STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated January __,
1999, between ISG Resources, Inc., a Utah corporation ("Purchaser") 11 and Xxxxx
X. Xxxxx and Xxxxx X. Xxxxx, individuals residing in the state of Texas
(individually a "Seller" and collectively the "Sellers").
RECITALS
The Sellers own and desire to sell to Purchaser, and Purchaser desires
to purchase from the Sellers, all of the issued and outstanding shares of
capital stock of J. Xxxxxx Xxxxx Interests, Inc., d/b/a Best Masonry & Tool
Supply (the "Company"), a Texas corporation.
The issued and outstanding capital stock of the Company is referred to
herein as the "Purchased Stock."
Unless otherwise defined in this Agreement, the capitalized terms used
in this, Agreement have the meanings given in Article VIII below.
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
1 SALE OF PURCHASED STOCK; CLOSING
1.1 Purchase and Sale. On the terms and conditions set forth in this
Agreement, the Sellers will sell to Purchaser, and Purchaser will purchase from
the Sellers, the Purchased Stock.
1.2 Consideration.
1.2.1 The consideration (the "Consideration") for the Purchased Stock
is comprised of: (i) $13,300,000.00 IN CASH, subject to increase (riot decrease)
as set forth in Section 1.2.2 below (the "Deferred Consideration"); and (ii) as
"Additional Consideration", the Purchaser shall also pay to the Sellers at
closing the sum of $2,400,000.00 IN CASH to retire all of the indebtedness of
the Company due to the Sellers (the "Shareholder Debt").
1.2.2 The consideration will increase (and thus, the amount of the
Deferred Consideration is determined), dollar for dollar, equal to the amount of
increase in the Company's net book value (the "Net Book Value") (defined as
total assets less liabilities) during the period from July 31, 1998, to the
Closing Date (the amount of the Additional Consideration paid to retire the
Shareholder Debt shall not be included in the Net Book Value calculation on
either date). To determine whether an adjustment is appropriate, Sellers shall
(within thirty days of the Closing Date) provide to Purchaser with financial
statements of the Company that are prepared in a manner consistent with the
determination of the Net Book Value as of July 31, 1998, indicating the Net Book
Value as of the Closing Date (the "Sellers' Calculation") . Purchaser shall make
the Company records available, as necessary, to make such calculation. If
Purchaser (by notice to Sellers within thirty (30) days of receipt of Sellers'
Calculation) disagrees with the Sellers' Calculation ("Sellers' Objection
Notice"), then Purchaser and the Sellers shall submit the matter to Ernst &
Young and Xx. Xxxxxx X. Xxxxx for resolution in accordance with GAAP on a basis
consistent with Sellers' Financial Statements. If, within thirty (30) days of
the dispute being submitted to them, Ernst & Young and Xx. Xxxxx are unable to
agree as to how the dispute should be resolved, then the parties shall submit
the matter to Arbitration as provided in Article 10 of this Agreement. If Ernst
& Young and Xx. Xxxxx are able to agree as to how the dispute should be
resolved, they will jointly prepare and deliver a report to all parties which
will detail whether a Consideration adjustment is necessary. The report will be
final and binding on both parties, absent fraud or clear error. If Seller fails
to furnish Sellers' Calculations within 45 days following the Closing, subject
to reasonable extensions due to the lack of Purchaser's cooperation, Sellers'
Calculation is deemed to be $350,000.00, subject to Purchaser timely objecting
to same pursuant to Sellers' Objection Notice.
1.3 Closing. The Closing (the "Closing") of the purchase and sale of
the Purchased Stock will take place at the offices of Sellers' attorney, Xxxxxxx
X. Xxxxxxxxxx, Esquire, Xxx Xxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, on the
date hereof (the "Closing Date").
1.4 Payment of Consideration and Additional Consideration. At the
Closing, Purchaser will pay the Consideration and the Additional Consideration
to the Sellers by wire transfer to such account as the Sellers may direct by
written notice delivered to Purchaser by the Sellers before the Closing Date.
