AGREEMENT FOR PURCHASE AND SALE OF ASSETS
OF
XXXXXX-XXXXXXXX, INC.
BY AND AMONG
ALEXANDER CITY CASTING COMPANY, INC.
INTERMET CORPORATION
XXXXXX-XXXXXXXX, INC.
XXXXXX X. XXXXXXXX, XX.
AND
XXXXXXXX FOUNDRY, INC.
November 15, 1995
TABLE OF CONTENTS*
Page
1. PURCHASE AND SALE OF ASSETS ........................................... 1
1.1 Purchase and Sale .................................................. 2
1.2 Excluded Assets ................................................... 3
1.3 Purchase Price; Post Closing Adjustment ........................... 3
1.4 Physical Inventory ................................................. 4
1.5 Assumption of Certain Liabilities ................................. 4
1.6 Obligations Not Assumed ........................................... 5
1.7 Sales Taxes ....................................................... 6
1.8 Proration ......................................................... 6
1.9 Allocation ......................................................... 6
1.10 Closing .......................................................... 6
1.11 Transactions and Documents at Closing ............................. 7
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER .................... 8
2.1 Organization and Authority .......................................... 8
2.2 Ownership of Shares; Subsidiaries ................................... 8
2.3 Authority; Inconsistent Obligations ................................. 8
2.4 Consents ............................................................ 9
2.5 No Violation; Compliance with Laws .................................. 9
2.6 Possession of Franchises, Licenses, Etc. ............................ 9
2.7 Financial Statements ................................................ 9
2.8 Liabilities ........................................................10
----------------------------------
*This Table of Contents does not constitute a part of this
Agreement.
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2.9 Title to Properties ............................................... 10
2.10 Inventories ...................................................... 10
2.11 Products Liability ............................................... 11
2.12 Returns and Consignments ........................................ 11
2.13 Personal Property ................................................ 12
2.14 Real Property .................................................... 13
2.15 Authority to Conduct Business and Intellectual Property Rights.... 16
2.16 Contracts ........................................................ 16
2.17 Insurance ........................................................ 16
2.18 Customers and Suppliers .......................................... 17
2.19 Contingencies .................................................... 17
2.20 Taxes ............................................................ 17
2.21 Employment and Labor Matters .................................... 18
2.22 Employee Benefit Matters ........................................ 19
2.23 Environmental Matters ............................................ 20
2.24 Absence of Certain Business Practices ............................ 22
2.25 Agreements and Transactions with Related Parties ................ 22
2.26 Absence of Changes .............................................. 22
2.27 No Defaults ...................................................... 24
2.28 Solvency ........................................................ 24
2.29 Full Disclosure .................................................. 24
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER ............ 25
2A.1 Authority ........................................................ 25
2A.2 Ownership of Shares; Subsidiaries ................................ 25
2A.3 Full Disclosure .................................................. 25
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3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT ............... 26
3.1 Organization ...................................................... 26
3.2 Authorization; No Inconsistent Agreements ......................... 26
3.3 Capitalization .................................................... 26
3.4 SEC Filings ...................................................... 26
3.5 Full Disclosure .................................................. 28
4. ADDITIONAL AGREEMENTS ............................................... 28
4.1 Effect of Access and Inspection .................................. 28
4.2 Expenses .......................................................... 28
4.3 Brokers .......................................................... 28
4.4 Publicity ........................................................ 28
4.5 Satisfaction of Certain Indebtedness .............................. 29
4.6 Employees ........................................................ 29
4.7 Confidentiality of Lost Foam Technology .......................... 29
4.8 No Bulk Sales Compliance .......................................... 30
4.9 Employee Benefits Matters ........................................ 30
5. INDEMNITIES ......................................................... 30
5.1 Indemnification of Purchaser and Parent by Seller and RFI ......... 30
5.2 Indemnification of Purchaser and Parent by Shareholder ............ 31
5.3 Indemnification of Seller and Shareholder ........................ 31
5.4 Payment .......................................................... 32
5.5 Defense of Claims ................................................ 32
5.6 Threshold and Limit of Liability ................................. 33
5.7 Indemnification Procedures ........................................ 34
5.8 Contractual Right of Offset ...................................... 35
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6 SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS ..................... 36
6.1 Survival .......................................................... 36
7. POWER-OF-ATTORNEY ................................................... 36
7.1 Appointment of Agent .............................................. 36
7.2 Liability of Agent ................................................ 37
7.3 Irrevocable; Binding on Successors, Etc. .......................... 37
8. MISCELLANEOUS ....................................................... 38
8.1 Notices .......................................................... 38
8.2 Counterparts ...................................................... 39
8.3 Entire Agreement .................................................. 39
8.4 Governing Law .................................................... 39
8.5 Dispute Resolution ................................................ 39
8.6 Successors and Assigns ............................................ 40
8.7 Partial Invalidity and Severability .............................. 40
8.8 Waiver ............................................................ 40
8.9 Headings .......................................................... 40
8.10 Number and Gender ................................................ 41
8.11 Time of Performance .............................................. 41
9. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS ........................... 41
9.1 Certain Definitions ............................................... 41
9.2 Index to Definitions ............................................. 45
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AGREEMENT FOR PURCHASE AND SALE OF
ASSETS OF
XXXXXX-XXXXXXXX, INC.
THIS AGREEMENT is made and entered into as of the 15th day
of November, 1995, by and among INTERMET CORPORATION, a Georgia
corporation ("Parent"); ALEXANDER CITY CASTING COMPANY, INC., an
Alabama corporation ("Purchaser"); XXXXXX-XXXXXXXX, INC., an
Alabama corporation ("Seller"); XXXXXX X. XXXXXXXX, XX., an
individual resident of the State of Alabama ("Shareholder"); and
XXXXXXXX FOUNDRY, INC., an Alabama corporation ("RFI").
RECITALS:
A. Seller is engaged in the manufacture, sale and
distribution of aluminum castings by the lost foam process
("Seller's Business").
B. Upon the terms and subject to the conditions contained
in this Agreement, Seller desires to sell, convey, transfer and
assign to Purchaser, and Purchaser desires to purchase and
acquire from Seller, all of the assets of Seller which are used,
usable or useful in the conduct and operation of Seller's
Business, other than the Excluded Assets.
C. Parent is the sole record and beneficial shareholder of
Purchaser and a portion of the consideration to be paid to Seller
hereunder consists of shares of the common stock of Parent.
D. Shareholder is the majority shareholder of Seller and
RFI and entering into certain representations, warranties,
covenants, agreements and indemnities contained herein as a
material and essential inducement to Purchaser entering into this
Agreement.
E. RFI is entering into certain representations,
warranties, covenants, agreements and indemnities contained
herein as a material and essential inducement to Purchaser
entering into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT:
1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale. Subject to the terms and conditions
contained herein and except as otherwise provided in Paragraph
1.2, Seller agrees to sell, transfer, convey and assign to
Purchaser, and Purchaser agrees to purchase and acquire from
Seller, on the Closing Date (such term and other capitalized
terms used herein being defined in this Agreement in either
Paragraph 9.1 or at the places indicated in Paragraph 9.2), all
of Seller's right, title and interest in and to all of the assets
and properties of Seller which are used, useable or useful in
Seller's Business (all of such assets and properties (excluding
the Excluded Assets) being referred to collectively as the
"Transferred Assets"), including without limitation, the
following:
(a) all that certain lot, tract or parcel of real
estate more particularly described on Schedule 1.1(a) attached
hereto, together with all plants, shrubs and trees located
thereon, and together with all rights, ways and easements
appurtenant thereto, including, without limitation, all of
Seller's right, title and interest in and to the land underlying
and the air space overlying any public or private ways or streets
crossing or abutting said real estate (the "Owned Real
Property");
(b) all of Seller's machinery, parts, toolings, dies,
jigs, molds, supplies, laboratory and testing equipment,
equipment, computers, software, tools, vehicles, furniture,
office equipment and other tangible personal property, including
without limitation, all of such assets described and identified
in Schedule 1.1(b);
(c) all of Seller's right, title and interest in and
to all real property leased from third parties and identified in
Schedule 1.1(c) and all of Seller's right, title and interest in
and to all structures, improvements, buildings, leasehold
improvements and fixtures situated on, affixed to or appurtenant
to such leased real property, together with all of Seller s
right, title and interest in and to all easements, rights of way,
licenses and other interests therein (collectively, the "Leased
Real Property");
(d) all of Seller's saleable and useable inventories
of raw materials, work-in-process (whether on hand or in transit
from suppliers), and finished goods or products, in existence at
the close of business on the day immediately preceding the
Closing Date, other than obsolete inventory (collectively, the
"Inventories");
(e) all of Seller's business, proprietary and
confidential information, including without limitation: (i) the
Lost Foam Technology; (ii) trade secrets, capabilities, technical
information, know-how, process technology, designs, processes,
procedures, algorithms, discoveries, patents, patent
applications, copyrights, copyright applications, blueprints,
engineering data, patterns, bills of materials, and drawings and
specifications, and all improvements thereof, (iii) all data,
files, books and records, customer lists, vendor lists, parts
lists and order information, (iv) all of Seller's certifications
and approvals issued or granted to Seller by Seller's customers,
but only to the extent transferable, and (v) all of Seller's
other information and intangible property rights relating to the
operation of the Transferred Assets or Seller's Business;
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(f) to the extent transferable, all of Seller's
trademarks, service marks and trade names (which shall not
include Seller's corporate name), all registrations and pending
applications therefor, and all goodwill associated therewith;
(g) all of Seller's right, title and interest in, to
and under the purchase orders, customer orders, contracts,
leases, permits, authorizations, licenses and agreements which
relate to Seller's Business and which are identified on Schedule
1.1(g) and which remain unfilled, open or incomplete at the
Closing Date (collectively, the "Assigned Contracts"); and
(h) all warranties and guaranties by third parties and
all purchase discounts, in each case relating to Seller's
Business or the Transferred Assets.
1.2 Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the Transferred Assets shall not
include the assets and properties described in Schedule 1.2 (the
"Excluded Assets").
1.3 Purchase Price; Post Closing Adjustment. (a) Subject to
Paragraphs 1.3(b) and 1.8, the purchase price for the Transferred
Assets (the "Purchase Price") shall be an amount equal to:
(i) $1,985,450, plus
(ii) the estimated amount of the Inventory
Component subject to post-closing adjustment as herein
provided.
(b) For purposes of determining the Purchase Price payable
at the Closing, Seller and Purchaser shall estimate the value of
the Inventories as follows: (i) raw materials (which shall for
this purpose include molten aluminum) shall be valued at their
aggregate direct cost plus associated inbound freight, (ii) work-
in-process, if any, shall be valued at sixty-seven percent (67%)
of their respective direct selling prices (net of freight), and
(iii) finished goods shall be valued at eighty-five percent (85%)
of their respective direct selling prices (net of freight), as
reflected in the books of account and records and purchase orders
or contracts of Seller, as appropriate (as so estimated, the
"Estimated Amount"). For purposes of finally determining the
Inventory Component, the Estimated Amount will be adjusted in
accordance with the provisions of Paragraph 1.3(c).
(c) Within 10 days after the Closing Date, Purchaser and
Seller shall in good faith jointly endeavor to determine the
actual value of the Inventory as reflected on the Inventory
Quantity Schedule, all of which shall be valued at cost for raw
materials and for all other inventory as historically priced in
the audited annual financial statements of Seller using GAAP. If
Purchaser and Seller agree on such valuation, they shall execute
an inventory component adjustment schedule that shall be final
and binding on the parties. If the inventory component
adjustment schedule reflects a valuation in excess of the
Estimated Amount, Purchaser shall promptly pay over to Seller in
immediately available funds the amount by which the actual
valuation of the Inventory exceeds the Estimated Amount. If the
inventory component adjustment schedule reflects a valuation
lower than the Estimated Amount, Seller shall promptly pay over
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to Purchaser in immediately available funds the amount by which
the Estimated Amount exceeds the actual valuation of the
Inventory.
(d) If Purchaser and Seller cannot agree on the inventory
component adjustment schedule within such 10-day period, then
those aspects as to which they cannot agree shall be submitted to
Xxxxxxx, Xxxxxxxx & Company, Montgomery, Alabama, independent
certified public accountants (the "Arbiter"), who shall resolve
the dispute and make a final written determination thereof which
shall be binding and conclusive on the parties. The costs of
such determination by the Arbiter shall be borne equally by
Seller and Purchaser.
(e) The value of the Inventories as so determined pursuant
to Paragraphs 1.3(c) and 1.3(d) is referred to herein as the
"Inventory Component".
1.4 Physical Inventory. Representatives of Purchaser and
Seller have, prior to the date hereof, jointly conducted and
completed a physical inventory of the Inventories. The quantity
of Inventories counted in the physical inventory has been
compiled into a schedule (the "Inventory Quantity Schedule")
which has been signed by Representatives of Purchaser and Seller,
and such Inventory Quantity Schedule is final and binding on the
parties.
1.5 Assumption of Certain Liabilities. (a) Purchaser
agrees to assume, as at the Closing Date, and to pay or perform,
in accordance with their terms, each of the following obligations
of Seller (collectively, the "Assumed Liabilities"):
(i) Seller's accrued obligations for current year
vacation and holiday pay as of the Closing Date as listed on
Schedule 1.5(a)(i), but only in respect of those employees
who accept employment with Purchaser immediately following
the Closing;
(ii) all obligations under the Assigned Contracts
(but specifically excluding any obligation or liability
arising from any default or non-performance by Seller prior
to the Closing Date); and
(iii) those obligations of Seller to be
prorated pursuant to Paragraph 1.8 for which Purchaser is
given a credit against the Purchase Price.
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(b) Nothing contained in this Paragraph 1.5 or in any
instrument of assumption executed by Purchaser at the Closing
shall be deemed to release or relieve Seller or Shareholder from
their respective representations, warranties, covenants,
agreements and indemnities contained in this Agreement or any
certificate, schedule, instrument, document or agreement executed
pursuant hereto or in connection herewith, including without
limitation, the obligations of Seller and Shareholder to provide
indemnification in accordance with the provisions of Article 5.
