any real property other than the real property
(the "Real Property") and the leased property (the "Leased Real Property")
identified on SCHEDULE 3.11(a), which constitutes all of the real property
used in the Business. Holding Company or Rheochem has a good and valid
leasehold interest in the Leased Real Property and the property subject to
the Personal Property Leases and has good and valid title to the Real
Property and its other tangible assets. Holding Company or Rheochem holds
title to each such property and asset free and clear of all Liens, adverse
claims, easements, rights of way, servitudes, zoning or building
restrictions, or any other rights of others or other adverse interests of any
kind, including chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retention arrangements
(collectively, "Encumbrances"), except for the Leases, utility easements and
Permitted Liens.
(b) SCHEDULE 3.11(b) sets forth a true and complete list of all
personal property leases or licenses (i) to which Holding Company or Rheochem
is a party or by which Holding Company or Rheochem is bound and (ii) that
provide for annual payments by Holding Company or Rheochem in excess of
$50,000 or that contain other affirmative material obligations that cannot be
terminated by Holding Company or Rheochem within 30 days (the "Personal
Property Leases") and all leases or licenses of Leased Real Property that
provide for annual payments by Holding Company or Rheochem in excess of
$50,000 or that cannot be terminated by Holding Company or Rheochem within 30
days (the "Real Property Leases" and collectively with the Personal Property
Leases, the "Leases") entered into in connection with the Business. With
respect to the Leases, except as set forth on SCHEDULE 3.11(b), there exist
no defaults by Holding Company or Rheochem, or, to the Knowledge of Holding
Company or Rheochem, any default or threatened default by any lessor or third
party thereunder, that has affected or could reasonably be expected to
materially affect the rights and privileges thereunder of Holding Company or
Rheochem.
(c) Neither Holding Company nor Rheochem has received notice of any
pending zoning or other land-use regulation proceedings or any proposed
change in any Applicable Laws that could reasonably be expected to
detrimentally affect the use or operation of the Real Property or any Leased
Real Property, nor has Holding Company or Rheochem received notice of any
special assessment proceedings affecting the Real Property or the Leased Real
Property or applied for any change to the zoning or land use status of the
Real Property or the Leased Real Property.
3.12 AFFILIATES. Except as set forth in SCHEDULE 3.12, or disclosed
in the notes to the 1996 Holding Company Balance Sheet and the 1996 Rheochem
Balance Sheet, neither Holding Company, Rheochem, any Shareholder, any
officers or directors of Holding Company or Rheochem, who are not employees
of Buyer or any of its Affiliates, (nor any immediate family member of any
such officer or director):
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(a) Now has or at any time subsequent to December 31, 1994, had,
either directly or indirectly, an equity or debt interest in any Person which
furnishes or sells or during such period furnished or sold services or
products to Holding Company or Rheochem or purchases or during such period
purchased from Holding Company or Rheochem any goods or services, or
otherwise does or during such period did business with Holding Company or
Rheochem of a material nature or amount; PROVIDED, HOWEVER, that neither
Holding Company, Rheochem, any Shareholder, nor any of Holding Company's or
Rheochem's officers and directors or other Affiliates shall be deemed to have
such an interest solely by virtue of the ownership of less than five percent
of the outstanding voting stock or debt securities of any publicly held
company, the stock or debt securities of which are traded on a national stock
exchange or quoted on the National Association of Securities Dealers
Automated Quotation System; or
(b) Now is or at any time subsequent to December 31, 1994, was, a
party to any contract, commitment or agreement to which Holding Company or
Rheochem is or during such period was a party or under which Holding Company
or Rheochem is or was obligated or bound or to which any of their respective
properties may be or may have been subject, other than through Holding
Company or Rheochem.
3.13 INVENTORIES. Subject to any reserve therefor that is included in
the 1996 Rheochem Balance Sheet and except as previously disclosed to the
Buyer, all Inventories of Rheochem are of a quality usable (including
processing into merchantable finished inventories) or salable in the ordinary
course of business, except for items of obsolete materials.
3.14 LITIGATION. Except as disclosed on SCHEDULE 3.14, (i) there are no
actions, suits, hearings, arbitrations, proceedings (public or private) or
governmental investigations that have been brought by or against any
Governmental Authority or any other Person (collectively, "Proceedings")
pending or, to the Knowledge of Holding Company, Rheochem or Xxxxxxxx,
threatened, against or affecting Holding Company, Rheochem, the Business, or
the Shares or which seek to enjoin or rescind the transactions contemplated
by this Agreement or otherwise prevent Holding Company, Rheochem or
Shareholders from complying with the terms and provisions of this Agreement;
and (ii) there are no existing orders, judgments or decrees of any
Governmental Authority affecting any of Holding Company, Rheochem, the
Business, or the Shares.
3.15 CONTRACTS.
(a) SCHEDULE 3.15 sets forth a complete list of the following
contracts, commitments and obligations (whether written or oral) of Holding
Company or Rheochem that are in connection with the Business (collectively
with the Leases and the Employment Agreements, the "Scheduled Contracts"):
(i) each Contract between Holding Company or Rheochem and (A)
each present or former director, officer or other member of management or
other personnel of Holding Company or Rheochem, (B) any supplier of services
or products to Holding Company or Rheochem whose dollar volume of sales to
Holding Company or Rheochem exceeded $50,000 in 1996, and (C) any Person in
which the aggregate payments made to Holding Company or Rheochem under such
Contract exceeded $50,000 in 1996;
(ii) each other agreement or arrangement of Holding Company or
Rheochem that (y) requires the payment or incurrence of Liabilities or the
rendering of services by
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Holding Company or Rheochem, subsequent to the date of this Agreement of more
than $50,000 and (z) cannot be terminated by Holding Company or Rheochem
within 30 days;
(iii) all Contracts relating to, and evidences of or guarantees
of, or providing security for, indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed or
secured by any asset);
(iv) all partnership, joint venture or other similar Contracts,
arrangements or agreements;
(v) to the extent that any of the following provide for annual
payments by Holding Company or Rheochem in excess of $50,000 and cannot be
terminated by Holding Company or Rheochem within 30 days, all license,
distribution, commission, marketing, agent, franchise, technical assistance
or similar agreements relating to or providing for the marketing and/or sale
of the products or services to which Holding Company or Rheochem is a party
or by which Holding Company or Rheochem is otherwise bound; and
(vi) all other contracts, commitments and obligations that are
not in the ordinary course of the Business.
(b) Each Scheduled Contract and Subsequent Material Contract is a
legal, valid and binding obligation of Holding Company or Rheochem and, to
the Knowledge of Holding Company, Rheochem and Xxxxxxxx, each other party
thereto, enforceable (except to the extent such enforceability may be limited
by bankruptcy, equity and creditors' rights generally) against Holding
Company, Rheochem and, to the Knowledge of Holding Company, Rheochem and
Xxxxxxxx, each such other party in accordance with its terms, and neither
Holding Company, Rheochem nor, to the Knowledge of Holding Company, Rheochem
and Xxxxxxxx, any other party thereto is in material default or has failed to
perform any material obligation thereunder. Complete and correct copies of
each Scheduled Contract have been delivered to Buyer.
3.16 PERMITS; REQUIRED CONSENTS.
(a) Rheochem has all material approvals, authorizations,
certificates, consents, licenses, orders and permits or other similar
authorizations of all Governmental Authorities (and all other Persons)
necessary for the operation of the Business or Rheochem's assets in
substantially the same manner as currently operated or affecting or relating
in any way to the Business or such assets (the "Permits").
(b) There is no Scheduled Contract with respect to which the consent
of the other party or parties thereto must be obtained by Holding Company,
Rheochem or Shareholders by virtue of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby to
avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach or default thereunder or any other change or modification
to the terms thereof. Each Permit is valid and in full force and effect in
all material respects and none of the Permits will be terminated or become
terminable or impaired in any material respect as a result of the
transactions contemplated hereby.
3.17 COMPLIANCE WITH APPLICABLE LAWS. The operation of the Business has
not violated or infringed, and does not violate or infringe, any Applicable
Law, or any order, writ, injunction
13
or decree of any Governmental Authority, except for violations and
infringements, which, individually or in the aggregate, will not have a
Material Adverse Effect.
3.18. EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL; AND EMPLOYEE BENEFITS.
(a) SCHEDULE 3.18 sets forth all Benefit Plans and Benefit
Arrangements of Holding Company and Rheochem used in connection with the
Business. Holding Company and Rheochem have made true and correct copies of
all governing instruments and related agreements pertaining to such Benefit
Plans and Benefit Arrangements available to Buyer.
(b) Except as set forth in SCHEDULE 3.18, neither Holding Company,
Rheochem nor any ERISA Affiliates of either of them sponsors or has within
the last five years sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit Plan.
(c) Except as set forth in SCHEDULE 3.18, no individual shall accrue
or receive additional benefits, service or accelerated rights to payments of
benefits under any Benefit Plan, including the right to receive any parachute
payment, as defined in Section 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a direct result of
the transactions contemplated by this Agreement.
(d) No Employee Benefit Plan has participated in, engaged in or been
a party to any non-exempt Prohibited Transaction, and neither Holding
Company, Rheochem nor any ERISA Affiliates of either of them has had asserted
against it any claim for taxes under Chapter 43 of Subtitle D of the Code and
Sections 5000 of the Code, or for penalties under ERISA Section 502(c), (i)
or (l), with respect to any Employee Benefit Plan nor, to the Knowledge of
Holding Company, Rheochem or Xxxxxxxx, is there a basis for any such claim.
To the Knowledge of Xxxxxxxx, no officer, director or employee of Holding
Company or Rheochem has committed a material breach of any responsibility or
obligation imposed upon fiduciaries by Title I of ERISA with respect to any
Employee Benefit Plan.
(e) Other than routine claims for benefits, there is no claim
pending or to the Knowledge of Holding Company or Rheochem threatened,
involving any Benefit Plan by any Person against such plan or Holding Company
or Rheochem or any ERISA Affiliate. There is no pending, or to the Knowledge
of Holding Company, Rheochem or Xxxxxxxx, threatened, proceeding involving
any Employee Benefit Plan before the IRS, the United States Department of
Labor or any other Governmental Authority.
