EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
________________
WASTE MANAGEMENT HOLDINGS, INC.
AND
GUNDLE/SLT ENVIRONMENTAL, INC.
January 22, 2002
TABLE OF CONTENTS
Page
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1 Definitions ............................................................ 1
2. Purchase and Sale of the Company Stock ................................. 6
(a) Basic Transaction ................................................. 6
(b) Purchase Price .................................................... 6
(c) The Closing ....................................................... 6
(d) Deliveries at the Closing ......................................... 6
(e) Closing Date Adjusted Net Working Capital ......................... 7
(f) Pre-Closing Transfers, Distributions and Sales .................... 8
(g) Certain Liabilities ............................................... 9
3. Representations and Warranties Concerning the Transaction............... 10
(a) Representations and Warranties of the Seller ..................... 10
(b) Representations and Warranties of the Purchaser .................. 11
4. Representations and Warranties Concerning the Company, Its
Subsidiaries and Investment Affiliates.................................. 12
(a) Organization, Qualification, and Corporate Power.................. 12
(b) Capitalization.................................................... 12
(c) Noncontravention.................................................. 12
(d) Brokers' Fees..................................................... 13
(e) Subsidiaries and Investment Affiliates............................ 13
(f) Financial Statements.............................................. 13
(g) Subsequent Events................................................. 13
(h) Undisclosed Liabilities........................................... 15
(i) Legal Compliance.................................................. 16
(j) Tax Matters....................................................... 16
(k) Title to Properties............................................... 17
(l) Intellectual Property............................................. 17
(m) Contracts......................................................... 18
(n) Powers of Attorney................................................ 19
(o) Insurance......................................................... 19
(p) Litigation........................................................ 19
(q) Product Warranty.................................................. 19
(r) Employees......................................................... 19
(s) Employee Benefits................................................. 20
(t) Compliance with Export Laws....................................... 22
(u) Environmental, Health, and Safety Matters......................... 22
(v) Additional Information............................................ 23
(w) Disclosure........................................................ 24
5. Obligations Pending Closing............................................. 24
(a) Access and Investigation.......................................... 24
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Table Of Contents
(continued)
Page
(b) Operation of the Business of the Company and its Subsidiaries..... 24
(c) Negative Covenant................................................. 25
(d) Updates to Disclosure Schedules................................... 25
6. Conditions to Obligation to Close....................................... 25
(a) Conditions to Obligation of the Purchaser......................... 25
(b) Conditions to Obligation of the Seller............................ 27
7. Termination............................................................. 28
8. Post-Closing Covenants.................................................. 28
(a) General........................................................... 28
(b) Removal of Identification......................................... 28
(c) Litigation Support................................................ 28
(d) Contingencies..................................................... 29
(e) Delivery and Retention of Records................................. 31
(f) Transition........................................................ 32
(g) Confidentiality................................................... 32
(h) Third-Party Payments.............................................. 32
(i) Claim Indemnification and Insurance Coverage...................... 33
(j) Galesburg, Illinois and Xxxxxxx 000 Xxxxxxxx, Xxxxx Xxxxxxxx
Facilities........................................................ 33
(k) German Letters of Credit.......................................... 34
(l) Liability and Obligations of the Company and its Affiliates....... 34
(m) Audited Financial Statements...................................... 34
9. Remedies for Breaches of This Agreement................................. 35
(a) Survival of Representations and Warranties........................ 35
(b) Indemnification Provisions for Benefit of the Purchaser........... 35
(c) Indemnification Provisions for Benefit of the Seller.............. 36
(d) Matters Involving Third Parties................................... 36
(e) Determination of Adverse Consequences............................. 37
10. Tax Matters............................................................. 37
(a) Scope of Tax Indemnity Provisions and Relationship to (S) 9....... 37
(b) Allocation of Liability for Taxes................................. 38
(c) Proration of Taxes, U.S. Income Taxes and Foreign Income Taxes and
Related Items..................................................... 38
(d) Preparation and Filing of Tax Returns............................. 39
(e) Refunds of Taxes; Amended Returns; Carryovers..................... 40
(f) Tax Controversies; Assistance and Cooperation..................... 42
11. Seller's Waiver and Release............................................ 44
12. Miscellaneous.......................................................... 44
(a) No Third-Party Beneficiaries...................................... 44
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Table of Contents
(Continues)
Page
(b) Entire Agreement....................................................... 44
(c) Succession and Assignment.............................................. 45
(d) Counterparts........................................................... 45
(e) Headings............................................................... 45
(f) Notices................................................................ 45
(g) Governing Law.......................................................... 46
(h) Dispute Resolution..................................................... 46
(i) Amendments and Waivers................................................. 47
(j) Severability........................................................... 47
(k) Expenses............................................................... 47
(l) Construction........................................................... 47
(m) Incorporation of Exhibits, Annexes, and Schedules...................... 47
Exhibit A -- Financial Statements
Exhibit B-1 -- Form of Supply Commitment Agreement
Exhibit B-2 -- Form of Noncompetition Agreement
Exhibit B-3 -- Form of Henderson Occupancy Agreement
Exhibit B-4 -- Form of Wellford Exit Agreement
Exhibit B-5 -- Form of Purchaser's Release
Schedule 2(d) -- Form of Preliminary Closing Date Adjusted Net
Working Capital
Schedule 2(e) -- Adjusted Net Working Capital
Schedule 2(f)(ii) -- Distributed Assets--Henderson, Nevada
Schedule 2(f)(iii) -- Distributed Assets--Wellford, South Carolina
Schedule 3(a) -- Exceptions to the Seller's Representations and
Warranties Concerning the Transaction
Schedule 3(b) -- Exceptions to the Purchaser's Representations and
Warranties Concerning the Transaction
Disclosure Schedule -- Exceptions to Representations and Warranties
Concerning the Company and Its Subsidiaries
Schedule 4(a) -- Directors and Officers
Schedule 4(e) -- Subsidiaries and Investment Affiliates
Schedule 4(j) -- U.S. and Foreign Income Tax Returns Subject to Audit
Schedule 4(l)(ii) -- Intellectual Property Owned
Schedule 4(l)(iii) -- Intellectual Property Licensed
Schedule 4(m)(i) -- Contracts
Schedule 4(m)(iii) -- Loss Contracts
Schedule 4(o) -- Insurance
Schedule 4(p) -- Litigation
Schedule 4(q) -- Standard Terms of Sale or Lease, Product Warranties
Schedule 4(s) -- Employee Benefit Plans
Schedule 4(u) -- Environmental and Safety Permits
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Table of Contents
(Continues)
Page
Schedule 4(v)(i) -- Bank Accounts
Schedule 4(v)(ii) -- Debt and Capital Leases
Schedule 4(v)(iii) -- Guaranties
Schedule 8(d)(v) -- Naue Claim
Schedule 8(d)(vi) -- Xxxxx Claim
Schedule 8(d)(viii) -- Post Closing Roofing Operations Obligations of the
Company
Schedule 8(k) -- Open Letters of Credit
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into on January
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22, 2002, by and between Gundle/SLT Environmental, Inc., a Delaware corporation
(the "Purchaser"), and Waste Management Holdings, Inc., a Delaware corporation
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(the "Seller"). The Purchaser and the Seller are referred to as a "Party" and,
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collectively, they are referred to as the "Parties".
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RECITALS
WHEREAS, the Seller owns 6,411,707 shares of the issued and outstanding
shares of common stock, no par value ("Company Common Stock"), and 747,361
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shares of the issued and outstanding shares of preferred stock, no par value
("Company Preferred Stock"), of Serrot International, Inc., an Illinois
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corporation (the "Company"), all of which shares constitute all of the issued
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and outstanding capital stock of the Company ("Company Stock"); and
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WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser
desires to purchase from the Seller, the Company Stock on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
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"Adjusted Net Working Capital" has the meaning set forth in (S) 2(e) below.
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"Adverse Consequences" means all actions, suits, proceedings, hearings,
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investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, whether or not involving a Third-Party Claim.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
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promulgated under the Securities Exchange Act. Notwithstanding any other
provisions set forth in this Agreement, (a) the Company and its Affiliates shall
not be deemed to be Affiliates of the Seller and its Affiliates and (b) the
Seller and its Affiliates shall not be deemed to be Affiliates of the Company
and its Affiliates.
"Affiliated Group" means any affiliated group within the meaning of Code
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(S) 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Closing" has the meaning set forth in (S) 2(c) below.
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"Closing Date" has the meaning set forth in (S) 2(c) below.
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"Closing Date Adjusted Net Working Capital" means the Adjusted Net Working
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Capital as of the Closing Date.
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"Closing Purchase Price" has the meaning set forth in (S) 2(e)(i) below.
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"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
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and Code (S) 4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the recitals above.
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"Company Common Stock" means the Company's common stock, no par value.
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"Company Preferred Stock" means the Company's preferred stock, no par
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value.
"Company Stock" means, collectively, the Company Common Stock and the
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Company Preferred Stock.
"Confidential Information" means any information concerning the businesses
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and affairs of the Company and its Consolidated Affiliates (other than
information concerning the Retained Assets) that is not already generally
available to the public.
"Consolidated Affiliate" means any Subsidiary of the Company, and any other
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Entity (a) organized under the laws of a Governmental Authority other than the
United States or any state or other political subdivision thereof, and (b) with
respect to which the Company either directly or indirectly owns greater than 50%
of the outstanding equity securities of the Entity.
"Disclosure Schedule" has the meaning set forth in (S) 4 below.
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"Employee Benefit Plan" means any "employee benefit plan" (as such term is
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defined in ERISA (S) 3(3)) and any other employee benefit plan, program or
arrangement of any kind including, without limitation, any change in control,
stock purchase, stock option, bonus, incentive, severance, deferred
compensation, or fringe benefit plan, program or arrangement.
"Employee Contingent Liabilities" has the meaning set forth in (S) 8(d)
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(iv) below.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)
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3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)
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3(1).
"Environmental Contingencies" has the meaning set forth in (S) 8(d)(vii).
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"Environmental, Health and Safety Requirements" shall mean all federal,
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state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes,
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chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"Entity" means any corporation (including any non-profit corporation),
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general partnership, limited partnership, joint venture, joint stock
association, estate, trust, cooperative foundation, union, syndicate, league,
consortium, coalition, committee, society, firm, company or other enterprise,
association, organization or entity of any nature, whether organized in the
United States or a foreign country, other than a Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means each Consolidated Affiliate which is treated as a
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single employer with the Company for purposes of Code (S) 414.
"Excess Deferred Taxes" has the meaning set forth in (S) 2(e)(i) below.
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"Fiduciary" has the meaning set forth in ERISA (S) 3(21).
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"Final Closing Date Balance Sheet" has the meaning set forth in (S)
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2(e)(iv) below.
"Financial Statements" has the meaning set forth in (S) 4(f) below.
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"Foreign Income Taxes" shall mean Taxes in the nature of income or
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franchise Taxes measured by net income, gross receipts or taxable capital which
are imposed by any Governmental Authority other than the United States or any
state or other political subdivision thereof.
"GAAP" means United States generally accepted accounting principles as in
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effect from time to time, consistently applied.
"Governmental Authority" means any foreign governmental authority, the
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United States of America, any State of the United States, any administrative
agency, any provincial or local authority and any political subdivision of any
of the foregoing, any multi-national organization or body, any agency,
department, commission, board, bureau, court or other authority of any of the
foregoing, or any quasi-governmental or private body exercising, or purporting
to exercise, any executive, legislative, judicial, administrative, police,
regulatory or taxing authority or power of any nature.
"Indemnified Items" has the meaning set forth in (S) 9(b) below.
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"Indemnified Party" has the meaning set forth in (S) 9(d) below.
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"Indemnifying Party" has the meaning set forth in (S) 9(d) below.
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"Intellectual Property" means (a) all inventions (whether patentable or
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unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and
3
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
Confidential Information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Investment Affiliate" means an Entity with respect to which a specified
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Person (or a Subsidiary thereof) owns at least 10 percent but less than a
majority of the outstanding equity securities.
"Knowledge" means actual knowledge without independent investigation, and
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in the context of the Seller's Knowledge, Knowledge of Xxxx Xxxx, Xxxxx Xxxxx,
Xxxxxx Xxxxxxxx and Xxx XxXxxxxxxx.
"Monetary Equivalent" means the amount indicated in United States dollars,
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or with reference to a currency other than the United States dollar, the
equivalent United States dollar amount based upon the rate at which United
States dollars may be purchased using such other currency, as reported in The
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Wall Street Journal on the date of execution of this Agreement.
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"Multiemployer Plan" has the meaning set forth in ERISA (S) 3(37).
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"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" and "Parties" have the meanings set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Person" means an individual, an Entity or a Governmental Authority.
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"Poly-America Patent Litigation" has the meaning set forth in (S) 8(d)(iii)
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below.
"Post-Closing Period" means any Tax Period of the Company and its
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Subsidiaries commencing after the Closing Date and the portion of any Straddle
Period commencing after the Closing Date.
"Pre-Closing Period" means any Tax Period of the Company and its
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Subsidiaries ending on or before the Closing Date and the portion of any
Straddle Period ending on the Closing Date.
"Preliminary Closing Date Adjusted Net Working Capital" means the Seller's
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estimate of the Closing Date Adjusted Net Working Capital as delivered at
Closing, which estimate shall include at least U.S. $2,000,000 in cash and cash
equivalents.
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"Prohibited Transaction" has the meaning set forth in ERISA (S) 406 and
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Code (S) 4975.
"Purchase Price" has the meaning set forth in (S) 2(b) below.
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"Purchaser" has the meaning set forth in the preface above.
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"Reportable Event" has the meaning set forth in ERISA (S) 4043.
