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EXHIBIT 10(aa)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of July 3, 1998 (the
"Agreement"), is entered into by and among TEAM, INC., a Texas corporation
("Team"), X. XXXXX AND XXXXX XXXXXX, both of whom are individual residents of
the State of Oregon (the "Benhams"), THE CLIMAX PORTABLE MACHINE TOOLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the "ESOP"), which is a qualified plan
under Section 401(a) of the Code (defined below) and an exempt trust under
Section 501(a) of the Code, XXXXXXX X. XXXX, TRUSTEE OF THE XXXXXXX XXXX LIVING
TRUST U/T/A DATED NOVEMBER 25, 1996, a trust created under the laws of the
State of Oregon (the "Edin Trust"), and XXXXX X. XXXXXX, an individual resident
of the State of Oregon ("Xxxxxx"). The Benhams, the ESOP, the Edin Trust and
Xxxxxx are referred to collectively herein as the "Sellers" and individually as
"Seller." Team and the Sellers are referred to collectively herein as the
"Parties."
INTRODUCTION
This Agreement contemplates a transaction in which Team will purchase
from the Sellers, and the Sellers will sell to Team, all of the outstanding
capital stock that the Sellers own of Climax in return for the consideration
provided below.
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.
AGREEMENT
1. Definitions.
1.1. "Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
1.2. "Adverse Consequences" means the dollar amount of any and all
losses suffered by and/or to be suffered by the Party who is entitled to be
indemnified pursuant to Section 9 as the result of a breach of a
representation, warranty and/or covenant by the other Party, including all
actions, suits, proceedings, hearings, 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, including expenses of
defending and/or pursuing a Third Party Claim, and which relate to facts or
circumstances arising on or prior to the Closing Date. The Parties shall take
into account Tax benefits, insurance proceeds (reasonably certain of receipt
and utility in each case), and the time cost of money
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(using the Applicable Rate as of the date the claim is paid as the discount
rate) in determining Adverse Consequences.
1.3. "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
1.4. "Affiliated Group" means any affiliated group within the
meaning of Code Sec. 1504 or any similar group defined under a similar
provision of state, local or foreign law.
1.5. "Alsana" means Alsana, Inc. d/b/a Xxxx Tool Company, a
California corporation.
1.6. "Alsana Bonus" has the meaning set forth in Section 6.10 below.
1.7. "Alsana Documents" means the following documents: that
certain Stock Purchase Agreement, by and among Climax, Xxxx X. Xxxx, Xx., Xxxxx
X. Xxxxxx, Xxxxxx X. Xxxxx, and Xxxxxxxx X. Xxxx, dated September 3, 1997; that
certain Buy-Sell Agreement, by and among the same parties, also dated September
3, 1997; that certain Settlement Agreement, Release and Termination of Buy-Sell
Agreement, by and among the same parties, dated May 21, 1998; that certain
Affidavit of William Bianca, dated May 20, 1998; that certain Release by
Kinetic Systems, Inc., a California corporation, dated May 20, 1998; that
certain Agreement and Xxxx of Sale Regarding Xxxxxxx-Denver Air Compressor, by
Alsana and Bar Fitting & Valve Corporation, dated May 21, 1998; that certain
$404,556 Promissory Note, by Climax in favor of Xxxx X. Xxxx, Xx. and Xxxxxxxx
X. Xxxx, as community property, dated May 21, 1998; that certain $35,000
Promissory Note, by Climax in favor of Xxxx X. Xxxx, Xx., dated May 21, 1998;
that certain $98,972.74 Promissory Note by Alsana in favor of Xxxx X. Xxxx,
Xx., dated September 5, 1997; and that certain $249,278.03 Promissory Note by
Alsana in favor of Xxxx X. Xxxx, Xx. and Xxxxxxxx X. Xxxx as community
property, dated September 3, 1997.
1.8. "Alsana Litigation" has the meaning set forth in Section 9.8
below.
1.9. "Applicable Rate" means the corporate prime rate of interest
published from time to time in the national edition of The Wall Street Journal.
1.10. "Audit" has the meaning set forth in Section 6.10 below.
1.11. "Audit Report" has the meaning set forth in Section 6.10 below.
1.12. "Audited Financial Statements" has the meaning set forth in
Section 6.10 below.
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1.13. "Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
1.14. "Cash" means payment by bank cashier's check, by wire transfer
or delivery of other immediately available funds.
1.15. "Climax" means Climax Portable Machine Tools, Inc., an Oregon
corporation.
1.16. "Climax Auditor" has the meaning set forth in Section 6.8
below.
1.17. "Climax Share" means any share of the common stock, without
par value, of Climax.
1.18. "Closing" has the meaning set forth in Section 2.3 below.
1.19. "Closing Date" has the meaning set forth in Section 2.3 below.
1.20. "Code" means the Internal Revenue Code of 1986, as amended.
1.21. "Confidential Information" means any information concerning
the businesses and affairs of Climax and its Subsidiaries that is not already
generally available to the public.
1.22. "Controlled Group of Corporations" has the meaning set forth
in Code Sec. 1563.
1.23. "Deferred Intercompany Transaction" has the meaning set forth
in Treas. Reg. Section 1.1502-13.
1.24. "Delivery Date" has the meaning set forth in Section 4 below.
1.25. "Disclosure Schedule" has the meaning set forth in Section 4
below.
1.26. "Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
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1.27. "Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
1.28. "Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
1.29. "Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other 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) concerning pollution or protection of
the environment, public health and safety, or employee health and safety,
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 of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
1.30. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.31. "ESOP Contribution" has the meaning set forth in Section 6.9
below.
1.32. "Escrow Agent" means West Coast Trust Co., Inc., d/b/a West
Coast Trust.
1.33. "Escrow Agreement" means that certain Escrow Agreement in
substantially the form of Exhibit F hereto.
1.34. "Escrowed Property" has the meaning set forth in Section 2.4
below.
1.35. "Excess Loss Account" has the meaning set forth in Treas. Reg.
Section 1.1502-19.
1.36. "Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
1.37. "Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
1.38. "Financial Statement" has the meaning set forth in Section 5.7
below.
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1.39. "GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
1.40. "Indemnified Party" has the meaning set forth in Section 9.4
below.
1.41. "Indemnifying Party" has the meaning set forth in Section 9.4
below.
1.42. "Intellectual Property" means (a) all inventions (whether
patentable or 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
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 business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (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).
1.43. "June 30, 1998 Audited Balance Sheet" has the meaning set
forth in Section 7.7 below.
1.44. "Knowledge" means, with respect to the Sellers, the actual
knowledge of any of R. XxXxx Xxxxxx, Xxxxxxx X. Xxxx, and Xxxxx X. Xxxxxx and,
with respect to Team, the actual knowledge of any of Xxxxxxx X. Xxxx, Xxxxxxx
X. Xxxxxx, and Xxx Xxxx.
1.45. "Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
1.46. "Most Recent Balance Sheet" means the balance sheet contained
within the Most Recent Financial Statements.
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1.47. "Most Recent Financial Statements" has the meaning set forth
in Section 5.7 below.
1.48. "Most Recent Fiscal Month End" has the meaning set forth in
Section 5.7 below.
1.49. "Most Recent Fiscal Year End" has the meaning set forth in
Section 5.7 below.
1.50. "Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
1.51. "Net Worth Deficit" has the meaning set forth in Section 7.7
below.
1.52. "Net Worth Surplus" has the meaning set forth in Section 7.7
below.
1.53. "Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
1.54. "Party" has the meaning set forth in the preface above.
1.55. "PBGC" means the Pension Benefit Guaranty Corporation.
1.56. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
1.57. "Problem Disclosures" has the meaning set forth in Section 4
below.
1.58. "Prohibited Transaction" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
1.59. "Purchase Price" has the meaning set forth in Section 2.2
below.
1.60. "Reportable Event" has the meaning set forth in ERISA Sec.
4043.
1.61. "SEC" means the United States Securities and Exchange
Commission.
1.62. "Securities Act" means the Securities Act of 1933, as amended.
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1.63. "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.64. "Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable
or for taxes that 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.
1.65. "Seller" has the meaning set forth in the preface above.
1.66. "Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
1.67. "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
1.68. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.69. "Team's Auditor" has the meaning set forth in Section 7.7
below.
1.70. "Team Stock" means the common stock, $0.30 par value per
share, of Team that Team shall issue to certain of the Sellers in accordance
with the terms and conditions herein contained.
1.71. "Third Party Claim" has the meaning set forth in Section 9.4
below.
2. Purchase and Sale of Climax Shares.
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2.1. Basic Transaction. Each Seller is the record owner of that
number of Climax Shares set forth next to such Seller's name on Exhibit A
attached hereto. At the Closing and subject to the terms and conditions of
this Agreement, Team agrees to purchase from each of the Sellers, and each of
the Sellers agrees to sell to Team, all of such Seller's Climax Shares for the
consideration specified in Section 2.2 below and as reflected by Exhibit A.
2.2. Purchase Price. Team agrees to pay to each of the Sellers at
the Closing $298.04 per Climax Share (the "Purchase Price"). At either of the
Seller"s election respectively, Team shall pay the Purchase Price to the
Sellers in Cash and Team Stock as provided more fully below. The Team Stock
shall be valued at $4.00 per share for purposes of determining the number of
shares of Team Stock, if any, which shall be issued in partial payment of the
Purchase Price. Any payments of Cash hereunder shall be by wire transfer in
immediately available funds.
2.2.1. Purchase Price for the Benhams' Climax Shares. The
Benhams are each owners of record of 6,355 Climax Shares and the
aggregate amount of the Purchase Price for the Climax Shares owned by
each of the Benhams is $1,894,044.20 (i.e. 6,355 X $298.04). If the
Benhams deliver their written election to Team at least five business
days prior to the Closing to receive 100,000 shares of Team Stock in
payment of $400,000 of the Purchase Price for the Benhams' Shares,
Team shall deliver to the Benhams at Closing (i) certificates for
100,000 shares of Team Stock issued in the name specified by the
Benhams in such written election (valued at $4.00 per share), and (ii)
Cash for the remainder of the Purchase Price of their Climax Shares.
Notwithstanding the foregoing, Team shall deliver to the Escrow Agent
to be held in accordance with the terms of the Escrow Agreement
property representing 15% of the Purchase Price for the Benhams"
Climax Shares (which shall consist of 15% of the Cash portion of the
Purchase Price and shares of Team Stock equal to 15% of the number of
shares of Team Stock included in the Purchase Price). If no such
written election to receive Team Stock is delivered by the Benhams to
Team, Team shall deliver the full amount of the Purchase Price for the
Benhams' Climax Shares in Cash to the Benhams at Closing, less 15% of
said Purchase Price, which Team shall deliver to the Escrow Agent to
be held in accordance with the terms of the Escrow Agreement.
2.2.2. Purchase Price for the ESOP's Climax Shares. The
ESOP is owner of record of 7,762 Climax Shares and the aggregate
amount of the Purchase Price for the ESOP's Climax Shares is
$2,313,386.48. If the ESOP delivers its written election to Team at
least five business days prior to the Closing to receive up to 289,173
shares of
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Team Stock (i.e. $2,313,386 X 50% divided by $4) valued at $4 per
share of the $2,313,386 Purchase Price for the ESOP's Climax Shares,
Team shall deliver to the ESOP at the Closing certificates for that
number of shares of Team Stock, if any, specified by such written
election, up to a maximum of 289,173 shares, and shall deliver to the
ESOP Cash for the remainder of the Purchase Price for the ESOP's
Climax Shares. Notwithstanding the foregoing, Team shall deliver to
the Escrow Agent to be held in accordance with the terms of the Escrow
Agreement property representing 15% of the Purchase Price for the
ESOP"s Climax Shares (which shall consist of 15% of the Cash portion
of the Purchase Price and shares of Team Stock equal to 15% of the
number of shares of Team Stock included in the Purchase Price). If
the ESOP does not elect to receive any of the Purchase Price in Team
Stock, Team shall deliver the entire amount of the Purchase Price for
the ESOP's Climax Shares to the ESOP in Cash at the Closing, less 15%
of said Purchase Price, which Team shall deliver to the Escrow Agent
to be held in accordance with the terms of the Escrow Agreement.