(f) Except as set forth on SCHEDULE 3.18, each Benefit Plan has at
all times prior hereto been maintained in all material respects, by its terms
and in operation, in accordance with ERISA and the Code including, but not
limited to, all applicable reporting and disclosure requirements. Holding
Company, Rheochem and each ERISA Affiliate have made full and timely payment
of all amounts required to be contributed under the terms of each Benefit
Plan and Applicable Law or required to be paid as expenses under such Benefit
Plan, and Holding Company, Rheochem and each ERISA Affiliate shall continue
to do so through the Closing.
(g) With respect to any Group Health Plans maintained by Holding
Company, Rheochem or its ERISA Affiliates, whether or not for the benefit of
Holding Company, Rheochem or its ERISA Affiliates, Holding Company, Rheochem
and its ERISA Affiliates have
14
complied in all material respects with the provisions of Part 6 of Title I of
ERISA and Section 4980B of the Code. Neither Holding Company nor Rheochem is
obligated to provide health care or life insurance benefits of any kind to
its retired employees pursuant to any Employee Benefit Plan, including
without limitation any Group Health Plan, or pursuant to any agreement or
understanding.
3.19 LABOR AND EMPLOYMENT MATTERS.
(a) No collective bargaining agreement exists that is binding on
Holding Company or Rheochem and, to the Knowledge of Xxxxxxxx, no petition
has been filed or proceedings instituted by an employee or group of employees
with any labor relations board seeking recognition of a bargaining
representative.
(b) (i) There is no labor strike, dispute, slow down or stoppage
pending or, to the Knowledge of Holding Company, Rheochem or Xxxxxxxx,
threatened against or directly affecting the Business, (ii) no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending, and no claims therefor exist; and (iii) neither Holding
Company, Rheochem nor Xxxxxxxx, nor any of their Affiliates has received any
notice or has any Knowledge of any threatened labor or civil rights dispute,
controversy or grievance or any other unfair labor practice proceeding or
breach of contract claim or action with respect to claims of, or obligations
to, any employee or group of employees of Holding Company or Rheochem.
(c) Holding Company, Rheochem and its Affiliates have complied and
are currently complying, in all material respects, in respect of all
employees of Holding Company or Rheochem, with all Applicable Laws respecting
employment and employment practices and the protection of the health and
safety of employees.
(d) All individuals who are performing or have performed services
for Holding Company or Rheochem, or any Affiliate thereof and are or were
classified by Holding Company, Rheochem or any Affiliate as "independent
contractors" qualify for such classification under Section 530 of the Revenue
Act of 1978 or Section 1706 of the Tax Reform Act of 1986, as applicable,
except for such instances which are not, in the aggregate, material.
3.20 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.20 sets forth a complete and correct list of each
patent, patent application and docketed invention, trademark, trade name,
trademark or tradename registration or application, copyright or copyright
registration or application for copyright registration, and each license or
licensing agreement for any of the foregoing relating to the Business or held
by Holding Company or Rheochem (the "Intellectual Property Rights").
(b) Neither Holding Company nor Rheochem has during the three years
preceding the date of this Agreement been a party to any Proceeding, nor to
the Knowledge of Holding Company or Rheochem is any Proceeding threatened as
to which there is a reasonable possibility of a determination adverse to
Holding Company or Rheochem that involved or may involve a claim of
infringement by any Person (including any Governmental Authority) of any
Intellectual Property Right. No Intellectual Property Right is subject to
any outstanding order, judgment, decree, stipulation or agreement restricting
the use thereof by Holding Company or Rheochem, or restricting the licensing
thereof by Holding Company or Rheochem to any Person. To the Knowledge of
Xxxxxxxx, the use of the Intellectual Property Rights does not conflict with,
infringe upon or violate any patent, patent license,
15
patent application, trademark, tradename, trademark or tradename
registration, copyright, copyright registration, service xxxx, brand xxxx or
brand name or any pending application relating thereto, or any trade secret,
know-how, programs or processes, or any similar rights, of any Person.
3.21 ADVISORY FEES. There is no investment banker,
broker, finder or other intermediary or advisor that has been retained by or
is authorized to act on behalf of Holding Company, Rheochem, Shareholders or
their Affiliates who might be entitled to any fee, commission or
reimbursement of expenses from Buyer or any of its Affiliates or any of their
respective Associates upon consummation of the transactions contemplated by
this Agreement.
3.22 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed in the Environmental
Report, Holding Company and Rheochem have obtained all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities, or from any other
Person, that are required under any Environmental Law.
(b) Except as disclosed in the Environmental
Report, Holding Company and Rheochem are in compliance in all respects with
all terms and conditions of all approvals, authorizations, certificates,
consents, licenses, orders and permits or other similar authorizations of all
Governmental Authorities (and all other Persons) required under all
Environmental Laws and is also in compliance in all respects with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws.
(c) Except as disclosed in the Environmental
Report, there are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans relating to or
in any way affecting Holding Company, Rheochem or the Business that could
reasonably be expected to prevent, or make more expensive, continued
compliance with any Environmental Law by Buyer, Holding Company or Rheochem
after the Closing, or that may give rise to any Environmental Liability, or
otherwise form the basis of any claim, action, demand, suit, Proceeding,
hearing, study or investigation (i) under any Environmental Law, (ii) based
on or related to the manufacture, processing, distribution, use, treatment,
storage (including without limitation underground storage tanks), disposal,
transport or handling, or the emission, discharge, release or threatened
release of any Hazardous Substance, or (iii) resulting from exposure to
workplace hazards.
3.23 INSURANCE. The Buyer has received from Rheochem a
list of all material insurance policies currently in force with respect to
the Business.
3.24 TAX MATTERS. Except as set forth on SCHEDULE 3.24:
(a) Holding Company has timely filed all Tax
Returns required to have been filed by it on or before the date hereof
(taking into account all extensions heretofore granted) and has paid or
accrued all Taxes shown thereon as owing. All such Tax Returns are true,
correct and complete in all material respects. Holding Company is not
currently the beneficiary of any extension of time within which to file any
Tax Return.
16
(b) Holding Company has not received any notice
that the IRS or any other taxing authority has asserted against it any
deficiency in Taxes or claim for additional Taxes in connection with any tax
period, which deficiency or claim has not been paid in full. Except for
Liens arising from Taxes which are due but not yet payable, there are no
Liens for Taxes on any assets of Holding Company.
(c) Holding Company is not a party to an agreement
extending the time within which to file any Tax Return or extending the
statute of limitations for any period with respect to any Tax to which it is
subject. No claim has ever been made by any Taxing Authority in a
jurisdiction in which Holding Company does not file Tax Returns that it is
subject to taxation by that jurisdiction.
(d) Holding Company has withheld and paid over all
Taxes required to have been withheld and paid over in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder,
or other third party.
(e) Holding Company has not been included in any
consolidated, combined or unitary Tax Return provided for under the laws of
the United States, any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired.
(f) Holding Company has not made any material
payments, and is not obligated to make any material payments, and is not a
party to any agreement that would reasonably be expected to require it to
make any material payments that are not deductible under Section 280G of the
Code.
(g) None of the assets of Holding Company
constitutes tax-exempt bond financed property or tax-exempt use property,
within the meaning of Section 168 of the Code. Holding Company is not a party
to any "safe harbor lease" that is subject to the provisions of Section
168(f)(8) of the Internal Revenue Code as in effect prior to the Tax Reform
Act of 1986.
(h) Holding Company is not a party to any joint
venture, partnership or other arrangement that is treated as a partnership
for federal income Tax purposes.
(i) Holding Company has no liability for Taxes of
any other person (1) under Section 1.1502-6 of the Treasury Regulations (or
any similar provision of state, local or foreign law), (2) as a transferee or
successor of or to such person, (3) by contract with such other person or (4)
otherwise.
(j) No Shareholder is a "foreign person" within the
meaning of Section 1445 (f)(3) of the Code or Treasury Regulation Section
1.1445 - 2(b).
3.25 MATERIAL DISCLOSURES. No statement, representation
or warranty made by Holding Company, Rheochem, Xxxxxxxx or the other
Shareholders in this Agreement or in any certificate, statement, list,
schedule or other document furnished or to be furnished to Buyer hereunder
contains, or when so furnished will contain, any untrue statement of a
material fact, or fails to state, or when so furnished will fail to state, a
material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not misleading.
17
3.26 SUFFICIENCY OF AND TITLE TO ASSETS. Rheochem has,
and as of the Closing Date will have, title to, or the right to use, all
assets, whether tangible or intangible, necessary to operate the Business as
a going concern with all operations of the Business unimpaired in any
material respect immediately after the Closing Date.
3.27 LONG-TERM DEBT. Holding Company and Rheochem have,
and as of the Closing Date will have, no long-term debt.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Shareholders to enter into this
Agreement and to consummate the transactions contemplated herein, Buyer
hereby represents and warrants to Shareholders that:
4.01 ORGANIZATION AND EXISTENCE. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware and has all corporate power and authority to enter into
this Agreement and consummate the transactions contemplated hereby.
4.02 CORPORATE AUTHORIZATION. The execution, delivery
and performance by Buyer of this Agreement and the consummation by Buyer of
the transactions contemplated hereby are within the corporate powers of Buyer
and have been duly authorized by all necessary corporate action on the part
of Buyer. This Agreement has been duly and validly executed by Buyer and
constitutes a legal, valid and binding agreement of Buyer, enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by Buyer of this Agreement require no action by, consent or
approval of, or filing with, any Governmental Authority.
4.04 NON-CONTRAVENTION. The execution, delivery and
performance by Buyer of this Agreement does not (a) contravene or conflict
with the Certificate of Incorporation or Bylaws of Buyer, or (b) contravene
or conflict with or constitute a violation of any provision of any Applicable
Law binding upon or applicable to Buyer or (c) assuming receipt of the
consent of Buyer's bank lenders, constitute a default under, or give rise to
any termination, cancellation or acceleration of, or to a loss of any benefit
to which Buyer is entitled under, any material contract or any material
permit or authorization relating to Buyer or by which Buyer may be bound.
4.05 ADVISORY FEES. There is no investment banker,
broker, finder or other intermediary or advisor that has been retained by or
is authorized to act on behalf of Buyer who might be entitled to any fee,
commission or reimbursement of expenses from Holding Company, Rheochem,
Shareholders or any of their Affiliates upon consummation of the transactions
contemplated by this Agreement.
4.06 LITIGATION. There is no Proceeding pending against,
or to the Knowledge of Buyer, threatened against or affecting, Buyer before
any court or arbitrators or any governmental body, agency or official that in
any manner challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated by this Agreement.