Notwithstanding such assumption, nothing contained herein or in
any instrument of assumption shall prohibit Purchaser from
contesting, in good faith and at the expense of Purchaser, the
amount, validity or enforceability of any of the Assumed
Liabilities.
1.6 Obligations Not Assumed. Except for the Assumed
Liabilities, Purchaser shall not assume or be liable or
responsible for any obligation or liability of Seller or
Shareholder of any kind or nature whatsoever. Except for the
Assumed Liabilities, Seller, and Shareholder shall cause Seller
to, pay, satisfy and perform all of its obligations, whether
fixed, contingent, known or unknown and whether existing as of
the Closing Date or arising thereafter, or which may affect in
any way the Transferred Assets or Seller's Business. Without
limiting the generality of the foregoing, under no circumstances
shall Purchaser be deemed to assume any liability or obligation
of Seller or Shareholder for (a) any actual or alleged tortious
conduct of Seller or any of its employees or agents, any product
liability claim relating to products cast (regardless of whether
Seller shall have removed the gating from such casting) or
services rendered by Seller, any claim for breach of warranty or
contract by Seller with respect to any products cast (regardless
of whether Seller shall have removed the gating from such
casting) or services rendered by Seller, any claim predicated on
strict liability or any similar legal theory with respect to any
products cast (regardless of whether Seller shall have removed
the gating from such casting) or services rendered by Seller, or
any other Action relating to Seller's Business, (b) Seller s
violation of any Law in effect prior to the Closing Date,
including without limitation, Seller's violation of or any
failure to comply with any Environmental Law or any liability
arising from or in connection with the possession, use,
ownership, handling or disposal of any Hazardous Material, (c)
any business or business activities of Seller which are not part
of Seller's Business, (d) any indebtedness for borrowed money or
capitalized lease or purchase money obligations, including,
without limitation, any Company Indebtedness, other than as
specifically set forth herein respecting the Assigned Contracts,
(e) any liability or obligation arising out of the operation of
Seller's Business on or prior to the Closing Date relating to
present or past employees of Seller's Business, including without
limitation, liability for wages, compensation, overtime, or any
employee benefit liability or obligation not expressly assumed by
Purchaser, any liability or obligation of Seller arising from a
violation of any employment discrimination or other Law by Seller
on or prior to the Closing Date for the protection or benefit of
employees, any severance or bonus obligation of Seller relating
to the transactions contemplated herein or caused by Purchaser's
failure to employ, or offer to employ, any Person, or any
workers' compensation claims or liabilities in respect to
incidents which occur on or prior to the Closing Date, (f) any
liability arising under any Plans of Seller, (g) any liability or
obligation of Seller to any of its shareholders, (h) any
liability of Seller or Shareholder for expenses or Taxes, if any,
in connection with, resulting from or arising out of this
Agreement or the transactions contemplated hereby (other than for
certain transaction taxes which shall be dealt with as provided
5
for in Paragraph 1.7), (i) any liability of Seller or its
shareholders for any Taxes of any kind or character, (j) any
liability of Seller or any its shareholders under or arising by
reason of this Agreement or the transactions contemplated by this
Agreement except with respect to payments or performance due for
any rights or assets whatsoever to which Purchaser shall be
entitled under any Assigned Contracts, or (k) any liability or
obligation arising out of or relating to the Excluded Assets.
Notwithstanding any other provision of this Agreement, the
obligations of Seller pursuant to this Paragraph 1.6 shall
survive the Closing and consummation of the transactions
contemplated by this Agreement.
1.7 Sales Taxes. Purchaser shall be responsible for the
payment of any and all sales, use, excise, transfer, value added
and similar taxes and transfer or recording fees imposed by any
Government in any jurisdiction in connection with the
transactions contemplated herein.
1.8 Proration. There shall be prorated between Purchaser
and Seller as of the close of business on the Closing Date the
following accrued or prepaid items relating to Seller's Business:
(a) ad valorem and similar taxes, with respect to the Transferred
Assets, (b) rents, royalties, and other payments due under the
Assigned Contracts, (c) charges for utilities serving the Leased
Real Property, and (d) license fees relating to any of the
Transferred Assets (but only in respect of transferable licenses
actually assumed by Purchaser). The cash portion of the Purchase
Price to be paid hereunder shall be appropriately decreased by
the pro rata amount of any such items which are accrued but
unpaid at the Closing Date, and the cash portion of the Purchase
Price shall be appropriately increased by the pro rata amount of
any such items which have been prepaid by Seller as of the
Closing.
1.9 Allocation. The Purchase Price shall be allocated
among the Transferred Assets in accordance with Schedule 1.9
hereto and the Evaluation Summary, dated September 5-6, 1995,
issued by AccuVal Associates, Incorporated, all in conformity
with Section 1060(b) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and the regulations
promulgated thereunder. Purchaser, Seller and Shareholder agree
to cooperate in filing all information required by Section
1060(b) of the Internal Revenue Code and the regulations there-
under, and to take no position on or with respect to any income
tax return, report or filing (including without limitation
amendments thereto) inconsistent with such allocation.
1.10 Closing. The consummation of the transactions
contemplated in this Agreement (the "Closing") are taking place
on the date hereof and concurrently with the execution and
delivery of this Agreement at the offices of Xxxxxxxxxx & Xxxx,
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx (the "Closing
Date"). The transactions provided for in this Agreement are
effective as of the opening of business on the Closing Date.
1.11 Transactions and Documents at Closing.
(a) At the Closing:
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(i) Seller shall convey to Purchaser all of the
Transferred Assets, free and clear of any and all Liens
except the lessor's interest in the IDB Lease, and in
furtherance thereof has delivered to Purchaser (x) an
Assignment and Xxxx of Sale in the form of Exhibit A with
respect to the Transferred Assets other than the Owned Real
Property, (y) a General Warranty Deed in the form of Exhibit
B with respect to the Owned Real Property, and (z) such
other deeds, bills of sale, assignments, certificates of
title, documents and other instruments of transfer and
conveyance and certificates as Purchaser and its legal
counsel shall reasonably request;
(ii) upon such delivery by Seller, Purchaser shall
pay the cash portion of the Purchase Price (i) first, by
wire transfer to Lenders of immediately available funds in
an amount sufficient to pay all Company Indebtedness due to
Lenders (but only to the extent that Seller has not
otherwise satisfied the Company Indebtedness and provided
evidence thereof satisfactory to Purchaser), and (ii) the
excess, if any, next by paying the remaining portion thereof
by wire transfer of immediately available funds to a bank
account in the continental United States as advised in
writing by Seller to Purchaser; and
(iii) Purchaser shall assume the Assumed
Liabilities by delivering to Seller an Instrument of
Assumption in the form of Exhibit C.
(b) All deliveries, payments and other transactions
and documents relating to the Closing shall be interdependent and
none shall be effective unless and until all are effective.
(c) Each party shall, at the request of any other
party from time to time and at any time, whether on or after the
Closing Date, and without further consideration, execute and
deliver such deeds, assignments, transfers, assumptions, convey-
ances, powers of attorney, receipts, acknowledgments, acceptances
and assurances as may be reasonably necessary to procure for the
party so requesting, and its transferees, successors and assigns,
or for aiding and assisting in collecting and reducing to
possession, any and all of the Transferred Assets or the Assumed
Liabilities, or otherwise to satisfy and perform the obligations
of the parties hereunder.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
To induce Purchaser and Parent to enter into this Agreement
and to induce Purchaser to purchase the Transferred Assets,
Seller represents and warrants to, and covenants and agrees with,
Purchaser and Parent as follows:
2.1 Organization and Authority. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Alabama. Seller's principal office and its
places of business are at the locations specified in Schedule
2.1. Seller has all requisite corporate power and authority and
7
is entitled to own or lease the Transferred Assets and to carry
on Seller's Business as and in all places where such business is
now conducted and such properties are owned or leased. Seller is
duly authorized, licensed, qualified or domesticated as a foreign
corporation in the jurisdictions listed in Schedule 2.1, which
are all jurisdictions where the character of the property owned
by it or the nature of the business transacted by it makes such
authorization, license, qualification or domestication necessary,
except where the failure to be so qualified and in good standing
would not have a material adverse effect on the business or
financial condition of Seller. Schedule 2.1 lists (i) all
locations where any Transferred Assets are located, or where
Seller has an office or place of business or maintains any
Inventory, and (ii) all names under which Seller or its
predecessors have operated during the past five years, if
different from its present corporate name.
2.2 Ownership of Shares; Subsidiaries. Those persons
listed in Schedule 2.2 are the record and beneficial owners of
all of the issued and outstanding capital stock of Seller. There
are no outstanding securities convertible into the capital stock
or rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements or arrangements providing for the
issuance (contingent or otherwise) of, or any Actions relating
to, the capital stock of Seller. Seller does not have any
ownership interest, direct or indirect, and has no commitment to
purchase or otherwise acquire any ownership interest, direct or
indirect, in any other Person.
2.3 Authority; Inconsistent Obligations. (a) Seller has
the full right, power and authority to execute and deliver and to
perform and comply with this Agreement and each other agreement,
document and instrument contemplated hereby, in each case in
accordance with their respective terms. All proceedings and
actions required to be taken by Seller to authorize the
execution, delivery, and performance of this Agreement have been
properly taken. This Agreement has been duly and validly
executed and delivered on behalf of Seller by its duly authorized
officers. This Agreement constitutes the valid and legally
binding obligation of Seller, enforceable against it in
accordance with its terms.
(b) Except as disclosed in Schedule 2.3(b), neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated herein will result in a
violation or breach of, or constitute a default under (a) the
Articles of Incorporation or By-Laws of Seller, (b) any material
term or provision of any indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other
agreement, instrument or document, (c) any material Law, or (d)
any other material commitment or restriction, to which Seller is
a party or by which it or any of the Transferred Assets is
subject or bound; nor will such actions result in (i) the
creation of any Lien on any of the Transferred Assets, (ii) the
acceleration or creation of any material obligation of Seller, or
(iii) the forfeiture of any material right or privilege of
Seller.
2.4 Consents. The execution and delivery of this Agreement
by Seller and the consummation of the transactions contemplated
by this Agreement (a) do not require the consent, approval or
action of, or any filing with or notice to, any Person or
Government, except as specified in Schedule 2.4, (b) do not
require the consent or approval of any of Seller's shareholders
8
or Seller's board of directors, except such as have been
obtained, and (c) do not impose any other term, condition or
restriction on Purchaser or the Transferred Assets pursuant to
any business combination, takeover or other similar Law.
2.5 No Violation; Compliance with Laws. Seller is not in
default under or in violation of its Articles of Incorporation or
By-Laws. Seller has complied in all material respects with all
Laws applicable to Seller's Business and/or the Transferred
Assets, the failure to comply with which may have a materially
adverse effect on the Transferred Assets or Seller's Business.
Except as specified in Schedule 2.23, Seller has not received any
notification of any asserted present or past failure by Seller to
comply with any such Laws.
2.6 Possession of Franchises, Licenses, Etc. Except as
specified in Schedule 2.6, Seller possesses all franchises,
certificates, licenses, permits and other authorizations from
Governments, that are necessary for the ownership, maintenance
and operation of its properties, assets and business, and Seller
is not in violation of any thereof the failure to comply with
which may have a material adverse effect on the Transferred
Assets or Seller's Business.
2.7 Financial Statements. Prior to the date hereof, Seller
has delivered to Purchaser copies of Seller's predecessor s
Audited Balance Sheets as at December 31, 1994, and September 30,
1993, and related Audited Statements of Income for the fiscal
years then ended, together with the audit opinion thereon of
Wilson, Price, Xxxxxxxx & Xxxxxxxxxxx, independent certified
public accountants. Except as disclosed in Schedule 2.7, all of
such financial statements (including any related notes and
schedules thereto) (the "Audited Financial Statements") are true
and correct and have been prepared in accordance with GAAP
consistently applied and present fairly the financial condition
of Seller predecessor's as at the respective dates thereof and
the results of its operations for the respective periods then
ended. Seller has also delivered to Purchaser copies of Seller's
unaudited Balance Sheet as at August 31, 1995 (the "Unaudited
Balance Sheet"), and unaudited Statement of Income for the eight-
month period then ended (such unaudited Statement of Income,
together with the Unaudited Balance Sheet, being collectively
referred to as the "Unaudited Financial Statements"). Except as
disclosed in Schedule 2.7, the Unaudited Financial Statements
(including any related notes and schedules thereto) are true and
correct, have been prepared from the books and records of Seller
in accordance with GAAP consistently applied, and present fairly
the financial condition of Seller as at the date thereof and the
results of its operations for the eight-month period then ended
subject only to reasonable and customary year end audit
adjustments.
2.8 Liabilities. Seller does not have any material debt,
liability or obligation of any kind, whether accrued, absolute,
known or unknown, contingent or otherwise, except (i) those
reflected on the audited Balance Sheet of Seller's predecessor as
at December 31, 1994 (the "Audited Balance Sheet"), (ii) current
liabilities of Seller incurred in the regular and ordinary course
of business consistent with Seller's and Seller's predecessor's
past practices in connection with the purchase of goods and
services since December 31, 1994 (the "Reference Date") properly
9
reflected in Seller's and Seller's predecessor's books of
account, and (iii) as specifically disclosed in Schedule 2.8.
2.9 Title to Properties. Except for the Excluded Assets
and as described in Schedule 2.9, the Transferred Assets
constitute all of the assets used in Seller's Business as
currently being conducted by Seller and as conducted during the
periods covered by the Audited Financial Statements. Except as
set forth in Schedule 2.9, no Person has any Lien on any of the
Transferred Assets. Except as set forth in Schedule 2.9, upon
consummation of the transactions contemplated by this Agreement
at the Closing, Purchaser will take the Transferred Assets free
and clear of any and all Liens except for the interest of the
lessor in the IDB Lease. All amounts due under the Bond (as
defined in the IDB Lease) have been paid in full and such Bond
fully retired and canceled, and all Indenture Indebtedness (as
defined in the IDB Lease) has been paid in full. There are no
unpaid rents or other amounts due but remaining unpaid under the
IDB Lease. The lessee under the IDB Lease may exercise at any
time the option to purchase the Project (as defined in the IDB
Lease) upon not less than thirty (30) days prior written notice
for the sum of $100.00, whereupon the Board (as defined in the
IDB Lease) will transfer and convey the Project to such lessee
subject only to the Permitted Exceptions (as defined in the IDB
Lease).
