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Exhibit 2.1
STOCK PURCHASE AGREEMENT
among
HARCO OFFSHORE, INC.
"Purchaser"
and
AIRLOG INTERNATIONAL, INC.
and
XXXXXX HOLDINGS, INC.
as "Sellers"
and
CORRPRO COMPANIES, INC.
"CORRPRO"
and
OFFSHORE LOGISTICS, INC.
"OLOG"
CONCERNING THE ACQUISITION OF
ALL THE OUTSTANDING SHARES OF
CATHODIC PROTECTION SERVICES COMPANY
June 4, 1997
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TABLE OF CONTENTS
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ARTICLE I PURCHASE PRICE OF SHARES: MANNER OF PAYMENT............................................1
1.1 Purchase Price of Shares......................................................1
1.2 Manner of Payment.............................................................1
1.3 Working Capital Adjustment....................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS
OF AIRLOG..............................................................................3
2.1 Authority of Airlog; Conflicts; Consents......................................3
2.2 Title to Shares...............................................................3
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS
OF CHI.................................................................................4
3.1 Authority of CHI; Conflicts; Consents.........................................4
3.2 Title to Shares...............................................................4
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SELLERS.............................................................................5
4.1 Organization and Standing.....................................................5
4.2 Conflicts; Consents...........................................................5
4.3 Capital Stock.................................................................5
4.4 Investments of the Corporation................................................6
4.5 Outstanding Options and Warrants..............................................6
4.6 Business Relations............................................................6
4.7 Real Property.................................................................6
4.8 Title to and Condition of Assets..............................................7
4.9 Financial Statements..........................................................8
4.10 Absence of Certain Changes....................................................8
4.11 Absence of Undisclosed Liabilities...........................................10
4.12 Taxes........................................................................10
4.13 Indebtedness to Officers, Directors and Shareholders.........................11
4.14 Certificate of Incorporation and By-Laws.....................................12
4.15 Corporate Minutes............................................................12
4.16 Brokerage and Finder's Fees..................................................12
4.17 Accounts Receivable..........................................................12
4.18 Employment Matters...........................................................12
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4.19 No Defaults..................................................................13
4.20 Contracts....................................................................13
4.21 Purchase Orders..............................................................13
4.22 Indebtedness.................................................................13
4.23 Litigation...................................................................13
4.24 Insurance....................................................................14
4.25 Transactions with Officers, Etc..............................................14
4.26 Employees....................................................................15
4.27 Trademarks, Copyrights and Similar Matters...................................15
4.28 Employee Benefit Plans and Other Plans.......................................16
4.29 Environmental Matters........................................................18
4.30 Bank Accounts................................................................20
4.31 Compliance with Laws.........................................................20
4.32 Powers of Attorney...........................................................20
4.33 Licenses and Rights..........................................................20
4.34 Schedule of Government Reports...............................................21
4.35 Products.....................................................................21
4.36 Casualty Occurrences.........................................................21
4.37 Inventory....................................................................21
4.38 Capital Expenditure Plans....................................................21
4.39 Shareholders and Consulting Agreements. ....................................22
4.40 Xxxxxx Agreement.............................................................22
4.41 Certain Employee Bonuses.....................................................22
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
OF PURCHASER..........................................................................22
5.1 Organization and Good Standing of Purchaser..................................22
5.2 Authority of Purchaser.......................................................22
5.3 Investment Purpose...........................................................22
5.4 OLOG Payment.................................................................23
5.5 CHI Payment..................................................................23
5.6 Bank One Payment.............................................................23
5.7 Indemnification..............................................................23
5.8 Net Operating Loss Carryforward..............................................23
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER.............................................................................23
6.1 Representations True.........................................................23
6.2 All Consents Obtained........................................................24
6.3 Performance and Obligations..................................................24
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6.4 Receipt of Documents by Purchaser............................................24
6.5 No Litigation................................................................24
6.6 Delivery of Books and Records................................................24
6.7 Xxxx-Xxxxx-Xxxxxx Compliance.................................................25
6.8 Intercompany Accounts........................................................25
6.9 Shareholders Agreement.......................................................25
6.10 Consulting Agreement.........................................................25
6.11 Supply Agreements Termination................................................25
6.12 Spin-Off of Subsidiaries.....................................................25
6.13 Pipeline Integrity Settlement................................................25
6.14 Employment/Compensation Agreements...........................................25
6.15 Registration Rights Agreement................................................25
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS........................................26
7.1 Representations True.........................................................26
7.2 All Consents Obtained........................................................26
7.3 Performance and Obligations..................................................26
7.4 Receipt of Documents by Sellers..............................................26
7.5 No Litigation................................................................26
7.6 Xxxx-Xxxxx-Xxxxxx Compliance.................................................27
ARTICLE VIII CLOSING...............................................................................27
ARTICLE IX TERMINATION OF AGREEMENT..............................................................27
ARTICLE X SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION; DISPUTES; ESCROW.........................................28
10.1 Survival of Representations and Warranties...................................28
10.2 Sellers' Indemnification. ..................................................28
10.3 Defense of Claim.............................................................29
10.4 Accounts Receivable..........................................................29
10.5 Purchaser's Indemnification..................................................30
10.6 Limitation on Indemnification................................................30
10.7 Escrow.......................................................................31
ARTICLE XI CONDUCT PRIOR TO CLOSING DATE.........................................................33
11.1 Continuation of Business.....................................................33
11.2 Preservation of Business.....................................................34
11.3 Consents and Approvals.......................................................34
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ARTICLE XII ASSIGNMENT, THIRD PARTIES, BINDING EFFECT.............................................34
ARTICLE XIII EXPENSES..............................................................................35
ARTICLE XIV NOTICES...............................................................................35
ARTICLE XV REMEDIES..............................................................................36
ARTICLE XVI NON-COMPETITION.......................................................................37
16.1 Non-Competition Agreement....................................................37
16.2 Disclosure of Confidential Information.......................................38
ARTICLE XVII BENEFIT PLANS AGREEMENTS..............................................................38
17.1 401(k) Plan..................................................................38
17.2 Welfare Plans................................................................39
ARTICLE XVIII SUBSIDIARIES..........................................................................39
ARTICLE XIX OFFSHORE LOGISTICS, INC. GUARANTEE....................................................40
ARTICLE XX CORRPRO COMPANIES, INC. GUARANTEE.....................................................40
ARTICLE XXI MISCELLANEOUS.........................................................................41
21.1 Counterparts.................................................................41
21.2 Captions and Section Headings................................................41
21.3 Waivers......................................................................41
21.4 Right of Inspection..........................................................41
21.5 Amendments, Supplements or Modifications.....................................41
21.6 Entire Agreement.............................................................41
21.7 Governing Laws...............................................................42
21.8 Knowledge....................................................................42
21.9 Press Releases...............................................................42
21.10 Supplemental Disclosure......................................................42
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CPS ACQUISITION CORP., AIRLOG INTERNATIONAL, INC. and XXXXXX HOLDINGS,
INC. STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 4th day of
June, 1997, among Harco Offshore, Inc. ("Purchaser"), an Ohio corporation and
wholly-owned subsidiary of Corrpro Companies, Inc., an Ohio corporation
("Corrpro"), Airlog International, Inc. ("Airlog"), a corporation organized
under the laws of Panama and a wholly-owned subsidiary of Offshore Logistics,
Inc., a Delaware corporation ("OLOG"), Xxxxxx Holdings, Inc., a Delaware
corporation ("CHI" and, together with Airlog, "Sellers" or individually each a
"Seller"), Corrpro and OLOG.
R E C I T A L S:
----------------
A. Sellers own all the issued and outstanding shares of capital stock
of Cathodic Protection Services Company, a Delaware corporation (the
"Corporation").
B. On the terms and subject to the conditions of this Agreement, and
subject to the performance by the parties of their respective obligations under
this Agreement, Sellers desire to sell, and Purchaser desires to purchase, all
the issued and outstanding shares of capital stock of the Corporation at the
"Closing" (as hereinafter defined) for the purchase price described in Article I
of this Agreement.
NOW, THEREFORE, Purchaser, Sellers, Corrpro and OLOG intending to be
legally bound, agree as follows:
ARTICLE I
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PURCHASE PRICE OF SHARES: MANNER OF PAYMENT
-------------------------------------------
1.1 PURCHASE PRICE OF SHARES. On the terms and subject to the
conditions of this Agreement, Sellers shall, with all transfer taxes of any kind
prepaid, convey, assign and transfer to Purchaser at the Closing all the Shares
(as defined in Section 4.3), free and clear of all liens, charges, security
interests, adverse claims, pledges, encumbrances and demands whatsoever.
Purchaser shall purchase all the Shares for an aggregate purchase price of the
difference of (a) Fifteen Million Dollars ($15,000,000.00) and (b) the sum of
the amounts to be paid pursuant to Sections 5.4, 5.5 and 5.6 (the "Purchase
Price"), subject to adjustment in accordance with Section 1.3 below.
1.2 MANNER OF PAYMENT. The Purchase Price will be payable by Purchaser
to Sellers at the Closing as follows:
(a) Seven Hundred Fifty Thousand Dollars ($750,000.00) (the
"Escrow Amount") by certified or official bank check in immediately
available funds to a banking institution reasonably acceptable to
Purchaser and Sellers as escrow agent under an escrow agreement in form
and substance reasonably acceptable to Purchaser and Sellers and
consistent with the provisions of Section 10.7 below; and
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(b) the balance of the Purchase Price by certified or official
bank check in immediately available funds or by wire transfer of next
day funds to an account or accounts designated by Sellers.
1.3 WORKING CAPITAL ADJUSTMENT.
(a) The Purchase Price shall be adjusted based on the change
in Working Capital (as defined below) from March 31, 1997 to the
Closing Date (the "Working Capital Adjustment"). If the Working Capital
Adjustment is positive, then the Purchase Price shall be increased by
the amount of the Working Capital Adjustment. If the Working Capital
Adjustment is negative, then the Purchase Price shall be reduced by the
amount of the Working Capital Adjustment. Notwithstanding the
foregoing, the Purchase Price shall be reduced only to the extent that
any negative Working Capital Adjustment is greater than Two Hundred
Fifty Thousand Dollars ($250,000.00).
(b) As promptly as possible, but in any event within sixty
(60) days after the Closing, Purchaser will deliver to Airlog a
schedule setting forth the calculation of the Working Capital
Adjustment (the "Adjustment Schedule"), together with the written
report of Purchaser's independent certified public accountants, stating
that, in their opinion, such schedule fairly states the Working Capital
Adjustment in accordance with the provisions of this Agreement. Airlog
and its independent certified public accountants, shall have the right
to observe and comment upon the preparation of such schedule, including
the taking of a physical inventory, which physical inventory shall be
taken at Purchaser's expense on the Closing Date. Within thirty (30)
days after receipt of the Adjustment Schedule by Airlog, Airlog may
notify Purchaser in writing that such schedule does not fairly state
the Working Capital Adjustment in accordance with the provisions of
this Agreement, setting forth in full the respects in which it fails to
do so and the reasons for reaching that conclusion. In the event that
Purchaser and Airlog are unable to resolve any dispute so raised within
sixty (60) days after receipt of the Adjustment Schedule by Airlog,
they shall appoint an independent "big six" accounting firm acceptable
to both of them, whose expenses will be shared equally by Sellers, on
the one hand, and Purchaser, on the other hand. Such accounting firm
shall as promptly as possible determine whether the Adjustment Schedule
fairly states, in accordance with the provisions of this Agreement, the
values of the items as to which Airlog has taken issue and, if such
firm concludes that it does not do so with respect to any of such
items, the value which in such firm's opinion does so shall be final
and dispositive. The determination of the Working Capital Adjustment by
such third firm shall be conclusive and binding on the parties hereto.
(c) Within five (5) days after receipt of the report by such
accounting firm or the settlement of any dispute, or within thirty-five
(35) days following receipt of the Adjustment Schedule by Airlog if no
dispute exists, and subject to the last sentence of the preceding
paragraph (a), payment shall be made of the Working Capital Adjustment,
if any. If the Working Capital Adjustment is positive, such amount
shall be paid by Purchaser to Sellers,
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pro rata. If the Working Capital Adjustment is negative in excess of
Two Hundred Fifty Thousand Dollars ($250,000.00), then such excess
amount shall be paid by Sellers, pro rata, to Purchaser.
(d) For purposes of calculating the Working Capital
Adjustments, the term "Working Capital" shall mean, as of any date, the
Corporation's current assets (as defined on Schedule 1.3 attached
hereto) less current liabilities (as defined on Schedule 1.3 attached
hereto) as of such date, all calculated in accordance with generally
accepted accounting principles ("GAAP"), on a basis consistent with the
preparation of Schedule 1.3 attached hereto (including with respect to
the line items shown thereon) and the March 31, 1997 balance sheet of
the Corporation, with inventory being valued at the lower of cost,
determined by the first-in, first-out method ("FIFO"), or market.
ARTICLE II
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF AIRLOG
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Airlog represents and warrants to, and covenants with, Purchaser as
follows:
2.1 AUTHORITY OF AIRLOG; CONFLICTS; CONSENTS.
(a) The execution, delivery and consummation of this Agreement
by Airlog has been duly authorized by the board of directors (or other
governing body of Airlog) and, if required, the shareholders of Airlog,
in accordance with all applicable laws and the Certificate of
Incorporation (or other charter instrument) and By-laws of Airlog and,
at the "Closing Date" (as defined below), no further action will be
necessary on the part of Airlog or any of Airlog's shareholders to make
this Agreement valid and binding on Airlog in accordance with its
terms. The execution, delivery and consummation of this Agreement by
Airlog (i) is not contrary to its Certificate of Incorporation (or
other charter instrument) or By-laws, and (ii) does not now and will
not, with the passage of time, the giving of notice or otherwise,
result in a violation or breach of, or constitute a default under, any
term or provision of any indenture, mortgage, deed of trust, lease,
instrument, order, judgment, decree, rule, regulation, law, contract,
agreement or any other restriction to which Airlog is a party or to
which Airlog or any of Airlog's assets is subject or bound.
(b) Except as may be listed on Schedule 2.1, no approval or
consent of any person, firm or other entity or governmental body is or
was required to be obtained by Airlog for the authorization of this
Agreement or the consummation by Airlog of the transactions
contemplated by this Agreement.