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ARTICLE V
COVENANTS OF SHAREHOLDERS, HOLDING COMPANY AND
RHEOCHEM
5.01 CONDUCT OF THE BUSINESS; DISTRIBUTIONS. From the
date hereof until the Closing Date, Rheochem shall, and Xxxxxxxx in his
capacity as President shall cause Rheochem to, conduct the Business in the
ordinary course and in substantially the same manner as it has prior to the
date of this Agreement and agrees, with respect to the Business and other
than in the ordinary course of business, not to enter into any material
agreements or take any other significant actions without the prior written
consent of Buyer, which shall not be unreasonably withheld. Rheochem shall
use its reasonable efforts to preserve intact the Business and the business
organizations and relationships and goodwill of Rheochem with third parties
and keep available the services of the present officers, employees, agents
and other personnel of Rheochem. Without limiting the generality of the
foregoing and except as otherwise expressly provided in this Agreement or
otherwise agreed upon by Holding Company and Buyer, from the date hereof
until the Closing Date:
(a) Rheochem will, and Xxxxxxxx in his capacity as
President will cause Rheochem to:
(i) (A) maintain the assets of Rheochem in the
ordinary course of business consistent with past practice in good operating
order and condition, reasonable wear and tear excepted, (B) promptly repair,
restore or replace any assets of Rheochem in the ordinary course of business
consistent with past practice, (C) upon any damage, destruction or loss to
any of the assets of Rheochem, apply any and all insurance proceeds received
with respect thereto to the prompt repair, replacement and restoration
thereof to the condition of the assets of Rheochem before such event, (D)
take all actions necessary to be in compliance with, and to maintain the
effectiveness of, all material Permits;
(ii) comply with all material Applicable Laws;
(iii) promptly notify Buyer in writing of (A) any
action, event, condition or circumstance, or group of actions, events,
conditions or circumstances, that results in, or could reasonably be expected to
result in, a Material Adverse Effect, other than changes in general economic
conditions, (B) the commencement of any Proceeding by or against Rheochem,
Holding Company or Shareholders, or Holding Company, Rheochem or Shareholders
becoming aware of any threat, claim, action, suit, inquiry, proceeding, notice
of violation, demand letter, subpoena, government audit or disallowance that
could reasonably be expected to result in a Proceeding, and (C) the occurrence
of any breach by Rheochem, Holding Company or Shareholders of any representation
or warranty, or any covenant or agreement, contained in this Agreement.
(b) Without Buyer's prior consent, Rheochem will
not, and Xxxxxxxx in his capacity as President shall not permit Rheochem to,
do any of the following and will not agree to:
(i) purchase or otherwise acquire assets from
any other Person other than in the ordinary course of the Business;
19
(ii) sell, assign, lease, license, transfer or
otherwise dispose of, or mortgage, pledge or encumber (other than with
Permitted Liens), any of the assets of Rheochem, including Leased Real
Property, except in the ordinary course of the Business;
(iii) enter any agreement or arrangement that
requires or allows payment, acceleration of payment or incurrence of
Liabilities, or the rendering of services by Rheochem outside the ordinary
course of the Business;
(iv) amend or modify in any material respect or
terminate any Scheduled Contract or any other Contract entered into by
Rheochem after the date hereof which, if in existence on the date hereof,
would be required to be set forth in the SCHEDULE 3.15 as a Scheduled
Contract (each, a "Subsequent Material Contract");
(v) make or commit to make any capital
expenditure, or group of related capital expenditures, in excess of $25,000;
(vi) enter into or commit or propose to enter
into any Subsequent Material Contract;
(vii) make any distribution, dividend, bonus or
other payment to any officer, director, stockholder or Affiliate of Rheochem
or any of their respective Affiliates or Associates except for salary,
benefit or lease payments in the ordinary course and due or to become due
under arrangements in existence prior to January 1, 1997, except that
Rheochem may pay Holding Company a management fee in the amount of $262,500,
provided that if the Closing does not occur on or before April 30, 0000,
Xxxxxxxx shall pay Buyer a management fee in the same amount on May 1, 1997;
(viii) (A) create, incur, assume, or guarantee
any indebtedness for borrowed money or (B) incur any Liability relating to a
documentary or standby letter of credit, other than in each such case
referred to in this clause (viii) in the ordinary course of the Business
where the aggregate dollar amount of all of the foregoing by Rheochem does
not exceed $10,000; and
(ix) (A) increase the rate or terms of
compensation payable or to become payable to its employees except in the
ordinary course of business, (B) pay or agree to pay any pension, retirement
allowance or other employee benefit not provided for by any Employee Benefit
Plan, Benefit Arrangement or Employment Agreement set forth in the Schedules
hereto, (C) commit itself to any additional pension, profit sharing, bonus,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, continuation pay,
termination pay, retirement or other employee benefit plan, agreement or
arrangement, or increase the rate or terms of any Employee Benefit Plan or
Benefit Arrangement, (D) enter into any employment agreement with or for the
benefit of any Person, or (E) increase the rate of compensation under or
otherwise change the terms of any Employment Agreement set forth in SCHEDULE
3.18.
5.02 ACCESS TO INFORMATION. Subject to compliance with
Applicable Laws, from the date hereof until the Closing Date, Rheochem will,
and Xxxxxxxx will cause Rheochem to, and Holding Company and Xxxxxxxx will,
promptly: (a) give Buyer and its counsel, financial advisors, auditors and
other authorized representatives reasonable access to the offices,
properties, books and records relating to Rheochem or the Business upon
reasonable prior notice, (b) furnish to Buyer and its counsel, financial
advisors, auditors and other authorized representatives such information
relating to Rheochem or the
20
Business as Buyer may reasonably request and (c) instruct the directors,
officers, employees, counsel, auditors and financial advisors of Rheochem,
Holding Company and Shareholders to cooperate with Buyer and its counsel,
financial advisors, auditors and other authorized representatives in their
investigation of Rheochem or the Business. Such investigation shall include,
but shall not be limited to:
(i) A business and financial performance review of the
Business;
(ii) A review of the financial statements and tax returns
of Holding Company and Rheochem;
(iii) An environmental review as to the presence and nature
of any hazardous materials in or on any real property owned or leased by
Rheochem; and
(iv) A standard legal due diligence examination relating
to Holding Company, Rheochem and the Business.
5.03 MAINTENANCE OF INSURANCE POLICIES. Between the date hereof and
the Closing Date, Rheochem shall not, and Xxxxxxxx shall cause Rheochem to not,
and Xxxxxxxx shall not, take or fail to take any action if such action or
inaction, as the case may be, would adversely affect the applicability of any
insurance in effect on the date hereof that covers all or any part of the assets
of Rheochem or the Business with respect to the period of time ending on the
Closing Date.
5.04 CONFIDENTIALITY.
(a) Shareholders, Holding Company and Rheochem will, and will
cause their representatives to, treat any data and information obtained with
respect to Buyer or any of its Affiliates from any representative, officer,
director, or employee of Buyer, or from any books or records of Buyer in
connection with this Agreement, confidentially and with commercially reasonable
care and discretion, and will not disclose any such information to third
parties; PROVIDED, HOWEVER, that the foregoing shall not apply to
(i) information in the public domain or that becomes public through disclosure
by any party other than Shareholders, Holding Company, Rheochem or their
Affiliates or representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that is required to be disclosed by
Applicable Law, or (iii) any disclosure of such information in litigation
between the parties hereto in the course of such litigation.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Shareholders, Holding Company, and Rheochem upon the
written request of Buyer, will, and will cause their representatives to,
promptly deliver to Buyer any and all documents or other materials furnished by
Buyer or any of its Affiliates to Holding Company, Rheochem or Shareholders in
connection with this Agreement without retaining any copy thereof. In the event
of such request, all other documents, whether analyses, compilations or studies,
that contain or otherwise reflect the information furnished by Buyer to Holding
Company, Rheochem or Shareholders, shall be destroyed by Holding Company,
Rheochem and Shareholders or shall be returned to Buyer, and Holding Company,
Rheochem and Xxxxxxxx on behalf of all Shareholders shall confirm to Buyer in
writing that all such materials have been returned or destroyed. No failure or
delay by Buyer in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
21
(c) The parties hereto recognize and agree that in the event of
a breach of this Section 5.04, money damages would not be an adequate remedy to
Buyer or its Affiliates for such breach and, even if money damages were
adequate, it would be impossible to ascertain or measure with any degree of
accuracy the damages sustained therefrom. Accordingly, if there should be a
breach or threatened breach of provisions of this Section 5.04, Buyer and its
Affiliates shall be entitled to an injunction restraining Holding Company,
Rheochem and Shareholders from any breach without showing or proving actual
damage sustained by Buyer or its Affiliates, as the case may be. Nothing in the
preceding sentence shall limit or otherwise affect any remedies that Buyer and
its Affiliates may otherwise have under Applicable Law.
5.05 TRANSACTIONS AFFECTING THE SHARES. From the date hereof until
the Closing Date, Shareholders will not (whether voluntarily or involuntarily,
and whether currently or prospectively) sell, transfer or otherwise dispose of
any of the Shares, or create (or permit the creation of) any Share Encumbrance
on any of the Shares.
5.06 CERTAIN TRANSACTIONS BY HOLDING COMPANY. On or prior to the
Closing Date, Holding Company shall, and Shareholders shall cause Holding
Company to:
(a) assign, transfer and convey to Rheochem (i) Holding
Company's entire right, title and interest in, to and under the lease agreement
dated October 31, 1996 between 000/000 Xx. Xxxx Xxxx, X.X.X. and Holding Company
with respect to Holding Company's current administrative office, including,
without limitation, any related security deposit and the benefit of any prepaid
expenses, and (ii) Holding Company's entire right, title and interest in and to
all office equipment and related property now owned by Holding Company;
(b) distribute, as a dividend to Shareholders, (i) all cash,
cash equivalents, accounts and loans receivable remaining after the payment of
all salaries, bonuses, and other operating expenses of Holding Company for its
taxable year (or portion thereof) ending on the Closing Date and (ii) the 8%
Series A and Series B Subordinated Notes due 2003 of Astor Holdings, Inc. now
held by Holding Company; and
(c) pay, discharge or satisfy, or make provision for the
payment, discharge or satisfaction, of all liabilities of Holding Company.