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"Retained Assets" has the meaning set forth in (S) 2(f) below.
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"Retained Litigation" has the meaning set forth in (S) 8(d)(i) below.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
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or other security interest, other than (a) mechanic's, materialmen's, and
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similar liens, (b) liens for taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
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"Seller's Continuing Claim Obligation" and "Seller's Continuing Workers'
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Compensation Obligation" have the meanings set forth in (S) 8(i) below.
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"Straddle Period" means any Tax Period of the Company or its Subsidiaries
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that begins before and ends after the Closing Date.
"Subsidiary" means any Entity with respect to which a specified Person (or
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a Subsidiary thereof) owns, of record or beneficially, all of the outstanding
equity securities, except that with respect to the Company, Bentofix
Technologies, Inc. and Bentofix Technologies (USA), Inc. shall be included in
this definition of Subsidiary.
"Tax" or "Taxes" means any income, corporation, gross receipts, profits,
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gains, capital stock, capital duty, franchise, withholding, social security,
unemployment, disability, property, wealth, welfare, stamp, excise, occupation,
sales, use, transfer, value added, estimated or other similar tax or charge in
the nature of a tax imposed by any governmental entity (whether national,
state, local or otherwise) or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the foregoing,
and including any liability and other damages arising out of, relating to, in
the nature of, or caused by taxes of any Person other than any of the Company
and its Consolidated Affiliates (a) under Treas. Reg. (S) 1.1502-6 (or any
similar provision of foreign, state or local law) as a result of being a member
of any affiliated, consolidated, combined, unitary or similar group, (b) as a
transferee or successor, (c) by contract, or (d) otherwise.
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"Tax Authority" shall mean, with respect to any Tax, the Governmental
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Authority that imposes such Tax, and the agency, if any, charged with the
collection of such Tax for such Governmental Authority.
"Tax Period" shall mean, with respect to any Tax, the period for which the
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Tax is reported as provided under applicable tax law.
"Tax Return" shall mean, with respect to any Tax, any information return,
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report, statement, declaration or document required to be filed under the
applicable tax law in respect of such tax, any claim for refund of Taxes paid
and any amendment or supplements to any of the foregoing.
"Third Party Claim" has the meaning set forth in (S) 9(d) below.
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"U.S. Income Taxes" shall mean Taxes in the nature of income or franchise
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Taxes measured by net income, gross receipts or taxable capital which are
imposed by the United States or any state or other political subdivision
thereof.
"Xxxxxxxx Xxxxxxxxx Costs" has the meaning set forth in (S) 8(d)(iv) below.
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2. Purchase and Sale of the Company Stock.
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(a) Basic Transaction. On and subject to the terms and conditions of this
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Agreement, the Purchaser agrees to purchase from the Seller, and the Seller
agrees to sell to the Purchaser, all of its Company Stock for the consideration
specified below in this (S) 2. The amount of the Purchase Price apportioned to
the Company Preferred Stock shall be its value in U.S. dollars as stated in the
Company's December 31, 2000 audited consolidated balance sheet.
(b) Purchase Price. The Purchaser agrees to pay to the Seller at the
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Closing U.S. $30,000,000 (the "Purchase Price"), net of any adjustment at
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Closing as described in (S) 2(e)(i) below, by delivery of cash payable by wire
transfer or delivery of immediately available funds. The Closing Purchase Price
shall be subject to a post Closing adjustment as described in (S) 2(e)(i) below,
if any.
(c) The Closing. Subject to (S)(S)6 and 7 below, the closing of the
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transactions contemplated by this Agreement (the "Closing") shall take place at
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the offices of Purchaser's counsel in Houston, Texas, commencing at 10:00 a.m.
local time on or before the date three business days following the satisfaction
or waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Purchaser and the Seller may mutually determine (the "Closing Date").
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(d) Deliveries at the Closing. At the Closing, (i) the Seller shall
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deliver to the Purchaser the various certificates, instruments, and documents
referred to in (S) 6(a) below, (ii) the Purchaser shall deliver to the Seller
the various certificates, instruments, and documents referred to in (S) 6(b)
below, (iii) the Seller shall deliver a good standing certificate or an opinion
of counsel regarding good standing for each of the Seller, the Company, the
Company's U.S. Subsidiaries, Columbia Geosystems Ltd., Bentofix Technologies,
Inc., Ground, Sea, Air International Forwarders, Inc.,
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(iv) the Purchaser shall deliver a good standing certificate or an opinion of
counsel regarding good standing for the Purchaser, (v) the Seller shall deliver
to the Purchaser stock certificates representing all of its Company Stock,
endorsed in blank or accompanied by duly executed assignment documents, (vi) the
Seller shall deliver the calculation of the Company's Preliminary Closing Date
Adjusted Net Working Capital in the form as set forth in Schedule 2(d), (vii)
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the Seller shall deliver written evidence reasonably satisfactory to Purchaser
that all notes and accounts payable (including any intercompany notes, loans or
advances) and other accrued obligations of the Company and its Consolidated
Affiliates to Seller and its Affiliates have been redeemed, extinguished,
satisfied, discharged or paid in full, and (viii) the Purchaser will deliver to
the Seller the consideration specified in (S) 2(b) above.
(e) Closing Date Adjusted Net Working Capital.
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(i) Seller and Purchaser agree that the Company's Closing Date
Adjusted Net Working Capital will equal U.S. $47,146,000 and will include
an accrued liability of U.S. $750,000 for the Poly-America Patent
Litigation. To the extent the Preliminary Closing Date Adjusted Net
Working Capital (attached hereto as Schedule 2(d) at Closing) is less than
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U.S. $47,146,000, the Purchase Price shall be reduced at Closing by such
shortage ("Closing Purchase Price"). To the extent that the Closing Date
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Adjusted Net Working Capital on the Final Closing Date Balance Sheet (A) is
greater than the Preliminary Closing Date Adjusted Net Working Capital, the
Closing Purchase Price shall be increased by such excess, or (B) is less
than the Preliminary Closing Date Adjusted Net Working Capital, the Closing
Purchase Price shall be reduced by the amount of such shortage. An
increase or reduction in the Closing Purchase Price shall be paid by
Purchaser or Seller, respectively, within seven (7) days of completion of
the Final Closing Date Balance Sheet by wire transfer or delivery of
immediately available funds to the other Party. As used herein, the term
"Adjusted Net Working Capital" means: the Company's consolidated current
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assets consisting of cash and cash equivalents, accounts receivable, cost
and earnings in excess of xxxxxxxx, inventories, and prepaid expenses; less
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accounts payable, billing in excess of cost and earnings, other accrued
expenses, the current portion of long-term debt, and the amount by which
deferred tax liabilities exceed by more than U.S.$300,000 deferred tax
assets ("Excess Deferred Taxes"), each as determined in accordance with
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GAAP; and excluding all working capital items to be transferred,
distributed, assigned, assumed or sold as set forth in (S) 2(g) and (S)
2(h). The Adjusted Net Working Capital as of December 31, 2000 is attached
hereto as Schedule 2(e).
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(ii) Promptly after Closing, and in any event not later than 45 days
after the Closing Date, Purchaser shall deliver to Seller the Purchaser's
calculation of the Company's consolidated balance sheet as of the Closing
Date (the "Proposed Closing Date Balance Sheet"), which shall set forth
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Purchaser's calculation of the Closing Date Adjusted Net Working Capital
(the "Proposed Closing Date Adjusted Net Working Capital Calculation"). If
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the Seller does not object in writing to the Proposed Closing Date Adjusted
Net Working Capital Calculation within 45 days after receipt, such Proposed
Closing Date Adjusted Net Working Capital Calculation and the Proposed
Closing Date Balance Sheet shall automatically become final and conclusive.
Any written objection (the "Objection Notice")
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to the Proposed Closing Date Adjusted Net Working Capital Calculation shall
set out the reasons for the objection, the amount in dispute (if
determinable) and the basis for the calculation of such amount (if
determinable). In the event that Seller objects in writing to the Proposed
Closing Date Adjusted Net Working Capital Calculation within said 45-day
review period, the Seller and the Purchaser shall promptly meet and
endeavor to reach agreement as to the content of the Proposed Closing Date
Adjusted Net Working Capital Calculation. If the Seller and the Purchaser
agree in writing on the content of the Proposed Closing Date Adjusted Net
Working Capital Calculation, such Proposed Closing Date Adjusted Net
Working Capital Calculation shall become final and conclusive. The 45-day
review period set forth herein is subject to the assumption that Purchaser
provides access to Seller and its representatives to all of the books,
records, workpapers, management letters, engagement letters, personnel,
accountants, professionals, outside consultants and other agents of the
Company and its Affiliates as set forth in (S) 8(e) below. To the extent
such access is delayed or limited, the 45-day review period shall be
extended to allow Seller and its representatives such access for the full
45 days.
(iii) If the Purchaser and the Seller are unable to settle any
dispute with respect to the Proposed Closing Date Adjusted Net Working
Capital Calculation within 15 days after the delivery by the Seller to the
Purchaser of the Objection Notice, the dispute shall be submitted to KPMG
LLP, certified public accountants, or if such firm declines the engagement,
then to such other mutually agreed certified public accounting firm of
recognized international standing as is jointly selected by the Purchaser
and the Seller (the firm accepting the engagement being referred to as the
"Accounting Arbiter"), whose decision with respect thereto shall be final
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and binding on the Parties in all respects. The Purchaser and the Seller
shall cooperate in completing any dispute resolution as expeditiously as
possible and the Accounting Arbiter may hire such experts as may appear to
be appropriate. All of the costs and expenses of the dispute resolution
shall be borne equally by the Purchaser and the Seller. Dispute resolution
under this (S) 2(e) shall be in substitution for and precludes the bringing
of any other proceeding in connection with any objection made by the
Purchaser or the Seller pursuant to this (S) 2(e).
(iv) The determination of the Accounting Arbiter shall be made within
30 days after the date on which the dispute was referred to dispute
resolution and the determination of the Accounting Arbiter shall be final
and binding on all Parties. The Company's consolidated balance sheet as of
the Closing Date, with the Closing Date Adjusted Net Working Capital set
forth thereon, as definitively determined pursuant to Sections (S)
2(e)(ii), (iii) or (iv) shall be referred to as the "Final Closing Date
------------------
Balance Sheet."
-------------
(f) Pre-Closing Transfers, Distributions and Sales. The Parties
----------------------------------------------
acknowledge and agree that prior to the Closing Date, the Company and its
Consolidated Affiliates shall distribute (or otherwise transfer or assign as
contemplated by (S) 6(b)(ix) below) the following assets to the Seller or its
Affiliates, or to a designee of the Seller, or sell such assets to a third
party:
(i) All of the Company's real property located in Galesburg,
Illinois, any related furniture, fixtures and non-manufacturing equipment.
8
(ii) The Company's real property and roofing assets, including
roofing inventory, located in Henderson, Nevada as listed in
Schedule 2(f)(ii).
-----------------
(iii) The Company's real property and roofing assets, including
roofing inventory, located in Wellford, South Carolina as listed in
Schedule 2(f)(iii).
------------------
(iv) All of the Company's accounts receivable related to its roofing
materials line of business.
(v) Cash and cash equivalents of the Company's and its Consolidated
Affiliates, provided that the Company and its Consolidated Affiliates,
shall retain, in the aggregate, at least U.S. $2,000,000 in cash and cash
equivalents at Closing.
Collectively, the items set forth in this (S) 2(f) shall be referred to as the
"Retained Assets". Notwithstanding any other provision set forth herein,
---------------
nothing in this Agreement shall be deemed to require the Company or the Seller
to complete the transactions contemplated by that certain Roofing Sale Agreement
referenced in Section 6(b)(ix) below.
(g) Certain Liabilities. The Parties acknowledge and agree that prior to
-------------------
or in connection with the Closing, notwithstanding anything to the contrary
herein:
(i) The Seller shall cause all of the Company's and its Consolidated
Affiliates' notes and accounts payable (including any intercompany notes,
loans or advances) and other accrued obligations of the Company and its
Consolidated Affiliates to the Seller and its Affiliates to be redeemed,
extinguished, satisfied discharged or paid in full.
(ii) The Seller shall cause the Company's warehouse lease for
property located at Xxxxxxx 000, Xxxxxxxx, Xxxxx Xxxxxxxx, to be
transferred or assigned to the Seller or one of its Affiliates, or to a
designee of the Seller. Seller shall use commercially reasonable efforts to
obtain (without any out of pocket expenditures) a landlord release under
such lease in Wellford, South Carolina, which shall fully release and
discharge the Company of any post-Closing obligation.
(iii) The Seller agrees to be liable for and indemnify the Purchaser
with respect to the Retained Litigation, the Seller's Continuing Claim
Obligation and the Seller's Continuing Workers' Compensation Obligation as
set forth in (S)(S) 8 and 9 below. Adjusted Net Working Capital and the
Final Closing Date Balance Sheet shall not include any accrued liabilities
for such retained and continuing obligations.
(iv) The Final Closing Date Balance Sheet shall not include any
accrued liabilities related to the lawsuit entitled GSE Lining Technology,
Inc. x. Xxxxxx International, Inc., Civil Action No. H-00-2445 in the
United States Court for the Southern District of Texas.
9
3. Representations and Warranties Concerning the Transaction.
----------------------------------------------------------
(a) Representations and Warranties of the Seller. The Seller represents
--------------------------------------------
and warrants to the Purchaser that the statements contained in this (S) 3(a) are
correct and complete as of the date of this Agreement, except as may be set
forth in Schedule 3(a) attached hereto.