Simultaneously, the Sellers will sell and convey to Purchaser the Purchased
Stock free and clear of all Liens, by delivering to Purchaser a stock
certificate, registered in the name of Purchaser, representing the Purchased
Stock. At the Closing, the parties shall also deliver the certificates,
documents and instruments to be delivered pursuant to this Agreement.
1.5 Deferred Consideration. If the Purchaser fails to timely give
notice to Seller that it disagrees with the Sellers' Calculation, then within
thirty (30) days after delivery of the Sellers' Calculation (or determination
pursuant to Section 1.2), the Purchaser will deliver to the sellers cash in the
amount of the adjustment specified therein. If the Purchaser timely disagrees
with the Sellers' Calculation, the Purchaser will deliver to the Sellers cash
equal to the undisputed portion of the adjustment specified in the report, if
any. The Purchaser shall also pay interest, at the rate of eight percent (8%)
per annum, on the unpaid principal amount of the Deferred Consideration from the
Closing Date to the earlier of the date of payment or forty-five (45) days
following the date of the Closing, and thereafter, until paid, the unpaid
balance will accrue interest at the rate of eighteen (18%) percent per annum,
but not to exceed the maximum lawful rate.
1.6 Payment of the Deferred Consideration. The first $350,000 of the
Deferred consideration (to the extent the proper amount of the Deferred
Consideration is sufficient) shall be paid equally to Xxxxx Management Services,
Inc. and Tomco Management Services, Inc., both Texas corporations owned by the
Sellers, as consideration for the termination of existing management contracts
with those management companies deemed terminated as of the Closing Dates, and
the balance, if any, paid to the Sellers. Payment of the Additional
Consideration shall not reduce the amount of the Deferred Consideration payable
to Seller.
ARTICLE II
2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to Purchaser that: (i) the "Seller
Financial Statements" described in section 2.4 are materially accurate and
complete, and prepared in accordance with generally accepted accounting
principles (11GAAP11); discrepancy or difference between the Seller Financial
Statements and the Ernst & Young findings are not the subject of any warranty or
representation on the part of Sellers and Purchaser acquires the Purchased Stock
subject to any possible difference (and the Sellers shall not be deemed to be in
breach of any representation or warranty set forth herein due to such
differences or any resulting change in the statements of operations or financial
position of the Company as a result of the Ernst & Young findings) ; i: ii) the
Company has no "Indebtedness" other than as set forth on the Seller Financial
Statements or the "Interim Statements" (and similar type obligations through the
Closing Date) and the Shareholder Debt has been satisfied; (iii) the Company is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Texas and has full corporate power and authority to conduct
its business; (iv) the Company is duly qualified, licensed and admitted to do
business in Texas and Georgia; (v) the Purchased Stock consists of the following
number of shares of capital stock: 1,000 shares of common stock, par value
($1.00) per share; (vi) the Sellers have full authority to enter into this
Agreement, to perform their obligations hereunder and to consummate the
transactions contemplated hereby; (vii) this Agreement has been duly and validly
executed and delivered by the Sellers and constitutes the legal, valid and
binding obligations of the Sellers, enforceable against them in accordance with
its terms; (viii) the Sellers have delivered to Purchaser true and complete
copies of the certificate or articles of incorporation and by-laws (or other
comparable corporate charter documents) of the Company, including all amendments
thereto effected through the Closing Date (the "Initial Corporate Documents");
and (ix) the Purchased Stock constitutes all of the issued and outstanding
shares of capital stock of the Company. The shares of Purchased Stock are
validly issued, fully paid and nonassessable, issued in compliance with all
applicable Laws, and no additional shares of capital stock have been reserved
for issuance. There are no outstanding Options with respect to the stock of the
Company or agreements, arrangements or understandings to issue options with
respect to the Company, nor are there any preemptive rights or agreements,
arrangements or understandings to issue preemptive rights with respect to the
issuance or sale of the capital stock of the Company. The Sellers are the record
and beneficial owners of all of the shares of Purchased Stock, free and clear of
all Liens. The delivery to Purchaser of" the certificates representing the
Purchased Stock will transfer to Purchaser good and valid title to all shares of
the Purchased Stock, free and clear of all Liens, and written restrictions that
the Sellers and/or the Company may be party to, and after such transfer the
Purchased Stock, in the hands of Purchaser, will have been duly authorized,
validly issued, fully paid and nonassessable. From and after the Closing, no
Seller nor any other Person (other than the Purchaser or its successors or
assigns, or any person claiming by or through them), except to the extent
attributable, directly or indirectly, to Purchaser, will, as of the Closing
Date, have any rights whatsoever with respect to the Purchased Stock or to any
other securities of the Company.
