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Exhibit 10.1
STOCK PURCHASE AGREEMENT
between
HECLA MINING COMPANY
and
ZEMEX U.S. CORPORATION
November 17, 2000
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TABLE OF CONTENTS
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase of Stock
1.2 Closing
1.3 Execution and Delivery of Closing Documents
1.4 Dividends and Capital Contributions
ARTICLE 2
ADJUSTMENTS TO PURCHASE PRICE
2.1 Balance Sheet
2.2 Post-Closing Adjustments
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 Organization and Good Standing
3.2 Authorization and Validity
3.3 No Conflict
3.4 Purchase for Investment
3.5 Investigation by Purchaser
3.6 Finder's Fee
3.7 Financing
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Good Standing of Seller
4.2 Authorization and Validity
4.3 No Conflict
4.4 Organization and Good Standing of Subsidiaries
4.5 Capitalization
4.6 Corporate Records
4.7 Financial Statements
4.8 Absence of Undisclosed Liabilities
4.9 Absence of Certain Changes
4.10 Material Contracts
4.11 Leases and Concessions
4.12 Real Estate; Encumbrances
4.13 Environmental
4.14 Patents, Trademarks and Trade Names
4.15 Litigation; Compliance with Law
4.16 Tax Matters
4.17 Employee Benefit Plans
4.18 Labor
4.l9 Inventory
4.20 Employees
4.21 Major Customers and Suppliers
4.22 Accounts Receivable
4.23 Finder's Fee
4.24 Title to Assets
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4.25 Accounts
4.26 Related Parties
4.27 Deleted Intentionally
4.28 Charitable Commitments
4.29 Defective Pricing
4.30 Insurance
4.31 Product Warranty Liabilities
4.32 Equipment
4.33 Y2K
4.34 Commercial Bribery
4.35 Actions Regarding Employees
4.36 Reclamation Liabilities
4.37 Reserve Estimates
4.38 Representations Not Misleading
4.39 Copies Accurate
4.40 Definition of Knowledge
ARTICLE 5
SELLER'S AND PURCHASER'S PRE-CLOSING COVENANTS
5.1 Business Operations
5.2 Access
5.3 Material Change
5.4 Governmental Approvals
5.5 Exclusivity
5.6 X-X Xxxx/Feldspar 401(k) and Benefit Plans
5.7 Purchaser's Obligations
5.8 Joint Obligations
5.9 Deliveries of Information; Consultations
5.10 Settlement of Intercompany Accounts
ARTICLE 6
PURCHASER'S CONDITIONS PRECEDENT
6.1 Representations and Warranties
6.2 Covenants
6.3 No Injunction
6.4 No Material Adverse Change
6.5 HSR Act; Exon-Xxxxxx
6.6 Consents
6.7 Opinion of Seller's Counsel
6.8 Deleted Intentionally
6.9 Certain Audited Financials
6.10 2000 Audit
ARTICLE 7
SELLER'S CONDITIONS PRECEDENT
7.1 Representations and Warranties
7.2 Covenants
7.3 No Injunction
7.4 HSR Act, Exon-Xxxxxx
7.5 Opinion of Purchaser's Counsel
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ARTICLE 8
CLOSING DOCUMENTS
8.1 Form of Documents
8.2 Purchaser's Deliveries
8.3 Seller's Deliveries
8.4 Joint Deliveries
ARTICLE 9
POST-CLOSING AGREEMENTS
9.1 Post-Closing Agreements
9.2 Inspection of Records
9.3 Use of Trademarks
9.4 Back-Up
9.5 Payments of Accounts Receivable
9.6 Third Party Claims
9.7 Non-Solicitation
9.8 Confidentiality
9.9 Non-Compete
9.10 Specific Performance
9.11 Retention Bonuses
9.12 Agreement to Defend and Indemnify
9.13 Retirement Plans
9.14 Claims under Welfare Plans
9.15 Hecla Name
9.16 K-T Feldspar Corporation
9.17 Releases/Collateral
9.18 Technology Support
ARTICLE 10
TAXES
10.1 In General
10.2 Reporting and Payment of Taxes
10.3 Certain Unpaid Taxes
10.4 Allocations Relating to Taxes
10.5 Refunds and Credits
10.6 Cooperation Audits
10.7 Section 338(h)(10) Election
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by Seller
11.2 Indemnification by Purchaser
11.3 Exclusive Nature of Remedies
11.4 Cooperation
11.5 Subrogation
11.6 Third Party Claims other than Taxes and
Environmental Matters
11.7 Environmental Claims
11.8 Characterization of Indemnity Payments
11.9 Representations at Closing
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ARTICLE 12
TERMINATION
12.1 Termination
12.2 Effect of Termination
ARTICLE 13
MISCELLANEOUS
13.1 Fees
13.2 Publicity
13.3 Amendments
13.4 Assignment
13.5 Non-Waiver
13.6 Binding Effect; Benefit
13.7 Notice
13.8 Entire Agreement
13.9 Costs, Expenses and Legal Fees
13.10 Severability
13.11 Survival of Representations and Warranties
13.12 Governing Law and Venue
13.13 Captions
13.14 Counterparts
13.15 Number and Gender
13.16 Facsimile Transmissions
13.17 Further Assurances
13.18 No Admissions
13.19 Dollars
LIST OF EXHIBITS
Exhibit A Escrow Agreement
Exhibit B-1 Opinion of Seller's Counsel
Exhibit B-2 Opinion of Seller's Outside Counsel
Exhibit C Opinion of Purchaser's Outside Counsel
Exhibit D Mica Purchase Agreement
Exhibit E Joint Mining Agreement
LIST OF SCHEDULES
2.1 Standards of Financial Statements
4.3 Conflicts & Consents - Charters, Bylaws, Contracts,
Judgments, Laws & Regulations
4.4 Qualifications in Foreign Jurisdictions; Other Entities
and Interests
4.5 Encumbrances on Stock
4.9 Changes in Position
4.10 Material Contracts
4.11(a) Leases - Non-mineral Real Property and Personal Property
4.11(b) Leases and Concessions - Mining and Mineral Real Property Interests
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4.12 Owned Real Property
4.13 Environmental Matters
4.14 Software Licenses, Patents, Trademarks & Trade Names
4.15 Litigation & Regulatory Compliance
4.16 Tax Matters
4.17 Employee Benefit Plans
4.18 Organized Labor Matters
4.l9 Inventories
4.20 Employees
4.21 Major Customers & Suppliers
4.22 Subsidiary Sales Contracts
4.24 Title to Assets - Exceptions
4.25 Accounts
4.26 Related Parties
4.30 Insurance
4.31 Product Warranties
4.32 Leased Equipment
4.36 Reclamation Liabilities
4.37 Reserve Estimates
5.3 Material Changes since September 30, 2000
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of November 17, 2000, is between
Hecla Mining Company, a Delaware corporation ("Seller"), and Zemex U.S.
Corporation, a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Kentucky-Tennessee Clay Company, a Delaware corporation ("X-X
Xxxx"), is a wholly owned subsidiary of Seller, and Hecla de Brasil
Empreendimentos de Participacoes Ltda., a Brazilian sociedade civil por quotas
de responsibilidade limitada ("Hecla Brazil"), is entirely owned by Seller
except for one share owned by Xxxxxxxxx X. Xxxxx pursuant to the requirements of
Brazilian law. X-X Xxxx de Mexico, S.A. de C.V., a Mexican sociedad anonima de
capital variable ("K-T Mexico") is entirely owned by X-X Xxxx except for one
share owned by Xxxxxxx Xxxxxx pursuant to the requirements of Mexican law.
Recursos Minerales del Norte, S.A. de C.V., a Mexican sociedad anonima de
capital variable ("Recursos"), is entirely owned by Seller except for one share
owned by Xxxxxxx Xxxxxx pursuant to the requirements of Mexican law, and Seller
will, prior to the Closing, transfer all its interest in Recursos to K-T Mexico.
Xxxxx de Caxias Mineracao Ltda. ("Xxxxx") and Mineracao Hecla do Brasil, Ltda.
("Mineracao Hecla"), each a Brazilian sociedade comercial por quotas de
responsibilidade limitada, are entirely owned by Hecla Brazil except for one
share of Xxxxx and one hundred shares of Mineracao Hecla owned by Xxxxxxxxx X.
Xxxxx pursuant to the requirements of Brazilian law. The minority owners of
each of Hecla Brazil, K-T Mexico, Recursos, Xxxxx, and Mineracao Hecla are
hereinafter referred to as the "Incidental Owners". X-X Xxxx, Hecla Brazil, K-T
Mexico, Recursos, Xxxxx and Mineracao Hecla are hereinafter jointly referred to
as "the Subsidiaries" and individually as a "Subsidiary"; and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, 100% of
the issued and outstanding shares of capital stock of X-X Xxxx, as well as all
of the issued and outstanding shares of capital stock or quotas of Hecla Brazil
owned by Seller (together, the "Stock"), and Purchaser desires to acquire, or
cause its designees to acquire all shares or quotas (as the case may be) of
Hecla Brazil, K-T Mexico, Recursos, Xxxxx and Mineracao Hecla owned by the
Incidental Owners;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants contained herein, and on the terms and subject to the conditions
set forth herein, the parties to this Agreement, intending to be legally bound,
agree as follows:
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ARTICLE 1
PURCHASE AND SALE
1.1 Purchase of Stock. On the terms and subject to the conditions set
forth herein, at the Closing (as defined below), Seller shall sell and deliver
to Purchaser, and Purchaser shall purchase from Seller, the Stock. Seller shall
sell the Stock to Purchaser, free and clear of all options, proxies, voting
trusts, voting agreements, judgments, pledges, charges, escrows, rights of first
refusal or first offer, mortgages, indentures, claims, transfer restrictions,
liens, equities, security interests and other similar encumbrances
(collectively, "Claims") other than Permitted Encumbrances or Permitted Liens
(as defined below). The purchase price for the Stock (the "Purchase Price")
shall be Sixty-Eight Million Dollars ($68,000,000), plus or minus (as the case
may be) the Purchase Price Adjustment (as herein defined). Of the Purchase
Price, Purchaser shall pay to LaSalle Bank, National Association, as escrowee
(Escrowee"), pursuant to an Escrow Agreement in the form attached hereto as
Exhibit A, Two Million Dollars ($2,000,000) upon the execution and delivery of
this Agreement to (a) offset Seller's costs and expenses associated with
entering into this Agreement and preparing to consummate the transactions
contemplated hereby, (b) compensate Seller for the risks (including reputational
risk) associated with entering into an Agreement which is not certain of
consummation, and (c) commit Purchaser to diligently pursue the consummation of
the transactions contemplated hereby (the "Execution Payment"). The Execution
Payment shall only be refundable to Purchaser in the limited circumstances as
provided in Section 12.2 hereof, which shall be strictly construed. On the
Closing Date (as defined below), Purchaser shall pay the Purchase Price less the
Execution Payment, plus or minus (as the case may be) the Estimated Purchase
Price Adjustment (as herein defined) to Seller, in exchange for the Stock. Each
payment of any portion of the Purchase Price shall be made by wire transfer of
immediately available funds to an account of Seller or to accounts designated by
it at a bank or banks designated in writing by Seller which designation shall be
made at least three (3) business days before the scheduled payment date,
provided the Execution Payment shall be made to the Escrow Agent on the date of
this Agreement. Certain adjustments may be made to the Purchase Price on the
Post-Closing Date (as defined below) in accordance with Article 2.
1.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m., Chicago, Illinois
time, at the offices of Xxxx, Xxxx & Xxxxx LLC, 00 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx on the latest of (a) January 16, 2001, (b) the second business day
following the availability of the Audited Financial Statements and the 2000
Audit (as defined below), or (c) such other date as may be agreed upon by Seller
and Purchaser in writing, subject, however, to Article 12. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
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1.3 Execution and Delivery of Closing Documents. At the Closing, the
parties shall execute and deliver each document, agreement and instrument
required by this Agreement to be so executed and delivered as provided in
Article 8.
1.4 Dividends and Capital Contributions. On the Closing Date, and prior
to the Closing, (x) Seller shall cause X-X Xxxx to declare and pay a dividend to
Seller of (i) all intercompany accounts receivable owed by Seller or any of its
Affiliates (as herein defined) to any of the Subsidiaries on account of cash
advances to Seller or its Affiliates plus (ii) the accounts receivable owed by
Xxxxx Corning Fiberglass, Inc. ("OCF") and its affiliates to the Subsidiaries on
the date of OCF's filing of a petition under Chapter 11 of the Bankruptcy Code,
and (y) Seller shall contribute to the capital of the appropriate Subsidiaries
all intercompany indebtedness owed by any of the Subsidiaries to Seller or any
of its Affiliates. As used herein: (i) an "Affiliate" is any Person which
controls another Person, which such other Person controls, or which is under
common control with another Person (except that, for the purposes of this
Agreement, the Subsidiaries shall not be deemed to be Affiliates of Seller);
(ii) "Control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a Person through voting securities,
contract or otherwise; and (iii) "Person" means an individual, any type of
business entity (including a corporation, joint-stock company, partnership or
limited liability company), any other type of legal entity (including a trust),
or any governmental agency or instrumentality.
ARTICLE 2
ADJUSTMENTS TO PURCHASE PRICE
2.1 Balance Sheet.
(a) As promptly as practicable after the Closing Date, Seller shall
prepare a proposed combined balance sheet of the Subsidiaries as of the
close of business on the Closing Date ("Proposed Balance Sheet"), in
accordance with this Section 2.1. The Proposed Balance Sheet shall reflect
the effects of the dividends and capital contributions required to be made
pursuant to Section 1.4, shall not reflect refinancings or equity
adjustments occurring on the Closing Date or Taxes to be paid by Seller
under Section 10.2, shall reflect the effects on the Subsidiaries of the
Tax Election (as herein defined) as a current liability, and shall be
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied by Seller in a manner consistent with the
accounting principles and practices applied in the preparation of the
Financial Statements (as herein defined), with such adjustments thereto, if
any, as are expressly set forth on Schedule 2.1 and/or this paragraph (a)
(the "Adjusted GAAP
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Principles"). Notwithstanding, or without limitation, as the case may be,
of the foregoing: (i) reserves and accruals shall be determined as if the
date of the Proposed Balance Sheet was the last day of the fiscal year, and
shall include pro rata accruals for accrued salaries, wages, bonuses,
vacation pay, utilities and like items; (ii) intercompany profit in
inventory shall be disregarded; (iii) to the extent any sums are required
to be converted to United States Currency, the rate of exchange utilized by
Seller in accordance with past practice (which is based upon exchange rates
stated in The Wall Street Journal) shall be employed; and (iv) inventories
shall be determined from a physical count taking place on the day prior to
the Closing Date, and valued at the lower of cost or net realizable value,
with cost being determined using the average cost methods heretofore used
by X-X Xxxx. Inventories in stockpiles shall be determined from surveys of
such stockpiles conducted by the licensed surveyors whom the Subsidiaries
have used in the past. Purchaser shall make available to Seller the books,
records, and personnel of the Subsidiaries which Seller reasonably requires
in order to prepare and deliver the Proposed Balance Sheet. Purchaser and
Seller shall, throughout the entire period from the date of this Agreement
to the date of the deliveries required by this Section 2.1, meet and
discuss any and all financial and business matters relating to such process
and the preparation of the Proposed Balance Sheet, and Seller shall make
available its work papers for confidential inspection and review by
Purchaser and Purchaser's accountants; provided, however, that Seller may
omit or redact information that contains competitively sensitive
information concerning Seller's or Seller's Affiliate's direct or indirect
feldspar operations, reserves, contracts, customers, pricing, costs, or
related matters. Seller shall use its reasonable efforts to deliver the
Proposed Balance Sheet within thirty (30) days after the Closing Date. The
date of delivery of the Proposed Balance Sheet to Purchaser is referred to
herein as the "Delivery Date".
(b) Purchaser shall have thirty (30) days after the Delivery Date
(the "Dispute Period") to dispute any of the elements of or amounts
reflected on the Proposed Balance Sheet and affecting the calculation of
the Purchase Price (a "Dispute"). Except as to any item on the Proposed
Balance Sheet as to which Purchaser gives written notice of a Dispute
within the Dispute Period to Seller (a "Dispute Notice"), the Proposed
Balance Sheet shall be deemed to have been accepted and agreed to by
Purchaser in the form in which it was delivered to Purchaser, and shall be
final and binding upon the parties hereto. If Purchaser has a Dispute,
Purchaser shall give Seller a Dispute Notice within the Dispute Period,
setting forth in reasonable detail the elements and amounts with which it
disagrees. Purchaser acknowledges and agrees that it has reviewed and is
familiar
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with Seller's policies, methodologies and past practices regarding the
accrual for reclamation obligations. Accordingly, Purchaser shall not
assert, as a basis of any dispute with any elements of or amounts reflected
on the Proposed Balance Sheet, the accrual for reclamation reflected on the
Proposed Balance Sheet provided such amount was determined according to
GAAP and consistently with Seller's accrual policies and past practices and
no material change in circumstances at a particular reclamation site has
occurred since the date of this Agreement. Within thirty (30) days after
delivery of such Dispute Notice, the parties hereto shall attempt to
resolve such Dispute and agree in writing upon the final content of the
disputed Proposed Balance Sheet.
(c) If Purchaser and Seller are unable to resolve any Dispute within
the thirty (30) day period after Seller's receipt of a Dispute Notice,
Seller and Purchaser shall promptly jointly engage the Chicago office of
Xxxxxx Xxxxxxxx LLP (the "Arbitrating Accountant") as arbitrator, so long
as Xxxxxx Xxxxxxxx LLP has not performed accounting, tax or auditing
services for Purchaser, Seller, or any of their Affiliates during the past
three years. If Xxxxxx Xxxxxxxx LLP is unable or unwilling to serve as
Arbitrating Accountant, the Arbitrating Accountant shall be a nationally
recognized accounting firm selected promptly by agreement of Purchaser and
Seller or, if they are unable to agree, by lot. The choice by lot shall be
between two accounting firms which have not performed accounting, tax, or
auditing services for the Purchaser, Seller, or any of their Affiliates
during the past three years one of which eligible firms shall be chosen by
each Seller's and Purchaser's respective accountants, who shall jointly
conduct such lottery. In connection with the resolution of any Dispute,
the Arbitrating Accountant shall have confidential access to all documents,
records, work papers, facilities and personnel necessary to perform its
function as arbitrator. The Arbitrating Accountant's function shall be to
conform the Proposed Balance Sheet to the requirements of Section 2.1. The
Arbitrating Accountant shall allow Purchaser and Seller to present their
respective positions regarding the Dispute and shall thereafter as promptly
as possible provide the parties hereto a written determination of the
Dispute, such written determination shall be final and binding upon the
parties hereto, and judgment may be entered on the award. The Arbitrating
Accountant shall promptly, and in any event within 60 calendar days after
the date of its appointment, render its decision on the question in writing
and finalize the Proposed Balance Sheet. The Arbitrating Accountant may,
at its discretion, conduct a conference concerning the Dispute, at which
conference each party shall have the right to present additional documents,
materials and other information and to have present its advisors, counsel
and accountants. In connection with such process,
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there shall be no other hearings or any oral examinations, testimony,
depositions, discovery or other similar proceedings. The Arbitrating
Accountant shall determine the proportion of its fees and expenses to be
paid by each of Seller and Purchaser, based on the degree to which the
Arbitrating Accountant has accepted the positions of the respective
parties.
(d) After the Proposed Balance Sheet has been prepared and any
related adjustments have been made and all Disputes resolved as provided
herein, all adjustments, if any, so agreed to by the parties or required by
the Arbitrating Accountant to be made with respect to the Proposed Balance
Sheet shall be made. The Proposed Balance Sheet, as so revised by any such
adjustments, is hereinafter referred to as the "Final Balance Sheet."
2.2 Post-Closing Adjustments.
(a) The Purchase Price is based on the assumption that the Closing
Date Net Working Capital at July 31, 2000 will be $10,926,000, as adjusted,
with Purchaser's consent (which shall not be unreasonably withheld), to
reflect any retroactive accrual of additional vacation pay and IBNR (as
herein defined) claims that may be required to conform the combined balance
sheet of the Subsidiaries at July 31, 2000 to GAAP (referred to hereafter
as "Stated Working Capital"). Accordingly, on the "Post-Closing Date" (as
defined below), if the Closing Date Working Capital is less than Stated
Working Capital, Seller will pay to Purchaser an amount equal to the
difference between (i) the Stated Working Capital and (ii) the Closing Date
Working Capital. If the Closing Date Working Capital is greater than the
Stated Working Capital, Purchaser will pay to Seller an amount equal to the
difference between (i) the Closing Date Working Capital and (ii) the Stated
Working Capital. The adjustment to be made pursuant to the two preceding
sentences is referred to herein as the "Purchase Price Adjustment." As
used in this Section 2.2, the term "Closing Date Working Capital" means an
amount equal to (i) the total combined current assets of the Subsidiaries
as shown on the Final Balance Sheet less (ii) the total combined current
liabilities, current accrued expenses and current reserves of the
Subsidiaries as shown on the Final Balance Sheet.
(b) At the Closing, the parties will make a good-faith estimate of
the Closing Date Working Capital, and a corresponding estimate of the
Purchase Price Adjustment (the "Estimated Purchase Price Adjustment"),
based upon the most recent available financial information. Upon the Final
Balance Sheet becoming final, Seller or Purchaser (as the case may be)
shall make a payment to the other to reconcile the difference, if any,
between the Estimated Purchase Price
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Adjustment and the Purchase Price Adjustment. Any payment which is
required to be made under the preceding sentence shall be made on the date
which is five (5) business days after the Final Balance Sheet has become
final, or on such other date or at such other time or place as Seller and
Purchaser shall agree in writing (such date and time is hereinafter
referred to as the "Post-Closing Payment Date"). All payments required to
be made under this Section 2.2(b) on the Post-Closing Payment Date shall be
made by wire transfer of immediately available funds to an account of
recipient at a bank designated in writing by the recipient at least three
(3) business days before the Post-Closing Payment Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants that:
3.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. Purchaser is
a wholly owned subsidiary of Zemex Corporation, a Canadian corporation
("Parent").
3.2 Authorization and Validity. The execution, delivery and performance
of this Agreement by Purchaser, and the consummation of the transactions
contemplated hereby, have been duly authorized by Purchaser. The execution,
delivery and performance of the Guaranty of Parent contained at the end of this
Agreement (the "Guaranty") by Parent have been duly authorized by Parent. This
Agreement has been duly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies or public policy limitations (including as to
the enforceability of indemnification provisions). The Guaranty has been duly
executed and delivered by Parent and constitutes the legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as may be limited by (i) applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally, (ii) equitable considerations, or
(iii) public policy limitations (including as to the enforceability of
indemnification provisions).
3.3 No Conflict. Neither the execution and delivery of this Agreement by
Purchaser nor the consummation by Purchaser of the transactions contemplated
hereby will (a) conflict with or result in a breach of any provisions of the
charter or by-laws of
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Purchaser, (b) violate, conflict with or result in a breach of any material
contract, agreement or other commitment or obligation to which Purchaser is a
party or by which Purchaser is bound, (c) violate or conflict with any judgment,
decree, order, regulation or rule of any court or governmental authority or any
statute or law applicable to Purchaser, or (d) require that Purchaser obtain any
consent, approval or authorization of, or make any declaration, filing or
registration with, any governmental or regulatory authority (other than those
approvals, authorizations, declarations, filings or registrations which have
been or will be obtained or made prior to the Closing). Neither the execution
and delivery of the Guaranty by Parent nor the performance by Parent of its
obligations thereunder will (a) conflict with or result in a breach of any
provisions of the charter or by-laws of Parent, (b) violate, conflict with or
result in a breach of any material contract, agreement or other commitment or
obligation to which Parent is a party or by which Parent is bound, (c) violate
or conflict with any judgment, decree, order, regulation or rule of any court or
governmental authority or any statute or law applicable to Parent, or (d)
require that Parent obtain any consent, approval or authorization of, or make
any declaration, filing or registration with, any governmental or regulatory
authority (other than those approvals, authorizations, declarations, filings or
registrations which have been or which will be obtained or made prior to the
Closing).