(i) Organization of Seller. The Seller is duly organized, validly
----------------------
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of Transaction. The Seller has full corporate
----------------------------
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. To the extent required under applicable law, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Seller's board of directors and no other corporate
proceedings on the part of the Seller are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
Seller, and this Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any provision of its charter or bylaws, or (B)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Seller is a party or by which it is bound or to which any of its assets is
subject.
(iv) Brokers' Fees. The Seller has no liability or obligation to pay
-------------
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser could
become liable or obligated, other than UBS Warburg LLC who has been or will
be paid by Seller.
(v) Company Stock. The Seller holds of record and owns beneficially
-------------
all the issued and outstanding Company Stock, free and clear of any
restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase right,
or other contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any Company Stock (other than this
Agreement). The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any Company Stock.
10
(b) Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller that the statements contained in this (S)
3(b) are correct and complete as of the date of this Agreement, except as may be
set forth in Schedule 3(b) attached hereto.
-------------
(i) Organization of the Purchaser. The Purchaser is a corporation
-----------------------------
duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Purchaser has full corporate
----------------------------
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. To the extent required under applicable law, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Purchaser's board of directors and no other corporate
proceedings on the part of the Purchaser are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
Purchaser, and this Agreement constitutes the valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms and
conditions. The Purchaser need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated
by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any provision of its charter or bylaws, or (B)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Purchaser is a party or by which it is bound or to which any of its assets
is subject.
(iv) Brokers' Fees. The Purchaser has no liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which any Seller could
become liable or obligated.
(v) Investment. The Purchaser is not acquiring the Company Stock
----------
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
4. Representations and Warranties Concerning the Company, Its
----------------------------------------------------------
Subsidiaries and Investment Affiliates. The Seller represents and warrants to
---------------------------------------
the Purchaser that the statements contained in this (S) 4 are correct and
complete as of the date of this Agreement, except as may be set forth in the
disclosure schedule delivered by the Seller to the Purchaser on the date hereof
and initialed by the Parties (the "Disclosure Schedule") and to the extent such
-------------------
representations and warranties relate to the Retained Assets (excluding
liabilities, potential liabilities and obligations of the Company and its
Subsidiaries related to the operation of the Retained Assets by the Company
prior to Closing) or the Retained Litigation. The Disclosure Schedule is
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this (S) 4.
11
(a) Organization, Qualification, and Corporate Power. Each of the Company
------------------------------------------------
and its Subsidiaries is an Entity duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation, organization
or formation. Each of the Company and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of the Company and its Subsidiaries
has full corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Schedule 4(a)
-------------
lists the directors and officers of each of the Company and its Subsidiaries.
(b) Capitalization. The entire authorized capital stock of the Company
--------------
consists of the Company Stock. All of the issued and outstanding shares of the
Company Stock have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Seller. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the Company Stock. There are no
dividends in arrears on the Company Stock.
(c) Noncontravention. Neither the execution and the delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Company and its Subsidiaries
is subject or any provision of the charter or bylaws of any of the Company and
its Subsidiaries or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any of the Company and its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). None of the Company and its Subsidiaries needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. None of the Company and its Subsidiaries has any
-------------
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(e) Subsidiaries and Investment Affiliates. Schedule 4(e) sets forth for
-------------------------------------- -------------
each Consolidated Affiliate and Investment Affiliate of the Company (i) its name
and jurisdiction of incorporation or formation, (ii) the number of shares of
authorized capital stock of each class of its capital stock or other equity
interests, (iii) the number of issued and outstanding shares of each class of
its capital stock or other equity interests, the names of the holders thereof,
and the number of shares held by each such holder, and (iv) the number of shares
of its capital stock held in treasury. All of the issued and outstanding shares
of capital stock of each Subsidiary of the Company have
12
been duly authorized and are validly issued, fully paid, and nonassessable. Each
of the Company and its Subsidiaries holds of record and owns beneficially the
number of shares as set forth in Schedule 4(e) of each Subsidiary of the
-------------
Company, free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and state securities laws), taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, claims, and demands.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require any of the Company and its Subsidiaries to sell,
transfer, or otherwise dispose of any capital stock of any of its Subsidiaries
or that could require any Subsidiary of the Company to issue, sell, or otherwise
cause to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to any Subsidiary of the Company. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any capital stock of any Subsidiary of the Company. Other than as set
forth on Schedule 4(e), the Company has no other Consolidated Affiliates or
-------------
Investment Affiliates.
(f) Financial Statements. Attached hereto as Exhibit A are the following
-------------------- ----------
unaudited financial statements for the Company and its Consolidated Affiliates
(collectively the "Financial Statements"): consolidated balance sheets and
--------------------
statements of income, changes in stockholder's equity, and cash flow as of and
for the fiscal years ended December 31, 2000, 1999, and 1998. The Financial
Statements (including the notes thereto) present fairly, in all material
respects, the financial position of the Company and its Consolidated Affiliates
as of such dates and their results of operations and their cash flows for each
of the years in the three-year period ended December 31, 2000, in conformity
with GAAP.
(g) Subsequent Events. Since December 31, 2000, there has not been any
-----------------
adverse change in the business, financial condition, operations or results of
operations of the Company and its Subsidiaries taken as a whole, and the Company
and its Subsidiaries have operated in the Ordinary Course of Business. Without
limiting the generality of the foregoing, since that date:
(i) none of the Company and its Subsidiaries has sold, leased,
transferred, or assigned any assets, tangible or intangible, outside the
Ordinary Course of Business or with an aggregate book value exceeding the
Monetary Equivalent of U.S. $200,000 individually or the Monetary
Equivalent of U.S. $500,000 in the aggregate, except in connection with the
pre-Closing transfers, distributions and sales contemplated by this
Agreement, and the sale of the Company's interest in Serrot International
Chile S.A.;
(ii) none of the Company and its Subsidiaries has entered into any
agreement, contract, lease, or license outside the Ordinary Course of
Business or aggregating in excess of the Monetary Equivalent of U.S.
$200,000 individually or the Monetary Equivalent of U.S. $500,000 in the
aggregate;
(iii) no party (including any of the Company and its Subsidiaries)
has accelerated, terminated, made modifications to, waived any right under
or canceled any material agreement, contract, lease, or license to which
any of the Company and its Subsidiaries is a party or by which any of them
is bound, except as contemplated by this Agreement;
13
(iv) none of the Company and its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible;
(v) none of the Company and its Subsidiaries has made any capital
expenditures or commitment for capital expenditures outside the Ordinary
Course of Business or aggregating in excess of the Monetary Equivalent of
U.S. $200,000 individually or the Monetary Equivalent of U.S. $500,000 in
the aggregate;
(vi) none of the Company and its Subsidiaries has made any
investments in, or any loans to other Persons outside the Ordinary Course
of Business;
(vii) the Company and its Subsidiaries have not created, incurred,
assumed, or guaranteed any indebtedness for capital lease obligations or
borrowed money, except for short-term borrowings reflected in the Final
Closing Date Balance Sheet;
(viii) none of the Company and its Subsidiaries has granted any
license or sublicense of any material rights under or with respect to any
Intellectual Property;
(ix) there has been no change made or authorized in the charter or
bylaws of any of the Company and its Subsidiaries;
(x) none of the Company or its Subsidiaries has made or permitted
any material change in their accounting methods or practices;
(xi) none of the Company and its Subsidiaries has issued, sold, or
otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock, except in connection with
the sale of the Company's interest in Serrot International Chile S.A.;
(xii) none of the Company and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock, except in connection with the
pre-Closing transfers and distributions contemplated by this Agreement;
(xiii) none of the Company and its Subsidiaries has experienced any
change, event, circumstance or condition which would reasonably be expected
to adversely affect the collectibility of accounts receivable and the
usability and saleability of inventory to the extent included within the
Closing Date Adjusted Net Working Capital;
(xiv) none of the Company and its Subsidiaries has experienced any
damage, destruction, or loss (whether or not covered by insurance) to its
property in excess of the Monetary Equivalent of U.S. $100,000 in the
aggregate;
(xv) none of the Company and its Subsidiaries has made any loan to,
or entered into any other transaction with, any of its directors, officers,
and employees;
14
(xvi) none of the Company and its Subsidiaries has entered into any
employment contract, consulting arrangement or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract or agreement;
(xvii) none of the Company and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) none of the Company and its Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect
to any other Employee Benefit Plan);
(xix) none of the Company and its Subsidiaries has made any other
change in employment terms for any of its directors, officers, and
employees; and
(xx) none of the Company and its Subsidiaries has entered into any
binding commitments related to any of the foregoing.
(h) Undisclosed Liabilities. Other than Taxes (which are described
-----------------------
in(S)(S) 4(j) and 10), none of the Company and its Subsidiaries has any
liability or, to the Seller's Knowledge, any potential liabilities (other than
the Retained Litigation), except for (i) liabilities accrued on the Company's
December 31, 2000 consolidated balance sheet and (ii) liabilities which have
arisen after December 31, 2000 in the Ordinary Course of Business.
(i) Legal Compliance.
----------------
(i) Other than Environmental, Health, and Safety Requirements,
(which are addressed in (S) 4(u)), and Taxes (which are addressed in (S)(S)
4(j) and 10), each of the Company and its Subsidiaries has complied with
all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any
of them alleging any failure so to comply.
(ii) Other than environmental permits (which are addressed in (S)
4(u)), the Company and each of its Subsidiaries has all governmental
authorizations necessary to permit each of them to own, operate, use and
maintain their respective assets in the manner in which they are now
operated and maintained and to conduct their respective businesses as now
being conducted (collectively, the "Permits"). All of the Permits are in
-------
full force and effect, and there are no Proceedings pending or, to the
Seller's Knowledge, threatened that seek the revocation, cancellation,
suspension or adverse modification thereof.
15
(j) Tax Matters.
-----------
(i) The Company and its Consolidated Affiliates, either separately
or as members of an Affiliated Group, have duly and timely filed each Tax
Return in respect of U.S. Income Taxes and Foreign Income Taxes required to
be filed with any Tax Authority (or have timely and properly filed valid
extensions of time with respect to the filing thereof) on or prior to the
date hereof, and have paid (or have had paid on their behalf by the Seller
or its Affiliates) all Taxes shown as due and payable thereon.
(ii) The Company and its Consolidated Affiliates are not a party to
Company or bound by any Tax sharing agreement and, except for liability of
the and its Consolidated Affiliates for Taxes of the Seller and any of its
past or present Affiliates arising as a result of being a member of an
Affiliated Group with any of Seller and such Affiliates, none of the
Company and its Consolidated Affiliates has any liability for U.S. Income
Taxes or Foreign Income Taxes of any Person other than the Company and its
Consolidated Affiliates (i) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of foreign, state or local law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise.
(iii) Neither the Company nor any of its Consolidated Affiliates is
currently the beneficiary of any extension of time within which to file any
Tax Return in respect of U.S. Income Taxes or Foreign Income Taxes.
(iv) There is no dispute or claim concerning any liability for U.S.
Income Taxes or Foreign Income Taxes of any of the Company or its
Consolidated Affiliates either (i) claimed or raised by any Tax Authority
in writing, or (ii) to the Seller's Knowledge based upon personal contact
with any agent of such Tax Authority.
(v) Schedule 4(j) lists all U.S. Income Tax Returns and Foreign
-------------
Income Tax Returns of the Company and its Consolidated Affiliates that are
currently subject to audit. None of the Company and its Consolidated
Affiliates is currently bound by (i) any waiver of any statute of
limitations in respect of U.S. Income Taxes or Foreign Income Taxes, or
(ii) any agreement to any extension of time with respect to an assessment
or deficiency of U.S. Income Taxes or Foreign Income Taxes.
(vi) None of the Company and its Consolidated Affiliates (i) has
filed a consent under Code Section 341(f) concerning collapsible
corporations, (ii) is obligated to make any payments or is a party to any
agreement that could obligate it to make any payments that will not be
deductible under Code Section 280G, or (iii) has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the period specified in Code Section 897(c)(1)(A)(ii).
(k) Title to Properties. The Company and each of its Subsidiaries has good
-------------------
legal title, free and clear of all Security Interests, to all of the assets,
real and personal, tangible and intangible, reflected as owned by them in the
Company's December 31, 2000 audited consolidated balance sheet and the fixed
asset records (real property, plant and equipment) supporting such balance
sheet, or acquired after the date thereof, except for assets transferred or
distributed pursuant to (S) 2(g) or
16
inventory and other assets sold for fair market value in the Ordinary Course of
Business since December 31, 2000. The Company's buildings, premises, fixtures,
vehicles, and material equipment and machinery are in good operating condition,
normal wear and tear excepted. There is no change in the zoning or building
ordinances affecting the real property or leasehold interests of the Company and
its Subsidiaries pending, or to the Seller's Knowledge, threatened.
(1) Intellectual Property.
---------------------
(i) None of the Company and its Subsidiaries has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties, and, to the knowledge of Seller, none of
the Seller and the directors and officers of the Company and its
Subsidiaries has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that any of the Company and its Subsidiaries
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of the Seller, no third party has interfered
with, infringed upon, misappropriated, or violated any Intellectual
Property rights of any of the Company and its Subsidiaries in any respect.
(ii) Schedule 4(l)(ii) identifies each patent or registration which
-----------------
has been issued to any of the Company and its Subsidiaries with respect to
any of its Intellectual Property, identifies each pending patent
application or application for registration which any of the Company and
its Subsidiaries has made with respect to any of its Intellectual Property,
and identifies each material license, agreement, or other permission which
any of the Company and its Subsidiaries has granted to any third party with
respect to any of its Intellectual Property (together with any exceptions).