2.10 Inventories. The Inventories (a) if finished goods,
are merchantable, fit for the purpose intended, and conform in
all material respects to all orders, contracts or commitments for
such goods, and (b) if not finished goods, are of a quality and
quantity suitable and useable for the production or completion of
finished goods for sale in the ordinary course of Seller's
Business as first quality goods; provided, however, that in the
event of a breach of the foregoing clauses (a) and (b) of this
Paragraph 2.10, Purchaser and Parent shall be entitled to return
such unfit, non-conforming, unsuitable or unusual or obsolete or
below standard quality Inventories to Seller for a prompt refund
of the portion of the Inventory Component attributable thereto,
such Inventory being returned to Seller at Seller's sole cost and
expense. Each item of inventory reflected on the Audited Balance
Sheet is so reflected on the basis of a complete physical count.
Each item of inventory reflected on the Audited Balance Sheet,
the Unaudited Balance Sheet, and the books and records of Seller
is valued at cost for raw materials and for all other inventory
as historically priced in Seller's annual audited financial
statements in accordance with GAAP, and Seller has recognized all
loss resulting from the obsolescence, physical deterioration,
changes in prices, discontinuation of product lines or any other
changes resulting in the valuation of any item of inventory below
cost. All inventories which are reasonably expected to not be
used or sold within the normal operating cycle of Seller s
Business have been classified as noncurrent assets and reported
as such in the Audited Financial Statements and Unaudited
Financial Statements, as appropriate. Except as disclosed in
Schedule 2.10, Seller has no Firm Purchase Commitments. For
purposes of this Agreement, "Firm Purchase Commitments" means (i)
any firm, noncancelable purchase commitment (or series of such
commitments) for the purchase of inventory goods, including
without limitation, raw materials, component parts, work-in-
progress and finished goods) equal to or greater than $25,000,
(ii) any other firm, noncancelable purchase commitments which
individually are more than $2,500 but less than $25,000, and
which in the aggregate are equal to or greater than $25,000, or
(iii) inventory acquired for a specific customer contract or
purchase order. Except as disclosed in Schedule 2.10, the
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Inventories, and orders for raw materials and supplies, are at
levels reasonably consistent with Seller's reasonable past
business practices.
2.11 Products Liability. Except as set forth in Schedule
2.11: (a) there is no Action by or before any Government, Forum
or Person pending, or to the knowledge of Seller threatened,
against or involving Seller in connection with any product
manufactured or sold as a part of Seller's Business or any of the
Transferred Assets, alleging that the product has been
manufactured, shipped or sold by Seller and that the product has
a defect in manufacture or design, or alleging any failure to
warn of the defect; nor to the knowledge of Seller is there any
reasonable basis therefor; (b) to the knowledge of Seller, there
has not been any Products Liability Occurrence; (c) since the
Reference Date, to the knowledge of Seller, there has not been
any (i) product recall, or (ii) product rework or retrofit (other
than in quantities which are normal in the industry), in either
case relating to any product which has been manufactured, shipped
or sold by Seller's Business; and (d) to the knowledge of Seller,
there are no design defects resulting in hazardous conditions,
nor has there been any failure to warn of any design defects,
involving any product manufactured, shipped or sold in connection
with Seller's Business. For purposes hereof, "Products Liability
Occurrence" means any accident, happening or event caused or
allegedly caused by any hazard or defect or alleged hazard or
alleged defect in the manufacture, design, materials or
workmanship, or, any failure or alleged failure to warn of the
hazard, defect or alleged hazard or alleged defect, of any
product or part thereof, manufactured, sold or distributed by
Seller.
2.12 Returns and Consignments. No customer of Seller has
any right to return any goods for credit or refund pursuant to
any agreement, understanding or practice that Seller will take
back goods which are unsold. Without limiting the generality of
the foregoing, and except as disclosed in Schedule 2.12, Seller
does not presently have any goods in the possession of any
customer, subcontractor or dealer on consignment or on a similar
basis.
2.13 Personal Property. (a) Except as set forth in
Schedule 2.13(a), all of the machinery, equipment, vehicles and
other items of tangible personal property which constitute part
of the Transferred Assets, or which are leased by Seller pursuant
to an Assigned Contract, are in operating condition and repair,
normal wear and tear excepted, as presently installed at their
present physical location. Except for the Excluded Assets, the
Transferred Assets listed on Schedules 1.1(b), 1.1(c), 1.1(g) and
the Inventory together constitute all items of tangible personal
property and real property owned or leased by Seller and used in
Seller's Business except as provided in Schedule 2.9 or Schedule
2.13(a).
(b) Except as set forth in Schedule 2.13(b), to the
knowledge of Seller, (i) all lessors of any machinery, equipment
or other tangible personal property leased to Seller have
performed and satisfied their respective duties and obligations
under such leases, and (ii) Seller has no claims, actions or
causes of action against any such lessor for failure to perform
and satisfy its duties and obligations thereunder.
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(c) Schedule 2.13(c) identifies by description or
inventory number all material items of personal property,
equipment and other tangible personal property which, to the
knowledge of Seller, are leased, loaned, bailed or otherwise
furnished by Seller to or on behalf of any Person that (i) relate
to Seller's Business, (ii) are used in the conduct of Seller's
Business, and (iii) are not physically located at Seller's
Alexander City manufacturing facility (collectively, the "Seller
Furnished Items"). Seller has the absolute right to demand the
return of the Seller Furnished Items at such time as Seller may
require without any liability whatsoever to Seller. All of the
Seller Furnished Items are held by such Person in accordance with
the terms and conditions described in Schedule 2.13(c), are
segregated from other property of the Person to whom furnished,
and are clearly labeled and identifiable as Seller's property,
and Seller has complied with all "signage" and similar Laws with
respect to Seller Furnished Items.
(d) Schedule 2.13(d) identifies by description or
inventory number all material items of personal property,
equipment and other tangible personal property which, to the
knowledge of Seller, are loaned, bailed or otherwise furnished to
Seller by or on behalf of any Person that (i) relate to Seller s
Business, (ii) are used in the conduct of Seller's Business, and
(iii) are in the possession of Seller (collectively, the
"Customer Furnished Items"). Schedule 2.13(d) identifies each
Assigned Contract pursuant to which each such Customer Furnished
Item is furnished. Seller has complied in all material respects
with all of its obligations relating to the Customer Furnished
Items, and, upon the return thereof to the customer who provided
such Customer Furnished Item in the condition thereof on the date
thereof, Seller would have no material liability with respect
thereto.
(e) No representation or warranty, express or implied,
is made regarding the physical condition or quality of any of the
tangible personal property constituting a part of the Transferred
Assets except as set forth in this Paragraph 2.13 and Paragraphs
2.10 and 2.11. EXCEPT as set forth in Paragraphs 2.13(a), 2.10
and 2.11, SELLER MAKES NO WARRANTY OF MERCHANTABILITY, or quality
or condition as to any such tangible personal property or any
item thereof, or as to the workmanship thereof of the absence of
any defects therein. Except as otherwise set forth in this
Paragraph 2.13 or in Paragraph 2.10, it is understood that all
machinery, equipment and vehicles are being conveyed on an "AS IS
- WHERE IS" basis as to their physical condition in their present
physical location on the Closing Date. In no event shall Seller
or Shareholder be liable to Purchaser or Parent for exemplary or
punitive damages in connection with any breach of this Paragraph
2.13, and, Purchaser and Parent hereby expressly waive any and
all right to assert any claim for exemplary or punitive damages
in connection with any claim for breach of the representations
and warranties made in Paragraph 2.13.
2.14 Real Property. (a) Except for the Owned Real Property
and as otherwise set forth on Schedule 2.14(a), Seller does not
own or have the right or option to acquire any real property, nor
does Seller have any other material rights, interests, easements,
rights of way, licenses, usufructs or other non-fee simple
interests in any real property, other than with respect to the
Leased Real Property.
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(b) Seller has good and marketable fee simple title to
the Owned Real Property free and clear of all Liens whatsoever
other than those matters listed in Schedule 2.14(b) (the
"Permitted Exceptions").
(c) All agreements with respect to leases, easements,
rights of way, licenses, usufructs and other non-fee simple
interests granted to Seller in the Leased Real Property
(collectively, the "Real Property Leases") are listed in Schedule
2.14(c). Except as set forth on Schedule 2.14(c) and for
statutory Liens arising in favor of landlords, the interest of
Seller in and under each of the Real Property Leases is free and
clear of any defects, claims or Liens and subject to no present
Action or threatened Action.
(d) Seller is lawfully in possession of all real
property which is the subject of a Real Property Lease and with
respect to which Seller is a tenant or lessee or has been granted
a possessory interest in such Leased Real Property, and all
conditions precedent to the obligation of Seller to take
possession and continue to occupy all Leased Real Property have
been fulfilled. Seller has the exclusive right of possession and
is presently occupying the entirety of each parcel of its Leased
Real Property for the purposes set forth in the respective Real
Property Lease.
(e) Other than as reflected on Schedule 2.14(c), all
of the Owned Real Property and the Leased Real Property is free
from any development, use or occupancy restrictions, except those
imposed by generally applicable zoning and land use Laws, and
from all special taxes or assessments, except those generally
applicable to other properties in the tax districts in which the
Owned Real Property and the Leased Real Property is located.
There is available to all the Owned Real Property and the Leased
Real Property, through private easements and facilities or
dedicated public easements and facilities, water, gas, sewer,
electricity and telephone service sufficient to allow Seller's
Business to be conducted as heretofore conducted by it, and all
of which are now being utilized. All of the Owned Real Property
and the Leased Real Property has adequate ingress and egress and
each parcel of Owned Real Property and the Leased Real Property
has adequate access to the existing paved roads and other public
rights of way for the operation of Seller's Business as presently
conducted, which access is not limited or restricted.
(f) The present use, occupancy and operation of the
Owned Real Property and the Leased Real Property, and all aspects
of the improvements to the Leased Real Property (the "Real
Property Improvements"), are in compliance in all material
respects with all, and not in material violation of any, Laws and
with all private restrictive covenants of record, and Seller does
not have any knowledge of any proposed change therein that would
affect materially and adversely any of the Owned Real Property or
13
the Leased Real Property or its use, occupancy or operation;
provided, however, that (i) there is no existing or to Seller s
knowledge threatened Action by any Person with respect to any
violation or any alleged violation of the ADA, and (ii) Seller
makes no other representation or warranty with respect to
compliance with the ADA. Other than as reflected in Schedule
2.14(f), to the knowledge of Seller there exist no conflicts or
disputes with any Government or Person relating to the Owned Real
Property, any Leased Real Property or the activities conducted
thereon. All Real Property Improvements are located within the
lot lines (and within the mandatory set-backs from such lot lines
established by applicable Law or otherwise) and not over areas
subject to easements or rights of way. To the knowledge of
Seller, all Real Property Improvements are in reasonably good
condition and repair, and are suited for the operation of
Seller's Business as it is presently being conducted. Other than
for the encroachment shown on that certain Plat of Survey, dated
October 25, 1995, prepared by Xxxx Xxxxxx Xxxxxx, Registration
No. 15299, there are no encroachments on either the Owned Real
Property or the Leased Real Property.
(g) Neither Seller nor any other Person has caused any
work or improvements to be performed upon, with respect to, or
made to the Owned Real Property or any of the Leased Real
Property for which there remains outstanding any payment
obligation that would or might serve as the basis for any Lien in
favor of the Person which performed the work. Other than for
"Old Radio Road" which has been deeded to Seller's predecessor
prior to the date hereof, there are no improvements on the Owned
Real Property.
(h) All requisite certificates of occupancy and other
permits and approvals required with respect to the Real Property
Improvements and the use, occupancy and operation thereof have
been obtained and paid for and are currently in effect and free
of restrictions.
(i) Except as set forth on Schedule 2.14(i), no rent
or use fee has been paid in advance, no security deposit has been
paid, and no brokerage commission is payable by Seller with
respect to any Real Property Lease.
(j) Seller has not received any notice that the owner
of any Leased Real Property has made any assignment, pledge or
hypothecation of such Real Property Lease or the rents or use
fees due thereunder.
(k) No portion of the Owned Real Property or the
Leased Real Property is located within any Special Flood Hazard
Area designated by the Federal Emergency Management Agency, or in
any area similarly designated by any Government. To Seller s
knowledge, no portion of the Owned Real Property or the Leased
Real Property has been designated "wetlands" within the
jurisdiction of the U.S. Army Corp of Engineers, or has been
similarly designated by any Government. To Seller's knowledge,
no portion of the Owned Real Property or the Leased Real Property
constitutes "wetlands" that have been filled, whether or not
pursuant to appropriate permits. To Seller's knowledge, no
portion of the Owned Real Property or the Leased Real Property is
subject to any classification, designation or preliminary
determination of any Government or pursuant to any Law which
would restrict the use, development, occupancy or operation of
the Owned Real Property or the Leased Real Property in connection
with Seller's Business in any material respect.
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(l) Neither the Owned Real Property nor the Leased
Real Property is subject to the zoning ordinance of any
Government.
(m) The Owned Real Property constitutes either a
previously subdivided lot in compliance with applicable
subdivision regulations and similar governmental requirements, or
was created in a manner not subject thereto; and no subdivision
filing or approval or similar governmental filing or approval is
required for the conveyance of the Owned Real Property at
Closing.
(n) Neither the Owned Real Property nor the Leased
Real Property is or and has been subject to any exemption from ad
valorem taxes that will result in imposition of any tax or
penalty upon (x) the transfer of title at Closing or any change
in use of the Owned Real Property or (y) the assignment of
Seller's interest in the Leased Real Property at Closing.