In addition, Sellers, to their actual knowledge, (Sellers having no
duty or obligation of independent investigation of any kind) , hereby represent
and warrant to Purchaser as follows with respect to the following acts or
occurrences during the last three years (or such shorter applicable period as
hereafter provided) subject to the limitations of Section 2.26:
2.1 No Conflicts. As of the Closing Date, the execution and delivery by
the Sellers of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, except to the extent attributable, directly or
indirectly, to Purchaser or its successors or assigns, or due to any Laws or
Orders applicable to Purchaser exclusively arising due to this transaction:
2.1.1 conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Initial Corporate Documents;
2.1.2 conflict with or result in a violation or breach of any term or
provision of any Laws or Order applicable to any of the Sellers or to the
Company, or any of their Assets; or
2.1.3 except as disclosed in Section 2.1 of the Disclosure Schedule,
(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require any
of the Sellers or the Company to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or
imposition of any Lien upon the Company or any of its Assets under, any written
Tiaterial contract or License to which any of the Sellers or the Company is a
party or by which any of their respective Assets is bound, except for such
conflicts, violations, breaches, defaults, consents, approvals, actions,
filings, notices ! terminations, cancellations, accelerations, modifications,
additional rights or entitlements or Liens that, individually or in the
aggregate, (A) are not having and could not be reasonably expected to have a
material adverse effect on the business or condition of the Company, and (B)
could not be reasonably expected to have a material adverse effect on the
validity or enforceability of this Agreement or on the ability of any of the
Sellers or the Company to perform its obligations hereunder.
2.2 Governmental Approvals and Filings. Except as disclosed in Section
2.2 of the Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority on the part of the Sellers
or the Company is required in connection with the execution, delivery and
performance of this Agreement or the consummation of transactions contemplated
herein, except to the extent attributable!, directly or indirectly, to
Purchaser, or any Laws or Orders applicable to Purchaser. Notwithstanding any
provision to the contrary, the Sellers make no representation whatsoever
regarding the necessity of a filing under the Xxxx- Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 : . as amended, or any similar or related Laws or
orders, and Purchaser shall indemnify, defend and hold Sellers harmless from any
claim relating thereto.
2.3 Books and Records. The minute books and other similar records of
the Company provided to Purchaser upon execution of this Agreement contain a
true and materially accurate record of the xxxxxx set forth therein.
2.4 Financial Statements. The Sellers have caused the Company to
furnish to Purchaser true and correct copies of (i) the reviewed but Unaudited
Financial Statements of the Company for the periods ending July 31, 1997 and
July 31, 1998 prepared in accordance with GAAP (the "Seller Financial
Statements") and (ii) the unaudited internal balance sheets and statements of
operations certified as materially true and correct by the chief financial
officer of the Company for the period from August 1, 1998 through November 30,
1998 (the "Interim Statements") . The Seller Financial Statements and the
Interim Financial Statements (both of which are attached as Exhibit A) fairly
represent the financial condition and results of operations of the Company as of
their respective dates and for the periods referred to, all in accordance with
GAAP. The Company engaged Ernst & Young to perform the Company's certain due
diligence procedures with respect to financial records and other matters prior
to the Closing, at Purchaser's request and expense (and the Purchaser shall pay
the fees associated with such review). Sellers make no representation or
warranty regarding the findings of' Ernst & Young and advise Purchaser that the
results thereof may be in conflict with the aforesaid books and records of the
Company and the Sellers will have no liability for those differences. Further,
the Sellers represent and warrant that, as of the Closing Date, the Net Book
Value of the Company shall be at least equal to the Net Book Value of the
Company as of July 31, 1998 (per GAAP).