3.4 Purchase for Investment. The Purchaser is an accredited investor, as
defined in Regulation D promulgated under the Securities Act of 1933 and the
rules and regulations thereunder, as amended from time to time (the "Securities
Act"). The Stock will be acquired by Purchaser for its own account for the
purpose of investment and not with a view to distribution. Purchaser will
refrain from transferring or otherwise disposing of any of the Stock or any
interest therein in such a manner as to cause Seller to be in violation of the
registration requirements of the Securities Act or applicable state securities
or blue sky laws.
3.5 Investigation by Purchaser. Purchaser has conducted its own
independent review and analysis of the assets, business, properties, operations,
financial condition and prospects of the Subsidiaries and acknowledges that
Purchaser has been provided access to the properties, premises and books and
records of the Subsidiaries for this purpose and has been offered an opportunity
to discuss the foregoing with Seller and the Subsidiaries. Purchaser
acknowledges that any estimates, forecasts, or projections furnished or made
available to it concerning the Seller or the Subsidiaries or any of them
(including, but not limited to, the contents of the confidential offering
memorandum circulated by Warrior, a division of Standard Bank London Limited) on
their properties, business, or assets have not been prepared in accordance with
GAAP or standards applicable under the Securities Act, reflect numerous
assumptions, and are subject to material risks and uncertainties. Purchaser
acknowledges that
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actual results may vary, perhaps materially. In entering into this Agreement,
Purchaser has relied solely upon its own investigation and analysis based upon
the information so provided and the representations and warranties of Seller
contained in this Agreement. Furthermore, Purchaser:
(a) acknowledges that, except for the express representations and
warranties set forth in this Agreement (including the Schedules), neither
Seller nor the Subsidiaries nor any of their respective Affiliates,
officers, directors or employees has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Purchaser or its agents or
representatives in connection with the transactions contemplated by this
Agreement;
(b) understands that the Stock has not been registered under the
Securities Act; and
(c) agrees, to the fullest extent permitted by law, that except as
otherwise set forth in this Agreement, none of Seller nor the Subsidiaries
or any of their respective Affiliates, officers, directors or employees
shall have any liability or responsibility whatsoever to Purchaser on the
basis of any information provided or made available, or statements made, to
Purchaser or its representatives or agents in connection with the
transactions contemplated by this Agreement.
3.6 Finder's Fee. Purchaser has not incurred any obligation for any
finder's, broker's or agent's fee in connection with the transactions
contemplated by this Agreement.
3.7 Financing. Purchaser has cash resources and/or financing sources
available to it reasonably sufficient to consummate the transactions
contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the representations and warranties set forth in this Article
4. To the extent set forth in this Article 4, such representations and
warranties are subject to the exceptions set forth in the schedules referred to
in the specific Sections of this Article 4. Seller may amend such schedules
after the execution hereof but prior to the Closing to reflect updated
information, events, agreements, transactions, and occurrences, except that no
such amendment to the Schedules may be made to add, modify, or update
information, events, agreements, transactions, or occurrences if (a) such
amendment arises from matters known or which were reasonably discoverable by the
Seller on the date of this Agreement, (b) such amendment results in any
16
liability under GAAP which will not be reflected on the Proposed Balance Sheet
and taken into account in the calculation of the Purchase Price, or (c) all such
amendments, considered in the aggregate, reflect facts or circumstances which,
individually or in the aggregate, are reasonably expected to have a Material
Adverse Effect (as defined below)).
4.1 Organization and Good Standing of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
with all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authorization and Validity. The execution, delivery and performance
of this Agreement by Seller, and the consummation of the transactions
contemplated hereby, have been duly authorized by Seller's board of directors,
and approval of such transactions by the stockholders of Seller is not required.
This Agreement has been duly executed and delivered by a duly authorized officer
of Seller and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) equitable considerations, or (iii) public
policy limitations (including as to the enforceability of indemnification
provisions).
4.3 No Conflict. Except as disclosed in Schedule 4.3, neither the
execution and delivery of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated hereby will (a) conflict with or result
in a breach of any provision of the charter or bylaws of Seller, (b) conflict
with or result in a breach of any provision of the charter or bylaws of any of
the Subsidiaries, (c) violate, conflict with or result in a breach of any
material contract, agreement or other commitment or obligation to which Seller
is a party or by which Seller is bound, (d) violate or conflict with any
judgment, decree, order, regulation or rule of any court or governmental
authority or any statute or law or arbitration award applicable to Seller or any
of the Subsidiaries, or (e) require that Seller or any of the Subsidiaries
obtain any consent, approval or authorization of, or make any declaration,
filing or registration with, any governmental or regulatory authority (other
than those approvals, authorizations, declarations, filings or registrations
which have been or will be obtained or made prior to the Closing), except in
cases of (c) and (d) for such violations, conflicts or breaches that,
individually or in the aggregate, are not reasonably expected to have a Material
Adverse Effect, and except in the case of (e) for such consents, approvals,
authorizations, declarations, filings or registrations which have been or will
be obtained or made prior to Closing or, if not made or obtained, are not,
individually or in the aggregate, reasonably expected to have a Material Adverse
Effect or prevent or substantially delay the consummation of the transactions
17
contemplated by this Agreement. For the purposes of this Agreement, "Material
Adverse Effect" means any event, change or effect which is materially adverse to
the financial condition, business as currently conducted, assets, liabilities,
or operations of the Subsidiaries, taken as a whole; provided, however, that a
Material Adverse Effect shall not be deemed to arise from the impact on the
Subsidiaries of (i) the effects of the consummation of the transactions
contemplated by this Agreement or compliance by any party with the provisions of
this Agreement or any judgment, decree, order, regulation or rule of any court
or governmental authority entered or promulgated in connection with such
transactions, (ii) any items or events that, in the aggregate result in or are
reasonably expected to result in a decrease in the Subsidiaries net income in
any twelve month period of $350,000 or less, or (iii) any effect that arises out
of or results from the condition of the economy or financial markets generally.
4.4 Organization and Good Standing of Subsidiaries.
(a) X-X Xxxx is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to carry on the business in which it is
engaged and to own and lease the properties it owns and leases. X-X Xxxx
is duly qualified and licensed to do business and is in good standing in
all jurisdictions where the nature of its business makes such qualification
necessary, except where the failure to be so qualified or licensed is not
reasonably expected to have a Material Adverse Effect. The jurisdictions
in which X-X Xxxx is qualified as a foreign corporation are listed on
Schedule 4.4. Except as disclosed in Schedule 4.4, X-X Xxxx does not own,
directly or indirectly, any of the capital stock of any other corporation
or any equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity.
(b) Hecla Brazil is a sociedade civil por quotas de responsibilidade
limitada duly organized, validly existing and in good standing under the
laws of Brazil, with all requisite power and authority to carry on the
business in which it is engaged and to own and lease the properties it owns
and leases. Hecla Brazil is duly qualified and licensed to do business and
is in good standing in all jurisdictions where the nature of its business
makes such qualification necessary, except where the failure to be so
qualified or licensed is not reasonably expected to have a Material Adverse
Effect. The jurisdictions in which Hecla Brazil is qualified as a foreign
civil limited liability quota company are listed on Schedule 4.4. Except
as disclosed in Schedule 4.4, Hecla Brazil does not own, directly or
indirectly, any of the capital stock of any other corporation or any
equity, profit sharing,
18
participation or other interest in any corporation, partnership, joint
venture or other entity.
(c) K-T Mexico is a sociedad anonima de capital variable duly
organized, validly existing and in good standing under the laws of Mexico,
with all requisite corporate power and authority to carry on the business
in which it is engaged and to own and lease the properties it owns and
leases. Except as disclosed in Schedule 4.4, K-T Mexico does not own,
directly or indirectly, any of the capital stock of any other corporation
or any equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity.
(d) Recursos is a sociedad anonima de capital variable duly
organized, validly existing and in good standing under the laws of Mexico,
with all requisite corporate power and authority to carry on the business
in which it is engaged and to own and lease the properties it owns and
leases. Except as disclosed in Schedule 4.4, Recursos does not own,
directly or indirectly, any of the capital stock of any other corporation
or any equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity.
(e) Xxxxx is a sociedade comercial por quotas de responsibilidade
limitada duly organized, validly existing and in good standing under the
laws of Brazil, with all requisite power and authority to carry on the
business in which it is engaged and to own and lease the properties it owns
and leases. Xxxxx is duly qualified and licensed to do business and is in
good standing in all jurisdictions where the nature of its business makes
such qualification necessary, except where the failure to be so qualified
or licensed is not reasonably expected to have a Material Adverse Effect.
The jurisdictions in which Xxxxx is qualified as a foreign commercial
limited liability quota company are listed on Schedule 4.4. Except as
disclosed in Schedule 4.4, Xxxxx does not own, directly or indirectly, any
of the capital stock of any other corporation or any equity, profit
sharing, participation or other interest in any corporation, partnership,
joint venture or other entity.
(f) Mineracao Hecla is a sociedade comercial por quotas de
responsibilidade limitada duly organized, validly existing and in good
standing under the laws of Brazil, with all requisite power and authority
to carry on the business in which it is engaged and to own and lease the
properties it owns and leases. Mineracao Hecla is duly qualified and
licensed to do business and is in good standing in all jurisdictions where
the nature of its business makes such qualification necessary, except where
the failure to be so qualified or licensed is not reasonably expected to
have a Material Adverse Effect. The jurisdictions in which
19
Mineracao Hecla is qualified as a foreign commercial limited liability
quota company are listed on Schedule 4.4. Except as disclosed in Schedule
4.4, Mineracao Hecla does not own, directly or indirectly, any of the
capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint
venture or other entity.
4.5 Capitalization.
(a) The authorized capital stock of X-X Xxxx consists of 150,000
shares of common stock, no par value, of which 147,641 shares are issued
and outstanding. All of the issued and outstanding shares of the common
stock of X-X Xxxx have been duly authorized and validly issued and are
fully paid and nonassessable. No shares of the common stock of X-X Xxxx
have been issued or disposed of in violation of the rights of X-X Xxxx'x
current or former shareholders.
(b) The authorized capital stock of Hecla Brazil consists of
1,925,865 quotas, R$1 par value, all of which have been issued and are
outstanding. All of the issued and outstanding quotas of Hecla Brazil have
been duly authorized and validly issued and are fully paid and
nonassessable. No quotas have been issued or disposed of in violation of
any rights of Hecla Brazil's current or former quotaholders.
(c) The authorized capital stock of K-T Mexico consists of 17,000
shares of Series A stock, having a value of fifty-one thousand nuevo pesos
(N$51,000), and (ii) 9,805,787 shares of Series B stock, having a value of
thirty eight million eight hundred seventeen thousand three hundred sixty-
one nuevo pesos (N$38,817,361). All of the authorized shares of stock of
each class of K-T Mexico have been issued and are outstanding. All of the
issued and outstanding shares of the stock of K-T Mexico have been duly
authorized and validly issued and are fully paid and nonassessable. No
shares of the stock of K-T Mexico have been issued or disposed of in
violation of any rights of K-T Mexico's current or former shareholders.
(d) The authorized capital stock of Recursos consists of 1,000 shares
of Series A stock, having a value of ten thousand nuevo pesos (N$10,000),
all of which shares have been issued and are outstanding. All of the
issued and outstanding shares of the stock of Recursos have been duly
authorized and validly issued and are fully paid and nonassessable. No
shares of the stock of Recursos have been issued or disposed of in
violation of any rights of Recursos' current or former shareholders.
20
(e) The authorized capital stock of Xxxxx consists of 1,000 quotas,
R$1 par value, all of which have been issued and are outstanding. All of
the issued and outstanding quotas of Xxxxx have been duly authorized and
validly issued and are fully paid and nonassessable. No quotas of Xxxxx
have been issued or disposed of in violation of any rights of Xxxxx'x
current or former quotaholders.
(f) The authorized capital stock of Mineracao Hecla consists of 2,100
quotas, R$1 par value, all of which are issued and outstanding. All of the
issued and outstanding quotas of Mineracao Hecla have been duly authorized
and validly issued and are fully paid and nonassessable. No quotas of
Mineracao Hecla have been issued or disposed of in violation of any rights
of Mineracao Hecla's current or former quotaholders.
(g) Except as disclosed in Schedule 4.5, Seller is the lawful record
and beneficial owner of all of the shares of Stock, and except as disclosed
in Schedule 4.5, the Stock is free and clear of all Claims, except
Permitted Liens.
(h) Except as disclosed in Schedule 4.5, X-X Xxxx is the lawful
record and beneficial owner of all of the outstanding shares of capital
stock of K-T Mexico, and except as disclosed in Schedule 4.5, such shares
are free and clear of all Claims, except Permitted Liens.
(i) Except as disclosed in Schedule 4.5, at the date hereof Seller
is, and on the Closing Date K-T Mexico will be, the lawful record and
beneficial owner of all of the outstanding shares of capital stock of
Recursos, and except as disclosed in Schedule 4.5, such shares are free and
clear of all Claims, except Permitted Liens.
(j) Except as disclosed in Schedule 4.5, Hecla Brazil is the lawful
record and beneficial owner of all of the outstanding quotas of Xxxxx, and
except as disclosed in Schedule 4.5, such quotas are free and clear of all
Claims, except Permitted Liens.
(k) Except as disclosed in Schedule 4.5, Hecla Brazil is the lawful
record and beneficial owner of all of the outstanding quotas of Mineracao
Hecla, and except as disclosed in Schedule 4.5, such quotas are free and
clear of all Claims, except Permitted Liens.
(l) Seller has the sole right to vote or direct the voting of the
shares or quotas (as the case may be) of Stock owned by it, at its
discretion, on any matter submitted to a vote of the stockholders of X-X
Xxxx and Hecla Brazil. X-X Xxxx has the sole right to vote or direct the
voting of the shares of capital stock of K-T Mexico owned by it, at its
discretion, on any matter submitted to a vote of K-T
21
Mexico's stockholders. As of the date of this Agreement Seller has, and as
of the Closing Date, K-T Mexico will have, the sole right to vote or direct
the voting of the shares of Recursos owned by it, at its discretion, on any
matter submitted to a vote of Recursos' stockholders. Hecla Brazil has the
sole right to vote or direct the voting of the quotas of Xxxxx and
Mineracao Hecla owned by it, in each case at its discretion, on any matter
submitted to a vote of such entities' respective quotaholders. There are
no voting trusts, voting agreements, proxies, shareholder agreements or
other arrangements relating to the Stock or the capital stock or quotas of
any of the Subsidiaries.
(m) The delivery at the Closing of the certificates representing the
shares of Stock, duly endorsed or accompanied by duly executed stock
xxxxxx, xxxx transfer to Purchaser good and indefeasible title to such
Stock, free and clear of all Claims, except Permitted Liens. The delivery
at the Closing of the shares or quotas (as the case may be) of Hecla
Brazil, K-T Mexico, Recursos, Xxxxx and Mineracao Hecla, owned at the date
hereof by the Incidental Owners, duly endorsed for transfer in accordance
with the laws of Mexico or Brazil (as the case may be), will transfer to
Purchaser or the third party designated by Purchaser in accordance with
Section 8.3(e) good and indefeasible title to such shares or quotas (as the
case may be), free and clear of all Claims, except Permitted Liens.
(n) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating any
the Subsidiaries or any other person or entity to issue, sell, exchange or
otherwise dispose of, or to purchase, redeem or otherwise acquire, shares
of or securities convertible into or exchangeable for, capital stock or
quotas of any of the Subsidiaries.
4.6 Corporate Records. The copies of the Articles of Incorporation and
the Bylaws, and all amendments thereto, of each of the Subsidiaries that have
been delivered to Purchaser are true, correct and complete copies. To the
knowledge of the Seller, the minutes and other corporate record books of the
Subsidiaries, copies of which have been delivered or made available to
Purchaser, contain materially accurate minutes of all meetings of and accurate
consents to all actions taken without meetings by the board of directors (and
any committees thereof) and stockholders of each of the Subsidiaries since
December 31, 1990.
4.7 Financial Statements.
(a) The Seller has furnished to Purchaser the combined balance sheets
of the Subsidiaries as of December 31, 1999 (the "Balance Sheet") and
December 31, 1998, and the combined statements of income, retained earnings
and cash
22
flows of the Subsidiaries for the years ended December 31, 1999 and
December 31, 1998 (such financial statements are hereinafter referred to
collectively as the "Financial Statements"). The Financial Statements have
been subjected to selected audit procedures in connection with the audit of
Seller's consolidated financial statements by PricewaterhouseCoopers LLP,
certified public accountants, and have been prepared in accordance with
GAAP, consistently applied (except for the absence of notes and except that
the accruals therein with respect to vacation pay and medical claims
incurred but not reported ("IBNR") may not be in accordance with GAAP).
The Financial Statements present fairly the combined financial position of
the Subsidiaries as of December 31, 1999 and December 31, 1998 and the
combined results of operations and cash flows of the Subsidiaries for the
years then ended.
(b) The Seller has furnished to Purchaser the combined balance sheet
of the Subsidiaries as of September 30, 2000 (the "Interim Balance Sheet")
and the consolidated statement of income of the Subsidiaries for the nine
month period then ended (the "Interim Financial Statements"). September
30, 2000 is referred to herein as the "Interim Financial Statement Date".
The Interim Financial Statements have been prepared in accordance with
GAAP, consistently applied (except for the absence of notes). The Interim
Financial Statements present fairly the combined financial position of the
Subsidiaries as of September 30, 2000 and the combined results of
operations of the Subsidiaries for the nine month period then ended,
subject to normal recurring year-end audit adjustments which are not
material in amount, individually and in the aggregate.
(c) The Subsidiaries' respective books, accounts and records are, and
have been, maintained in their usual, regular and ordinary manner, in
accordance with generally accepted accounting practices, and all
transactions to which any of the Subsidiaries is or has been a party are
fairly reflected therein in all material respects.
(d) Seller has furnished to Purchaser complete and correct copies of
such portions as relate to the Subsidiaries of all attorneys' responses to
audit inquiry letters and all management letters from Seller's independent
certified public accountants for the last five (5) fiscal years of Seller.
4.8 Absence of Undisclosed Liabilities. None of the Subsidiaries has any
material obligation or liability of any nature whatsoever (direct or indirect,
matured or unmatured, absolute, accrued, contingent or otherwise), which would
be required by GAAP as consistently applied to be provided or
23
reserved against on a balance sheet (all the foregoing herein collectively being
referred to as the "Liabilities") except for:
(a) Liabilities provided for or reserved against in the Balance Sheet
or the Interim Balance Sheet;
(b) Liabilities which have been incurred by the Subsidiaries
subsequent to the Interim Financial Statement Date in the ordinary course
of the Subsidiaries' respective businesses and consistent with past
practice;
(c) Liabilities under the executory portion of any Contract (as
herein defined) by which any of the Subsidiaries is bound and which was
entered into in the ordinary course of the Subsidiaries' respective
businesses and consistent with past practice;
(d) Liabilities under the executory portion of Permits (as herein
defined) and Environmental Permits (as herein defined) issued to, or
entered into by, the Subsidiaries in the ordinary course of business;
(e) Liabilities arising from or through Purchaser or Parent under
this Agreement or otherwise; and
(f) Liabilities arising in respect of federal income taxes not
accrued at X-X Xxxx as a result of X-X Xxxx'x inclusion in Seller's
consolidated federal income tax returns;
4.9 Absence of Certain Changes. Since the Interim Financial Statement
Date, except as set forth in Schedule 4.9:
(a) There has not been nor to the knowledge of Seller has any of the
Subsidiaries been threatened with any adverse change in the assets,
liabilities, business as currently conducted, properties, operations, or
financial condition of the Subsidiaries, taken as a whole which has had or
is reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect;
(b) None of the Subsidiaries has suffered any casualty loss or
substantial interruption in use (whether or not covered by insurance) on
account of fire, flood, riot, strike or other hazard or Act of God, other
than customary or recurring interruptions in use typically associated with
seasonality and weather conditions;
(c) No material liability or material obligation of any nature
(whether absolute, accrued, contingent or otherwise) of any of the
Subsidiaries (considered as a whole) has been incurred except in the
ordinary course of business, consistent with past practice, and the
24
Subsidiaries have not increased, or experienced any significant change in
assumptions underlying or methods of calculating, any bad debt, contingency
or other reserve;
(d) No liability or obligation (whether absolute, accrued, contingent
or otherwise) of any of the Subsidiaries which is material to the
Subsidiaries taken as a whole has been paid, discharged or satisfied other
than by payment, discharge or satisfaction in the ordinary course of
business;
(e) Except in the ordinary course of business, consistent with past
practice, none of the Subsidiaries has permitted or allowed any of such
assets or properties to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except
Permitted Liens or Permitted Encumbrances (as herein defined);
(f) None of the Subsidiaries has canceled or waived any claims or
rights of value or sold, transferred, distributed or otherwise disposed of
any assets or properties (real, personal or mixed, tangible or intangible)
except, in each case, in the ordinary course of business, consistent with
past practice;
(g) None of the Subsidiaries has disposed of or permitted to lapse
any rights to the use of any patent, trademark, trade name, service xxxx,
license or copyright, or disposed of or disclosed to any Person not bound
to maintain its confidentiality any trade secret, formula, process or
knowhow not theretofore a matter of public knowledge;
(h) Except as granted in the ordinary course of business consistent
with past practice or as required under collective bargaining agreements,
none of the Subsidiaries has granted any increase in the compensation of
officers, directors or employees, whether now or hereafter payable,
including any such increase pursuant to any option, bonus, stock purchase,
pension, profit sharing, deferred compensation, retirement payment or other
plan, arrangement, contract or commitment, and none of the Subsidiaries has
employed any additional executive or management personnel having an annual
salary (in each case) in excess of $50,000, or terminated any such
personnel having an annual salary (in each case) in excess of $50,000;
(i) None of the Subsidiaries has made any change in any method of
accounting or accounting practice, whether or not required by GAAP, except
with respect to possible vacation and IBNR accruals;
25
(j) None of the Subsidiaries has written off any asset as unusable or
obsolete or for any other reason, which asset is material to the
Subsidiaries taken as a whole;
(k) None of the Subsidiaries has made or suffered any material change
in the conduct or nature of any aspect of the businesses of the
Subsidiaries (considered as a whole), other than changes made in the
ordinary course of business and which did not have a Material Adverse
Effect;
(l) None of the Subsidiaries has made (or committed to make) capital
expenditures in an amount which exceeds $100,000 for any item or $350,000
in the aggregate (for all capital expenditures of the Subsidiaries, taken
as a whole);
(m) None of the Subsidiaries has paid (or delayed payment of)
payables, collected (or delayed collection of) receivables or waived any
rights, which rights are material to the Subsidiaries taken as a whole, in
each case other than in the ordinary course of business consistent with
past practices;
(n) None of the Subsidiaries has borrowed any money, or issued any
bonds, debentures, notes or other corporate securities, including without
limitation, those evidencing borrowed money;
(o) None of the Subsidiaries has paid (or been paid by) any Related
Party (as herein defined), or charged (or been charged by) any Related
Party, for (A) goods sold or services rendered by or to any of the
Subsidiaries, or (B) corporate overhead expenses, management fees, legal or
accounting fees, capital charges, or similar charges or expenses on a basis
which is either materially more or materially less favorable to the
Subsidiaries taken as a whole than the basis which would be employed by a
party which is not a Related Party;
(p) None of the Subsidiaries has paid or incurred any management or
consulting fees, or engaged any consultants, other than in the ordinary
course of business consistent with past practice;
(q) None of the Subsidiaries has issued or sold any securities of any
class;
(r) Except as required pursuant to Section 1.4, none of the
Subsidiaries has paid, declared or set aside any dividend or other
distribution on its securities of any class or purchased, exchanged or
redeemed any of its securities of any class;
(s) None of the Subsidiaries has experienced an adverse change in the
aggregate amount of trade receivables
26
of the Subsidiaries or the aging thereof which is material to the
Subsidiaries taken as a whole, or a change in the level of the Inventory
(as herein defined which is material to the Subsidiaries taken as a whole);
(t) None of the Subsidiaries has entered into any transaction not
enumerated above other than in the usual and ordinary course of business in
accordance with past practices; and
(u) None of the Subsidiaries has agreed, whether in writing or not,
to do any of the foregoing.