(o) To the knowledge of Seller, there are no pending,
threatened or contemplated condemnation actions involving all or
any portion of the Leased Real Property or the Owned Real
Property; and, to Seller's knowledge and belief, there are no
existing, proposed or contemplated plans to widen, modify or
realign any public rights-of-way located adjacent to any portion
of the Leased Real Property or the Owned Real Property.
(p) There are no leases or other agreements for use,
occupancy or possession with respect to all or any portion of the
Owned Real Property or the Leased Real Property (other than for
the Real Property Leases). There are no management, maintenance,
service or other contracts with respect to the Owned Real
Property or the Leased Real Property..
2.15 Authority to Conduct Business and Intellectual Property
Rights. Except as disclosed in Schedule 2.15, Seller owns all
rights to the Lost Foam Technology as it has been used by Seller,
and the Lost Foam Technology as so used and as being sold to
Purchaser is not subject to or in violation of the rights or
interests of any third party. Schedule 2.15 indicates whether
Seller holds any patent or patent application therefor (in each
such case, identifying the date(s) and jurisdiction(s) in which
the patent was granted or applied for and the number of such
patent or application) or has sought any advice as to the
patentability of the same (in each such case, summarizing such
advice) or believes it has trade secret protection therefor (in
each such case, providing a description of the measures which
have been taken to protect the secrecy of the item). Seller is
not a party to, either as licensor or licensee, and is not bound
by or subject to, any license agreement for any patent, process,
trademark, service xxxx, trade secrets, trade name, service name
15
or copyright, except as described in Schedule 2.15. All patents,
copyrights, trademarks, service marks and trade names, and
applications therefor or registrations thereof, owned or used by
Seller are listed in Schedule 2.15, and, to the extent indicated
thereon, have been duly registered in, filed in or issued by the
Patent and Trademark Office, the Copyright Office or the
corresponding agency or office of the Forum identified therein.
Except as set forth in Schedule 2.15 and to the knowledge of
Seller, there are no rights of third parties with respect to any
patent, patent application, invention, process, know-how,
copyright, copyright application, trademark, service xxxx, trade
secrets, trade name or device which would have an adverse effect
on the operations or prospects of Seller's Business.
2.16 Contracts. Schedule 2.16 identifies all existing
contracts and commitments of Seller (a) which, in the reasonable
opinion of Seller, are necessary to conduct Seller's Business in
substantially the same manner as currently conducted by Seller,
(b) by which the Transferred Assets may be bound or affected in
any material respect immediately following the Closing, or (c)
which are material to Seller or Seller's Business, in each case
whether written or oral. Seller has heretofore delivered to
Purchaser a true, correct and complete copy of each such written
agreement and a complete and accurate summary of each such oral
agreement. All of the Assigned Contracts have been entered into
in the ordinary and reasonable course of Seller's Business. None
of the Assigned Contracts constitutes an illegal restraint of
trade under any applicable Law.
2.17 Insurance. Schedule 2.17 contains a complete list and
description of all fire, theft, casualty, health, life, accident,
title, automobile, liability, products liability, worker's
compensation and other policies of insurance maintained by
Seller, all of which are, and will be maintained through the
Closing Date, in full force and effect. Seller has delivered to
Purchaser a true, correct and complete copy of each such
insurance policy. All premiums due thereon have been paid and
Seller has not received any notice of cancellation with respect
thereto. To the knowledge of Seller, all such policies taken
together provide adequate coverage to insure the properties,
business and operations of Seller against such risks and in such
amounts as are prudent and customary. Schedule 2.17 also lists
and describes all occurrences which, to the knowledge of Seller,
may form the basis for a claim by or on behalf of Seller under
any such policy; and Seller has timely given notice of all such
occurrences to the appropriate insurer and has not intentionally
waived its right to make the related claim under any such policy.
In the immediately preceding five years, Seller has neither been
denied insurance coverage of any sort nor had any of its then
existing insurance coverage rated up.
2.18 Customers and Suppliers. Schedule 2.18 sets forth the
names and addresses of any sole source suppliers of significant
goods, equipment or services to Seller (other than public
utilities) with respect to which practical alternative sources of
supply are not available, and the names and addresses of each
customer of Seller that purchased $500,000 in goods or services
from Seller in any of the two prior years or that accounted for
three percent (3%) or more of Seller's gross revenues in any such
year ("Significant Customers"). To the knowledge of Seller,
Seller has substantially complied with the terms and conditions
of all customer purchase orders, all goods delivered pursuant to
a customer purchase order have been delivered in a timely manner,
and all goods delivered pursuant to a customer purchase order
have met all customer specifications and conform with all
applicable express and implied warranties. Except as set forth
on Schedule 2.18, no customer of Seller has made any advance
payment to or for the benefit of Seller with respect to any order
placed by such customer with Seller.
2.19 Contingencies. Except as set forth in Schedule 2.19,
there are no Actions pending or, to the knowledge of Seller,
threatened against, by or affecting Seller, Seller's Business or
16
the Transferred Assets in any Forum, nor do there exist any other
"loss contingencies" (as such term is defined in Statement of
Financial Standards No. 5 of the Financial Accounting Standards
Board), the eventual outcome of which might have a material
adverse effect on Seller, the Transferred Assets or the operation
of Seller's Business after the Closing, or which would prevent or
impede the transactions contemplated by this Agreement. Except
as set forth in Schedule 2.19, to the knowledge of Seller, Seller
has not been charged with, nor to the knowledge of Seller, is
Seller under investigation with respect to any charge concerning,
any violation or alleged violation of any provision of any
material Law. There are no unsatisfied judgments against Seller
or any of its shareholders or any Orders to which Seller,
Shareholder, Seller's Business or any of the Transferred Assets
are subject.
2.20 Taxes. Except as disclosed in Schedule 2.20, all taxes
(including without limitation, all income, property, sales, use,
customs, franchise, value added, ad valorem, withholding,
employees' income withholding, and social security and medicare
taxes, and all other taxes imposed on Seller or its income,
properties, sales, franchises, wages and other payments,
operations or Plans or trusts), and all deposits in connection
therewith required by applicable Law imposed by any Government,
and all interest and penalties thereon and additions thereto (all
of the foregoing being hereafter collectively referred to as
"Taxes"), which are due and payable by Seller for all periods
through the date hereof have been paid in full, and adequate
reserves for all other Taxes, whether or not due and payable, and
whether or not disputed, have been set up on the books of account
of Seller. From and after the date of this Agreement, Seller and
Shareholder will timely and accurately file all returns and
reports with respect to Taxes, and will timely pay all Taxes
imposed on Seller or Shareholder which directly or indirectly
affect Purchaser's operation of Seller's Business or the
Transferred Assets after the Closing Date, or which might create
a Lien on the Transferred Assets, or which could materially and
adversely affect Purchaser's ability to carry on Seller's
Business after the Closing Date. There is not now any pending
audit of Seller or either Shareholder, nor is there any proposed
assessment against Seller or either Shareholder for additional
Taxes of any kind. Seller has timely and accurately filed all
federal, state, local and foreign tax returns and reports
(including without limitation, returns for estimated tax), and
all returns and reports of all other Governments having
jurisdiction, with respect to all Taxes, all such returns and
reports show the correct and proper amount due, and all Taxes
shown on such returns or reports and all assessments received by
Seller have been paid to the extent that such Taxes, or any
estimates thereon, have become due. The federal income tax
returns of Seller have been examined by the Internal Revenue
Service through the date set forth in Schedule 2.20, and, except
as set forth therein, all deficiencies proposed and indicated as
a result of the examination of such tax returns have been paid
and settled. Schedule 2.20 sets forth any position taken by
Seller on its federal income tax returns for unexamined years
which is substantially at variance with the published position of
the Internal Revenue Service. For each of its taxable years
beginning on or after January 1, 1988, Seller and its
shareholders have properly elected that Seller be treated as an
"S corporation" for federal and state income tax purposes within
the meaning of the Internal Revenue Code; and Seller and its
shareholders have taken no action nor are they aware of any
action by a third party that would result in the revocation or
termination of the's election.
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2.21 Employment and Labor Matters. (a) Schedule 2.21(a)
lists all employees and agents who on the date hereof perform
services on a regular basis in the business operations of or for
Seller and whose annualized rate of compensation exceeds $25,000
per year. Except as provided in Schedule 2.21(a), no such
employee or agent has terminated his employment, nor, to the
knowledge and belief of Seller, plans not to accept employment
with Purchaser after the Closing Date if so offered by Purchaser.
(b) Seller is not a party to any collective bargaining
agreement or agreement of any kind with any union or labor
organization, and no union or other collective bargaining unit
has been certified or recognized by Seller as representing any
employee, nor, to the knowledge of Seller, is a union or other
collective bargaining unit seeking recognition for such purpose.
There are no controversies pending, or to the knowledge of Seller
threatened, between Seller and any labor union or collective
bargaining unit seeking to represent any of its employees.
Except as disclosed in Schedule 2.21(b), to the knowledge of
Seller there has been no attempt by any union or other labor
organization to organize any of Seller's employees at any time in
the past five years. During the past three years to the
knowledge of Seller, Seller has complied in all material respects
with all applicable Laws relating to wages, hours, health and
safety, payment of social security, medicare, withholding and
other taxes, maintenance of worker's compensation insurance,
labor and employment relations, and employment discrimination,
including without limitation, the Americans with Disabilities
Act.
(c) Except as set forth on Schedule 2.21(c) to the
knowledge of Seller, Seller's operations do not involve any risk
unusual to the type of business conducted by Seller or in
Seller's industry to the health or safety of its employees
(including, without limitation, any risk associated with
hazardous airborne contaminants or hazardous chemicals or waste
materials) and, except as disclosed in Schedule 2.21(c), no
employee of Seller has suffered any adverse health consequence or
significant personal injury as a result of his or her working
conditions or employment by Seller within the past three years.
2.22 Employee Benefit Matters. (a) Schedule
2.22(a) lists all plans, programs, and similar agreements, commitments
or arrangements maintained by or on behalf of Seller that provide
benefits or compensation to, or for the benefit of, current or former
employees of Seller ("Plan or Plans") and identifies each such Plan
that is an "employee benefit plan" as defined in Section 3(3) of
ERISA ("ERISA Plan"), including any frozen or terminated "employee
pension benefit plan" which covers any employee. Copies of all
Plans and, to the extent applicable, all related trust agreements
and/or insurance contracts, actuarial reports, and valuations
for the most recent three years, all summary plan descriptions,
prospectuses, Annual Report Form 5500s or similar forms (and
attachments thereto) for the most recent three years, all Internal
Revenue Service determination letters and filings and any related
documents requested by Purchaser, including all amendments, modifications
and supplements thereto, have been delivered to Purchaser, if so
requested, and all of the same are true, correct and complete.
18
(b) With respect to each Plan, except as set forth
on Schedule 2.22(b): (i) no litigation or administrative or other proceeding
is pending or threatened involving such Plan (other than undisputed claims
for benefits under such Plan); (ii) such Plan has been administered and
operated in material compliance with, and has been amended to comply with
all applicable Laws, including, without limitation, ERISA, the Internal
Revenue Code, and the regulations issued under ERISA and the Internal Revenue
Code; (iii) Seller and its predecessors, if any, have made and as of the
Closing Date will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under the
provisions of such Plan or required to be made under applicable Laws,
with respect to any period prior to Closing Date, such amounts to be
determined using the ongoing actuarial and funding assumptions of the Plan;
and (iv) such Plan has been administered and operated only in the ordinary
and usual course and in accordance with its terms.
(c) No ERISA Plan is a "Multiemployer Plan" as defined
in Section 3(37) of ERISA. Seller is not required to contribute to any
Multiemployer Plan, nor does Seller have any liability to any Multiemployer
Plan. Seller does not maintain nor has ever maintained or been required
to contribute to a Plan which covers or is intended primarily to cover
employees located in a country other than the United States.
(d) With respect to each ERISA Plan, except as set
forth on Schedule 2.22(d), neither such Plan, nor any trustee, administrator,
fiduciary, agent or employee thereof, has at any time been involved in a
transaction which would constitute a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, unless such transaction is specifically permitted under Section 407
or 408 of ERISA, Section 4975 of the Internal Revenue Code, or a class
or administrative exemption issued by the Department of Labor, nor, to
the best of Seller's knowledge, has any such person been involved in
or caused such Plan to be involved in a breach of fiduciary duty under
Section 404 of ERISA.
(e) Of the ERISA Plans, only the 401(k) Restated Profit
Sharing Plan (the "Company Pension Plan") is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA. With respect to the
Company Pension Plan, except as set forth on Schedule 2.22(e): (i) such
Company Pension Plan constitutes a qualified plan within the meaning of
Section 401(a) of the Internal Revenue Code and the trust (if any)
thereunder is exempt from federal income tax under Section 501(a) of
the Internal Revenue Code; (ii) such Company Pension Plan is not a defined
benefit plan subject to the minimum funding standards of Internal
Revenue Code Section 412 or the provisions of Title IV of ERISA; and
(iii) the Company Pension Plan is funded in an amount equal to the
participants account balances, whether or not vested.
(f) Neither Seller nor any of the Plans, has any
obligation to provide or liability for, health care, life insurance or other
benefits after termination of employment ("Post-employment Benefits"),
except for retirement benefits under the Company Pension Plan or except
as required by Section 601 of ERISA and Section 4980B of the Internal
Revenue Code. As of the Closing Date, notice of availability of
continuation coverage (as defined in Section 602 of ERISA and Section
4980B of the Internal Revenue Code) will have been provided to all
persons entitled thereto and all persons electing such coverage have been or
will be provided such coverage if so entitled thereto under applicable law.
19
(g) The active participation in each Plan set forth
in Schedule 2.22(g) of all employees of Seller hired by Purchaser shall
cease as of the Closing Date for all periods of time on or after the
Closing Date and the parties agree that neither Purchaser nor Parent
is adopting or continuing such Plans.
(h) The consummation of the transactions contemplated
by this Agreement will not (x) entitle any current or former employee or
officer of the Seller to severance pay, unemployment compensation or any
other payment, or (y) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer.