2.2.3. Purchase Price for the Edin Trust's Climax Shares.
The Edin Trust is owner of record of 340 Climax Shares and the
aggregate amount of the Purchase Price for the Edin Trust's Climax
Shares is $101,333.60. If the Edin Trust delivers its written
election to Team at least five business days prior to the Closing to
receive up to 12,666 shares of Team Stock (i.e. $101,333.60 X 50%
divided by $4) valued at $4 per share of the $101,333.60 Purchase
Price for the Edin Trust's Climax Shares, Team shall deliver to the
Edin Trust at the Closing certificates for that number of shares of
Team Stock, if any, specified by such written election, up to a
maximum of 12,666 shares, and shall deliver to the Edin Trust Cash for
the remainder of the Purchase Price for the Edin Trust's Climax
Shares. Notwithstanding the foregoing, Team shall deliver to the
Escrow Agent to be held in accordance with the terms of the Escrow
Agreement property representing 15% of the Purchase Price for the Edin
Trust"s Climax Shares (which shall consist of 15% of the Cash portion
of the Purchase Price and shares of Team Stock equal to 15% of the
number of shares of Team Stock included in the Purchase Price). If
the Edin Trust does not elect to receive any of the Purchase Price in
Team Stock, Team shall deliver the entire amount of the Purchase Price
for the Edin Trust's Climax Shares to the Edin Trust in Cash at the
Closing, less 15% of said Purchase Price, which Team shall deliver to
the Escrow Agent to be held in accordance with the terms of the Escrow
Agreement.
2.2.4. Purchase Price for Weigel's Climax Shares. Xxxxxx is
owner of record of 180 Climax Shares and the aggregate amount of the
Purchase Price for Weigel's Climax Shares is $53,647.20. If Xxxxxx
delivers his written election to Team at least five business days
prior to the Closing to receive up to 6,705 shares of Team Stock (i.e.
$53,647.20 X
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50% divided by $4) valued at $4 per share of the $53,647.20 Purchase
Price for Weigel's Climax Shares, Team shall deliver to Xxxxxx at the
Closing certificates for that number of shares of Team Stock, if any,
specified by such written election, up to a maximum of 6,705 shares,
and shall deliver to Xxxxxx Cash for the remainder of the Purchase
Price for Weigel's Climax Shares. Notwithstanding the foregoing, Team
shall deliver to the Escrow Agent to be held in accordance with the
terms of the Escrow Agreement property representing 15% of the
Purchase Price for Weigel's Climax Shares (which shall consist of 15%
of the Cash portion of the Purchase Price and shares of Team Stock
equal to 15% of the number of shares of Team Stock included in the
Purchase Price). If Xxxxxx does not elect to receive any of the
Purchase Price in Team Stock, Team shall deliver the entire amount of
the Purchase Price for Weigel's Climax Shares to Xxxxxx in Cash at the
Closing, less 15% of said Purchase Price, which Team shall deliver to
the Escrow Agent to be held in accordance with the terms of the Escrow
Agreement.
2.3. The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxxx, P.C., Xxx 0000 Xxxxxxxx, Xxxxx 000, 0000 X.X. Fifth Avenue, Portland,
Oregon, commencing at 9:00 a.m. local time on the second business day 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 Team and the Sellers may mutually determine (the "Closing
Date"); provided, however, that the Closing Date shall be no later than August
31, 1998. Irrespective of the actual date of the Closing, the transaction
shall be deemed to have occurred for accounting purposes as of June 30, 1998.
2.4. Deliveries at the Closing. At the Closing, (i) the Sellers
will deliver to Team the various certificates, instruments, and documents
referred to in Section 8.1 below, (ii) Team will deliver to the Sellers the
various certificates, instruments, and documents referred to in Section 8.2
below, (iii) each of the Sellers will deliver to Team stock certificates
representing all of such Seller's Climax Shares, endorsed in blank or
accompanied by duly executed assignment documents, (iv) Team will deliver to
each of the Sellers the consideration specified in Section 2.2 above, and (v)
Team will deliver 15% of the aggregate Purchase Price, as specified in Section
2.2 above (the "Escrowed Property"), to the Escrow Agent to be held pursuant to
the terms and conditions of the Escrow Agreement.
3. Representations and Warranties Concerning the Transaction.
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3.1. Representations and Warranties of the Sellers. Each Seller
severally and not jointly represents and warrants to Team that the statements
with respect to such Seller contained in this Section 3.1 are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date, as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.1.
3.1.1. Organization of the ESOP. The ESOP is a qualified
plan within the meaning of Section 401(a) of the Code and a
determination letter of such qualified status by the Internal Revenue
Service has been applied for and received.
3.1.2. Organization of the Edin Trust. The Edin Trust is a
trust duly organized and validly existing under the laws of the
jurisdiction of its organization.
3.1.3. Authorization of Transaction. Seller has the legal
power, authority and capacity to execute and deliver this Agreement
and to perform his or its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions, except as
enforceability may be limited or affected by applicable bankruptcy,
insolvency, reorganization or other laws of general application
relating to or affecting the rights of creditors and except as
enforceability may be limited by rules of law governing specific
performance, injunctive relief or other equitable remedies. The
Seller does not need to 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.
3.1.4. Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Seller is subject or, with respect to the ESOP, any
provision of its plan documents, or with respect to the Edin Trust,
any provision of its trust indenture or other organizational
documents, 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 he or it
is bound or to which any of his, her, or its assets is subject.
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3.1.5. Brokers' Fees. The Seller does not have 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 for which Team could become liable or obligated.
3.1.6. Investment. With respect to those Sellers who are
acquiring shares of Team Stock hereunder, such Seller (A) understands
that the Team Stock has not been, and will not be, registered under the
Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (B) is acquiring the
Team Stock solely for his, her, or its own account for investment
purposes, and not with a view to the distribution thereof, (C) is a
sophisticated investor with knowledge and experience in business and
financial matters, (D) has received Team's most recent Form 10-K report
to the SEC and Proxy Statement pursuant to the Securities Exchange Act,
and all reports that Team has filed with the SEC pursuant to the
Securities Exchange Act since its most recent Form 10-K, and has had
the opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding the Team Stock,
(E) is able to bear the economic risk and lack of liquidity inherent in
holding the Team Stock, and (F), except for the ESOP, the Edin Trust
and Xxxxxx, is an Accredited Investor.
3.1.7. Climax Shares. The Seller holds of record and,
except for the ESOP, owns beneficially the number of Climax Shares set
forth next to his, hers or its name on Exhibit A, 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 such Seller to sell, transfer, or otherwise dispose of any
capital stock of Climax (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 capital stock of
Climax.
3.2. Representations and Warranties of Team. Team represents and
warrants to the Sellers that the statements contained in this Section 3.2 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3.2).
3.2.1. Organization of Team. Team is a corporation duly
organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
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3.2.2. Authorization of Transaction. Team has full power
and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Team, enforceable in accordance with its terms and
conditions, except as enforceability may be limited or affected by
applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the rights of creditors
and except as enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable remedies.
Team does not need to 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.
3.2.3. Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which Team is subject or 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 Team is a party or by which it is bound or to
which any of its assets is subject.
3.2.4. Brokers' Fees. Team 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.
3.2.5. Investment. Team is not acquiring Climax Shares with
a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
4. Preparation and Delivery of Disclosure Schedule--Team's Right to
Review. On or before the 30th day following the date of this Agreement, the
Sellers will prepare and deliver to Team a disclosure schedule (the "Disclosure
Schedule"), which shall supply the various items specified by Section 5 hereof.
If Team does not notify the Sellers on or before the tenth (10th) day
following the date of the delivery to Team of the Disclosure Schedule (the
"Delivery Date") that it takes exception to any one or more of the disclosures
contained in the Disclosure Schedule, the
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Disclosure Schedule will be deemed to be accepted by Team for purposes of this
Agreement. If, however, any disclosures ("Problem Disclosures") contained in
the Disclosure Schedule cause Team, acting in its sole and absolute discretion,
to determine that it may be inadvisable for Team to proceed with the
acquisition of Climax pursuant to the provisions of this Agreement, then Team
will so notify the Sellers within 10 days of the Delivery Date and the Parties
acting in good faith will attempt to agree upon a mutually satisfactory
solution to Team's concern with the Problem Disclosures. If the Parties are
unable to resolve the Problem Disclosures within 20 days after the Delivery
Date, Team acting in its sole and absolute discretion may by written notice to
the Sellers on or before the 25th day after the Delivery Date terminate this
Agreement without liability to any Party. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in Section 5 of this Agreement. The Sellers shall endeavor to
disclose in the Disclosure Schedule each item of information in each separate
section of the Disclosure Schedule in which such item may reasonably be
required to be disclosed. Notwithstanding the foregoing, if an item is
disclosed in one section of the Disclosure Schedule, it shall be deemed to have
been disclosed in all other sections of the Disclosure Schedule if on the face
of such disclosure, the plain meaning of the disclosure or the context in which
the disclosure is used would reasonably apply to another section of the
Disclosure Schedule, and the failure of the Sellers to disclose it in multiple
sections of the Disclosure Schedule shall not be a breach of this Agreement.
Similarly, the Sellers may disclose items in Sections of the Disclosure
Schedule corresponding to a paragraph in Section 5 of this Agreement, even if
such paragraph does not reference the Disclosure Schedule, without being in
breach of this Agreement. The disclosure of information in the Disclosure
Schedule shall not be construed as an admission that any such information is
material to the Sellers or the business or operations of the Company or its
Subsidiaries. The Disclosure Schedule is qualified in its entirety by
reference to the specific provisions of this Agreement, and none of the
disclosures contained in the Disclosure Schedule are intended to constitute,
and shall not be construed as constituting, representations or warranties
except as and to the extent specifically provided in this Agreement.
5. Representations and Warranties Concerning Climax and Its Subsidiaries.
The Sellers represent and warrant to Team that the statements contained in
this Section 5 (including the information contained in the Disclosure Schedule
delivered by the Sellers to Team pursuant to Section 4 above) will be correct
and complete on the Delivery Date and will be correct and complete as of the
Closing Date as though made then and as though the Closing Date were
substituted for the Delivery Date throughout this Section 5.
5.1. Organization, Qualification, and Corporate Power. Climax
and each Subsidiary, as defined in Section 5.6, is a corporation duly organized,
validly existing, and in good standing
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if applicable) under the laws of the jurisdiction of its incorporation.
Climax and each Subsidiary is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify would not have a material
adverse effect. Each Climax and each Subsidiary has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it, except for such
licenses, permits and authorizations the failure of which to have will not have
a material adverse effect. Section 5.1 of the Disclosure Schedule lists the
directors and officers of Climax and each Subsidiary. The Sellers have
delivered to Team correct and complete copies of the charter and bylaws of each
Climax and each Subsidiary as amended to date. The minute books (containing
the records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of Climax and each Subsidiary are correct and complete in
all material respects. Neither Climax nor any Subsidiary is in default under
or in violation of any provision of its charter or bylaws.
5.2. Capitalization. The entire authorized capital stock of Climax
consists of 50,000 common shares without par value, of which 24,235 Climax
shares are issued and outstanding and no shares are held in treasury. All of
the issued and outstanding Climax Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the respective
Sellers as set forth in Exhibit A. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Climax 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 Climax. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Climax.