2.2 TITLE TO SHARES. Airlog owns 6,000,000 shares of the Corporation's
Class A Common Stock, par value $.01 per share (the "Airlog Shares"). The Airlog
Shares are owned by Airlog of record and beneficially with good and marketable
title thereto, free and clear of all liens, charges,
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security interests, adverse claims, pledges, encumbrances and demands
whatsoever. Airlog has not agreed to issue, purchase, sell or transfer any
shares of capital stock or other equity interest of the Corporation, except as
provided in this Agreement.
ARTICLE III
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHI
------------------------------------------------
CHI represents and warrants to, and covenants with, Purchaser as follows:
3.1 AUTHORITY OF CHI; CONFLICTS; CONSENTS.
(a) The execution, delivery and consummation of this Agreement
by CHI has been duly authorized by the board of directors and, if
required, the shareholders of CHI, in accordance with all applicable
laws and the Certificate of Incorporation and By-laws of CHI and, at
the "Closing Date" (as defined below), no further action will be
necessary on the part of CHI or any of CHI's shareholders to make this
Agreement valid and binding on CHI in accordance with its terms. The
execution, delivery and consummation of this Agreement by CHI (i) is
not contrary to its Certificate of Incorporation or By-laws, and (ii)
does not now and will not, with the passage of time, the giving of
notice or otherwise, result in a violation or breach of, or constitute
a default under, any term or provision of any indenture, mortgage, deed
of trust, lease, instrument, order, judgment, decree, rule, regulation,
law, contract, agreement or any other restriction to which CHI is a
party or to which CHI or any of CHI's assets is subject or bound.
(b) Except as may be listed on Schedule 3.1, no approval or
consent of any person, firm or other entity or governmental body is or
was required to be obtained by CHI for the authorization of this
Agreement or the consummation by CHI of the transactions contemplated
by this Agreement.
3.2 TITLE TO SHARES. CHI owns 2,000,000 shares of the Corporation's
Common Stock, par value $.01 per share (the "CHI Shares"). The CHI Shares are
owned by CHI of record and beneficially with good and marketable title thereto,
free and clear of all liens, charges, security interests, adverse claims,
pledges, encumbrances and demands whatsoever. CHI has not agreed to issue,
purchase, sell or transfer any shares of capital stock or other equity interest
of the Corporation, except as provided in this Agreement.
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ARTICLE IV
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
----------------------------------------------------
Sellers, severally but not jointly, and proportionately, represent and
warrant to, and covenant with, Purchaser as follows:
4.1 ORGANIZATION AND STANDING.
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Corporation has full power and authority to carry on its business
as and where now conducted and to own or lease and operate its
properties at and where now owned or leased and operated by it, and is
duly qualified to do business and is in good standing in every
jurisdiction in which the property owned, leased or operated by it, or
the nature of the business conducted by it, makes such qualification
necessary, except where the failure to so qualify would not have a
material adverse effect on the business or financial condition of the
Corporation. The Corporation's failure to qualify to do business in the
States of Illinois and Kansas will not have a material adverse effect
on the business or financial condition of the Corporation.
(b) Set forth on Schedule 4.1 is a true and correct list of
all jurisdictions in which the Corporation is qualified to do business
as a foreign corporation and each jurisdiction where the Corporation
owns or leases property.
4.2 CONFLICTS; CONSENTS. The execution, delivery and consummation of
this Agreement by Sellers (i) is not contrary to the Certificate of
Incorporation or By-laws of the Corporation, (ii) does not now and will not,
with the passage of time, the giving of notice or otherwise, result in a
violation or breach of, or constitute a default under, any term or provision of
any indenture, mortgage, deed of trust, lease, instrument, order, judgment,
decree, rule, regulation, law, contract, agreement or any other restriction to
which the Corporation is a party or to which the Corporation or any of its
assets is subject or bound except where such violation, breach or default would
not have a material adverse effect on the business or financial condition of the
Corporation, (iii) will not result in the creation of any material lien or other
charge upon any assets of the Corporation, and (iv) will not result in any
acceleration or termination of any loan or security interest agreement to which
the Corporation is a party or to which the Corporation or any of its assets is
subject or bound and that will be set forth on Schedule 4.20 when delivered by
Sellers in accordance with Section 4.20 hereof.
4.3 CAPITAL STOCK. The Corporation is authorized to issue 6,000,000
shares of Class A Common Stock, par value $.01 per share, all of which shares
are issued and outstanding (the "Class A Common Shares"), 20,000,000 shares of
Common Stock, par value $.01 share, 2,000,000 shares of which are issued and
outstanding (the "Common Shares") and 100,000 shares of Preferred Stock, par
value $.01 per share, none of which are issued and outstanding (the "Preferred
Shares"). The outstanding Class A Common Shares and Common Shares are
collectively referred to as the
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"Shares". All the Shares are duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of preemptive or any other rights
of any shareholder.
4.4 INVESTMENTS OF THE CORPORATION. Other than the subsidiaries listed
on Schedule 4.4 (the "Subsidiaries"), the Corporation has no direct or indirect
equity, debt or other interest in any entity, corporate or otherwise, or any
right, warrant or option to acquire any such interest. Schedule 4.4 lists the
name of each Subsidiary, the number of shares of capital stock of such
Subsidiary owned, directly or indirectly, by the Corporation and the
corresponding percentage ownership of the voting securities of each such
Subsidiary owned by the Corporation, and each Subsidiary's jurisdiction of
incorporation.
4.5 OUTSTANDING OPTIONS AND WARRANTS. There are no subscriptions,
options, warrants, rights, puts, calls, commitments or agreements (respecting
issuance, redemption, repurchase, voting or otherwise) relating to, nor any
outstanding securities convertible into, any shares of capital stock or other
equity interest of the Corporation, or into any such convertible securities, and
the Corporation has not agreed to issue, purchase, sell or transfer any of same,
except as provided in this Agreement.
4.6 BUSINESS RELATIONS. Other than as set forth on Schedule 4.6(a), the
Corporation is not required, in the ordinary course of business, to provide any
bonding or any other financial security arrangements in connection with any
transactions with any customers or suppliers. Neither Sellers nor the
Corporation has knowledge of any disruption (including, without limitation,
delayed deliveries or allocations by suppliers) in the availability of any
materials or products used in the Corporation's business which disruption would
have a material adverse effect on the business or financial condition of the
Corporation, and has no reason to believe that any such disruption will occur.
There are no sole source suppliers of goods, equipment or services used by the
Corporation (other than public utilities) with respect to which practical
alternative sources of supply are unavailable. Other than as set forth on
Schedule 4.6(b), no single customer of the Corporation accounted for greater
than five percent (5%) of the Corporation's gross revenues for either the most
recently completed fiscal year or the portion of the current fiscal year ended
March 31, 1997.
4.7 REAL PROPERTY.
(a) Schedule 4.7(a) is a true and complete list of (i) all
real property leases to which the Corporation is a party and (ii) all
options, deeds of trust, deeds of declaration, mortgages and land
contracts pursuant to or in which the Corporation has any interest
(collectively, the "Real Property"). Sellers have furnished to
Purchaser or its counsel true and complete copies of each written
contract and a written description of each oral contract relating to
the list set forth on Schedule 4.7(a). The Corporation owns no real
property.
(b) With respect to the leased property comprising the Real
Property including all leasehold improvements (collectively, the
"Leased Property"), except as set forth on Schedule 4.7(b):
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(i) All leases are in writing and are duly executed
and, where required, witnessed, acknowledged and recorded to
make them valid and binding and in full force and effect for
their full term, and none have been modified, amended, sublet
or assigned;
(ii) The rental set forth in each such lease is the
actual rental being paid, and there are no separate agreements
or understandings with respect to the same not set forth on
Schedule 4.7(b);
(iii) Where the Corporation is the lessee, the lessee
under each such lease has the full right to exercise any
renewal option and on due exercise will be entitled to enjoy
the use of the leased premises for the full term of such
renewal option, and such renewal option does not terminate on
assignment of such lease;
(iv) There is no default by the Corporation or, to the
knowledge of Sellers, any other party which materially affects
the Leased Property;
(v) Where the Corporation is the lessee, on performance
by the lessee of the terms of each lease (all of which terms
have been fully performed by the lessee as of the date of this
Agreement and will have been fully performed as of the Closing
Date), the lessee has the full right to enjoy the use of the
premises demised for the full term of the lease without
disturbance by any other party, and there are no written or
oral contracts between the Corporation and any third party
relating to any claim by such third party of any right to all
or any part of the interest of the Corporation in any
leasehold estate or otherwise relating to the use and
occupancy by the Corporation of such estate;
(vi) Except as set forth on Schedule 4.7(b), all
security deposits required by such leases have been made and
have not been refunded or returned, or their forfeiture
claimed, in whole or in part, by any lessor; and
(vii) Where the Corporation is the lessee, all leasehold
improvements are in good operating or working condition and
repair, after taking into account ordinary wear and tear, and
are reasonably adequate for the operation of the business of
the Corporation as presently conducted. All contributions
required to have been paid by any lessor of property in
respect of any leasehold improvements have been paid.
4.8 TITLE TO AND CONDITION OF ASSETS. Except as set forth on Schedule
4.8, the Corporation owns and possesses all right, title and interest in and to
its material assets, including, without limitation (i) valid and subsisting
leasehold interests in all leasehold estates comprising the Real Property and
(ii) good and merchantable title to all material properties and assets other
than the Real Property, in each case free and clear of all material conveyances,
conditions, easements, liens, charges, security interests, adverse claims,
encumbrances, encroachments, reservations, easements, limitations, servitudes,
other title defects or restrictions of any nature. All tangible assets of the
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Corporation having a net book value at March 31, 1997 in excess of Five Thousand
Dollars ($5,000.00) or acquired since March 31, 1997 are in the Corporation's
possession or under its respective control, and all equipment used by the
Corporation is in good operating condition and repair, subject only to routine
maintenance, and is reasonably fit and adequate for the purposes intended. The
Corporation enjoys peaceful and quiet possession of its assets pursuant to or by
all of the deeds, bills of sale, leases, licenses and other agreements under
which it is operating its business.
4.9 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Sellers
have provided Purchaser with the consolidated financial statements of the
Corporation and the Subsidiaries listed below (the "Financial Statements") and
will provide to Purchaser monthly financial statements for the months after
April 30, 1997 (the "New Monthly Financial Statements") as soon as practicable
after the end of each month:
(a) Audited Balance Sheets at June 30, 1995 and 1996;
(b) Audited Statement of Operations and Cash Flows for the
nine months ended June 30, 1995 and the year ended June 30, 1996;
(c) Unaudited Balance Sheet at April 30, 1997; and
(d) Unaudited Statement of Operations and Cash Flows for the
ten months ended April 30, 1997.
The Financial Statements (and, with respect to the New Monthly
Financial Statements, when delivered, will or will be as the content may
require) (i) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods, (ii) present fairly
in all material respects, the Corporation's financial position, results of its
operations and changes in its financial position and cash flows at and for the
periods therein specified in accordance with GAAP, except, with respect to the
unaudited financial statements only, for notes and normal recurring adjustments,
and (iii) are consistent with the books and records of the Corporation.
4.10 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 4.10,
since March 31, 1997, the Corporation has actively conducted its business in the
ordinary and regular course consistent with past practice. Since such date,
there has not been any material adverse change in the business, condition
(financial or otherwise), assets, liabilities, or results of operations of the
Corporation. Except as set forth on Schedule 4.10, without limiting the
generality of the foregoing, since March 31, 1997, there has not been:
(a) Any increase made or promised in the compensation or other
remuneration payable or to become payable by the Corporation to any of
its employees, agents or partners;
(b) Any mortgage or pledge of, or any other lien, charge or
encumbrance of any kind, on any of the assets, tangible or intangible,
of the Corporation;
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(c) Any sale or transfer of any assets, except for sales of
inventory in the ordinary course of business, or settlement,
cancellation or release of any indebtedness owing to the Corporation or
of any other claims of the Corporation;
(d) Any sale, license, assignment or transfer by the
Corporation of any patents, trademarks, trade names or other similar
intangible assets;
(e) Any amendments or termination of any material contract,
agreement or license to which the Corporation is a party or to which
the Corporation or any of its assets are subject or bound;
(f) Any commitment made (through negotiations or otherwise) or
any liability incurred to any labor organization by the Corporation;
(g) Any payment, declaration or setting aside by the
Corporation of dividends or a return of capital or any distribution by
the Corporation of any cash or other assets to any shareholder in
redemption of or as the purchase price for any of the Corporation's
capital stock or equity or in discharge or cancellation in whole or in
part of any indebtedness owing (whether in payment of principal,
interest or otherwise) to any shareholder;
(h) Any discharge or satisfaction by the Corporation of any
lien, encumbrance, obligation or liability (accrued, absolute, fixed or
contingent), other than those shown on the March 31, 1997 balance sheet
of the Financial Statements that have been discharged or satisfied in
the ordinary course without acceleration and other than those incurred
and discharged in the ordinary course of business consistent with past
practice;
(i) Any material transaction entered into by the Corporation
other than in the ordinary course of business consistent with past
practice;
(j) Any institution of a bonus, stock option, profit-sharing,
pension plan or similar arrangement for the Corporation's employees or
any changes in any such existing plans;
(k) Any incurrence by the Corporation (whether discharged or
not) of any obligation or liability (whether accrued, absolute, fixed
or contingent) other than current liabilities incurred, and obligations
entered into, in the ordinary course of business consistent with past
practice;
(l) Any material adverse change in collection loss experience;
(m) Any material loss, damage or destruction to any of the
Corporation's material properties (whether or not covered by insurance)
or any labor trouble;
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(n) Any payments in cash or otherwise by the Corporation to
Sellers or any affiliate pursuant to a tax sharing arrangement or any
other type of intercompany agreement; or
(o) Any change in accounting principles or practices from
those utilized in the preparation of the Financial Statements.
4.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
March 31, 1997 balance sheet of the Financial Statements or on Schedule 4.11,
the Corporation is not obligated for, nor are any of its assets or properties
subject to, any material liabilities or adverse claims or obligations, absolute
or contingent, except those incurred in the ordinary course of business since
March 31, 1997, and the Corporation is not in default with respect to any terms
or conditions of any material liability or obligation. There are no facts known
to Sellers that might reasonably serve as a basis, in whole or in part, for any
material liabilities or obligations not disclosed in this Agreement, in the
Financial Statements, in the New Monthly Financial Statements or in the
Schedules attached hereto.