2.23 Environmental Matters. (a) Except as set forth on
Schedule 2.23(a), Seller has all permits, licenses, approvals and
operating authorizations, including without limitation, permits
for air emissions, water discharges, and the storage, treatment
and disposal of hazardous waste, that are required pursuant to
all Environmental Laws for (i) the conduct of Seller's Business
as it is now being conducted, and (ii) the ownership of its
properties and assets. Seller shall use its reasonable best
efforts to convey and arrange, and to transfer to Purchaser by
appropriate instruments all of its transferable rights, options
and privileges existing under any permit, license, approval or
operating authorization, including but not limited to air
emission permits, water discharge permits, and solid and
hazardous waste treatment, storage and disposal permits.
Schedule 2.23(a) contains a true, correct and complete list of
all permits, licenses, approvals and operating authorizations
obtained by or transferred to Seller pursuant to all
Environmental Laws with respect to the Seller's Business or the
Transferred Assets, and true, correct and complete copies of such
permits, licenses, approvals and operating authorizations have
been delivered to Purchaser. Except as set forth on Schedule
2.23(a), Seller is in material compliance with all such permits,
licenses, approvals, or operating authorizations and all are in
full force and effect.
(b) Except as set forth on Schedule 2.23(b), Seller
has conducted and is presently conducting Seller's Business in
material compliance with all applicable Environmental Laws, and
there are no existing Environmental Laws with a future compliance
date that will require material operational changes or capital
expenditures at the facilities owned or operated by or on behalf
of Seller. Except as set forth on Schedule 2.23(b), no Hazardous
Materials have been stored, treated, disposed of, discharged,
released, deposited or are present in, on or under the Leased
Real Property. Except as set forth on Schedule 2.23(b), no Solid
Waste has been stored, treated, disposed of, discharged,
released, deposited or are present in, on or under the Leased
Real Property except in material compliance with applicable Law.
Seller has no knowledge of any claims or assertions that Seller
or any of its predecessors in interest arranged for the disposal
of Hazardous Materials at any facility not currently owned or
operated by Seller, except as set forth in Schedule 2.23(b). In
20
addition, except as set forth on Schedule 2.23(b) and to the
knowledge of Seller neither Seller nor any of its predecessors in
interest have generated, used, stored, treated, disposed of,
discharged, released, or deposited any Hazardous Materials at any
facility not currently owned or operated by Seller. To the
knowledge of Seller, neither Seller nor any of its predecessors
in interest have damaged any natural resources by the release of
any Hazardous Material into the environment. There are no
pending, to the knowledge of Seller, or threatened Actions or any
outstanding Orders against or involving Seller relating to
Hazardous Materials, any Environmental Law, or permits, licenses,
approvals or operating authorizations under any Environmental
Law. All Actions and Orders against or involving Seller which
occurred during Seller's ownership or operation of the Leased
Real Property, relating to any Environmental Law, are described
in Schedule 2.23(b). Seller has not disposed of, or arranged for
the disposal of, any materials from its facilities at any sites
listed by the United States Environmental Protection Agency on
the published proposed or final National Priorities List
developed pursuant to 42 U.S.C. Section 9605(8)(B) of the
Comprehensive Environmental Response, Compensation and Liability
Act. Additionally, except as specified in Schedule 2.23(b),
Seller has no knowledge of any disposal sites utilized by Seller
that are presently under investigation by any Government. Except
as set forth on Schedule 2.23(b), no underground storage tanks
are or have been at any time located on the Leased Real Property.
Except as specified in Schedule 2.23(b), none of the Real
Property Improvements at, on or under the Leased Real Property
contain asbestos or asbestos-containing material.
2.24 Absence of Certain Business Practices. Neither Seller
nor Shareholder, or any director, officer, employee or agent of
Seller, nor any other person acting on its behalf, has, directly
or indirectly, within the past five years given or agreed to give
any gift or similar benefit to any customer, supplier,
governmental employee or other Person who is or may be in a
position to help or hinder Seller's Business (or assist Seller in
connection with any actual or proposed transaction) which, to the
knowledge of Seller, (a) might subject Seller or Purchaser to any
damage or penalty in any civil, criminal or governmental Action
or which might have a material adverse effect on Seller's
Business or the Transferred Assets or, (b) might subject Seller
or Purchaser to suit or penalty in any private or governmental
Action.
2.25 Agreements and Transactions with Related Parties.
Except as set forth in Schedule 2.25, Seller is not directly or
indirectly a party to any contract, agreement or lease with, or
any other commitment to (a) any Person owning, or formerly
owning, beneficially or of record, directly or indirectly, any of
the capital stock of Seller, (b) any person related by blood,
adoption or marriage to any such Person, (c) any director or
officer of Seller, (d) any Person in which any of the foregoing
has, directly or indirectly, at least a five percent (5.0%)
beneficial interest in the capital stock or other type of equity
interest in such Person, or (e) any partnership in which any such
Person is a general partner (any or all of the foregoing being
herein referred to as "Related Parties"). Without limiting the
generality of the foregoing, except as disclosed in Schedule
2.25, (i) no Related Party, directly or indirectly, owns or
controls any assets or properties which are used in Seller's
Business, and (ii) no Related Party, directly or indirectly,
engages in or has any significant interest in or connection with
any business (x) which is or which within the last three years
has been a competitor, customer or supplier of Seller or has done
business with Seller, or (y) which as of the date hereof sells or
21
distributes products or services which are substantially the same
as Seller's products or services.
2.26 Absence of Changes. Except as expressly provided for
in this Agreement, or as may be set forth in Schedule 2.26, or
expressly set forth in any Schedule to this Agreement, since the
Reference Date:
(a) there has been no change in the business, assets,
liabilities, results of operations, financial condition or
prospects of Seller or in its relationships with suppliers,
customers, employees, lessors or others, other than changes in
the ordinary course of business, none of which have been or will
be, in the aggregate, materially adverse to the Transferred
Assets, Seller's Business or the business or condition (financial
or otherwise) of Seller;
(b) there has been no damage, destruction or loss to
the properties or business of Seller exceeding in any single case
$5,000 or exceeding $25,000 in the aggregate, whether or not
covered by insurance;
(c) the business of Seller has been operated in the
ordinary and reasonable course and consistent with its prior
practices;
(d) the books, accounts and records of Seller have
been maintained in the usual, regular, ordinary and reasonable
manner on a basis consistent with prior years;
(e) there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the capital stock of Seller, nor has there been any direct or
indirect redemption, retirement, purchase or other acquisition of
any of the capital stock or other securities of Seller;
(f) there has been no (i) increase in the compensation
or in the rate of compensation or commissions payable or to
become payable by Seller to any director, officer, manager or
other employee or agent of Seller earning $50,000 or more per
annum, (ii) general increase in the compensation or in the rate
of compensation payable or to become payable to hourly or
salaried employees earning less than $25,000 per annum ("general
increase" for the purpose hereof shall mean any increase
generally applicable to a class or group of employees and shall
not include increases granted to individual employees for merit,
length of service, change in position or responsibility or other
reasons applicable to specific employees and not generally
applicable to a class or group thereof), (iii) employee hired at
a salary in excess of $50,000 per annum, or (iv) payment of or
commitment to pay any bonus, profit share or other extraordinary
compensation to any employee;
(g) except as set forth in Schedule 2.26, no
indebtedness, liability or obligation (whether absolute, accrued,
contingent or otherwise) has been discharged or satisfied, other
than current liabilities reflected in the Audited Balance Sheet,
and current liabilities incurred since the date thereof in the
22
ordinary and reasonable course of business and consistent with
its prior practice;
(h) there have been no amendments or other corporate
actions having the effect of an amendment increasing past or
future liabilities or contributions of any kind to any Plan;
(i) Seller has not (i) paid any judgment resulting
from any Action or (ii) made any payment to any Person of more
than $10,000 in settlement of any Action;
(j) Seller has not discontinued or determined to
discontinue the production or sale of any products previously
produced or sold by Seller representing more than one percent
(1.0%) of Seller's annual sales during the period covered by the
Audited Financial Statements;
(k) there has been no sale, transfer, lease or other
disposition of any asset or assets of Seller, other than sales of
inventory in the ordinary and reasonable course of Seller's
Business;
(l) Seller has not acquired any capital stock or other
equity securities of any Person or otherwise made any loan or
advance to or investment in any Person; and
(m) Seller has not failed to replenish its inventories
and supplies in a normal and customary manner consistent with its
prior practices or made any purchase commitment in excess of the
normal, ordinary and usual requirements of its business or at any
price in excess of the then-current market price or upon terms
and conditions more onerous than those normal, customary and
consistent with its prior practices or made any change in its
selling, pricing, advertising or personnel practices inconsistent
with its prior practices.
2.27 No Defaults. All of the Assigned Contracts and all
other contracts, agreements, documents, instruments, plans,
leases, policies and licenses which comprise a part of the
Transferred Assets are, to the knowledge of Seller, valid,
binding and enforceable in accordance with their terms and are in
full force and effect; to the knowledge of Seller, there are no
existing material defaults by Seller thereunder; and to the
knowledge of Seller, no default has occurred (whether with or
without notice, lapse of time or the happening or occurrence of
any event) which would constitute an event of default thereunder.
2.28 Solvency. Following the Closing Date and after giving
effect to the transactions contemplated by and provided for in
this Agreement, including, without limitation, the payment and
satisfaction in full of the Company Indebtedness, (i) the then
present saleable value of Seller's assets will exceed its stated
liabilities, including, without limitation, identified contingent
liabilities, and (ii) Seller will be able to pay its stated
liabilities, including, without limitation, identified contingent
liabilities, as they mature during the normal course of business.
23
2.29 Full Disclosure. No representation, warranty,
covenant, agreement or indemnity of Seller contained in this
Agreement or in any other document, instrument, agreement, paper
or other written statement or certificate delivered by Seller
pursuant to this Agreement, or in connection with the
transactions contemplated herein, contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein not misleading. The information contained in
any of the Schedules to this Agreement shall be deemed to be part
of and qualify only those representations and warranties
contained in Article 2 specifically referenced in such Schedules.
2A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SHAREHOLDER
To induce Purchaser and Parent to enter into this Agreement
and to induce Purchaser to purchase the Transferred Assets,
Shareholder represents and warrants to, and covenants and agrees
with, Purchaser and Parent as follows:
2A.1 Authority. (a) This Agreement has been duly and
validly executed and delivered by Shareholder. Shareholder has
the full right, power and capacity to execute and deliver and to
perform and comply with this Agreement and each other agreement,
document and instrument contemplated hereby, in each case in
accordance with their respective terms. This Agreement
constitutes the valid and legally binding obligation of
Shareholder, enforceable against Shareholder in accordance with
its terms.
(b) Neither the execution and delivery of this
Agreement by Shareholder nor the consummation of the transactions
contemplated herein by Shareholder will result in a violation or
breach of, or constitute a default under (a) any material term or
provision of any indenture, note, mortgage, bond, security
agreement, loan agreement, guaranty, pledge, or other agreement,
instrument or document, (c) any material Law, or (d) any other
material commitment or restriction, to which Shareholder is a
party or by which Shareholder is subject or bound; nor will such
actions result in (i) the acceleration or creation of any
material obligation of Shareholder, or (ii) the forfeiture of any
right or privilege of Shareholder which may materially affect
Shareholder's ability to perform under this Agreement. There are
no unsatisfied judgments against Shareholder.
2A.2 Ownership of Shares; Subsidiaries. Those persons
listed in Schedule 2.2 are the record and beneficial owners of
all of the issued and outstanding capital stock of Seller. There
are no outstanding securities convertible into the capital stock
or rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements or arrangements providing for the
issuance (contingent or otherwise) of, or any Actions relating
to, the capital stock of Seller. Seller does not have any
ownership interest, direct or indirect, and has no commitment to
purchase or otherwise acquire any ownership interest, direct or
indirect, in any other Person.
24
2A.3 Full Disclosure. No representation, warranty,
covenant, agreement or indemnity of Shareholder contained in this
Agreement or in any other document, instrument, agreement, paper
or other written statement or certificate delivered by
Shareholder pursuant to this Agreement, or in connection with the
transactions contemplated herein, contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
As an inducement to Seller and Shareholder to enter into
this Agreement and as an inducement to Seller to sell the
Transferred Assets to Purchaser, Purchaser and Parent hereby
represent, warrant and covenant as follows:
3.1 Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Georgia, and Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Alabama. Each of Parent and Purchaser is qualified to do
business and is in good standing in each jurisdiction where the
character of its property owned or leased or the nature of its
activities makes such qualification necessary, except where the
failure to be so qualified and in good standing would not have a
material adverse effect on the business or financial condition of
Purchaser or Parent.
3.2 Authorization; No Inconsistent Agreements. Each of
Purchaser and Parent has full corporate power and authority to
make, execute and perform this Agreement and the transactions
contemplated hereby. This Agreement and all transactions
required hereunder to be performed by Purchaser and Parent have
been duly and validly authorized and approved by all necessary
corporate action on the part of Purchaser and Parent. This
Agreement has been duly and validly executed and delivered on
behalf of Purchaser and Parent by their respective duly
authorized officers, and this Agreement once so approved shall
constitute the valid and legally binding obligation of Purchaser
and Parent enforceable in accordance with its terms. Neither the
execution and delivery of this Agreement by Purchaser and Parent
nor the consummation by Purchaser and Parent of the transactions
nor compliance by Purchaser and Parent with any of the provisions
hereof will (i) conflict with or result in any breach of the
Articles of Incorporation or Bylaws of Purchaser or Parent, as
appropriate (true and correct copies of which have been provided
to Seller and Shareholder), (ii) result in a violation or breach
of, or constitute (with our without due notice or lapse of time
or both) a default under any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other
instrument or obligation to which Purchaser or Parent is a party
or by which they or any of their respective properties or assets
may be bound, or (iii) violate any Order or Law applicable to
Purchaser or Parent or any of the properties or assets of
Purchaser or Parent.