5.3. Noncontravention. Neither the execution and the delivery of
this agreement, nor the consummation of the transactions contemplated hereby,
will in any material way (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 Climax and its
Subsidiaries are subject or any provision of the charter or bylaws of Climax
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
Climax and its Subsidiaries is a party or by which it is bound or to which any
of its assets is subject (or
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result in the imposition of any Security Interest upon any of its assets).
Climax and its Subsidiaries shall not be required 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.
5.4. Brokers' Fees. None of Climax 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.
5.5. Title to Assets. Except as disclosed by Section 5.5 of the
Disclosure Schedule, Climax and its Subsidiaries each have good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it, located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets acquired and/or disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet.
5.6. Subsidiaries. Section 5.6 of the Disclosure Schedule sets
forth the following information with respect to each entity in which Climax
owns a material interest: (i) its correct corporate name and state of
organization (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares
of each class of its capital stock, 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 the each such Subsidiary have been duly authorized and are
validly issued, fully paid, and nonassessable. Climax holds of record and owns
beneficially the number of the outstanding shares of each Subsidiary disclosed
in Section 5.6 of the Disclosure Schedule, 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, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Climax or a Subsidiary to sell, transfer, or otherwise dispose of any capital
stock of a Subsidiary or that could require a Subsidiary 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. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of
any capital stock of any Subsidiary. Neither Climax nor any Subsidiary
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of Climax.
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5.7. Financial Statements. Attached hereto as Exhibit B are the
following financial statements (collectively, the "Financial Statements"): (i)
unaudited consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1995, December 31, 1996, and December 31, 1997 (the
"Most Recent Fiscal Year End") for Climax and its Subsidiaries; and (ii)
unaudited consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the three months ended March 31, 1998 (the
"Most Recent Fiscal Month End") for Climax and its Subsidiaries. The Financial
Statements have been prepared in the Ordinary Course of Business in accordance
with the accounting policies and procedures customarily followed by Climax and
its Subsidiaries and in accordance with GAAP in all material respects, and on a
consistent basis throughout the periods covered thereby. The Financial
Statements present fairly in all material respects the financial condition of
Climax and its Subsidiaries as of such dates and the results of operations of
Climax and its Subsidiaries for such periods; provided, however, that the Most
Recent Financial Statements lack footnotes and other presentation items.
5.8. Events Subsequent to the date of the Most Recent Financial
Statements. Except as disclosed on Section 5.8 of the Disclosure Schedule,
since the Most Recent Fiscal Month End through the date hereof, there has not
been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of any of Climax and its
Subsidiaries. Without limiting the generality of the foregoing, except as
disclosed on Section 5.8 of the Disclosure Schedule, since the Most Recent
Fiscal Month End:
5.8.1. neither Climax nor any Subsidiary has sold, leased,
transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of Business;
5.8.2. neither Climax nor any Subsidiary has entered into
any agreement, contract, lease or license (or series of related
agreements, contracts, leases, and licenses) either involving more than
$10,000 or outside the Ordinary Course of Business;
5.8.3. no party (including any of Climax and its
Subsidiaries) has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$10,000 to which any of Climax and its Subsidiaries is a party or by
which any of them is bound;
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5.8.4. neither Climax nor any Subsidiary has imposed any
Security Interest upon any of its assets, tangible or intangible;
5.8.5. neither Climax nor any Subsidiary has made any capital
expenditure (or series of related capital expenditures) either
involving more than $10,000 or outside the Ordinary Course of Business;
5.8.6. neither Climax nor any Subsidiary has made any capital
investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than $10,000 or outside
the Ordinary Course of Business;
5.8.7. neither Climax nor any Subsidiary has issued any note,
bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000 singly or $100,000 in the
aggregate;
5.8.8. neither Climax nor any Subsidiary has delayed or
postponed the payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
5.8.9. neither Climax nor any Subsidiary has canceled,
compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $10,000 or
outside the Ordinary Course of Business;
5.8.10. neither Climax nor any Subsidiary has granted any
license or sublicense of any rights under or with respect to any
Intellectual Property;
5.8.11. there has been no change made or authorized in the
charter or bylaws of any of Climax and its Subsidiaries;
5.8.12. neither Climax nor any Subsidiary 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;
5.8.13. neither Climax nor any Subsidiary has declared, set
aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in
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kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
5.8.14. neither Climax nor any Subsidiary has experienced any
damage, destruction, or loss (whether or not covered by insurance) to
its property;
5.8.15. neither Climax nor any Subsidiary has made any loan
to, or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
5.8.16. neither Climax nor any Subsidiary has entered into
any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement
outside the Ordinary Course of Business;
5.8.17. neither Climax nor any Subsidiary has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business;
5.8.18. neither Climax nor any Subsidiary 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) outside the
Ordinary Course of Business;
5.8.19. neither Climax nor any Subsidiary has made any other
change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
5.8.20. neither Climax nor any Subsidiary has made or pledged
to make any charitable or other capital contribution outside the
Ordinary Course of Business;
5.8.21. there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of Climax and its Subsidiaries; and
5.8.22. neither Climax nor any Subsidiary has committed to
any of the foregoing.
5.9. Undisclosed Liabilities. Except as disclosed by Section 5.9
of the Disclosure Schedule, the Sellers do not have any Knowledge that either
Climax or any Subsidiary has any
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Liability, except for (i) Liabilities included in the Most Recent Balance Sheet
and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End
in the Ordinary Course of Business.
5.10. Legal Compliance. Except as disclosed by Section 5.10 of the
Disclosure Schedule, Climax, the Subsidiaries, and their respective
predecessors and Affiliates have 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, complaint, claim, demand, or notice has been filed against any of them
alleging any failure so to comply. This Section 5.10 shall not apply to any
representation set forth elsewhere in this Agreement addressing compliance by
Climax or any Subsidiary with all such applicable laws as determined by the
context of the representation.
5.11. Tax Matters.
Except as disclosed by Section 5.11 of the Disclosure
Schedule, the following statements are correct and complete:
5.11.1. Climax and its Subsidiaries have each filed all Tax
Returns that it was required to file. All such Tax Returns were
correct and complete in all respects. All Taxes owed by Climax and
its Subsidiaries (whether or not shown on any Tax Return) have been
paid. Neither Climax nor any Subsidiary currently is the beneficiary
of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where any
of Climax and its Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of any of Climax and its
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax.
5.11.2. Climax and each Subsidiary has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
5.11.3. No Seller or director or officer of Climax or any
Subsidiary expects any taxing authority to assess any additional Taxes
for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of any of Climax and its
Subsidiaries either (A) claimed or raised by any authority in writing
or (B) as to which any of the Sellers has Knowledge based upon
personal contact with any agent of
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such authority. Section 5.11 of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with
respect to any of Climax and its Subsidiaries for taxable periods
ended on or after December 31, 1995, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are
the subject of audit. The Sellers have delivered to Team correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by any of Climax and its Subsidiaries since December 31, 1995.
5.11.4. Neither Climax or any Subsidiary has waived any
statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
5.11.5. Neither Climax nor any Subsidiary has filed a consent
under Code Sec. 341(f) concerning collapsible corporations. Neither
Climax nor any Subsidiary has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G. Neither Climax nor any Subsidiary
has been a United States real property holding corporation within the
meaning of Code Sec. 897(c)(2) during the applicable period specified
in Code Sec. 897(c)(1)(A)(ii). Each of Climax and its Subsidiaries
has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Sec. 6662. Neither
Climax nor any Subsidiary is a party to any Tax allocation or sharing
agreement. Neither Climax nor any Subsidiary (A) has been a member of
an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Climax) or (B) has
any Liability for the Taxes of any Person (other than any of Climax
and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
5.11.6. The unpaid Taxes of Climax and its Subsidiaries (A)
did not, as of the Most Recent Fiscal Month End, exceed the reserve
for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
included in the Most Recent Balance Sheet and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Climax and its
Subsidiaries in filing their Tax Returns.
5.12. Real Property.
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5.12.1. Section 5.12.1 of the Disclosure Schedule lists and
describes briefly all real property that any of Climax and its
Subsidiaries owns. With respect to each such parcel of owned real
property, except as described by Section 5.12.1 of the Disclosure
Schedule:
5.12.1.1. the identified owner has good and
marketable title to the parcel of real property, free and
clear of any Security Interest, easement, covenant, or other
restriction, except for installments of special assessments
not yet delinquent and recorded easements, covenants, and
other restrictions which do not materially impair the current
use, occupancy, or value, or the marketability of title, of
the property subject thereto;
5.12.1.2. there are no pending or, to the
Knowledge of Sellers, threatened condemnation proceedings,
lawsuits, or administrative actions relating to the property
or other matters affecting adversely the current use,
occupancy, or value thereof;
5.12.1.3. the legal description for the parcel
contained in the deed thereof describes such parcel fully and
adequately, the buildings and improvements are located within
the boundary lines of the described parcels of land, are not
in violation of applicable setback requirements, zoning laws,
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications),
and do not encroach on any easement which may burden the land,
and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the
property is not located within any flood plain or subject to
any similar type restriction for which any permits or licenses
necessary to the current use thereof have not been obtained;
5.12.1.4. all facilities have received all
approvals of governmental authorities (including licenses and
permits) required in connection with the ownership or current
operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
5.12.1.5. there are no leases, subleases,
licenses, concessions, or other agreements, written or oral,
granting to any party or parties the right of use or occupancy
of any portion of the parcel of real property;
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5.12.1.6. there are no outstanding options or
rights of first refusal to purchase the parcel of real
property, or any portion thereof or interest therein;
5.12.1.7. there are no parties (other than
Climax and its subsidiaries) in possession of the parcel of
real property, other than tenants under any leases disclosed
in Section 5.12.1 of the Disclosure Schedule who are in
possession of space to which they are entitled;
5.12.1.8. all facilities located on the parcel
of real property are supplied with utilities and other
services necessary for the operation of such facilities as
presently used, including gas, electricity, water, telephone,
sanitary sewer, and storm sewer, all of which services are
adequate in all material respects in accordance with all
applicable laws, ordinances, rules, and regulations and are
provided via public roads or via permanent, irrevocable,
appurtenant easements benefitting the parcel of real property,
unless the lack of such access will not have a material
adverse effect; and
5.12.1.9. except with respect to any
unimproved land, each parcel of real property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of real property, and access to the
property is provided by paved public right-of-way with
adequate curb cuts available.
5.12.2. Section 5.12.2 of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of
Climax and its Subsidiaries. Section 5.12.2 of the Disclosure
Schedule also identifies the leased or subleased properties for which
title insurance policies are to be procured in accordance with Section
6.8.2 below. The Sellers have delivered to Team correct and complete
copies of the leases and subleases listed in Section 5.12.2 of the
Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in Section 5.12.2 of the Disclosure Schedule,
except as disclosed in Section 5.12.2 by the Disclosure Schedule:
5.12.2.1. the lease or sublease is legal,
valid, binding, enforceable, and in full force and effect
enforceable in accordance with its terms and conditions,
except as enforceability may be limited or affected by
applicable bankruptcy, insolvency, reorganization or other
laws of general application
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relating to or affecting the rights of creditors and except as
enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable
remedies;
5.12.2.2. the lease or sublease will continue
to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of
the transactions contemplated hereby enforceable in accordance
with its terms and conditions, except as enforceability may be
limited or affected by applicable bankruptcy, insolvency,
reorganization or other laws of general application relating
to or affecting the rights of creditors and except as
enforceability may be limited by rules of law governing
specific performance, injunctive relief or other equitable
remedies;
5.12.2.3. none of Climax and its Subsidiaries
nor, to the Sellers' Knowledge, any other party to the lease
or sublease 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 thereunder;
5.12.2.4. no party to the lease or sublease
has repudiated any material provision thereof;
5.12.2.5. there are no disputes, oral
agreements, or forbearance programs in effect as to the lease
or sublease;
5.12.2.6. with respect to each sublease, the
representations and warranties set forth in subsections
5.12.2.1 through 5.12.2.5 above are true and correct with
respect to the underlying lease;
5.12.2.7. neither Climax nor any Subsidiary
has assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or
subleasehold;
5.12.2.8. all facilities leased or subleased
thereunder have received all approvals of governmental
authorities (including licenses and permits) required in
connection with the operation thereof and have been operated
and maintained in all material respects in accordance with
applicable laws, rules, and regulations;
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5.12.2.9. all facilities leased or subleased
thereunder are supplied with utilities and other services
necessary for the operation of said facilities as presently
used; and
5.12.2.10. the owner of the facility leased or
subleased has good and marketable title to the parcel of real
property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of
special easements not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of
title, of the property subject thereto.