4.10 Material Contracts. Except as set forth on Schedule 4.32, Schedule
4.10 or Schedule 4.17, none of the Subsidiaries is a party to or bound by, any
currently effective:
(a) commitment, obligation, agreement or contract with respect to any
sales agent, broker or distributor not cancelable without penalty upon
notice of 60 days or less pursuant to which any Subsidiary must pay
commissions or other compensation in connection with the sale of such
Subsidiary's respective products;
(b) employment contract (or any other form of contract) with any
officer, consultant, director or employee with a term exceeding one year or
requiring any of the Subsidiaries to pay severance pay, deferred
compensation, retention bonuses or so-called "sale bonuses";
(c) plan, arrangement or contract providing for options, bonuses,
stock purchases, deferred compensation, stock appreciation rights, medical
or dental benefits, or similar arrangements;
(d) restrictive covenants or agreements with any former employees,
officers, consultants, directors or stockholders of any of the
Subsidiaries;
(e) joint venture or other commitment, obligation, agreement or
contract involving the sharing of profits or any contract or agreement
restricting any of the Subsidiaries or otherwise limiting their freedom to
compete in any line of business or with any Person or from otherwise
carrying on its business;
(f) outstanding guaranty, subordination or other similar type of
commitment, obligation, agreement or contract, whether or not entered into
in the ordinary course of business;
(g) outstanding power of attorney empowering any person, company or
other organization to act on behalf of
27
the Subsidiary (other than powers of attorney in the ordinary course of
business in Mexico and Brazil to perform ministerial and non-material
acts);
(h) management, consulting or employment contract or collective
bargaining agreement or other labor union agreement;
(i) agreement or order for the purchase of Inventory, Equipment (as
herein defined) or other materials having a price under any such agreement
or order in excess of $25,000;
(j) agreement restricting in any manner any of the Subsidiaries'
right to sell to or purchase from any other Person, the right of any other
Person to compete with such Subsidiary, or the ability of such Person to
employ any of the Subsidiaries' respective employees;
(k) agreement between any Subsidiary, on the one hand, and Seller or
any of its Affiliates, or any other Related Parties, on the other hand;
(l) agreement for the advertisement, display, or promotion of any of
the Subsidiaries' respective products or services in excess of $25,000
which cannot be canceled by the applicable Subsidiary without payment or
penalty upon notice of sixty (60) days or less;
(m) service agreement affecting any of the Subsidiaries' respective
assets where the annual service charge is in excess of $25,000 and has an
unexpired term as of the Closing Date in excess of sixty (60) days;
(n) agreement or order for the sale of goods or the performance of
services sold or performed by the applicable Subsidiary which can not be
performed within the time limits or on the other terms therein provided or,
when actually performed, would result in an obligation (contractual or
otherwise) to pay damages or penalties;
(o) performance, bid or completion bond, or surety or indemnification
agreement;
(p) requirements contract;
(q) loan or credit agreement, pledge agreement, note, security
agreement, mortgage, debenture, indenture, factoring agreement or letter of
credit;
(r) contract with any railroad or other transportation company which
provides for the expenditure of more than $25,000 annually;
28
(s) agreement for the purchase, sale or removal (as the case may be)
of electricity, gas, water, telephone, coal, sewage, or other utility
service in excess of $50,000 annually;
(t) material governmental order or directive;
(u) agreement for the treatment or disposal of Hazardous Substances
(as herein defined);
(v) agreement or arrangement not specifically enumerated above
concerning or which provides for the receipt or expenditure of more than
$50,000, except agreements for the purchase or sale of goods or rendering
of services entered into by the Subsidiaries in the ordinary course of
business; or
(w) any other commitments, obligations, contracts or agreements in
excess of $10,000 individually or $50,000 in the aggregate not made in the
ordinary course of business.
All of the foregoing contracts, leases, agreements and other instruments
referred to in this Section 4.10, and all of the other contracts, leases,
agreements and other instruments referred to in this Agreement (including,
without limitation, the Personal Property Leases (as herein defined), the Real
Property Leases (as herein defined), the Mineral Leases (as herein defined) and
the Intellectual Property Licenses (as herein defined)), are referred to
collectively as the "Contracts". Except as set forth in any Schedule hereto:
(i) all of the Contracts are in full force and effect and are valid and
enforceable against the Subsidiaries parties thereto and, to the Seller's
knowledge, the other parties thereto, in accordance with their terms, except as
may be limited by (A) applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (B) equitable considerations, or (C)
public policy limitations (including as to the enforceability of indemnification
provisions); (ii) the applicable Subsidiary is in material compliance with all
terms and requirements of each Contract and, to the Seller's knowledge, each
other Person that is a party to a Contract is in material compliance with the
terms and requirements of such Contract; (iii) to Seller's knowledge no event
has occurred or circumstance exists that (with or without notice or lapse of
time) is reasonably expected to contravene, conflict with or result in a
violation or breach of, or give any Subsidiary or any other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify any Contract; (iv) there are
no renegotiations or, to Seller's knowledge, attempts to renegotiate or
outstanding rights to negotiate any material amount to be paid or payable to or
by any Subsidiary under any Contract other than in the ordinary course of
business and, to Seller's knowledge, no Person has made a written demand for
such renegotiation; and (v) none of the Subsidiaries has
29
released or waived any of its rights under any Contract, except, with respect to
the matters enumerated in clauses (i)-(v), both inclusive, as is not,
individually or in the aggregate, reasonably expected to have a Material Adverse
Effect. Except as set forth in Schedule 4.10, none of the Subsidiaries is a
party to, or bound by, any unexpired, undischarged or unsatisfied Contract,
under the terms of which the execution, delivery and performance by Seller of
this Agreement and the consummation of the transactions contemplated hereby will
require a consent, approval, or notice or will result in a breach, lapse,
cancellation, right to terminate, default or acceleration of any right or
obligation or result in a lien on any of the assets of the Subsidiaries, except
for breaches, lapses, cancellations, terminations, defaults, accelerations and
liens which are not, individually or in the aggregate, reasonably expected to
have a Material Adverse Effect.
4.11 Leases and Concessions.
(a) Schedule 4.11(a) is a complete and accurate list of all material
leases (excluding Mineral Leases) and other agreements under which any
Subsidiary is a lessee of or holds or operates any property, real or
personal, owned by any other Person. The Subsidiary identified in Schedule
4.11(a) is the owner of the leasehold estates or other rights and interests
purported to be granted by such leases and agreements, in each case free
and clear of any security interest, claims, liens, mortgages or
encumbrances, except as set forth in Schedule 4.11(a) and except for
Permitted Liens and Permitted Encumbrances. The leases of personal
property under which any Subsidiary is the lessee are referred to herein as
the "Personal Property Leases", and such personal property is referred to
herein as the "Leased Personalty." The leases of real property (other than
mineral leases) under which a Subsidiary is the lessee are referred to
herein as the "Real Property Leases," and the real property leased
thereunder is referred to herein as the "Leased Premises."
(b) Schedule 4.11(b) is a complete and accurate list of all leases,
subleases, assignments of leases, mineral concessions and other agreements
granting to any Subsidiary the right of mining, extracting and removing
kaolin or ball clay. Such leases, subleases, assignments of leases,
mineral concessions and other agreements are referred to herein
collectively as the "Mineral Leases," and the real property subject thereto
is referred to herein as the "Leased Mining Properties." The Subsidiary
identified in Schedule 4.11(b) is the owner of the leasehold estate or
other rights and interests purported to be granted by the Mineral Leases,
in each case free and clear of any Claims, except as set forth in Schedule
4.11(b) and except for Permitted Liens and Permitted Encumbrances. The
copies of the Mineral Leases made available to Purchaser during the
30
investigation described in Section 3.5 are true, correct and complete
copies of the same as in effect on the date of this Agreement. Such
Mineral Leases are the only leases or agreements providing for any royalty
or other fee or amount payable on kaolin or ball clay mined from, or the
use of the surface or underground portions of, any of the Leased Mining
Properties.
(c) All royalties or rents due under the Mineral Leases have been
paid in full when due. The term of all Mineral Leases whose original terms
have heretofore expired has been renewed or extended in accordance with the
terms of such Mineral Leases.
4.12 Real Estate; Encumbrances.
(a) Schedule 4.12 (a) is a complete and accurate list of real
property owned by each Subsidiary, by name of tract, date of conveyance to
such Subsidiary, and area (in approximate square feet/meters or number of
acres). Such real property is referred to herein as the "Real Estate".
The copies of the deeds to the Real Estate made available to Purchaser
during the investigation described in Section 3.5 are true and correct
copies of all instruments conveying to the applicable Subsidiary all Real
Estate owned by such Subsidiary. Except as set forth on Schedule 4.12 (a),
such Subsidiary has good and marketable fee simple title (or its
equivalent, if any, under the laws of jurisdictions other than the United
States in which any of the Real Estate is located) to the surface estate
and the mineral estate of the Real Estate, subject to no liens or other
restrictions except: (a) liens shown on or reflected in the Balance Sheet;
(b) easements, covenants, conditions and restrictions (including, without
limitation, building and use restrictions) of record which do not
materially interfere with the use made of such property by the applicable
Subsidiary; (c) liens for current taxes not yet due and delinquent, and (d)
liens arising from or through Purchaser or Parent or by reason of this
Agreement (collectively, "Permitted Encumbrances").
(b) Schedule 4.12 (b) identifies the parcels of Real Estate or Leased
Premises on which any of the Subsidiaries currently operate a manufacturing
or processing plant (collectively the "Plant Properties", such plants being
referred to herein as the "Plants"), and the parcels of Real Estate which
any of the Subsidiaries currently use for the purpose of mining, extracting
and removing kaolin or ball clay (the "Owned Mining Properties"). The term
"Plant Properties" is not intended to include and does not include
locations (such as Aiken or Xxxxxxxx) used for storage or sporadic or
occasional processing on other than a currently active and continuous
basis. Schedule 4.12 (b) also identifies the Leased Mining Properties which
any of
31
the Subsidiaries currently use for the purpose of mining, extracting and
removing ball clay or kaolin. The Owned Mining Properties and the Leased
Mining Properties are referred to herein collectively as the "Mining
Properties".
(c) Except as set forth on Schedules 4.9, 4.11(a), 4.11(b), 4.12(a),
or 4.12(b), the Real Estate: (i) constitutes all real property and
improvements owned by the Subsidiaries and used in the conduct of their
respective businesses; (ii) to the Seller's knowledge, is not in possession
of any adverse possessors; and (iii) is not subject to any leases or
tenancies of any kind. As to each of the Plant Properties (i) to Seller's
knowledge, no Plant Property is used in a manner which violates any
applicable zoning ordinances or other laws or regulations; and (ii) to
Seller's knowledge, the Plant Properties are served by all water, sewer,
electrical, telephone, drainage and other utilities required for the normal
current operations of the business of the Subsidiaries; and (iii) to
Seller's knowledge, the Plant Properties require no work or improvements in
excess of $150,000 in the aggregate to bring them into compliance in all
material respects with any applicable law or regulation, and are in
operating condition and functional repair sufficient for the Subsidiaries
to conduct their the business as currently conducted.
(d) To the Seller's knowledge, none of the utility companies serving
any of the Plant Properties has overtly threatened any of the Subsidiaries
in writing with any reduction in service.
(e) The Plant Properties have access to railroad main lines over side
tracks. Neither Seller nor any Subsidiary has received written notice, and
Seller has no knowledge that any of the Subsidiaries is in violation of any
railroad side track agreements pertaining to such side tracks, all of which
are, to Seller's knowledge, in full force in effect and none of the
Subsidiaries is in default thereunder.
(f) None of the Plant Properties or Mining Properties are operated as
joint mines or facilities with any non-affiliated Person. Neither Seller
nor any of its Affiliates own or operate any facility or property which is
necessary to the operation or business of any of the Subsidiaries.
(g) There are no challenges or appeals pending regarding the amount
of the real estate Taxes (as herein defined) on, or the assessed valuation
of, any of the Real Estate or to Seller's knowledge, the Leased Premises,
and no special arrangements or agreements exist with any governmental
authority with respect to the Real Estate or, to Seller's knowledge, the
Leased Premises (the
32
representations and warranties contained in this paragraph (g) shall not be
deemed to be breached by any prospective general increase in real estate
Tax rates or assessments).
(h) To Seller's knowledge, there is no pending or threatened
condemnation proceedings with respect to any portion of the Real Estate,
the Leased Premises, or the Leased Mining Properties.
(i) To Seller's knowledge, there is no pending or threatened Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) with respect to any portion of the Real Estate or, to the
extent Seller is liable for payment therefor, the Leased Premises or the
Leased Mining Properties.
(j) To Seller's knowledge: (i) none of the Real Estate, Leased
Premises or Leased Mining Properties (collectively, the "Properties") has
ever been used as a sanctioned modern cemetery; (ii) none of the Properties
has been identified by any authoritative governmental entity of applicable
jurisdiction as having significant archeological artifacts or historical
buildings or structures; and (iii) there is no unique habitat or
significant concentration of threatened or endangered species of (A)
animal, under Federal or state law (or regulations or interpretations
thereof) on any of the Properties, or (B) plant under Federal or state law
(or regulations or interpretations thereof) on any of the Properties.
Except as set forth in Schedule 4.13, to Seller's knowledge, no Person
residing within one mile of any of the Properties has, within the past
year, complained in writing to any of the Subsidiaries or to any
governmental authority about the alleged conduct of the operations of the
Subsidiaries thereat.
(k) The Mining Properties have access to public roads which is
sufficient to permit mining activities to take place as currently
conducted.
(l) Except for the Properties, neither Seller nor any of its
Affiliates owns or leases any real property in the geographic areas in
which the Subsidiaries currently operate which, to Seller's knowledge,
contains non-incidental reserves of ball clay or kaolin which are feasible
to commercially mine.
(m) Other than as disclosed on Schedule 4.9, all capital improvements
and expansions which have been planned to be made to the Plant owned by K-T
Mexico have been made, and such Plant, as so improved, is operating in
accordance with the specifications therefor. Other than as disclosed on
Schedule 4.9, all such improvements and expansions have been paid for in
full prior to the date hereof, and all warranties of contractors and
subcontractors who were
33
engaged in connection with the construction of such improvements and
expansions and which are in favor of K-T Mexico are in full force and
effect. K-T Mexico is in possession of "as built" plans and specifications
for such Plant, as so improved.
4.13 Environmental.
Except as listed in Schedule 4.13:
(a) The Subsidiaries are in compliance with applicable Environmental
Laws (as herein defined) and Environmental Permits (as herein defined),
except to the extent such failure to be in compliance, individually or in
the aggregate, either is permitted by so-called "grandfather provisions"
specified therein or is not reasonably expected to have a Material Adverse
Effect.
(b) The Subsidiaries possess all Environmental Permits which are
required for the operation of their respective businesses, except to the
extent the failure to possess such Environmental Permits, individually or
in the aggregate, either is permitted by so-called "grandfather provisions"
specified therein or is not reasonably expected to have a Material Adverse
Effect.
(c) None of the Subsidiaries has received any written communication
alleging that any Subsidiary currently is not or was not since January 1,
1998, in compliance with applicable Environmental Laws or Environmental
Permits, provided that as of the Closing Date this reference in Section
4.13(c) to "1998" shall automatically be deemed to read "1995" for purposes
of the Closing and Seller shall be permitted to amend Schedule 4.13 to
reflect the 1995 to 1998 written communications.
(d) To Seller's knowledge, there is no Environmental Claim (as herein
defined) pending or threatened, against any of the Subsidiaries.
(e) None of the Subsidiaries has received any written communication
alleging that any of the Properties is currently listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation
and Liability Information System, both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or any comparable state or foreign list.
(f) None of the Subsidiaries has received any written notice from any
Person with respect to any Off-Site Facility (as herein defined), of
potential or actual liability or a written request for information from any
Person under or relating to CERCLA or any comparable state or local law.
34
(g) There are currently no Hazardous Substances used, generated,
treated, stored, transported, disposed of, or handled by the Subsidiaries
at any of the Properties except in material compliance with applicable
Environmental Laws or Environmental Permits. Furthermore, there have not
been any Hazardous Substances historically used, generated, treated,
stored, transported, disposed of, or handled by the Subsidiaries in
violation of Environmental Laws in effect at the time such use, generation,
treatment, storage, transportation, disposal or handling occurred. To
Seller's knowledge there are no Hazardous Substances existing on, under or
about any of the Properties in violation of, or prohibited by, any
Environmental Laws.
(h) There are no underground storage tanks located on the Properties.
All underground storage tanks previously located at the Properties and not
present thereat as of the date hereof were removed in accordance with all
Environmental Laws in effect at the time of such removal.
(i) For the purposes of this Agreement:
(1) "Environmental Claim" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person alleging potential liability
(including potential liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from: (A) the presence,
or release into the environment, of any Hazardous Substance at any
location, whether or not owned by any of the Subsidiaries; or (B)
circumstances forming the basis of any violation or alleged violation, of
any Environmental Law; or (C) any and all claims by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Substances.
(2) "Environmental Laws" shall mean all federal, state, local or
foreign statutes, laws, rules, ordinances, codes, rule of common law,
regulations, judgments and orders (including any so-called "grandfather
provisions" specified therein) relating to protection of human health or
the environment (including ambient air, surface water, ground water,
drinking water, wildlife, plants, land surface or subsurface strata and
applicable mine reclamation), including laws and regulations relating to
Releases or threatened Releases of Hazardous Substances, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport
35
or handling of Hazardous Substances, as in effect as of the Closing Date
(except as otherwise specifically provided in Section 4.13(g) and 4.13(h)
herein).
(3) "Environmental Permits" shall mean all environmental,
health, safety and applicable mining permits, licenses, registrations, and
governmental approvals and authorizations.
(4) "Facility" means any facility as defined in CERCLA.
(5) "Hazardous Substances" shall mean: (A) any petroleum,
petroleum products, radioactive materials, urea formaldehyde foam
insulation, asbestos (whether friable or not), transformers or other
equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls (PCBs) and radon gas; and (B) any chemicals,
materials or substances which are now or ever have been defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or other words of similar
import, under any Environmental Law.
(6) "Offsite Facility" shall mean any Facility (as defined in
CERCLA) which is not presently, and never has been, owned, leased or
occupied by any of the Subsidiaries.
(7) "Release" shall mean any release, spill, emission, emptying,
leaking, injection, deposit, disposal, discharge, dispersal, leaching,
pumping, pouring, or migration into the atmosphere, soil, surface water,
groundwater or property.
4.14 Patents, Trademarks and Trade Names.
(a) Except as provided in Schedule 4.14, each Subsidiary owns, or has
the sole and exclusive right to use, all Intellectual Property (as herein
defined) used in or necessary for the conduct of its business
substantially as it is now conducted, and the consummation of the
transactions contemplated hereby will not alter or impair the use of any
such rights by the Subsidiaries in any material respect. To the knowledge
of the Seller, no claims have been asserted during the past five years by
any Person against the use by any of the Subsidiaries of, or challenging or
questioning the validity or effectiveness of, any Intellectual Property
used by any of the Subsidiaries, or any license or agreement related
thereto ("Intellectual Property Licenses"), and the Seller does not know of
any valid basis for any such claim. To the knowledge of the Seller, the
use of such Intellectual Property by each of the
36
Subsidiaries is not in violation of and does not infringe any material
patent, trademark, trade name, copyright, technology, knowhow or process or
other proprietary or trade rights of any third party.
(b) Schedule 4.14 sets forth a complete and accurate list of all U.S.
and foreign copyright registrations, copyright applications, patents and
patent applications, trademark and service xxxx registrations (including
Internet domain name registrations), trademark and service xxxx
applications and material unregistered trademarks and service marks
included within the Intellectual Property.
(c) Except with respect to unregistered trademarks and service marks,
each owner listed on Schedule 4.14 is listed in the records of the
appropriate governmental entity as the sole owner of record of the
Intellectual Property.
(d) Schedule 4.14 lists all Software (as herein defined) which is
owned ("Proprietary Software") or licensed, leased or otherwise used by any
of the Subsidiaries (other than "off-the-shelf" Software), and identifies
which Software is owned, licensed, leased or otherwise used, as the case
may be.
(e) Schedule 4.14 sets forth a complete and accurate list of all
agreements (other than agreements with respect to "off-the-shelf" Software)
between any of the Subsidiaries, on the one hand, and any Person, on the
other hand, granting any right to use or practice any rights under any of
the Intellectual Property owned either by any of the Subsidiaries or by any
other Person (collectively, "Intellectual Property Licenses").
(f) None of the Subsidiaries has received notice of any claims, and,
to the best of Seller's knowledge, there are no pending claims, of any
Persons relating to the scope, ownership or use of any of the Intellectual
Property.
(g) Each copyright registration, patent and registered trademark and
application therefor listed on Schedule 4.14 is in proper form, not
disclaimed and has been duly maintained, including the submission of all
necessary filings in accordance with the legal and administrative
requirements of the appropriate jurisdictions.
(h) None of the Subsidiaries has licensed or sublicensed its rights
in any of the Intellectual Property or received or granted any such rights,
other than pursuant to Intellectual Property Licenses.
(i) All Proprietary Software set forth in Schedule 4.14 was either
developed (a) by employees of the
37
Subsidiaries within the scope of their employment; or (b) by independent
contractors who have assigned their right to the Subsidiaries pursuant to
written agreements.
(j) As used herein (x) "Intellectual Property" means all intellectual
property rights, including, without limitation, all patents, trademarks,
designs, service marks, copyrights, Internet domain names and web sites,
trade or business names, trade dress and slogans (and all registrations of
any of the foregoing, and all applications for registration thereof),
Software, and all goodwill associated with such intellectual property
rights, and (y) "Software" means any and all (i) computer programs,
including any and all software implementation of algorithms, models and
methodologies whether in source code or object code, (ii) databases and
computations, including any and all data and collections of data, (iii) all
documentation, including user manuals and training materials, relating to
any of the foregoing, and (iv) the content and information contained in any
Web site, provided, however, that neither Intellectual Property nor
Software shall include any off-the-shelf, shrinkwrapped licensed, or
standardized software, program, or similar material (including
documentation therefor) generally commercially available, nor any rights
whatsoever in the name Hecla or any similar or derivative name.
4.15 Litigation; Compliance with Law.
(a) Except as set forth in Schedule 4.15, (i) none of the
Subsidiaries is engaged in or a party to, and to the knowledge of the
Seller none of them is overtly threatened with, any material claim,
controversy, legal action or other proceeding (excluding any arising from
or through Purchaser or Parent), whether or not before any court or
administrative agency; (ii) none of the Subsidiaries has been charged at
any time during the last five years with, and, to Seller's knowledge, is
not under investigation with respect to, any violation of any material
provision of federal, state, foreign or other applicable law or
administrative regulation; and (iii) none of the Subsidiaries is a party to
or subject to any judgment, decree or substantive order entered in any
lawsuit or proceeding brought by any governmental or regulatory authority
or by any other Person.
(b) To Seller's knowledge, there are no facts which, if known by a
potential claimant or governmental authority, would give rise to a claim or
proceeding which, individually or in the aggregate, is reasonably expected
to have a Material Adverse Effect or inhibit the consummation of the
transaction contemplated by this Agreement.
38
(c) The Subsidiaries are in compliance in all material respects with
each decree, order, writ, judgment or arbitration award, or law, statute,
or regulation of or agreement with, or Permit from, any Federal, state,
local, foreign or other governmental authority (or to which the properties,
assets, personnel or business activities of the Subsidiaries are subject),
including laws, statutes and regulations relating to equal employment
opportunities, fair employment practices, wages, hours, benefits,
collective bargaining, payment of social security and similar Taxes,
occupational safety and health, plant closings, sexual harassment, and sex,
race, religious and age discrimination. Since December 31, 1996, none of
the Subsidiaries has received from any governmental authority any written
notification with respect to possible noncompliance of any material decree,
order, writ, judgment or arbitration award or law, statute, or regulation.
Notwithstanding the foregoing, no representation or warranty is made by
this paragraph (c) with respect to laws, rules and regulations relating to
the environment (which are exclusively provided for in Section 4.13
hereof).