Schedule 4(l)(ii) also identifies each trade name, trademark, service xxxx,
-----------------
logo, and copyright used by any of the Company and its Subsidiaries in
connection with any of its businesses, except for those owned by the Seller
or its Affiliates. With respect to each item of Intellectual Property
required to be identified in Schedule 4(l)(ii): (A) the Company and its
-----------------
Subsidiaries possess all right, title, and interest in and to the item,
free and clear of any Security Interest, license, or other restriction; (B)
the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge; and (C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of the Seller, is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item.
(iii) Schedule 4(l)(iii) identifies each material item of
-----------------
Intellectual Property that any third party owns and that any of the
Company and its Subsidiaries uses pursuant to license, sublicense,
agreement, or permission, except for any trade name, trademark, service
xxxx, logo or copyright of the Seller or its Affiliates, all of which are
in full force and effect. None of the Company and its Subsidiaries has
granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(m) Contracts.
---------
(i) The Seller has delivered to the Purchaser a true and complete copy
of each written lease, sublease, license, bid, commitment, guarantee,
contract, purchase order and
17
agreement, and a written summary setting forth the material terms and
conditions of each oral lease, sublease, license, commitment, contract and
agreement to which the Company or any Subsidiary is a party and which are
executory and provide for payments to or by the Company or any Subsidiary,
(A) in the case of each lease and sublease, aggregating more than the
Monetary Equivalent of U.S. $25,000 in any calendar year or more than the
Monetary Equivalent of U.S. $50,000 over the remaining term of such lease
or sublease, and (B) in the case of each license, bid, commitment,
guarantee, contract, purchase order and agreement, aggregating more than
the Monetary Equivalent of U.S. $500,000 over the remaining term of such
license, bid, commitment, contract, purchase order or agreement
(collectively, the "Contracts"). All of the Contracts are listed
---------
at Schedule 4(m)(i).
----------------
(ii) To Seller's Knowledge, each Contract (A) is legal, valid,
binding, enforceable, and in full force and effect, (B) no party is in
breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination,
modification, or acceleration, under the Contract, and (C) no party has
repudiated any provision of the Contract.
(iii) Schedule 4(m)(iii) sets forth a true and complete list of all
contracts included in the Company's and its Subsidiaries' work-in-progress
or backlog, as of the latest practicable date, to which the Company or any
of its Subsidiaries is committed to or has bid to deliver product or
services and which it is required or has recorded a loss in accordance with
GAAP (the "Loss Contracts"). Such list sets forth the customer name, gross
contract amount, and the estimated loss and percentage of completion for
each Loss Contract as of the date thereof; provided, however, that the
estimated loss represents the best judgement of the Company's officers as
of the Closing Date and is not a warranty that any loss under such
contracts will not exceed the estimated loss.
(n) Powers of Attorney. To the Knowledge of the Seller, there are no
------------------
outstanding powers of attorney executed on behalf of any of the Company and its
Subsidiaries.
(o) Insurance. The properties and operations of the Company and its
---------
Subsidiaries are insured in amounts, against risks and by insurers deemed
adequate by their respective Boards of Directors or managements. Schedule 4(o)
-------------
lists all such policies. Seller has delivered (or will deliver on or before 9:00
a.m. (Houston, Texas time) of the third business day before the Closing Date) to
Purchaser true and complete copies of all such policies and binders as in effect
on the date hereof. With respect to each such insurance policy: (A) neither of
the Company and its Subsidiaries nor, to Seller's Knowledge, any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; (B) no party to
the policy has repudiated any provision thereof; and (C) neither any of the
Company or its Subsidiaries has received notice of cancellations or refusal of
coverage thereunder. Schedule 4(o) describes any self-insurance arrangements and
-------------
amounts affecting any of the Company and its Subsidiaries.
18
(p) Litigation. Schedule 4(p) sets forth each instance in which any of the
---------- -------------
Company and its Subsidiaries (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
(q) Product Warranty. To Seller's Knowledge, substantially all of the
----------------
products manufactured, sold, leased, and delivered by the Company and its
Subsidiaries have conformed with all applicable contractual commitments and all
express and implied warranties, and none of the Company and its Subsidiaries has
any liabilities or any potential liabilities for replacement or repair thereof
or other damages in connection therewith, subject only to the reserve for
product warranty claims set forth in the Final Closing Date Balance Sheet.
Substantially all of the products manufactured, sold, leased, and delivered by
the Company and its Subsidiaries are subject to standard terms and conditions of
sale or lease, and material warranties. Schedule 4(q) includes copies of the
-------------
standard terms and conditions of sale or lease, and written limited warranties
for each of the Company and its Subsidiaries (containing applicable guaranty,
warranty, and indemnity provisions).
(r) Employees. None of the Company and its Subsidiaries is a party to or
---------
bound by any collective bargaining agreement, nor has any of them experienced
any strike or grievance, claim of unfair labor practices, or other collective
bargaining dispute within the past three years and there are no unfair labor
practice complaints pending against the Company and its Subsidiaries. The Seller
does not have any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of any
of the Company and its Subsidiaries.
(s) Employee Benefits.
-----------------
(i) Schedule 4(s) lists each Employee Benefit Plan that any of the
-------------
Company, its Subsidiaries and ERISA Affiliates maintains or to which any of
the Company, its Subsidiaries and ERISA Affiliates contributes or has any
obligation to contribute.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and
administered in accordance with the terms of such Employee Benefit
Plan and complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and other
applicable laws including, without limitation, COBRA and the Health
Insurance Portability and Accountability Act ("HIPPA"). None of the
-----
assets of any Employee Benefit Plan are invested in employer
securities or employer real property.
(B) All required reports and descriptions (including annual
reports (IRS Form 5500), summary annual reports, and summary plan
descriptions) have been timely filed and/or distributed in accordance
with the applicable requirements of ERISA and the Code with respect to
each such Employee Benefit Plan. The requirements of COBRA have been
met in all material respects with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to
COBRA.
19
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been made
within the time period prescribed by ERISA to each such Employee
Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date
which are not yet due have been made to each such Employee Pension
Benefit Plan or are fully accrued on the Financial Statements. All
premiums or other payments for all periods ending on or before the
Closing Date have been paid with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan intended to meet the
requirements of a "qualified plan" under Code Section 401(a) has
received a favorable determination letter from the Internal Revenue
Service that it is a "qualified plan," and none of the Seller or any
of the Company's officers is aware of any facts, circumstances or
amendments that could adversely affect the qualified status of any
such Employee Benefit Plan.
(E) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested liabilities thereunder (determined in accordance with
then current funding assumptions).
(F) The Seller has made available to the Purchaser correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent annual report (IRS Form 5500, with
all applicable attachments), and all related trust agreements,
insurance contracts, and other funding arrangements which implement
each such Employee Benefit Plan, and all correspondence received from
or sent to the IRS or Department of Labor within the past two years
concerning any Employee Benefit Plan.
(G) Benefits under any Employee Benefit Plan are as represented
in the applicable plan documents and have not been increased or
modified (whether written or unwritten) subsequent to the dates of
such documents. Seller or Company has not communicated to any employee
or former employee any intention or commitment to modify any Employee
Benefit Plan or to establish or implement any such plan.
(H) In connection with the consummation of the transactions
contemplated in this Agreement, no current or former employee or
director of the Company or its Subsidiaries will become entitled to
any bonus, retirement, severance, job security, change in control or
similar benefit or enhanced benefit (including acceleration of an
award, vesting or exercise of an incentive award) or any fee or
payment of any kind as a result of any of the transactions
contemplated hereby.
(ii) With respect to each Employee Benefit Plan that any of the
Company, its Subsidiaries, and any ERISA Affiliate maintains, to which any
of them contributes, or has
20
any obligation to contribute, or with respect to which any of them has any
liability or potential liability:
(A) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be required to
be filed with the PBGC. No proceeding by the PBGC to terminate any
such Employee Pension Benefit Plan has been instituted or, to the
Knowledge of the Seller, threatened.
(B) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any liability for
material breach of fiduciary duty or any other material failure to act
or comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, audit or investigation with respect to the administration or
the investment of the assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge of
any of the Seller, threatened.
(C) None of the Company and its Subsidiaries has incurred any
liability or, to the Seller's Knowledge, any potential liability to
the PBGC (other than with respect to PBGC premium payments not yet
due) or otherwise under Title IV of ERISA (including any withdrawal
liability as defined in ERISA (S) 4201) or under the Code with respect
to any such Employee Benefit Plan which is an Employee Pension Benefit
Plan, or under COBRA with respect to any such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(iii) Within the last six years prior to the date hereof, none of the
Company, its Subsidiaries, any ERISA Affiliate nor or any Entity,
corporation, trade or business that is under common control with them
within the meaning of 414 of the Code or Section 4001 of ERISA has ever
maintained or contributed to, or participated in, any Multiemployer Plan or
"voluntary employees beneficiary association " (as defined in Code (S)
501(c)(9)); has any withdrawal liability, within the meaning of Section
4201 of ERISA, has any liability to the PBGC (other than for premiums not
yet due), has any liability under Title IV of ERISA or the Code with
respect to an Employee Pension Benefit Plan, has any liability with respect
to a Multiple Employee Welfare Arrangement as defined in ERISA Section
3(40)(A), has any accumulated funding deficiency, whether or not waived
within the meaning of Section 302 of ERISA or Section 412 of the Code with
respect to an Employee Pension Benefit Plan, has terminated or has filed a
notice (or received a notice from the PBGC) to terminate an Employee
Pension Benefit Plan, or has or had a Reportable Event to which notices
would be required to be filed with PGBC.
(iv) None of the Company and its Subsidiaries maintains, contributes
to or has an obligation to contribute to, or has any liability or, to the
Seller's Knowledge, any potential liability with respect to, any Employee
Welfare Benefit Plan providing medical, health, or
21
life insurance or other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their dependents (other than in
accordance with COBRA).
(t) Compliance with Export Laws. All exports by the Company and its
---------------------------
Subsidiaries of equipment, software and other technology have been made in
compliance with all federal and other applicable laws, rules and regulations and
in connection therewith, the Company and its Subsidiaries have obtained all
required approvals of the U.S. Department of Commerce and Department of
Treasury.
(u) Environmental, Health, and Safety Matters.
-----------------------------------------
(i) Each of the Company and its Subsidiaries and their respective
predecessors by merger or consolidation is in compliance with and, to
Seller's Knowledge, has complied with all Environmental, Health, and Safety
Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Company and its Subsidiaries has obtained, has complied, and is in
compliance with, all material permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business. A list of all such material permits, licenses and other
authorizations is set forth on the attached Schedule 4(u). The Seller does
-------------
not have Knowledge of any reason why Purchaser would not be able to renew
any of the Environmental and Safety permits.
(iii) None of the Company or its Subsidiaries has received any
written or oral notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its
facilities arising under Environmental, Health, and Safety Requirements.
(iv) None of the following are being used nor, to Seller's
Knowledge, have ever been used at any property or facility now or in the
past owned or operated by the Company or its Subsidiaries: (A) underground
storage tanks; (B) asbestos-containing material in any friable and damaged
form or condition; (C) materials or equipment containing polychlorinated
biphenyls; or (D) landfills, surface impoundments, or disposal areas.
(v) None of the Company or its Subsidiaries or any of their
respective predecessors by merger or consolidation has treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or released any substance, including without limitation any
hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to liabilities, including any
liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as amended
------
("SWDA") or any other Environmental, Health, and Safety Requirements.
----
22
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental, Health, and
Safety Requirements.
(v) Additional Information. Attached as Schedule 4(v) are true, complete
---------------------- -------------
and correct lists of the following items, and Seller agrees that upon the
request of Purchaser, it will furnish to Purchaser true, complete and correct
copies of any documents referred to in such lists:
(i) Bank Accounts. The name of each bank in which the Company or
-------------
any of its Subsidiaries have an account and the names of all Persons
authorized to draw thereon.
(ii) Debt and Capital Leases. All long-term and short-term promissory
-----------------------
notes, installment contracts, loan agreements, credit agreements, capital
leases and any other agreements of the Company or any Subsidiary relating
thereto or with respect to collateral securing the same.
(iii) Guaranties. All indebtedness, liabilities and commitments of
----------
others and as to which the Company or any of its Subsidiaries is a
guarantor, endorser, co-maker, surety, or accommodation maker, or is
contingently liable therefor (excluding liabilities as an endorser of
checks and the like in the Ordinary Course of Business) and all letters of
credit, whether stand-by or documentary, of the Company or any Subsidiary
issued for the benefit of any third party, including any Investment
Affiliate.
(w) Disclosure. The representations and warranties contained in this (S)
----------
4 do not contain any untrue statement of a fact or omit to state any fact
necessary in order to make the statements and information contained in this (S)
4 not misleading. Any exception set forth on the Disclosure Schedule with
respect to any representation and warranty shall be deemed, to the extent
relevant, an exception to any other applicable representation and warranty.
5. Obligations Pending Closing.
---------------------------
(a) Access and Investigation. From the date hereof through the Closing
------------------------
Date or earlier termination of this Agreement pursuant to (S) 7, Purchaser and
its respective officers, attorneys, accountants and authorized representatives
shall have the right, during normal business hours, to inspect the Company and
its Consolidated Affiliates' and Investment Affiliates' properties, books and
records, and to consult with the Company and its Consolidated Affiliates' and
Investment Affiliates' officers, directors, employees, suppliers, customers,
lenders, agents and attorneys concerning the ownership and operation of the
Company and its Consolidated Affiliates and Investment Affiliates. Such
inspections may reasonably include, for example, environmental and other
physical inspections of the Company and its Consolidated Affiliates' and
Investment Affiliates' properties; review of the Company and its Consolidated
Affiliates' and Investment Affiliates' books, records of account and tax
records; and a review of records of corporate proceedings, contracts,
trademarks, licenses, permits, and other business activities and matters in
which the Purchaser may have an interest in light of the transactions
contemplated by this
23
Agreement. The Purchaser agrees to maintain all information it learns from such
inspections and consultations in confidence and will not disclose such
information except to its officers, directors, employees, bankers, investors,
attorneys, accountants and other authorized representatives unless such
information is or becomes public knowledge through no fault of the Purchaser and
prior to Closing will not use such information except in connection with this
Agreement.