4.12 TAXES.
(a) The Corporation has paid in full or made adequate
provision in the Financial Statements and the New Monthly Financial
Statements for the payment of all taxes (including penalties, additions
to tax and interest) for which it has or may have liability as a result
of the operation of its business through and including the Closing
Date, except where any such individual failure to pay or make adequate
provision therefor would not result in a liability to the Corporation
in excess of Five Hundred Dollars ($500.00). Except as otherwise
provided herein, all income, franchise, sales, withholding and other
tax returns and reports of every nature filed by the Corporation
(including any consolidated or combined return filed by it and any
affiliated person or entity) ("Tax Returns") are true, correct and
complete in all material respects. Sellers have no knowledge of any
unassessed tax deficiency proposed or threatened against the
Corporation as a result of the operation of its business. There are no
material liens on the Corporation's assets as a result of any tax
liabilities except for taxes not yet due and payable. To Seller's
knowledge, there are no tax deficiencies (including penalties,
additions to tax and interest) of any kind assessed against or relating
to the Corporation with respect to any taxable period ending on or
before the Closing Date. To Sellers' knowledge, there are no federal
income tax deficiencies assessed against the Corporation pursuant to
Treasury Regulations Section 1.1502-6. To Seller's knowledge there are
no other tax deficiencies relating to Tax Returns which include the
Corporation for periods ending on or before the Closing Date. As to all
tax periods, or portions thereof, which end prior to, or include, the
Closing Date for which no Tax Returns are yet due, the liability of the
Corporation for taxes allocable to periods (or portions thereof) ending
on or before the Closing Date does not exceed the amount accrued on the
Financial Statements or the New Monthly Financial Statements for such
taxes.
(b) The Corporation is not a party to any action or proceeding
by any governmental authority for the assessment or collection of
taxes, nor, to the knowledge of
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Sellers, has any such event been asserted or threatened. The
Corporation has not filed any consent of the type described under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), nor is it subject to any accumulated earnings penalties. The
Corporation has not made any payments, is not obligated to make any
payments, or is not a party to any agreement that under certain
circumstances could oblige it to make any payments that would not be
deductible under Section 280G of the Code. The Corporation has not been
a United States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
(c) Except as set forth on Schedule 4.12, there are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local, or foreign Tax
Return of the Corporation for any period. The federal income tax
returns which include the Corporation have not been audited by the
Internal Revenue Service since September 30, 1994.
(d) The Corporation has furnished to Purchaser complete and
correct copies of all federal income tax returns of the Corporation for
all taxable years beginning on or after September 30, 1994. The
Corporation has furnished to Purchaser complete and correct copies of
all state, local and foreign income or franchise tax returns filed by
the Corporation for each of their respective taxable years beginning
after September 30, 1994.
(e) Sellers have furnished to Purchaser complete and correct
copies of all audit reports (or portions thereof) received by Sellers
from the U.S. Treasury Department which relate to the Corporation for
any taxable period beginning after September 30, 1994. Sellers have
furnished or, prior to the Closing will furnish, to Purchaser complete
and correct copies of all audit reports (or portions thereof) received
by Sellers or the Corporation from any state, local or foreign taxing
authority, which relate to the Corporation for any taxable period
beginning after September 30, 1994.
(f) Schedule 4.12 sets forth all tax elections made by the
Corporation, all adjustments under Section 481(a) of the Code which
will affect the taxes of Purchaser for all taxable years which end on
or after the Closing Date and all tax rulings or closing agreements to
which the Corporation is a party. Schedule 4.12 sets forth all
jurisdictions in which the Corporation has filed or will file state
income or franchise tax returns for each taxable period, or portion
thereof, ending on or before the Closing Date.
(g) There are no tax sharing agreements or similar
arrangements in effect that include the Corporation.
(h) Since September 30, 1994, the Corporation has not been a
member of any group that filed a combined, unitary or consolidated
federal, state or local Tax Return other than Tax Returns filed by the
Corporation which included only the Subsidiaries.
4.13 INDEBTEDNESS TO OFFICERS, DIRECTORS AND SHAREHOLDERS. Except as
set forth on Schedule 4.13, the Corporation is not indebted to any of its
shareholders, officers or directors (or to
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members of their immediate families) in any amount whatever other than for
salaries payable or for expenses incurred on behalf of the Corporation in the
ordinary course of business.
4.14 CERTIFICATE OF INCORPORATION AND BY-LAWS. True, accurate and
complete copies of the Certificate of Incorporation and By-laws of the
Corporation, together with all amendments thereto, have been delivered to
Purchaser or its counsel.
4.15 CORPORATE MINUTES. Sellers have furnished or made available to
Purchaser and its counsel the corporate record books of the Corporation and the
same are accurate and complete and reflect all resolutions adopted and all
actions taken, authorized or ratified by the shareholders and directors of the
Corporation. Copies of all corporate minutes of meetings held and of all written
actions taken after the date of this Agreement will be furnished to Purchaser
promptly, and in all events, prior to the Closing Date.
4.16 BROKERAGE AND FINDER'S FEES. Except for fees payable to Xxxxxxx &
Company International which will be paid by Sellers, neither Sellers nor any
officer, director or agent of the Corporation has incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees, or commissions
with respect to the transactions contemplated by this Agreement.
4.17 ACCOUNTS RECEIVABLE. Sellers have previously delivered to
Purchaser an aging schedule as of March 31, 1997, which is true, correct and
complete, of the accounts receivables, both trade and non-trade, of the
Corporation as of that date. The reserves for doubtful receivables and
uncollectible accounts that will be reflected on the books of the Corporation as
of the Closing Date will be sufficient to provide for any losses that may arise
in connection with the collection of the accounts receivable. The accounts
receivable as reflected on the books of the Corporation as of the Closing Date
(the "Closing Date Accounts Receivable") will represent valid claims that have
arisen in the ordinary course of business.
4.18 EMPLOYMENT MATTERS.
(a) Except as set forth on Schedule 4.18, the Corporation is
not a party to, participant in, or bound by, any collective bargaining
agreement, union contract or employment, bonus, deferred compensation,
insurance, pension, profit sharing or similar personnel arrangement,
any stock purchase, stock option or other stock plans or programs or
any employee termination or severance arrangement.
(b) Except as set forth on Schedule 4.18, the employment by
the Corporation of any person (whether or not there is a written
employment agreement) is "at will" and may be terminated for any reason
whatsoever not inconsistent with current law, without penalty or
liability of any kind other than accrued vacation pay.
(c) Except as set forth on Schedule 4.18, there are no active,
pending or, to Sellers' knowledge, threatened administrative or
judicial proceedings under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Fair Labor Standards Act,
the Occupational Safety and Health Act, the National Labor Relations
Act or
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any other foreign, federal, state or local law (including common law),
ordinance or regulation relating to employees of the Corporation.
(d) There are no pending or, to Sellers' knowledge,
threatened, labor difficulties.
4.19 NO DEFAULTS. The Corporation is not in default (nor is any such
default alleged to exist) under the terms of any written or oral contract,
agreement, lease, license, mortgage, deed of trust, note, guaranty, instrument
or understanding including, without limitation, any contract or agreement with
any of the Corporation's customers, to which it is a party or to which any of
its assets, business or operations is subject (collectively, "Contracts") where
such default would have a material adverse effect on the business or financial
condition of the Corporation, nor, to Sellers' knowledge, is any condition or
event threatened, which, after notice or the passage of time, or both, would
constitute such a default under any such Contract. To Sellers' knowledge, no
such default, condition or event exists or is alleged to exist with respect to
the performance of any obligation of any other party to any of such Contracts.
4.20 CONTRACTS. Schedule 4.20 when delivered by Sellers will be a true
and correct list of each Contract to which the Corporation is a party or by
which any of its assets, businesses or operations is bound or affected. Schedule
4.20 when delivered will include a description of any default under any such
Contracts and any consents or approvals required of third parties under the
terms of such Contracts for the consummation of the transactions contemplated by
this Agreement. Schedule 4.20 when delivered will exclude any Contract that (i)
may be cancelled by the Corporation on thirty (30) days' notice or less without
incurring a liability or obligation on the part of the Corporation for such
cancellation, or (ii) involves or is reasonably expected to involve the payment
of consideration having an aggregate value of less than Fifty Thousand Dollars
($50,000.00). A true, correct and complete copy of each written, and a
description of each oral, Contract, so listed has been delivered to Purchaser or
its counsel. Sellers will deliver Schedule 4.20 to Purchaser on or before the
fourteenth (14th) business day after the date of this Agreement at which time
such schedule will be incorporated into and made a part of this Agreement with
the same effect as if delivered on the date hereof.
4.21 PURCHASE ORDERS. Schedule 4.21 is a true and complete list of all
purchase orders under which the Corporation is or will become obligated to pay
any particular vendor an aggregate sum in excess of Fifty Thousand Dollars
($50,000.00).
4.22 INDEBTEDNESS. Schedule 4.22 is a true and complete list of all
indebtedness for borrowed money, including a description of the terms of
payment, and, if such indebtedness is secured, a description of all properties
or other assets pledged, mortgaged or otherwise hypothecated (voluntarily or
involuntarily) as security.
4.23 LITIGATION. Schedule 4.23 is a true and complete list of all
administrative or judicial proceedings to which the Corporation is a party
(other than workers' compensation claims arising in the ordinary course of
business as a result of which the Corporation is not reasonably likely to incur
liabilities in excess of Fifty Thousand Dollars ($50,000.00)) or, to the
knowledge of Sellers, to which it is threatened to be made a party which relate,
directly or indirectly, to any of the
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Corporation's assets, including, without limitation, proceedings that could
affect title to or interests in the assets. There is no action, suit, claim,
demand, arbitration or other proceeding or investigation, administrative or
judicial, pending or, to the knowledge of Sellers, threatened against or
affecting the Corporation or any of its assets, including, without limitation,
any relating to so-called product liability, which, if adversely determined or
resolved, would have a material adverse effect on the business or financial
condition of the Corporation, or any provisions of, or the validity of, or
rights under, any material leases or other operating agreements, licenses,
permits or grants of authority of the Corporation. Neither Sellers nor the
Corporation has received notice that the Corporation is the subject of any
governmental investigation and the Corporation is not subject to, nor is it or,
to Sellers' knowledge, has it been in default with respect to, any order, writ,
injunction or decree of any court, or of any federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. Schedule 4.23 indicates which of the matters listed are
covered by valid insurance and the extent of such coverage.
4.24 INSURANCE. Schedule 4.24 is a true and correct list of all the
policies of insurance covering the business, properties and assets of the
Corporation presently in force (including as to each (i) risk insured against,
(ii) name of carrier, (iii) policy number, (iv) amount of coverage, (v) amount
of premium, (vi) expiration date and (vii) the property, if any, insured),
indicating as to each whether it insures on an "occurrence" or a "claims made"
basis. All of the insurance policies set forth on Schedule 4.24 are in full
force and effect and all premiums, retention amounts and other related expenses
due have been paid, and the Corporation has not received any notice of
cancellations with respect to any of the policies. The Corporation has not been
refused any insurance by any insurance carrier to which it has applied for
insurance since September 30, 1994. To Sellers' knowledge, there are no
circumstances existing which would enable any insurer to avoid liability under
any of the Corporation's policies.
4.25 TRANSACTIONS WITH OFFICERS, ETC.
(a) Schedule 4.25(a) is a true and correct list of the
ownership of the Corporation in any entity that has any existing
contractual relationship, oral or written, or other business
relationship with Sellers.
(b) Schedule 4.25(b) is a true and correct list of all
Contracts (oral or written), including, but not limited to, any loans
(other than those set forth on Schedule 4.13 of this Agreement or not
required to be set forth thereon) or leases, to which the Corporation
is a party and to which any of the officers, directors or other
employees or shareholders of the Corporation, or members of their
immediate families or other corporations, partnerships or other
entities in which any of them has a material interest, is also a party.
Schedule 4.25(b) includes a list of indebtedness of any such person or
entity to the Corporation.
(c) Except as set forth on Schedule 4.25(c) none of the
Corporation or any officer, director, employee or shareholder of the
Corporation, or members of their immediate families or other
corporations, partnerships or other entities in which any of them has a
material interest, has any direct or indirect interest in any
competitor, supplier or customer of the Corporation or in any person,
firm or entity from whom or to whom the Corporation leases
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any property, or in any other person, firm or entity with whom the
Corporation transacts business of any nature.
4.26 EMPLOYEES. Schedule 4.26 is a true and correct list of all
employees of the Corporation and their accrued vacation and sick pay as of March
31, 1997. As used in this Agreement, the term "employees" includes employees,
salesmen, agents and sales representatives. A true, correct and complete copy of
each written employment contract and a description of each oral employment
agreement with any employee has been delivered to Purchaser or its counsel.
4.27 TRADEMARKS, COPYRIGHTS AND SIMILAR MATTERS.
(a) Since September 30, 1994, the Corporation has not been
charged with infringement or violation of any patent, trademark,
service xxxx, trade name or copyright. To Sellers' knowledge, the
Corporation is not using or has not in any way made use of any
patentable or unpatentable invention, or any confidential information
or trade secret, of any former employer of any present or past employee
of the Corporation. All patents, trademarks, service marks, trade names
and copyrights (the "Specified Items"), and all applications or
registrations (including those whose use is limited to one or more
states of the United States), owned or, if material, used by the
Corporation are listed on Schedule 4.27 and, to the extent indicated,
have been duly registered in, filed in or issued by the United States
Patent Office or the corresponding agency or office of each of such
states. Except as indicated on Schedule 4.27, the Corporation is the
sole and exclusive owner of, or has the sole and exclusive right to
use, the Specified Items, except for the rights of licensees (whose
names and addresses are listed on Schedule 4.27). Except as set forth
on Schedule 4.27, the Corporation does not use any of the Specified
Items by consent of any other party and the same are free and clear of
any attachments, liens, claims, encumbrances or agreements. Except as
listed on Schedule 4.27, there are no claims or demands of any other
person, firm or corporation pertaining to any of the Specified Items,
and no proceedings have been instituted, are pending or, to the
knowledge of Sellers, are threatened which challenge the right of the
Corporation in respect of any of the Specified Items. To the knowledge
of Sellers, none of the Specified Items infringes on, or is being
infringed on by others, and none of the Specified Items is subject to
any outstanding order, decree, judgment, stipulation or agreement
restricting the scope of its use.
(b) Except as set forth on Schedule 4.27(b), the Corporation
is the sole and exclusive owner of its corporate name. The Corporation
does not use such name by consent of any other person or entity, and
owns such name free and clear of any attachments, liens, claims,
encumbrances or agreements. There are no claims or demands of any other
person or entity pertaining to the use of the name and no proceedings
have been instituted or, to the knowledge of Sellers, are threatened,
which challenge the right of the Corporation in respect of such name;
and to the knowledge of Sellers, the use of such name by the
Corporation does not infringe on and is not being infringed on by
others, and is not subject to any outstanding order, decree, judgment,
stipulation or agreement restricting the scope of its use.