5.13. Intellectual Property.
Except as otherwise disclosed by Section 5.13 of the
Disclosure Schedule, the following statement are correct and complete:
5.13.1. Climax and its Subsidiaries own or have the right to
use pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the businesses of
Climax and its Subsidiaries as presently conducted and as presently
proposed to be conducted. Each item of Intellectual Property owned or
used by any of Climax and its Subsidiaries immediately prior to the
Closing hereunder will be owned or available for use by Climax or the
Subsidiary on substantially identical terms and conditions immediately
subsequent to the Closing hereunder. Each of Climax and its
Subsidiaries has taken all necessary action to maintain and protect
each item of Intellectual Property that it owns or uses.
5.13.2. Neither Climax nor any Subsidiary has interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and none of
the Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of Climax 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 Climax
and its Subsidiaries must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of
any of the Sellers, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of Climax and its Subsidiaries.
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5.13.3. Section 5.13.3 of the Disclosure Schedule identifies
each patent or registration which has been issued to any of Climax and
its Subsidiaries with respect to any of its Intellectual Property,
identifies each pending patent application or application for
registration which any of Climax and its Subsidiaries has made with
respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which any of Climax and its
Subsidiaries has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). The Sellers
have delivered to Team correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and have made available to Team
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. Section 5.13.3 of the Disclosure Schedule also identifies each
trade name or unregistered trademark used by any of Climax and its
Subsidiaries in connection with any of its businesses. With respect
to each item of Intellectual Property required to be identified in
Section 5.13.3 of the Disclosure Schedule:
5.13.3.1. Climax 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;
5.13.3.2. the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
5.13.3.3. no action, suit, proceeding,
hearing, complaint, claim, or demand is pending or to the
Sellers' Knowledge is threatened which challenges the
legality, validity, enforceability, use, or ownership of the
item; and
5.13.3.4. none of Climax and its Subsidiaries
has ever agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other
conflict with respect to the item.
5.13.4. Section 5.13.4 of the Disclosure Schedule identifies
each item of Intellectual Property that any third party owns and that
any of Climax and its Subsidiaries uses pursuant to license,
sublicense, agreement, or permission. The Sellers have delivered to
Team correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to
each item of
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Intellectual Property required to be identified in Section 5.13.4 of
the Disclosure Schedule:
5.13.4.1. the license, sublicense, agreement,
or permission covering the item is legal, valid, binding,
enforceable, and in full force and effect enforceable in
accordance with its terms and conditions, except as
enforceability may be limited or affected by applicable
bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the rights of
creditors and except as enforceability may be limited by rules
of law governing specific performance, injunctive relief or
other equitable remedies;
5.13.4.2. the license, sublicense, agreement,
or permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing enforceable in accordance with its terms
and conditions, except as enforceability may be limited or
affected by applicable bankruptcy, insolvency, reorganization
or other laws of general application relating to or affecting
the rights of creditors and except as enforceability may be
limited by rules of law governing specific performance,
injunctive relief or other equitable remedies;
5.13.4.3. none of Climax and its Subsidiaries
nor, to the Sellers' Knowledge, any other party to the
license, sublicense, agreement, or permission 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 thereunder;
5.13.4.4. no party to the license, sublicense,
agreement, or permission has repudiated any material provision
thereof;
5.13.4.5. with respect to each sublicense, the
representations and warranties set forth in subsections
5.13.4.1 through 5.13.4.4 above are true and correct with
respect to the underlying license;
5.13.4.6. the underlying item of Intellectual
Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
5.13.4.7. no action, suit, proceeding,
hearing, complaint, claim, or
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demand is pending or to the Sellers' Knowledge is threatened
which challenges the legality, validity, or enforceability of
the underlying item of Intellectual Property; and
5.13.4.8. neither Climax nor any Subsidiary
has granted any sublicense or similar right with respect to
the license, sublicense, agreement, or permission.
5.13.5. The Sellers have no Knowledge that Climax or any
Subsidiary will interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its business
as presently conducted.
5.13.6. None of the Sellers has any Knowledge of any new
products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed
which reasonably could be expected to supersede or make obsolete any
product or process of any of Climax and its Subsidiaries.
5.14. Tangible Assets. Climax and its Subsidiaries own or lease all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of their businesses as presently conducted. Each such tangible asset
is free from defects (patent and latent), has been maintained in accordance
with normal industry practice, is in good operating condition and repair
(subject to normal wear and tear), and is suitable for the purposes for which
it presently is used.
5.15. Inventory. The inventory of Climax and its Subsidiaries
consists of raw materials and supplies, manufactured and purchased parts, goods
in process, and finished goods, substantially all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and is carried
at its net realizable value in accordance with GAAP, after deducting the LIFO
reserve included in the Most Recent Balance Sheet as adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of Climax and its Subsidiaries.
5.16. Contracts. Section 5.16 of the Disclosure Schedule lists the
following contracts and other agreements to which any of Climax and its
Subsidiaries is a party:
5.16.1. any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for
lease payments in excess of $10,000 per annum;
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5.16.2. any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or receipt
of services, the performance of which will extend over a period of
more than one year, result in a loss to any of Climax and its
Subsidiaries, or involve consideration in excess of $10,000;
5.16.3. any agreement concerning a partnership, joint venture
or limited liability company;
5.16.4. any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of $10,000 or under which it has imposed a Security Interest
on any of its assets, tangible or intangible;
5.16.5. any agreement concerning confidentiality or
noncompetition;
5.16.6. any agreement with any of the Sellers and their
Affiliates (other than Climax and its Subsidiaries);
5.16.7. any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
5.16.8. any collective bargaining agreement;
5.16.9. any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
5.16.10. any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
5.16.11. any agreement under which the consequences of a
default or termination could have an adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of any of Climax and its Subsidiaries; or
5.16.12. any other agreement (or group of related agreements)
the
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performance of which involves consideration in excess of $10,000.
The Sellers have delivered to Team a correct and complete copy of each written
agreement listed in Section 5.16 of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 5.16 of the Disclosure Schedule. With respect
to each such agreement, except as disclosed by Section 5.16 of the Disclosure
Schedule: (A) the agreement is legal, valid, binding, and in full force and
effect, enforceable in accordance with its terms and conditions, except as
enforceability may be limited or affected by applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting
the rights of creditors and except as enforceability may be limited by rules of
law governing specific performance, injunctive relief or other equitable
remedies; (B) the agreement will continue to be legal, valid, binding, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby, enforceable in accordance with its terms and
conditions, except as enforceability may be limited or affected by applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the rights of creditors and except as enforceability
may be limited by rules of law governing specific performance, injunctive
relief or other equitable remedies; (C) none of Climax and its Subsidiaries,
nor to the Sellers' Knowledge, any other 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
agreement; and (D) no party has repudiated any provision of the agreement.
5.17. Notes and Accounts Receivable. All notes and accounts
receivable of Climax and its Subsidiaries are reflected properly on their books
and records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts included
in the Most Recent Balance Sheet as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of Climax and
its Subsidiaries.
5.18. Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of Climax and its Subsidiaries, other than
with respect to financing arrangements.
5.19. Insurance. Section 5.19 of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which any of Climax and its
Subsidiaries has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past 10 years:
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5.19.1. the name, address, and telephone number of the agent;
5.19.2. the name of the insurer, the name of the
policyholder, and the name of each covered insured;
5.19.3. the policy number and the period of coverage;
5.19.4. the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
5.19.5. a description of any retroactive premium adjustments
or other loss-sharing arrangements.
With respect to each such insurance policy, except as disclosed by Section 5.19
of the Disclosure Schedule: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect; (B) the policy will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C)
none of Climax and its Subsidiaries nor, to the Sellers' 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; and (D) no
party to the policy has repudiated any material provision thereof. Each of
Climax and its Subsidiaries has been covered during the past 10 years by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. Section 5.19 of the
Disclosure Schedule describes any self-insurance arrangements affecting any of
Climax and its Subsidiaries.
5.20. Litigation. Section 5.20 of the Disclosure Schedule sets
forth each instance in which any of Climax and its Subsidiaries (i) is subject
to any outstanding injunction, judgment, order, decree, or ruling, or (ii) is a
party or, to the Knowledge of Sellers, is threatened to be made a party to any
action, suit, proceeding, or hearing, in or before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator. None of the actions, suits, proceedings, hearings,
and investigations set forth in Section 5.20 of the Disclosure Schedule could
result in any adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of Climax and its
Subsidiaries.
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5.21. Product Warranty. Each product manufactured, sold, leased, or
delivered by any of Climax and its Subsidiaries has been in conformity in all
material respects with all applicable contractual commitments and all express
and implied warranties, and none of Climax and its Subsidiaries has any
Liability for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims included in
the Most Recent Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of Climax and its
Subsidiaries. No product manufactured, sold, leased, or delivered by any of
Climax and its Subsidiaries is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
5.22. Product Liability. None of Climax and its Subsidiaries has
any Liability arising out of any injury to individuals or property as a result
of the ownership, possession, or use of any product manufactured, sold, leased,
or delivered by any of Climax and its Subsidiaries.
5.23. Employees. Sellers have no Knowledge that any executive, key
employee, or group of employees has any plans to terminate employment with any
of Climax and its Subsidiaries. Neither Climax nor any Subsidiary is a party
to or bound by any collective bargaining agreement, nor has any of them
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Neither Climax nor any Subsidiary has
committed any unfair labor practice. None of the Sellers has 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 Climax and its
Subsidiaries.
5.24. Employee Benefits.
5.24.1. Section 5.24 of the Disclosure Schedule lists each
Employee Benefit Plan that Climax and its Subsidiaries maintain and/or
to which Climax and any Subsidiary contributes.
5.24.1.1. Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
form and in operation in all material respects with the
applicable requirements of ERISA, the Code, and other
applicable laws.
5.24.1.2. All required reports and
descriptions (including Form 5500 Annual Reports, Summary
Annual Reports, PBGC-1's, and Summary Plan
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Descriptions) have been filed or distributed appropriately
with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Sec. 4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
5.24.1.3. All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid 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 paid to each
such Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of Climax and its
Subsidiaries. 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.
5.24.1.4. Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Code Sec. 401(a) and
has received a favorable determination letter from the
Internal Revenue Service.
5.24.1.5. 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 PBGC
methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for
determination.
5.24.1.6. The Sellers have delivered to Team
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
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
5.24.2. With respect to each Employee Benefit Plan that any
of Climax, its Subsidiaries, and the Controlled Group of Corporations
which includes Climax and its Subsidiaries maintains or ever has
maintained or to which any of them contributes, ever
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has contributed, or ever has been required to contribute:
5.24.2.1. No such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any
Multiemployer 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 (other than any Multiemployer Plan) has been
instituted or threatened.