(d) The Subsidiaries possess all material licenses, permits,
registrations and governmental approvals ("Permits") which are required in
order for the Subsidiaries to conduct their businesses as presently
conducted. It is understood and agreed that the foregoing definition and
the foregoing representation and warranty does not apply to Environmental
Permits or environmental matters which are the subject of Section 4.13
hereof.
4.16 Tax Matters.
(a) Except as set forth in Schedule 4.16, all Tax Returns (as herein
defined) of every kind that are due (after giving effect to any extended
due date) to have been filed by or on behalf of any of the Subsidiaries in
accordance with applicable law have been duly and timely filed, or to the
extent not timely filed, all applicable penalties and interest have been
paid or accrued on the Interim Financial Statements. Such Tax Returns are
correct in all material respects. Each Subsidiary has paid all Taxes
required to be paid. Each Subsidiary has paid, or made provision for the
payment of, all Taxes shown to be due on such Tax Returns or otherwise, or
pursuant to any assessment received by any of the Subsidiaries. The
amounts so paid or reserved have been and are adequate to pay all Taxes of
every kind whatsoever, including interest and penalties, due and payable by
the Subsidiaries. No material deficiencies for any Taxes have been
asserted or, to the best of Seller's knowledge, threatened, and, to the
best of Seller's knowledge, no audit of any Tax Returns is currently
underway or threatened. There are no outstanding agreements by any
Subsidiary for the extension of time for the
39
assessment of any Tax. Schedule 4.16 sets forth, with respect to income
and franchise Taxes, (i) the taxable years of the Subsidiaries as to which
the respective statutes of limitations with respect to Taxes have not
expired, and (ii) with respect to such taxable years sets forth those years
for which examinations have been completed, those years for which
examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which required
Tax Returns have not yet been filed.
(b) None of the Subsidiaries is a party to or bound by (nor will any
of the Subsidiaries become a party to or bound by) any tax indemnity, tax
sharing or tax allocation agreement.
(c) Except for the affiliated group of which Seller is the common
parent, none of the Subsidiaries has been a member of an affiliated group
of corporations since December 31, 1990, within the meaning of Section 1504
of the Code.
(d) None of the Subsidiaries has filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local or foreign income Tax law) or
agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local or foreign income Tax law) apply to any
disposition of any asset owned by it.
(e) None of the Subsidiaries is a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(f) Seller is not a person other than a United States person within
the meaning of the Code and the transaction contemplated hereby is not
subject to the withholding provisions of Section 3406 or subchapter A of
Chapter 3 of the Code.
(g) None of the Subsidiaries has made a deemed dividend election
under Regulations Section 1.1502-32(f)(2) or a consent dividend election
under section 565 of the Code.
(h) As used in this Agreement, the following terms shall have the
following meanings:
(1) the term "Taxes" means all federal, state, local, foreign
and other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use, value
added,
40
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto,
and the term "Tax" means any one of the foregoing Taxes;
(2) the term "Tax Returns" means all returns, declarations,
reports, statements and other documents required to be filed in respect of
Taxes, and the term "Tax Return" means any one of the foregoing Tax
Returns; and
(3) the term "Code" means the Internal Revenue Code of 1986, as
amended. All citations to the Code, or to the Treasury Regulations
promulgated thereunder, shall include any amendments or any substitute or
successor provisions thereto.
4.17 Employee Benefit Plans.
(a) Neither X-X Xxxx nor any affiliate of X-X Xxxx as determined
under Code Section 414(b), (c), (m) or (o) ("ERISA Affiliate," provided
that no non-U.S. affiliate shall be included within the meaning of ERISA
Affiliate under this Agreement) maintains, administers, contributes or has
any liability with respect to any: (i) employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) ("Plan"), including any multiemployer plan as
defined in Section 3(37) of ERISA ("Multiemployer Plan"); (ii) employee
welfare benefit plan (as defined in Section 3(1) of ERISA) ("Welfare
Plan"); or (iii) bonus, deferred compensation, stock purchase, stock
option, severance, salary continuation, vacation, sick leave, fringe
benefit, incentive, insurance, welfare or similar plan or arrangement
("Employee Benefit Plan"), for the benefit of employees of X-X Xxxx or any
ERISA Affiliate, other than those Plans, Welfare Plans and Employee Benefit
Plans described in Schedule 4.17. Except as required by Section 4980B of
the Code, Part 6 of Subtitle B of Title I of ERISA or applicable state law,
neither X-X Xxxx nor any ERISA Affiliate (on behalf of X-X Xxxx or any
ERISA Affiliate) has promised any former employee or other individual not
employed by X-X Xxxx or any ERISA Affiliate, medical or life insurance
coverage or other welfare benefit and neither X-X Xxxx nor any ERISA
Affiliate maintains or contributes (on behalf of X-X Xxxx or any ERISA
Affiliate) to any plan or arrangement providing medical or life insurance
benefits to former employees of X-X Xxxx or any ERISA Affiliate or their
dependents, other than benefits provided in the event of disability and
conversion privileges. Each Plan, Welfare Plan and Employee Benefit Plan
(each, a "Benefit Plan") is described in Schedule 4.17.
41
(b) Except as disclosed in Schedule 4.17, each Benefit Plan complies,
in form and operation, in all material respects, with all applicable
statutes, laws and regulations, including ERISA and the Code.
(c) Except as disclosed in Schedule 4.17, the funds available under
each Benefit Plan which is intended to be a funded Benefit Plan equal or
exceed the amounts required to be paid, or which would be required to be
paid, if such Benefit Plan were terminated as of the Closing Date.
(d) Any Plan that is intended to qualify under Section 401(a) of the
Code meets (or the time has not expired during which such Plan may be
amended to meet) in all material respects all requirements for
qualification under Section 401(a) of the Code and the regulations
thereunder, and Seller has provided, or shall prior to Closing provide,
Purchaser with a copy of the most recent favorable determination letter
issued by the Internal Revenue Service ("IRS") concerning the Plan's
qualification. Each such Benefit Plan has been administered in all
material respects in accordance with its terms and the applicable
provisions of ERISA and the Code and the regulations thereunder and all
other applicable laws and no matter exists which would adversely affect the
qualified tax-exempt status of such Benefit Plan and any related trust.
(e) All reports and information relating to each such Benefit Plan
required to be filed with any governmental entity have been accurately and
timely filed except to the extent the failure to do so, individually or in
the aggregate, is not reasonably expected to have a Material Adverse
Effect; all reports and information relating to each such Benefit Plan
required to be disclosed or provided to participants or their beneficiaries
have been timely disclosed or provided except to the extent the failure to
do so, individually or in the aggregate, is not reasonably expected to have
a Material Adverse Effect; each trust related to any Benefit Plan which is
a voluntary employee beneficiary association pursuant to Section 501(c)(9)
of the Code has received a favorable determination letter from the Internal
Revenue Service with respect to its tax-exempt status, and nothing has
occurred since the date of such letter that has or is likely to adversely
affect such qualification or exemption. To the best of Seller's knowledge,
no fiduciary of any Benefit Plan has committed a breach of any
responsibility or obligation imposed upon fiduciaries under Title I of
ERISA with respect to such Benefit Plan. The annual reports and actuarial
statements furnished to Purchaser fully and accurately set forth the
financial and actuarial condition of each Benefit Plan and each trust
funding any Benefit Plan.
42
(f) There has been delivered to Purchaser, or shall be delivered to
Purchaser prior to Closing, with respect to each Benefit Plan, the
following: a copy of the annual report (if required under ERISA) with
respect to each such Benefit Plan for the last three years (including all
schedules and attachments); a copy of the summary plan description,
together with each summary of material modifications, required under ERISA
with respect to such Benefit Plan; all material employee communications
relating to such Benefit Plan; a true and complete copy of such Benefit
Plan; all trust agreements, insurance contracts, accounts or other
documents which establish the funding vehicle for any Benefit Plan and the
latest financial statements thereof; and any investment management
agreements, administrative services contracts, or other agreements and
documents relating to the ongoing administration and investment of any
Benefit Plan.
(g) There are no actions, suits, proceedings, investigations or
hearings pending with respect to any Benefit Plan, or to the best of
Seller's knowledge any claims (other than routine claims for benefits
arising in the ordinary course of any Benefit Plan) threatened against or
with respect to any Benefit Plan or any fiduciary or assets thereof, and,
to the best of Seller's knowledge, there are no facts which could
reasonably give rise to any such actions, suits, proceedings,
investigations, hearings or claims.
(h) Each Welfare Plan which is a group health plan (within the
meaning of Section 5000(b)(1) of the Code) ("Group Health Plan") complies
with and has been maintained and operated in accordance with each of the
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title
I of ERISA or any other similar state or local law. Schedule 4.17 sets
forth the individuals with rights to continuation coverage under Section
4980B of the Code or Part 6 of Subtitle B of Title I or ERISA or similar
state or local law, including those individuals within the applicable
election period.
(i) None of X-X Xxxx or any ERISA Affiliate will incur any liability
under any Benefit Plan solely on account of the consummation of the
transaction contemplated hereby, alone or together with any other event.
Each Benefit Plan is terminable and may be amended to prospectively
decrease the level of any benefit thereunder at the discretion of X-X Xxxx
or any ERISA Affiliate subject to the terms thereof and of any collective
bargaining agreement. No Benefit Plan has any provision which could
increase or accelerate benefits or any provision which could increase
liability as a result of the transaction contemplated hereby, alone or
together with any other event. Neither X-X Xxxx nor any ERISA Affiliate
43
nor any officer, director, agent or employee of X-X Xxxx or any ERISA
Affiliate has made any oral or written statement regarding any Benefit Plan
which could result in liability in excess of that set forth in the Benefit
Plan.
(j) No withdrawals have occurred so as to cause any Plan to become
subject to the provisions of Section 4063 of ERISA, nor has X-X Xxxx or any
ERISA Affiliate ceased making contributions to any Plan subject to Section
4064(a) of ERISA to which X-X Xxxx or any ERISA Affiliate made
contributions during the six (6) years prior to the date hereof, nor ceased
operations at any facility so as to become subject to Section 4062(e) of
ERISA. No amendment to any Plan has been adopted for which security is
required under Section 401(a)(29) of the Code. Neither X-X Xxxx nor any
ERISA Affiliate has incurred or suffered to exist any "accumulated funding
deficiency" (as defined in Section 302 of ERISA) whether or not waived by
the IRS, involving any Plan subject to Section 412 of the Code or Part 3 of
Subtitle B of Title I of ERISA. There is currently no active filing by X-X
Xxxx or any ERISA Affiliate with the PBGC (as herein defined) (and no
proceeding has been commenced by the PBGC and no condition exists and no
event has occurred that could constitute grounds for the termination of any
Plan by the PBGC) to terminate any Plan which is subject to Title IV of
ERISA and which has been maintained or funded, in whole or in part, by X-X
Xxxx or any ERISA Affiliate.
(k) Neither X-X Xxxx nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") as a result
of the voluntary or involuntary termination of any Plan which is subject to
Title IV of ERISA. There is currently no active filing by X-X Xxxx or any
ERISA Affiliate with the PBGC (and no proceeding has been commenced by the
PBGC) to terminate any Plan which is subject to Title IV of ERISA and which
has been maintained or funded, in whole or in part, by X-X Xxxx or any
ERISA Affiliate.
(l) Neither any Benefit Plan fiduciary nor any Benefit Plan has
engaged in any transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of the Code) and
there has been no "reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan. Neither X-X Xxxx nor any ERISA Affiliate has
failed to make any contributions or to pay any amounts due and owing as
required by the terms of any Benefit Plan or collective bargaining
agreement or ERISA or any other applicable law. Full payment has been made
of all amounts which X-X Xxxx or any ERISA Affiliate is required or
committed to pay to the Benefit Plans as of the Interim Financial Statement
Date.
44
(m) Neither X-X Xxxx nor any ERISA Affiliate contributes or has ever
contributed to a Multiemployer Plan.
(n) Each employee benefit plan relating to employees of the
Subsidiaries employed outside of the United States is in compliance in all
material respects with all requirements of law applicable thereto and the
respective requirements of the governing documents of such plan. Each
employee benefit plan relating to employees of the Subsidiaries employed
outside the United States is funded in accordance with, and the assets
thereof are held by a person authorized to hold such assets under,
applicable law and regulation and the governing documents of such plan.
4.18 Labor.
(a) Except as disclosed in Schedule 4.18, none of the Subsidiaries is
a party to, or bound by, any collective bargaining agreement with a labor
union or labor organization. There is no unfair labor practice or labor
arbitration proceeding pending or, to the best knowledge of the Seller,
threatened against any Subsidiary relating to its business, except for such
proceedings which are not, individually or in the aggregate, reasonably
expected to have a Material Adverse Effect.
(b) To Seller's knowledge, no employee of any of the Subsidiaries is
a party to, or is otherwise bound by, any agreement, including any
confidentiality, noncompetition or proprietary rights agreements between
such employee and any other Person that materially and adversely affects or
is reasonably expected to materially and adversely affect: (A) the
performance of that employee's duties as an employee of any Subsidiary; or
(B) the ability of the Subsidiaries to conduct their respective businesses
following the Closing. Except for Xxxxxx Xxxxxxx, Xxxx XxxXxxx, and
Xxxxxxx Xxxxxx, to Seller's knowledge, no officer or key employee of any of
the Subsidiaries has made an express indication that he or she intends to
terminate employment with such Subsidiary; provided, however, that
knowledge of Seller shall not include for purposes of this sentence the
knowledge of any officer, employee or agent of any Subsidiary of his or her
own intention to terminate his or her employment with any Subsidiary which
has not been communicated to any other knowledge party of Seller (as
defined in Section 4.40).
(c) Except as disclosed on Schedule 4.18, there has not been, there
is not presently pending or existing, and, to the best of Seller's
knowledge, there is not threatened, (A) any material strike, slowdown,
picketing, work stoppage or employee grievance process; (B) any material
charge, grievance proceeding or other claim against or affecting any of the
Subsidiaries relating to the alleged violation of any law pertaining to
labor relations or employment matters,
45
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission
or any comparable governmental authority, (C) any union organizational
activity or other labor or employment dispute against or affecting any of
the Subsidiaries or (D) any application for certification of a collective
bargaining agent. To Seller's knowledge, no event has occurred or
circumstances exist that is reasonably expected to provide the basis for
any work stoppage or other labor dispute with respect to any of the
Subsidiaries. There is no lockout of any employees of any of the
Subsidiaries and no such action is contemplated by any of the Subsidiaries.
(d) Except as disclosed on Schedule 4.18, no employee of any of the
Subsidiaries has any claim against such Subsidiary or any other Subsidiary
(whether under law, any employment agreement or otherwise) on account of or
for: (A) overtime pay, other than overtime pay for the current payroll
period, (B) wages or salaries, other than wages or salaries for the current
payroll period, or (C) vacations, sick leave, time off or pay in lieu of
vacation, sick leave or time off, other than vacation, sick leave or time
off (or pay in lieu thereof) earned in the twelve month period immediately
prior to the date of this Agreement.
(e) The Subsidiaries have made all required payments to the relevant
unemployment compensation reserve accounts with the appropriate
governmental departments with respect to the employees of the Subsidiaries
and such accounts have positive balances.
(f) Except as disclosed on Schedule 4.18, the employment of each of
the Subsidiaries' respective employees is terminable at will without cost
to the applicable Subsidiary (as the case may be) except for payments
required under the Benefit Plans, the payment of accrued salaries or wages
and vacation pay, and payments required under applicable law. No employee
or former employee has any right to be rehired by any of the Subsidiaries
prior such Subsidiary's hiring a Person not previously employed by such
Subsidiary.
4.19 Inventory. Except as disclosed on Schedule 4.19: (i) all inventory
of the Subsidiaries which is held for sale or resale, including raw materials,
work in process and finished goods (collectively, "Inventory"), consists of
items of a quantity and quality historically useable and/or saleable in the
normal course of business, except for items of obsolete and slow-moving material
and materials which are below standard quality, all of which have been written
down on the Financial Statements to estimated net realizable value on an item by
item basis; and (ii) with the exception of items of below standard quality which
have been written down to their estimated net realizable value,
46
the Inventory is free from material defects in materials and/or workmanship. The
product mix of the Inventory and the raw materials and work in process necessary
to convert to finished goods is not materially out of balance in relation to the
Subsidiaries' customary experience and reasonable business judgment. The
Inventory is not excessive in kind or amount, or slow moving, in light of the
business of the Subsidiaries done or expected to be done; (iii) all Inventory
reflected in the Financial Statements and the Interim Financial Statements is
valued at the lower of cost or net realizable value, with cost determined on an
average cost basis. Schedule 4.19 identifies the locations at which Inventory
is maintained and the types and approximate quantities and grades of such
Inventory by location.
4.20 Employees. Schedule 4.20 contains a complete and accurate list of the
following information for each employee of each Subsidiary, including each
employee on leave of absence or layoff status: name, job title, and current
rate of compensation. Schedule 4.20 also contains a complete and accurate list
of any retired employee or director of any Subsidiary, or their dependents,
receiving or scheduled to receive in the future any supplemental pension
benefits (other than pursuant to the Hecla Salaried Employees' Retirement Plan),
retiree medical insurance coverage, or retiree life insurance coverage, and the
amounts of such benefits.
4.21 Major Customers and Suppliers. Schedule 4.21 is a complete and
accurate list of (i) the twenty largest customers of the Subsidiaries (taken as
a whole) for the year ended December 31, 1999, in dollar amount of sales by the
Subsidiaries to such customer (each, a "Significant Customer"), and (ii) the
three largest suppliers to the Subsidiaries (taken as a whole) for the year
ended December 31, 1999, in dollar amount of purchases by the Subsidiaries of
goods or services (each, a "Significant Supplier"). No Subsidiary is engaged in
any dispute with a Significant Customer or Significant Supplier which is
reasonably likely to have a Material Adverse Effect, individually or in the
aggregate. Seller has no knowledge that a Significant Customer intends to
terminate its business relationship with any Subsidiary or to limit or alter its
business relationship with any Subsidiary in any material respect. Seller has
no knowledge of any intention by a Significant Supplier to terminate its
business relationship with any Subsidiary or to limit or alter its business
relationship with any Subsidiary in any material respect.
4.22 Accounts Receivable. All accounts receivable of the Subsidiaries that
are reflected on the Interim Balance Sheet or on the accounting records of the
Subsidiaries as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business, and to
Seller's knowledge none of the Accounts Receivable is subject to any
counterclaim or setoff. Unless paid
47
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible, using normal collection practices, net of
the respective reserves shown on the Interim Balance Sheet or on the accounting
records of the Subsidiaries as of the Closing Date (which reserves are
calculated consistent with past practice). Except as set forth on Schedule
4.22, none of the Subsidiaries has any outstanding sales on consignment, sales
on approval, sales on return or guaranteed sales.
4.23 Finder's Fee. Except for fees that may be payable to Warrior, a
division of Standard Bank London Limited, neither Seller nor any of the
Subsidiaries has incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
4.24 Title to Assets. Except as set forth on Schedule 4.24, the
Subsidiaries have good and valid title to their respective assets, free and
clear of any liens, claims, encumbrances and security interests, except for the
following liens ("Permitted Liens"): (i) statutory liens for Taxes not yet due,
(ii) liens of carriers, warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due; (iii) liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; and
(iv) claims or liens arising from or through Purchaser or Parent or by reason of
this Agreement. Except as set forth in Schedule 4.24, no unreleased mortgage,
trust deed, chattel mortgage, security agreement, financing statement or other
instrument encumbering any of the Subsidiaries' respective assets has been
recorded, filed, executed or delivered. This Section 4.24 shall not apply with
respect to title to the Real Estate (which is governed exclusively by Section
4.12) or the Intellectual Property (which is governed exclusively by Section
4.14).
4.25 Accounts. Schedule 4.25 contains a list showing:
(a) the name of each bank, safe deposit company or other financial
institution in which any of the Subsidiaries has an account, lock box or
safe deposit box;
(b) the names of all Persons authorized to draw thereon or to have
access thereto and the names of all Persons, if any, holding powers of
attorney relating thereto from any of the Subsidiaries; and
(c) all instruments or agreements to which any of the Subsidiaries is
a party as an endorser, surety or guarantor, other than checks endorsed for
collection or deposit in the ordinary course of business.
48
4.26 Related Parties. Schedule 4.26 describes each: (i) business
relationship (excluding employee compensation and other ordinary incidents of
employment) between (x) any of the Subsidiaries, and (y) Seller or any present
or post-December 31, 1997 officer, director, or Affiliate of Seller, any present
or post-December 31, 1997 known spouse, ancestor or descendant of any of the
aforementioned Persons or any known trust or other similar entity for the
benefit of any of the foregoing Persons or any Affiliate of any such Persons
(all such Persons and trusts encompassed by this clause (y) being sometimes
collectively referred to herein as the "Related Parties" and individually as a
"Related Party"), provided, however, that for purposes of Seller's disclosures
with respect to the representations and warranties in this Article 4, none of
the Subsidiaries shall be deemed to be a Related Party with respect to any other
Subsidiary; (ii) transaction occurring since December 31, 1997 between any of
the Subsidiaries and any Related Party; and (iii) amount owing by or to any of
the Related Parties (other than pursuant to Section 1.4 of this Agreement),
respectively, to or from any of the Subsidiaries as of the date of this
Agreement. No property or interest in any property (including, without
limitation, designs and drawings concerning products or machinery) which relates
to and is or will be necessary or useful in the present operation of the
Subsidiaries' respective businesses, is presently owned by or leased or licensed
by or to any Related Party.
Neither Seller nor to Seller's knowledge any Affiliate has an interest,
directly or indirectly, in any business, corporate or otherwise, which is in
competition with the Subsidiaries' respective businesses, except for ownership,
in the aggregate, of not more than five percent (5%) of any class of securities
of a publicly traded entity with respect to which neither Seller nor any such
Affiliate participates in any way in the management, operation or control of
such entity.
4.27 [deleted intentionally]
4.28 Charitable Commitments. None of the Subsidiaries has any unsatisfied
community or charitable pledges, contributions or commitments in excess of
$25,000 in the aggregate.
4.29 Defective Pricing. None of the Subsidiaries is subject to any
liability, or claim therefor, for or with respect to price adjustment under any
contract with the U.S. Government or any agency thereof, including any liability
for defective pricing.
4.30 Insurance. Schedule 4.30 contains a true and correct list and
description (including policy owners, coverages, deductibles and expiration
dates) of all insurance policies which are owned by any of the Subsidiaries or
which name any of the Subsidiaries as an insured (or loss payee), including
without limitation those which pertain to the Subsidiaries' respective
49
assets, employees or operations. All such insurance policies are in full force
and effect and neither Seller nor any of the Subsidiaries has received notice of
cancellation of any such insurance policies. In the three (3) year period
ending on the date hereof, neither Seller nor any of the Subsidiaries has
received any written notice from, or on behalf of, any insurance carrier
relating to or involving an increase in insurance rates (except to the extent
that insurance risks may be increased for all similarly situated risks) or non-
renewal of a policy, or requiring or suggesting material alteration of any of
the Subsidiaries' respective assets, purchase of additional equipment, or
material modification of any of the Subsidiaries' respective methods of doing
business.
4.31 Product Warranty Liabilities. None of the Subsidiaries has made any
oral or written warranties with respect to the quality or absence of defects of
its products or services which they respectively have sold or performed which
are in force as of the date hereof, except for those warranties which are
described in Schedule 4.31. Except as disclosed in Schedule 4.31, there are no
material claims pending or, to Seller's knowledge, threatened against any of the
Subsidiaries with respect to the quality of or absence of defects in such
products or services. Schedule 4.31 sets forth a summary, which is accurate in
all material respects, of all returns of defective products during the period
beginning January 1, 1997 and ending on the date hereof, and all credits and
allowances for defective products given to customers during said period, and
said summary in each case accurately describes the defect which resulted in the
return, allowance or credit. Seller has no any knowledge that the percentage of
products sold and services performed by any of the Subsidiaries for which
warranties are presently in effect and for which warranty adjustments can be
expected during unexpired warranty periods which extend beyond the Closing Date
will be higher than the percentage of such products and services which the
Subsidiaries have sold and performed for which warranty adjustments have been
required in the past. Except as disclosed in Schedule 4.31, none of the
Subsidiaries has paid or been required to pay direct, incidental, or
consequential damages to any Person in connection with any of such products or
services at any time during the six (6) year period preceding the date hereof.