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(c) True, correct and complete copies of all patents,
trademarks, service marks, trade names and copyrights, and of all
related applications or registrations, that are listed on Schedule 4.27
have been delivered to Purchaser or its counsel.
4.28 EMPLOYEE BENEFIT PLANS AND OTHER PLANS. Except for the plans or
arrangements listed on Schedule 4.28 (hereinafter referred collectively to as
the "Plans" and individually as the "Plan"), the Corporation does not, directly
or indirectly, maintain, sponsor or have an obligation or liability with respect
to, any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), executive
compensation or incentive plan, bonus or severance arrangement, employment
contract, collective bargaining agreement, union contract, deferred compensation
agreement, stock purchase or incentive plan or arrangement, or other employee
benefit plan or arrangement. For the purposes of this Agreement, "Controlled
Group" shall mean the Corporation and any trade or business, whether or not
incorporated, which is treated together with the Corporation under Section
4001(b)(1) of ERISA or Sections 414(b), (c), (m) or (o) of the Code. With
respect to each Plan identified on Schedule 4.28:
(a) All applicable ERISA and Code requirements with respect to
such Plan as to the filing of reports, documents and notices with the
Secretary of Labor, the Pension Benefit Guaranty Corporation, and the
Secretary of the Treasury, or the furnishing of such documents to
participants or beneficiaries, have been complied with in all material
respects by such Plan or its administrators;
(b) No member of the Controlled Group, Plan, fiduciary of such
Plan or administrator of such Plan, has taken any action, or failed to
take any action, which action or failure could subject the Corporation,
or any employee of the Corporation to any material liability for breach
of any fiduciary duty, or for any prohibited transaction (as defined in
Section 4975 of the Code), with respect to or in connection with such
Plan;
(c) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of Sellers,
threatened against such Plan, the Corporation, Sellers, or against any
fiduciary of such Plan;
(d) Such Plan, the fiduciaries of such Plan, Controlled Group
members and administrators of such Plan have at all times complied in
all material respects with applicable requirements of ERISA, the Code,
and any other applicable law (including the Health Maintenance
Organization Act of 1973, as amended) governing such Plan, and such
Plan has at all times been administered in all material respects in
accordance with all such requirements of law and in accordance with its
terms to the extent consistent with all such requirements of law;
(e) The Plan is not a "multiemployer plan" as described in
Section 3(37) of ERISA or Section 414(f) of the Code, nor is it subject
to Title IV of ERISA;
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(f) All bonding required by applicable provisions of ERISA
with respect to the Plan has been obtained and is in full force and
effect;
(g) No trust associated with the Plan has earned any material
"unrelated business taxable income" (as such term is defined in Section
512 of the Code and the regulations thereunder) or material "unrelated
debt financed income" (as such term is defined in Section 514 of the
Code and regulations thereunder);
(h) If the Plan is an "employee pension benefit plan" (as
defined in ERISA Section 3(2)), the Plan and its associated trust
complies in all material respects with the applicable provisions of the
Code (including, but not limited to, Code Sections 401(a), 401(a)(4),
410(b), 401(a)(26) and 501(a)), has received a favorable determination
letter from the Internal Revenue Service stating that the Plan
qualifies under Section 401(a) and that the associated trust, if any,
qualifies under Section 501(a), has been timely amended (and the
amendment has been submitted to the Internal Revenue Service for a
favorable determination letter) with respect to changes required by the
Tax Reform Act of 1986 and subsequent legislation and regulations;
(i) The Plan has not incurred any "accumulated funding
deficiency," as defined in Section 301(a)(2) of ERISA whether or not
waived;
(j) The Plan which is a welfare benefit plan does not (i)
provide for non-terminable or non-alterable medical benefits for
employees, dependents or retirees or (ii) provide any benefits for any
person upon or following retirement or termination of employment except
as otherwise required by Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the Code (herein collectively referred to as "COBRA"),
and then only to the extent the person pays the "applicable premium"
(as defined in Code Section 4980B(f)(4)) for such coverage;
(k) No events or changes have occurred or are expected to
occur with respect to the Plan that would cause an increase in the cost
of providing the benefits under the Plan;
(l) Full payment has been made of all amounts which Sellers,
the Corporation or other member of the Controlled Group, is required,
under applicable law or under the Plan, to have paid as a contribution
or a benefit for the plan years of the Plan ended prior to the date
hereof. All contributions required to be made by, and all other
liability of, the Corporation with respect to the Plan for the periods
covered by the Financial Statements shall have been set forth on the
appropriate Financial Statement in accordance with generally accepted
accounting principles. Benefits under the Plan are as represented and
have not been increased subsequent to the date as of which documents
have been provided.
(m) Except as otherwise specifically provided herein, the
consummation of the transactions contemplated by this Agreement will
not (i) entitle any current or former employee or officer of the
Corporation to severance pay, unemployment compensation or
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any other payment, (ii) accelerate the time of payment or vesting under
the Plan, (iii) increase the amount of compensation due any such
employee or officer, (iv) directly or indirectly cause the Corporation
to transfer or set aside any assets to fund or otherwise provide for
the benefits under the Plan for any current or former employee, officer
or director, or (v) result in any non-exempt prohibited transaction
described in ERISA Section 406 or Code Section 4975.
(n) Sellers have timely provided all notices and have provided
continuation of health benefit coverage (including but not limited to
medical and dental coverage) required to be provided to any of
Sellers', the Corporation's, or any other member of the Controlled
Group's, employees, former employees, or the beneficiaries or
dependents of such employees or former employees, under COBRA, to the
extent such notices and continuation of health benefit coverage were
required to be provided by reason of events occurring prior to or on
the Closing.
(o) Sellers have delivered or caused to be delivered to
Purchaser or Purchaser's counsel true and correct copies of the
following with respect to the Plan:
(i) A copy of the Plan and amendments thereto to the
date hereof;
(ii) A copy of each trust agreement and insurance
contract pertaining to the investment of the assets, if any,
of the Plan or the payment of benefits thereunder, including
all amendments to such documents to the date hereof;
(iii) The most recent determination letter issued by the
IRS with respect to the Plan for which a determination letter
has been issued and any pending determination letter request
with respect to the Plan;
(iv) The three (3) most recent IRS Form 5500 series
annual return/reports, including all applicable Schedules and
audited financial statements, filed with respect to the Plan;
and
(v) A copy of the latest summary plan description
(within the meaning of Section 10(a)(1) of ERISA) for the Plan
and each summary of material modifications (within the meaning
of Section 101(b)(2) of ERISA) thereto, each of which has been
provided to employees and filed with the Department of Labor.
4.29 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 4.29(a):
(i) to the knowledge of Sellers, the Corporation has
not caused or allowed any Contaminant to be used,
manufactured, stored, placed, processed or released on or
off-site of any of the Real Property listed on Schedule
4.7(a);
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(ii) the Real Property is in compliance with all
applicable Requirements of Law except where such noncompliance
would not have a material adverse effect on the business or
financial condition of the Corporation;
(iii) to Sellers' knowledge, neither the Corporation, nor
the Real Property, nor any real property owned or leased by
the Corporation in the past or in which the Corporation has
had any interest in the past, are the subject of any notice,
order or agreement regarding any remedial action or the
Release, threatened Release or presence of a Contaminant; and
(iv) neither the Corporation, nor the Real Property are
subject to any material contingent liability in connection
with the Release, threatened Release, or presence of any
Contaminants on or off-site of the Real Property.
(b) Except as set forth on Schedule 4.29(b):
(i) the Corporation has obtained all material
environmental, health and safety permits necessary, and made
all material notifications necessary, for the current use of
its assets;
(ii) all such permits and notifications are in good
standing and the Corporation has made timely application for
renewal of such permits where necessary;
(iii) the Corporation is in material compliance with
all terms and conditions of such permits and notifications;
and
(iv) the Corporation's assets are in compliance with
all applicable Requirements of Law except where such
noncompliance would not have a material adverse effect on the
business or financial condition of the Corporation and are
subject to no material contingent liability in connection with
the Release, threatened Release or presence of any
Contaminants on or off-site of such assets.
(c) To the knowledge of Sellers, there is not now on or in the
Corporation's assets, including but not limited to, the Real Property:
(i) any treatment, storage, recycling, disposal or
arrangement therefor, of any hazardous waste as that term is
defined under 40 CFR Part 261 or any state equivalent;
(ii) any underground storage tanks, in use or
abandoned;
(iii) any asbestos-containing material; and
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(iv) any polychlorinated biphenyls (PCBs) in any
hydraulic oils, transformers, capacitors or other electrical
equipment.
(d) Definitions. For purposes of this Section:
"Contaminant" means any substance or waste containing hazardous
substances, pollutants or contaminants as those terms are defined in
the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 ET SEQ., and any other substance similarly
defined or identified in any other federal, state or local laws, rules
or regulations governing the manufacture, import, use, handling,
storage, processing, release or disposal of substances or wastes deemed
hazardous, toxic, dangerous or injurious to public health or to the
environment. This definition includes asbestos-containing material and
petroleum or petroleum-based products.
"Requirements of Law" means any federal, state or local law, rule,
regulation, permit, agreement, order or other binding determination of
any governmental authority relating to the environment, public health
or safety.
"Release" has the same meaning as in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 ET
SEQ.
4.30 BANK ACCOUNTS. Schedule 4.30 is a true and correct list of the
name of each bank, savings and loan, or other financial institution in which the
Corporation has an account or safe deposit box, the names of all persons
authorized to draw on each account or to have access to each box, the number of
signatures required to be given for a withdrawal and a description of the type
of account.
4.31 COMPLIANCE WITH LAWS. The Corporation has complied with all laws,
regulations, rules and orders of any governmental department or agency or any
other commission, board, agency or instrumentality, federal, state or local, or
other requirements of law affecting its business and operations and is not in
default under or in violation of any provision of any federal, state or local
law, regulation, rule or order except where such non-compliance or default would
not have a material adverse effect on the business or financial condition of the
Corporation.
4.32 POWERS OF ATTORNEY. Except as set forth on Schedule 4.32, the
Corporation has not given any power of attorney (irrevocable or otherwise) that
is presently in effect to any person or entity for any purpose.
4.33 LICENSES AND RIGHTS. The Corporation possesses all material
franchises, licenses, easements, permits and other authorizations from
governmental or regulatory authorities and from all other persons or entities
that are necessary to permit it to engage in its business as presently conducted
in and at all locations and places where it is presently operating. Such
franchises, licenses, permits and other authorizations are listed on Schedule
4.33.
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4.34 SCHEDULE OF GOVERNMENT REPORTS. Schedule 4.34 is a true and
correct list, and Sellers have furnished to Purchaser or its counsel complete
copies of all reports, if any, filed since September 30, 1994, by the
Corporation with the Department of Labor, Equal Employment Opportunity
Commission, Federal Trade Commission, Department of Justice, Occupational Safety
and Health Administration, Internal Revenue Service (other than tax returns and
standard forms relating to compensation or remuneration of employees),
Environmental Protection Agency, Securities and Exchange Commission or Pension
Benefit Guarantee Corporation, or any similar state agency, the failure to file
of which would have a material adverse effect on the business or financial
condition of the Corporation.
4.35 PRODUCTS.
(a) Schedule 4.35 contains a written statement describing in
all material respects the Corporation's warranties and customer service
policies and any recurring warranty problems. The Corporation has no
outstanding material contracts or proposals that depart from the
warranty and customer service policy and practice described in such
Schedule.
(b) The Corporation has not manufactured, sold or supplied
products or services which are or were or will became faulty or
defective or which do not comply with any warranties or representations
expressly or impliedly made by it or with all applicable regulations,
standards and requirements of law, except where such fault, defect or
noncompliance would not have a material adverse effect on the business
or financial condition of the Corporation.
4.36 CASUALTY OCCURRENCES. Schedule 4.36 is a list of occurrences since
September 30, 1994 of damages to persons or property involving any defects or
alleged defects in any of the Corporation's products or their respective designs
that have been asserted against the Corporation.
4.37 INVENTORY. Except as set forth on Schedule 4.37, the inventories
of the Corporation consist only of items of a quality and quantity reasonably
usable and saleable in the ordinary course of business, consistent with past
practice, within the Corporation's normal inventory "turn" experience and do not
include any item of inventory which has previously been written off by the
Corporation. Items of below-standard quality and items not previously reasonably
saleable in the ordinary course of business have been written down in value in
accordance with generally accepted accounting principles to estimated net
realizable market values. The value at which the inventories are carried on the
Corporation's books reflects the lower of cost (on a FIFO basis) or estimated
net realizable market value, and is based on quantities determined by physical
count.
4.38 CAPITAL EXPENDITURE PLANS. Schedule 4.38 sets forth a description
of each capital expenditure program of the Corporation involving the expenditure
of at least Fifty Thousand Dollars ($50,000) as to which the expenditure of
funds is incomplete, setting forth (i) the budgeted expenditures and (ii) the
actual amounts expended, if any.
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4.39 SHAREHOLDERS AND CONSULTING AGREEMENTS. Upon their termination in
accordance with the provisions of Sections 6.9 and 6.10 hereof, the Corporation
will have no liability or obligation under the Shareholders' Agreement and
Consulting Agreements referred to in said sections.
4.40 XXXXXX AGREEMENT. The Corporation has no material obligations or
liabilities arising under the Stock Purchase Agreement by and between Sponsor's
Plan Asset Management, Inc. (a wholly owned subsidiary of Xxxxxx, Inc.) and
Xxxxxx Acquisition Company dated as of September 30, 1994.
4.41 CERTAIN EMPLOYEE BONUSES. As soon as practicable after the
Closing, Sellers will pay and discharge or otherwise obtain the Corporation's
release from all liabilities of the Corporation relating to the change of
control incentive payments referred to on Schedule 2.10(j).
ARTICLE V
---------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
------------------------------------------------------
Purchaser warrants and represents to, and covenants with, Sellers as
follows:
5.1 ORGANIZATION AND GOOD STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio, has full power and authority to carry on its business as
and where now conducted and to own or lease and operate its properties at and
where now owned or leased and operated by it, and is duly qualified to do
business and is in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by it,
makes such qualification necessary.