5.24.2.2. There have been no non-exempt
Prohibited Transactions with respect to any such Employee
Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other 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, 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 threatened. None of the Sellers has any
Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
5.24.2.3. Neither Climax nor any Subsidiary
has incurred, and none of the Sellers has any reason to expect
that any of Climax and its Subsidiaries will incur, any
Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
5.24.3. Neither Climax nor any Subsidiary, nor the other
members of the Controlled Group of Corporations that includes Climax
and its Subsidiaries contributes to, ever has contributed to, or ever
has been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer
Plan.
5.24.4. Neither Climax nor any Subsidiary maintains or ever
has maintained or contributes, ever has contributed, or ever has been
required to contribute to any Employee Welfare Benefit Plan providing
medical, health, or 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 Code Sec. 4980B).
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5.25. Guaranties. Neither Climax nor any Subsidiary is a guarantor
or otherwise is liable for any Liability or obligation (including indebtedness)
of any other Person.
5.26. Environment, Health, and Safety.
5.26.1. Climax, each Subsidiary, and their respective
predecessors and Affiliates have each complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
complaint, claim, demand, or notice has been filed against any of them
alleging any failure so to comply. Without limiting the generality of
the preceding sentence, Climax, each Subsidiary, and their respective
predecessors and Affiliates have obtained and been in compliance with
all of the terms and conditions of all material permits, licenses, and
other authorizations which are required under, and each has complied
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables
which are contained in, all Environmental, Health, and Safety Laws.
5.26.2. Neither Climax nor any Subsidiary nor their
respective predecessors or Affiliates has any Liability for nor has
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance
or condition, or owned or operated any property or facility in any
manner that could form the Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of Climax and its Subsidiaries giving rise to any
Liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental,
Health, and Safety Law.
5.27. Certain Business Relationships with Climax and Its
Subsidiaries. Except as disclosed by Section 5.27 of the Disclosure Schedule,
none of the Sellers and/or their Affiliates has been involved in any material
business arrangement or relationship with Climax and/or any Subsidiary within
the past 12 months, and none own any material asset, tangible or intangible,
which is used in the business of Climax or any Subsidiary.
5.28. Disclosure. The representations and warranties contained in
this Section 5 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5 not misleading.
6. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between
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the execution of this Agreement and the Closing.
6.1. General. Each of the Parties will use his or its reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 8 below).
6.2. Notices and Consents. The Benhams will cause Climax and any
Subsidiary to give any required notices to third parties, and will cause Climax
and any Subsidiary to use its reasonable best efforts to obtain any third-party
consents, that Team reasonably may request in connection with the matters
referred to in this Agreement. Each of the Parties will (and the Benhams will
cause each of Climax and the Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any required
authorizations, consents, and approvals of governments and governmental
agencies to the transaction contemplated by this Agreement.
6.3. Operation of Business. The Benhams will not cause or permit
Climax and its Subsidiaries to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Benhams will not cause or permit
Climax and its Subsidiaries to (i) declare, set aside, or pay any dividend or
make any distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock, or (ii) otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 5.8 above.
6.4. Preservation of Business. The Benhams will cause Climax and
its Subsidiaries to each keep its business and properties substantially intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
6.5. Full Access. The Benhams cause Climax and its Subsidiaries to
permit, representatives of Team to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
Climax and its Subsidiaries, to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
Climax and its Subsidiaries.
6.6. Notice of Developments. The Benhams and the ESOP will give
prompt written notice to Team of any material adverse development causing a
breach of any of their respective
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representations and warranties in Section 3 and/or Section 5 above. Team will
give prompt written notice to the Sellers of any material adverse development
causing a breach of any of their representations and warranties in Section 3
above. No disclosure by any Party which is made after the Delivery Date, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant unless such
misrepresentation and/or breach is waived in writing by the Party to whom such
disclosure is made.
6.7. Exclusivity. None of the Sellers will (and the Benhams will
not cause or permit Climax and its Subsidiaries to): (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of, any of Climax and its Subsidiaries
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or
seek any of the foregoing. None of the Sellers will vote their Climax Shares
in favor of any such acquisition structured as a merger, consolidation, or
share exchange. Each Seller will notify Team immediately if any Person makes
any proposal, offer, inquiry, or contact to them or it with respect to any of
the foregoing.
6.8. Audit. Sellers shall, as promptly as practicable after the
date of this Agreement, cause Climax and the Subsidiaries to cause an audit
(the "Audit") to be conducted in accordance with generally accepted auditing
standards, of the books, records, and financial statements of Climax and the
Subsidiaries as of and for each of the fiscal years ended December 31, 1996 and
December 31, 1997. The Audited Financial Statements (hereinafter defined)
shall be prepared with respect to such two years in accordance with the
accounting policies and procedures customarily followed by Climax and its
Subsidiaries, so long as such policies and procedures are in accordance with
GAAP in all material respects. As used in this Agreement, "Audited Financial
Statements" shall mean for Climax and the Subsidiaries (a) an audited
consolidated balance sheet as of December 31, 1996 and 1997, (b) an audited
consolidated statement of operations and cash flows as of the end of and for
the fiscal years ended December 31, 1996 and December 31, 1997 and (c) an
audited consolidated statement of changes in stockholders equity as of the end
of and for the fiscal years ended December 31, 1996 and December 31, 1997. The
Audit will be conducted by Xxxxxxxx & Xxxxx, LLP (the "Climax Auditor"), a firm
of independent certified public accountants which has previously been engaged
by Climax and which is located in Portland, Oregon. The Seller shall cause the
Climax Auditor to provide Team with the Audited Financial Statements and with
its written report ("Audit Report") with
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respect to the Audit and the Audited Financial Statements promptly after the
completion thereof. The Seller shall also cause the Climax Auditor to consent
to the use of the Audited Financial Statements by Team in connection with
filings with appropriate governmental authorities, including the SEC. The fees
and expenses of such accounting firm shall be paid by Team. The Sellers agree
to cause the officers, directors, employees, accountants and attorneys of
Climax and the Subsidiaries to cooperate with Team and its respective officers,
accountants and other representatives at all reasonable times and in all
material respects during the conduct of the Audit.
6.9. ESOP Contribution. Immediately prior to the Closing, the
Benhams shall cause Climax to contribute $100,000 to the ESOP (the "ESOP
Contribution"), which shall be allocated as an employer contribution for 1998
in addition to any amounts otherwise contributed and allocated for 1998.
6.10. Alsana Bonus. Immediately prior to the Closing, the Benhams
shall cause Climax to pay to Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxx a total bonus
of $50,000 each (the "Alsana Bonus").
7. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
7.1. 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 Section 9
below). The Sellers acknowledge and agree that from and after the Closing Team
will be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to Climax and its
Subsidiaries; provided, however, nothing herein is intended to waive the
attorney-client privilege of any of Sellers, and from and after the Closing
Date, neither Team, Climax, or any of their respective Affiliates, directly or
indirectly, shall have access to or scrutiny over any of the books, files,
documents and records, of any of the Sellers' attorneys, accountants, or
advisers; provided further, however, that the Benhams agree to segregate, and
the Benhams agree to cause their counsel to segregate, the books, files,
documents and records of the Benhams in the Benhams' and their counsel's
possession from the books, files, documents and records of Climax and its
Subsidiaries in the Benhams' and their counsel's possession.
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7.2. 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, failure to act, or transaction on or prior
to the Closing Date involving any of Climax and its Subsidiaries, each of the
other Parties will cooperate with him or it and his or 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 necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 9 below).
7.3. Transition. None of the Sellers will 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 Climax and its
subsidiaries from maintaining the same business relationships with Climax and
its Subsidiaries after the Closing as it maintained with Climax and its
Subsidiaries prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the businesses of Climax and its Subsidiaries to Team
from and after the Closing.
7.4. Confidentiality. Each of the Sellers will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to Team or destroy, at the request and option of Team, all tangible
embodiments (and all copies) of the Confidential Information which are in his
or its possession. In the event that any of the Sellers 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, that Seller will notify Team
promptly of the request or requirement so that Team may seek an appropriate
protective order or waive compliance with the provisions of this Section 7.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
any of the Sellers is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his or its reasonable
best efforts to obtain, at the reasonable request of Team, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as Team shall designate. The
foregoing provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of disclosure.
7.5. Team Stock. Each certificate for shares of Team Stock to be
issued hereunder will
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be imprinted with a legend substantially in the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 ("Act") or any
other securities statute, and no reoffer, sale, transfer,
pledge or other disposition thereof may be made unless the
shares are registered under the Act and any other applicable
statute, or, in the written opinion of counsel reasonably
satisfactory to the issuer, such transaction will not require
registration under the Act or any other securities statute.
Full statements of the designations, preferences, limitations
and relative rights of the shares of each class of authorized
stock of Team, the variations in the relative rights and
preferences of the shares of any series of Preferred Stock so
far as the same have been fixed and determined, and the
authority of the Board of Directors to fix and determine the
relative rights and preferences each series thereof, and of
the denial of the preemptive rights of shareholders to acquire
unissued or treasury shares of Team, are set forth in the
Articles of Incorporation of the Team, as amended, which are
on file in the Office of the Secretary of State of the State
of Texas, copies of which may be obtained without charge on
written request to Team at its principal place of business or
registered office.
7.6. [Intentionally Deleted.]
7.7. June 30, 1998 Audited Balance Sheet.
7.7.1 As promptly as practical after the Closing Date, Team
shall cause a Consolidated Balance Sheet as of June 30, 1998 to be prepared for
Climax and its Subsidiaries and shall cause Deloitte & Touche, LLP ("Team's
Auditor") to audit the June 30, 1998 Balance Sheet ("June 30, 1998 Audited
Balance Sheet"). Team's Auditor shall conduct the audit of the June 30, 1998
Balance Sheet in accordance with generally accepted auditing standards. The
June 30, 1998 Audited Balance Sheet shall be prepared and audited using the
accounting policies and procedures customarily followed by Climax and its
Subsidiaries, so long as such policies and procedures are in accordance with
GAAP in all material respects. Team waives and releases any claim, and shall
have no right to indemnification under Section 9 of this Agreement for a breach
of the representation in Section 5.7 above concerning the Most Recent Balance
Sheet, with respect to any item that results in an adjustment to the Purchase
Price pursuant to this Section
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7.7, to the extent of such adjustment.
7.7.2 Within 30 days after receipt of the June 30, 1998
Audited Balance Sheet, either Seller shall inform Team in writing that either
the June 30, 1998 Audited Balance Sheet is acceptable or object to the June 30,
1998 Audited Balance Sheet in writing setting forth a specific description the
Seller's objections (it being agreed that the failure of a Seller to deliver
such written notice to Team within such 30-day period shall be deemed
acceptance by such Seller). If a Seller objects as provided above and if Team
does not agree with the Seller's objections, if any (it being agreed that the
failure of Team to deliver written notice to the objecting Seller of Team's
disagreement with the objecting Seller's objections within 15 days of Team's
receipt of the objecting Seller's objections shall be deemed acceptance by
Team), or such objections are not resolved on a mutually agreeable basis within
15 days after Team's receipt of the objecting Seller's objections, any such
disagreement shall be promptly submitted to arbitration in accordance with
Section 11.15 of this Agreement; provided, however, that the neutral arbitrator
shall be an independent accounting firm agreed upon by Team's Auditor on behalf
of Team and by Climax's Auditor on behalf of the objecting Seller(s) or, if
they cannot agree on a single neutral arbitrator, a panel of three neutral
arbitrators consisting of one neutral arbitrator selected by Team's Auditor and
a second neutral arbitrator selected by Climax's Auditor, and a third neutral
arbitrator selected by the first two neutral arbitrators in accordance with
Section 11.15.4. A neutral arbitrator agreed upon or selected by Team's
Auditor or by Climax's Auditor shall be a member in good standing of the
American Institute of Certified Public Accountants SEC Practice Division. The
arbitrators' determination shall be limited to whether the June 30, 1998
Audited Balance Sheet was prepared by Climax and audited by the Team Auditor in
accordance with instructions set forth in this Section 7.7. Team shall bear
one-half of the fees, costs and expenses arising under and relating to such
arbitration and each objecting Seller shall bear a proportion of the other
one-half of such fees, costs and expenses determined by dividing the objecting
Seller's number of Climax Shares by the total number of Climax Shares of all
objecting Sellers. Team and each objecting Seller shall bear the fees, costs
and expenses of his, her or its own accountants and representatives. Upon
resolution of any and all disputes concerning the June 30, 1998 Audited Balance
Sheet, the determination of the June 30, 1998 Audited Balance Sheet shall be
deemed to be final.