ARTICLE VI
COVENANTS OF BUYER
6.01 CONFIDENTIALITY.
(a) Buyer will, and will cause its representatives to, treat any
data and information obtained with respect to Holding Company, Rheochem or
Shareholders from any representative, officer, director or employee of Holding
Company, Rheochem or Shareholders, or from any books or records of Holding
Company, Rheochem or Shareholders in connection with this
22
Agreement, confidentially and with commercially reasonable care and discretion,
and will not disclose any such information to third parties; PROVIDED, HOWEVER,
that the foregoing shall not apply to information in the public domain or that
becomes public through disclosure by any party other than Buyer or its
Affiliates or representatives, so long as such other party is not in breach of a
confidentiality obligation, (ii) information that is required to be disclosed by
Applicable Law, (iii) any information that is disclosed by Buyer or its
Affiliates to any of their actual or prospective lenders or investors in
connection with financing the transactions contemplated by this Agreement, or
(iv) any information that is disclosed by Buyer after the Closing shall have
occurred; PROVIDED, HOWEVER, that in the event the Closing has occurred, this
Section 6.01(a) shall cease to be effective with respect to any data and
information obtained with respect to Holding Company and Rheochem.
(b) In the event that the Closing fails to take place and this
Agreement is terminated, Buyer, upon the written request of Holding Company or
Rheochem, will, and will cause its representatives to, promptly deliver to
Holding Company or Rheochem any and all documents or other materials furnished
by Holding Company, Rheochem or Shareholders to Buyer in connection with this
Agreement without retaining any copy thereof. In the event of such request, all
other documents, whether analyses, compilations or studies, that contain or
otherwise reflect the information furnished by Holding Company, Rheochem or
Shareholders to Buyer, shall be destroyed by Buyer or shall be returned to
Holding Company, Rheochem or Shareholders, and Buyer shall confirm to Holding
Company, Rheochem and Shareholders in writing that all such materials have been
returned or destroyed. No failure or delay by Holding Company, Rheochem or
Shareholders in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege hereunder.
(c) The parties hereto recognize and agree that in the event of
a breach of this Section 6.01, money damages would not be an adequate remedy to
Holding Company, Rheochem and Shareholders for such breach and, even if money
damages were adequate, it would be impossible to ascertain or measure with any
degree of accuracy the damages sustained by Holding Company, Rheochem and
Shareholders therefrom. Accordingly, if there should be a breach or threatened
breach of provisions of this Section 6.01, Holding Company, Rheochem and
Shareholders shall be entitled to an injunction restraining Buyer from any
breach without showing or proving actual damage sustained by Holding Company,
Rheochem and Shareholders. Nothing in the preceding sentence shall limit or
otherwise affect any remedies that Holding Company, Rheochem and Shareholders
may otherwise have under Applicable Law.
6.02 ACCESS TO INFORMATION. Subject to compliance with Applicable
Laws, from the Closing Date until December 31, 2002, Buyer will, promptly:
(a) furnish to Shareholders and their counsel, financial advisors, auditors and
other authorized representatives such information relating to Holding Company,
Rheochem or the Business as Shareholders may reasonably request in connection
with the preparation of Tax Returns and (b) instruct the directors, officers,
employees, counsel, auditors and financial advisors of Buyer to cooperate in all
reasonable respects with Shareholders and their counsel, financial advisors,
auditors and other authorized representatives in connection with the preparation
of Tax Returns. After the Closing Date, in the event that Buyer intends to
destroy any documents that contain or otherwise reflect information in
connection with Holding Company, Rheochem or the Business for any period prior
to the Closing Date, Buyer will provide written notice to Shareholders of its
intention to destroy such documents and provide Shareholders with the
opportunity to request that such documents instead be delivered to Shareholders.
Any documents delivered to Shareholders pursuant to the preceding sentence shall
be held by Shareholders pursuant to Section 5.04.
23
ARTICLE VII
COVENANTS OF ALL PARTIES
7.01 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law to consummate the transactions contemplated by
this Agreement. Each party agrees to execute and deliver such documents,
certificates, agreements and other writings and to take such other actions as
may be reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement. Following the
Closing, Buyer shall make the records of Holding Company and Rheochem, and the
employees of Buyer, reasonably available to Shareholders, at no charge to
Shareholders other than for out of pocket expenses incurred by Buyer for items
such as photocopying or travel, for the purposes of providing accounting
information reasonably required by Shareholders, providing testimony or
information in connection with any legal proceeding or for any other appropriate
purpose arising out of Shareholders' ownership of the Shares.
7.02 CERTAIN FILINGS. The parties hereto shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Contract is required or
reasonably appropriate, in connection with the consummation of the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to
obtain any such actions, consents, approvals or waivers.
7.03 PUBLIC ANNOUNCEMENTS. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except as
may be required by Applicable Law, will not issue any such public statement
prior to such consultation. Notwithstanding the foregoing, the parties may, on
a confidential basis, advise and release information regarding the existence and
content of this Agreement or the transactions contemplated hereby to their
respective Affiliates or any of their agents, accountants, attorneys and
prospective lenders or investors in connection with or related to the
transactions contemplated by this Agreement, including without limitation the
financing of such transactions.
7.04 TAXES.
(a) All sales, use, registration, stamp and similar Taxes
imposed in connection with the sale of the Shares shall be borne by Buyer and
all transfer and similar Taxes imposed in connection with the sale of the Shares
shall be borne by Shareholders.
(b) The Shareholders shall prepare or cause to be prepared, and,
except as set forth below, shall file or cause to be filed, all Tax Returns for
Holding Company for all taxable periods ending on or prior to the Closing Date
which are due after the Closing Date. Such Tax Returns shall be prepared in a
manner consistent with the past practices of Holding Company. Any such Tax
Return which is required to be signed by or on behalf of Holding Company shall
be provided to the Buyer for execution and filing at least 5 business days prior
to the due date thereof.
(c) The Buyer shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns of Holding Company for taxable periods which
begin before the Closing Date and end after the Closing Date. The Buyer shall
deliver, at least 30 days prior to the due date for filing any
24
such Tax Return to which this Section 7.04(c) relates (including extensions),
to the Shareholders a statement setting forth the amount of Tax allocated to
the Shareholders pursuant to Section 7.04(f) hereof (the "Tax Statement") for
such Tax Returns and copies of such Tax Returns. Such Tax Returns shall be
prepared in a manner consistent with the past practices of Holding Company.
The Shareholders shall have the right to review such Tax Returns and the Tax
Statement prior to the filing of such Tax Returns and to suggest to the Buyer
any reasonable changes to such Tax Returns.
If the Shareholders disagree with the Tax Statement, the
Shareholders and the Buyer agree to consult and to resolve in good faith any
issue arising as a result of the review of such Tax Returns and the Tax
Statement and to mutually consent to the filing of such Tax Returns as promptly
as possible. In the event the parties are unable to resolve any dispute within
ten days following the delivery of such Tax Returns and the Tax Statement, such
dispute shall be resolved in accordance with the provisions of Section 11.11
hereof. If such dispute is not resolved within five Business Days prior to the
due date (including extensions) for the filing of the Tax Return in question,
then the Buyer may file such Tax Return on the due date (including extensions)
therefor without such determination having been made and without the
Shareholders' consent. Notwithstanding the filing of such Tax Return, the
arbitrators appointed pursuant to Section 11.11 hereof shall make a
determination with respect to any disputed issue, and the amount of Taxes that
are allocated to the Shareholders pursuant to Section 7.04(f) hereof shall be as
determined by such arbitrators.
(d) Buyer shall have the exclusive authority and obligation
and shall be responsible for the correct and timely filing of all other Tax
Returns of Holding Company and Rheochem due to be filed or actually filed after
the Closing Date. Such authority shall include, but not be limited to, the
determination of the manner in which any items of income, gain, deduction, loss
or credit arising out of the income, properties and operations of Holding
Company and Rheochem shall be reported or disclosed on such Tax Returns.
(e) Each of the Buyer, Holding Company, and the Shareholders
shall cooperate fully, as and to the extent reasonably requested by any other
party, in connection with the filing of Tax Returns pursuant to this Section
7.04 and any audit, litigation, or other proceeding with respect to Taxes of
the Company. Such cooperation shall include the retention and (upon the
other party's request) the provision of such records and information which
are reasonably relevant to any such Tax Return, audit, litigation, or other
proceeding.
(f) (i) After giving effect to all payments in respect thereof
which have been made on or prior to the Closing Date, Shareholders shall be
responsible and liable for, and hereby indemnify and hold harmless Buyer and
Holding Company for, any unpaid Taxes imposed on Holding Company for all periods
ending on or prior to the Closing Date, except to the extent such Taxes arise
out of or are related to transactions required to be undertaken pursuant to
Section 5.06 of this Agreement. Shareholders shall be responsible and liable
for, and hereby indemnify and hold harmless Buyer and Rheochem for, 50% of all
Taxes imposed on Rheochem for all periods ending on or prior to December 31,
1996, except (i) to the extent such Taxes arise out of or are related to
transactions required to be undertaken pursuant to Section 5.06 of this
Agreement and (ii) any Tax arising from an adjustment to the treatment of
management fees paid to Buyer by Rheochem; provided, however, that Shareholders
shall indemnify and hold harmless Buyer and Rheochem for 100% of any Tax
assessed as the result of an adjustment to the treatment of management fees paid
to Holding Company by Rheochem after such Tax is offset by the net tax benefit
that may inure to Holding Company as a result of such adjustment (it being
understood that it shall be the responsibility of Buyer to obtain such tax
benefit through the
25
appropriate action including the filing of amended tax returns and the like).
In the case of any Taxes attributable to any taxable period of Holding
Company that begins before and ends after the Closing Date, the allocable
share of such Taxes for which the Shareholders shall be responsible under
this Section 7.04(f)(i) shall not exceed the portion of such Taxes which
relates to the part of such taxable period ending on the Closing Date. For
purposes of this Section 7.04(f)(i), the portion of any such Taxes which
relates to the part of such taxable period ending on the Closing Date shall
(x) in the case of any Taxes other than Taxes based upon or related to income
or receipts, be deemed to be the amount of such Taxes for the entire taxable
period multiplied by a fraction the numerator of which is the number of days
in the taxable period ending on the Closing Date and the denominator of which
is the number of days in the entire taxable period, and (y) in the case of
any Tax based upon or related to income or receipts, be deemed equal to the
amount of such Taxes which would have been payable if the relevant taxable
period ended on the Closing Date. Any credits relating to a taxable period
shall be taken into account as though the relevant taxable period ended on
the Closing Date.