5.2 AUTHORITY OF PURCHASER. The execution, delivery and consummation of
this Agreement by Purchaser has been duly authorized by the board of directors
and, if required, the shareholders of Purchaser, in accordance with all
applicable laws and the Articles of Incorporation and Code of Regulations of
Purchaser and, at the "Closing Date" (as defined below), no further action will
be necessary on the part of Purchaser or any of Purchaser's shareholders to make
this Agreement valid and binding on Purchaser in accordance with its terms. The
execution, delivery and consummation of this Agreement by Purchaser (i) is not
contrary to its Articles of Incorporation or Code of Regulations; and (ii) does
not now and will not, with the passage of time, the giving of notice or
otherwise, result in a violation or breach of, or constitute a default under,
any term or provision of any indenture, mortgage, deed of trust, lease,
instrument, order, judgment, decree, rule, regulation, law, contract, agreement
or any other restriction to which Purchaser is a party or to which Purchaser or
any of Purchaser's assets is subject or bound.
5.3 INVESTMENT PURPOSE. The shares of capital stock of the Corporation
purchased pursuant to this Agreement will be acquired for investment and not
with a view toward the resale or distribution thereof.
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5.4 OLOG PAYMENT. Purchaser shall cause the Corporation to pay to OLOG
immediately after the Closing the full amount owing by the Corporation to OLOG
under the Consulting Agreement referred to in Section 6.10 as provided in a
written notice delivered by OLOG to Purchaser not less than two (2) business
days prior to the Closing.
5.5 CHI PAYMENT. Purchaser shall cause the Corporation to pay to CHI
immediately after the Closing the full amount of all outstanding indebtedness of
the Corporation owed to CHI under the Subordinated Promissory Notes in the
aggregate original principal amount of Seven Hundred Seventy Thousand Dollars
($770,000.00) as provided in a written notice delivered by CHI to Purchaser not
less than two (2) business days prior to the Closing.
5.6 BANK ONE PAYMENT. Purchaser shall cause the Corporation to pay to
Bank One immediately after the Closing the full amount of all outstanding
indebtedness of the Corporation owed to Bank One as provided in a written notice
delivered by Bank One to Purchaser not less than two (2) business days prior to
the Closing.
5.7 INDEMNIFICATION. Purchaser agrees that (i) Section 6.02 of the
Corporation's Restated Certificate of Incorporation constitutes binding
contractual obligations of the Corporation to each of the directors and officers
of the Corporation and (ii) the repeal or amendment of such section subsequent
to the date hereof shall not affect the rights of existing directors or officers
to the benefits of such section as now in effect and such section shall continue
in existence with respect to any action, suit, or proceeding, as those terms are
used in such section, arising before or after any such repeal or amendment, that
relates to services within the scope of such section occurring prior to such
repeal or amendment.
5.8 NET OPERATING LOSS CARRYFORWARD. Purchaser acknowledges and agrees
that notwithstanding any other provision of this Agreement, no representation or
warranty is being made by any of the Sellers in this Agreement with respect to
the amount of and availability to the Corporation or the Purchaser after the
Closing Date of the Corporation's net operating loss carryforwards for federal
income tax purposes.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing
Date:
6.1 REPRESENTATIONS TRUE. The representations and warranties of Sellers
contained in this Agreement are true, complete and accurate in all material
respects on and as of the Closing Date to the same extent and with the same
force and effect as if made on such date, except as affected by the transactions
contemplated under this Agreement.
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6.2 ALL CONSENTS OBTAINED. All necessary and material approvals or
consents required to be obtained by Sellers have been obtained from all local,
state and federal departments and agencies, from all other commissions, boards,
agencies and from any other person or entity whose approval or consent is
necessary to consummate the transactions contemplated under this Agreement
including, without limitation, such consents as may be listed or required to be
listed on Schedules 2.1(b), 3.1(b) and 4.20.
6.3 PERFORMANCE AND OBLIGATIONS. Sellers have duly performed all
obligations, covenants and agreements undertaken by Sellers in this Agreement
and have complied with all terms and conditions applicable to Sellers under this
Agreement to be performed and complied with on or before the Closing Date.
6.4 RECEIPT OF DOCUMENTS BY PURCHASER. Purchaser has received:
(a) a certificate executed by each Seller certifying as to the
fulfillment of the matters contained in Sections 6.1, 6.2, 6.3, 6.5 and
6.9;
(b) a true and correct copy of the Corporation's Certificate
of Incorporation, certified by the Secretary of State of Delaware as of
a date not more than seven (7) days prior to the Closing Date, and a
true and correct copy of the Corporation's By-Laws certified by the
Secretary of the Corporation as of the Closing Date;
(c) a written opinion from counsel for each Seller (who must
be reasonably satisfactory to Purchaser and its counsel), dated as of
the Closing Date, addressed to Purchaser, satisfactory to Purchaser and
its counsel in the form of EXHIBIT "A" to this Agreement;
(d) the resignations of such officers and directors of the
Corporation as may be requested by Purchaser; and
(e) certificates representing all of the Shares, with stock
powers covering such shares duly endorsed in blank.
6.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain material damages or relief in
connection with this Agreement or the consummation of this Agreement, or which
is reasonably likely to materially and adversely affect the value of the
business or assets of the Corporation.
6.6 DELIVERY OF BOOKS AND RECORDS. Sellers have delivered or made
available to Purchaser all books and records of the Corporation relating to or
reasonably required for the operation of the business of the Corporation,
including, without limitation, copies of all Contracts, financial and accounting
records, files and records relating to employees, and all related
correspondence.
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6.7 XXXX-XXXXX-XXXXXX COMPLIANCE. The applicable time period under the
Antitrust Improvements Act of 1976 ("Xxxx-Xxxxx-Xxxxxx") has expired and none of
the parties to this Agreement has received any notice from the Federal Trade
Commission or any other governmental agency which would prevent proceeding with
the transactions contemplated under this Agreement.
6.8 INTERCOMPANY ACCOUNTS. All accounts owed by the Corporation to any
shareholder or other affiliate of the Corporation and owed by any such
shareholder or affiliate to the Corporation shall be settled and paid, except as
provided in Sections 5.4 and 5.5.
6.9 SHAREHOLDERS AGREEMENT. The Shareholders Agreement dated October 7,
1994 among the Sellers and the Corporation shall have been terminated and the
Corporation shall have been fully released from any liabilities or obligations
in connection therewith. Purchaser shall have received satisfactory evidence of
such termination and release.
6.10 CONSULTING AGREEMENT. The Consulting Agreement dated October 7,
1994 between the Corporation and OLOG shall have been terminated and the
Corporation shall have been fully released from any liabilities or obligations
in connection therewith. Purchaser shall have received satisfactory evidence of
such termination and release.
6.11 SUPPLY AGREEMENTS TERMINATION. The Metal Supply Agreement dated
July 1, 1996 between the Corporation and Northwest Alloys, Inc. and the Tolling
Agreement dated as of July 22, 1996 between the Corporation and Xxxxxx Aluminum
Specialty Products shall have been terminated and the Corporation shall have
been released from all liabilities and obligations in connection therewith.
Purchaser shall have received satisfactory evidence of such terminations and
releases.
6.12 SPIN-OFF OF SUBSIDIARIES. Subject to Article XVIII hereof, all the
outstanding capital stock of the Subsidiaries shall have been spun-off or
distributed to the Corporation's shareholders or otherwise transferred or
conveyed by the Corporation without the incurrence of any liability or
obligation on the part of the Corporation.
6.13 PIPELINE INTEGRITY SETTLEMENT. The Corporation and Pipeline
Induction Heat Limited shall have settled their dispute with respect to the
Agreement for Sale of Assets dated February 3, 1995 between such parties and the
Corporation shall have been fully released from any liabilities or obligations
in connection therewith.
6.14 EMPLOYMENT/COMPENSATION AGREEMENTS. The Corporation's employment
agreement with Xxxxxxx X. Xxxxxx and incentive compensation agreement with Xxx
Xxxxx (each referred to on Schedule 4.18) shall have been terminated and the
Corporation shall have been fully released from any liabilities or obligations
in connection therewith. Purchaser shall receive satisfactory evidence of such
termination and releases.
6.15 REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement
dated as of October 7, 1994 among the Sellers and the
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Corporation shall have been terminated and the Corporation shall have been fully
released from any liabilities or obligations in connection therewith. Purchaser
shall receive satisfactory evidence of such termination and release.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
----------------------------------------------
The obligations of Sellers under this Agreement are, at the option of
Sellers subject to satisfaction of the following conditions at or prior to the
Closing Date:
7.1 REPRESENTATIONS TRUE. The representations and warranties of
Purchaser contained in this Agreement are true, complete and accurate in all
material respects on and as of the Closing Date to the same extent and with the
same force and effect as if made on such date, except as affected by the
transactions contemplated under this Agreement.
7.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Purchaser have been obtained from all local, state and federal
departments and agencies, from all other commissions, boards, agencies and from
any other person or entity whose approval or consent is necessary to consummate
the transactions contemplated under this Agreement.
7.3 PERFORMANCE AND OBLIGATIONS. Purchaser has duly performed all
obligations, covenants and agreements undertaken by Purchaser in this Agreement
and has complied with all terms and conditions applicable to Purchaser under
this Agreement to be performed and complied with on or before the Closing Date.
7.4 RECEIPT OF DOCUMENTS BY SELLERS. Sellers have received:
(a) the Purchase Price as provided in Section 1.1;
(b) a certificate executed by the President and Secretary or
Treasurer of Purchaser certifying as to the fulfillment of the matters
contained in Section 7.1, 7.2, 7.3 and 7.5 of this Article;
(c) a written opinion from counsel for Purchaser, dated as of
the Closing Date, addressed to Sellers, satisfactory to Sellers and
their respective counsel in the form of EXHIBIT "B" to this Agreement;
and
(d) certified copies of resolutions duly adopted by the Board
of Directors of Purchaser approving this Agreement and the transactions
contemplated under it.
7.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain material damages or relief in
connection with this Agreement or the consummation of this Agreement.
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7.6 XXXX-XXXXX-XXXXXX COMPLIANCE. The applicable time period under the
Antitrust Improvements Act of 1976 ("Xxxx-Xxxxx-Xxxxxx") has expired and none of
the parties to this Agreement has received any notice from the Federal Trade
Commission or any other governmental agency which would prevent proceeding with
the transactions contemplated under this Agreement.
ARTICLE VIII
------------
CLOSING
-------
The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxx 00000-0000 on the later of June 30, 1997 or five (5)
business days after the fulfillment of the last condition necessary to complete
the transaction, at 10:00 A.M. Houston, Texas Time or on such other date
mutually agreeable to the parties (the "Closing Date"). Unless the parties
otherwise agree in writing, if the Closing has not occurred within ninety 90
days from execution of this Agreement, then this Agreement will be deemed to
have been terminated and abandoned, subject to the legal rights and remedies of
either party arising out of the other party's breach of any of the provisions of
this Agreement. The parties will in good faith use all reasonable efforts to
achieve the Closing.
ARTICLE IX
----------
TERMINATION OF AGREEMENT
------------------------
This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing Date (unless otherwise
specified below):
(a) by mutual consent in writing of Purchaser and Sellers;
(b) by Purchaser if there has been a material
misrepresentation or breach of warranty in the representation and
warranties of Sellers made under this Agreement; or
(c) by Purchaser if all or a material portion of the
Corporation's assets have been materially damaged or destroyed before
the Closing.
Any termination pursuant to this Article IX will not affect the obligations of
the parties under Article XIII or Section 21.4, and will be without prejudice to
the terminating party's legal rights and remedies by reason of any breach of
this Agreement occurring prior to such termination. Notwithstanding the
preceding provisions of this Article IX, in the event that Purchaser terminates
this Agreement as a result of a breach of warranty in Sellers' representations
and warranties contained in Sections 4.2(iv) or 4.19 which occurs solely as a
result of Sellers' delivery of Schedule 4.20 subsequent to the date hereof,
Purchaser shall not have any other rights or remedies (other than the right to
terminate this Agreement) arising out of such breach.
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ARTICLE X
---------
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES; INDEMNIFICATION; DISPUTES; ESCROW
-------------------------------------------------
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding the
Closing of the transactions contemplated under this Agreement, or any
investigation made by or on behalf of Sellers or Purchaser, the representations
and warranties of Sellers and Purchaser contained in this Agreement or in any
certificate, Schedule, chart, list, letter, compilation or other document
furnished or to be furnished pursuant to this Agreement, will survive the
Closing for a period of one (1) year, except that the representations and
warranties of Sellers contained in Sections 2.2, 3.2 and 4.12 with respect to
title and tax matters will survive for so long as any applicable statute of
limitations has not expired, been suspended or been waived or extended, and for
thirty (30) days thereafter, and the representations and warranties of Sellers
contained in Section 4.29 with respect to environmental matters will survive the
Closing for a period of five (5) years. However, as to any breach of any such
representation or warranty as to which Purchaser has given notice to Sellers on
or prior to the expiration of the applicable period, as above set forth, the
same will continue to survive beyond said period, but only as to the matters
contained in such notice.
10.2 SELLERS' INDEMNIFICATION.
(a) Each Seller, severally but not jointly, and
proportionately, will indemnify and save harmless Purchaser and its
subsidiaries, shareholders, directors, officers, employees and agents
from its Proportionate Interest of any and all costs, expenses, losses,
damages and liabilities incurred or suffered, directly or indirectly,
by any of them (including, without limitation, reasonable legal fees
and expenses) (collectively, "Losses") resulting from or attributable
to (i) the breach of any one or more of the representations, warranties
or covenants of Sellers made in Article IV of this Agreement (other
than Section 4.17 which is provided for in Section 10.4 below), (ii)
any claims, demands, suits, investigations, proceedings or actions by
any third party containing or relating to allegations that, if true,
would constitute a breach of any one or more of the representations,
warranties or covenants of Sellers made in Article IV of this Agreement
(other than Section 4.17 which is provided for in Section 10.4 below),
(iii) any liabilities required to have been discharged as a condition
to Purchaser's obligation to consummate the transactions contemplated
by this Agreement pursuant to Section 6.8 hereof, and (iv) the
Corporation's spin-off or distribution to its shareholders, or other
transfer or conveyance, of all the outstanding capital stock of the
Subsidiaries as contemplated by Section 6.12. As used in this
Agreement, "Proportionate Interest" shall mean in the case of Airlog,
seventy-five percent (75%) and in the case of CHI, twenty-five percent
(25%).