2.5 Absence of Changes. Since July 31, 1998, sellers have not received
written notice that there has been any undisclosed material adverse change or
event or development, which, individually or together with other such events,
including any positive related events, could reasonably be expected to result in
a material adverse change, in the business or condition of the Company as of the
Closing. In addition, except as expressly contemplated hereby, including any
matter covered by the preceding sentence, and except as otherwise disclosed by
the books and records of the Company (the Seller Financial Statements and the
Interim Statements being deemed to be part of the books and records of the
Company) or otherwise in section 2.5 of the Disclosure Schedule, Sellers have
received no written notice since July 31, 1998:
2.5.1 any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock (or other equity interests)
of the Company or any direct or indirect redemption, purchase or other
acquisition by the Company of any such capital stock (or other equity interests)
of the Company;
2.5.2 any authorization, issuance, sale or other disposition by the
Company of any shares of its capital stock (or other equity interests) , or any
modification or amendment of any right of any holder of any outstanding shares
of capital stock (or other equity interests) of the Company;
2.5.3 any uninsured physical damage, destruction or other casualty loss
(not covered by insurance) affecting any of the Assets of the Company in an
aggregate amount exceeding $50,000;
2.5.4 any undisclosed capital expenditures or commitments for additions
to property, plant or equipment of the Company constituting capital assets in an
aggregate amount exceeding $100,000;
2.5.5 any transactions by the Company with any of its officers,
directors, stockholders or Affiliates, involving in the aggregate more than
$50,000 other than pursuant to a Contract or arrangement in effect on July 31,
1998 and disclosed to Purchaser pursuant to Section 2.13.1.6. Contracts of
employment are verbal except for those listed pursuant to Section 2.13.1 of the
Disclosure Schedule; or
2.5.6 any entering into of a binding agreement to do or engage in any
of the foregoing for the time period indicated above.
2.6 Taxes.
2.6.1 Except as disclosed in Section 2.6 of the Disclosure Schedule and
subject to Section 6.3 of this Agreement, all Tax Returns required to have been
filed by or with respect to the Company with any Taxing Authority have been duly
and timely filed, and each such Tax Return correctly and completely reflects the
income, franchise or other Tax liability and all other information required to
be reported thereon.
The Company is not and has never been a member of any affiliated,
combined, consolidated, unitary or similar group with respect to the filing of
tax returns with respect to any Taxing Authority. All income taxes owed by the
Company (whether or not shown on any Tax Return) have been paid through the
period ending July 31, 1998. All monies required to be withheld by the Company
from employees, independent contractors, creditors or other third parties for
Taxes have been collected or withheld through the period ending July 31, 1998,
and either duly and timely paid to the appropriate Taxing Authority or (if not
yet due for payment) set aside in accounts for such purposes (Purchaser agreeing
to pay same, as due for the period indicated above). The Company has no
liability for Taxes for any Person other than the Company, except as shown in
the Seller Financial Statements or the Interim Statements.
2.6. 2 The taxes due as of July 31, 1998, have been paid.
2.6.3 The Company is not a party to any existing written agreement
extending, or having the effect of extending, the time within which to file any
Tax Return or the period of assessment or collection of any Taxes. The Company
has not received any written ruling of a Taxing Authority related to Taxes or
entered into any written and legally binding agreement with a Taxing Authority
relating to Taxes.