(ii) Buyer shall be responsible and liable for the timely
payment of all other Taxes imposed on or with respect to the properties,
income and operations of Holding Company and Rheochem, including, without
limitation, any Tax Liability imposed as a result of any election made under
Section 338 of the Code.
(g) (i) Shareholders, at their election and sole expense,
shall have the exclusive authority to represent Holding Company before any
taxing authority or any court regarding the Tax consequences of the
operations of Holding Company for all taxable periods ending on or prior to
the Closing Date; PROVIDED, HOWEVER, that Shareholders shall not enter into
any settlement of any contest or otherwise compromise any issue that
materially affects the Tax Liability of Holding Company for any period
beginning after the Closing Date without the prior written consent of Buyer
which shall not be unreasonably withheld. Shareholders shall keep Buyer
fully and timely informed with respect to the commencement, status and nature
of any such administrative or judicial proceedings involving any Tax
Liability of Holding Company.
(ii) Except as provided in Section 7.04(g)(i), Buyer
shall have the sole right to control any audit or examination by any taxing
authority, initiate any claim for refund or amend any Tax Return, and
contest, resolve and defend against any assessment for additional Taxes,
notice of Tax deficiency or other adjustment of Taxes of, or relating to,
Holding Company or Rheochem; PROVIDED, HOWEVER, that with respect to any
audit or examination by any taxing authority regarding the Tax consequences
of the operations of Holding Company for all periods ending on or prior to
the Closing Date, Buyer shall notify Shareholders thereof and keep them
reasonably informed.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 CONDITIONS TO OBLIGATION OF BUYER. The obligation
of Buyer to consummate the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions:
(a) (i) Holding Company, Rheochem and Shareholders shall
each have performed and satisfied in all material respects each of its
material obligations hereunder required to be performed and satisfied by any
of them on or prior to the Closing Date, (ii) each of the representations and
warranties of Holding Company, Rheochem and Shareholders contained in this
Agreement shall have been true and correct in all material respects when made
and shall contain no misstatement or
26
omission that would make any such representation or warranty materially
misleading when made and shall be true and correct in all material respects,
and shall not contain any misstatement or omission that would make any such
representation or warranty materially misleading, at and as of the Closing
Date with the same force and effect as if made as of the Closing Date, and
(iii) Buyer shall have received certificates signed by Shareholders and duly
authorized executive officers of Holding Company and Rheochem to the
foregoing effect and to the effect that to the Knowledge of such officers the
conditions specified within this Section 8.01 have been satisfied.
(b) Since the date hereof, there shall not have been any
event, occurrence, development or state of circumstances or facts or change
in Holding Company, Rheochem or the Business (including any damage,
destruction or other casualty loss, but excluding any event, occurrence,
development or state of circumstances or facts or change resulting from
changes in general economic conditions) affecting Holding Company, Rheochem
or the Business that has had or that may be reasonably expected to have,
either alone or together with all such events, occurrences, developments,
states of circumstances or facts or changes, a Material Adverse Effect.
(c) Xxxxxx X. Xxxxxxxx shall have executed and delivered
to Buyer an Employment Agreement in the form previously agreed by Xxxxxxxx
and Buyer.
(d) Buyer shall have received an opinion of Xxxxxxx
Breed Xxxxxx & Xxxxxx, counsel to Holding Company, Rheochem and Shareholders,
in a form reasonably acceptable to Buyer.
(e) Buyer shall be reasonably satisfied that there has
been no material degradation of the assets of Rheochem since the completion
by Buyer of its inspection of the assets of Rheochem.
(f) Buyer shall have completed its customary due
diligence as contemplated by Section 5.02(c) and Buyer shall be satisfied, in
its reasonable judgment, with both the quantity and the substance of the
information provided to it.
(g) As of the Closing Date, there shall exist no Liens
on any assets of Rheochem, other than Permitted Liens, nor any Share
Encumbrances.
(h) Buyer shall have received the consent of its bank
lenders to consummate the transactions contemplated hereby.
8.02 CONDITIONS TO OBLIGATION OF SHAREHOLDERS. The obligation
of Shareholders to consummate the transactions contemplated hereby is subject
to the satisfaction of each of the following conditions:
(a) (i) Buyer shall have performed and satisfied in all
material respects each of its material obligations hereunder required to be
performed and satisfied by it on or prior to the Closing Date, and the
aggregate effect of all failures to perform or satisfy all obligations of
Buyer on or prior to the Closing Date shall not be materially adverse to
Shareholders; (ii) the representations and warranties of Buyer contained in
this Agreement shall be true, complete and accurate in all material respects
at and as of the Closing Date, as if made at and as of such date and (iii)
Shareholders shall have received a certificate signed by a duly authorized
executive officer of Buyer to the foregoing effect and to the effect that to
such officer's Knowledge the conditions specified within this Section 8.02
have been satisfied.
27
(b) The sale and transfer contemplated by this Agreement
and the consummation of the Closing shall not violate any Applicable Law. No
temporary restraining order, preliminary or permanent injunction, cease and
desist order or other order issued by any court of competent jurisdiction or
any competent Governmental Authority or any other legal restraint or
prohibition preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall be
in effect, and there shall be no pending or threatened actions or proceedings
by any Governmental Authority (or determinations by any Governmental
Authority) or by any other Person challenging or in any manner seeking to
restrict or prohibit the transfer and exchange contemplated hereby or the
consummation of the Closing.
(c) Buyer shall have executed and delivered to Xxxxxx X.
Xxxxxxxx, an Employment Agreement in the form previously agreed by Xxxxxxxx
and Buyer.
(d) Shareholders shall have received an opinion of Xxxxx
X. Xxxxx, Esq., General Counsel of Buyer, in a form reasonably acceptable to
Shareholders.
ARTICLE IX
INDEMNIFICATION
9.01 AGREEMENT TO INDEMNIFY.
(a) Subject to the limitations provided herein, Buyer
and its Affiliates (collectively, the "Buyer Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this Article IX on a
joint and several basis by Shareholders in respect of any Damages reasonably
and proximately incurred by any Buyer Indemnitee (i) as a result of any
inaccuracy or misrepresentation in or breach of or failure to perform any
representation, warranty, covenant, agreement or obligation of Holding
Company, Rheochem or Shareholders in this Agreement or (ii) in connection
with any Environmental Liability.
(b) Shareholders and their Affiliates (collectively the
"Shareholder Indemnitees") shall each be indemnified and held harmless to the
extent set forth in this Article IX by Buyer in respect of any and all
Damages reasonably and proximately incurred by any Shareholder Indemnitee as
a result of (i) any inaccuracy or misrepresentation in or breach of or
failure to perform any representation, warranty, covenant, agreement or
obligation of Buyer in this Agreement or (ii) Rheochem's or Buyer's conduct
of the Business after the Closing.
(c) Notwithstanding the foregoing, Buyer Indemnitees may
not seek indemnification hereunder from Shareholders unless and until the
claims in the aggregate exceed $100,000, provided that if such threshold is
exceeded, Buyer Indemnitees may seek indemnification hereunder for any and
all claims subject to a one-time deductible in the amount of $10,000. This
Section 9.01(c) shall not apply to indemnification claims relating to
Sections 3.01, 3.06, 3.21, and 7.04, which will be fully indemnified by
Shareholders.
(d) From and after the Closing Date, Holding Company and
Rheochem shall have no liability to Shareholders for contribution or
reimbursement due to, or other Damages arising out of, liability incurred by
Shareholders pursuant to Section 9.01(a) notwithstanding the fact that the
28
representations and warranties of Holding Company, Rheochem and
Shareholders in Article III and the covenants of Holding Company, Rheochem
and Shareholders in Article V are joint and several.
9.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Except as hereinafter provided in this Section 9.02,
all representations, warranties, covenants, agreements and obligations of
each Indemnifying Party contained herein and all claims of any Indemnitee in
respect of any breach of any representation, warranty, covenant, agreement or
obligation of any Indemnifying Party contained in this Agreement, shall
survive the Closing and shall expire on the second anniversary of the Closing
Date.
(b) Notwithstanding Section 9.02(a) the representations,
warranties, covenants, agreements and obligations of Shareholders as
Indemnifying Parties shall survive the Closing Date until the expiration of
any applicable statute of limitations, including extensions thereof with
respect to: (i) the inaccuracy or misrepresentation in or breach of any
representation, warranty, covenant or agreement made by Shareholders in this
Agreement arising out of fraud or willful misconduct; (ii) any inaccuracy or
misrepresentation in or breach of any representation or warranty made in
Sections 3.22 and 3.24 regardless of whether such inaccuracy or
misrepresentation or breach arises out of fraud or willful misconduct; and
(iii) the breach or failure to perform by Shareholders after the Closing Date
of any of the covenants, agreements or obligations of such Person contained
in this Agreement.
(c) Notwithstanding Section 9.02(a), each of the
following representations, warranties, covenants, agreements and obligations
of Buyer as an Indemnifying Party shall survive the Closing Date until the
expiration of the applicable statute of limitations, including extensions
thereof: (i) any inaccuracy or misrepresentation in or breach of any
representation, warranty, covenant or agreement made by Buyer in this
Agreement arising out of fraud or willful misconduct; and (ii) the breach or
failure to perform by Buyer after the Closing Date of any of the covenants,
agreements or obligations of such Person contained in this Agreement.
(d) Notwithstanding anything in this Article IX to the
contrary, in the case of any Damages (i) incurred by any Buyer Indemnitee (A)
as a result of any inaccuracy in or breach of or failure to perform any
representation, warranty, covenant, agreement or obligation of or concerning
Rheochem or the Business in this Agreement or (B) in connection with any
Environmental Liability of Rheochem and (ii) not arising out of Shareholders'
fraud or willful misconduct, the liability of Shareholders under Section
9.01(a) shall be limited to one-half of the amount of such Damages and in no
event shall Shareholders' aggregate liability for such Damages exceed
one-half of the Purchase Price.
(e) Notwithstanding anything in this Article IX to the
contrary, no Indemnitee shall be entitled to indemnification pursuant to this
Article IX in respect of any Damages that result solely from the negligence
or willful misconduct of such Indemnitee.