(b) Airlog will indemnify and save harmless Purchaser and its
subsidiaries, shareholders, directors, officers, employees and agents
from any and all Losses resulting from or attributable to (i) the
breach of any one or more of the representations, warranties or
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covenants of Airlog made in Article II of this Agreement, and (ii) any
claims, demands, suits, investigations, proceedings or actions by any
third party containing or relating to allegations that, if true, would
constitute a breach of any one or more of the representations,
warranties or covenants of Airlog made in Article II of this Agreement.
(c) CHI will indemnify and save harmless Purchaser and its
subsidiaries, shareholders, directors, officers, employees and agents
from any and all Losses resulting from or attributable to (i) the
breach of any one or more of the representations, warranties or
covenants of CHI made in Article III of this Agreement, and (ii) any
claims, demands, suits, investigations, proceedings or actions by any
third party containing or relating to allegations that, if true, would
constitute a breach of any one or more of the representations,
warranties or covenants of CHI made in Article III of this Agreement.
10.3 DEFENSE OF CLAIM. If Purchaser has received actual notice of any
claim asserted or any action or administrative or other proceeding commenced in
respect of which claim, action or proceeding indemnity properly may be sought
against Sellers or either Seller pursuant to this Agreement, Purchaser will give
notice in writing to Sellers or such Seller, as the case may be. Within fifteen
(15) days after the earlier of (i) receipt of such notice or (ii) receipt of
actual notice by Sellers from sources other than Purchaser, Sellers may give
Purchaser written notice of their election to conduct the defense of such claim,
action or proceeding at its own expense. If Sellers have given Purchaser such
notice of election to conduct the defense, Sellers may conduct the defense at
its expense, but Purchaser will nevertheless have the right to participate in
the defense, but such participation will be solely at the expense of Purchaser,
without a right of further reimbursement. If Sellers have not so notified
Purchaser in writing (within the time above provided) of its election to conduct
the defense of such claim, action or proceeding, Purchaser may (but need not)
conduct (at Sellers' expense) the defense of such claim, action or proceeding.
Purchaser may at any time notify Sellers of Purchaser's intention to settle,
compromise or satisfy any such claim, action or proceeding (the defense of which
Sellers have not previously elected to conduct) and may make such settlement,
compromise or satisfaction (at Sellers' expense) unless Sellers notify Purchaser
in writing (within seven (7) days after receipt of such notice of intention to
settle, compromise or satisfy) of its election to assume (at its sole expense)
the defense of any such claim, action or proceeding and promptly take
appropriate action to implement such defense. If Sellers have elected under this
Section 10.3 to conduct the defense of any claim, action or proceeding, then
Sellers will be obligated to pay the amount of any adverse final judgment or
decree rendered with respect to such claim, action or proceeding. If Sellers
elect to settle, compromise or satisfy any claim, action or proceeding defended
by them, the cost of any such settlement, compromise or satisfaction will be
borne entirely by Sellers and may be made only with the consent of Purchaser,
which shall not be unreasonably withheld. Purchaser and Sellers will use all
reasonable efforts to cooperate fully with respect to the defense of any claim,
action or proceeding covered by this Section 10.3.
10.4 ACCOUNTS RECEIVABLE. Each Seller agrees that it will purchase its
Proportionate Interest of all Closing Date Accounts Receivable that remain
uncollected three hundred and thirty (330) days after the Closing Date submitted
for transfer by Purchaser as set forth below for an amount equal to the face
amount of such purchased accounts less the reserves for doubtful
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receivables and uncollectible accounts as recorded on the balance sheet of the
Corporation as of the Closing Date; provided however that in no case shall the
purchased portion of the Closing Date Accounts Receivable be less than the
amount of such reserves as of the Closing Date. Payments received with respect
to the Closing Date Accounts Receivables shall be applied first to the oldest
receivables unless the customer notifies the Corporation that it has a dispute
with respect to a particular receivable. Purchaser will cause the Corporation to
use its reasonable best efforts (which shall not include paying any third party
or bringing legal action to collect such receivables) to collect the Closing
Date Accounts Receivables and to preserve Sellers' potential subsequent rights
therein. After three hundred thirty (330) days after the Closing Date, Purchaser
may submit and transfer ownership of all or any portion of such uncollected
Closing Date Accounts Receivable to Sellers against payment therefor, provided
that if Purchaser submits for transfer any such uncollected accounts, it shall
be not less than the amount of such reserves as of the Closing Date.
10.5 PURCHASER'S INDEMNIFICATION. Purchaser covenants and agrees to
indemnify and save harmless Sellers from any and all Losses resulting from or
attributable to the breach of any one or more of the representations, warranties
or covenants of Purchaser made in or pursuant to this Agreement to the same
extent as provided in Clauses (i) and (ii) of Section 10.2, and in the same
manner as provided in Section 10.3, of this Article X.
10.6 LIMITATION ON INDEMNIFICATION.
(a) Any of the foregoing notwithstanding, in no event will the
individual indemnification obligations of Airlog, CHI and Purchaser
pursuant to this Article X exceed Eleven Million Two Hundred Fifty
Thousand Dollars ($11,250,000.00), Three Million Seven Hundred Fifty
Thousand Dollars ($3,750,000.00) and Fifteen Million Dollars
($15,000,000.00), respectively. If Sellers pursuant to Section 21.10
hereof supplement or amend any Schedule with respect to any matter that
existed as of the date of this Agreement and should have been set forth
or described in any Schedule, and if Purchaser nevertheless closes the
transaction, Sellers shall not be liable to Purchaser for any matter
set forth in any such supplement or any breach of representation or
warranty arising from the matter set forth in any such supplement.
(b) Any of the foregoing notwithstanding, in the event that
Sellers are obligated to indemnify Purchaser pursuant to (x) Section
10.2(a)(i) or (ii) hereof for Losses resulting from or attributable to
a breach of any of the representations or warranties contained in
Section 4.12 hereof which relate solely to federal income taxes or (y)
Section 10.2(a)(iv) hereof (collectively, "Qualified Losses"), Sellers'
indemnification obligation shall be limited to the amount that such
Qualified Losses (when taken together with any prior Qualified Losses)
exceed the net operating losses of the Corporation on June 30, 1997
that either (x) are available to the Corporation to offset against such
Qualified Losses or (y) have been utilized by the Corporation to offset
against income of the Corporation earned subsequent to June 30, 1997.
Purchaser and Corrpro agree that they will not, and will cause the
Corporation to not, elect to forego the Corporation's ability to
carryback such Closing Date
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net operating losses (for purposes of federal and state income taxes
only) for the taxable year ended June 30, 1997.
10.7 ESCROW.
(a) The escrow payment referred to in Section 1.2(a) hereof,
shall be placed in a banking institution in an interest-bearing money
market account satisfactory to Purchaser and the Sellers for a period
beginning on the Closing Date and ending on the ninetieth (90th) day
after the Closing Date, to be disbursed solely upon the joint
signatures of Purchaser and Sellers, all as set forth below.
Disbursements from the amount in escrow from time to time (the "Escrow
Amount") shall be made for the payment of amounts, if any, to secure
the indemnification obligations of Sellers pursuant to Section 10.2(a)
hereof.
(b) The Escrow Amount shall be disbursed during the term
hereof as follows:
(i) At any time or from time to time, Purchaser may
give the Sellers written notice asserting a claim for
indemnification pursuant to Section 10.2(a) hereof ("Notice of
Claim"). Such Notice of Claim must be for a specified amount.
(ii) Each Notice of Claim shall (A) be signed by a
proper representative of Purchaser, (B) contain a description
of the claim and reasonable documentation with respect
thereto, (C) specify the amount of such claim, and (D) state
that, in the opinion of the signer thereof, such notice of
claim is valid under the terms of Section 10.2(a) hereof and
is being given by the Purchaser in good faith.
(iii) Subject to subsection (iv) below, thirty days after
receipt of such Notice of Claim, Sellers will join with
Purchaser in a joint instruction to release to the Purchaser
from the Escrow Amount a cash sum equal to the amount
specified in said Notice of Claim delivered pursuant to
paragraph (ii)(C) above. Sellers are not required to agree to
take any action with respect to a Notice of Claim that fails
to specify the amount of the claim asserted thereby unless and
until Purchaser gives Sellers a written supplement thereto
signed by a proper representative of Purchaser specifying the
amount of such claim. Subject to subsection (iv) below, thirty
days after receipt of any such supplement, Sellers will join
with Purchaser in a joint instruction to release said amount
to Purchaser as if the amount specified in such supplement had
been originally specified in the related Notice of Claim
pursuant to paragraph (ii)(C) above.
(iv) Instead of the payment specified in paragraph (iii)
above, Sellers may give the Purchaser written notice ("Notice
of Objection") (A) attaching a copy of such Notice of Claim,
(B) stating that, in the good faith opinion of Sellers, the
claim described in such Notice of Claim is invalid (either in
whole or in specified part) under the terms of Section 10.2(a)
hereof, (C) giving the reasons for the alleged invalidity, and
(D) stating that, based on such alleged invalidity, Sellers
object to the payment of any portion of the Escrow Amount to
the requesting party on account
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thereof. In the event that a Notice of Objection alleges that
a Notice of Claim is only partially invalid, Sellers, within
30 days of the receipt of such Notice of Claim, agree to
release over to Purchaser from the Escrow Amount that portion
of the amounts specified in such Notice of Claim as to which
no objection is made. Sellers are not required to agree to
make any payments to Purchaser in respect of a Notice of Claim
that has been objected to in a Notice of Objection given to
Purchaser as aforesaid except (X) as provided in the
immediately preceding sentence, or (Y) in accordance with an
order of any arbitration panel initiated by any of the parties
hereto pursuant to paragraph (v) below.
(v) Purchaser and Sellers agree to submit to final and
binding arbitration in Houston, Texas, any and all disputes
that Sellers have specified in a Notice of Objection or
Purchaser has specified in a Notice of Claim to which Sellers
have not responded within 30 days of receipt of such Notice of
Claim. Any such dispute subject to arbitration pursuant to
this Section 10.7(b)(v) shall be resolved by arbitration in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA Rules"). Within ten
days of the initiation of an arbitration hereunder, each party
will designate an arbitrator pursuant to Rule 14 of the AAA
Rules. The appointed arbitrators will appoint a neutral
arbitrator from the panel in the manner prescribed in Rule 13
of the AAA Rules. Purchaser and Sellers agree that the
arbitrators selected hereunder have the authority to allocate
costs of any arbitration initiated under this paragraph and
the decision of the arbitrators selected hereunder will be
final and binding on both parties. This arbitration provision
is expressly made pursuant to and shall be governed by the
Federal Arbitration Act, 9 U.S.C. Sections 1-14. The parties
hereto agree that pursuant to Section 9 of the Federal
Arbitration Act a judgment of the United States District Court
for the Southern District of Texas, Houston Division, shall be
entered upon the award made pursuant to the arbitration.
(c) The escrow shall be terminated on the ninetieth (90th) day
after the closing Date; provided, however, that the escrow may continue
beyond such ninety (90) days, if Purchaser has asserted indemnification
claims, and any such claims remain unsatisfied. Upon termination of the
escrow, all remaining amounts therein that constitute the Escrow Amount
and that have not been paid or are not properly payable to third
parties, or to Purchaser pursuant hereto, shall be disbursed to
Sellers.
(d) Sellers' indemnification obligations pursuant to Section
10.2(a) hereof shall not be limited to the Escrow Amount; but rather
are subject only to the limitations contained in Section 10.6.
Notwithstanding the preceding sentence, during the ninety-day escrow
period, any claims made by Purchaser against Sellers for
indemnification pursuant to Section 10.2(a) shall be made first against
the Escrow Amount.
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ARTICLE XI
----------
CONDUCT PRIOR TO CLOSING DATE
-----------------------------
11.1 CONTINUATION OF BUSINESS. Until the Closing Date, Sellers will
cause the Corporation to continue to conduct its business in the ordinary and
usual course consistent with past practice, and, without limiting the generality
of this undertaking, Sellers will not, and will cause the Corporation not to, do
or suffer to be done any of the following, whether or not in the ordinary and
usual course, without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld:
(a) Other than the contemplated distribution by the
Corporation to its shareholders of all the outstanding capital stock of
the Subsidiaries, dispose or contract to dispose of, or acquire or
contract to acquire, any Real Property or other assets (except for
inventory disposed of or acquired in the ordinary course of business),
or any interest in any Real Property or other capital assets;
(b) Borrow any money;
(c) Enter into any lease with a term longer than ninety (90)
days;
(d) Encumber any material assets;
(e) Enter into any contract, commitment or arrangement of the
type required by Section 11.20 above to be listed on Schedule 4.20;
(f) Other than as contemplated by 11.1(a) above, declare or
pay any dividend or declare or make any other distribution to
shareholders;
(g) Purchase or redeem any shares, notes or other securities;
(h) Increase the rate or amount of compensation or the amount
or type of other remuneration to any of its directors, officers,
employees, agents or other representatives, or agree to do so;
(i) Other than as contemplated by 11.1 (a) above, form or
cause to be formed, or dispose or contract to dispose of, any
Subsidiary, or any interest in any Subsidiary or acquire any stock or
equity interest in any corporation or other entity;
(j) Reclassify, split or combine its shares, or issue, sell,
distribute or dispose of any shares, notes or other securities, or
issue or make any changes to any options, warrants or rights with
respect to its shares, or commit itself to do so;
(k) Make any new commitments or agree to make commitments for
capital improvements or significantly alter standing commitments for
capital improvements;
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(l) Make any single expenditure or agree to make any single
expenditure, or series of expenditures in excess of Twenty Thousand
Dollars ($20,000) in the aggregate, except expenditures for raw
materials and supplies which are purchased and services which are being
paid for in the ordinary course of business and consistent with past
practice;
(m) Negotiate with anyone other than Purchaser for, or
participate with anyone other than Purchaser in, the acquisition of the
Shares;
(n) Amend, or permit to be amended, in any way, its
Certificate of Incorporation or By-Laws or merge or consolidate with
any other corporation or other entity or change the character of its
business; or
(o) Make any material change in accounting methods.
11.2 PRESERVATION OF BUSINESS. Sellers will use all reasonable efforts
to cause the Corporation to (i) preserve intact its present business
organization and personnel, (ii) preserve its business, actual and potential,
and its advantageous relationships with all persons having business dealings
with it, and (iii) preserve and maintain in force all its licenses,
certificates, leases, contracts, permits, registrations, franchises,
confidential information, patents, trademarks, trade names, service marks and
copyrights, and applications for any of the same, and other similar rights.