3.3 Capitalization. Parent's authorized capital stock
consists of (i) 50,000,000 shares of common stock, par value
$0.10 per share (the "Parent Stock"), of which 24,738,374 shares
of the Parent Stock were issued and outstanding as of November
10, 1995, and (ii) 5,000,000 shares of preferred stock, par value
25
$1.00 per share, none of which were issued and outstanding as of
November 10, 1995. All of such issued and outstanding shares of
the Parent Stock have been duly and validly authorized and are
validly issued, fully paid and non-assessable. There are no
preemptive rights to the issuance of the Shares. As of November
10, 1995, there were no outstanding (a) securities of Parent
convertible into or exchangeable for shares of capital stock or
other voting securities of Parent, (b) options or other rights to
acquire shares of capital stock or other voting securities of
Parent from Parent, (c) no other obligation of Parent to issue
any capital stock, voting securities or other ownership interest
in Parent, and (d) obligations of Parent to repurchase, redeem or
otherwise acquire any of its outstanding securities, other than
as disclosed in the SEC Reports and Parent's Articles of
Incorporation (a true, correct and complete copy of which has
been provided to Seller).
3.4 SEC Filings. Parent has heretofore made available to
Seller the following reports, documents and other materials
(collectively, the "SEC Reports"):
(i) its Annual Report on Form 10-K for its fiscal
year ended December 31, 1994;
(ii) its Proxy Statement for its annual meeting of
shareholders held on April 27, 1995, filed pursuant to
Section 14 of the Exchange Act;
(iii) its Annual Reports on Form 10-K for its
fiscal years ended December 31, 1993 and December 31, 1992;
(iv) its Quarterly Reports on Form 10-Q for the
fiscal quarters ended April 2, 1995, July 2, 1995 and
October 1, 1995;
(v) all Forms 8-K and Registration Statements
filed by Parent on or after January 1, 1995.
As of their respective dates, the SEC Reports did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. All financial statements
included in the SEC Reports have been prepared in accordance with
GAAP applied on a consistent basis (except as disclosed therein
and except for customary year-end adjustments in the case of the
interim statements) and present fairly the consolidated financial
position and the consolidated statements of operations, cash
flows, and changes in shareholders equity (owners deficit) of
Parent and its consolidated subsidiaries as of the date and for
the periods indicated. Parent has filed all reports and other
documents required by Law with the SEC and the Internal Revenue
Service. All of the reports filed by Parent with the SEC, as of
their respective dates, complied in all material respects with
the requirements of the Laws pursuant to which they were filed.
Except as set forth on Schedule 3.4, since November 10, 1995,
there has been no material adverse change in the information set
26
forth in Parent's Form 10-Q filed in respect of the fiscal
quarter ended October 1, 1995.
3.5 Full Disclosure. No representation, warranty or
covenant of Purchaser or Parent contained in this Agreement, or
in any other written statement or certificate (including without
limitation the SEC Reports, which speak only as of their
respective dates) delivered by Purchaser or Parent pursuant to
this Agreement or in connection with the transactions
contemplated herein, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein
or therein not misleading.
4. ADDITIONAL AGREEMENTS
4.1 Effect of Access and Inspection. No investigation made
heretofore or hereafter by or on behalf of any party shall limit
or affect in any way the representations, warranties, covenants,
agreements and indemnities of the other parties hereunder, each
of which shall survive any such investigation.
4.2 Expenses. All expenses incurred by Purchaser and
Parent in connection with the authorization, preparation,
execution and performance of this Agreement and the transactions
contemplated hereby, including without limitation, all fees and
expenses of their Representatives, shall be paid by Purchaser and
Parent, as appropriate. All expenses incurred by any or all of
Seller and its shareholders in connection with the authorization,
preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including without limitation,
all fees and expenses of their respective Representatives, shall
be paid by Seller and/or its shareholders.
4.3 Brokers. Seller and Shareholder, jointly and
severally, hereby represents and warrants to Purchaser and Parent
that no broker or finder has acted on behalf of Seller or any of
its shareholders in connection with this Agreement or the
transactions contemplated herein, and each of them agrees,
jointly and severally, to indemnify Purchaser, Parent and their
Affiliates from and against any and all claims or demands for
commissions or other compensation by any other broker, finder or
similar agent claiming to have been employed by or on behalf of
such party. Purchaser and Parent, jointly and severally,
represent and warrant to Seller and Shareholder that no broker or
finder other than Xxxxxxxx & Associates has acted on their behalf
in connection with this Agreement or the transactions
contemplated herein and agree to indemnify Seller and its
shareholders and hold them harmless from and against any and all
claims or demands for commissions or other compensation by
Xxxxxxxx & Associates or by any other broker, finder or similar
agent claiming to have been employed by or on behalf of Purchaser
or Parent. The fees and expenses of Xxxxxxxx & Associates shall
be paid by Purchaser.
4.4 Publicity. Except as may be required by applicable
Law, all press releases and other public announcements respecting
the subject matter hereof shall be made only with the mutual
agreement of Purchaser and Agent.
27
4.5 Satisfaction of Certain Indebtedness. On the Closing
Date, and as part of the Closing, Seller and Shareholder shall
cause to be satisfied and paid in full all indebtedness secured
by the liens listed as Items 2 and 3 on Schedule 2.9 (the holders
liens and indebtedness being referred to herein as "Lenders")
(all of the foregoing indebtedness being referred to herein
collectively as the "Company Indebtedness"). At the Closing,
Seller and Shareholder shall provide evidence satisfactory to
Purchaser of the payment in full of the Company Indebtedness and
the release and satisfaction of all Liens securing the same.
4.6 Employees. The employment of all employees of Seller
shall terminate immediately prior to the Closing Date. Seller
and Shareholder represent and warrant to Purchaser and Parent
that, as of the date hereof, Seller has 75 employees, and in
reliance upon such representation and warranty, Purchaser agrees
that it shall offer to hire, and so hire if its offers of
employment are accepted, in the aggregate, at least 30 of
Seller's employees for cash wages greater than or equal to the
cash wages of such employees as of the Closing Date and offer to
such employees employee benefits comparable, taken as a whole, to
those for which such employees are eligible as of the Closing
Date. In further reliance upon Seller's and Shareholder s
representation and warranty in the immediately preceding
sentence, if Purchaser fails to offer employment to, and if such
offers of employment are accepted and Purchaser fails to hire,
such number of employees, Purchaser shall be responsible for, and
hold Seller harmless from and against, any liability of Seller
under the WARN Act (x) resulting from Purchaser's failure to so
hire such number of Seller's employees or (y) that the notice
required under the WARN Act has not been given. Notwithstanding
anything else in this Agreement to the contrary but subject to
Purchaser's agreement set forth in the immediately preceding
sentence, (a) neither Purchaser nor Parent shall have any
responsibility or liability for any severance obligations to
Seller's employees resulting from or arising out of the
transactions contemplated by this Agreement, and (b) nothing in
this Paragraph 4.6 creates or is intended to create any rights of
any kind or nature in any third parties, including, without
limitation, any rights or remedies in favor of any of Seller's
employees to be employed after the Closing Date, or respecting
the terms of employment, for any specified period of time.
4.7 Confidentiality of Lost Foam Technology. From and
after the Closing Date, Seller and Shareholder, jointly and
severally, covenant and agree that each of them shall hold and
treat the Lost Foam Technology in confidence, and will not ,
without the prior written consent of Parent, use or disclose or
give to any Person any of the Lost Foam Technology (the
"Confidential Information"); provided, however, that any action
taken by Seller or Shareholder that complies with the provisions
of Paragraph 3 of that certain License Agreement, of even date
herewith, between Purchaser and Seller (the "License Agreement"),
shall not constitute a violation of this Paragraph 4.7. Seller
and Shareholder agree that the Confidential Information does not
include information which (a) is or becomes generally available
to the public other than as a result of a disclosure by Seller or
Shareholder, (b) has been disclosed by Seller or its
representatives to the parties to the technology transfer
contracts listed on Exhibit A to the License Agreement in strict
accordance with the terms thereof, including, without limitation,
the representatives of such parties, or (c) Seller or Shareholder
28
is required by applicable law or regulation or by legal process
to disclose. Notwithstanding anything in the foregoing to the
contrary, in the event that Seller or Shareholder becomes legally
compelled to disclose any such Confidential Information, Seller
and Shareholder will provide Company with prompt notice so that
Purchaser may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement.
In the event that such protective order or other remedy is not
obtained, or that Purchaser expressly in writing waives
compliance with the provisions of this Agreement, Seller and
Shareholder will furnish only that portion of the Confidential
Information which Seller and Shareholder are is advised by
opinion of legal counsel is legally required and Seller and
Shareholder will exercise their respective reasonable best
efforts to obtain reliable assurance that confidential treatment
will be afforded the disclosed portion(s) of the Confidential
Information.
4.8 No Bulk Sales Compliance. In consideration of Seller s
and Shareholder's agreements in Paragraph 1.6 to pay all of
Seller's obligations (other than the Assumed Liabilities) and to
provide the indemnification set forth in Article 5, the parties
waive compliance with all bulk transfer laws applicable to the
transactions contemplated hereunder, including, without
limitation, the Alabama Uniform Commercial Code -- Bulk
Transfers, Code of Alabama, SectionSection 7-6-101 et seq.
4.9 Employee Benefit Matters. Immediately prior to the
Closing, Seller shall fully vest the participant's account
balance in the Company Pension Plan for each of the employees
hired by Purchaser, and shall distribute, or cause to be
distributed, such vested account balance to each such employee in
a single lump-sum payment as soon as is administratively
practicable following Closing. The participation of each such
employee in the Company Pension Plan shall cease following such
distribution. The participation of each such employee in any of
the Plans other than the Company Pension Plan shall cease as of
the Closing Date, except to the extent that Purchaser, in its
sole discretion, elects to continue any of such Plans.
5. INDEMNITIES
5.1 Indemnification of Purchaser and Parent by Seller and
RFI. In accordance with and subject to the provisions of this
Article 5, Seller and RFI (collectively, "Purchaser Indemnitors")
shall, jointly and severally, indemnify and hold harmless
Purchaser, Parent and their Affiliates, and their respective
officers, directors, agents and employees (collectively,
"Purchaser Indemnitees"), from and against and in respect of any
and all loss, damage, liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement
pursuant to Paragraph 5.5(b) (collectively, the "Purchaser
Indemnified Losses"), suffered or incurred by any one or more of
the Purchaser Indemnitees by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or
breach or nonfulfillment of any agreement of Seller contained in
this Agreement, or in any certificate, schedule, document,
agreement or instrument delivered to Purchaser or Parent by or on
behalf of Seller pursuant to the provisions of this Agreement;
29
(b) all obligations and liabilities of Seller other
than the Assumed Liabilities, whether direct or indirect, fixed
or contingent, known or unknown, including, without limitation,
all obligations and liabilities resulting from or arising out of
any default, performance or non-performance by Seller prior to
the Closing under or with respect to any Assigned Contract; and
(c) any claims, liabilities, obligations, damages,
costs and expenses, known or unknown, fixed or contingent,
claimed or demanded by third parties against Purchaser
Indemnitees (including claims relating to environmental response
under 42 U.S.C. 9601 et seq. or any other Law) arising out of or
resulting from Seller's operation of its businesses (including
without limitation Seller's Business) or the Transferred Assets
prior to the Closing, including without limitation, any liability
or obligation described in Paragraph 5.1(b), but excluding the
Assumed Liabilities.
5.2 Indemnification of Purchaser and Parent by Shareholder.
In accordance with and subject to the provisions of this Article
5, Shareholder shall indemnify and hold harmless Purchaser
Indemnitees from and against and in respect of any and all
Purchaser Indemnified Losses suffered or incurred by any one or
more of the Purchaser Indemnitees by reason of, or arising out
of:
(a) any misrepresentation, breach of warranty or
breach or nonfulfillment of any agreement of Shareholder
contained in this Agreement, or in any certificate, schedule,
document, agreement or instrument delivered to Purchaser or
Parent by or on behalf of Shareholder pursuant to the provisions
of this Agreement; and
(b) any and all Purchaser Indemnified Losses for which
(i) a Purchaser Indemnitee has admitted in writing that it is
liable and which the Purchaser Indemnitees have failed to satisfy
within fifteen days of such written admission, (ii) a settlement
has been reached among the Purchaser Indemnitees and a Purchaser
Indemnitor and any amounts required to be paid pursuant to such
settlement have not been satisfied by the Purchaser Indemnitors
within fifteen days of any required payment date, or (iii) any
arbitration award has been rendered in accordance with this
Agreement stating that a Purchaser Indemnitor is liable for all
or any portion of the Purchaser Indemnified Losses and the
Purchaser Indemnitors shall have failed to satisfy such
arbitration award within fifteen days of the date of its
issuance, and then only to the extent that the Purchaser
Indemnitors have not satisfied such Purchaser Indemnified Losses.
30
5.3 Indemnification of Seller and Shareholder. In
accordance with and subject to the provisions of this Article 5,
Purchaser and Parent (collectively, "Seller Indemnitors") shall,
jointly and severally, indemnify and hold harmless Seller,
Shareholder and their Affiliates, and their respective officers,
directors, agents and employees (collectively, "Seller
Indemnitees"), from and against and in respect of any and all
loss, damage, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement pursuant to
Paragraph 5.5(b) (collectively, the "Seller Indemnified Losses"),
suffered or incurred by any one or more of the Seller Indemnities
by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or
breach or nonfulfillment of any agreement of Parent or Purchaser
contained in this Agreement, or in any certificate, schedule,
document, agreement or instrument delivered to Seller or
Shareholder by or on behalf of Parent or Purchaser pursuant to
the provisions of the Agreement;
(b) the failure of Purchaser to pay, perform and
discharge any of the Assumed Liabilities in accordance with their
terms, provided that neither Purchaser nor Parent shall have any
liability hereunder if they are in good faith contesting any such
Assumed Liability;
(c) any claims, liabilities, obligations, damages,
costs and expenses, known or unknown, fixed or contingent,
claimed or demanded by third parties against Seller Indemnitees
(including claims relating to environmental response under 42
U.S.C. 9601 et seq. or any other Law) arising out of or resulting
from Purchaser's operation of Seller's Business or the
Transferred Assets from and after the Closing; and
(d) the ownership or operation of the Transferred
Assets or the conduct of Seller's Business after the Closing
Date.