2.6.4 Except as set forth in Section 2.6.4 (being the IRS disputed
proposed penalty of $2,000), the Sellers have not received written notice since
January 1, 1996 that any Taxing Authority is asserting against the Company any
deficiency, claim or liability for additional Taxes or any adjustment of Taxes.
The Federal income Tax Returns of the Company for the 3-year period ending July
31, 1998 disclose (in accordance with Section 6662(d) (2) (B) of the Code) all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of section 6662(d) of the Code. The
Sellers have delivered to Purchaser complete and correct copies of all federal,
state, local and foreign income Tax Returns filed by or with respect to, and all
Tax examination reports and statements of deficiencies assessed against or
agreed to by, the Company since July 31, 1996. The Sellers have not received
written notice after January 1, 1996, that there are any Liens for Taxes upon
the Assets of the Company.
2.6.5 Except as arising in the ordinary course of business or as
otherwise disclosed in section 2.6 of the Disclosure Schedule, or otherwise
disclosed to Purchaser, the Sellers have not received written notice since
January 1, 1996 that the Company is (i) a party to or bound by any obligations
under any tax sharing, tax indemnity or similar agreement or arrangement, (ii)
subject to any election under sections 338(e) or 341(f) of the Code or the
regulations thereunder, (iii) required to make, any adjustment under section 481
of the Code (or any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise, (iv) subject to any
agreement or arrangement that could result separately or in the aggregate in the
payment of any "excess parachute payments" within the meaning of section 280G of
the Code, (v) has ever been, a "United States real property holding corporation"
within the meaning of section 897 (c) (2) of the Code, (vi) a party to any "safe
harbor lease" that is subject to the provisions of section 168(f)(8) of the
Internal Revenue Code as in effect prior to the Tax Reform Act of 1986 or to any
"long-term contract" within the meaning of section 460 of the Code, (vii) a
party to any joint venture, partnership or other arrangement that is treated as
a partnership for federal income Tax purposes, or (viii) a member of any
affiliated, consolidated, combined, unitary or similar group for any Tax
purpose.
2.7 Legal Proceedings.
2.7. 1 Except as disclosed in Section 2.7 of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) :
2.7.1.1 Sellers have not received any written notice that there are any
material lawsuits, actions or proceedings pending or threatened, against the
Company, or any of its Assets which (A) could reasonably be expected to result
in the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal any of the transactions contemplated by this Agreement or
otherwise result in a material diminution of the benefits contemplated by this
Agreement to Purchaser, or (B) if determined adversely to the Company, could
reasonably be expected to result in (x) any injunction or other equitable relief
against the Company, or (y) Losses by the Company, individually or in the
aggregate with Losses in respect of other such actions or proceedings, exceeding
$50,000 (any such claim less than $50,000 not being deemed to be material);
2.7.1.2 The Sellers have not received written notice during the last
six months of any material defects, dangerous or substandard conditions in the
products or materials manufactured, sold, distributed, or to be manufactured,
sold or distributed by the Company that could cause substantial bodily injury,
sickness, disease, death, or damage to property, or result in loss of use of
property, or any claim, suit, demand for arbitration or notice seeking damages
for bodily injury, sickness, disease, death, or damage to property, or loss of
use or property.
2.7.2 Section 2.7 of the Disclosure Schedule sets forth all known
actions or proceedings relating to or affecting the Company or its Assets during
the period commencing January 1, 1996, and ending upon the Closing Date.
2.8 Compliance with Laws and Orders. Except as disclosed in Section 2.8
of the Disclosure Schedule or otherwise, the Sellers have not received since
January 1, 1996 any written notice (or any actual verbal notice from a reliable
source within the 90 day period preceding the date of this Agreement) that the
Company is or has been at any time since such date, in material violation of or
in default under, any Law or order applicable to the Company or any of its
Assets which remains uncured. In furtherance and not limitation of the
foregoing, neither the Sellers nor the Company has violated any federal or state
securities law in connection with the offer, sale or purchase of any securities
prior to this Agreement (and unrelated to this transaction).