7.7.3 In the event that the Shareholders' Equity, as
reflected by the June 30, 1998 Audited Balance Sheet of Climax and its
Subsidiaries, is less ("Net Worth Deficit") than the Shareholders' Equity as
reflected by the Most Recent Balance Sheet (as adjusted in the manner set forth
on Exhibit G), the Purchase Price for the Climax Shares, as provided in Section
2.2 of
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this Agreement and as reflected by Exhibit A, shall be retroactively reduced by
the amount of such Net Worth Deficit, and the amount of such Net Worth Deficit
shall be recovered by Team out of the Escrowed Property in accordance with each
Escrow Agreement. In the event that the Shareholders' Equity, as reflected by
the June 30, 1998 Audited Balance Sheet of Climax and its Subsidiaries, is more
("Net Worth Surplus") than the Shareholders' Equity as reflected on the Most
Recent Balance Sheet (as adjusted in the manner set forth on Exhibit G), the
Purchase Price for the Climax Shares, as provided in Section 2.2 of this
Agreement and as reflected by Exhibit A, shall be retroactively increased by
the amount of the Net Worth Surplus, and within one business day, Team shall
pay to the Sellers the amount of such difference in Cash by wire transfer of
immediately available funds. The Net Worth Deficit shall be borne by each
Seller in the ratio that the number of Climax Shares held by such Seller bears
to all of the Climax Shares purchased hereunder by Team. Each Seller shall
receive that portion of the Net Worth Surplus in accordance with the ratio of
the number of Climax Shares held by such Seller bears to all of the Climax
Shares purchased hereunder by Team. Notwithstanding anything to the contrary
herein contained, the calculation of a Net Worth Deficit or Net Worth Surplus
shall (i) add back losses at Alsana to the extent such losses are attributable
to any inventory adjustments and goodwill write-off (other than normal
amortizations) at Alsana; (ii) add back any other losses at Alsana up to an
amount equal to $85,000; and (iii) recognize the effect of any losses not
attributable to the sources described in (i) at Alsana in excess of the amount
described in (ii) only for the purpose of offsetting the effect of gains shown
on the income statement related to the consolidated June 30, 1998 Audited
Balance Sheet from the operations of Climax, Climax Leasing, Inc., Climax
International II, Inc., and Climax Rental Venture LLC (i.e., excluding all
operations of Alsana) and not recognize such losses to the extent they
contribute to a Net Worth Deficit after such gains are entirely offset. All
adjustments contemplated in the immediately preceding sentence shall be made
net of their tax effect.
8. Conditions to Obligation to Close.
8.1. Conditions to Obligation of Team. The obligation of Team to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
8.1.1. each of the Seller's representations and warranties
set forth in Section 3.1 and Section 5 above shall be true and correct
in all material respects at and as of the Closing Date;
8.1.2. each of the Sellers shall have performed and complied
with all of his, hers or its covenants hereunder in all material
respects through the Closing;
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8.1.3. Climax and its Subsidiaries shall have procured all
of the third party consents specified in Section 6.2 above;
8.1.4. no action, suit, or proceeding shall be pending or
threatened 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) affect adversely the right of Team to own Climax
Shares and to control Climax and its Subsidiaries, or (D) affect
adversely the right of any of Climax and its Subsidiaries to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
8.1.5. each of the Sellers shall have delivered to Team a
certificate to the effect that each of the conditions specified above
in Sections 8.1.1 through 8.1.4 is satisfied in all respects, as such
conditions apply to such Seller;
8.1.6. the Parties, Climax, and its Subsidiaries shall have
received all required authorizations, consents, and approvals, if
any, of governments and governmental agencies;
8.1.7. the relevant parties (other than Climax) shall have
entered into employment agreements in form and substance as set forth
in Exhibits C-1 through C-3 attached hereto and the same shall be in
full force and effect;
8.1.8. Team shall have received from counsel to the Benhams
an opinion in form and substance as set forth in Exhibit D-1 attached
hereto, addressed to Team, and dated as of the Closing Date;
8.1.9. Team shall have received from counsel to the ESOP an
opinion in form and substance as set forth in Exhibit D-2 attached
hereto, addressed to Team, and dated as of the Closing Date;
8.1.10. Team shall have received the resignations, effective
as of the Closing, of each director and officer of Climax and its
Subsidiaries other than those whom Team
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shall have specified in writing prior to the Closing;
8.1.11. Each of the Sellers and the Escrow Agent shall have
entered into a separate Escrow Agreement substantially in the form
attached to this Agreement as Exhibit F (the "Escrow Agreement"); and
8.1.12. all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Team.
Team may waive any condition specified in this Section 8.1 if it executes a
writing so stating at or prior to the Closing.
8.2. Conditions to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
8.2.1. the representations and warranties set forth in
Section 3.2 above shall be true and correct in all material respects
at and as of the Closing Date;
8.2.2. Team shall each have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
8.2.3. no action, suit, or proceeding shall be pending or
threatened 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);
8.2.4. Team shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
in Sections 8.2.1 through 8.2.3 is satisfied in all respects;
8.2.5. Team and the Escrow Agent shall have entered into a
separate Escrow
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Agreement with each of the Sellers; and
8.2.6. the Parties shall have received all required
authorizations, consents, and approvals of governments and
governmental agencies, if any;
8.2.7. as a condition solely with respect to the ESOP,
Climax shall have contributed $100,000 to the ESOP;
8.2.8. as a condition solely with respect to the Benhams,
Team shall have entered into the Employment Agreement in form and
substance as set forth in Exhibits C-1 and the same shall be in full
force and effect;
8.2.9. as a condition solely with respect to the Edin Trust,
Team shall have entered into the Employment Agreement in form and
substance as set forth in Exhibits C-2 and the same shall be in full
force and effect;
8.2.10. as a condition solely with respect to Xxxxxx, Team
shall have entered into the Employment Agreement in form and substance
as set forth in Exhibits C-3 and the same shall be in full force and
effect;
8.2.11. the Sellers shall have received from counsel to Team
an opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to the Sellers, and dated as of the Closing Date;
and
8.2.12. all actions to be taken by Team in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 8.2 if they
execute a writing so stating at or prior to the Closing.
9. Remedies for Breaches of This Agreement.
9.1. Survival of Representations and Warranties. All of the
representations and warranties of Team and the Benhams contained in this
Agreement shall survive the Closing hereunder (unless the damaged Party had
Knowledge of any misrepresentation or breach of the
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representation or warranty at the time of Closing) and continue in full force
and effect thereafter for a period of one year, except for the representations
and warranties contained in Sections 3.1 and 3.2, Sections 5.1 through 5.6, and
Section 5.11, which shall survive the Closing hereunder and continue in full
force and effect thereafter, subject to any applicable statutes of limitations.
All of the representations and warranties of the ESOP, the Edin Trust and
Xxxxxx contained in this Agreement, including those in Sections 3.1 and 5
above, shall survive the Closing hereunder (unless Team had Knowledge of any
misrepresentation or breach of the representation or warranty at the time of
Closing) and continue in full force and effect for a period of one year.
9.2. Indemnification Provisions for Benefit of Team.
9.2.1. In the event the Sellers breach (or in the event any
third party alleges facts in writing that, if true, would mean the
Sellers breached) any of their representations or warranties contained
in Section 5 of this Agreement (other than representations or
warranties relating to Alsana) or covenants contained in this
Agreement, and provided that the particular representation, warranty,
or covenant survives the Closing and that Team makes a written claim
for indemnification against the Sellers pursuant to Section 11.7 below
within the applicable survival period, then the Sellers agree to
indemnify Team from and against the entirety of any Adverse
Consequences Team may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach); provided,
however, that the Sellers shall not have any obligation to indemnify
Team from and against any such Adverse Consequences, resulting from,
arising out of, relating to, in the nature of, or caused by the breach
of any representation or warranty of the Sellers contained in Section
5 of this Agreement (other than representations or warranties relating
to Alsana), (i) less than $3,000 and (ii) until the aggregate of all
such claims against the Sellers for Adverse Consequences in excess of
$3,000 exceeds $100,000, and then only for the amount by which such
Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach of any representation,
warranty, or covenant of the Sellers contained in Section 5 of this
Agreement (other than representations and warranties relating to
Alsana) exceeds $100,000.
9.2.2. In the event the Sellers breach (or in the event any
third party alleges facts in writing that, if true, would mean the
Sellers breached) any of their representations or warranties contained
in Section 5 of this Agreement relating to Alsana, and provided that
the particular representation or warranty survives the Closing and
that Team makes a written claim for indemnification against the
Sellers pursuant to Section 11.7 below
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within the applicable survival period, then the Sellers agree to
indemnify Team from and against the entirety of any Adverse
Consequences Team may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach); provided,
however, that the Sellers shall not have any obligation to indemnify
Team from and against any such Adverse Consequences, resulting from,
arising out of, relating to, in the nature of, or caused by the breach
of any representation or warranty of the Sellers contained in Section
5 of this Agreement relating to Alsana, (i) less than $3,000 and (ii)
until the aggregate of all such claims against the Benhams for Adverse
Consequences in excess of $3,000 exceeds $100,000, and then only for
the amount by which such Adverse Consequences resulting from, arising
out of, relating to, in the nature of, or caused by the breach of any
representation or warranty of the Sellers contained in Section 5 of
this Agreement relating to Alsana exceeds $100,000.
9.2.3. Notwithstanding anything in Section 9.2.1 or Section
9.2.2 above to the contrary, and subject to the other terms and
conditions of this Section 9, each Seller will be responsible to
indemnify Team for the entirety of any Adverse Consequences Team may
suffer as a result of any breach of his, her or its covenant in
Section 2 above and his, her or its representations and warranties in
Section 3.1 above concerning the transaction. Each Seller will be
responsible to indemnify Team for any Adverse Consequences Team may
suffer as a result of the breach by such Seller of any other covenant
or representation and warranty contained in Section 5 of this
Agreement in the ratio that the number of Climax Shares held by such
Seller bears to all of the Climax Shares purchased hereunder by Team.
9.3. Indemnification Provisions for Benefit of the Sellers. In the
event Team breaches (or in the event any third party alleges in writing facts
that, if true, would mean Team has breached) any of its representations,
warranties, and covenants contained herein, then Team agrees to indemnify each
of the Sellers from and against the entirety of any Adverse Consequences the
Seller may suffer through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
9.4. Matters Involving Third Parties. 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 this Section 9, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing;
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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.
9.5. Defense of Third Party Claims. Any Indemnifying Party will
have the right to defend the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified Party in writing
within 10 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of
the Indemnified Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified Party, and (E)
the Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently. So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with the foregoing, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (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 unreasonably), and (C) the Indemnifying
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 Indemnified Party (not to be withheld unreasonably). In the
event any of the aforesaid conditions in this Section 9.5 fail and/or cease to
be satisfied, (A) 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 (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Section 9.