4.32 Equipment. The furniture, fixtures, vehicles, machinery, shelving,
racks, equipment, tools, dies, molds, jigs, fixtures and other tangible personal
property (other than Inventory) owned or leased by any of the Subsidiaries and
used in their respective operations (collectively, the "Equipment") constitutes
all tangible personal property reasonably necessary in the ordinary course of
business in order for the Subsidiaries to conduct their respective businesses as
they have been conducted in the past. All Equipment is in operating condition
and functional repair (ordinary wear and tear excepted). Schedule 4.32 contains
a complete list of all leased Equipment
50
with a cost in excess of $10,000 per year. The Addendum to Schedule 4.32
contains a list of certain equipment and other assets that is either owned by
Southeastern Land Resources, Inc. or was transferred by X-X Xxxx to Seller for
nominal consideration (the "Excluded Assets"), it being understood that the
Excluded Assets shall be removed from the Leased Premises in Nashville,
Tennessee or such other locations as set forth in the Addendum to Schedule 4.32
on or about the Closing Date (but in no event later than 60 days following the
Closing Date).
4.33 Y2K. To the Seller's knowledge, all of the computer hardware and
Software used by the Subsidiaries in the conduct of their respective businesses
(including those related to their respective facilities, equipment,
manufacturing processes, quality control activities, accounting and bookkeeping,
records and record keeping activities) are Year 2000 Compliant (as herein
defined). "Year 2000 Compliant" means the ability of the hardware and Software
systems to be able to accurately process date and time data (including
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations.
4.34 Commercial Bribery. To the Seller's knowledge, none of the
Subsidiaries, nor any of their respective former or current officers, directors,
employees, agents or representatives has made, directly or indirectly, with
respect to any of the Subsidiaries, or their respective business activities,
any bribes or kickbacks, illegal political contributions, payments from
corporate funds not recorded on the books and records of any of the Subsidiaries
(as the case may be), payments from corporate funds to governmental officials,
in their individual capacities, for the purpose of affecting their action or the
action of the government they represent, to obtain favorable treatment in
securing business or licenses or to obtain special concessions, or illegal
payments from corporate funds to obtain or retain business. Without limiting
the generality of the foregoing, none of the Subsidiaries has directly or
indirectly made or agreed to make (whether or not said payment is lawful) any
payment to obtain, or with respect to, sales other than usual and regular
compensation to its employees and sales representatives with respect to such
sales.
4.35 Actions Regarding Employees. None of the Subsidiaries nor Seller has
taken any actions (other than pre-existing agreements with employees referenced
in Schedule 4.10 and the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby) which were calculated to
dissuade any present employees, representatives or agents of any of the
Subsidiaries from continuing an association with such Subsidiary after the
Closing, but Seller gives Purchaser no assurance as to the continuation of any
such relationship post-Closing.
51
4.36 Reclamation Liabilities. Schedule 4.36 describes all obligations as
of December 31, 1999 of any of the Subsidiaries to reclaim any land heretofore
mined by any of them or any of their predecessors, Seller's reasonable opinion
as to the cost of such reclamation, the basis for calculation of such cost, the
document, instrument, law, rule or regulation under which such obligation
arises, and all deposits, bonds, letters of credit or other security devices
outstanding with respect to all such obligations not scheduled in Schedule 4.10.
4.37 Reserve Estimates. Schedule 4.37 lists certain estimates of
geological ball clay and kaolin reserves of X-X Xxxx as of December 31, 1999.
Those estimates were prepared by X-X Xxxx in good faith in the ordinary course
of business in accordance with methodologies generally accepted in the ball clay
and kaolin mining industries. Seller has no knowledge that any of such
estimates is overstated in any material respect, except that such reserves and
methodologies may be based on market prices, costs, interest rates, and other
factors known within or applicable to the mining industry which fluctuate from
time to time and may have been or be affected thereby.
4.38 Representations Not Misleading. The representations and warranties of
Seller in this Agreement, and all representations, warranties and statements of
Seller or the Subsidiaries contained in any schedule, financial statement or
exhibit, delivered pursuant hereto considered in the aggregate, do not omit to
state a material fact necessary in order to make the representations, warranties
or statements contained herein or therein not misleading in light of the
circumstances under which they were made, provided, however, it is not the
intention of the parties that this Section 4.38 obviate the qualifications and
dollar limitations of the other sections of this Article 4.
4.39 Copies Accurate. Seller has delivered or made available to Purchaser
complete and accurate copies of all documents requested by Purchaser pursuant to
this Agreement, and all documents referred to in any of the Schedules to this
Agreement, except as limited or as provided in Section 5.2 of this Agreement.
4.40 Definition of Knowledge. For the purposes of this Article 4, the
knowledge of Seller shall be deemed to mean, and be limited to, the actual
knowledge of any of the chief executive officer, chief operating officer, chief
financial officer, general counsel, corporate environmental manager and
corporate safety manager of Seller or any of the Subsidiaries, and the plant
managers of the Plants, in each case after reasonable inquiry.
52
ARTICLE 5
SELLER'S AND PURCHASER'S PRE-CLOSING COVENANTS
The Seller and Purchaser agree that on or prior to Closing:
5.1 Business Operations.
(a) From the date of this Agreement until the Closing Date, Seller
shall cause each of the Subsidiaries to conduct their business only in the
ordinary course of business consistent with past and current practices,
except that Subsidiaries may take all other action necessary or advisable
pursuant to the terms of this Agreement. Seller shall cause the
Subsidiaries to use their commercially reasonable efforts to maintain and
preserve the business organization and goodwill of the Subsidiaries intact,
to retain the services of their key officers and employees and to retain
their present customers and suppliers so that they will be available to
Purchaser after the Closing.
(b) Seller shall cause the Subsidiaries to maintain the insurance
policies required to be listed in Schedule 4.30 in full force and effect.
If any of the said policies shall expire, Seller shall cause the applicable
Subsidiary to use reasonable efforts to renew or replace the same prior to
the expiration of the expiring policies with policies from a reputable
insurance carrier with a "Best's Rating" equal to or better than that of
the existing carrier, containing insurance coverage in the same or greater
amount than the existing policies in substantially the same form and
substance as the existing policies.
(c) Seller shall use its commercially reasonable efforts (and
Purchaser shall cooperate with Seller) to cause the Subsidiaries to obtain
all consents required for the consummation of the transactions contemplated
hereby under or with respect to, any Contract, Permit or Environmental
Permit which is required to be scheduled pursuant to Schedules 4.10, 4.13
and 4.15.
5.2 Access.
(a) From the date of this Agreement until the Closing Date, Seller
shall cause the Subsidiaries to permit Purchaser and its authorized
representatives full access to, and make available for inspection, upon
prior 24 hour notice and during reasonable business hours (or as otherwise
agreed between the parties), the business of the Subsidiaries, including
the employees, customers and suppliers of the Subsidiaries, and furnish
Purchaser all documents, records and information relating thereto and with
respect to the affairs of the Subsidiaries as Purchaser and its
representatives may reasonably request, all for the sole
53
purpose of permitting Purchaser to become familiar with the business and
assets and liabilities of the Subsidiaries. The right of access described
in the preceding sentence will include, without limitation, the right of
entry on the Properties for the purpose of conducting test drilling of the
Subsidiaries' mineral reserves and to conduct a Phase I Environmental Site
Assessment ("ESA") (each at Purchaser's sole risk and expense).
Notwithstanding the foregoing, Purchaser shall not contact or otherwise
communicate with any customer of Seller, a Subsidiary or any of their
Affiliates; provided, however, that Purchaser may contact or communicate
with such customers that are also customers of Purchaser so long as
(i) Purchaser does not during such contact or communication discuss the
terms, conditions, existence or any other aspect of this Agreement or the
transactions contemplated thereby, including the impending availability of
Seller's products or services, or (ii) a representative of Seller is
provided reasonable prior notice of (which notice need not be written) and
afforded a reasonable opportunity to participate in such contact or
communication and Purchaser does not discuss the impending availability of
combined feldspar and ball clay or kaolin sales. Any additional Phase II
environmental investigative work shall be performed only upon prior written
agreement of the parties. The Purchaser agrees that it shall conduct the
activities specified in this paragraph in a manner that does not
unreasonably interfere with the Subsidiaries' business activities at the
Properties and in a manner that minimizes disturbance to the existing
condition of the Properties. Purchaser agrees that it, its agents,
employees, consultants, invitees, or permittees will present proper
credentials when seeking access to the Properties and shall comply with all
applicable safety and environmental laws and regulations when performing
the activities contemplated herein. Following the activities specified
herein, Purchaser shall restore the Properties to their original condition
and shall remove all equipment, tools or other property brought onto the
Properties. Any unreasonable disturbance to the Properties as a result of
the work contemplated herein will be promptly corrected by the Purchaser
and/or its agents, employees, consultants, invitees, or permittees. Prior
to Closing, Purchaser, and/or its agents, employees, consultants, invitees,
or permittees, shall not disclose, and shall maintain as confidential, all
information obtained as a result of the work contemplated herein and the
results of the Phase I ESA or additional Phase II environmental
investigation to any other person or entity, including, without limitation,
any federal, state, or local governmental agencies, without the prior
written consent of Seller, and during the period from the Closing until the
fifth anniversary of the Closing Date, Purchaser and/or its agents,
employees, consultants, invitees, or permittees shall not make such
disclosures without providing Seller 15 days' prior written notice.
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(b) Notwithstanding the foregoing, the Seller shall not be required
to provide any information which it reasonably believes it may not provide
to Purchaser by reason of applicable law, rules or regulations, which
constitutes information protected by attorney/client privilege, or which
the Seller or any Affiliate is required to keep confidential by reason of
contract, agreement or understanding with third parties. The parties agree
and acknowledge that the information not disclosed may include contracts,
documents, and information, or portions thereof, which are competitively
sensitive concerning the Seller's feldspar reserves, customers, business,
or operations. At Purchaser's request, however, Seller will disclose the
general nature of such documents and the identities of the other parties
thereto to Purchaser and, if requested by Purchaser, will use commercially
reasonable efforts to obtain consents to confidential disclosure of the
contents thereof to Purchaser from the applicable contracting parties,
except that Seller shall not supply any information or make reasonable
efforts to obtain consents under this sentence with respect to any
information relating to Feldspar (as herein defined) or similarly
competitively sensitive subjects.
(c) Seller and Purchaser acknowledge that they are competitors with
respect to certain lines of business. In order to prevent the misuse of
competitively sensitive information relating to such lines of business, as
promptly as possible following the date hereof the parties shall establish
an appropriate protocol which shall remain in place until the expiration of
the applicable waiting periods under the HSR Act (as defined herein)
pursuant to which each party may disclose to a limited number of
representatives of the other party confidential information which is
competitively sensitive in nature with respect to such lines of business,
for the purpose of preparing filings required under the HSR Act, and
otherwise consistent with the advice of the parties' respective outside
antitrust counsel. In addition, as the parties deem advisable and
necessary with respect to their respective competitively sensitive written
materials, each party, acting reasonably, may designate any of its
competitively sensitive written materials to be provided to "outside
counsel only." Materials of the type referred to in the preceding sentence
and the information contained therein shall be given only to the outside
legal counsel of the respective parties and will not be disclosed by such
outside counsel to employees, officers or directors of the recipient unless
express permission is obtained in advance from the disclosing party or its
legal counsel.
5.3 Material Change. Except as set forth in Schedule 5.3, without the
prior written consent of Purchaser, and without limiting the generality of any
other provision of this Agreement, from the date hereof until the Closing Date,
Seller shall cause the Subsidiaries not to:
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(1) amend the Subsidiaries' respective Certificates of
Incorporation or bylaws (or comparable documents);
(2) make any change in any Subsidiary's authorized capital
stock, or issue any shares of stock or other equity securities of any class
or issue or become a party to any subscriptions, warrants, rights, options,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other equity securities
of any Subsidiary, or grant any stock appreciation or similar rights;
(3) make any payment or distributions to its employees, officers
or directors except such amounts as constitute currently effective
compensation for services rendered or reimbursement for reasonable ordinary
and necessary out-of-pocket business expenses;
(4) hire any new employee who shall have, or terminate the
employment of any employee who has, an annual salary in excess of $50,000;
(5) incur or commit to incur any capital expenditures not set
forth in Schedule 4.9 in excess of $50,000 in the aggregate other than
repairing and maintenance in the ordinary course of business consistent
with past practice;
(6) do any act or omit to do any act, or permit any act or
omission to occur, which will cause a breach by any of the Subsidiaries of
any of the Contracts;
(7) institute or amend any employee benefit program or fringe
benefit program with respect to the employees of any of the Subsidiaries;
(8) enter into or modify any written employment agreement with
any Person;
(9) prepay any of its material obligations except in the
ordinary course of business consistent with past practice;
(10) incur, assume or guarantee any indebtedness;
(11) directly or indirectly, enter into or assume any Contract
other than in the ordinary course of business in accordance with past
practices;
(12) increase the compensation payable to any employee, except in
the ordinary course of business consistent with past practices, and except
as required pursuant to collective bargaining agreements;
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(13) pay or incur any management or consulting fee;
(14) sell, transfer or otherwise dispose of any asset or
property, except for sales of Inventory in the usual and ordinary course of
business and except for application of cash in payment of the Subsidiaries'
respective liabilities in the usual and ordinary course of business;
(15) amend, terminate or give notice of termination with respect
to any existing Contract to which any of the Subsidiaries is a party, or
waive any of the Subsidiaries' respective material rights other than in the
ordinary course of business consistent with past practice;
(16) pay, declare, accrue or set aside any dividends or any other
distributions (except pursuant to Section 1.4 of this Agreement), or
purchase, exchange or redeem any of its securities of any class;
(17) except as expressly permitted hereunder, enter into any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or rendering of services), directly or indirectly,
with, or make any payment to, or incur any liability to, any Affiliate or
Related Party; or
(18) make any election with respect to Taxes.
5.4 Governmental Approvals.
As promptly as practicable following the execution and delivery of
this Agreement but in any event within five (5) business days after the date
hereof, the Seller and the Purchaser shall make all filings and submissions as
may be reasonably required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the Exon-Xxxxxx Act ("Exon-Xxxxxx") and
under other applicable laws (including, but not limited to, the antitrust or
business combination notification or similar provisions of Mexico and Brazil),
to obtain such governmental approvals or endure such waiting periods as may be
required in connection with this Agreement and the transactions contemplated
hereby, and Purchaser shall use its best efforts to obtain such approvals as
promptly as practicable following the execution and delivery of this Agreement.
Each such party shall furnish to each other party upon its request all such
information and assistance as such other party may reasonably request in
connection with such filings or submissions. Each such party shall also provide
to the other parties hereto copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
authority, on the other, with respect
57
to this Agreement and the transactions contemplated hereby. The filing fees for
any filings required pursuant to the HSR Act shall be shared equally between
Purchaser and Seller. Purchaser shall be responsible for all filing fees, if
any, required with respect to Exon-Xxxxxx.
5.5 Exclusivity. From the date hereof until the Closing or until this
Agreement is terminated or abandoned as provided in Section 12.1, the Seller
shall not, directly or indirectly solicit or initiate discussions concerning, or
enter into negotiations with, or furnish any information that is not publicly
available to, any Person or group concerning, any proposal for a merger, sale of
assets, sale of shares of stock or securities or other takeover or business
combination transaction involving any of the Subsidiaries (other than as may be
required by law with respect to a transaction involving the Seller as an
entirety), and the Seller will instruct its and each of the Subsidiaries'
respective officers, directors, advisors and other financial and legal
representatives and consultants not to take any action contrary to the foregoing
provision of this sentence.
5.6 X-X Xxxx/Feldspar 401(k) and Benefit Plans.
(a) Seller shall cause the assets and liabilities of the XX
Xxxx/Feldspar 401(k) Plan ("KT 401(k) Plan") attributable to the accounts
of the current and former employees of K-T Feldspar Corporation, a North
Carolina corporation ("Feldspar") (excluding any assets attributable to the
accounts of former employees of Feldspar who are currently employed by X-X
Xxxx) to a separate plan sponsored and administered by Feldspar. The
assets so transferred shall include the assets attributable to any suspense
account maintained with respect to a former employee of Feldspar which has
not been forfeited pursuant to the terms of the K-T 401(k) Plan. Seller
shall cause the KT 401(k) Plan to retain the assets and liabilities
attributable to the accounts of current and former employees of X-X Xxxx
(excluding any assets attributable to the accounts of the former employees
of X-X Xxxx who are currently employed by Feldspar). The assets which
remain in the KT 401(k) Plan shall include all assets attributable to any
suspense account maintained with respect to a former employer of X-X Xxxx.
Seller shall cause X-X Xxxx and Feldspar to take any and all action
necessary to comply with all applicable laws and the terms of the KT 401(k)
Plan relating to the transfer of assets contemplated by this Section 5.6,
including, but not limited to, the timely filing of Forms 5310 to the
extent required by law, by X-X Xxxx and Feldspar with respect to the
transfer contemplated by this Section 5.6.
(b) Seller shall cause the Benefit Plans of X-X Xxxx to be revised to
exclude the employees and former employees of Feldspar from coverage under
the Benefit Plans and shall
58
cause any insurance policy providing benefits under any Benefit Plan to be
revised similarly to exclude the employees and former employees of Feldspar
from coverage, effective no later than the Closing Date.
5.7 Purchaser's Obligations. Purchaser agrees to continue to be bound by
that certain Confidentiality Agreement dated as of July 28, 2000 between Parent
and Seller (the "Confidentiality Agreement").
5.8 Joint Obligations. The following shall apply with equal force to
Seller, on the one hand, and Purchaser, on the other hand:
(a) Each of the parties hereto shall use its commercially reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable to consummate the
transaction contemplated hereby as soon as practicable.
(b) Each party shall cooperate in obtaining such audited financial
statements of the Subsidiaries for the years 1998, 1999 and 2000 as
Purchaser may reasonably deem necessary to comply with regulatory and
financing requirements applicable to Purchaser, at Purchaser's expense.
(c) Each party shall promptly give the other party written notice of
the existence or occurrence of any condition which would make any
representation or warranty herein contained of either party untrue or which
is reasonably expected to prevent the consummation of the transactions
contemplated hereby. In the event that (v) Purchaser shall become aware of
any facts or circumstances which would make any of Seller's representations
and warranties contained in Article 4 untrue in a material respect, (w)
Seller shall not have given written notice of the existence of such facts
to Purchaser in accordance with the preceding sentence, (x) Purchaser shall
not have given written notice of its knowledge of the existence of such
facts to Seller in accordance with the preceding sentence, and (y) the
Closing shall occur, Purchaser shall not be entitled to indemnification
under Article 11 with respect to the untruth of such representations and
warranties.
(d) No party shall intentionally perform any act which, if performed,
or omit to perform any act which, if omitted to be performed, would prevent
or excuse the performance of this Agreement by any party hereto or which
would result in any representation or warranty herein contained of said
party being untrue in any material respect as if originally made on and as
of the Closing Date.
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5.9 Deliveries of Information; Consultations. From time to time prior to
the Closing Date:
(a) Seller shall furnish promptly to Purchaser: (i) all separate
monthly financial statements of the Subsidiaries (as prepared by the
Subsidiaries in accordance with their normal accounting procedures)
promptly after such financial statements are available; and (ii) all other
material information concerning the operations, properties and personnel of
the Subsidiaries as Purchaser may reasonably request.
(b) Seller shall confer and consult with representatives of Purchaser
on a regular and frequent basis to report on operational matters of the
Subsidiaries, provided such conferences and consultations do not materially
interfere with the operation of the Subsidiaries.
(c) Seller shall notify Purchaser immediately: (i) of any
Acquisition Proposal (as herein defined); (ii) of any inquiry received by
Seller or any of its Affiliates from any Person concerning an Acquisition
Proposal; (iii) of any request from any Person for confidential information
concerning any of the Subsidiaries, or both; and (iv) if any Person seeks
to initiate or continue any discussions or negotiations with Seller or any
of its Affiliates concerning a Competing Transaction (as herein defined) or
an Acquisition Proposal. For the purposes of this Agreement, (x),
"Acquisition Proposal" shall mean any inquiry, proposal or offer relating
to a Competing Transaction, and (y) "Competing Transaction" shall mean any
or all of the following, other than the transactions contemplated hereby:
(i) a sale, transfer or other disposition of all or substantially all of
the assets of any of the Subsidiaries in a single transaction or a series
of related transactions; (ii) a sale, transfer or assignment of more than
50% of the outstanding shares of capital stock of any of the Subsidiaries
(including by means of a merger); or (iii) a public announcement of a
proposal, plan, intention or agreement to do any of the foregoing.
5.10 Settlement of Intercompany Accounts. As used herein, the term
"Intercompany Accounts" shall mean those accounts maintained by Seller and
Seller's Affiliates, on the one hand, and the Subsidiaries, on the other hand,
in accordance with their customary practices in the ordinary course of business,
in which there are reflected or recorded the amounts owed by Seller or any of
its Affiliates to any of the Subsidiaries, or by any of the Subsidiaries to
Seller or any of its Affiliates, attributable to intercompany transactions,
including without limitation charges for data processing, payroll and employee
benefits services, corporate office overhead, legal and/or audit services,
insurance, loans and advances by any of the Subsidiaries to Seller or any of its
Affiliates, and loans and advances by Seller
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or any of its Affiliates to any of the Subsidiaries. Seller shall cause all
amounts owing from time to time under the Intercompany Accounts (whether by or
in favor of the Subsidiaries) to be paid and settled prior to the Closing Date
to the extent the amounts thereof are reasonably ascertainable, including by
means of offsets of amounts owing by the obligee to the obligor, it being
understood that all loans and advances are to be settled as provided in Section
1.4. Any liabilities under the Intercompany Accounts which are not satisfied in
accordance with the preceding provisions of this Section 5.10 shall be treated
as trade accounts receivable (if owed to the Subsidiaries) or trade accounts
payable (if owed by the Subsidiaries) and settled within 30 days after the
obligor is invoiced therefor. The amounts owed as of the Closing Date under the
Intercompany Accounts shall be reflected on the Final Balance Sheet.
ARTICLE 6
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
6.1 Representations and Warranties. Each of the representations and
warranties of Seller contained herein shall have been true and correct in all
material respects when made and (as amended pursuant to the introductory
provisions of Article 4) shall be true and correct in all material respects as
of the Closing as if originally made on the Closing Date (other than any such
representations or warranties given as of a specific date, which shall be true
and correct in all material respects as of such date), except as affected by the
transactions contemplated or permitted hereby.
6.2 Covenants. Seller shall have performed and complied in all material
respects with all covenants or conditions required by this Agreement to be
performed and complied with by it prior to the Closing (including, without
limitation, all obligations which Seller would be required to perform at the
Closing if the transactions contemplated hereby were consummated).
6.3 No Injunction. No court or governmental or regulatory authority of
competent jurisdiction shall have entered an order which enjoins the carrying
out of the transaction contemplated by this Agreement nor shall any bona fide
third party not an Affiliate of Purchaser have pending in a court of applicable
jurisdiction, on the basis of a bona fide, non-frivolous claim, a petition for
an order enjoining the carrying out of the transactions contemplated by this
Agreement.
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6.4 No Material Adverse Change. During the period from the date of this
Agreement to the Closing Date there shall not have occurred, and there shall not
exist on the Closing Date, any condition or fact which has, or is reasonably
expected to result in, a Material Adverse Effect.
6.5 HSR Act; Exon-Xxxxxx. The waiting period applicable to the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated. Approval of the transaction contemplated hereby under Exon-Xxxxxx
shall have been obtained.