9.03 CLAIMS FOR INDEMNIFICATION. If any Indemnitee shall
believe that such Indemnitee is entitled to indemnification pursuant to this
Article IX in respect of any Damages, such Indemnitee shall give the
appropriate Indemnifying Party prompt written notice thereof. Any such
notice shall set forth in reasonable detail and to the extent then known the
basis for such claim for indemnification. The failure of such Indemnitee to
give notice of any claim for indemnification promptly shall not adversely
affect such Indemnitee's right to indemnity hereunder except to the extent
29
that such failure materially adversely affects the right of the Indemnifying
Party to assert any reasonable defense to such claim. Each such claim for
indemnity shall expressly state that the Indemnifying Party shall have only
the 30-day period referred to in the next sentence to dispute or deny such
claim. The Indemnifying Party shall have 30 days following its receipt of
such notice either (a) to acquiesce in such claim by giving such Indemnitee
written notice of such acquiescence or (b) to object to the claim by giving
such Indemnitee written notice of the objection. If the Indemnifying Party
does not object thereto within such 30-day period, such Indemnitee shall be
entitled to be indemnified for all Damages reasonably and proximately
incurred by such Indemnitee in respect of such claim. If the Indemnifying
Party objects to such claim in a timely manner, and such Indemnitee and the
Indemnifying Party are unable to resolve their dispute within 30 days
following such objection (or such additional period of time as may be
mutually agreed to by such Persons), the claim shall be submitted immediately
to arbitration pursuant to Section 11.11.
9.04 DEFENSE OF CLAIMS.
(a) In connection with any claim which may give rise to
indemnity under this Article IX resulting from or arising out of any claim or
Proceeding against an Indemnitee by a Person that is not a party hereto, the
Indemnifying Party may, subject to Section 9.04(b), assume the defense of any
such claim or Proceeding (unless such Indemnitee elects not to seek indemnity
hereunder for such claim), upon written notice to the relevant Indemnitee, if
all Indemnifying Parties with respect to such claim or Proceeding jointly
acknowledge to the Indemnitee its right to indemnity pursuant hereto in
respect of the entirety of such claim (as such claim may have been modified
through written agreement of the parties or arbitration hereunder) and
provides assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Parties will be financially able to satisfy such claim in full
if such claim or Proceeding is decided adversely. Prior to the assumption by
an Indemnifying Party of the defense of any claim or Proceeding, the
Indemnitee may make such appearances and filings with respect thereto as the
Indemnitee reasonably determines to be necessary or appropriate. If the
Indemnifying Parties assume the defense of any such claim or Proceeding, the
Indemnifying Parties shall select counsel reasonably acceptable to such
Indemnitee to conduct the defense of such claim or Proceeding, shall take all
steps necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the Indemnifying
Parties shall have assumed the defense of any claim or Proceeding in
accordance with this Section 9.04, the Indemnifying Parties shall be
authorized to consent to a settlement of, or the entry of any judgment
arising from, any such claim or Proceeding, without the prior written consent
of such Indemnitee; PROVIDED, HOWEVER, that the Indemnifying Parties shall
pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; PROVIDED, FURTHER, that
the Indemnifying Parties shall not be authorized to encumber any of the
assets of any Indemnitee or to agree to any restriction that would apply to
any Indemnitee or to its conduct of business; and PROVIDED, FURTHER, that a
condition to any such settlement shall be a complete release of such
Indemnitee and its Affiliates, officers, employees, consultants and agents
with respect to such claim. Subject to Section 9.04(b), such Indemnitee
shall be entitled to participate in (but not control) the defense of any such
action, with its own counsel and at its own expense. Each Indemnitee shall,
and shall cause each of its Affiliates, officers, employees, consultants and
agents to, cooperate fully with the Indemnifying Parties in the defense of
any claim or Proceeding being defended by the Indemnifying Parties pursuant
to this Section 9.04. If the Indemnifying Parties do not assume the defense
of any claim or Proceeding resulting therefrom in accordance with the terms
of this Section 9.04(a), such Indemnitee may defend against such claim or
Proceeding.
(b) Notwithstanding Section 9.04(a), the Indemnifying Parties
may not assume the defense of any claim or Proceeding and the Indemnitee may
assume such defense if, in the
30
reasonable opinion of the Indemnitee, (i) such claim or Proceeding involves
an issue or matter that, if determined adversely to the Indemnitee, is likely
to have a material adverse effect on the business, operations, assets,
properties or prospects of the Indemnitee, or (ii) there is one or more legal
defenses available to the Indemnitee that conflict with those available to an
Indemnifying Party. If the Indemnitee assumes defense of any such claim or
Proceeding, (A) the Indemnifying Parties may participate in, but not control,
the defense of such claim or Proceeding, and (B) if the Indemnitee receives a
settlement proposal from the Person asserting such claim or instituting such
Proceeding and is notified by an Indemnifying Party that such Indemnifying
Party wants to accept such settlement proposal, the liability of the
Indemnifying Parties with respect to such claim or Proceeding shall equal the
lesser of (x) the amount offered in such settlement proposal, (y) the amount
of actual Damages of the Indemnitee with respect to such claim or Proceeding
or (z) the maximum liability of the Indemnifying Parties pursuant to Section
9.02(d).
(c) If the Indemnitee elects to defend any claim or Proceeding
pursuant to the last sentence of Section 9.04(a) or pursuant to Section
9.04(b), the Indemnitee shall conduct such defense in such manner as it shall
deem appropriate, including settling such claim or Proceeding after giving
notice of the same to the Indemnifying Parties, on such terms as such
Indemnitee shall deem appropriate. If the Indemnifying Parties seek to
question the manner in which such Indemnitee defended such claim or
Proceeding or the amount of or nature of any such settlement, the
Indemnifying Parties shall have the burden to prove by a preponderance of the
evidence that such Indemnitee did not defend such claim or Proceeding in a
reasonably prudent manner.
(d) This Section 9.04 shall in no way limit the rights of
Shareholders under Section 7.04(g)(i).
ARTICLE X
TERMINATION
10.01 GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of all of the parties hereto;
(b) by Buyer at any time following the expiration of 15 days
from the date that Buyer has given notice to Shareholders of any one or more
inaccuracies or misrepresentations in or breaches of the representations or
warranties made by Holding Company, Rheochem or Shareholders contained herein
that, if not cured prior to the Closing Date, would give Buyer grounds not to
close under Section 8.01 when taken into account with all other uncured
inaccuracies or misrepresentations in or breaches of such representations or
warranties as to which Buyer shall have given notice to Shareholders as
provided in this clause (b); PROVIDED, HOWEVER, that no termination under
this clause (b) shall take effect if such inaccuracies, misrepresentations or
breaches shall have been cured in all material respects within such 15-day
period;
(c) by Buyer at any time following the expiration of 15 days
from the date that Buyer has given written notice to Shareholders of the
failure by Holding Company, Rheochem or Shareholders to perform and satisfy
in any material respect any of their respective material obligations under
this Agreement required to be performed and satisfied by Holding Company,
Rheochem or Shareholders on or prior to the Closing Date, or the failure to
perform and satisfy any other obligations of Holding Company, Rheochem or
Shareholders under this Agreement if the aggregate of all such other
31
failures shall be material; PROVIDED, HOWEVER, that no termination under this
clause (c) shall take effect if such breaches or failures shall have been
cured in all material respects within such 15-day period;
(d) by Shareholders at any time following the expiration of
15 days from the date that Shareholders have given written notice to Buyer of
any one or more material inaccuracies or material misrepresentations in or
material breaches of the representations or warranties made by Buyer herein
which, if not cured prior to the Closing Date, have had or could be
reasonably expected to give Shareholders grounds not to close under Section
8.02 when taken into account with all other uncured inaccuracies or
misrepresentations in or breaches of such representations or warranties as to
which Shareholders shall have given notice to Buyer as provided in this
clause (d); PROVIDED, HOWEVER, that no termination under this clause (d)
shall take effect if such breaches shall have been cured in all material
respects within such 15-day period;
(e) by Shareholders at any time following the expiration of
15 days from the date that Shareholders have given written notice to Buyer of
Buyer's failure to perform and satisfy in any material respect any of its
material obligations under this Agreement required to be performed and
satisfied by Buyer on or prior to the Closing Date, or the failure to perform
and satisfy any other obligations of Buyer under this Agreement if the
aggregate of all such other failures shall be material; PROVIDED, HOWEVER,
that no termination under this clause (e) shall take effect if Buyer shall
have cured such breaches or failures in all material respects within such
15-day period;
(f) by any party hereto, if the Closing shall not have been
consummated by May 31, 1997 (the "Outside Date"); PROVIDED, HOWEVER, that no
party may terminate this Agreement pursuant to this clause (f) if the Closing
shall not have been consummated within such time period by reason of the
failure of such party or any of its Affiliates to perform in all material
respects any of its or their respective covenants or agreements contained in
this Agreement; and
(g) by any party hereto if any Federal, state or foreign law
or regulation thereunder shall hereafter be enacted or become applicable that
makes the transactions contemplated hereby or the consummation of the Closing
illegal or otherwise prohibited, or if any judgment, injunction, order or
decree enjoining either party hereto from consummating the transactions
contemplated hereby is entered, and such judgment, injunction, order or
decree shall become final and nonappealable.
The party desiring to terminate this Agreement pursuant to clauses
(b) through (g) shall give written notice of such termination to the other
party.
10.02 EFFECT OF TERMINATION. If this Agreement is terminated
as permitted by Section 10.01, such termination shall be without liability of
any party to any other party to this Agreement; PROVIDED, HOWEVER, that if
such termination shall result from the breach by any party of its
representations, warranties or covenants contained in this Agreement, such
party shall be fully liable for any and all Damages incurred or suffered by
the other parties as a result of such failure or breach notwithstanding such
termination. The provisions of Sections 5.04, 6.01, 10.02, 11.01, 11.03,
11.05 11.07, 11.08, 11.10, 11.11 and 11.12 shall survive any termination of
this Agreement pursuant to Article X.
32
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES. All notices, requests, demands, claims and
other communications hereunder shall be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given
(i) if personally delivered, when so delivered, (ii) if mailed, two Business
Days after having been sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set
forth below, (iii) if given by telex or telecopier, once such notice or other
communication is transmitted to the telex or telecopier number specified
below and the appropriate answer back or telephonic confirmation is received,
PROVIDED that such notice or other communication is promptly thereafter
mailed in accordance with the provisions of clause (ii) above or (iv) if sent
through an overnight delivery service in circumstances in which such service
guarantees next day delivery, the day following being so sent:
If to Shareholders:
Xxxxxx X. Xxxxxxxx, as
Shareholder Representative
000 Xx. Xxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
If to Holding Company:
Rheochem, Incorporated
000 Xx. Xxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
If to Rheochem:
Rheochem Technologies, Inc.