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9.6. Indemnification Payments Deemed to be Adjustments to Purchase
Price. All indemnification payments under this Section 9 shall be deemed
adjustments to the Purchase Price.
9.7. Indemnification for Certain Alsana Litigation. A Subsidiary
of Climax, Alsana, is currently the subject of that certain complaint for
infringement of patent, Case No. CIV S-98-0911 FCD PAN, under the style Tri
Tool Inc. v. Climax Portable Machine Tools, Inc., et al., in the United States
District Court for the Eastern District of California (the "Alsana
Litigation"). Climax recently acquired its equity ownership of Alsana under
the terms and conditions of the Alsana Documents. Each Seller agrees to
indemnify Team from and against the entirety of any Adverse Consequences Team
may suffer from and after the Closing Date resulting from, arising out of,
relating to, in the nature of, or caused by the Alsana Litigation. A condition
precedent to Team's exercise of its right to seek indemnity from the Sellers
for the Alsana Litigation shall be Team's causing Climax to exercise its rights
to set-off and seek indemnity from Xxxx X. Xxxx, Xx. under the Alsana
Documents. Team shall not seek indemnity from the Sellers for the Alsana
Litigation, including for the costs and expenses incurred pursuing the rights
and remedies contemplated by the preceding sentence, until Team has used all
reasonable efforts to pursue such rights and remedies contemplated by the
preceding sentence. Team shall not, and shall cause Climax and Alsana not to,
pay any amount or amounts in settlement of or in connection with the Alsana
Litigation unless Team has a reasonable basis for concluding that all such
amount or amounts paid shall not exceed the Adverse Consequences that could
result from the Alsana Litigation. Each Seller will be responsible to Team for
the indemnity contained in this Section 9.7 in the ratio that the number of
Climax Shares held by such Seller bears to all of the Climax Shares purchased
hereunder by Team.
9.8. Limit on Liability. Notwithstanding any provision contained
herein to the contrary, (i) the limit of the aggregate liability of the ESOP
under this Section 9 shall be the Purchase Price (as adjusted under Section
7.7) for the ESOP's Climax Shares less $1,109,966; (ii) the limit of the
aggregate liability of the Edin Trust under this Section 9 shall be the
Purchase Price (as adjusted under Section 7.7) for the Edin Trust's Climax
Shares less $48,620; (iii) the limit of the aggregate liability of Xxxxxx under
this Section 9 shall be the Purchase Price (as adjusted under Section 7.7) for
Weigel's Climax Shares less $25,740; and, (iv) the limit of the aggregate
liability of the Benhams under this Section 9 shall be the Purchase Price (as
adjusted under Section 7.7) for the Benhams' Climax Shares. A Seller shall not
have any obligation to indemnify Team from and against any Adverse Consequences
resulting from, arising out of, or relating to, in the nature of, or caused by
the breach of a covenant contained in this Agreement if
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such Seller is not the breaching Seller.
9.9. Other Indemnification Provisions. Team agrees that the
foregoing indemnification provisions in this Section 9 shall be the exclusive
remedy of Team for any breach of the representations, warranties, or the
covenants of any of the Sellers in this Agreement. Each of the Sellers hereby
agrees that he or it will not make any claim for indemnification against any of
Climax and its Subsidiaries by reason of the fact that he or it was a director,
officer, employee, or agent of any such entity or was serving at the request of
any such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or
demand brought by Team against such Seller (whether such action, suit,
proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
9.10. Assignment of Rights Under Alsana Documents. To the extent
that Team seeks and receives indemnity from the Sellers relating to Adverse
Consequences under Section 9.2.2 above without having first exercised and
received the benefit of Climax' and Alsana's rights of set-off and to seek
indemnity from Xxxx X. Xxxx, Xx. under the Alsana Documents, then, upon the
written request of either Seller, Team shall cause Climax and Alsana to assign
to such Seller their respective rights to set-off and to seek indemnity from
Xxxx X. Xxxx, Xx. under the Alsana Documents.
10. Termination.
10.1. Termination of Agreement. This Agreement may be terminated
as provided below:
10.1.1. Team and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
10.1.2. Team may terminate this Agreement pursuant to the
provisions of Section 4 above;
10.1.3. Team may terminate this Agreement by giving written
notice to the Sellers on or before the 10th day following the later
date to occur of the Delivery Date or the date of the delivery to Team
of the Audit Report pursuant to Section 6.8 above if it is not
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reasonably satisfied with the results of its continuing business,
legal, and accounting due diligence regarding Climax and its
Subsidiaries;
10.1.4. Team may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (A) in the
event any of the Sellers has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, Team has notified the Sellers of the breach, and the breach
has continued without cure for a period of five days after the notice
of breach or (B) if the Closing shall not have occurred on or before
August 31, 1998, by reason of the failure of any condition precedent
under Section 8.1 hereof (unless the failure results primarily from
Team breaching any representation, warranty, or covenant contained in
this Agreement); and
10.1.5. the Sellers may terminate this Agreement by giving
written notice to Team at any time prior to the Closing (A) in the
event Team has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, any of
the Sellers has notified Team of the breach, and the breach has
continued without cure for a period of five days after the notice of
breach or (B) if the Closing shall not have occurred on or before
August 31, 1998, by reason of the failure of any condition precedent
under Section 8.2 hereof (unless the failure results primarily from
any of the Sellers themselves breaching any representation, warranty,
or covenant contained in this Agreement).
10.2. Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
except for any Liability of any Party then in breach.
11. Miscellaneous.
11.1. Press Releases and Public Announcements. Sellers shall not
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of Team. Team
shall, promptly after the execution of this Agreement by the Parties, issue a
press release and make such public disclosure with respect to the Agreement as
it believes in good faith is appropriate and/or is required by applicable law
or any listing or trading agreement concerning its publicly-traded securities
and will use its reasonable best efforts to timely provide the Sellers with a
copy of such press release and public announcement .
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11.2. 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.
11.3. 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 among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
11.4. 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 his or its rights, interests, or obligations hereunder without the prior
written approval of Team and the Sellers; provided, however, that Team may (i)
assign any or all of its rights and interests hereunder to a wholly-owned
subsidiary and (ii) designate a wholly-owned subsidiary to perform its
obligations hereunder (in any or all of which cases under Section 11.4(i) or
Section 11.4(ii), Team nonetheless shall remain unconditionally and absolutely
responsible for the full and immediate performance of all of its and/or its
assignee's obligations hereunder).
11.5. 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.
11.6. 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.
11.7. 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 if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Sellers: Copy to:
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Mr. and Mrs. R. XxXxx Xxxxxx Xxxxxx & Xxxxxxx, P.C.
Climax Portable Machine Tools, Inc. The 0000 Xxxxxxxx, Xxxxx 000
0000 X. Xxxxxx Xxxxxx 0000 X.X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000-0000 Xxxxxxxx, Xxxxxx 00000
Tel: 000-000-0000 Attn: Xx. Xxxx Xxxxxx
Fax: 000-000-0000 Tel: 000-000-0000
Fax: 000-000-0000
Climax Portable Machine Tools, Inc. Stoel Rives LLP
Employee Stock Ownership Plan Trust 000 XX Xxxxx Xxxxxx, Xxxxx 0000
0000 X. Xxxxxx Xxxxxx Xxxxxxxx, Xxxxxx 00000
Xxxxxxx, Xxxxxx 00000-0000 Attn: Xx. Xxxxxxx Xxxxxxxxxx
Attn: Xxxxxxx X. Xxxx, Trustee Tel: 000-000-0000
Xxxxx X. Xxxxxx, Trustee Fax: 000-000-0000
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxxxx X. Xxxx, Trustee Xxxxx Xxxxxx Xxxxxxxx LLP
The Xxxxxxx X. Xxxx Living Trust Xxxxx 0000
0000 X. Xxxxxxxxxxx Xxxx, Xx. 000 0000 X.X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000 Xxxxxxxx, Xxxxxx 00000-0000
Attn: Xxxxxx X. XxxxxXxxxx
Xx. Xxxxx X. Xxxxxx Tel: 000-000-0000
00000 X.X. Xxxxxxx Xxxxx Fax: 000-000-0000
Xxxxxxxxx, Xxxxxx 00000
If to Team: Copy to:
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Team, Inc. Chamberlain, Hrdlicka, White,
000 Xxxxxxx Xxxxx Xxxxxxxx & Xxxxxx
Xxxxx, Xxxxx 00000 0000 Xxxxx Xxxxxx, Xxxxx 0000
P.O. Box 123 Houston, Texas 77002-4310
Xxxxx, Xxxxx 00000-0000 Attn: Xx. Xxxxxx X. Xxxxxxxx
Attn: Xx. Xxxxxxx X. Xxxxxx, President Tel: 000-000-0000
Tel: 000-000-0000 Fax: 000-000-0000
Fax: 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, or ordinary 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.
11.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Oregon without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Oregon or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Oregon.
11.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Team
and the Sellers. 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.
11.10. 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.
11.11. Expenses. Except as otherwise provided in this Agreement,
each of the Parties, Climax and the Subsidiaries will bear his, her or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated
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hereby. The Sellers agree that none of Climax and its Subsidiaries has borne
or will bear any of the Sellers' costs and expenses (including any of their
legal fees and expenses) in connection with this Agreement or any of the
transactions contemplated hereby; provided, however, to the extent that Climax
or any of its Subsidiaries has borne such costs and expenses, the Sellers agree
(i) to cause such costs and expenses to be paid to Climax or such Subsidiary
out of the Purchase Price in Cash at the Closing, or (ii) to reimburse Climax
or such Subsidiary for such costs and expenses by Cash payment at the Closing.
11.12. 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. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
11.13. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.14. Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11.15 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
11.15. Arbitration. All disputes, controversies or claims arising
out of the transaction evidenced by this Agreement, or between or among the
Parties hereto, including but not limited
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to those arising out of or relating to this Agreement or any related
instruments, agreements, or documents, including any claim from an alleged
tort, shall be determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the Rules of
Practice and Procedure for the Arbitration of Commercial Disputes of the
American Arbitration Association or any successor thereof ("AAA"), and the
"Special Rules" set forth below. In the event of any inconsistency, the
Special Rules shall control. Judgment upon any arbitration award may be
entered in any court having jurisdiction. Any Party to this agreement or any
related instruments, agreements, or documents may bring an action, including a
summary or expedited proceeding, to compel arbitration of any controversy or
claim to which this agreement applies in any court having jurisdiction over
such action.
11.15.1. Special Rules. The following "Special Rules" shall
apply to all arbitrations hereunder:
11.15.2. Commencement. All arbitration hearings will be
commenced within 90 days of the demand for arbitration; further, the arbitrator
shall only, upon a showing of cause, be permitted to extend the commencement of
such hearing for up to an additional 60 days.
11.15.3. Three Arbitrators. The arbitration shall be
conducted before a tribunal composed of three neutral arbitrators each of whom
shall sign an oath agreeing to be bound by the code of ethics for arbitrators
in commercial disputes promulgated by the AAA for neutral arbitrators. Each
Party shall appoint an arbitrator, obtain its appointee's acceptance of such
appointment, and deliver written notification of such appointment and
acceptance to the other Party within 30 days after delivery of the notice of
arbitration.
11.15.4. Appointment of Chairman. The two Party-appointed
arbitrators shall jointly appoint the third arbitrator from the AAA "blue
ribbon" panel for commercial disputes. If the appointment of the third
arbitrator is not effected within 30 days, then, upon the joint request of the
Parties or the request of either of them, the appointing authority shall
appoint the third arbitrator, obtain acceptance of such appointment and
acceptance. The third arbitrator shall serve as the chairman of the tribunal.