Sellers will use all reasonable efforts to cause the Corporation to maintain in
force all property, casualty, crime, life, directors, officers and other forms
of insurance and bonds which it presently carries.
11.3 CONSENTS AND APPROVALS. Sellers will use all reasonable efforts
(which shall not include paying any fee to any third party for the purpose of
obtaining any consent or approval or any costs and expenses of any third party
resulting from the process of obtaining any such consent or approval) to obtain
all necessary consents and approvals of all persons, firms, entities and
governmental authorities to the consummation of the transactions contemplated by
this Agreement.
ARTICLE XII
-----------
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
-----------------------------------------
The rights under this Agreement are not assignable nor are the duties
delegable by a party without the written consent of the other party first having
been obtained, and any attempted assignment or delegation without such consent
will be null and void. Nothing contained in this Agreement is intended to convey
upon any person or entity, other than the parties hereto and their successors in
interest and permitted assigns, any rights or remedies under or by reason of
this Agreement unless expressly stated. All covenants, agreements,
representations and warranties of the parties contained in this Agreement are
binding on and will inure to the benefit of Purchaser, on the one hand and
Sellers, on the other, and their respective successors and permitted assigns.
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ARTICLE XIII
------------
EXPENSES
--------
Purchaser, on the one hand, and Sellers, on the other, will bear their
own respective expenses, including, without limitation, counsel and accountants'
fees, in connection with the preparation and negotiation of, and transactions
contemplated under, this Agreement, provided, however, that Purchaser will pay
the filing fees associated with the Xxxx-Xxxxx-Xxxxxx filings. None of the
expenses of Sellers shall be borne by the Corporation.
ARTICLE XIV
-----------
NOTICES
-------
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary in this Agreement, (i) when personally
delivered, (ii) upon receipt of a telephonic facsimile transmission with a
confirmed telephonic transmission answer back, (iii) three (3) days after having
been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (iv) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
To Purchaser: Corrpro Companies, Inc.
------------- 0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxx, Chairman, President
and Chief Executive Officer
With a copy to: Benesch, Friedlander,
Xxxxxx & Aronoff LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
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To Sellers: Airlog International, Inc.
---------- c/o Offshore Logistics, Inc.
000 Xxx xx Xxxx
X.X. Xxx 0X
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
and
Xxxxxx Holdings, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
With a copy to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
ARTICLE XV
----------
REMEDIES
--------
The Parties hereto agree that the sole and exclusive remedies for
breaches of this Agreement, for negligence, negligent misrepresentation or for
any tort (but not any tort based upon fraud or intent to deceive) committed in
connection with the transactions described in, or contemplated by, this
Agreement are those set forth in this Agreement, and that no claim may be made
by any party hereto for any matter in connection with the transactions described
in, or contemplated by, this Agreement unless specifically set forth in this
Agreement and then only pursuant to the terms of this Agreement. Notwithstanding
the foregoing, no remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy conferred by this
Agreement, and each and every remedy will be cumulative and will be in addition
to every remedy given under this Agreement. The election of any one or more
remedies by Purchaser or Sellers will not constitute a waiver of the right to
pursue other available remedies conferred by this Agreement.
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ARTICLE XVI
-----------
NON-COMPETITION
---------------
16.1 NON-COMPETITION AGREEMENT.
(a) For a period of five (5) years from and after the Closing
Date each Seller and OLOG will not, and will cause their affiliates to
not, directly or indirectly:
(i) anywhere in North America engage in, carry on, be
employed by, consult with or have any interest in a business
substantially similar to, or in competition with the
Corporation on matters substantially similar to, the business
as carried on by the Corporation on the Closing Date;
(ii) induce any person who is a present or future
employee, officer, agent, affiliate or customer of the
Corporation now or subsequently existing to terminate the
relationship; and
(iii) induce any customer, supplier or any other party
with whom the Corporation does business to refuse to do
business with the Corporation on as favorable terms as
previously done with the Corporation.
Notwithstanding the foregoing, the parties acknowledge that CHI and its
affiliates from time to time provide, among other things, services
relating to the installation of cathodic protection systems. Nothing in
this Article XVI shall prohibit CHI or its affiliates from providing
such installation services so long as such services are secondary to a
primary project, in the ordinary course of CHI or its affiliates'
businesses.
Sellers and OLOG acknowledge that the length of time and geographic
restriction pertaining to all prohibitions in this Subsection (a) both
are reasonable and necessary for the legitimate protection of
Purchaser's business and interests.
(b) For purposes of this Article XVI, the business carried on
by the Corporation on the Closing Date shall mean the business of
providing materials or services for the evaluation, design,
installation, commissioning or maintenance of cathodic protection
systems and remote monitoring services.
(c) Each Seller and OLOG expressly agree and understand that
the remedy at law for any breach by such Seller or OLOG of this Article
XVI will be inadequate and that the damages flowing from such breach
are not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that upon adequate proof of such
Seller's or OLOG's violation of this Article XVI, Purchaser will be
entitled, among other remedies, to immediate injunctive relief and may
obtain a temporary restraining order restraining any threatened or
further breach. Nothing in this subsection (c) will be deemed to limit
Purchaser's remedies
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at law or in equity for any breach by either Seller or OLOG of any of
the provisions of this Agreement which may be pursued or availed of by
Purchaser.
(d) In the event any court of competent jurisdiction
determines that the specified time period or geographical area set
forth in this Section 16.1 is unreasonable, arbitrary or against public
policy, then a lesser time period or geographical area that is
determined by the court to be reasonable, non-arbitrary and not against
public policy may be enforced.
(e) In the event either Seller or OLOG violates any legally
enforceable provision of this Section 16.1 as to which there is a
specific time period during which such Seller or OLOG is prohibited
from taking certain actions or engaging in certain activities, then, in
such event the violation will toll the running of the time period from
the date of the violation until the violation ceases.
16.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required
by law or necessary in connection with any dealings with any public agency or
authority, from and after the Closing Date, Sellers will not disclose,
disseminate, divulge, discuss, copy or otherwise use or suffer to be used, in
competition with, or harmful to the interests of, the Corporation, any
information (written or oral), documents, lists or other data of or respecting
any aspect of the business being acquired by Purchaser from Sellers under this
Agreement.
ARTICLE XVII
------------
BENEFIT PLANS AGREEMENTS
------------------------
17.1 401(K) PLAN. Effective as of the Closing Date, Sellers shall cause
the Corporation to withdraw from and cause each employee of the Corporation to
cease to participate in The Xxxxxx Companies 401(k) Plan ("Sellers' 401(k)
Plan"). As soon as practicable after, but effective as of the Closing Date,
Purchaser shall take all action necessary and appropriate to extend coverage
under a new or existing defined contribution plan qualified under Sections
401(a) and 501(a) of the Code ("Purchaser's 401(k) Plan"), to employees of the
Corporation having account balances under Sellers' 401(k) Plan as of the Closing
Date. Such employees shall be credited under Purchaser's 401(k) Plan with
service, for eligibility and vesting purposes, with the service credited under
the terms of Sellers' 401(k) Plan. As soon as practicable following the Closing
Date and the extension or establishment of Purchaser's 401(k) Plan, but no
earlier than 60 days after the Closing Date, Sellers shall cause to be
transferred from the trustee of Sellers' 401(k) Plan to the trustee of
Purchaser's 401(k) Plan an amount in cash or in kind (with any in-kind transfer
to be agreed upon by Sellers and Purchaser) equal to the aggregate account
balances of employees of the Corporation under Sellers' 401(k) Plan determined
as of the transfer date (which shall be a valuation date) in accordance with the
methods of valuation set forth in Sellers' 401(k) Plan. From and after the date
of such transfer, Purchaser shall cause Purchaser's 401(k) Plan to assume the
obligations of Sellers' 401(k) Plan with respect to benefits accrued by
employees of the Corporation under Sellers' 401(k) Plan, and Sellers' 401(k)
Plan shall cease to be responsible therefor. Sellers shall cause the Corporation
to make any contributions that are required under Sellers' 401(k) Plan for the
period prior to the Closing Date. Sellers and
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Purchaser shall cooperate in making all appropriate IRS filings in connection
with the transfer described above.
17.2 WELFARE PLANS. Effective as of the Closing Date, (a) Sellers shall
cause the Corporation to withdraw from and cause each employee of the
Corporation to cease to participate in each welfare benefit plan sponsored by
Sellers and/or Sellers' affiliates and (b) Purchaser shall cause each such
employee to be covered by the welfare benefit plans sponsored and maintained by
Purchaser or adopted by the Corporation on and after the Closing Date. Sellers
and Sellers' affiliates shall only be liable for claims for benefits (other than
for short-term disability, workers' compensation and medical and dental
benefits) by employees of the Corporation (active or inactive) under such
welfare benefit plans arising out of occurrences prior to the Closing Date.
Sellers and Sellers' affiliates shall only be liable for claims for short-term
disability benefits and workers' compensation benefits by employees of the
Corporation (active or inactive) under such welfare benefit plans with respect
to payments otherwise due prior to the Closing Date. Sellers and Sellers'
affiliates shall only be liable for claims for medical and dental benefits by
employees of the Corporation (active or inactive) under such welfare benefit
plans with respect to services and treatment rendered prior to the Closing Date.
Moreover, the liability of Sellers and Sellers' affiliates under any such
welfare benefit plans is expressly conditioned upon such claims being made
within the applicable time period prescribed by Sellers' welfare benefit plans.
Purchaser shall cause each of the employees of the Corporation to be granted
credit under the welfare benefit plans which may be established by Purchaser for
such employees, for the year during which the Closing Date occurs, with any
deductibles already incurred by such employees for such year under the welfare
plans of Sellers and Sellers' affiliates, and Purchaser shall cause there to be
waived any pre-existing condition restrictions under Purchaser's welfare benefit
plans to the extent necessary to provide immediate coverage under Purchaser's
welfare plans with respect to conditions which were not excluded from coverage
as pre-existing conditions under Sellers' welfare benefit plans. Purchaser shall
provide the employees of the Corporation (active or inactive) and their
respective beneficiaries with medical benefits sufficient to eliminate health
continuation obligations of Sellers and Sellers' affiliates under Section 4980B
of the Code. It is agreed and understood that Sellers and/or Sellers' affiliates
will cooperate with Purchaser, and take any other actions reasonably requested
by Purchaser, so as to enable Purchaser, at its option, to continue the
insurance coverage in place immediately prior to the Closing Date (or similar
coverage) with respect to the welfare benefits of employees of the Corporation
(active and inactive) in a manner consistent with the foregoing provisions of
this Section 17.2, to the extent such continuance of insurance or similar
insurance is available from the existing insurance carrier(s).
ARTICLE XVIII
-------------
SUBSIDIARIES
------------
For a period expiring ten (10) days after the Closing Date, Purchaser
shall have the right to purchase any one or more of the Subsidiaries, for no
additional purchase price, on terms mutually satisfactory to Purchaser and the
Sellers. Purchaser shall exercise such right by written notice delivered to
Sellers. In such event, the parties will make necessary and appropriate changes
to this
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Agreement including, without limitation, Section 6.12 hereof. Sellers will not,
and will cause the Corporation to not, spin-off or distribute to the
Corporation's shareholders or otherwise transfer or convey any of the
outstanding Capital Stock of the Subsidiaries during such ten-day period.
ARTICLE XIX
-----------
OFFSHORE LOGISTICS, INC. GUARANTEE
----------------------------------
OLOG hereby irrevocably and unconditionally guarantees the full, timely
and faithful performance by Airlog of its obligations contained in this
Agreement, including, without limitation, Airlog's indemnification obligations
under Article X hereof (for the purposes of this Article XIX, the "Guaranteed
Obligations"). This guarantee is a continuing, absolute and unconditional
guarantee and shall remain in full force and effect so long as Airlog has any
obligations under the Guaranteed Obligations. OLOG waives notice of acceptance
of this guarantee and notice of any liability to which it may apply, and waives
presentation, demand and protest of any Guaranteed Obligation and also waives
notice of any nonpayment. The obligations of OLOG under this guarantee are
absolute and unconditional and shall not be impaired by:
(a) the failure of Purchaser to assert any claim or demand or
to enforce any right or remedy against Airlog; or
(b) the act or failure to act in any manner referred to in
this guarantee which may deprive OLOG of its right to subrogation
against Airlog to recover fully indemnity for any payment made pursuant
to this guarantee.
This guarantee is a continuing guarantee and shall be binding upon OLOG
and its successors and assigns and shall inure to the benefit of the successors
and assigns of Purchaser.
ARTICLE XX
----------
CORRPRO COMPANIES, INC. GUARANTEE
---------------------------------
Corrpro hereby irrevocably and unconditionally guarantees the full,
timely and faithful performance by Purchaser of its obligations contained in
this Agreement, including, without limitation, the payment of the Purchase Price
and Purchaser's indemnification obligations under Article X hereof (for purposes
of this Article XX, the "Guaranteed Obligations"). This guarantee is a
continuing, absolute and unconditional guarantee and shall remain in full force
and effect so long as Purchaser has any obligations under the Guaranteed
Obligations. Corrpro waives notice of acceptance of this guarantee and notice of
any liability to which it may apply, and waives presentation, demand and protest
of any Guaranteed Obligation and also waives notice of any nonpayment. The
obligations of Corrpro under this guarantee are absolute and unconditional and
shall not be impaired by:
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(a) the failure of Sellers to assert any claim or demand or to
enforce any right or remedy against Purchaser; or
(b) the act or failure to act in any manner referred to in
this guarantee which may deprive Corrpro of its right to subrogation
against Purchaser to recover fully indemnity for any payment made
pursuant to this guarantee.
This guarantee is a continuing guarantee and shall be binding upon
Corrpro and its successors and assigns and shall inure to the benefit of the
successors and assigns of Seller.
ARTICLE XXI
MISCELLANEOUS
21.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same document.
21.2 CAPTIONS AND SECTION HEADINGS. Captions and section headings are
for convenience only, are not a part of this Agreement and may not be used in
construing it.
21.3 WAIVERS. Any failure by any of the parties to comply with any of
the obligations, agreements or conditions set forth in this Agreement may be
waived by the other party or parties, but any such waiver will not be deemed a
waiver of any other obligation, agreement or condition contained herein.