(b) Operation of the Business of the Company and its Subsidiaries. From
-------------------------------------------------------------
the date hereof through the Closing Date or earlier termination of this
Agreement pursuant to (S) 7, except as otherwise contemplated in this Agreement,
Seller will, and will cause the Company and its Subsidiaries to:
(i) conduct the business of the Company and its Subsidiaries only in
the Ordinary Course of Business;
(ii) use its best efforts to preserve intact the current business
organization of the Company and its Subsidiaries, keep available the
services of the current officers, employees, and agents of the Company and
its Subsidiaries, and maintain the relations and goodwill with suppliers,
customers, landlords, creditors, employees, agents, and others having
business relationships with the Company and its Subsidiaries;
(iii) confer with the Purchaser concerning operational matters of a
material nature, and before offering or accepting any sales contracts in
excess of the U.S. Monetary Equivalent of $3.0 million; and
(iv) otherwise report periodically to the Purchaser concerning the
status of the business, operations, and finances of the Company and its
Subsidiaries.
(c) Negative Covenant. Except as otherwise expressly permitted by this
-----------------
Agreement, from the date hereof through the Closing Date or earlier termination
of this Agreement pursuant to (S) 7, Seller will not, and will cause the Company
and its Subsidiaries not to, without the prior consent of the Purchaser, take
any affirmative action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events listed in (S)
4(g) is likely to occur, or any of the other representations or warranties in
(S) 4 may not then be correct and complete.
(d) Updates to Disclosure Schedules. The Seller shall have the right, from
-------------------------------
time to time after the date hereof and until 9:00 a.m. (Houston, Texas time) on
the third business day before the Closing Date, to update the Disclosure
Schedules (the "Updated Schedules). An Updated Schedule (together with
supporting information) shall be promptly furnished to the Purchaser. The
Purchaser shall have until 5:00 p.m. (Houston, Texas time) on the last business
day before the Closing Date to review all Updated Schedules. Seller may give
written notice to Purchaser at any time that the Disclosure Schedules are
complete and final and that no further Updated Schedules shall be forthcoming;
at which time Purchaser shall have three business days from receipt of such
notice to review all Updated Schedules. If the items disclosed on the Updated
Schedules, individually or in the aggregate, have had or could reasonably be
expected to have a material adverse effect on the Company, the Purchaser may, in
accordance with and subject to the terms of Section 7 terminate this Agreement
by prompt written notice thereof to the Seller.
24
6. Conditions to Obligation to Close.
---------------------------------
(a) Conditions to Obligation of the Purchaser. The obligation of the
-----------------------------------------
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) All of Seller's representations and warranties in this
Agreement (considered collectively), and each of the representations and
warranties (considered individually), must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, except for
representations and warranties that speak as of a specified date, without
giving effect to any supplement to the Disclosure Schedule.
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
(iii) the Seller and the Company and its Subsidiaries shall have
procured all of the authorizations and consents in connection with the
matters referred to in (S) 3(a)(ii) and (S) 4(c) above;
(iv) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (C) (other than those listed on
Schedule 4(p)) affect adversely the right of the Purchaser to own the
--------------
Company Stock and to control the Company and its Consolidated Affiliates,
or (D) (other than those listed on Schedule 4(p)) affect adversely the
--------------
right of any of the Company and its Consolidated Affiliates to own its
assets and to operate its businesses (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Purchaser a certificate
to the effect that each of the conditions specified above in (S) 6(a)(i)-
(iv) is satisfied in all respects;
(vi) the Parties shall have entered into the Supply Commitment
Agreement, the Noncompetition Agreement, the Xxxxxxxxx Occupancy Agreement,
and the Wellford Exit Agreement in form and substance as set forth,
respectively, in Exhibits X-0, X-0, X-0 and B-4 attached hereto and the
same shall be in full force and effect;
(vii) Purchaser shall have executed credit agreements in form and
substance satisfactory to Purchaser and the lenders (the "Lenders") for not
-------
less than an aggregate U.S. $80,000,000, and the Lenders shall be ready,
willing and able to fund such credit agreements on the Closing Date; and
(viii) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents
25
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Purchaser.
The Purchaser may waive any condition specified in this (S) 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
--------------------------------------
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) All of Purchaser's representations and warranties in this
Agreement (considered collectively), and each of the representations and
warranties (considered individually), must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, except for
representations and warranties that speak as of a specified date;
(ii) the Purchaser shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) the Purchaser shall have procured all of the authorizations and
consents in connection with the matters referred to in (S) 3(b)(ii);
(iv) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Purchaser shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in (S) 6(b)(i)-
(iv) is satisfied in all respects;
(vi) the Parties shall have entered into the Supply Commitment
Agreement, the Noncompetition Agreement and the Xxxxxxxxx Occupancy
Agreement and the Wellford Exit Agreement in form and substance as set
forth, respectively, in Exhibits X-0, X-0, X-0 and B-4 and the same shall
be in full force and effect;
(vii) the Purchaser shall have executed and delivered to Seller a
release from any liability on the part of Seller and its Affiliates related
to the patent litigation between the Company and Purchaser in form and
substance as set forth in Exhibit B-5, including an agreement that the
Purchase Price is net of $20,340 representing royalties due on the
Company's sale of the reflective sheet that was the subject of such patent
litigation;
(viii) Purchaser shall have executed credit agreements reasonably
satisfactory in form and substance to Seller for not less than an aggregate
U.S. $80,000,000, and the
26
Lenders providing such credit agreements shall be ready, willing and able
to fund such credit agreements on the Closing Date;
(ix) The Company shall have closed the transactions contemplated in
and in accordance with the Asset Purchase Agreement (the "Roofing Sale
------------
Agreement") dated January 14, 2002 by and among the Company, Waste
---------
Management, Inc. and BFS Diversified Products, LLC ("BFS"); and
---
(x) all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to the Seller.
The Seller may waive any condition specified in this (S) 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination. Anything contained in this Agreement to the contrary
-----------
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time before the Closing Date (i) by mutual
consent of Purchaser and Seller, (ii) by the Purchaser pursuant to (S) 5(d), or
(iii) by either Purchaser or Seller if the transactions contemplated by this
Agreement have not been consummated on or before January 28, 2002. If the
transactions contemplated hereby are terminated under the provisions of this (S)
7, then this Agreement shall thereafter be of no further force and effect,
without any liability on the part of any Party, except that the obligations
under (S) 12(k) shall survive.
8. Post-Closing Covenants. The Parties agree as follows with respect to
----------------------
the period following the Closing.
(a) General. In case at any time after the Closing any further action is
-------
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under (S) 9 below), including the execution
and delivery by Purchaser or the Company and its Subsidiaries of all necessary
documents to transfer to Seller or its Affiliates the Retained Assets.
(b) Removal of Identification. The Purchaser shall remove or otherwise
-------------------------
conceal all names, trade names, trademarks, service marks and logos of the
Seller and its Affiliates (other than the trade names "Serrot" and "National
Seal" and the servicemarks and logos of the Company and its Consolidated
Affiliates directly relating thereto) that appear on any of the assets of the
Company or its Consolidated Affiliates within 90 days after the Closing.
(c) Litigation Support. In the event and for so long as any Party
------------------
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action,
27
failure to act, or transaction on or prior to the Closing Date involving any of
the Company and its Subsidiaries and Affiliates, including without limitation
the Retained Litigation, the Poly-America Patent Litigation, the Naue Claim and
the Xxxxx Claim, the other Party will cooperate with it and its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be reasonably requested in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (except with respect to the Naue Claim and the
Xxxxx Claim, or unless the contesting or defending Party is entitled to
indemnification therefor under (S) 9 below), but excluding reimbursement for
employee salary, benefits or overhead charges that are not out-of-pocket costs.
Any information or documents provided under this (S) 8(c) shall be kept
confidential by the Party receiving such information or documents, except as may
otherwise be necessary in connection with contesting or defending against any
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand described in this (S) 8(c).
(d) Contingencies.
-------------
(i) Retained Litigation. The Seller shall retain control of and
-------------------
responsibility for the Summitville Colorado litigation and the Bemalux
Canadian patent litigation further described at (S) 4(p) to the Disclosure
Schedule (the "Retained Litigation"). In addition, the Seller agrees to be
-------------------
liable for and to indemnify the Purchaser, the Company and its Subsidiaries
with respect to the Retained Litigation as set forth in (S) 9 below. The
Seller agrees that any settlement of such litigation shall fully release
and discharge the Company and its Affiliates of any further liability.
(ii) Serrot Acquisition. The Seller shall retain responsibility for
------------------
any Adverse Consequences existing as of or arising after the Closing Date
under (S) 1.2.2(a) and (b) of the Stock Purchase Agreement dated as of July
30, 1999, by and among Waste Management, Inc., National Seal Corporation
and the shareholders of Serrot Acquisition Corp. in excess of the amounts,
if any, paid or accrued on the books of the Company as of Closing (the
"Serrot Stock Purchase Agreement Earnout"). In addition, the Seller agrees
---------------------------------------
to indemnify the Purchaser the Company and its Subsidiaries with respect to
the Serrot Stock Purchase Agreement Earnout as set forth in (S) 9 below.
(iii) Poly-America Patent Litigation. The Purchaser shall assume
------------------------------
control of and responsibility for the Poly-America/Poly-Flex patent
litigation further described at (S) 4(p) to the Disclosure Schedule (the
"Poly-America Patent Litigation"). In addition, the Purchaser agrees to be
------------------------------
liable for and to indemnify the Seller with respect to the Poly-America
Patent Litigation as set forth in (S) 9 below. The Purchaser agrees that
any settlement of such litigation shall fully release and discharge the
Seller and its Affiliates of any further liability.
(iv) Employee Contingent Liabilities. The Seller shall indemnify
-------------------------------
Purchaser, the Company and its Subsidiaries for any Adverse Consequences:
(A) resulting from (y) acts of the Company or the Seller prior to Closing
and relating to the employment, or the termination of employment, of Xxxxx
Xxxxx and Xxx XxXxxxxxxx, and (z) the release or termination of employment
by the Company and its Subsidiaries of Messrs. Xxxxx and
28
XxXxxxxxxx within ten (10 days) after Closing, which Adverse Consequence
are in excess of the amounts owed to Messrs. Xxxxx and XxXxxxxxxx pursuant
to any existing written employment, retention or severance agreements in
effect as of the date of this Agreement; and (B) arising out of the
employment, or the termination of employment of any employees terminated in
connection with the cessation of operations at the Company's Wellford,
South Carolina facility which are in excess of the amounts, if any, accrued
on the Final Closing Date Balance Sheet (the "Xxxxxxxx Xxxxxxxxx Costs")
------------------------
(collectively "Employee Contingent Liabilities").
--------------------------------
(v) German Joint Venture. Subject to the limitations set forth in
--------------------
(S)9 below, the Seller agrees to indemnify the Purchaser, the Company and
its Subsidiaries for any damages, dues, penalties, fines, costs,
liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court cost's and reasonable attorneys' fees resulting from any
final, nonappealable judgment of a court of competent jurisdiction after a
full trial on the merits (the "Naue Order") arising out of the claim
----------
asserted by Naue Fastertechnik GmbH & Co. KG in the letter dated November
6, 2001 to G.M. (Xxxx) Xxxxxx, of the Company, from Xx. Xxxxx Xxxxxx, of
Xxxxxx Xxxxx Xxxxx Heuer & Gronemeyer (the "Naue Claim") (attached as
----------
Schedule 8(d)(v) hereto), except Seller shall have no responsibility or
----------------
liability for any Adverse Consequences which are specifically identified in
the Naue Order as arising out of the actions of the Company or its
Subsidiaries after Closing, or the Purchaser's own actions ("Purchaser's
-----------
Naue Actions"), if any, before on or after Closing. Purchaser's Naue
------------
Actions shall not include its negotiation, preparation, execution or
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement. Subject to the limitations set forth in
(S)9 below, the Seller also agrees to indemnify the Purchaser, the Company
and its Subsidiaries for all reasonable attorneys' fees and expenses
incurred in connection with the preparation and conduct of the defense of
the Naue Claim. Any settlement by Purchaser, the Company or its
Subsidiaries prior to issuance of the Naue Order and without prior written
consent of the Seller, shall not be subject to the Seller's
indemnification.
(vi) Irish Joint Venture. Subject to the limitations set forth in (S)
-------------------
9 below, the Seller agrees to indemnify the Purchaser, the Company and its
Subsidiaries for any damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court
cost's and reasonable attorneys' fees resulting from any final,
nonappealable judgment of a court of competent jurisdiction after a full
trial on the merits (the "Xxxxx Order") arising out of the claim made by
-----------
Xxxxxxx Xxxxx against of the Company in the High Court in Ireland, 2001
Record No. 7429P, dated November 28, 2001 (the "Xxxxx Claim") (attached as
-----------
Schedule 8(d)(vi) hereto), except Seller shall have no responsibility or
-----------------
liability for any Adverse Consequences which are specifically identified in
the Xxxxx Order as arising out of the actions of the Company or its
Subsidiaries after Closing, or the Purchaser's own actions ("Purchaser's
-----------
Xxxxx Actions"), if any, before on or after Closing. Purchaser's Xxxxx
-------------
Actions shall not include its negotiation, preparation, execution or
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement. Subject to the limitations set forth in
(S)9 below, the Seller also agrees to indemnify the Purchaser, the Company
and its Subsidiaries for all reasonable attorneys' fees and expenses
incurred in
29
connection with the preparation and conduct of the defense of the Xxxxx
Claim. Any settlement by Purchaser, the Company or its Subsidiaries prior
to issuance of the Xxxxx Order and without prior written consent of the
Seller, shall not be subject to the Seller's indemnification.