5.4 Payment. Seller and RFI shall, subject to the
provisions of Paragraph 5.5 and the arbitration provisions of
Paragraph 8.5, reimburse Purchaser Indemnitees, within 10 days of
written demand on Agent, for any Purchaser Indemnified Loss.
Parent and Purchaser shall, subject to the provisions of
Paragraph 5.5, reimburse Seller Indemnitees, within 10 days of
written demand on Purchaser, for any Seller Indemnified Loss.
5.5 Defense of Claims. (a) If any Action by a third party
arises after the Closing Date for which any party hereto may be
liable under the terms of this Agreement, then the party entitled
to indemnification shall notify the indemnifying party within a
reasonable time after such claim or action arises and is known to
the indemnified party, and shall give the indemnifying party a
reasonable opportunity:
(i) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend
the indemnified party;
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(ii) to take all other required steps or
proceedings to settle or defend any such Action; and
(iii) to employ counsel to contest any such
Action in the name of the indemnified party or otherwise.
The expenses of all proceedings, contests or lawsuits with
respect to such Actions shall be borne by the indemnifying party.
If the indemnifying parties wish to assume the defense of such
Action, then the indemnifying party shall give written notice to
the indemnified parties within 30 days after notice from the
indemnified parties of such Action (unless the Action reasonably
requires a response in less than 30 days after the notice is
given, in which event they shall notify the indemnified parties
as soon as possible but in no event less than 10 days prior to
the required response date), and the indemnifying party shall
thereafter assume the defense of any such Action through counsel
reasonably satisfactory to the indemnified parties; provided,
that the indemnified parties may participate in such defense at
their own expense. The defense and settlement of the Action
shall be controlled by the indemnifying party, it being
understood and agreed that the indemnifying party shall use its
best efforts to avoid taking any action that would significantly
prejudice or harm any of the indemnified parties or any of their
businesses, assets or properties.
(b) If the indemnifying parties do not assume the
defense of, or if after so assuming the indemnifying parties fail
to defend, any such Action, then the indemnified parties may
defend against such Action in such manner as they may deem
appropriate (provided that the indemnifying parties may
participate in such defense at their own expense) and the
indemnified parties may settle such Action on such terms as they
may deem appropriate, and the indemnifying parties shall promptly
reimburse the indemnified parties for the amount of all expenses,
legal and otherwise, reasonably and necessarily incurred by the
indemnified parties in connection with the defense against and
settlement of such Action. If no settlement of such Action is
made, the indemnifying parties shall satisfy any judgment
rendered with respect to such Action, before the indemnified
parties are required to do so, and pay all expenses, legal or
otherwise, reasonably and necessarily incurred by the indemnified
parties in the defense of such Action.
(c) If a judgment is rendered against any of the
indemnified parties in any Action covered by the indemnification
hereunder, or any Lien in respect of such judgment attaches to
any of the assets of any of the indemnified parties, the
indemnifying parties shall immediately upon such entry or
attachment pay such judgment in full or discharge such Lien
unless, at the expense and direction of the indemnifying parties,
an appeal is taken under which the execution of the judgment or
satisfaction of the Lien is stayed. If and when a final judgment
is rendered in any such Action, the indemnifying parties shall
forthwith pay such judgment or discharge such Lien before any of
the indemnified parties is compelled to do so.
5.6 Threshold and Limit of Liability. (a) Notwithstanding
anything in this Agreement to the contrary, the liability of the
Purchaser Indemnitors and Shareholder under this Article 5 shall
be subject to the limitations set forth in this Paragraph 5.6(a):
32
(i) with respect to all Purchaser Indemnified
Losses (except for (x) Purchaser Indemnified Losses relating
to Balance Sheet Liabilities and (y) matters actually known
by Purchaser Indemnitors or Shareholder but not disclosed,
for which the liability of the Purchaser Indemnitors and
Shareholder shall not be subject to the $75,000 floor
described below), neither the Purchaser Indemnitors nor
Shareholder shall have any liability to any Purchaser
Indemnitee until the aggregate amount of Purchaser
Indemnified Losses under and pursuant to (A) this Agreement,
(B) that certain Agreement for Purchase and Sale of Certain
Assets of Xxxxxxxx Foundry, Inc., of even date herewith,
among RFI, Seller, Shareholder, Purchaser and Parent (the
"RFI Agreement") (except with respect to "balance sheet
liabilities" under the RFI Agreement which are likewise not
subject to the $75,000 floor described therein), and (C)
that certain Disa Agreement, of even date herewith between
Seller and Purchaser (the "Disa Agreement") (collectively,
the "Losses") exceeds $75,000, and then only to the extent
that such Losses exceed $75,000; and
(ii) the Purchaser Indemnitors and Shareholder
shall not have any liability with respect to Losses under
this Article 5, the correlative provisions of the RFI
Agreement, and the indemnification provisions of the Disa
Agreement, in the aggregate, in excess of the sum of
$4,450,000.
(b) Notwithstanding anything in this Agreement to the
contrary, no Seller Indemnitor shall have any liability under
this Article 5 until such time as the aggregate amount of Seller
Indemnified Losses (other than for unpaid Assumed Liabilities
hereunder and other than for unpaid "Assumed Liabilities" under
the RFI Agreement, none of which are subject to the $75,000 floor
described below) under and pursuant to (A) this Agreement, (B)
the RFI Agreement, and (C) the Disa Agreement exceed $75,000, and
then only to the extent that the Seller Indemnified Losses exceed
$75,000. Further, the Seller Indemnitors shall not have any
liability with respect to Seller Indemnified Losses under this
Agreement, the correlative provisions of the RFI Agreement, and
the indemnification provisions of the Disa Agreement, in the
aggregate, in excess of $4,450,000.
5.7 Indemnification Procedures. Should a claim for
Purchaser Indemnified Losses arise, the Purchaser Indemnitees
shall give written notice thereof to each of Seller, RFI and
Shareholder, and the Purchaser Indemnitees agree that they shall
first request indemnification under this Article 5 from the
Purchaser Indemnitors. The Purchaser Indemnitees shall not seek
to recover any Purchaser Indemnified Losses from Shareholder
unless and until (i) a Purchaser Indemnitor admits in writing
that it is liable for any such Purchaser Indemnified Losses and
the Purchaser Indemnitors fail to satisfy same within fifteen
days thereof, (ii) a settlement has been reached among the
Purchaser Indemnitees and a Purchaser Indemnitor and any amounts
required to be paid pursuant to such settlement have not been
satisfied by the Purchaser Indemnitors within fifteen days of any
required payment date, or (iii) any arbitration award rendered in
33
accordance with this Agreement shall have been rendered stating
that a Purchaser Indemnitor is liable for all or any portion of
the Purchaser Indemnified Losses and the Purchaser Indemnitors
shall have failed to satisfy such arbitration award within
fifteen days of the date of its issuance, and then only to the
extent that the Purchaser Indemnitors shall not have satisfied
such Purchaser Indemnified Losses. The Purchaser Indemnitees
shall not have any obligation to first request indemnification
from the Purchaser Indemnitors in the event that they are
liquidated, dissolved or merged out of existence. Shareholder
agrees that any notice, demand or request for indemnification
timely served upon or delivered to a Purchaser Indemnitor shall
for all purposes constitute a timely notice, demand or request
for indemnification to Shareholder, and Shareholder acknowledges
and agrees that any written admission of liability by a Purchaser
Indemnitor, any settlement of a claim for indemnification with a
Purchaser Indemnitor, or any arbitration award rendered holding a
Purchaser Indemnitor liable for all or any part of the Purchaser
Indemnified Losses shall be final and binding upon Shareholder
and that Shareholder shall not be entitled, in any Forum or in
any manner, to challenge the validity or finality of any such
written admission or arbitration award. Notwithstanding the
temporal limits set forth in Article 6, the period of time in
which any Purchaser Indemnitee shall have to pursue Shareholder
shall be extended by a period of time equal to the period of time
between (i) the date the related claim for indemnification was
made, and (ii) the date fifteen days after the date (x) upon
which Seller admitted in writing its liability therefor, (y)
after any payment is required to be made pursuant to the
settlement of a claim for indemnification, or (z) upon which any
arbitration award is rendered by the arbitrators with respect to
all or any portion of the related claim for indemnification.
5.8 Contractual Right of Offset. Shareholder acknowledges
and agrees that any Purchaser Indemnitee shall have the right to
offset against, or request that either or both of Purchaser and
Parent offset against, the last payment due and payable on
January 2, 1998 under and pursuant to that certain Management
Agreement (the "Management Agreement"), of even date herewith,
among Purchaser, Parent and Shareholder, the amount of any
Purchaser Indemnified Losses or other amounts due as a result of
Shareholder's indemnification obligations set forth in Paragraph
5.2(a), in an amount up to the $500,000 amount of such payments,
for which an indemnification claim is made by a Purchaser
Indemnitee on or before the sixth month anniversary after the
Closing Date and which has not otherwise been fully satisfied (a
"Six Month Unsatisfied Claim"). If the January 2, 1998 payment
shall become due while any Six Month Unsatisfied Claim is
unresolved and/or still subject to a pending litigation or
arbitration proceeding, Purchaser's obligation to make the
January 2, 1998 payment with respect to any amount in dispute
shall be suspended (without constituting a default under or
breach of this Agreement or the Management Agreement).
Shareholder acknowledges and agrees that he shall not be entitled
to object, and shall not object, to the validity or finality of
any Purchaser Indemnified Loss for which offset is sought or
taken hereunder or under the Management Agreement if the Six
Month Unsatisfied Claim for any such Purchaser Indemnified Loss
(i) has not theretofor been disputed by any Purchaser Indemnitor,
(ii) any Purchaser Indemnitor has admitted in writing its
liability therefor, (iii) has been settled in writing with any
Purchaser Indemnitor, or (iv) has been finally determined by
arbitration as evidenced by an arbitration award. If any such
Purchaser Indemnified Loss is unpaid and offset is sought
pursuant to the terms hereof, the amount of any such Purchaser
Indemnified Loss shall bear interest at the rate of 8.75 percent
34
annually, computed, (i) in the case of a third party claim from
the date that a Purchaser Indemnitee pays or otherwise satisfies
the Purchaser Indemnified Loss or (ii) in the case of other than
a third party claim, from the date that Purchaser Indemnitee
accrues the Purchaser Indemnified Loss on its books of account,
in each case until the amount thereof shall have been satisfied
in full, whether by offset or otherwise.
6. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS
6.1 Survival. The representations and warranties of the
parties contained in this Agreement or in any writing delivered
pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by any party or its
Representatives and the consummation of the transactions
contemplated herein and shall continue in full force and effect
for the periods specified below (the "Survival Period");
(i) representations and warranties relating to
the reporting, payment or liability for Taxes and the
representations and warranties relating to or affecting the
title of or to the Transferred Assets, and the related
indemnification obligation, shall survive the closing of the
transactions under this Agreement and the Closing Date
indefinitely;
(ii) all other representations and warranties
hereunder, and the related indemnification obligations,
shall be of no further force and effect after the expiration
of four years from and after the Closing Date; and
(iii) except as otherwise provided, all other
covenants and agreements of the parties contained in this
Agreement or in any document, instrument, agreement or other
paper delivered pursuant hereto or in connection herewith
shall survive indefinitely.
Anything to the contrary notwithstanding, the Survival
Period shall be extended automatically to include any time period
necessary to resolve, and collect upon, a claim for
indemnification which was made before expiration of the Survival
Period but not resolved prior to its expiration; and provided,
further, that any such extension shall apply only as to claims
asserted and not so resolved within the Survival Period.
Liability for any such item shall continue until such claim shall
have been finally settled, decided or adjudicated.
7. POWER-OF-ATTORNEY
7.1 Appointment of Agent. Seller, RFI and Shareholder, and
each of them, hereby irrevocably constitute and appoint Xxxxxx X.
Xxxxxxxx, Xx. ("Agent") as their agent and attorney-in-fact to
modify, amend or otherwise change this Agreement or any of its
terms or provisions (including modifications, amendments or
changes subsequent to Closing), to take all actions and to
execute all documents necessary or desirable to consummate the
35
transactions contemplated by this Agreement, and to take all
actions and to execute all documents which may be necessary or
desirable in connection therewith, to give and receive consents
and all notices hereunder, to negotiate and settle claims for
indemnification under Article 5 hereof, and to perform any other
act arising under or pertaining to this Agreement and the
transactions contemplated hereby. Seller, RFI and Shareholder,
and each of them, agree that service of process upon Agent in any
action or proceeding arising under or pertaining to this
Agreement shall be deemed to be valid service of process upon
Seller, RFI and Shareholder, and each of them, as appropriate,
and any claim by Purchaser, Parent or any Purchaser Indemnitee
against Seller, RFI and Shareholder, or any of them, in respect
to this Agreement may be asserted against, and settled with,
Agent. Agent shall be deemed to have accepted the appointment
herein upon Agent's execution of this Agreement.
7.2 Liability of Agent. Nothing contained herein shall be
deemed to make Agent personally liable (in its capacity as Agent
only, which shall in no way limit or impair Shareholder s
liability hereunder) to Purchaser, Parent, Seller, RFI and
Shareholder, or any of them, solely because of service in Agent's
capacity as agent and attorney-in-fact. In performing any of
Agent's duties hereunder, Agent shall not incur any liability to
Purchaser, Parent, Seller, RFI and Shareholder, or any of them,
for losses, damages, liabilities or expenses, except for his own
willful default (except to the extent that Agent is otherwise
liable for the same as Shareholder).
7.3 Irrevocable; Binding on Successors, Etc.. It is
expressly understood and agreed that this power of attorney and
the agency created hereby is coupled with an interest of the
respective parties hereto and shall be binding and enforceable on
and against the respective heirs, personal representatives,
successors and assigns of Seller, RFI and Shareholder, and each
of them, and this power of attorney shall not be revoked or
terminated by the death, disability, bankruptcy or incompetency
of Seller, RFI and Shareholder, or any of them, but shall
continue to be binding and enforceable by Agent, Purchaser,
Parent and their respective successors and on and against the
heirs, personal representatives, successors and assigns of
Seller, RFI and Shareholder, and any of them, in the manner
provided herein.