2.9 Benefit Plans; ERISA. All active Benefit Plans relating to the
Company are listed in Section 2.9 of the Disclosure Schedule, and copies of al:_
documentation relating to such Benefit Plans during the last three years have
been delivered or made available to Purchaser (including copies of written
Benefit Plans, written descriptions of oral Benefit Plans, summary plan
descriptions, trust agreements, the three most recent annual returns, employee
communications, and IRS determination letters). Except as disclosed in Section
2.9 of the Disclosure Schedule, the Sellers have not received written notice of
any uncured violations of any of the following since January 1, 1996:
2.9.1 each Benefit Plan, and the administration thereof, complies, and
has at all times complied, with the requirements of all applicable Law,
including ERISA and the Code, and each Benefit Plan intended to qualify under
section 401(a) of the Code has been so qualified, and each trust which forms a
part of any such plan has at all times since its adoption been tax-exempt under
section 501(a) of the Code;
2.9.2 no Benefit Plan has incurred any "accumulated funding deficiency"
within the meaning of section 302 of ERISA or section 412 of the Code;
2.9.3 no direct, contingent or secondary liability has been incurred or
is expected to be incurred by the Company under Title IV of ERISA to any party
with respect to any Benefit Plan, or with respect to any other Plan presently or
heretofore maintained or contributed to by any ERISA affiliate;
2. 9. 4 the "amount of unfunded benefit liabilities" within the meaning
of section 4001(a) (18) of ERISA does not exceed zero with respect to any
Benefit Plan subject to Title IV of ERISA;
2. 9. 5 no "reportable event" (within the meaning of section 4043 of
ERISA.) has occurred with respect to any Benefit Plan or any Plan maintained by
an ERISA affiliate;
2.9.6 no Benefit Plan is a multiemployer plan within the meaning of
section 3(37) of ERISA;
2.9.7 Neither the Company nor any ERISA affiliate has incurred any
liability for any Tax imposed under section 4971 through 4980B of the Code or
civil liability under section 502(i) or (1) of ERISA;
2.9.8 no benefit under any Benefit Plan, including, without limitation,
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested or payable by reason of any transaction contemplated
under this Agreement;
2 .9 no Tax has been incurred under section 511 of the Code with
respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto);
2.9.10 no Benefit Plan provides health or death benefit coverage beyond
the termination of an employee's employment, except as required by Part 6 of
Subtitle B of Title I of ERISA or section 4980B of the Code or any state laws
requiring continuation of benefits coverage following termination of employment;
2.9.11 no suit, actions or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been brought
with respect to any Benefit Plan and there are not facts or circumstances known
to any the Sellers or the Company that could reasonably be expected to give rise
to any such suit, action or other litigation; and
2.9.12 all known contributions to Benefit Plans that were required to
be made under such Benefit Plans prior to December 31, 1998 have been made, and
all known benefits accrued under any unfunded Benefit Plan have been paid,
accrued or otherwise adequately reserved in accordance with GAAP, all of which
accruals under unfunded Benefit Plans are as disclosed in Section 2.9 of the
Disclosure Schedule, and the Company has performed all material obligations
required to be performed under all Benefit Plans.
2.10 Real Property.
2.10.1 Section 2.10.1 of the Disclosure Schedule contains a true and
correct list of (i) each parcel of real property owned (the "Owned Real
Property") by the Company, (ii) each parcel of real property leased or subleased
or otherwise occupied by the Company as tenant or subtenant (the "Leased Real
Property"; together with the owned Real Property, the "Real Property") together
with a true and correct list of all such leases, subleases or other similar
agreements and any amendments, modifications or extensions thereto (the "Real
Property Leases") , and (iii) all Liens relating to or affecting any parcel of
Real Property, in each case identifying the owner, lessor and lessee thereof,
except for liens in favor of Sellers which will be satisfied as of the Closing
as a result of the retirement of Shareholder Debt as contemplated hereby.