21.4 RIGHT OF INSPECTION. From and after the date of this Agreement to
the Closing Date, Sellers will give to Purchaser and its counsel, accountants
and other representatives, full access during normal business hours to the
offices, properties, agreements, records and affairs of the Corporation. Such
investigation will not affect the warranties and representations of Sellers
under this Agreement. All such information will be treated confidentially and
will be used only for the purposes intended. If the transactions contemplated
under this Agreement do not take place, all documents and other property of the
Corporation or Sellers will be returned and all disclosures and information
given to Purchaser as contemplated under this Agreement will be treated as
confidential and not disclosed to others unless disclosed publicly by Sellers or
other third parties without fault on the part of Purchaser, or unless otherwise
required by law.
21.5 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS. Each of the parties
agrees to cooperate in the effectuation of the transactions contemplated under
this Agreement and to execute any and all additional documents to take such
additional action as is reasonably necessary or appropriate for such purposes.
21.6 ENTIRE AGREEMENT. This Agreement, including any certificate,
schedule, exhibit or other document delivered pursuant to its terms and the
Confidentiality Agreement dated
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December 17, 1996, constitutes the entire agreement between the parties. There
are no verbal agreements, representations, warranties, undertakings or
agreements between the parties, and this Agreement may not be amended or
modified in any respect, except by a written instrument signed by the parties to
this Agreement.
21.7 GOVERNING LAWS. This Agreement is to governed by and construed in
accordance with the internal laws of the State of Delaware.
21.8 KNOWLEDGE. All references to "knowledge" of a party or "known to"
a party means the actual knowledge of a party after reasonable investigation and
due diligence. Actual knowledge of any officer, director or supervisory employee
of a party will be imputed to, and deemed to be actual knowledge of, that party.
21.9 PRESS RELEASES. Prior to the Closing, neither party will issue or
cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated under this Agreement
without the prior consent of the other party first obtained; provided, however,
that nothing in this Agreement will prohibit either party from issuing or
causing publication of any press release or public announcement to the extent
that such party determines, on advice on counsel, that such action is required
by law, in which case the party making such determination will, if practicable
under the circumstances, use reasonable efforts to allow the other party
reasonable time to comment on such release or announcement in advance of its
issuance.
21.10 SUPPLEMENTAL DISCLOSURE. Sellers shall have the right from time
to time prior to the Closing to supplement or amend any Schedule with respect to
(a) any matter that existed as of the date of this Agreement and should have
been set forth or described in any Schedule and (b) any matter hereafter arising
which, if existing as of the date of this Agreement, would have been required to
be set forth or described in any Schedule; PROVIDED, HOWEVER, that with respect
to clause (a) above, any such supplemental or amended disclosure shall not be
deemed to cure any breach of any representation or warranty made in this
Agreement as of the date of this Agreement unless so consented to by Purchaser.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
HARCO OFFSHORE, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Its: Treasurer
--------------------------------------
"PURCHASER"
AIRLOG INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Small
---------------------------------------
Its: V.P. -- CFO
--------------------------------------
XXXXXX HOLDINGS, INC.
By: /s/ J. Xxxx Xxxx
---------------------------------------
Its: Sr. V.P.
--------------------------------------
"SELLERS"
By its execution of this Agreement below, Offshore Logistics, Inc.
agrees to be bound by the provisions of Articles XVI and XIX contained in this
Agreement.
OFFSHORE LOGISTICS, INC.
By: /S/ XXXXXX X. SMALL
---------------------------------------
Its: V.P. -- CFO
--------------------------------------
Date: 6-4-97
--------------------------------------
By its execution of this Agreement below, Corrpro Companies, Inc.
agrees to be bound by the provisions of Article XX contained in this Agreement.
CORRPRO COMPANIES, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Its: Senior V.P. and CFO
--------------------------------------
Date: 6-4-97
--------------------------------------
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EXHIBIT A
1. Each of CHI and the Corporation is validly existing and in good
standing as a corporation under the laws of the jurisdiction of its
incorporation with the corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as it is now being
conducted.
2. The Corporation is authorized to issue 6,000,000 shares of Class A
Common Stock, par value $.01 per share, all of which have been duly and validly
issued and are outstanding, 20,000,000 shares of Common Stock, par value $.01
per share, 2,000,000 of which have been duly and validly issued and are
outstanding, 100,000 shares of Preferred Stock, par value $.01 per share, none
of which are issued and outstanding. All the outstanding shares are fully paid
and nonassessable and were not issued in violation of any pre-emptive rights.
To our knowledge there are no other shares of stock, convertible or other
securities or rights, warrants or options with respect to any shares of stock
or securities of the Corporation authorized, issued or outstanding.
3. CHI has all requisite corporate power and corporate authority to
execute and deliver the Agreement and to perform its obligations thereunder.
4. The execution, delivery and performance of the Agreement by CHI have
been duly authorized by all requisite corporate action. The Agreement has been
executed and delivered by CHI and (assuming the Agreement is a valid and
binding obligation of Purchaser) is a valid and binding obligation of CHI,
enforceable against CHI in accordance with its terms, except that the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
5. Except as set forth in the Agreement or in any Schedule, the
execution and delivery of the Agreement and the consummation of the
transactions contemplated under the Agreement by the Sellers (a) are not in
conflict with the Certificate of Incorporation or By-Laws of the Corporation,
(b) do not (with or without notice or the passage of time or both) constitute a
default under, and are not in conflict with, any Contract set forth in Schedule
4.20, (c) do not violate any order, judgment or decree known to us to which the
Corporation is a party or to which any of its assets are subject, and (d) will
not (with or without notice or the passage of time or both) result in the
creation of any lien or any charge on or any loss of any assets of the
Corporation or in the acceleration or termination of any loan, security interest
or other agreement set forth on Schedule 4.22.
6. Except with respect to those matters as may be disclosed in any
Schedule, we have no knowledge of any action, suit, claim, demand, arbitration
or other proceeding or investigation, administrative or judicial, pending or
threatened against or affecting the Corporation or any of its assets at law or
in equity, or before or by any federal, state, municipal or other governmental
department or by any other commission, board, agency or instrumentality,
domestic or foreign, that
51
can reasonably be expected to have a material adverse effect on the business or
financial condition of the Corporation.
7. Upon transfer, assignment and delivery of the Shares owned by CHI
and payment therefor in accordance with the terms of the Agreement (assuming
Purchaser purchases such Shares without notice of any adverse claim within the
meaning of Section 8-302 of the Delaware Uniform Commercial Code), Purchaser
will acquire title to such Shares, free and clear of any adverse claims other
than those created by or through Purchaser.
52
EXHIBIT A-1
1. Each of OLOG and Airlog is validly existing and in good standing as
a corporation under the laws of the jurisdiction of its incorporation with the
corporate power and authority under such laws to own, lease and operate its
properties and conduct its business as it is now being conducted.
2. Each of OLOG and Airlog has all requisite corporate power and
corporate authority to execute and deliver the Agreement and to perform its
obligations thereunder.
3. The execution, delivery and performance of the Agreement by OLOG and
Airlog have been duly authorized by all requisite corporate action. The
Agreement has been executed and delivered by OLOG and Airlog and (assuming the
Agreement is a valid and binding obligation of Purchaser) is a valid and binding
obligation of OLOG and Airlog, enforceable against OLOG and Airlog in accordance
with its terms, except that the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
4. Upon transfer, assignment and delivery of the Shares owned by Airlog
and payment therefor in accordance with the terms of the Agreement (assuming
Purchaser purchases such Shares without notice of any adverse claim within the
meaning of Section 8-302 of the Delaware Uniform Commercial Code), Purchaser
will acquire title to such Shares, free and clear of any adverse claims other
than those created by or through Purchaser.
53
EXHIBIT B
[BFCA LETTERHEAD]
, 1997
------------------
Airlog International, Inc.
c/o Offshore Logistics, Inc.
000 Xxx xx Xxxx
X.X. Xxx 0X
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx Holdings, Inc.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Re: Stock Purchase Agreement dated June ___, 1997 among Harco Offshore, Inc.,
Airlog International, Inc. and Xxxxxx Holdings, Inc., et al
Ladies and Gentlemen:
We have acted as counsel for Harco Offshore, Inc., an Ohio corporation
(the "Company"), and Corrpro Companies, Inc., an Ohio corporation ("Corrpro"),
in connection with the Stock Purchase Agreement dated June , 1997 among Harco
Offshore, Inc., Airlog International, Inc., Xxxxxx Holdings, Inc., Corrpro and
Offshore Logistics, Inc. (the "Agreement"). This letter is furnished to you
pursuant to Section 7.4(c) of the Agreement. Capitalized terms not defined in
this letter have the meanings given to them in the Agreement.
We have examined and relied on originals or copies, certified or
otherwise identified to our satisfaction as being true copies, of all such
records of the Company and Corrpro, all such agreements, certificates of
officers of the Company and Corrpro and others, and such other documents,
certificates and corporate or other records we have deemed necessary as a basis
for the opinions expressed in this letter.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of all documents submitted to us as certified or photostatic copies. As to facts
material to the opinions expressed in this letter, we have relied on statements
and certificates of officers and representatives of the Company and Corrpro and
of stat authorities and on the representations, warranties and statements
contained in the Agreement. We have assumed that the Agreement, together with
the other contracts referred to in the Agreement, reflect the complete
understanding and agreement of the parties.
54
Airlog International, Inc.
,1997
-------------
Page 2
We have assumed: that each entity that is a party to the Agreement
(other than the Company and Corrpro) has been duly organized or formed and is
validly existing and in good standing as a corporate or similar organization
under the laws of its jurisdiction of organization, and is qualified to do
business and is in good standing as a foreign corporation or other organization
in each jurisdiction where by law it is required xx.xx so qualified; that the
Agreement has been duly authorized, executed and delivered by each other party
and constitutes such party's valid and binding obligation, enforceable against
such party in accordance with its terms; that each other party has the requisite
corporate or other organizational power and authority to perform such party's
obligations under the Agreement; and that each other party to the Agreement has
performed and will perform such party's obligations under the Agreement.
We have investigated such questions of law for the purpose of rendering
the opinions in this letter as we have deemed necessary. We express no opinion
in this letter concerning any law other than the law of the State of Ohio. We
assume, with your permission and without independent review, that insofar as the
law of the State of Delaware may be applicable to any matters opined to herein,
such law is identical to the State of Ohio, but we express no opinion as to the
extent to which the law of the State of Ohio or the laws of any other
jurisdiction may apply.
On the basis of and in reliance on the foregoing, and subject to the
limitations, qualifications and exceptions set forth below, we are of the
opinion that:
(1) Each of the Company and Corrpro is duly incorporated, validly
existing and is in good standing under the laws of the State of Ohio, has full
corporate power and authority to carry on its business as and where now
conducted, and to own or lease and operate its properties at and where now owned
or leased and operated by it.
(2) Each of the Company and Corrpro has all requisite corporate power
to execute, deliver and carry out its obligations under the Agreement and the
execution, delivery and performance of the Agreement by the Company and Corrpro
have been duly authorized by all requisite corporate action.
(3) The execution and delivery of the Agreement and the consummation of
the transactions contemplated under the Agreement by the Company and Corrpro are
not in conflict with the Articles of Incorporation or Code of Regulations of the
Company or Corrpro.
(4) The Agreement constitutes the legal, valid, and binding obligations
of the Company and Corrpro, and is enforceable against each of the Company and
Corrpro in accordance with its terms.
55
Airlog International, Inc.
,1997
-------------
Page 3
The above opinions are subject to the following additional limitations,
qualifications and exceptions:
A. The effect and application of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
laws now or hereafter in effect which relate to or limit
creditors' rights generally;
B. The effect and application of general principles of equity,
whether considered in a proceeding in equity or at law;
C. Limitations imposed by or resulting from the exercise by any
court of its discretion; and
D. Limitations imposed by reason of generally applicable public
policy principles or considerations.
Whenever we have asserted above that a matter is "to our knowledge" or
"known to us," our knowledge is limited to actual knowledge of those in our
office who have directly participated in this engagement.
We do not assume any responsibility for the accuracy, completeness or
fairness of any information, including, but not limited to, financial
information, furnished to you by the Company or Corrpro concerning the business
or affairs of the Company or Corrpro or any other information furnished to you
of a factual nature.
The opinions in this letter are rendered only to Airlog International,
Inc. and Xxxxxx Holdings, Inc. in connection with the Agreement. The opinions
may not be relied upon by Airlog International, Inc. and Xxxxxx Holdings, Inc.
for any other purpose, or relied upon by an other person, firm or entity for any
purpose. This letter may not be paraphrased, quoted or summarized, nor may it be
duplicated or reproduced in party.
Very truly yours,
BENESCH, FRIEDLANDER,
XXXXXX & XXXXXXX LLP
56
Exhibit 2.2
FIRST AMENDMENT
TO
STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT ("Amendment") is made
this 16th day of July, 1997, among Harco Offshore, Inc., an Ohio corporation
("Harco"), Airlog International, Inc., a corporation organized under the laws of
Panama ("Airlog"), Xxxxxx Holdings, Inc., a Delaware corporation ("Xxxxxx"),
Offshore Logistics, Inc., a Delaware corporation ("OLOG"), and Corrpro
Companies, Inc., an Ohio corporation ("Corrpro").
RECITALS:
A. Harco, Airlog, Xxxxxx, OLOG and Corrpro are parties to a Stock
Purchase Agreement dated June 4, 1997 concerning the acquisition of all the
outstanding shares of Cathodic Protection Services Company (the "Agreement").
B. The parties desire to amend the Agreement in accordance with the
terms set forth in this Amendment.
NOW, THEREFORE, Harco, Airlog, Xxxxxx, OLOG and Corrpro intending to be
legally bound, agree as follows:
1. Harco Offshore, Inc. is hereby removed as a party to the Agreement.
2. The term "Purchaser" in the Agreement shall mean Corrpro Companies,
Inc.
3. References to "Corrpro" in (a) the paragraph immediately following
Recital B in the Agreement; and (b) the last sentence of Section 10.6(b) of the
Agreement are hereby deleted.
4. The entirety of Article XX is hereby deleted and in its place, the
following is hereby inserted:
[This Article is intentionally left blank.]
57
5. Except as expressly set forth in this Amendment, the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
HARCO OFFSHORE, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Its: Treasurer
-------------------------------
AIRLOG INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Small
--------------------------------
Its: Vice President and CFO
-------------------------------
XXXXXX HOLDINGS, INC.
By: /s/ J. Xxxx Xxxx
--------------------------------
Its: Sr. Vice President
-------------------------------
OFFSHORE LOGISTICS, INC.
By: /s/ Xxxxxx X. Small
--------------------------------
Its: Vice President and CFO
-------------------------------
CORRPRO COMPANIES, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Its: Sr. Vice President and CFO
-------------------------------