11.15.5. Qualifications of Chairman. The chairman shall be
a lawyer admitted to the bar of the State of Oregon who shall have practiced
for at least 12 years, shall speak, read and write the English language
fluently, shall have expertise in commercial litigation, and be either a former
judicial officer or an active partner in a law firm of no less than 50 lawyers.
11.15.6. Unavailability of Blue Ribbon Panelists. If for any
reason members of
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the blue ribbon panel are not available to serve as arbitrators or as chairman,
then other commercial arbitrators of the AAA may serve, provided that
preference shall be given to former judicial officers or active partners or
shareholders in a law firm of no less than 50 lawyers with expertise in
commercial litigation.
11.15.7. Impartiality. It is the intent of the Parties to
avoid the appearance of impropriety due to bias or partiality on the part of
any arbitrator. Prior to his or her formal appointment, each arbitrator shall
disclose to the Parties and to the other members of the tribunal, any
financial, fiduciary, kinship or other relationship between that arbitrator and
any Party or its counsel, or between that arbitrator and any individual or
entity with any financial, fiduciary, kinship or other relationship with any
Party. For the purpose of this Agreement, "appearance of impropriety" shall be
defined as such relationship or behavior as would cause a reasonable person to
believe that bias or partiality on the part of the arbitrator may exist in
favor of any Party.
11.15.8. Written Opinion. Any award or portion thereof,
whether preliminary or final, shall be in a written opinion containing findings
of fact and conclusions of law signed by each arbitrator. The arbitrator
dissenting from an award or portion thereof shall issue a dissent from the
award or portion thereof in writing, stating the reasons for his dissent.
11.15.9. Framing of Issues. The notice of arbitration shall
contain a statement of any dispute in sufficient detail to apprise the other
party of (i) the nature and scope of each dispute, (ii) the initiating party's
position and (iii) the relief sought. Each other party shall, within 45 days
after receipt of the notice, or within such other period of time as the parties
may agree, deliver its answer to the initiating party, which shall contain its
statement of the dispute, its positions and any counterclaims and the relief
that it seeks. The initiating party shall then have 45 days, or such other
period of time as the parties may agree, to deliver its reply to any
counterclaim raised in the answer. No amendments to the notice, answer or
reply shall be permitted without the consent of the other parties or of the
arbitrators.
11.15.10. Discovery. The Parties agree that discovery
shall be handled expeditiously. The Parties shall be entitled to a reasonable
number of depositions, the final number which may be decided by the arbitrators
if the Parties cannot agree. Interrogatories and requests for production may
be used by the Parties under the Federal Rules of Civil Procedure. All
disputes regarding discovery shall be promptly resolved by the arbitrators.
11.15.11. Locale. The locale for the arbitration shall
be in Portland, Oregon unless otherwise agreed by the Parties.
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11.15.12. Reservation of Rights. Nothing in this
arbitration provision shall be deemed to limit the applicability of any
otherwise applicable statutes of limitation or repose and any waivers contained
in this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
TEAM:
TEAM, INC.
By:
Xxxxxxx X. Xxxxxx, President
THE BENHAMS:
R. XxXxx Xxxxxx
Xxxxx Xxxxxx
THE ESOP:
CLIMAX PORTABLE
MACHINE TOOLS, INC. EMPLOYEE
STOCK OWNERSHIP PLAN TRUST
By:
Xxxxxxx X. Xxxx, Trustee
By:
Xxxxx X. Xxxxxx, Trustee
By:
R. XxXxx Xxxxxx, Trustee
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THE EDIN TRUST:
The Xxxxxxx Xxxx Living Trust
By:
Xxxxxxx X. Xxxx, Sole Trustee
XXXXXX:
Xxxxx X. Xxxxxx
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EXHIBIT A - SHAREHOLDERS
--------------------------------------------------------------------------------
Name of Seller Number of Climax Shares Held by Such
Seller
--------------------------------------------------------------------------------
R. XxXxx Xxxxxx 6,355
--------------------------------------------------------------------------------
Xxxxx Xxxxxx 6,355
--------------------------------------------------------------------------------
The ESOP 7,662
--------------------------------------------------------------------------------
Xxxxxxx X. Xxxx, Trustee of the Xxxxxxx Xxxx 340
Living Trust
--------------------------------------------------------------------------------
Xxxxx X. Xxxxxx 180
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. "Accredited Investor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. "Adverse Consequences" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. "Affiliated Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. "Alsana" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. "Alsana Bonus" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. "Alsana Documents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8. "Alsana Litigation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9. "Applicable Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10. "Audit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11. "Audit Report" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12. "Audited Financial Statements" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13. "Basis" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14. "Cash" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15. "Climax" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16. "Climax Auditor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17. "Climax Share" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18. "Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19. "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20. "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21. "Confidential Information" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22. "Controlled Group of Corporations" . . . . . . . . . . . . . . . . . . . . . . . 3
1.23. "Deferred Intercompany Transaction" . . . . . . . . . . . . . . . . . . . . . . 3
1.24. "Delivery Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25. "Disclosure Schedule" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26. "Employee Benefit Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27. "Employee Pension Benefit Plan" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28. "Employee Welfare Benefit Plan" . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29. "Environmental, Health, and Safety Laws" . . . . . . . . . . . . . . . . . . . . 4
1.30. "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31. "ESOP Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.35. "Excess Loss Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36. "Extremely Hazardous Substance" . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37. "Fiduciary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.38. "Financial Statement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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1.39. "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.40. "Indemnified Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.41. "Indemnifying Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.42. "Intellectual Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.43. "June 30, 1998 Audited Balance Sheet" . . . . . . . . . . . . . . . . . . . . . 5
1.44. "Knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45. "Liability" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.46. "Most Recent Balance Sheet" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.47. "Most Recent Financial Statements" . . . . . . . . . . . . . . . . . . . . . . . 5
1.48. "Most Recent Fiscal Month End" . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.49. "Most Recent Fiscal Year End" . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.50. "Multiemployer Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.51. "Net Worth Deficit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.52. "Net Worth Surplus" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.53. "Ordinary Course of Business" . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.54. "Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.55. "PBGC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.56. "Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.57. "Problem Disclosures" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.58. "Prohibited Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.59. "Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.60. "Reportable Event" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.61. "SEC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.62. "Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.63. "Securities Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.64. "Security Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.65. "Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.66. "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.67. "Tax" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.68. "Tax Return" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.69. "Team's Auditor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.70. "Team Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.71. "Third Party Claim" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Purchase and Sale of Climax Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1. Basic Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.1. Purchase Price for the Benhams' Climax Shares. . . . . . . . . . . . . . . . . . 8
2.2.2. Purchase Price for the ESOP's Climax Shares. . . . . . . . . . . . . . . . . . . 8
2.2.3. Purchase Price for the Edin Trust's Climax Shares. . . . . . . . . . . . . . . . 9
2.2.4. Purchase Price for Weigel's Climax Shares. . . . . . . . . . . . . . . . . . . . 9
2.3. The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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2.4. Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Representations and Warranties Concerning the Transaction. . . . . . . . . . . . . . . . . . . . . 10
3.1. Representations and Warranties of the Sellers. . . . . . . . . . . . . . . . . . . . . . 10
3.1.1. Organization of the ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.2. Organization of the Edin Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.3. Authorization of Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.4. Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.5. Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.6. Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.7. Climax Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Representations and Warranties of Team. . . . . . . . . . . . . . . . . . . . . . . . 12
3.2.1. Organization of Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2.2. Authorization of Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2.3. Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2.4. Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2.5. Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Preparation and Delivery of Disclosure Schedule--Team's Right to Review. . . . . . . . . . . . . . 13
5. Representations and Warranties Concerning Climax and Its Subsidiaries. . . . . . . . . . . . . . . 14
5.1. Organization, Qualification, and Corporate Power. . . . . . . . . . . . . . . . . . . . 14
5.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3. Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4. Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5. Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.6. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8. Events Subsequent to the date of the Most Recent Financial Statements. . . . . . . . . . 16
5.9. Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.10. Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12. Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.13. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.14. Tangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.16. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.17. Notes and Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.18. Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.19. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.20. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.21. Product Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.22. Product Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.23. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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65
5.24. Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.25. Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.26. Environment, Health, and Safety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.27. Certain Business Relationships with Climax and Its Subsidiaries. . . . . . . . . . . . . 33
5.28. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6. Pre-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2. Notices and Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3. Operation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4. Preservation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5. Full Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6. Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.7. Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8. Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.10. Alsana Bonus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7. Post-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2. Litigation Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.3. Transition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.5. Team Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.6. [Intentionally Deleted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7. June 30, 1998 Audited Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8. Conditions to Obligation to Close. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.1. Conditions to Obligation of Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2. Conditions to Obligation of the Sellers. . . . . . . . . . . . . . . . . . . . . . . . . 41
9. Remedies for Breaches of This Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1. Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . 43
9.2. Indemnification Provisions for Benefit of Team. . . . . . . . . . . . . . . . . . . . . 43
9.3. Indemnification Provisions for Benefit of the Sellers . . . . . . . . . . . . . . . . . 45
9.4. Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.5. Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.6. Indemnification Payments Deemed to be Adjustments to Purchase Price. . . . . . . . . . . 46
9.7. Indemnification for Certain Alsana Litigation. . . . . . . . . . . . . . . . . . . . . . 46
9.8. Limit on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.9. Other Indemnification Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.10. Assignment of Rights Under Alsana Documents. . . . . . . . . . . . . . . . . . . . . . . 47
10. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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66
10.2. Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1. Press Releases and Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2. No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.3. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.4. Succession and Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.6. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.7. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.9. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.11. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.12. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.13. Incorporation of Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . 52
11.14. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.15. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.15.1. Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.2. Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.3. Three Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.4. Appointment of Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.5. Qualifications of Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.6. Unavailability of Blue Ribbon Panelists . . . . . . . . . . . . . . . . . . . . 53
11.15.7. Impartiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.15.8. Written Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.15.9. Framing of Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.15.10. Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.15.11. Locale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.15.12. Reservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
66
67
TABLE OF CONTENTS (Cont'd.)
67
68
TABLE OF CONTENTS (Cont'd.)
68
69
TABLE OF CONTENTS (Cont'd.)
69
70
TABLE OF CONTENTS (Cont'd.)
LIST OF ANNEXES, SCHEDULES AND EXHIBITS:
ANNEX I - Exceptions to Representations and Warranties of the Sellers contained
in Section 3.1.
ANNEX II - Exceptions to Representations and Warranties of the Team contained
in Section 3.2.
DISCLOSURE SCHEDULE - Exceptions to Representations and Warranties of the
Sellers concerning Climax and the Subsidiaries contained in Section 5.
EXHIBIT A - Shareholder List
EXHIBIT B - Financial Statements
EXHIBIT C-1 - Employment Agreement of R. XxXxx Xxxxxx
EXHIBIT C-2 - Employment Agreement of Xxxxxxx X. Xxxx
EXHIBIT C-3 - Employment Agreement of Xxxxx X. Xxxxxx
EXHIBIT D-1 - Opinion of Counsel to the Sellers
EXHIBIT D-2 - Opinion of Counsel to the ESOP
EXHIBIT E - Opinion of Counsel to Team
EXHIBIT F - Escrow Agreement
EXHIBIT G - Adjustments to the Most Recent Balance Sheet
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TABLE OF CONTENTS (Cont'd)
STOCK PURCHASE AGREEMENT
AMONG
TEAM, INC.
AND
X. XXXXX AND XXXXX XXXXXX,
THE CLIMAX PORTABLE MACHINE TOOLS, INC. EMPLOYEE
STOCK OWNERSHIP PLAN TRUST,
XXXXXXX X. XXXX, TRUSTEE OF THE
XXXXXXX XXXX LIVING TRUST,
AND XXXXX X. XXXXXX
DATED AS OF
JULY 3, 1998
71