Notwithstanding any provision to the contrary, all Real Property which is owned
or leased is subject to all matters of record applicable thereto (other than
mortgage-type liens) , and matters that a correct survey thereof would reflect.
2.10.2 Subject to Section 2.10.1, the Company has good and marketable
title to its Owned Real Property, free and clear of all Liens, other than as
specifically listed in Section 2.10.2 of the Disclosure Schedule or matters of
record (other than mortgage-type liens) or that a survey of such property would
reflect.
2.10.3 Subject to the terms of its leases (and Section 2.10.1), the
Company has a valid and subsisting leasehold estate in and the right to quiet
enjoyment to the Leased Real Property for the full term of the lease thereof.
Except as set forth in Section 2.10.3 of the Disclosure Schedule, the Sellers
have not received any specific notice of any uncured default (or any condition
or event which, after notice or lapse of time or both, would constitute a
default) thereunder which is presently uncured. The Company has not assigned,
sublet, transferred, hypothecated or otherwise disposed of its interest in any
Real Property Lease, unless; disclosed by the Sellers to Purchaser.
Notwithstanding the foregoing or anything to the contrary, Sellers make no
representation or warranty regarding (i) oral leases including, without
limitation, any representation or warranty as their enforceability; or (ii) a
master lease where the Company is a sublessee.
2.10.4 The Sellers shall deliver to Purchaser, to the extent reasonably
available, upon the execution of this Agreement true and complete copies of all
(i) title policies, mortgages, deeds of trust, deeds, leases, easements,
restrictive covenants, certificates of occupancy, and similar documents, and all
amendments thereto concerning the Owned Real Property, and (ii) Real Property
Leases and all other documents referred to in clause (i) of this paragraph with
respect to the Leased Real Property.
2.10.5 Except as disclosed in Section 2.10.5 of the Disclosure
Schedule, have not received written notice of any pending or threatened
condemnation or appropriation proceedings, pending or threatened against Real
Property or the improvements thereon.
2.10.6 The Sellers have not received written notice of any specific
written claim, action or proceeding, actual or threatened in writing, against
the Company or the Real Property by any Person which would materially affect the
future use, occupancy or value of the Real Property or any part thereof.
2.11 Tangible Personal Property. Except as disclosed in Section 2.11 of
the Disclosure Schedule, the company is in possession of and has good and
marketable title to, or has valid leasehold interests in or valid rights under
contract to use, all tangible personal property used in the conduct of its
business, during the last 12 months, including all tangible personal property
reflected on the Seller Financial Statements and tangible personal property
acquired since July 31, 1998 other than (i) property disposed of since such date
in the ordinary course of business consistent with past practice and the terms
of this Agreement, or otherwise disclosed. All such tangible personal property
is free and clear of all Liens, other than Liens disclosed in Section 2.13 of
the Disclosure Schedule.
2.12 Intellectual Property Rights. The Sellers have not received
written notice after January 1, 1996 that the Company is infringing on any
intellectual property of any Person, and no litigation is pending and no claim
has been made or, to the knowledge of any the Sellers or of the Company, has
been threatened to such effect. The Company owns no patents, trademarks or other
intellectual property (other than common law rights, trade secrets, and assumed
name reservations) . If it is subsequently determined that the Sellers, or
either of them, own any intellectual property which relates to the business'
conducted by the Company, the Sellers shall assign their respective right, title
and interest in and to such intellectual property to the Purchaser or its
designee.