(vii) Environmental Contingencies. Seller agrees to indemnify the
---------------------------
Purchaser, the Company and its Subsidiaries for any Adverse Consequences
arising from the Company's failure to comply with any Environmental Law
applicable to the Company's facilities located in Galesburg, Illinois,
Henderson, Nevada or Wellford, South Carolina ("Environmental
-------------
Contingencies"). For purposes hereof, "Environmental Law" means any
-------------
federal, state or local law, rule, ordinance or regulation relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling or pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Resource Conservation and Recovery Act of
1976.
(viii) Roofing Operations. Notwithstanding anything to the contrary
------------------
set forth in the Roofing Sale Agreement, including the provisions set forth
in (S) 10.5(d) therein, the Seller and its Affiliates shall retain
responsibility for all obligations to perform and any liabilities
(including potential liabilities) not accrued on the Final Closing Date
Balance Sheet which are related to the pre-Closing operations of the
Company's roofing materials line of business, including any obligations of
the Company and its Subsidiaries to BFS set forth in the Roofing Sale
Agreement, except for the specific obligations described in Schedule
--------
8(d)(viii), (the "Roofing Operations"), and any Adverse Consequences
---------- ------------------
related thereto. In addition, the Seller agrees to indemnify the
Purchaser, the Company and its Subsidiaries with respect to the Roofing
Operations as set forth in (S) 9 below. As to the Roofing Operations,
Purchaser's, the Company's and its Subsidiaries' only post-Closing
obligation to the Seller and its Affiliates shall be to satisfy all
liabilities accrued on the Final Closing Date Balance Sheet and to use
commercially reasonable efforts to cooperate with the Seller and its
Affiliates, all at the sole cost and expense of the Seller, but excluding
reimbursement for employee salary, benefits or overhead charges that are
not out-of pocket costs, so that Seller and its Affiliates may timely
perform their obligations related to the Roofing Operations.
(e) Delivery and Retention of Records. On or before the Closing Date, and
---------------------------------
from time to time after the Closing, Seller will deliver or cause to be
delivered to the Company, all files, records, information and data relating to
the Company, its Consolidated Affiliates and Investment Affiliates that are in
the possession or control of Seller and Seller's Affiliates other than such
files, records, information and data relating to the Retained Assets and
Retained Litigation (collectively, the "Records"). The Purchaser agrees to (i)
-------
hold the Records and not to destroy or dispose of any Records for a period of
six years from the Closing Date; provided that, if it desires to destroy or
dispose of such Records during such period, it will first offer in writing at
least 60 days before such destruction or disposition to surrender them to Seller
and if Seller does not accept such offer within
30
such 60-day period, the Purchaser may take such action and (ii) following the
Closing Date to afford Seller, its accountants and counsel, upon reasonable
request, at any time during normal business hours, full access to the Records
and to the employees, accountants, professionals, outside consultants and other
agents of the Purchaser, the Company and their Affiliates to the extent that
such access may be requested for any legitimate purpose at no cost to Seller
(other than for reasonable out-of-pocket expenses); provided that such access
will not be construed to require the disclosure of Records that would cause the
waiver of any attorney-client, work product doctrine or similar protection;
provided, further, that in the event of any litigation, nothing herein shall
limit either Party's rights of discovery under applicable law.
(f) Transition. The Seller will not take any action that is designed or
----------
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of the Company and its Subsidiaries
from maintaining the same business relationships with the Company and its
Subsidiaries after the Closing as it maintained with the Company and its
Subsidiaries prior to the Closing, except as contemplated in the divestitures of
the Company's roofing business and its interest in Serrot International Chile
S.A.
(g) Confidentiality. The Seller and its Affiliates will use its good faith
---------------
efforts to treat and hold in strictest confidence all of the Confidential
Information, refrain from using any of the Confidential Information except in
connection with this Agreement and as set forth in (S) 8(c) (Litigation Support)
and (S) 10 (Tax Matters), and deliver promptly to the Purchaser or destroy, at
the request and option of the Purchaser, all tangible embodiments (and all
copies) of the Confidential Information which are in its possession, except that
such delivery or destruction shall not apply to Confidential Information
pertaining to the Retained Litigation until entry of final judgment or
settlement with respect thereto. In the event that the Seller is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Seller will notify the
Purchaser promptly of the request or requirement so that the Purchaser may seek
an appropriate protective order or waive compliance with the provisions of this
(S) 8(g). If, in the absence of a protective order or the receipt of a waiver
hereunder, the Seller is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, the
Seller may disclose the Confidential Information to the tribunal; provided,
however, that the Seller shall use its reasonable best efforts to obtain, at the
reasonable request of the Purchaser, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Purchaser shall designate.
(h) Third-Party Payments. To the extent that Seller or its Affiliates
--------------------
receives any payment on any assets of the Company or any of its Affiliates as of
or relating to periods after the Closing Date, other than relating to the
Retained Litigation, Seller's Continuing Claim Obligation or Seller's Continuing
Workers' Compensation Obligation, Seller agrees that such amounts shall be held
by the Seller and its Affiliates as custodian on behalf of the Company or its
Affiliates, as applicable, and Seller shall deliver all such amounts to
Purchaser promptly (and in any event within seven calendar days) upon receipt by
Seller or its Affiliates. Without limiting (S) 8(i) hereof, to the extent that
the Purchaser or any of its Affiliates receives any payment belonging to Seller
on the Retained Assets or relating to the Retained Litigation, Seller's
Continuing Claim Obligation or Seller's Workers'
31
Compensation Obligation, Purchaser agrees that such amounts shall be held by the
Purchaser and its Affiliates as custodian on behalf of the Seller (or its
designee) and Purchaser or its Affiliates shall deliver all such amounts to
Seller (or its designee) promptly (and in any event within seven calendar days)
upon receipt by Purchaser or its Affiliates. Notwithstanding the foregoing, any
refund payments received by Seller or Purchaser or their respective Affiliates
in respect of Taxes shall be governed by (S) 10 (Tax Matters).
-------------------
(i) Claim Indemnification and Insurance Coverage.
--------------------------------------------
(i) The Seller shall retain control of and responsibility for all
premiums, deductibles and self-insurance amounts related to Seller's
insurance coverage as it exists on the Closing Date related to the conduct
of the Company's and its Subsidiaries' business prior to the Closing,
including, but not limited to, (as applicable) existing claims as of the
Closing Date, claims that have occurred but have not been discovered as of
the Closing Date and claims related to faulty product existing as of the
Closing Date which fails after the Closing ("Seller's Continuing Claim
-------------------------
Obligation").
----------
(ii) Seller shall retain control of and responsibility for all
premiums, deductibles, self-insurance amounts related to Seller's workers
compensation insurance for the continued coverage of such insurance as it
exists on the Closing Date related to the conduct of the Company's and its
Subsidiaries' business prior to Closing, including, but not limited to,
workers' compensation claims incurred as of the Closing Date but not
reported, and claims open as of the Closing Date, or arising after the
Closing Date and related to reinjuries of pre-Closing injuries ("Seller's
--------
Continuing Workers' Compensation Obligation"). The provisions of this (S)
-------------------------------------------
8(i)(ii) shall not obligate the Seller beyond the terms of the applicable
insurance policies existing as of the Closing Date.
(iii) The Seller agrees to indemnify the Purchaser with respect to
Seller's Continuing Claim Obligation and Seller's Continuing Workers'
Compensation Obligation as set forth in (S) 9 below.
(j) Galesburg, Illinois and Highway 290 Wellford, South Carolina
------------------------------------------------------------
Facilities.
----------
(i) The Purchaser shall complete the removal of the 11 foot extruder
line located at 0000 Xxxxxxxx Xxxx. in Galesburg, Illinois, not later than
thirty (30) days following the Closing Date, and all spare parts and
machinery components located at Highway 290 in Wellford, South Carolina not
later than ninety (90) days following the Closing Date.
(ii) In the event Seller does not obtain on or before the Closing
Date, a release for the Company's warehouse lease for property located at
Xxxxxxx 000, Xxxxxxxx, Xxxxx Xxxxxxxx as referred to in (S)2(g)(ii) herein
(the "Release"), the Seller shall indemnify the Purchaser, the Company and
its Subsidiaries for any Adverse Consequences incurred by the Purchaser,
the Company and its Subsidiaries in connection with or arising out of the
failure by the Seller or any of its Affiliates to pay their liabilities as
and when due and perform their obligations under such warehouse lease. If
the Seller does obtain the Release on or before
32
the Closing Date, this (S)8(j)(ii) and any reference to such section in
(S)9 herein shall have no force and effect.
(k) German Letters of Credit. The Purchaser shall use all commercially
------------------------
reasonable efforts to not later than ninety (90) days following the Closing Date
obtain the release of all guarantees and other credit support provided by Seller
and its Affiliates with respect to the letters of credit of Geolining
Abdichtungstechnik GmbH, a wholly-owned Subsidiary of the Company ("Geolining"),
---------
in favor of DG Bank Deutsche Genossenschaftsbank ("Open Letters of Credit"). If
----------------------
within such ninety (90) day period the Purchaser is not able to obtain the
release of all such guarantees and other credit support provided by the Seller
and its Affiliates with respect to the Open Letters of Credit as described in
the preceding sentence, then the Purchaser shall immediately provide to the
Seller and its Affiliates an irrevocable letter of credit securing all of the
obligations of Seller and its Affiliates under all such Open Letters of Credit
in form satisfactory to the Seller. A true, complete and correct list of the
Open Letters of Credit is set forth in Schedule 8(k).
-------------
(l) Liability and Obligations of the Company and its Affiliates. The
-----------------------------------------------------------
Purchaser shall indemnify the Seller and its Affiliates for any Adverse
Consequences incurred by the Seller or its Affiliates in connection with or
arising out of the failure by the Company and its Subsidiaries to pay their
liabilities (as accrued on the Final Closing Date Balance Sheet) as and when
due. Notwithstanding the preceding provisions of this (S)8(l); (i) this (S)8(l)
shall not confer any rights or remedies upon any Person other than the Seller
and its Affiliates and their respective successors and permitted assigns, and
(ii) in the event of any conflict between the indemnification obligations of the
Seller under (and subject to the limitations and qualifications set forth in)
(S)(S)8, 9 and 10 of this Agreement and the rights of the Seller and its
Affiliates set forth in the preceding provisions of this (S)8(l), the
Purchaser's rights to indemnification from the Seller under (S)(S)8, 9 and 10 of
this Agreement shall take precedence and control.
(m) Audited Financial Statements. The Parties shall use their commercially
----------------------------
reasonable efforts to, on or before February 7, 2002, complete the preparation
of the Financial Statements attached hereto as Exhibit A, audited in accordance
---------
with generally accepted auditing standards, together with the report(s) of
independent auditors (the "Audited Financial Statements"), the unaudited
----------------------------
consolidated balance sheet and statements of income, changes in stockholder's
equity, and cash flow for the nine months ended September 30, 2001, and 2000
(collectively, the "Interim Financial Statements"), and necessary financial
----------------------------
information (related to portions of the Company and Consolidated Affiliates not
being acquired by the Purchaser) for purposes of preparing pro-forma financial
data for the year ended December 31, 2000 and on a quarterly basis for the nine
months ended September 30, 2001. The Audited Financial Statements and the
Interim Financial Statements (including the notes thereto, except for the notes
with respect to the Interim Financial Statements) shall present fairly, in all
material respects, the financial position of the Company and its Consolidated
Affiliates as of such dates and their results of operations and their cash flows
for each of the years in the three-year period ended December 31, 2000, and the
nine months ended September 30, 2001 and 2000, in conformity with GAAP and
applicable Securities and Exchange Commission ("SEC") rules and reporting
---
requirements so that Purchaser can comply with the requirements for filing a
complete SEC Form 8-K. pursuant to items two and seven of such Form 8-K.
33
9. Remedies for Breaches of This Agreement.
---------------------------------------
(a) Survival of Representations and Warranties. All of the
------------------------------------------
representations, warranties, covenants and agreements of the Parties contained
in this Agreement shall survive the Closing hereunder and continue in full force
and effect for a period of three years thereafter; provided, however, that the
representations, warranties, covenants and agreements (i) contained in (S) 10
(Tax Matters) shall survive the Closing and continue in full force and effect
until 30 days after the applicable statutes of limitations on the Taxes
described therein, including waivers and extensions thereof, have expired, and
(ii) related to the Retained Litigation, the Serrot Stock Purchase Agreement
Earnout, the Poly-America Patent Litigation, Employee Contingent Liabilities,
Seller's Continuing Claim Obligation, Seller's Continuing Workers' Compensation
Obligation, the Naue Claim, the Xxxxx Claim, Environmental Contingencies and the
Roofing Operations as expressly set forth in (S)(S) 8(d) and 8(i) shall survive
the Closing without limitation. Notwithstanding any provisions set forth in this
Agreement or otherwise, and except for appropriate injunctive relief or specific
performance, the Parties acknowledge and agree that the sole and exclusive
remedies of the Purchaser for any inaccuracy or breach of any representation or
warranty in this Agreement or any agreement or covenant set forth in (S)(S) 5,
8(d)(i), (ii), (iv), (v), (vi), (vii) and (viii), 8(i), 8(j)(ii) and 10 by the
Seller shall be the indemnification remedies expressly set forth in (S)(S) 8, 9
and 10 of this Agreement, subject to the limitations and qualifications set
forth in (S) 7 and in this (S) 9, if applicable.