000 Xx. Xxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy of any notice to Shareholders, Holding Company or Rheochem to:
Xxxxxxx Breed Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
33
If to Buyer:
Astor Corporation
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxxxx
Telecopier No: (000) 000-0000
with a copy to:
Aurora Capital Partners L.P.
10th Floor
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. X. Xxxxxxxx Yort
Telecopier No: 310-277-5591
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered to such party by giving the other parties notice in the
manner herein set forth.
11.02 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by all parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No failure or delay
by a party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
11.03 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense. Without limiting the generality of the
foregoing, the Shareholders shall pay the fees and expenses of all legal,
accounting and other fees and expenses incurred by the Shareholders, Holding
Company and/or Rheochem prior to the Closing Date in connection with the
negotiation, execution, delivery and performance of this Agreement.
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party hereto may assign either this
Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of each other party, which approval shall not be
unreasonably withheld.
34
11.05 GOVERNING LAW. This Agreement shall be
construed in accordance with and governed by the internal laws (without
reference to choice or conflict of laws) of the State of New York.
11.06 COUNTERPARTS; EFFECTIVENESS. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other
parties hereto.
11.07 ENTIRE AGREEMENT. This Agreement (including
the Schedules and Exhibit referred to herein which are hereby incorporated by
reference) constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to the subject matter of this Agreement. Neither this Agreement
nor any provision hereof is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
11.08 CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. All references to an Article or Section include all
subparts thereof.
11.09 SEVERABILITY. If any provision of this
Agreement, or the application thereof to any Person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such provisions as
applied to other Persons, places and circumstances shall remain in full force
and effect only if, after excluding the portion deemed to be unenforceable,
the remaining terms shall provide for the consummation of the transactions
contemplated hereby in substantially the same manner as originally set forth
at the later of the date this Agreement was executed or last amended.
11.10 CONSTRUCTION.
(a) The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either party. Any reference to any Applicable Law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Whenever required by the context, any gender shall
include any other gender, the singular shall include the plural and the
plural shall include the singular. The words "herein," "hereof," "hereunder,"
and words of similar import refer to the Agreement as a whole and not to a
particular section. Whenever the word "including" is used in this Agreement,
it shall be deemed to mean "including, without limitation," "including, but
not limited to" or other words of similar import such that the items
following the word "including" shall be deemed to be a list by way of
illustration only and shall not be deemed to be an exhaustive list of
applicable items in the context thereof.
(b) The parties hereto intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
35
11.11 ARBITRATION OF CLAIMS.
(a) Except as otherwise specifically provided
elsewhere in this Agreement, any dispute or difference between or among the
parties arising out of this Agreement or the transactions contemplated
hereby, including, without limitation, any dispute between any Indemnitee and
any Indemnifying Party under Article IX which the parties are unable to
resolve themselves, shall be submitted to and resolved by arbitration
pursuant to and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date of the initial request
that gave rise to the dispute to be arbitrated (the "AAA Rules").
(b) Such arbitration shall be conducted by a
panel of three arbitrators, which shall be selected from a list of
arbitrators pursuant to and in accordance with the AAA Rules. Such
arbitration proceeding shall be conducted in the Borough of Manhattan, The
City of New York. The arbitrators shall not have the authority to modify any
term or provision of this Agreement. The arbitration proceeding shall include
an opportunity for the parties to conduct discovery in advance of the
proceeding, which discovery may be limited by rules established by the
arbitrators. Notwithstanding the foregoing, the parties agree that they will
attempt, and they intend that they and the arbitrators should use their best
efforts in that attempt, to conclude such arbitration proceeding and have a
final decision from the arbitrators within 90 days from the date of selection
of the arbitrators; provided, however, that the arbitrators shall be entitled
to extend such 90-day period one or more times to the extent necessary for
such arbitrators to place a dollar value on any claim that may be
unliquidated. The arbitrators shall promptly deliver a written decision with
respect to the dispute to each of the parties, which shall promptly act in
accordance therewith. Each party agrees that any decision of the arbitrators
shall be final, conclusive and binding, absent fraud or manifest error, and
that they will not contest any action by any other party hereto in accordance
with a decision of the arbitrators, except on a basis of fraud or manifest
error. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section
11.11 by bringing suit in any court of competent jurisdiction.
(c) All fees, costs and expenses (including
attorneys' fees and expenses) incurred by the party that prevails in any such
arbitration commenced pursuant to this Section 11.11 or any judicial action
or proceeding seeking to enforce the agreement to arbitrate disputes as set
forth in this Section 11.11 or seeking to enforce any order or award of any
arbitration commenced pursuant to this Section 11.11 may be assessed against
the party or parties that do not prevail in such arbitration in such manner
as the arbitrators or the court in such judicial action, as the case may be,
may determine to be appropriate under the circumstances. All costs and
expenses attributable to the arbitrators shall be allocated among the parties
to the arbitration in such manner as the arbitrators shall determine to be
appropriate under the circumstances.
11.12 CUMULATIVE REMEDIES. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
11.13 THIRD PARTY BENEFICIARIES. No provision of
this Agreement shall create any third party beneficiary rights in any Person,
including any employee of Buyer or employee or former employee of Holding
Company, Rheochem or any Affiliate thereof (including any beneficiary or
dependent thereof).
36
11.14 SHAREHOLDERS' REPRESENTATIVE. By execution
hereof, each Shareholder appoints and designates Xxxxxxxx as his or her
representative under this Agreement, who shall be authorized and empowered to
act for each Shareholder under this Agreement, including, without limitation,
to represent each Shareholder at the Closing, and in connection with all
transactions contemplated hereby. In such capacity, Xxxxxxxx shall have no
liability as such to Buyer unless Buyer suffers any loss, damage or expense
as a result of the gross negligence or willful misconduct of Xxxxxxxx in his
capacity as Shareholder's representative.
37
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be duly executed by their respective
authorized representatives as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx, as Custodian for
Xxxxxx X. Xxxxxxxx, a Minor
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx, as Custodian for
Xxxxxx X. Xxxxxxxx, a Minor
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx, as Custodian for
Xxxxx X. Xxxxxxxx, a Minor
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx
RHEOCHEM, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
RHEOCHEM TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
ASTOR CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive
Officer
EXHIBIT A
Number of Shares
Name of Shareholder of Common Stock Certificate No. Purchase Price
------------------- ---------------- --------------- --------------
Xxxxxx X. Xxxxxxxx 1,290 1 & 12 $9,573,157.89
Xxxxx X. Xxxxxxxx 330 7 & 23 2,448,947.37
Xxxxxx X. Xxxxxxxx 150 17 1,113,157.89
Xxxx X. Xxxxxxxx 30 8, 15 & 18 222,631.58
Xxxxxx X. Xxxxxxxx 30 9, 16 & 19 222,631.58
Xxxxxx X. Xxxxxxxx 30 6, 13 & 20 222,631.58
Xxxxx X. Xxxxxxxx 30 14, 21 & 22 222,631.58
Xxxxx X. Xxxxxx 10 10 74,210.53
----- --------------
Total 1,900 $14,100,000.00
Per Share Price - $7,421.05 per share
39
Disclosure Schedules
to
Stock Purchase Agreement
between the Shareholders of Rheochem, Inc.
as Sellers, and
Astor Corporation, as Buyer
------------------------
SCHEDULE 3.11(a)
REAL PROPERTY
For legal description see attached copies of Special Warranty Deed dated
March 31, 1993 and Trustees' Deed dated August 21, 1995.
LEASED REAL PROPERTY
2,064 square feet on the 2nd floor of Mount Airy Corners III, 000 Xxxxx Xxxx
Xxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx.
SCHEDULE 3.11(b)
PERSONAL PROPERTY LEASES
None
SCHEDULE 3.12
TRANSACTIONS WITH AFFILIATES
None, except as disclosed in the notes to the 1996 financial statements of
Holding Company and Rheochem or as otherwise agreed upon between Holding
Company, Rheochem, Shareholders and Buyer.
SCHEDULE 3.14
LITIGATION
XXXXXXXXX XXXXXX V. RHEOCHEM MANUFACTURING, INC., Case No., 95CC061456
(Circuit Court of Xxxxx Country, Missouri). Suit for personal injuries to
truck driver of a Rheochem vendor. Alleges damages of $1 million.
Potential claim of Colonial Plastics of Tampa, Florida, or its trustee in
bankruptcy. Rheochem received possibly preferential payments within 60 days
of customer's filing for Chapter 11 protection. Payments totalled
approximately $38,000.
SCHEDULE 2.15
SCHEDULE CONTRACTS
Lease, dated October 31, 1996, between 180/188 Mt. Airy Road, L.L.C.,
Landlord, and Rheochem, Inc., Tenant.
Employment Agreement, dated as of January 1, 1992, between Rheochem
Manufacturing Co., Inc. and Xxxx X. Xxxxxxxxxxxx.
Employment Agreement, dated as of July 1, 1996, between Rheochem
Technologies, Inc. and Xxxxxx X. Xxxxxxx.
Representative Agreement, dated April 15, 1986, and Amendment, dated
February 25, 1988, among Rheochem Manufacturing Company, Inc., Rheochem Inc.
and Xxxxxxxx and Company.
Representative Agreement, dated December 20, 1985, and Amendment, dated
February 25, 1988, among Rheochem Manufacturing Co., Inc., Rheochem Inc. and
X.X. Xxxxx Associates, Inc.
Representative Agreement, dated August 29, 1990, between Rheochem
Manufacturing Co., Inc. and X.X. Xxxx and Associates, Inc.
Representative Agreement, dated March 17, 1995, between Rheochem
Manufacturing Co., Inc. and Xxxx Plastic Material and Equipment, Inc.
Representative Agreement, dated March 12, 1990, between Rheochem
Manufacturing Co., Inc. and Zaparanick & Associates, Inc.
Contract of Sale, dated as of January 1, 1995, between Chevron Chemical
Company, as seller, and Astor Wax Corporation and Rheochem Manufacturing
Company, Inc., as buyers
Master Supply Agreement, dated June 1996, between Allied Signal Inc., as
Seller, and Rheochem Technologies Inc., as buyer.
Commercial Activities Agreement, dated June 15, 1994, between Rheochem
Manufacturing Co., Inc. and Chusei (U.S.A.) Inc.
Side Track Agreement, dated August 21, 1996, between the City of Columbia,
Missouri and Rheochem Technologies, Inc. for the construction by Rheochem of
a railroad side track.