6.6 Consents. All of the consents referred to in Schedule 6.6 shall have
been obtained (without cost to Purchaser or any of the Subsidiaries in excess of
the normal and customary cost associated therewith) or, to the extent the
Permits and Environmental Permits held by any of the Subsidiaries would
terminate upon a change of control of any of the Subsidiaries, Purchaser shall
have either obtained licenses and permits on substantially the same terms as
such Permits and Environmental Permits, or shall have obtained binding
commitments from the applicable governmental authorities to issue such licenses
and permits to such Subsidiaries following the Closing.
6.7 Opinion of Seller's Counsel. Seller shall have delivered to Purchaser
the written opinion of Xxxxxxx X. Xxxxx, Esq., in substantially the form of
Exhibit B-1 attached hereto, and the written opinion of Xxxx, Xxxx & Xxxxx LLC,
counsel to Seller, in substantially the form of Exhibit B-2 attached hereto,
each dated as of the Closing Date (it being understood that Purchaser's lenders,
if any, for the transactions contemplated by this Agreement may rely upon such
opinions and that each such opinion may rely on the opinion of the other and on
the opinions of local counsels as to certain matters).
6.8 [Deleted intentionally.]
6.9 Certain Audited Financials. Except for certain accruals, notes and
other aspects occasioned by applying generally accepted auditing standards to a
lesser, stand-alone entity (the Subsidiaries), the audited financial statements
for the years ended December 31, 1999 and December 31, 1998 to be prepared
pursuant to Section 5.8(b) of this Agreement (the "Audited Financial
Statements") shall be the same in all material respects as the corresponding
Financial Statements, and the Audited Financial Statements shall be accompanied
by an opinion of PriceWaterhouseCoopers LLP, Seller's auditors ("PWC") subject
only to standard exceptions and qualifications (including, without limitation, a
qualification as to the absence of federal tax accruals); provided, however,
that any differences between the Audited Financial Statements and the Financial
Statements or any exceptions or qualifications cited in the accompanying audit
opinion the effects of each of which would be reflected in the Final Balance
Sheet but would not affect the
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statements of income included in the Audited Financial Statements shall be
excluded in determining whether the condition precedent set forth in this
Section 6.9 has been satisfied.
6.10 2000 Audit. If required for Purchaser's financing or for regulatory
purposes, PWC shall have delivered to Purchaser an audited combined balance
sheet of the Subsidiaries as of December 31, 2000 and audited combined
statements of income, retained earnings and cash flows of the Subsidiaries for
the year then ended (the "2000 Audit").
ARTICLE 7
SELLER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Seller, the obligations of the Seller
hereunder are subject to fulfillment at or prior to the Closing of each of the
following conditions:
7.1 Representations and Warranties. Each of the representations and
warranties of Purchaser contained herein shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing as if originally made as of the Closing Date, except
as affected by the transactions contemplated or permitted hereby.
7.2 Covenants. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by it prior to the Closing (including, without
limitation, all obligations which Purchaser would be required to perform at the
Closing if the transactions contemplated hereby were consummated).
7.3 No Injunction. No court or governmental or regulatory authority of
competent jurisdiction shall have entered an order which enjoins the carrying
out of the transactions contemplated by this Agreement nor shall any bona fide
third party not an Affiliate of any of the Subsidiaries have pending in a court
of applicable jurisdiction, on the basis of a bona fide, non-frivolous claim, a
petition for an order enjoining the carrying out of the transactions
contemplated by this Agreement.
7.4 HSR Act; Exon-Xxxxxx. The waiting period applicable to the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated. Approval of the transaction contemplated hereby under Exon-Xxxxxx
shall have been obtained.
7.5 Opinion of Purchaser's Counsel. Purchaser shall have delivered to
Seller the written opinion of Altheimer & Xxxx, counsel for Purchaser and
Parent, dated as of the Closing Date, in substantially the form of Exhibit C
attached hereto (it being understood that (x) as to matters relating to Canadian
law,
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Altheimer & Xxxx may rely on the opinion of Parent's Canadian counsel, and
(y) Purchaser's lenders, if any, for the transactions contemplated by this
Agreement may rely upon such opinions).
ARTICLE 8
CLOSING DOCUMENTS
8.1 Form of Documents. At the Closing, the parties shall deliver the
documents, and shall perform the acts, which are set forth in this Article 8.
All documents which Seller shall deliver shall be in form and substance
reasonably satisfactory to Purchaser and Purchaser's counsel. All documents
which Purchaser shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
8.2 Purchaser's Deliveries. Subject to the fulfillment or written waiver
of the conditions set forth in Article 6, Purchaser shall execute and/or deliver
to Seller all of the following:
(a) the Purchase Price, minus the Execution Payment (to the extent it
is released by Escrowee to Seller), plus or minus (as the case may be) the
Estimated Purchase Price Adjustment;
(b) a certified copy of Purchaser's and Parent's Certificate of
Incorporation and by-laws;
(c) a certificate of good standing of Purchaser, issued not earlier
than ten (10) days prior to the Closing Date by the Secretary of State of
Delaware.
(d) an incumbency and specimen signature certificate with respect to
the officers of Purchaser and Parent executing this Agreement, and any
other document delivered hereunder, on behalf of Purchaser or Parent;
(e) a certified copy of resolutions of Purchaser's and Parent's board
of directors, authorizing the execution, delivery and performance of this
Agreement, and any other document delivered by Purchaser and Parent
hereunder;
(f) a closing certificate executed by the President of Purchaser (or
any other officer of Purchaser specifically authorized to do so), on behalf
of Purchaser, pursuant to which Purchaser represents and warrants to Seller
that Purchaser's representations and warranties to Seller are true and
correct as of the Closing Date as if then originally made (or, if any such
representation or warranty is untrue in any respect, specifying the respect
in which the same is untrue), that all covenants required by the terms
hereof to be performed by Purchaser on or before the
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Closing Date, to the extent not waived by Seller in writing, have been so
performed (or, if any such covenant has not been so performed, indicating
that such covenant has not been performed), and that all documents to be
executed and delivered by Purchaser at the Closing have been executed by
duly authorized officers of Purchaser;
(g) a closing certificate of Parent that the guaranty of Parent and
all other documents to be executed and delivered by Parent at the Closing
have been executed by duly authorized officers of Parent; and
(h) without limitation by the specific enumeration of the foregoing,
all other documents reasonably required from Purchaser and Parent to
consummate the transaction contemplated hereby.
8.3 Seller's Deliveries. Subject to the fulfillment or written waiver of
the conditions set forth in Article 7, Seller shall execute or deliver to
Purchaser all of the following:
(a) a certified copy of the Certificate of Incorporation and by-laws,
or comparable documents, with respect to each of the Subsidiaries;
(b) certificates of good standing of X-X Xxxx issued not earlier than
ten (10) days prior to the Closing Date by the Secretaries of State of
Delaware, Kentucky, Tennessee, Mississippi, South Carolina and Georgia;
(c) to the extent documents of such type are reasonably available, a
notary public certificate of good standing of K-T Mexico and Recursos
issued not earlier than thirty (30) days prior to the Closing Date by
Mexican authorities;
(d) to the extent documents of such type are reasonably available,
notary public certificates of good standing of Hecla Brazil, Xxxxx, and
Mineracao Brazil issued not earlier than thirty (30) days prior to the
Closing Date by Brazilian authorities;
(e) an incumbency and specimen signature certificate with respect to
the officers of X-X Xxxx executing any document delivered by X-X Xxxx
hereunder or in connection with the transaction contemplated hereby, on
behalf of X-X Xxxx;
(f) an incumbency and specimen signature certificate with respect to
the officers of Seller executing this Agreement or any document delivered
by Seller hereunder or in connection with the transaction contemplated
hereby, on behalf of Seller;
65
(g) certificates representing all Stock, duly endorsed in blank or
with duly executed stock powers attached, and certificates representing the
shares or quotas (as the case may be) of the Subsidiaries which are owned
by the Incidental Owners, endorsed in favor of such Persons as Purchaser
shall specify by written notice delivered to Seller prior to the Closing;
(h) a closing certificate duly executed by Seller, pursuant to which
Seller represents and warrants to Purchaser that Seller's representations
and warranties to Purchaser are true and correct (as updated by the updated
Schedules as permitted by the introductory provisions of Article 4) as of
the Closing Date as if then originally made (or if any such representation
or warranty is untrue in any respect, specifying the respect in which the
same is untrue), that all covenants required by the terms hereof to be
performed by Seller on or before the Closing Date, to the extent not waived
by Purchaser in writing, have been so performed (or if any such covenant
has not been so performed, indicating that such covenant has not been
performed), and that all documents to be executed and delivered by Seller
at the Closing have been executed by duly authorized officers of Seller;
(i) the written resignations, effective as of the Closing Date, of
such of the directors and officers of the Subsidiaries as are designated by
Purchaser no later than ten (10) days prior thereto;
(j) physical possession of all records, tangible assets, licenses,
policies, Contracts, plans or other instruments owned by or pertaining to
the Subsidiaries which are in the possession of Seller it being understood
that presence at the Real Estate or Leased Premises of such materials shall
be deemed to constitute delivery hereunder;
(k) all consents obtained pursuant to Section 5.1(c);
(l) the minute books, stock records and other corporate governance
books and records of the Subsidiaries, it being understood that presence at
the Real Estate or Leased Premises of such materials shall be deemed to
constitute delivery hereunder;
(m) XXX-0, XXX-0, Federal and State tax lien, bankruptcy and seven
(7) year judgment searches with respect to X-X Xxxx, for the States of
Kentucky, Tennessee, South Carolina, Mississippi and Georgia, and the
counties thereof in which a portion of the business of X-X Xxxx is
conducted, and patent, trademark and copyright searches with respect to X-X
Xxxx, and comparable Mexican searches with respect to K-T Mexico (to the
extent documents of such type are
66
reasonably available) all prepared by search companies reasonably
satisfactory to Purchaser, and dated not earlier than fifteen (15) days
prior to the Closing Date;
(n) owner's title insurance policies (ALTA Owner's Policy Form B
(rev. 1992)) with respect to the Properties identified on Schedule 4.12(b),
insuring X-X Xxxx and issued as of the Closing Date by title insurance
companies reasonably satisfactory to Purchaser, in the amounts of
$5,000,000 with respect to the Properties located in Kentucky, Tennessee
and Mississippi and $5,000,000 with respect to the Properties located in
South Carolina and Georgia, showing fee simple title thereto to be vested
in X-X Xxxx, subject in each case only to Permitted Encumbrances (other
than fixture filings in favor of Standard Bank London Limited), with
extended coverage over all general exceptions and a nonimputation
endorsement, and to the extent available, a zoning endorsement in the form
of ALTA endorsement Form 3.0, a tie-in endorsement, a last dollar
endorsement, an owner's comprehensive endorsement, and subdivision, survey,
access, tax parcel, creditors' rights and utility facilities endorsements.
The cost of such title insurance (including both premiums and title
investigation charges) shall be payable in equal shares by Seller and
Purchaser;
(o) to the extent the landlord is obligated to deliver the same
pursuant to the relevant Real Property Lease, estoppel letters, duly
executed by the landlords of the Leased Premises dated not earlier than
fourteen (14) days prior to the Closing Date, stating the following: (i)
the copy of the lease attached to the estoppel letter is a true, correct
and complete copy of the lease and represents the entire agreement between
the landlord and X-X Xxxx, (ii) neither the landlord nor, to landlord's
knowledge, X-X Xxxx is in breach or default under the lease, and, to
landlord's knowledge, no event has occurred which, with notice or the
passage of time, or both, would constitute a breach or default, or permit
termination, modification or acceleration under the lease, (iii) the
landlord has not repudiated any provision of the lease, (iv) to the
landlord's knowledge, there are no disputes, oral agreements or forbearance
programs in effect as to the lease, (v) stating such other matters as
Purchaser shall reasonably request, provided that failure to obtain an
estoppel certificate from a landlord that fails or refuses to honor its
obligation to deliver the same shall not constitute a breach or default by
Seller under this Agreement;
(p) to the extent the landlord is obligated to deliver the same
pursuant to the relevant Real Property Lease, if requested by Purchaser,
non-disturbance agreement, duly executed by each mortgagee of the Leased
Premises stating that, notwithstanding any default by the respective
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landlords of the Leased Premises under any mortgage on the Leased
Premises, the mortgagee will not disturb X-X Xxxx'x tenancy as long as X-X
Xxxx is not in default under the lease pertaining to such Leased Premises
and stating such other matters as Purchaser shall reasonably request,
provided that failure to obtain a non-disturbance agreement from a landlord
that fails or refuses to honor its obligation to deliver the same shall not
constitute a breach or default by Seller under this Agreement;
(q) a certification duly executed by Seller that Seller is not a
foreign person, in the form provided in Treasury Regulation 1.1445-
2(b)(2)(iii)A;
(r) all clearance certificates or similar types of documents which
may be required by any state taxing authority in order to relieve the
Purchaser of any obligation to withhold any portion of the Purchase Price;
(s) a pay-off letter, accompanied by wire transfer instructions, from
Standard Bank London Limited, setting forth the amount necessary to satisfy
Seller's indebtedness to such lender as of the Closing Date, and containing
the commitment of said lender to terminate all financing statements and/or
mortgages in favor of such lender covering any assets of any of the
Subsidiaries upon receipt of payment in full of such amount;
(t) a notice of this transaction, to be given to employees of each of
the Subsidiaries, in form and substance reasonably satisfactory to
Purchaser and Seller;
(u) a notice of this transaction, to be given to customers and
suppliers of each of the Subsidiaries, in form and substance reasonably
satisfactory to Purchaser and Seller;
(v) a mutual release between Seller and its Affiliates, on the one
hand, and each of the Subsidiaries, on the other hand, whereby each party
releases all claims of every kind which it may have against the other
party, except for those claims which are to be settled through the
Intercompany Accounts as set forth in Section 5.9;
(w) to the extent assignable, an assignment of all of Seller's rights
under all confidentiality agreements which Seller shall have executed in
connection with the proposed sale of the Subsidiaries; and
(x) without limitation by the specific enumeration of the foregoing,
all other documents reasonably required from Seller to consummate the
transaction contemplated hereby.
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8.4 Joint Deliveries. At the Closing, Seller and Purchaser shall jointly
direct the Escrowee to pay the Execution Payment to, or as directed by, Seller.
In addition, at the Closing, Seller and Purchaser shall cause their respective
Affiliates to enter into a Mica Purchase Agreement in the form attached hereto
as Exhibit D, and a Joint Mining Agreement in the form attached hereto as
Exhibit E, or in such other form as the Purchaser and Seller shall mutually
agree.
ARTICLE 9
POST-CLOSING AGREEMENTS
9.1 Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article 9.
9.2 Inspection of Records. Seller, on the one hand, and Purchaser, on the
other hand, and their respective Affiliates, shall each retain and make their
respective books and records (including expired insurance policies and work
papers in the possession of their respective accountants) with respect to the
Subsidiaries available for inspection by the other party, or by its duly
accredited representatives, for reasonable business purposes at all reasonable
times during normal business hours, for a seven (7) year period after the
Closing Date, with respect to all transactions of any of the Subsidiaries
occurring prior to and relating to the Closing, and the historical financial
condition, assets, liabilities, operations and cash flows of the Subsidiaries,
provided such right of inspection shall not obligate any party or entity to
waive, violate, or jeopardize attorney/client privilege or similar privileges.
As used in this Section 9.2, the right of inspection includes the right to make
extracts or copies. The representatives of a party inspecting the records of
the other party shall be reasonably satisfactory to the other party.
9.3 Use of Trademarks. Seller shall not use and shall not license or
permit any third party to use, any name, slogan, logo or trademark which is
similar or deceptively similar to any of the names or trademarks included in the
Intellectual Property, provided, however, that Feldspar may continue to utilize
the "K-T" designation in its corporate name and trade names, trademarks, and
other intellectual property containing the designation "K-T" or "KT" (including
product logos, names, and slogans) until the earlier of (a) December 31, 2001
and (b) one year following the consummation of a business transaction by which
the Seller disposes of substantially all of the stock or assets of Feldspar.
During the period specified Buyer shall not use or claim the designation "K-T"
in marketing or sale of feldspar products. Buyer shall not claim or use the
designation or trade names "Minspar" or "Minsilspar" for any purpose at any time
for the period ending twenty (20) years after the Closing Date.
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9.4 Back-Up. Seller shall, at Purchaser's request, furnish complete
detailed back-up material with respect to any of the Subsidiaries, the past
financial statements of any of the Subsidiaries, the Financial Statements and
the Interim Financial Statements as are in Seller's possession or are reasonably
available to Seller.
9.5 Payments of Accounts Receivable. In the event Seller shall receive
any instruments of payment of any of the accounts receivable of any of the
Subsidiaries (other than the receivable of OCF which was distributed to Seller
pursuant to Section 1.4). Seller shall forthwith deliver such instruments to
Purchaser, endorsed where necessary, without recourse, in favor of Purchaser.
In the event Purchaser shall receive any instruments of payment of any amount
owing Seller, Purchaser shall forthwith deliver such instruments to Seller,
endorsed where necessary, without recourse, in favor of Purchaser.
9.6 Third Party Claims. The parties shall cooperate with each other with
respect to the defense of any claims or litigation made or commenced by third
parties subsequent to the Closing Date which are not subject to the
indemnification provisions contained in Article 11, provided that the party
requesting cooperation shall reimburse the other party for the other party's
reasonable out-of-pocket costs and expenses of furnishing such cooperation.
9.7 Non-Solicitation. From and after the Closing and until the second
anniversary of the Closing Date:
(a) Seller shall not, and shall cause its Affiliates to not, directly
or indirectly, as a partner, stockholder, proprietor, consultant, joint
venturer, investor or in any other capacity, hire or solicit to perform
services (as an employee, consultant or otherwise) any Persons who are then
current employees of any of the Subsidiaries or take any actions which are
intended to persuade any employee of the Subsidiaries to terminate his or
her association with the Subsidiaries;
(b) Purchaser shall not, and shall cause its Affiliates and the
Subsidiaries to not, directly or indirectly, as a partner, stockholder,
proprietor, consultant, joint venturer, investor or in any other capacity,
hire or solicit to perform services (as an employee, consultant or
otherwise) any Persons who are then current employees of Feldspar or take
any actions which are intended to persuade any employee of Feldspar to
terminate his or her association with Feldspar.
General solicitations of employment published in a journal, newspaper,
electronic database, website, or internet posting or other publication of
general circulation and not specifically
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directed towards employees of the Subsidiaries or Feldspar, as the case may be
("General Solicitations"), and hiring of Persons responding to such General
Solicitations (including, without limitation, employees of the Subsidiaries or
Feldspar), shall not be deemed to constitute solicitation for purposes of this
Section 9.7 and any hires in response to such General Solicitations shall not
violate the provisions of this Section 9.7.
9.8 Confidentiality. From and after the Closing, Seller and its
Affiliates shall keep confidential and not disclose to any other Person or use
for their own benefit or the benefit of any other Person, any information
regarding the Subsidiaries. The obligation of Seller and its Affiliates under
this Section 9.8 shall not apply to information which: (i) is or becomes
generally available to the public without breach of the commitment provided for
in this Section 9.8 or (ii) is required to be disclosed by law, order or
regulation of a court or tribunal or government authority; provided, however,
that in the case of any proceeding before any court or other tribunal, Seller
shall notify Purchaser as early as reasonably practicable prior to disclosure to
allow Purchaser to take appropriate measures to preserve the confidentiality of
such information.
9.9 Non-Compete.
From and after the Closing and until the fifth anniversary of the Closing
Date, Seller shall not and shall cause its Affiliates to not, directly or
indirectly, as a partner, stockholder, proprietor, consultant, joint venturer or
in any other capacity:
(a) engage in, or own, manage, operate or control, or participate in
the ownership, management, operation or control of, any business or entity
which engages anywhere in North America in the business of mining,
processing or distributing ball clay or kaolin other than incidental to
other mining activities; provided, however, that nothing herein shall
prohibit Seller and its Affiliates from owning, in the aggregate, not more
than five percent (5%) of any class of securities of a publicly traded
entity in any of the foregoing lines of business so long as neither Seller
nor any of its Affiliates participates in any way in the management,
operation or control of such entity; or
(b) solicit any customer of any of the Subsidiaries to purchase
products or services which are regularly supplied by any of the
Subsidiaries as of the Closing Date.
9.10 Specific Performance. Seller acknowledges that, given the nature of
the business of the Subsidiaries, the covenants contained in Sections 9.7, 9.8,
and 9.9 contain reasonable limitations as to time, geographical area and scope
of activity to be restrained, and do not impose a greater restraint than is
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necessary to protect and preserve for the benefit of Purchaser the goodwill of
the Subsidiaries and to protect the legitimate business interests of Purchaser.
If, however, any portion of Sections 9.7, 9.8, and 9.9 is determined by any
court of competent jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too large a geographic area or by reason
of its being too extensive in any other respect or for any other reason it will
be interpreted to extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court and in such action. Seller
agrees that Purchaser's remedies at law for any breach or threat of breach by
Seller of the provisions of Sections 9.7, 9.8, and 9.9 will be inadequate, and
that Purchaser shall be entitled to an injunction or injunctions, without the
necessity for the posting of a bond or other collateral security, to prevent
breaches of the provisions of Sections 9.7, 9.8 and 9.9 and to enforce
specifically the terms and provisions hereof.
9.11 Retention Bonuses. Seller shall pay when due, or promptly reimburse
the applicable Subsidiary for, all retention or "sale" bonuses under agreements
in existence as of the Closing Date and which bonuses are payable solely by
virtue of the Closing to employees of any of the Subsidiaries, it being
understood that Seller shall have no liability for any cost, payment, damage,
expense, or bonus arising due to a combination of the Closing and any other
fact, circumstance, or event (e.g., termination by employer or employee or
reduction in responsibilities, title or compensation, including any reduction of
responsibility that automatically occurs as a consequence of the Closing).
9.12 Agreement to Defend and Indemnify. Purchaser shall cause the
Subsidiaries to indemnify and hold harmless each of the present and former
directors, officers, employees and agents of the Subsidiaries, and each present
and former director, officer, employee, agent or trustee of any employee benefit
plan for employees of the Subsidiaries (individually, an "Indemnified Employee,
and collectively, the "Indemnified Employees") against any losses, claims,
damages, liabilities, costs, expenses (including, without limitation, reasonable
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with any threatened, pending or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative
("Indemnifiable Claim"), arising out of or pertaining to any action or omission
occurring on or prior to the Closing Date (including, without limitation, any
which arise out of or relate to the transactions contemplated by this
Agreement), whether asserted or commenced prior to or after the Closing Date, to
the full extent permitted under the certificates of incorporation and by-laws of
the Subsidiaries as currently in effect (or as such rights to indemnification
may be
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expanded subsequent to the Closing Date under applicable law). Purchaser
acknowledges and accepts as contract rights (and agrees to cause the
Subsidiaries to honor in accordance with their terms) the provisions of the
Certificates of Incorporation and/or bylaws of the Subsidiaries, as in effect on
the date hereof with respect to indemnification of officers, directors,
employees and agents of the Subsidiaries (including provisions relating to
contributions, advancement of expenses and the like) and such provisions shall
not be modified or amended except as required by law, unless such modification
or amendment expands the rights of the Indemnified Employees to indemnification
(including with respect to contribution, advancement of expenses and the like).
Purchaser shall cause the applicable Subsidiary to advance expenses (including
attorneys' fees) to each such Indemnified Employee to the full extent permitted
by law. In the event of any Indemnifiable Claim (whether asserted or commenced
before or after the Closing Date), (a) the Indemnified Employees may retain
counsel satisfactory to them, and Purchaser shall cause the applicable
Subsidiary to pay all fees and expenses of such counsel for the Indemnified
Employees promptly as statements therefor are received, and (b) Purchaser shall
cause the applicable Subsidiary to use its commercially reasonable efforts to
assist in the vigorous defense of any such matter; provided that no Subsidiary
shall be liable for any settlement effected without its written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified Employee
wishing to claim indemnification under this Section 9.12, upon learning of any
Indemnifiable Claim, shall notify his or her employer thereof; provided,
however, that the failure of an Indemnified Employee to give such notice shall
only relieve Purchaser and the Subsidiaries of their indemnification obligation
to the extent of actual prejudice resulting therefrom. Purchaser shall, and
shall cause the Subsidiaries to, indemnify Seller against any claim by an
Indemnified Employee against Seller or any of its Affiliates with respect to any
matter as to which such Indemnified Employee is entitled to indemnification both
(x) from the Subsidiaries to this Section 9.12 and (y) from Seller or any of its
Affiliates, pursuant to Seller's or such Affiliate's Articles of Incorporation,
by-laws or any agreement to which Seller or such Affiliate may be a party.