36
8. MISCELLANEOUS
8.1 Notices. (a) All notices, demands or other
communications required or permitted to be given or made
hereunder shall be in writing and (i) delivered personally, or
(ii) sent by pre-paid, first class, certified or registered mail,
return receipt requested, or (iii) by priority overnight national
express courier service, or (iv) by facsimile transmission
(followed by a hardcopy by U.S. mail or priority overnight
delivery as aforesaid), to the intended recipient thereof at its
address or facsimile number set out below. Any such notice,
demand or communication shall be deemed to have been duly given
(i) immediately if delivered personally, (ii) three Business Days
after mailing, (iii) the Business Day after delivery to a
national express courier service, or (iv) if given by confirmed
facsimile, immediately if received by recipient during its normal
business hours on a Business Day or, if not, at the beginning of
recipient's business on the next Business Day. In proving same
it shall be sufficient to show that the envelope containing the
same was duly addressed, stamped and posted (or that the envelope
was delivered to the national express courier service), or that
receipt of a facsimile was confirmed by the recipient. The
addresses and facsimile numbers of the parties for purposes of
this Agreement are:
(i) If to Purchaser Intermet Corporation
or Parent: 0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxxxxxx, Chairman & CEO
With a copy to: Xxxxxxxxxx & Cody
Suite 2800
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
(ii) If to Seller, RFI or
Shareholder: c/x Xxxxxxxx Foundry, Inc.
Xxxxxxxx Road
P.O. Box 1235 (Mail Only)
Xxxxxxxxx Xxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President
With a copy to: Xxxx & Xxxxxx
3100 SouthTrust Tower
000 Xxxxx 00xx Xxxxxx
00
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Xx., Esq.
Xxxxx X. Xxxx, III, Esq.
(b) Any party may change the address or facsimile
number to which notices, demands or other communications to such
parties shall be given or made by giving notice thereof to the
other parties hereto in the manner provided herein.
8.2 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same
instrument.
8.3 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to
the subject matter hereof, and this Agreement contains the sole
and entire agreement among the parties with respect to the
matters covered hereby. This Agreement shall not be altered or
amended except by an instrument in writing signed by or on behalf
of the party entitled to the benefit of the provision against
whom enforcement is sought.
8.4 Governing Law. The validity and effect of this
Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Alabama, without regard
to conflicts of laws principles.
8.5 Dispute Resolution. (a) Any controversy, claim or
dispute arising out of or in any way relating to this Agreement
or its breach or the transactions contemplated hereby including
without limitation any claim that this Agreement or any of its
parts is invalid, illegal or otherwise voidable or void, shall be
submitted to arbitration before and, unless otherwise provided
herein, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA").
Notwithstanding any provision of this Agreement relating to which
state laws govern this Agreement, all issues relating to
arbitrability or the enforcement of the agreement to arbitrate
contained herein shall be governed by the Federal Arbitration Act
(9 U.S.C. Section 1 et seq.) and the federal common law of
arbitration.
(b) Judgment upon an arbitration award may be entered
in any court having competent jurisdiction and shall be final,
binding and non-appealable. The parties hereby waive to the
fullest extent permitted by Law any right to or claim for any
punitive or exemplary damages against the other and agree that in
the event of a dispute between them, each shall be limited to the
recovery of only the actual damages sustained.
(c) The arbitration provisions of this Paragraph 8.5
are self-executing and shall remain in full force and effect
after the expiration or termination of this Agreement. If either
party fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party by default
38
or otherwise, notwithstanding such failure to appear. Unless
otherwise agreed to in writing by the parties, such proceeding
shall take place in Atlanta, Georgia. With respect to any
dispute involving $100,000 or more, arbitration proceedings shall
be conducted before three (3) neutral arbitrators. With respect
to any dispute involving less than $100,000, arbitration
proceedings shall be conducted by a single arbitrator in
accordance with the Expedited Rules of the AAA.
(d) The obligation herein to arbitrate shall not
prevent any party from seeking temporary restraining orders,
preliminary injunctions or other procedures in a court of
competent jurisdiction to obtain interim relief when deemed
necessary by such court to preserve the status quo or prevent
irreparable injury pending resolution by arbitration of the
actual dispute.
8.6 Successors and Assigns. No party may assign all or any
part of its rights, duties or obligations under or pursuant to
this Agreement. Except as otherwise provided, this Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, legal
representatives, successors and permitted assigns.
8.7 Partial Invalidity and Severability. All rights and
restrictions contained herein may be exercised and shall be
applicable and binding only to the extent that they do not
violate any applicable Laws and are intended to be limited to the
extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be
held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, it is the intention of the parties that
the remaining terms hereof, or part thereof, shall constitute
their agreement with respect to the subject matter hereof and all
such remaining terms, or parts thereof, shall remain in full
force and effect. To the extent legally permissible, any
illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable
provision.
8.8 Waiver. Any term or condition of this Agreement may be
waived at any time by the party which is entitled to the benefit
thereof, but only if such waiver is evidenced by a writing signed
by such party. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or remedy
created hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or remedy by
any such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. No waiver by
any party hereto of any breach of or default in any term or
condition of this Agreement shall constitute a waiver of or
assent to any succeeding breach of or default in the same or any
other term or condition hereof.
8.9 Headings. The headings of particular provisions of
this Agreement are inserted for convenience only and shall not be
construed as a part of this Agreement or serve as a limitation or
expansion on the scope of any term or provision of this
Agreement.
39
8.10 Number and Gender. Where the context requires, the use
of the singular form herein shall include the plural, the use of
the plural shall include the singular, and the use of any gender
shall include any and all genders.
8.11 Time of Performance. Time is of the essence.
9. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS
9.1 Certain Definitions. For purposes of this Agreement,
the following capitalized terms shall have the meanings specified
with respect thereto below (all terms used in this Agreement
which are not defined in this Article 9 but defined elsewhere in
this Agreement, shall have for purposes of this Agreement the
meanings set forth elsewhere in this Agreement):
"ADA" shall mean the Americans with Disabilities Act of
1990.
"Action" shall mean any action, suit, complaint, claim,
counter-claim, petition, set-off, inquiry, investigation,
administrative proceeding, arbitration, or private dispute
resolution proceeding, whether at law, in equity, by contract or
agreement, or otherwise, and whether conducted by or before any
Government, any Forum, or other Person.
"Affiliate" of any Person shall mean any other Person
directly or indirectly controlling, controlled by, or under
direct or indirect common control with the former Person. A
Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract
or otherwise.
"Balance Sheet Liabilities" shall mean all liabilities that
are required to be reflected in financial statements properly
prepared in accordance with GAAP (excluding contingent
liabilities other than those which meet the standards enunciated
in Statement of Financial Accounting Standards No. 5, "Accounting
For Contingencies").
"Blue Sky Laws" shall mean all state securities and "blue
sky" Laws regulating or governing the offer, offer for sale,
issuance, or sale of securities.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in either Birmingham,
Alabama, or Atlanta, Georgia, are required or authorized to be
closed.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Environmental Laws" shall mean all federal, state and local
laws, including but not limited to all statutes, ordinances,
rules, regulations, and common law, relating to pollution or
40
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including
without limitation ambient air, surface water, ground water or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments,
injunctions, consent agreements, stipulations, provisions and
conditions of permits, licenses and other operating
authorizations, notices or demand letters issued, entered,
promulgated or approved thereunder.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and all rules and regulations promulgated
pursuant thereto.
"Forum" shall mean any federal, state, local or municipal
court, governmental agency, administrative body or agency,
tribunal, private alternative dispute resolution system, or
arbitration panel.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Government" shall mean any federal, state, local or
municipal government or any department, commission, board,
bureau, agency, instrumentality, unit, or taxing authority
thereof.
"Hazardous Material" shall mean any substance, material or
waste designated as hazardous or toxic under any applicable
Environmental Laws including, without limitation, petroleum and
petroleum products, and any substance which is (i) designated as
a "toxic pollutant" pursuant to the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1317; (ii) defined as
a "hazardous substance" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq.; or (iii) defined as a
"hazardous waste" pursuant to the Federal Resource Conservation
and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.
"Hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
"article", "paragraph", "Schedule", "Exhibit" and like references
are to this Agreement unless otherwise specified.
41
"IDB Lease" shall mean that certain Lease dated December 1, 1988,
by and between The Industrial Development Board of the City of
Alexander City, Alabama, as lessor, and Xxxxxx-Xxxxxxxx Co., predecessor
corporation of Seller, as lessee, as recorded in the Probate Office
of Tallapoosa County, Alabama on Fiche Card No. #051956 (the "Lease")
as assigned to Seller (then known as HCR, Inc.) by Xxxxxx-Xxxxxxxx
Co. under that certain Assignment of Leasehold Interest and Assumption
Agreement dated February 3, 1995 between Xxxxxx-Xxxxxxxx Co. and
Seller, as recorded on Card No. 0099750 in the Office of the Judge of
Probate of Tallapoosa County, Alabama.
"Known," "to the knowledge of," "to the best knowledge of,"
"aware" or words of similar import employed in this Agreement
with reference to (i) Seller, shall be conclusively presumed to
mean the actual knowledge of Shareholder, Xxx Xxxxx (Executive
Vice President of RFI), Xxxxxx Xxxxx (Vice President of Sales &
Marketing of RFI), Xxx Xxxxxxx (Vice President of Quality
Assurance and Technical Development of RFI), Xxxxx Xxxxxx (Vice
President of Manufacturing of RFI), and Xxxxx XxXxxxx (Assistant
Secretary of RFI), or any of them, and (ii) Purchaser or Parent,
shall be conclusively presumed to mean the actual knowledge of
the Chairman of the Board and Chief Executive Officer, and Vice
President - Finance of Parent.
"Law" shall mean all federal, state, local or municipal
constitutions, statutes, rules, regulations, ordinances, acts,
codes, legislation, conventions and similar laws and legal
requirements, as in effect from time to time.
"Lien" shall mean any mortgage, pledge, hypothecation,
security interest, encumbrance, lien or charge of any kind, or
any rights of others, however evidenced or created (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction).
"Lost Foam Technology" shall mean all technology, processes,
know-how, technical information, trade secrets, procedures and
other intellectual property and proprietary information related
to the casting process known variously in Seller's industry as
"expendable pattern casting process," "evaporative pattern
casting," or "lost foam casting."
"Orders" shall mean all applicable orders, writs, judgments,
decrees, rulings and awards of any court, tribunal, agency,
administrative or governmental body.
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated association or organization,
and a Government.
"Representative" of a party shall mean such party's
directors, officers, partners, employees, agents, accountants,
lenders, lawyers, investment bankers, and other financial or
professional advisors or consultants.
42
"SEC" shall mean the Securities and Exchange Commission or
any successor Person(s) having similar responsibilities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated pursuant
thereto.
"Solid Waste" shall have the meaning as defined pursuant to
the Federal Resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 6901 et seq.
43
9.2 Index to Definitions. The definitions for the
following defined terms used in this Agreement can be found as
follows:
Defined Term Paragraph or Section
AAA 8.5
Agent 7.1
Arbiter 1.3(d)
Assigned Contracts 1.1(g)
Assumed Liabilities 1.5(a)
Audited Balance Sheet 2.8
Audited Financial Statements 2.7
Bank 4.5
Confidential Information 4.7
Closing 1.10
Closing Date 1.10
Company Indebtedness 4.5
Company Pension Plan 2.22(e)
Customer Furnished Items 2.13(d)
Disa Agreement 5.6(a)(i)
ERISA Plan 2.22(a)
Estimated Amount 1.3(b)
Excluded Assets 1.2
Firm Purchase Commitments 2.10
Internal Revenue Code 1.9
Inventories 1.1(d)
Inventory Component 1.3(e)
Inventory Quantity Schedule 1.4
Leased Real Property 1.1(c)
License Agreement 4.7
Lenders 4.5
Losses 5.6a)(i)
Management Agreement 5.8
Owned Real Property 1.1(a)
Parent Preamble
Parent Stock 3.3
Permitted Exceptions 2.14(b)
Plan or Plans 2.22(a)
Post-employment Benefits 2.22(f)
Products Liability Occurrence 2.11
Purchase Price 1.3(a)
Purchaser Preamble
Purchaser Indemnified Losses 5.1
44
Purchaser Indemnitees 5.1
Purchaser Indemnitors 5.1
Real Property Improvements 2.14(f)
Real Property Leases 2.14(c)
Reference Date 2.8
Related Parties 2.25
RFI Preamble
RFI Agreement 5.6a)(i)
SEC Reports 3.4
Seller Preamble
Seller Furnished Items 2.13(c)
Seller Indemnified Losses 5.3
Seller Indemnitees 5.3
Seller Indemnitors 5.3
Seller's Business Recitals
Shareholder Preamble
Significant Customers 2.18
Six Month Unsatisfied Claim 5.8
Survival Period 6.1
Taxes 2.20
Transferred Assets 1.1
Unaudited Balance Sheet 2.7
Unaudited Financial Statements 2.7
[Signatures Appear on Following Page]
45
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
PARENT:
INTERMET CORPORATION
By: /s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Chairman and CEO
PURCHASER:
ALEXANDER CITY CASTING COMPANY, INC.
By: /s/ C. Xxxxx Xxxxxxxx
C. Xxxxx Xxxxxxxx, President
SELLER:
XXXXXX-XXXXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
Xxxxxx X. Xxxxxxxx, Xx.
President
RFI:
XXXXXXXX FOUNDRY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
Xxxxxx X. Xxxxxxxx, Xx.
President
[Signatures Continued on Following Page]
[Signatures Continued from Preceding Page]
SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxxxx, Xx.
___________________________(SEAL)
XXXXXX X. XXXXXXXX, XX.
AGENT:
/s/ Xxxxxx X. Xxxxxxxx, Xx.
___________________________(SEAL)
XXXXXX X. XXXXXXXX, XX.
For purposes of accepting the
appointment as "Agent" pursuant to
Paragraph 7.1