(b) Indemnification Provisions for Benefit of the Purchaser.
-------------------------------------------------------
(i) In the event the Seller breaches any of its representations,
warranties, covenants or agreements contained in this Agreement
(collectively, the "Indemnified Items"), and, if there is an applicable
-----------------
survival period pursuant to (S) 9(a) above, provided that the Purchaser
makes a written claim for indemnification with respect to such particular
Indemnified Item against the Seller pursuant to (S) 12(f) below within such
survival period, then the Seller agrees to indemnify the Purchaser, the
Company and its Subsidiaries from and against the entirety of any Adverse
Consequences the Purchaser, the Company or its Subsidiaries may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Purchaser, the Company or its Subsidiaries may
suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the Indemnified
Items; provided, however, that (A) the Seller shall not have any obligation
to indemnify the Purchaser, the Company and its Subsidiaries from and
against any Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by the breach of any representation,
warranty, covenant or agreement of the Seller contained in this Agreement
until the Purchaser, the Company or its Subsidiaries has suffered Adverse
Consequences by reason of all such breaches in excess of the Monetary
Equivalent of a U.S. $3,000,000 aggregate deductible (after which point the
Seller will be obligated only to indemnify the Purchaser, the Company and
its Subsidiaries from and against further such Adverse Consequences);
provided, however, that no indemnifiable Adverse Consequences shall be
applied against this aggregate deductible unless the amount of such
indemnifiable Adverse Consequences exceeds the Monetary Equivalent of U.S.
$25,000 per occurrence, and (B) there will be the Monetary Equivalent of a
U.S. $7,000,000 aggregate ceiling on all obligations of the Seller to
indemnify the
34
Purchaser, the Company and its Affiliates under this Agreement, except for
the Seller's indemnification obligations under (S)(S) 8(d)(i), (ii), (iv),
(vii) and (viii), 8(i) and 8(j)(ii). For purposes of clarification, it is
the intent of the parties that the U.S. $3,000,000 and $25,000 deductibles
referenced in (A) and the U.S. $7,000,000 aggregate ceiling referenced in
(B) of this (S)9(b)(i) shall apply to and limit all of the Seller's
indemnification obligations contained in this Agreement with the exception
of Seller's indemnification obligations under (S)(S) 8(d)(i), (ii), (iv),
(vii) and (viii), 8(i), and 8(j)(ii).
(ii) Delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall not relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(c) Indemnification Provisions for Benefit of the Seller. In the event the
----------------------------------------------------
Purchaser breaches any of its representations, warranties, covenants or
agreements, contained in this Agreement, and, if there is an applicable survival
period pursuant to (S) 9(a) above, provided that the Seller makes a written
claim for indemnification with respect to such particular Indemnified Item
against the Purchaser pursuant to (S) 12(f) below within such survival period,
then the Purchaser agrees to indemnify the Seller from and against the entirety
of any Adverse Consequences the Seller may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach. Delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall not
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(d) Matters Involving Third Parties.
-------------------------------
(i) If any third party shall notify any Party (the "Indemnified
-----------
Party") with respect to any matter (a "Third Party Claim") which may give
----- -----------------
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under (S) 8 or this (S) 9, then the Indemnified Party
-------------------
shall promptly notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Except with respect to the Naue Claim and the Xxxxx Claim, any
Indemnifying Party will have the right to assume the defense of the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party at any time within 15 days after the Indemnified Party
has given notice of the Third Party Claim; provided, however, that the
Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and provided further that the Indemnified Party may retain separate
----------------
co-counsel at its sole cost and expense and participate in the defense of
the Third Party Claim.
(iii) So long as the Indemnifying Party has assumed and is conducting
the defense of the Third Party Claim in accordance with (S) 9(d)(ii) above,
(A) the Indemnifying Party will
35
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld or delayed unreasonably) unless the
judgment or proposed settlement involves only the payment of money damages
by the Indemnifying Party and does not impose an injunction or other
equitable relief upon the Indemnified Party and (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld or delayed unreasonably).
(iv) In the event the Indemnifying Party does not assume and conduct
the defense of the Third Party Claim in accordance with (S) 9(d)(ii) above,
the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate, subject to the
consent of the Indemnifying Party in connection therewith (not to be
withheld or delayed unreasonably). Nothing in this (S) 9(d)(iv) shall
relieve the Indemnifying Party from any obligation under this (S) 9.
(e) Determination of Adverse Consequences. The Parties shall make
-------------------------------------
appropriate adjustments for tax consequences and insurance coverage in
determining Adverse Consequences for purposes of this (S) 9. All indemnification
payments under this (S) 9 and (S) 10 hereof shall be deemed adjustments to the
Purchase Price to the extent permitted under federal tax law.
10. Tax Matters.
------------
(a) Scope of Tax Indemnity Provisions and Relationship to (S) 9. In the
-----------------------------------------------------------
case of any indemnity claim for Taxes described in this (S) 10, the respective
indemnification rights and obligations of the Parties hereto shall be governed
by this (S) 10 and (S)(S) 9(a) and 9(e) and not by (S)(S) 9(b), 9(c) and 9(d)
(regardless of whether the Taxes for which indemnity is being claimed result
from the breach of a representation in (S) 4(j) hereof).
(b) Allocation of Liability for Taxes.
---------------------------------
(i) Seller's Liability. The Seller shall be liable for, and shall
------------------
indemnify, defend and hold the Purchaser, the Company or its Consolidated
Affiliates harmless from and against, (A) any and all U.S. Income Taxes
imposed on or arising with respect to the operations of the Company and its
Consolidated Affiliates for any Pre-Closing Period; (B) any and all Foreign
Income Taxes imposed on or with respect to the Company and its Consolidated
Affiliates for any Pre-Closing Period to the extent not accrued as a
liability on the Final Closing Date Balance Sheet; (C) any and all ad
valorem Taxes in the nature of real estate Taxes for any Pre-Closing Period
to the extent not accrued as a current liability on the Final Closing Date
Balance Sheet; and (D) any and all Adverse Consequences with respect to
(A), (B) and (C) of this paragraph.
(ii) Purchaser's Liability. The Purchaser shall be liable for, and
---------------------
shall indemnify, defend and hold the Seller harmless from and against, (A)
any and all Taxes imposed on or arising with respect to the operations of
the Company and its Consolidated Affiliates for any
36
Post-Closing Period; (B) any and all Foreign Income Taxes imposed on or
arising with respect to the operations of Company and its Consolidated
Affiliates for any Pre-Closing Period to the extent accrued as a liability
on the Final Closing Date Balance Sheet; and (C) any and all Adverse
Consequences with respect to (A) and (B) of this paragraph. Any Taxes of
the Company that are not described in this (S) 10(b) and any Adverse
Consequences related thereto shall be the obligation solely of the
Purchaser.
(c) Proration of Taxes, U.S. Income Taxes and Foreign Income Taxes and
------------------------------------------------------------------
Related Items.
-------------
(i) Proration of U.S. Income Taxes and Foreign Income Taxes for
-----------------------------------------------------------
Straddle Periods. Tax items related to U.S. Income Taxes and Foreign
----------------
Income Taxes shall be apportioned between Pre-Closing and Post-Closing
Periods based on a closing of the books and records of the relevant
Entities as of the Closing Date (provided that (i) any Tax item incurred by
reason of the transactions occurring on or before the Closing Date as
contemplated by this Agreement shall be treated as occurring in a Pre-
Closing Period, and (ii) depreciation, amortization and depletion for any
Straddle Period shall be apportioned on a daily pro-rata basis).
(ii) Proration of Other Taxes for Straddle Periods. Notwithstanding
---------------------------------------------
any provision of this (S) 10 to the contrary (other than (S) 10(c)(iii)),
Taxes that relate to the portion of a Straddle Period ending on the Closing
Date shall (A) 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 Tax for
the entire Straddle Period multiplied by a fraction the numerator of which
is the number of days in the Straddle Period ending on the Closing Date and
the denominator of which is the number of days in the entire Straddle
Period, and (B) in the case of any Taxes based upon or related to income or
receipts be deemed equal to the amount which would be payable if the
Straddle Period ended on the Closing Date. Any credits relating to a
Straddle Period shall be taken into account as though the Straddle Period
ended on the Closing Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of the Company and its Consolidated Affiliates.
(iii) U.S. Consolidated Income Tax Return for Period Ending on
--------------------------------------------------------
Closing Date. Notwithstanding any provision of this (S) 10 to the contrary,
------------
the Parties agree that for U.S. federal income Tax purposes, Tax items of
the Company shall be apportioned between the Pre-Closing and Post-Closing
Periods in accordance with Treas. Reg. (S) 1.1502-76(b), which regulations
shall be reasonably interpreted by the Parties in a manner intended to
achieve a method of apportionment based on a closing of the books of the
Company as of the end of the Closing Date. The Seller will include the
income of the Company (including any deferred income triggered into income
by Treas. Reg. (S) 1.1502-13 and Treas. Reg. (S) 1.1502-14 and any excess
loss accounts taken into income under Treas. Reg. (S) 1.1502-19) on the
Seller's consolidated federal income Tax Returns for all Tax Periods ending
on or before the Closing Date and pay any U.S. Income Taxes attributable to
such income.
(d) Preparation and Filing of Tax Returns.
-------------------------------------
37
(i) Seller's Rights and Responsibilities. The Seller shall have the
------------------------------------
right and obligation to timely prepare and file, or cause to be timely
prepared and filed, when due, (A) all Tax Returns that report U.S. Income
Taxes imposed on or with respect to the Company and its Consolidated
Affiliates for any Pre-Closing Period (except that, with respect to
Straddle Period Tax Returns, the Seller shall have the right and obligation
to prepare and file only those Straddle Period Tax Returns with respect to
Tax Periods for which a consolidated, unitary or combined Tax Return for
U.S. Income Taxes of Seller includes the operations of any of the Company
and its Consolidated Affiliates); and (B) any Tax Return other than those
described in clause (A) of this (S) 10(d)(i) the due date of which
(including all proper extensions thereof) is on or before the Closing Date.
(ii) Purchaser's Rights and Responsibilities. The Purchaser shall
---------------------------------------
have the right and obligation to timely prepare and file, or cause to be
timely prepared and filed, when due, (i) all Tax Returns that report U.S.
Income Taxes imposed on or with respect to the Company and its Consolidated
Affiliates for any Post-Closing Period (including all Straddle Period Tax
Returns other than those with respect to Tax Periods for which a
consolidated, unitary or combined Income Tax Return for U.S. Income Taxes
of the Seller includes the operations of any of the Company and its
Consolidated Affiliates, which consolidated, unitary or combined Straddle
Period Tax Returns shall be prepared and filed by the Seller); and (ii) any
Tax Return other than those described in clause (i) of this (S) 10(d)(ii)
the due date of which (including all proper extensions thereof) is after
the Closing Date.
(iii) Preparation of Tax Returns.
--------------------------
(A) The Purchaser shall prepare and provide, or cause the
Company and its Consolidated Affiliates to prepare and provide, to the
Seller, in accordance with the past custom and practice of the Company
and its Consolidated Affiliates, the Seller's Tax packages and such
other Tax information as is reasonably requested by the Seller to
enable the Seller to prepare any Tax Return which the Seller has the
right and obligation hereunder to prepare and file. The Seller's Tax
packages shall be provided to the Seller on or before the due date
established by the Seller's tax department generally for the receipt
of Tax packages from Affiliates of the Seller, and any other Tax
information reasonably requested by the Seller pursuant to this (S)
10(d)(iii)(A) shall be provided to the Seller within 10 days of such
request.
(B) The Seller shall prepare and provide to the Purchaser such
Tax information as is reasonably requested by the Purchaser with
respect to the operations, ownership, assets or activities of the
Company and its Consolidated Affiliates for any Pre-Closing Period to
the extent such information is relevant to any Tax Return which the
Purchaser has the right and obligation hereunder to prepare and file.
Any Tax information reasonably requested by the Purchaser pursuant to
this (S) 10(d)(iii)(B) shall be provided to the Purchaser within 10
days of such request.
(C) The Seller shall, on the one hand, and the Purchaser shall,
on the other hand, with respect to any Tax Return which such Party is
responsible hereunder for
38
preparing and filing, or causing to be prepared and filed, make such
Tax Return and related workpapers available for review by the other
Party if the Tax Return (A) is with respect to Taxes for which the
other Party or one of its Affiliates may be liable hereunder or under
applicable Tax law, or (B) claims Tax benefits which the other Party
or one of its Affiliates is entitled to receive hereunder. The filing
Party shall use its reasonable best efforts to make Tax Returns
available for review as required under this (S) 10(d)(iii)
sufficiently in advance of the due date for filing such Tax Returns to
provide the non-filing Party with a meaningful opportunity to analyze
and comment on such Tax Returns and have such Tax Returns modified
before filing, accepting the position of the filing Party unless such
position is contrary to the provisions of (S) 10(d)(iv) hereunder.
(iv) Consistency of Accounting Methods. Any Tax Return which includes
---------------------------------
or is based on the operations, ownership, assets or activities of the
Company or its Affiliates for any Pre-Closing Period, and any Tax Return
which includes or is based on the operations, ownership, assets or
activities of the Company or its Affiliates for any Post-Closing Period, to
the extent that items reported on such Tax Return might reasonably increase
any Tax liability of the Seller for any Pre-Closing Period or Straddle
Period, shall be prepared in accordance with past Tax accounting practices
used with respect to the Tax Returns in question (unless such past
practices are no longer permissible under applicable Tax law), and to the
extent any items are not covered by past practices (or in the event such
past practices are no longer permissible under applicable Tax law), in
accordance with reasonable Tax accounting practices selected by the filing
Party with respect to such Tax Return under this Agreement with the consent
of the non-filing Party (which consent shall not be unreasonably withheld
or delayed).