9.13 Retirement Plans. The Kentucky-Tennessee Clay Hourly Employees'
Pension Plan has been, and will remain, sponsored and maintained by X-X Xxxx for
the benefit of its eligible hourly employees. Salaried employees of X-X Xxxx
have been covered under Seller's Hecla Mining Company Retirement Plan ("Seller's
Retirement Plan"). Seller shall fully vest all affected salaried employees of K-
T Clay under Seller's Retirement Plan as of the Closing Date. Purchaser and X-X
Xxxx may establish such new retirement programs as are considered desirable to
cover salaried employees of X-X Xxxx with respect to future retirement benefit
accruals on and after the Closing Date. It is the intent of Purchaser and
Seller to apportion the assets and liabilities of Seller's Retirement Plan in
accordance with and subject to the following provisions of this Section 9.13.
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(a) It is the intent of Purchaser and Seller to apportion the
liabilities and assets of Seller's Retirement Plan to provide for a
transfer of liabilities and assets as of the Closing Date, in an
amount equal to the total liabilities for retirement benefits of
employees who are employees of X-X Xxxx immediately after the Closing
Date which have accrued under Seller's Retirement Plan as of the
Closing Date, determined as if such employees had terminated
employment as of the Closing Date, with the determination of the
amount of such assets to be transferred being made in accordance with
the actuarial methods and assumptions used by Seller's actuary for
plan funding purposes for the 2000 plan year, which assumptions
include a 7% interest rate and mortality in accordance with the 1983
Group Annuity Mortality Table, and taking into account projected
future salary increases. Purchaser shall establish or shall cause X-X
Xxxx to establish a retirement plan ("Purchaser's Retirement Plan")
which shall be equal in all material respects to Seller's Retirement
Plan with respect to benefits accrued as of Closing Date, including
optional forms of benefits. Purchaser's Retirement Plan will assume
the liability for benefits accrued under Seller's Retirement Plan
prior to the Closing Date with respect to employees who are employed
by X-X Xxxx immediately after the Closing Date, contingent upon the
receipt of the transferred assets as provided herein. Such amount to
be transferred as of the Closing Date shall accrue interest at a rate
of 7% per annum from the Closing Date until the date of transfer, and
shall be reduced by the amount of any benefit payments (plus interest
at 7%) made to or on behalf of covered employees after the Closing
Date and prior to the date of transfer.
(b) The amount of transferred assets as described above may be
transferred in cash or in kind, to the extent a transfer in kind is
approved by Purchaser. Promptly after the Closing Date, Seller and
Purchaser shall each file Forms 5310-A, to the extent not excepted
from such filing requirement by applicable regulations, in respect of
Seller's Retirement Plan in the case of Seller, and Purchaser's
Retirement Plan in the case of Purchaser, and shall provide the other
party a copy thereof. The actuarial calculations required hereunder
shall be provided by Seller and performed by Xxxx & Xxxxxx ("Seller's
Actuary"). Purchaser will be supplied with a copy of the report of
Seller's Actuary embodying the results of such calculation. An
actuary designated by Purchaser shall, at Purchaser's expense, be
entitled to confirm the accuracy of the calculations by which such
results were reached. In the event of a disagreement between said
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actuaries, the disagreement shall be settled by reference to a third
independent actuary of national standing agreed to by Seller and
Purchaser. Seller and Purchaser shall each pay one-half of the fee
charged by any such third actuary. Seller and Purchaser shall cause
any required advance notification to the IRS regarding transfers of
plan assets to be made and shall cooperate to secure any approval by
any government agency which is required by law for a transfer of
assets and liabilities for benefits from Seller's Retirement Plan to
Purchaser's Retirement Plan.
(c) Purchaser shall be entitled to receive from Seller, within a
reasonable time after the Closing Date and at all times thereafter,
such pertinent data and information that Purchaser may reasonably
require (including, but not limited to, participant and beneficiary
records) to implement the requirements of this Section 9.13, to
administer Purchaser's Retirement Plan and to respond to any claims,
audits or examinations. Seller and Purchaser shall cooperate with
each other in all respects relating to this Section 9.13 and, except
as otherwise set forth, shall each pay their respective expenses
arising from the obligations undertaken by each pursuant to this
Section 9.13.
9.14 Claims under Welfare Plans. Seller shall reimburse Purchaser for all
liabilities of any of the Subsidiaries under the Welfare Plans in regard to any
claims submitted on behalf of employees or former employees, or their eligible
dependents, of any of the Subsidiaries, or of Seller or any Affiliate of Seller,
with respect to illnesses or injuries which have occurred or are in existence on
or prior to the Closing Date (including IBNR claims) in each case for the
portion thereof which pertains to the period ending on the Closing Date,
regardless of when the claim is made; provided, however, that Seller shall have
no liability or obligation under this Section 9.14 except to the extent the
aggregate of such claims and liabilities shall exceed the reserve therefor on
the Final Balance Sheet. Purchaser shall provide (or shall cause the third-
party administrator administering such Welfare Plans to provide) monthly
statements to Seller, setting forth in detail all payments made under such
Welfare Plans during such month on account of illnesses or injuries in existence
or occurring prior to the Closing Date.
9.15 Hecla Name. Purchaser shall promptly take all action necessary or
advisable to change the names of Hecla Brazil and Mineracao to delete the name
of "Hecla" therefrom and to remove all reference to "Hecla" from their and their
Affiliates' logos, letterheads, doing business designations and qualifications,
and its other assets, properties, equipment, and documentation, and filings.
Purchaser acknowledges that Seller shall retain all worldwide rights to the
trademark, trade name, and corporate name of "Hecla".
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9.16 K-T Feldspar Corporation. Nothing in this Agreement, including, but
not limited to the provisions of Section 9.9 hereof, shall in any way limit,
impede, restrict, hamper, or prohibit (a) Seller's ownership and control of
Feldspar and the ability of Feldspar and Seller to continue to conduct the
normal business activities of Feldspar in accordance with its past business
practice or any expansion of such activities (other than mining kaolin or ball
clay other than on an incidental basis in connection with other mining
activities) while Seller controls the ownership or operation of Feldspar or (b)
the ability of any non-affiliated purchaser of substantially all of the stock or
assets Feldspar to conduct any activity whatsoever in the entire world.
9.17 Releases/Collateral. Purchaser shall take all actions necessary or
appropriate to cause Seller and each of its Affiliates to be released, as soon
as reasonably practicable after the Closing (but in no event longer than 60
days), from all guaranty, collateral or other obligations entered into by Seller
or any of such Affiliates in connection with a deposit, bond, letter of credit
or other security device (including, without limitation, any equipment leases)
provided or maintained by or on behalf of any Subsidiary with respect to
reclamation or other obligations, and Purchaser shall take all actions necessary
or appropriate to ensure that Seller or such Affiliate promptly receives any
deposit, collateral, or other assets made available as a result of such release,
provided that if any such release or return is not commercially possible,
Purchaser shall, instead, provide to Seller or its Affiliate, as the case may
be, its corresponding guaranty (which shall be deemed an obligation of Purchaser
hereunder) and back-to-back collateral for such non-returned deposit, collateral
or other assets.
9.18 Technology Support. For a period of six (6) months after the Closing
Date, Seller shall provide telephone support to Purchaser in connection with the
operation of the Jonas & Xxxxxxxx business system software. In addition, Seller
shall allow Purchaser the right to use the Jonas & Xxxxxxxx Software business
system, the Dynacom terminal emulation package currently used by the Company
which is licensed in the name of Seller for the later to occur of (a) six (6)
months following the Closing Date or (b) the date Purchaser purchases and
implements a suitable replacement for such software. Purchaser hereby agrees to
use commercially reasonable efforts to replace the Dynacom software and the J&E
Software within the six (6) month period following the Closing Date.
ARTICLE 10
TAXES
10.1 In General. This Article 10 shall govern the obligation of the
parties with respect to Taxes.
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10.2 Reporting and Payment of Taxes. For all taxable periods of the X-X
Xxxx ending on or prior to the Closing Date, (i) the parties shall cause X-X
Xxxx to join in Seller's consolidated federal income Tax Returns and, in
jurisdictions requiring or permitting combined reporting with Seller or any of
its Affiliates, to join in combined income Tax Returns for such jurisdictions,
in accordance with current practices, and Seller shall pay the Taxes required to
be paid in respect of such Tax Returns, (ii) Seller shall cause the Subsidiaries
to file all other income Tax Returns to the extent such returns are required to
be filed (taking into account any extensions) on or before the Closing Date and
pay the Taxes required to be paid in respect of such Tax Returns, and (iii)
Purchaser shall cause the Subsidiaries to file all other state income Tax
Returns required to be filed on or after the Closing Date and pay the Taxes
required to be paid in respect of such Tax Returns. Purchaser shall cause the
Subsidiaries to file separate, combined or consolidated income Tax Returns, or
shall include the Subsidiaries in its combined or consolidated income Tax
Returns, for all Tax periods ending after the Closing Date and shall pay or
cause to be paid all Taxes required to be paid in respect of such Tax Returns.
Seller shall cause to be filed all other Tax Returns required to be filed
(taking into account any extensions) by Seller on behalf of any of the
Subsidiaries on or before the Closing Date, and shall pay or cause to be paid
all Taxes required to be paid in respect of such Tax Returns, and Purchaser
shall cause to be filed all other Tax Returns required to be filed by, or on
behalf of, any of the Subsidiaries and shall pay or cause to be paid all Taxes
shown to be due thereon. All Tax Returns referred to in this Section 10.2 shall
be filed in a timely manner and in proper form. Purchaser shall prepare and
provide Seller with copies of each Tax Return (or the relevant portions thereof)
reflecting any obligations with respect to any taxable period of any of the
Subsidiaries which begins before and ends after the Closing Date ("Straddle
Periods") at least thirty (30) days prior to the due date for filing such
return, and Seller shall have the right to review and to grant or withhold
approval of such Tax Returns (which approval shall not unreasonably be
withheld). Purchaser and Seller shall attempt in good faith mutually to resolve
any disagreements regarding such Tax Returns prior to the due date for filing
thereof.
10.3 Certain Unpaid Taxes. To the extent an accrual on the Final Balance
Sheet with respect to the Tax Election or with respect to Taxes for the portions
of Straddle Periods ending on the Closing Date exceeds the amount of Taxes paid
by the Subsidiaries on account of such Straddle Period Taxes with respect to
such period, as the case may be, Purchaser shall cause the applicable
Subsidiary, as appropriate, to refund the excess to Seller. To the extent such
accrual is less than the amount of such Taxes paid by the applicable Subsidiary,
Seller shall reimburse the applicable Subsidiary for the deficiency. Any such
refund or reimbursement shall be paid concurrently with the
77
filing of the related return relating to such Straddle Period Taxes or
reflecting the effect of the Tax Election (as the case may be).
10.4 Allocations Relating To Taxes. Responsibilities for Taxes shall be
allocated between Seller and Purchaser as follows:
(a) For federal income Tax purposes, the taxable year of the
Subsidiaries shall end as of the close of the Closing Date and, with
respect to all other Taxes, Seller and Purchaser will, unless prohibited by
applicable law, close the taxable period of the Subsidiaries as of the
close of the Closing Date. Neither Seller nor Purchaser shall take any
position inconsistent with the preceding sentence on any Tax Return.
(b) Any allocation of income or deductions required to determine any
Taxes attributable to any Straddle Period shall be made by means of an
interim closing of the books and records of the Subsidiaries as of the
close of the Closing Date, provided that exemptions, allowances, deductions
(including, without limitation, depreciation and amortization deductions)
or any Taxes (such as property, sales or similar Taxes) that are calculated
on an annual or periodic basis shall be allocated between the period ending
on the Closing Date and the period after the Closing Date in proportion to
the number of days in each such period, excluding any impact of the Tax
Election. Any disagreements regarding the allocations shall be promptly
resolved in an arbitration conducted by the Selected Accounting Firm (as
herein defined), whose decision shall be binding on the parties.
(c) Any transaction occurring outside the ordinary course of business
and not caused by Seller or its Affiliates on the Closing Date after the
Closing, except with respect to the Tax Election, shall be treated as
occurring on the day following the Closing Date.
10.5 Refunds and Credits. Seller shall be entitled to any refunds or
credits for any income Taxes for periods for which Seller is responsible
pursuant to this Article 10 or for which Seller must indemnify Purchaser
pursuant to Article 11. Purchaser shall be entitled to any refunds of or
credits for any income Taxes for periods for which Purchaser is responsible
under this Article 10. Refunds for Straddle Periods shall be equitably divided
between the parties in accordance with the principles in this Article 10.
10.6 Cooperation; Audits. Seller and Purchaser agree that:
(a) After the Closing Date, Seller and Purchaser shall cooperate
fully with each other regarding Tax matters and shall make available to the
other as reasonably requested
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all information, records and documents relating to Taxes governed by this
Agreement until the expiration of the applicable statute of limitations or
extension thereof or at the conclusion of all audits, appeals or litigation
with respect to Taxes relating to the Subsidiaries for such period;
(b) if Purchaser or any of the Subsidiaries shall receive written
notice from an appropriate Taxing authority of any pending examination,
claims, settlements, proposed adjustments or related matters with respect
to Taxes of any of the Subsidiaries that could affect Seller or any of its
Affiliates, or if Seller or any of its Affiliates receives written notice
from an appropriate Taxing authority of any such matters that could affect
Purchaser or any of the Subsidiaries, the party receiving such notice shall
notify in writing the potentially affected party within ten (10) business
days thereafter. The failure of any party to give the notice required by
this paragraph (b) shall not impair the party's rights under this Agreement
or impose any liabilities on such party except to the extent the other
party demonstrates that it has been prejudiced thereby;
(c) Seller shall have the right, at its expense, to control, conduct,
compromise and settle any contest relating to any liability for Taxes for
which Seller is solely responsible pursuant to this Article 10. If
Purchaser does not consent to such compromise or settlement, however,
Seller may turn over control of such contest to Purchaser, and Seller's
liability for Taxes with respect to the items subject to the contest shall,
in such case, be limited to the amount for which Seller would have been
liable under such compromise or settlement;
(d) Purchaser shall have the sole right to represent the interests of
any of the Subsidiaries in all other Tax audits or administrative or court
proceedings;
(e) Seller shall not (unless believed required by law) file or amend
any Tax Return or claim for refund or credit for taxable periods ending on
or before the Closing Date to the extent that adverse consequences as to
Purchaser or any of the Subsidiaries would result without Purchaser's
written consent, which shall not unreasonably be withheld. Purchaser
undertakes that neither it nor any of its Affiliates shall file or amend
any Return or claim for refund or credit, or settle or compromise any
matter, for taxable periods ending after the Closing Date to the extent
adverse consequences to Seller would result without Seller's written
consent, which consent shall not unreasonably be withheld.
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10.7 Section 338(h)(10) Election.
(a) To the extent permitted by law (it being understood, for example,
that an election under Section 338(g) but not section 338(h)(10) of the
Code may be made for a foreign Subsidiary) Purchaser, Seller and the
Subsidiaries, as applicable, shall make the elections under Section 338(g)
and Section 338(h)(10), of the Code and the Treasury Regulations
promulgated thereunder (and any comparable election under state, local or
foreign Tax law) (all such elections being referred to herein as the "Tax
Election", whether or not actually under Section 338(h)(10) of the Code).
Seller, Purchaser and the Subsidiaries shall report, in connection with the
determination of income, franchise or other Taxes measured by net income,
the transaction being undertaken pursuant to this Agreement in a manner
consistent with the Tax Election.
(b) Purchaser, Seller and the Subsidiaries shall cooperate fully with
each other in the making of the Tax Election. In particular, and not by
way of limitation, in order to effect the Tax Election, Seller and
Purchaser shall jointly execute necessary copies of Internal Revenue
Service Form 8023 and all attachments required to be filed therewith
pursuant to applicable Treasury regulations. Purchaser, no later than 100
days after the Closing Date, shall provide Seller with a valuation
statement reflecting, as of the Closing Date, the fair market values of all
of the assets and the amount of the liabilities and obligations of the
Subsidiaries. Purchaser and Seller shall file, and shall cause members of
their respective affiliated groups (within the meaning of Section 1504 of
the Code or any similar group defined under a similar provision of state,
local or foreign law) to file, all Tax returns and statements, forms and
schedules in connection therewith in a manner consistent with such
valuations and shall take no position contrary thereto unless required to
do so by applicable Tax laws. Seller shall have the right to review any
appraisal upon which such valuations are based and to grant or withhold
approval of such valuations and any such forms and schedules relating to
such valuations, prior to the filing of such Tax returns, statements, forms
and schedules. Any disputes regarding the valuation statement or the
preparation, execution or filing of the forms and documents required in
connection with making the Tax Election shall be resolved in an arbitration
to be conducted by a "big five" accounting firm mutually selected by
Purchaser and Seller (the "Selected Accounting Firm"), whose fees shall be
borne equally by Seller and Purchaser. Each of the parties to this
Agreement shall be bound by the decision of the Selected Accounting Firm
rendered in such arbitration. To the extent permitted by state, local or
foreign Tax laws, the principles of this Section 10.7(b) shall also apply
with respect to a Tax Election under state, local or foreign law.
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ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by Seller.
(a) Seller shall indemnify Purchaser and hold Purchaser harmless from
any losses, damages, diminution of value of assets or properties,
liabilities, demands, claims, actions or causes of action, regulatory,
legislative or judicial proceedings or investigations, assessments, levies,
fines, penalties, costs and expenses whatsoever (including, without
limitation, reasonable attorneys' and expert witness fees and litigation
expenses, expenses incurred in connection with any product recall and
testing expenses) (together with the additional matters described in
paragraph (b) hereof, "Damages") resulting to Purchaser, its directors,
officers and employees from any of the following:
(1) Any inaccuracy in any representation or warranty by the
Seller contained in this Agreement or in any closing document delivered by
Seller pursuant to the provisions of this Agreement, whether or not
involving a Third Party Claim (as herein defined);
(2) Any breach of any covenant or agreement by the Seller
contained in this Agreement or in any closing document delivered by Seller
pursuant to the provisions of this Agreement;
(3) Taxes which are unpaid as of the Closing Date and which are
imposed upon any of the Subsidiaries with respect to (i) any taxable period
ending on or before the Closing Date for which a Return shall be filed by
Seller pursuant to Section 10.2 ("Pre-Closing Periods"), and (ii) Taxes
imposed on any of the Subsidiaries pursuant to and solely by reason of
Treasury Regulations Section 1.1502-6 (or any comparable provision under
state, local, or foreign law or regulation imposing several liability upon
members of a consolidated, combined, affiliated or unitary group) for any
Pre-Closing Period; provided, however, that clause (ii) shall apply only
with respect to such Taxes for which Seller or its Affiliates are also
liable;
(4) Taxes resulting from (i) the Tax Election (except to the
extent of the excess of the amount reflected on the Final Balance Sheet
pursuant to Section 10.3 over any amounts refunded to Seller by Purchaser
pursuant to Section 10.3), or (ii) Taxes imposed on any of the Subsidiaries
with respect to the portion of any Straddle Period ending on the Closing
Date (except to the extent of the excess of the amount reflected on the
Final Balance Sheet over any amounts refunded to Seller by Purchaser
pursuant to Section 10.3);
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(5) Without being limited by subparagraph (1) of this Section
11.1(a) and without regard to the fact that any one or more of the items
referred to in this Section 11.1(a)(5) may be disclosed in any of the
Schedules to this Agreement or in any documents included or referred to
herein, any action or failure to act in violation of any applicable ERISA
provision, in whole or in part, and any liabilities incurred, on or prior
to the Closing Date with respect to any Benefit Plan which any of the
Subsidiaries or Seller or any ERISA Affiliate has at any time maintained or
administered or to which any of the Subsidiaries or Seller or any ERISA
Affiliate has at any time contributed; other than any underfunding in any
funded Benefit Plans;
(6) Without being limited by subparagraph (1) of this Section
11.1(a), and without regard to the fact that any one or more of the items
reflected in this Section 11.1(a)(6) may be disclosed in the Schedules to
this Agreement or in any document included or referred to herein, any
liability or obligation of the Subsidiaries under any Environmental Law
resulting from or arising out of:
a. any generation, transportation, storage, treatment or
Release of any Hazardous Substances giving rise to liability
under any Environmental Law occurring on or prior to the Closing
Date (including without limitation those that allegedly result
in, or result in, any Release or treatment of Hazardous
Substances after the Closing Date) at (x) any of the Properties
or (y) any Offsite Facility which received Hazardous Substances
from any of the Subsidiaries prior to the Closing Date,
regardless of when liability is asserted;
b. any discharges to or from storm, ground or surface
waters or wetlands, and any air emissions or pollution giving
rise to liability under any Environmental Law, which result from
or are caused by activities, events, conditions or occurrences at
any of the Properties prior to the Closing Date;
c. the exposure of and resulting consequences to any
Persons, including, without limitation, employees of any of the
Subsidiaries, to any Hazardous Substances created, generated,
processed, handled or originating on or prior to the Closing Date
at any of the Properties giving rise to liability under any
Environmental Law; or
d. without limiting the generality of any of the foregoing
provisions of this subparagraph (6), any Environmental Claim as
a result of activities, events, conditions or occurrences at any
of the Properties prior to the Closing Date;
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(7) Without being limited by subparagraph (1) of this Section
11.1 (a) and without regard to the fact that any one or more of the items
referred to in this Section 11.1(a)(7) may be disclosed in any of the
Schedules to this Agreement or in any documents included or referred to
therein or may be otherwise known to Purchaser at the date of this
Agreement or on the Closing Date), any claim or liability for personal
injury, property damage or economic loss or other damages of any kind
whatsoever arising out of the Seller's or Subsidiaries' sale of products
containing dioxin or the exposure of Persons to silica, in each case, prior
to the Closing Date.
(8) Any claims or liability asserted against the Subsidiaries in
respect of payments received by any of them from OCF prior to its filing of
a petition under Chapter 11 of the Bankruptcy Code.
(b) For the purposes of this Agreement, Damages shall include,
without limitation: (i) reasonable attorneys', accountants',
investigators', consultants' and experts' fees and expenses, sustained or
incurred in connection with the defense or investigation of any Third Party
Claim; (ii) expenses (computed on an after-Tax basis) reasonably incurred
to compensate employees for any costs or ramifications associated with
compliance with (or lack of compliance with) the requirements of Section
401(a) or 401(k) of the Code; and (iii) costs and expenses reasonably
incurred and necessary to bring the Subsidiaries' respective assets and
business into compliance with Environmental Laws taking into account any
existing grandfather provisions (and which non-compliance occurred prior to
the Closing Date) including, without limitation:
(1) costs and expenses associated with all filings, court
orders, awards or directives issued in connection with such compliance;
(2) costs and expenses incurred for the protection of any of the
Subsidiaries, their respective employees, members of the public and the
environment, and for the prevention of harm to any of the Subsidiaries,
their respective employees, members of the public and the environment;
(3) costs and expenses resulting from the loss of use of a
Covered Property, including, without limitation, moving and relocation
costs;
(4) costs and expenses of additions to and modifications of the
Equipment and the Leased Premises;
(5) costs of sampling, monitoring or other testing programs and
laboratory equipment; and
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(6) all legal, engineering and consulting fees and expenses
related to any of the foregoing.
(c) Seller shall not be responsible to Purchaser with respect to any
losses, liabilities, damages or expenses as to which Purchaser is otherwise
entitled to indemnification pursuant to Section 11.1 (exclusive of Sections
11.1(a)(2), 11.1(a)(3), 11.1(a)(4), 11.1(a)(5) and 11.1(a)(7) thereof)
unless and until (i) the aggregate amount (taking into account the $10,000
baskets in the following subsection (ii)) of such losses, liabilities,
damages and expenses incurred by Purchaser exceeds Three Hundred Fifty
Thousand Dollars ($350,000) and then only with respect to the amount that
in the aggregate is in excess of Three Hundred Fifty Thousand Dollars
($350,000), and (ii) the amount of any one, individual loss, liability,
damage or expense incurred by Purchaser exceeds Ten Thousand Dollars
($10,000).