$2,000,000 Line of Credit Letter Agreement, dated as of June 16, 1996,
between Fleet Bank, as lender, and Rheochem Technologies, Inc., as borrower,
together with $2,000,000 Interest Bearing Grid Note, dated June 16, 1996.
Product Supply Agreement, effective June 30, 1994, between Rheochem
Manufacturing Company, Inc., as seller, and Concorde Industries, Inc., as
buyer.
Noncompetition and Assistance Agreement, dated June 30, 1994, between
Rheochem Manufacturing Company, Inc. and Concorde Industries, Inc.
$800,000 Target Promissory Note, dated June 30, 1994, issued by Rheochem
Manufacturing Company, Inc. and payable to the order of Concorde Industries,
Inc.
Amended and Restated Rail Siding Agreement, dated June 30, 1994, between
Uponor ETI Company (f/k/a Extrusion Technologies, Incorporated) and Rhoechem
Manufacturing COmpany, Inc.
Amended and Restated Service Agreement for Wastewater Facility Use, dated as
of June 30, 1994, between Uponor ETI Company (f/k/a Extrusion Technologies,
Incorporated) and Rheochem Manufacturing Company, Inc.
SCHEDULE 3.18
BENEFIT PLANS AND BENEFIT AGREEMENTS
Rheochem, Inc.:
Blue Cross Select PPO
Key Man Disability
Simplified Employee Pension
Key Man Life Insurance
Medical Reimbursement Plan
Rheochem Technologies:
Aetna HMO/PPO
Dental Plan
Life Insurance
Accidental Death & Dismemberment
401(k) Plan
SCHEDULE 3.20
INTELLECTUAL PROPERTY
Rheochem Technologies:
Trademark application for the xxxx "Smart-Pak" filed with the U.S. Patent and
Trademark Office on or about November 14, 1996.
Trademark application for the xxxx "Smart-Lub" filed with the U.S. Patent and
Trademark Office on or about November 14, 1996.
SCHEDULE 3.24
TAX MATTERS
None
Filed for record on April 1, 1993 at 2:36:37 PM in Xxxxx Co. Mo. Document No.
5739 recorded in Book 968 page 975. Xxxxxx Xxxxxxx, Recorder of Deeds
SPECIAL WARRANTY DEED
THIS DEED, made and entered into this 31st day of March, 1993, by and
between EXTRUSION TECHNOLOGIES, INCORPORATED, a Colorado corporation, whose
address is 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 ("Grantor"),
and RHEOCHEM MANUFACTURING COMPANY, INC., a Colorado corporation, whose
address is 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxxxx 00000
("Grantee").
WITNESSETH, that Grantor, for and in consideration of the sum of Five
Hundred Three Thousand Five Hundred Thirty-Four and 00/100THS Dollars paid by
Grantee, the receipt of which is hereby acknowledged, does by these presents
BARGAIN and SELL, CONVEY and CONFIRM unto Grantee the following described
Real Estate, situated in the County of Xxxxx, State of Missouri, to-wit:
Lot 2 of E.T.I. Subdivision as shown by the plat recorded in Plat Book
27, Page 2, Records of Xxxxx County, Missouri.
TO HAVE AND TO HOLD the same, together with all rights and appurtenances
to the same belonging, unto Grantee, and to its heirs and assigns forever.
Grantor hereby covenants that it and its heirs, executors and administrators
shall and will WARRANT AND DEFEND the title to the premises unto Grantee, and
to its heirs and assigns forever, against the lawful claims of all persons
claiming by, through or under Grantor but none other, excepting, however, the
general taxes for the calendar year 1993 and thereafter, the special taxes
becoming a lien after the date of this deed, and all other easements, rights
and matters of record.
IN WITNESS WHEREOF, Grantor has executed these presents the day and year
first above written.
EXTRUSION TECHNOLOGIES, INCORPORATED
------------------------------------
By: /s/ X.X. Xxxxxxx
--------------------------------
Title: President
-----------------------------
(SEAL)
ATTEST:
---------------------------------------
By: /s/ illegible
-----------------------------------
Title: Secretary & V.P. [Finance]
--------------------------------
976
STATE OF Colorado )
) SS.
COUNTY OF Denver )
On this 29th day of March, 1993, before me personally appeared to me
known to be the person described in and who executed the foregoing
instrument, and acknowledged that X.X. Xxxxxxx, as President of Extrusion
Technologies, Incorporated, a Colorado corporation, executed the same as his
free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal in the County and State aforesaid, the day and year first above
written.
/s/ Xxxxx X. Xxxxxx
------------------------------
Notary Public
[SEAL]
My term expires: June 10; 1994
274726.1 2
STATE OF MISSOURI) Document No. 5759
COUNTY OF XXXXX ) SS.
I, the undersigned Recorder of Deeds for said county and state
do hereby certify that the foregoing instrument of writing was filed
for record in my office on the 1st day of April, 1993 at 2 o'clock
and 36:37 minutes PM and is truly recorded in Book 968 Page 975.
[SEAL]
Witness my hand and official seal on the day and year aforesaid.
XXXXXX XXXXXXX, RECORDER OF DEEDS
by /s/ Xxxxx Xxxxxxx deputy
-----------------------------
Xxxxx Xxxxxxx
Filed for record Aug 22, 1995 at 9:28:11 A.M. in Xxxxx Co. Mo. Document No.
15799 recorded in Book 1174 Page 427. Xxxxxx Xxxxxxx, Recorder of Deeds
TRUSTEES' DEED
THIS DEED is made and entered into this 21st day of August, 1995, by and
between XXXX X. XXXXXXX AND XXXXX COUNTY NATIONAL BANK, TRUSTEES OF THE X.
XXXXX PHILIPS MARITAL TRUST (said Trustees are hereinafter referred to as
"the First Parties") AND RHEOCHEM MANUFACTURING COMPANY, INC., A COLORADO
CORPORATION (hereinafter referred to as "the Second Party").
The mailing address of the Second Party is: 0000 X. Xxxxx Xxxxxxx Xxxx,
Xxxxxxxx, XX 00000.
WITNESSETH:
WHEREAS, Xxxx X. XxXxxxx and Xxxxx County National Bank are the Trustees,
and are presently acting as Trustees, of the X. Xxxxx Philips Marital Trust;
and
WHEREAS, the X. Xxxxx Philips Marital Trust has not been revoked and is
presently in full force and effect; and
WHEREAS, the X. Xxxxx Philips Marital Trust granted to the undersigned,
as Trustees, full power to sell and convey the real estate hereinafter
described; and
WHEREAS, the Second Party has purchased the real estate hereinafter
described from the First Parties.
NOW, THEREFORE, the First Parties, for and in consideration of the sum of
Ten Dollars ($10.00) and other valuable considerations paid by the Second
Party, the receipt of which is hereby acknowledged, does by these presents,
sell and convey unto the Second Party, the following described real estate
lying, being and situated in Xxxxx County, Missouri, to-wit:
PARCEL NO. 1: Lot One (1) of Columbia Industrial Development Corporation
Plat II as shown by plat recorded in Plat Book 11, Page 139, Records of
Xxxxx County, Missouri, EXCEPTING THEREFROM that part conveyed to the
State of Missouri, acting by and through the State Highway Commission of
Missouri, by warranty deed recorded July 30, 1985 in Book 540, Page 457,
Records of Xxxxx County, Missouri.
PARCEL NO. 2: Lot Two B (2B) of a replat of Lot 2 Columbia Industrial
Development Corporation Plat II as shown by plat recorded in Plat Book
28, Page 75, Records of Xxxxx County, Missouri.
Subject to easements and restrictions of record.
TO HAVE AND TO HOLD THE SAME, together with all rights, immunities,
privileges and appurtenances to the same belonging, unto the Second Party,
and unto its successors and assigns forever.
-2-
IN WITNESS WHEREOF, Xxxxx County National Bank, acting by and through
Xxxxx X. Xxxxxxx, an authorized Trust Officer of Xxxxx County National Bank,
and Xxxx X. XxXxxxx have hereunto set their hands the day and year first
above written.
[SEAL] TRUSTEES OF THE X. XXXXX PHILIPS MARITAL
TRUST:
XXXXX COUNTY NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name Printed: Xxxxx X. Xxxxxxx
---------------------------
Trust Officer
ATTEST:
/s/ Xxxx X. Xxxxxx
-----------------------------------------
Name Printed: Xxxx X. Xxxxxx
----------------------------
Secretary or Asst. Secretary
/s/ Xxxx X. XxXxxxx
-----------------------------------------
Xxxx X. XxXxxxx
STATE OF MISSOURI )
)SS.
COUNTY OF XXXXX )
On this 21 day of August, 1995, before me appeared XXXXX X. XXXXXXX, to
me personally known, who being by me duly sworn, did say that he/she is a
Trust Officer of Xxxxx County National Bank, and that the seal affixed to the
foregoing instrument is the corporate seal of Xxxxx County National Bank by
authority of its Board of Directors and the said Trust Officer acknowledged
said instrument to be the free act and deed of Xxxxx County National Bank,
acting as Trustee of the X. Xxxxx Philips Marital Trust.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, at my office in Columbia, Missouri the day and year first above written.
[SEAL] /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
------------------------, Notary Public
My commission expires:
-------------.
[STAMP]
STATE OF INDIANA )
)SS.
COUNTY OF TIPPECANOE )
On this 14th day of August, 1995, before me personally appeared Xxxx X.
XxXxxxx, to me known to be the person described in and who executed the
foregoing instrument and acknowledged that he executed the same as his free
act and deed as Trustee of the X. Xxxxx Philips Martial Trust.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal at my office in the State and County aforesaid, the day and year first
above written.
/s/ Xxxx Xxx Xxxxx
-----------------------------------------
Xxxx Xxx Xxxxx, Notary Public
---------------
Resident of Tippecanoe County, Indiana.
[SEAL]
My commission expires: June 27, 1997.
---------------
STATE OF MISSOURI)
COUNTY OF XXXXX ) SS. Document No. 15799
I, the undersigned Recorder of Deeds for said county and state do hereby
certify that the foregoing instrument of writing was filed for record in my
office on the 22nd day of August, 1995 at 9 o'clock and 28:11 minutes AM and
is truly recorded in Book 1174 Page 427.
Witness my hand and official seal on the day and year aforesaid.
[SEAL] XXXXXX XXXXXXX, RECORDER OF DEEDS
by /s/ Xxxx Xxxxxxx deputy
-------------------
Xxxx Xxxxxxx