(e) Refunds of Taxes; Amended Returns; Carryovers.
---------------------------------------------
(i) Refunds. If the Purchaser receives a refund of Taxes for which
-------
the Seller is liable hereunder or of Foreign Income Taxes which were
accrued as a liability on the Final Closing Date Balance Sheet, the
Purchaser shall pay, within 30 days following the receipt of such Tax
refund, the amount of such Tax refund to the Seller. If the Seller
receives a Tax refund with respect to Taxes for which the Purchaser is
liable hereunder (other than with respect to Foreign Income Taxes which
were accrued as a liability on the Final Closing Date Balance Sheet), the
Seller shall pay, within 30 days following the receipt of such Tax refund,
the amount of such Tax refund to the Purchaser. The Parties agree that any
such amounts shall be accounted for separately from the funds of the
receiving Party or its Affiliates, and neither the receiving Party nor its
Affiliates shall ever have title to such amounts refunded, it being the
intent that the receiving Party and its Affiliates merely hold such amounts
as a custodian on behalf of the other Party.
(ii) Amended Tax Returns.
-------------------
(A) The Seller, and only the Seller, shall file or cause to be
filed any amended Tax Return or claim for Tax refund if the original
Tax Return for the Tax
39
Period to which the amended Tax Return or claim for Tax Refund relates
was filed by the Seller. The Seller shall not, without the prior
written consent of the Purchaser (which consent shall not be
unreasonably withheld or delayed), make or cause to be made any such
filing to the extent that such filing, if accepted, reasonably might
change the Tax liability of the Purchaser for any Tax Period.
(B) The Purchaser, and only the Purchaser, shall file or cause to
be filed any amended Tax Return or claim for Tax refund if the
original Tax Return for the Tax Period to which the amended Tax Return
or claim for Tax Refund relates was filed by the Purchaser. The
Purchaser shall not, without the prior written consent of the Seller
(which consent shall not be unreasonably withheld or delayed), make or
cause to be made any such filing to the extent that such filing, if
accepted, reasonably might change the Tax liability of the Seller for
any Tax Period.
(C) Notwithstanding anything in this (S) 10(e)(ii) to the
contrary, the Seller may, with the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld or
delayed), instruct the Purchaser to file an amended Tax Return or
claim for Tax refund otherwise described in (ii) of this (S) 10(e)(ii)
if such amended Tax Return or claim for Tax refund relates to a Tax
Return that reports Taxes imposed on or with respect to the Company or
its Consolidated Affiliates for any Pre-Closing Period (including any
Straddle Period Tax Returns). Upon such request and the Purchaser's
consent, the Purchaser shall promptly file such amended Tax Return or
claim for Tax refund, with any costs related to the filing of such
amended Tax Return or its ultimate disposition to be borne by Seller.
(iii) Carrybacks. No Tax loss or credit with respect to the Company
----------
or any of its Affiliates arising in a Post-Closing Period may be carried
back and included in any Tax Return filed or caused to be filed by the
Seller hereunder.
(iv) Overall Foreign Losses. Upon Seller's filing of its
----------------------
consolidated federal income Tax Return for the Tax Period ending December
31, 2002, which shall occur no later than September 15, 2003, Seller shall
within thirty (30) days pay to Purchaser by wire transfer or delivery of
immediately available funds an amount in U.S. dollars equal to 27 1/2% of
Seller's allocation of its overall foreign losses ("OFLs") to the Company.
----
The OFLs shall be determined pursuant to Treas. Reg. (S) 1.1502-9.
(f) Tax Controversies; Assistance and Cooperation.
---------------------------------------------
(i) Notice. In the event any Tax Authority informs the Seller, on
------
the one hand, or the Purchaser, the Company or any of its Affiliates, on
the other hand, of any notice of proposed audit, claim, assessment or other
dispute concerning an amount of Taxes with respect to which the other Party
may incur liability hereunder, the Party so informed shall promptly notify
the other Party of such matter. Such notice shall contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable detail and shall be accompanied by copies of any notice or other
documents received from any Tax Authority with respect to such matter. If a
Party has Knowledge of an asserted Tax liability with
40
respect to a matter for which it is to be indemnified hereunder and such
Party fails to provide the indemnifying Party prompt notice of such
asserted Tax liability, (A) if the indemnifying Party is precluded from
contesting the asserted Tax liability in any forum as a result of the
failure to give prompt notice, the indemnifying Party shall have no
obligation to indemnify the indemnified Party for Taxes arising out of such
asserted Tax liability, and (B) if the indemnifying Party is not precluded
from contesting the asserted Tax liability in any forum, but such failure
to provide prompt notice results in Adverse Consequences to the
indemnifying Party, then any amount which the indemnifying Party is
otherwise required to pay the indemnified Party pursuant to this Agreement
shall be reduced by the cost of such Adverse Consequences.
(ii) Control Rights. The filing Party under this (S) 10 shall
--------------
control any audits, disputes, administrative, judicial or other proceedings
related to Taxes with respect to which either Party may incur liability
hereunder. Subject to the preceding sentence, in the event an adverse
determination may result in the non-filing Party having responsibility for
an amount of Taxes under this (S) 10, each Party shall be entitled to fully
participate in that portion of the proceedings relating to the Taxes with
respect to which it may incur liability hereunder. For purposes of this (S)
10(f)(ii), the term "participate" shall include (i) participation in
conferences, meetings or proceedings with any Tax Authority, the subject
matter of which includes an item for which such Party may have liability
hereunder, (ii) participation in appearances before any court or tribunal,
the subject matter of which includes an item for which such Party may have
liability hereunder, and (iii) with respect to matters described in the
preceding clauses (i) and (ii), participation in the determination of the
content of the discovery responses, stipulations, motions, documentation,
protests, memoranda of fact and law and briefs, and in the content and
conduct of oral arguments and presentations.
(iii) Audit Adjustments.
-----------------
(A) Seller's Audit Adjustments. In the event that (1) a final
--------------------------
determination is made by a Tax Authority which results in an
adjustment to the Tax items reported on a Tax Return filed with
respect to a Tax Period or portion thereof for which the Seller is
liable for Taxes hereunder (including that portion of a Straddle
Period for which the Seller is liable for Taxes hereunder), and (2)
that adjustment creates a corresponding adjustment (or adjustments)
that either reduces the taxable income or increases the amount of any
Tax credit reported on a Tax Return filed with respect to a Tax Period
or portion thereof for which the Purchaser is liable for Taxes
hereunder (including that portion of a Straddle Period for which the
Purchaser is liable for Taxes hereunder) (an "Adjusted Post-Closing
---------------------
Period Tax Return"), then the Purchaser shall pay to the Seller an
-----------------
amount equal to the sum of (X) the product of the amount of the
reduction to taxable income made as a result of such corresponding
adjustment(s) for the Tax Period of such adjustment(s) multiplied by
the highest marginal tax rate in effect for that Tax Period, and (Y)
the increase in the amount of any Tax credit made as a result of such
corresponding adjustment(s) for that Tax Period. With respect to any
Tax Period for which the Adjusted Post-Closing Tax
41
Return has an original due date after the date on which the Purchaser
receives from the Seller written notice of the final determination
referred to in this (S) 10(f)(iii)(A), the payment by the Purchaser
for such Tax Period shall be made no later than 30 days after the
original due date of the Adjusted Post-Closing Tax Return for that Tax
Period. With respect to all other Tax Periods, the payment by the
Purchaser shall be made no later than 30 days after the date on which
the Purchaser receives from the Seller written notice of the final
determination referred to in this (S) 10(f)(iii)(A).
(B) Purchaser's Audit Adjustments. In the event that (1) a final
-----------------------------
determination is made by a Tax Authority which results in an
adjustment to the Tax items reported on a Tax Return filed with
respect to a Tax Period for which the Purchaser is liable for Taxes
hereunder (including that portion of a Straddle Period for which the
Purchaser is liable for Taxes hereunder), and (2) that adjustment
creates a corresponding adjustment (or adjustments) that either
reduces the taxable income or increases the amount of any Tax credit
reported on a Tax Return filed with respect to a Tax Period for which
the Seller is liable for Taxes hereunder (including that portion of a
Straddle Period for which the Seller is liable for Taxes hereunder)
(an "Adjusted Pre-Closing Period Tax Return"), then the Seller shall
--------------------------------------
pay to the Purchaser an amount equal to the sum of (X) the product of
the amount of the reduction to taxable income made as a result of such
corresponding adjustment(s) for the Tax Period of such adjustment(s)
multiplied by the highest marginal tax rate in effect for that Tax
Period, and (Y) the increase in the amount of any Tax credit made as a
result of such corresponding adjustment(s) for that Tax Period. The
payment by the Seller shall be made no later than 30 days after the
date on which the Seller receives from the Purchaser written notice of
the final determination referred to in this (S) 10(f)(iii)(B).
(iv) Expenses. Except as may be otherwise provided in this
--------
Agreement, the Purchaser and the Seller shall each bear their own expenses
in connection with audit and other administrative and judicial proceedings
under this (S) 10.
(v) Assistance and Cooperation. The Seller, on the one hand, and
--------------------------
the Purchaser, the Company and its Consolidated Affiliates, on the other
hand, shall cooperate (and cause their Affiliates to cooperate) with each
other and each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Company and its
Affiliates, including (A) preparation and filing of Tax Returns, (B)
determining the liability and amount of any Taxes due or the right to and
amount of any refund of Taxes, (C) examinations of Tax Returns, and (D) any
administrative or judicial proceedings in respect of Taxes assessed or
proposed to be assessed. Such cooperation shall include making all
information and documents in its possession available to the other Party.
The Parties shall retain all Tax Returns, schedules and workpapers, and all
material records and other documents relating thereto, until the expiration
of the applicable statute of limitations (including, to the extent notified
by any Party, any extension thereof) of the Tax Period to which such Tax
Returns and other documents and information relate. Each of the Parties
shall also make available to the other Party, as reasonably requested and
available, personnel
42
(including employees and agents) responsible for preparing, maintaining,
and interpreting information and documents relevant to Taxes, and personnel
reasonably required as witnesses or for purposes of providing information
or documents in connection with any administrative or judicial proceedings
relating to Taxes. Any information or documents provided under this (S)
10(f)(v) shall be kept confidential by the Party receiving such information
or documents, except as may otherwise be necessary in connection with the
filing of Tax Returns or in connection with administrative or judicial
proceedings relating to Taxes.
11. Seller's Waiver and Release. THE SELLER AND ITS SUBSIDIARIES AND
---------------------------
AFFILIATES HEREBY WAIVE, RELEASE AND COVENANT NOT TO XXX THE COMPANY OR ANY OF
ITS SUBSIDIARIES OR AFFILIATES FOR ANY DAMAGES OF ANY KIND AND CHARACTER ARISING
FROM THE COMPANY OR ANY OF ITS SUBSIDIARIES HAVING SUPPLIED AND/OR INSTALLED
PRODUCT TO AND/OR FOR THE SELLER OR ANY OF ITS SUBSIDIARIES OR AFFILIATES ON OR
PRIOR TO THE CLOSING DATE.
12. Miscellaneous.
-------------
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents referred to
----------------
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Purchaser and the Seller; provided, however, that the Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Purchaser nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given two business days
after it is sent if such notice is sent by registered or
43
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:
(i) if to the Seller, to:
Waste Management Holdings, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(ii) if to the Purchaser, to:
Gundle/SLT Environmental, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Vice President & Corporate Counsel
Facsimile: (000) 000-0000
with a required copy to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: T. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, 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 intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
(h) Dispute Resolution. Whenever one Party believes that the other Party
------------------
has violated its obligations related to or arising out of this Agreement or any
of the transactions contemplated herein, such Party shall provide written notice
to the other Party setting forth in detail the nature of the dispute,
controversy or claim ("Dispute"). Each Party agrees to attempt to resolve any
-------
Dispute, as follows:
44
(i) first, by submitting such Dispute to the Senior Vice President
and General Counsel (or such other officer designee) for WMI, and the
Executive Vice President and Chief Financial Officer for GSE;
(ii) if such Dispute can not be resolved by such individuals within
thirty (30) calendar days of receipt of written notice of the Dispute, by
submitting such Dispute to the Senior Vice President and General Counsel
(or such other officer designee) for WMI, and the President and Chief
Executive Officer for GSE for the following fifteen (15) calendar days;
prior to which neither Party shall have the right to institute any action,
lawsuit or proceeding in any court with respect to the merits of such Dispute.
Each of the parties hereto consents to submit itself to the personal
jurisdiction of any state court in Xxxxxx County, Texas in the event of any
Dispute not resolved by the Parties' management as described above, agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and agrees that it will not bring
any action relating to any Dispute in any court other than state court in Xxxxxx
County, Texas.
(i) Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any 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 such
occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties, the Company and its Consolidated
--------
Affiliates will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. The Seller agrees that none of the Company and its
Consolidated Affiliates has borne or will bear any of the Seller's costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
45
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
-------------------------------------------------
Annexes, Schedules and Disclosure Schedule identified in this Agreement are
incorporated herein by reference and made a part hereof.
[Signature Page Follows]
46
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
GUNDLE/SLT ENVIRONMENTAL, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
WASTE MANAGEMENT HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President, CFO & Controller
With respect only to (S) 8(d)(viii) of this
Agreement:
WASTE MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President & CFO
47