(d) Any claim for indemnification by Purchaser under Section 11.1 (a)
shall be asserted by written notice to Seller within the appropriate Claim
Period (as herein defined). Any matters as to which a claim has been
asserted under Section 11.1(a) within the Claim Period and which are
pending or unresolved before the end of the Claim Period shall continue to
be covered by Section 11.1(a) until finally terminated or resolved. For
the purposes of this Agreement, the relevant Claim Period with respect to
any claim for indemnification pursuant to this Section 11.1 shall be the
following:
(1) With respect to any claim under Section 11.1(a)(1) (other
than with respect to a breach of Sections 4.1, 4.2, 4.3 (except
subparagraph 4.3(c)), 4.5, 4.12(a), 4.13, 4.16 and 4.24), the Claim Period
shall be the period commencing on the Closing Date and ending on the last
day of the eighteenth full calendar month following the Closing Date.
(2) With respect to any claim under Section 11.1(a)(1) with
regard to a breach of Section 4.16 or any claim under Section 11(a)(3), (4)
or (5), the Claim Period shall be the period commencing on the Closing Date
and ending on the date which is six months after the expiration of the
underlying statutes of limitation.
(3) With respect to any claim under Section 11.1(a)(1) with
regard to a breach of Section 4.13, or any claim under Section 11.1(a)(6),
the Claim Period shall be the period commencing on the Closing Date and
ending on the date which is five years after the Closing Date.
(4) With regard to any claim under Section 11.1(a)(1) with
regard to a breach of Sections 4.1, 4.2, 4.3 (except subparagraph 4.3(c)),
4.5, 4.12(a) or 4.24, or with
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regard to a claim under Section 11.1(a)(7) or 11.1(a)(8), the Claim Period
shall be the period commencing on the Closing Date and shall continue
thereafter without limitation, provided any such claim shall be made no
later than six months after discovery thereof by Purchaser.
(e) Notwithstanding any provision in this Agreement to the contrary,
the maximum aggregate liability of Seller with respect to claims made
pursuant to Sections 11.1 (other than Sections 11.1(a)(2), 11.1(a)(3),
11.1(a)(4), 11.1(a)(5), 11.1(a)(7) and 11.1(a)(8) hereof) shall be 30% of
the Purchase Price. The maximum aggregate liability of Seller with respect
to claims made pursuant to the remaining provisions of Section 11.1(a)
shall not exceed the amount by which (x) the Purchase Price exceeds (y) all
amounts paid by Seller pursuant to the preceding sentence. In addition,
Seller shall not be liable with respect to:
(1) any contingent, speculative, non-quantifiable or punitive
damages, or any consequential, incidental or special damages not directly
resulting from the inaccuracy or breach (by way of example, the failure of
title to equipment or mineral properties would entitle Purchaser to damages
for the value of the equipment or mineral properties, plus reasonable
attorneys' fees and expenses if applicable, but not the speculative future
profits that might have been earned by the equipment or mineral properties;
(2) any losses, damages, liabilities or expenses with respect to
which Purchaser had a reasonable opportunity, but failed, in good faith to
mitigate its loss, including but not limited to its failure to use
commercially reasonable best efforts to recover under a policy of insurance
or to assert contractual rights, it being understood that this provision
shall not obligate Purchaser to purchase any insurance coverage it does not
currently have; or
(3) title to Real Estate, to the extent Seller has delivered
title insurance policies (or commitments therefor) conforming to the
requirements of Section 8.3(o); or
(4) any losses, damages, liabilities or expenses to the extent
arising from or caused by actions taken by Purchaser or its Affiliates or
their respective officers, directors or employees after the Closing.
(f) Purchaser shall not be entitled to indemnification with regard to
any matter set forth in Section 11.1(a), to the extent such matters (taken
together with all other matters of a similar nature) do not exceed the
amount of the reserves for such matter set forth on the Final Balance
Sheet.
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(g) In the event that Purchaser makes a claim for indemnification
under Section 11.1(a), Purchaser agrees to give Seller reasonable access to
the books, records and employees of Purchaser and the Subsidiaries in
connection with the matters for which indemnification is sought to the
extent that Seller reasonably deems such access to be necessary in
connection with their rights and obligations under this Article 11.
(h) For the purposes of this Agreement, "Third Party Claim" shall
mean any claim, action, suit, proceeding or like matter asserted or
threatened by a party other than the parties hereto, their Affiliates, and
each of their successors and permitted assigns, against any Indemnified
Party as to which any Indemnified Party is subject, and which claim is
reasonably expected to be subject to a party's obligations of
indemnification hereunder.
(i) For the purposes of clarification, any losses, damages,
diminution of value of assets or properties, liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial
proceedings or investigations, assessments, levies, fines, penalties, costs
and expenses which have been incurred or suffered by any of the
Subsidiaries and arise out of a state of facts constituting a breach of a
representation and warranty of Seller which give rise to an obligation of
Seller to indemnify Purchaser pursuant to the provisions of Section 11.1(a)
shall constitute Damages and shall be deemed to have been suffered by
Purchaser, provided, however, that Purchaser and Subsidiaries may not both
collect for such Damages.
11.2 Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and hold harmless Seller, its
directors, officers, employees, agents, and Affiliates from any loss,
damage, diminution of value of assets or properties, liability and expense
whatsoever (including, without limitation, reasonable attorneys' and expert
witness fees and litigation expenses) resulting to Seller, its directors,
officers, employees, agents, and Affiliates from:
(1) Any inaccuracy in any representation or warranty by
Purchaser contained in this Agreement (other than in Section 3.1 or 3.2) or
in any closing document delivered by Purchaser pursuant to the provisions
of this Agreement, whether or not involving a Third Party Claim;
(2) Any inaccuracy in any representation or warranty by
Purchaser contained in Sections 3.1 and 3.2, whether or not involving a
Third Party Claim;
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(3) Any breach of any covenant or agreement by Purchaser
contained in this Agreement or in any closing document delivered by
Purchaser pursuant to the provisions of this Agreement; or
(4) any acts or omissions of Purchaser or any of the
Subsidiaries or the operation of their respective businesses or assets for
any period after the Closing Date.
(5) any claim by OCF (or any receiver or trustee in bankruptcy
for OCF) for any return of the settlement payment pursuant to that certain
settlement X-X Xxxx and OCF dated November 17, 2000 and previously supplied
to Purchaser due to a breach after the Closing Date of X-X Xxxx'x supply
contract for kaolin to OCF's Jackson, Tennessee plant, which contract has
previously been supplied to Purchaser.
(b) Any claim for indemnification by Seller under Section 11.2 (a)(1)
shall be asserted by written notice to Purchaser within two (2) years after
the Closing Date. Any matters as to which a claim has been asserted under
Section 11.2(a)(1) within two (2) years after the Closing Date and which
are pending or unresolved as of the date which is two (2) years after the
Closing Date shall continue to be covered by Section 11.2(a)(1) until
finally terminated or resolved. With regard to any other claim under
Section 11.2, any claim for indemnification by Seller shall be asserted
after the Closing Date without limitation.
11.3 Exclusive Nature of Remedies. Except for the remedy of specific
performance and other equitable remedies and except to the extent that any of
the parties shall have engaged in fraud or a willful breach of this Agreement,
if the transactions contemplated by this Agreement are consummated the rights
and remedies set forth in this Article 11 shall be the exclusive rights or
remedies available to the persons to be indemnified with respect to claims
against any of the parties hereto or any of their respective Affiliates,
officers, directors and employees for which indemnification is authorized or
provided pursuant to this Article. Such limitation shall apply notwithstanding
that such claims are asserted by a cause of action or legal theory other than
breach of contract.
11.4 Cooperation. Subject to the provisions of Sections 11.6, and 11.7,
the party who is obligated to provide indemnification hereunder (the
"Indemnifying Party") shall have the right, at its own expense, to participate
in the defense of any Third Party Claim, and if said right is exercised, the
parties shall cooperate in the investigation and defense of said Third Party
Claim.
11.5 Subrogation. The Indemnifying Party shall not be entitled to require
that any action be brought against any other Person before action is brought
against it hereunder by the
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Indemnified Party and shall not be subrogated to any right of action until it
has paid in full or successfully defended against the Third Party Claim for
which indemnification is sought.
11.6 Third Party Claims other than Taxes and Environmental Matters.
Forthwith following the receipt of notice of a Third Party Claim, other than a
Third Party Claim with respect to Taxes (as to which Section 10.6 shall apply)
or environmental matters (as to which Section 11.7 shall apply), the party
receiving the notice of the Third Party Claim shall (i) notify the other party
of its existence setting forth with reasonable specificity the facts and
circumstances of which such party has received notice and (ii) if the party
giving such notice is a party who is entitled to receive indemnification
hereunder (an "Indemnified Party"), specifying the basis hereunder upon which
the Indemnified Party's claim for indemnification is asserted. The Indemnified
Party may, upon reasonable notice, tender the defense of a Third Party Claim to
the Indemnifying Party. If:
(a) the defense of a Third Party Claim is so tendered and within
thirty (30) days thereafter such tender is accepted without qualification
by the Indemnifying Party; or
(b) within thirty (30) days after the date on which written notice of
a Third Party Claim has been given pursuant to this Section 11.6, the
Indemnifying Party shall acknowledge in writing to the Indemnified Party
and without qualification its indemnification obligations as provided in
this Article 11 and assume the defense of the Third Party Claim;
then, except as hereinafter provided, the Indemnified Party shall not, and the
Indemnifying Party shall, have the right to contest, defend, litigate or settle
such Third Party Claim. The Indemnified Party shall have the right to be
represented by counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party provided that the
Indemnified Party shall be entitled to reimbursement therefor only if the
Indemnifying Party shall lose its right to contest, defend, litigate and settle
the Third Party Claim as herein provided. The Indemnifying Party shall lose its
right to defend and settle the Third Party Claim if it shall fail to diligently
contest the Third Party Claim. So long as the Indemnifying Party has not lost
its right and/or obligation to contest, defend, litigate and settle as herein
provided, the Indemnifying Party shall have the exclusive right to contest,
defend and litigate the Third Party Claim and shall have the exclusive right, in
its discretion exercised in good faith, and upon the advice of counsel, to
settle any such matter, either before or after the initiation of litigation, at
such time and upon such terms as it deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice of its
intention to settle shall be given to the Indemnified Party. All expenses
(including without limitation attorneys'
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fees) incurred by the Indemnifying Party in connection with the foregoing shall
be paid by the Indemnifying Party. Notwithstanding the foregoing, in connection
with any settlement negotiated by an Indemnifying Party, no Indemnified Party
shall be required by an Indemnifying Party to (x) enter into any settlement that
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the Indemnified Party of a release from all liability in respect
of such claim or litigation, (y) enter into any settlement that attributes by
its terms liability to the Indemnified Party or (z) consent to the entry of any
judgment that does not include as a term thereof a full dismissal of the
litigation or proceeding with prejudice. No failure by an Indemnifying Party to
acknowledge in writing its indemnification obligations under this Article 11
shall relieve it of such obligations to the extent they exist. If an
Indemnified Party is entitled to indemnification against a Third Party Claim,
and the Indemnifying Party fails to accept a tender of, or assume, the defense
of a Third Party Claim pursuant to this Section 11.6, or if, in accordance with
the foregoing, the Indemnifying Party shall lose its right to contest, defend,
litigate and settle such a Third Party Claim, the Indemnified Party shall have
the right, without prejudice to its right of indemnification hereunder, in its
discretion exercised in good faith and upon the advice of counsel, to contest,
defend and litigate such Third Party Claim, and may settle such Third Party
Claim, either before or after the initiation of litigation, at such time and
upon such terms as the Indemnified Party deems fair and reasonable, provided
that at least ten (10) days prior to any such settlement, written notice of its
intention to settle is given to the Indemnifying Party. If, pursuant to this
Section 11.6, the Indemnified Party so contests, defends, litigates or settles a
Third Party Claim, for which it is entitled to indemnification hereunder as
hereinabove provided, the Indemnified Party shall be reimbursed by the
Indemnifying Party for the reasonable attorneys' fees and other expenses of
defending, contesting, litigating and/or settling the Third Party Claim which
are incurred from time to time, forthwith following the presentation to the
Indemnifying Party of itemized bills for said attorneys' fees and other
expenses.
11.7 Environmental Claims. Upon Purchaser becoming aware of the occurrence
of any event or the existence of any state of facts in respect of which
Purchaser could seek indemnification with respect to a claim for breach of any
of the representations and warranties contained in Section 4.13 or a claim for
indemnification under Section 11.1(a)(6) (an "Environmental Claim"):
(a) Purchaser will give to Seller prompt notice specifying in
reasonable detail the basis for the Environmental Claim;
(b) Purchaser will promptly deliver to Seller copies of all draft and
final environmental reports, studies,
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surveys, test data and reports, assessments, cost estimates and all other
information available to it or any of the Subsidiaries relating to or
supporting the Environmental Claim;
(c) Purchaser will permit and will cause the relevant Subsidiary to
permit representatives of Seller (including advisors and consultants) to
visit and inspect from time to time any of the properties to which the
Environmental Claim relates, and to enter on such properties from time to
time for the purpose of conducting such environmental tests as Seller may
reasonably desire with respect to the Environmental Claim, all during
normal business hours and at Seller's expense; and
(d) Purchaser shall cause to be furnished to Seller drafts of all
proposed remediation plans not less than seven business days prior to the
date on which they are required to be submitted to any applicable
governmental authorities in order to give Seller a reasonable opportunity
to comment on such draft plans.
(e) With respect to any Environmental Claim involving proposed action
by Purchaser required by any Environmental Laws as in effect as of the
Closing to bring a Property or any Off-Site Facility into compliance with
such Environmental Laws (a "Response Action"), Purchaser shall use a
Reasonable Alternative. The "Reasonable Alternative" shall be limited
solely to that action which (A) is necessary to achieve compliance with
Environmental Laws as in effect at the time of Closing, (B) uses the most
cost-effective, commercially reasonable approach that complies with
Environmental Laws, and assumes the continued use of the Property as a
mining, processing or manufacturing facility, as applicable, and (C) to the
extent allowed by Environmental Laws uses institutional controls,
containment remedies or other remedies which do not require excavation and
disposal of Hazardous Substances, unless such controls, containment or
other remedy are reasonably expected to interfere with the continued use of
the Property as a mining, manufacturing or processing facility, as
applicable. Purchaser may, in selecting a Response Action, take into
consideration issues other than cost, including, but not limited to,
timing, difficulty of implementation, general acceptance of the proposed
technology and concerns expressed by interested parties; provided, however,
that Seller shall not be liable under this Agreement for any substantial
additional costs for a Response Action beyond the reasonably anticipated
costs of a Reasonable Alternative. In no event shall the Purchaser be
entitled to indemnity for any Response Action that exceeds applicable
clean-up levels established by or under applicable Environmental Laws as in
effect as of the Closing. All costs and expenses for such Response Action
shall be, to the extent possible, reasonable
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and customary charges in the location of the Property or Off-Site Facility
at issue for the type and kind of services to be rendered. In no event
shall Damages include Damages arising out of a Response Action that would
not have been required but for the shut-down of a Property by Purchaser.
11.8 Characterization of Indemnity Payments. Purchaser and Seller agree to
treat any payment made by Seller under this Article 11 to Purchaser as an
adjustment to the Purchase Price. However, in the event the IRS determines that
any such payment constitutes taxable gain or income to Purchaser or any of the
Subsidiaries, such payment shall be increased so that the payee receives, on an
after-Tax basis, the amount which would have been received had the payment not
resulted in taxable gain or income. In case payments to Purchaser through
application to Purchaser's or the Subsidiaries' assets may be deducted for Tax
purposes, the amount of Seller's indemnification obligation shall be reduced by
the amount equal to the net saving in Taxes resulting from such deduction offer
taking into account the Tax consequences to the Purchaser of the receipt of the
indemnification payment.
11.9 Representations at Closing. For the purposes of this Article 11, each
party shall be deemed to have remade all of its representations and warranties
contained in this Agreement at the Closing (as amended pursuant to Article 4, in
the case of Seller) with the same effect as if originally made at the Closing.
ARTICLE 12
TERMINATION
12.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be terminated and abandoned:
(a) in writing by mutual consent of the parties hereto; or
(b) by Seller, if, as of January 31, 2001, the closing conditions set
forth in Article 7 to the performance of the obligations of the Seller
shall not have been fulfilled and shall not have been waived by Seller; or
(c) by Purchaser, if, as of a date which is ninety (90) days after
the date hereof, the closing conditions set forth in Article 6 to the
performance of the obligations of Purchaser shall not have been fulfilled
and shall not have been waived by Purchaser.
12.2 Effect of Termination. In the event of any termination or abandonment
of this Agreement pursuant to Section 12.1, no party (or any of its affiliates,
parents, officers, directors or employees) shall have any liability or further
obligation to any other party to this Agreement, except that (i) nothing herein
will relieve any party from liability for fraud or any willful
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breach of this Agreement, (ii) Section 13.9 shall remain in full force and
effect, and (iii) the obligations of the parties under the Confidentiality
Letter shall remain in full force and effect. Notwithstanding anything to the
contrary set forth in this Agreement, the Execution Payment shall be refunded to
Purchaser by Escrowee upon a termination or abandonment only if (a) during the
period from the date of this Agreement to the date of such termination or
abandonment, there occurred a condition or fact which has, or is reasonably
expected to result in, a Material Adverse Effect, (b) Seller has committed a
breach of this Agreement that is so substantial as to deny Purchaser a
fundamental portion of the benefits of the transactions contemplated by this
Agreement (it being understood by the parties that failure of the parties to
obtain title insurance on all parcels of Real Estate, consents to the assignment
of a minority of the Contracts or similar items does not constitute grounds for
a refund of the Execution Payment), (c) a court or governmental or regulatory
authority of competent jurisdiction shall have entered an order which enjoins
the carrying out of the transaction contemplated by this Agreement nor shall any
bona fide third party not an Affiliate of Purchaser have pending in a court of
applicable jurisdiction, on the basis of a bona fide, non-frivolous claim, a
petition for an order enjoining the carrying out of the transactions
contemplated by this Agreement, the waiting period applicable to the
transactions contemplated hereby under the HSR Act has not expired, even though
Purchaser has been duly diligent in fulfilling its obligations pursuant to
Section 5.4(a), (e) Seller's counsels shall be unwilling or unable to deliver
the opinions required at the Closing by Section 6.7 of this Agreement, it being
understood that any exception to the opinions required thereby which does not
constitute a Material Adverse Effect or is not so substantial as to deny
Purchaser a fundamental portion of the benefits of the Transaction contemplated
by this Agreement, or (f) Seller shall not have delivered the Audited Financial
Statements and the 2000 Audit or the Audited Financial Statements or the 2000
Audit shall not satisfy the requirements of Section 6.9 or 6.10, respectively.
ARTICLE 13
MISCELLANEOUS
13.1 Fees. Seller shall pay all fees and expenses due to Warrior, a
division of Standard Bank London, Limited by reason of this Agreement.
13.2 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases and other publicity concerning this transaction
shall be made only with the prior agreement of Seller and Purchaser. Seller and
Purchaser shall use reasonable efforts to consult with each other with respect
to the content of any such required press release or other publicity.
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13.3 Amendments. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all of the parties hereto or, in
case of an asserted waiver, signed by the party against which enforcement of the
waiver is sought.
13.4 Assignment. Neither this Agreement nor any right created hereby shall
be assignable by any party hereto, except that at or prior to the Closing,
Purchaser may assign its rights and delegate its duties under this Agreement to
a subsidiary corporation and may assign its rights under this Agreement to its
lenders for collateral security purposes, and after the Closing, Purchaser may
assign its rights and delegate its duties under this Agreement to any third
party. No such assignment shall relieve Purchaser of any of its liabilities
under this Agreement or Parent of its obligations under the attached guaranty.
13.5 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party. A breach of any
representation, warranty or covenant shall not be affected by the fact that a
more general or more specific representation, warranty or covenant was not also
breached.
13.6 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Nothing in this Agreement, express or implied, shall confer on any
Person other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except that the Indemnified Employees shall be third
party beneficiaries of Section 9.12.
13.7 Notice. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, by delivering the same in person, by reputable courier or by
facsimile or electronic transmission. Such notice shall be deemed received on
the date on which it is hand-delivered or otherwise confirmed to have been
received on the third business day following the date on which it is so mailed.
For purposes of notice, the addresses of the parties shall be:
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If to Seller: Hecla Mining Company
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxx, Xxxx & Xxxxx LLC
00 Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: Zemex U.S. Corporation
Canada Trust Tower
BCE Place
000 Xxx Xxxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Altheimer & Xxxx
00 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Any party may change its address for notice by written notice given to the other
parties in accordance with this Agreement.
13.8 Entire Agreement. This Agreement and the exhibits and schedules
hereto supersede all prior agreements and understandings relating to the subject
matter hereof, provided that the obligations of the parties under the
Confidentiality Letter shall survive the execution and delivery of this
Agreement.
13.9 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' fees).
13.10 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall
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not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
13.11 Survival of Representations and Warranties. Each of the
representations, warranties, obligations, covenants and agreements of the
parties included or provided for herein shall survive the consummation of the
transactions contemplated by this Agreement, notwithstanding any investigation
heretofore or hereafter made by any of them or on behalf of any of them;
provided, however, that all claims by Purchaser against Seller pursuant to
Article 11 shall be made subject to the time limitations set forth in Section
11.1 and all claims by Seller against Purchaser pursuant to Article 11 shall be
subject to the time limitation set forth in Section 11.2.
13.12 Governing Law and Venue. THE PARTIES ACKNOWLEDGE AND AGREE THAT
THIS AGREEMENT AND THE OBLIGATIONS AND UNDERTAKINGS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE (WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF). IF ANY
ACTION IS BROUGHT TO ENFORCE OR INTERPRET THIS AGREEMENT, EXCLUSIVE VENUE FOR
SUCH ACTION SHALL BE IN DELAWARE AND THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN WILMINGTON, DELAWARE FOR SUCH PURPOSE.
13.13 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
13.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
13.15 Number and Gender. Whenever the context requires, references in
this Agreement to the singular number shall include the plural, the plural
number shall include the singular and words denoting gender shall include the
masculine, feminine and neuter.
13.16 Facsimile Transmissions. This Agreement and all agreements,
documents and certificates delivered pursuant to this Agreement or in connection
with the transactions consummated pursuant to this Agreement may be executed by
any party and transmitted by such party to any other party or parties by
facsimile, and any such document shall be deemed to have full force and effect
as if the facsimile signature or signatures on such documents were originals.
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13.17 Further Assurances. Any time after the Closing, Seller and
Purchaser will promptly execute, acknowledge and deliver any other assurances or
documents reasonably requested by Purchaser or Seller, as the case may be, to
satisfy or in connection with any party's obligations hereunder or to consummate
or implement the transactions and agreements contemplated hereby.
13.18 No Admissions. This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person, other than the parties
hereto and such assigns, any legal or equitable rights hereunder. (except that
the Indemnified Employees shall be third party beneficiaries of Section 9.12).
All references herein to the enforceability of agreements with third parties,
the existence or non-existence of third-party rights, the absence of breaches or
defaults by third parties, or similar matters or statements, are intended only
to allocate rights and risks between the Parties and were not intended to be
admissions against interests, give rise to any inference or proof of accuracy,
be admissible against any Party by any non-Party, or give rise to any claim or
benefit to any non-Party.
13.19 Dollars. All references herein to "$" shall be U.S. dollars
unless otherwise expressly indicated N$ or R$.
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IN WITNESS WHEREOF, the parties hereto, have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
SELLER HECLA MINING COMPANY
By: /s/ J. Gary Childress
------------------------------------
Title: Vice President - Industrial
Minerals
PURCHASER ZEMEX U.S. CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Title: Vice President, Chief
Financial Officer and
Corporate Secretary
Execution Copy of Stock Purchase Agreement