2.13 Contracts.
2.13.1 Section 2.13.1 of the Disclosure Schedule (with paragraph
references corresponding to those set forth below) contains a true and complete
list of each of the following Contracts of a substantial nature currently in
effect (true and complete copies, or, if none, reasonably complete and accurate
written descriptions of which, together with all amendments and supplements
thereto and all waivers of any terms thereof, have been delivered to Purchaser
prior to the execution of this Agreement), to which the Company is a party or by
which any of its Assets is bound in a material way:
2.13.1.1 (A) all written Contracts (excluding Benefit Plans) providing
for a commitment of employment or consultation services for a specified term
(other than (i) with Trans Management Company (Georgia plant manager) which
remain in effect after the Closing, and (ii) at-will agreements); and (B) any
written commitments involving an obligation of the Company to make substantial
payments to any Person in connection with, or as a consequence of, the
transactions contemplated hereby or to any employee, other than with respect to
salary or incentive compensation payments in the ordinary course of business
consistent with past practice;
2.13.1.2 all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company to engage in any
business activity or compete with any Person or prohibiting or limiting the
ability of any Person to compete with the Company or prohibiting or limiting
disclosure of confidential or proprietary information, of a material nature;
2.13.1.3 all management, partnership, joint venture, shareholders' or
other similar Contracts with any Person which is to survive the Closing;
2.13.1.4 all guarantees of the Indebtedness of the Company or any third
Person;
2.13.1.5 all Contracts relating to the future disposition or
acquisition of any Assets, other than dispositions or acquisitions in the
ordinary course of business consistent with past practice or the provisions of
this Agreement;
2.13.1.6 all Contracts between or among the Company and any of the
Sellers, any current or former officer, director, stockholder or Affiliate of
the Company or of any such officer, director, stockholder or Affiliate, on the
other hand, which is to survive the Closing, other than Contracts disclosed
pursuant to Section 2.13.1.6;
2.13.1.7 any existing collective bargaining or similar labor Contracts;
2.13.1.8 all Contracts which are to survive the Closing that (A) limit
or contain restrictions on the ability of the Company to declare or pay
dividends on, to make any other distribution in respect of or to issue or
purchase, redeem or otherwise acquire its capital stock, to incur Indebtedness,
to incur or suffer to exist any Lien, to purchase or sell any Assets or to
change the lines of business, (B) require the Company to maintain specified
financial ratios or levels of net worth or other indicia of financial condition
or (C) require the Company to maintain insurance in certain amounts or with
certain coverages; and
2.13.1.9 subject to Section 2.19 of this Agreement, all other
Contracts, including but not limited to Contracts with customers, that involve
the payment or potential payment, pursuant to the terms of any such Contract, by
or to the Company of more than $50,000 and all powers of attorney and comparable
delegations of authority.
2.13.2 Each Contract required to be disclosed in Section 2.13.1 of the
Disclosure Schedule is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, of each party
thereto; and except as disclosed in Section 2.13.2 of the Disclosure Schedule,
Sellers have not received written notice that it is, in violation or breach of
or default under any such Contract (or with notice or lapse of time or both,
would be violation or breach of or default under any such Contract).
2.14 Licenses. Section 2.14 of the Disclosure Schedule contains a true
and complete list of all Licenses, other than sales tax permits, used in and
material to the business or operations of the Company;
2.14.1 the Company owns or validly holds all such Licenses;
2.14.2 each license listed in Section 2.14 of the Disclosure Schedule
is valid, binding and in full force and effect;
2.14.3 the Sellers are not aware that the Company received any written
notice during the last 12 months that the company is in default (or with the
giving of notice of lapse of time or both, would be in default) under any such
License; and
2.14.4 the transactions contemplated in this Agreement will not violate
any such License or give any other party thereto rights to terminate the License
or change the terms thereof.
2.15 Insurance. Section 2.15 of the Disclosure Schedule contains a true
and complete list of all existing insurance policies in effect (other than
medical or disability insurance or insurance relating to the Plans), each of
which is in force and effect on this date. The Sellers have not received written
notice during the last 12 months that any insurer under any policy referred to
in this Section is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause. Section 2.15 of the Disclosure
Schedule contains a list of all claims made under any insurance policies
covering the Company since January 1, 1996.
2.16 Affiliate Transactions. Except for the Shareholder Debt and the
Purchase]7'S obligation to pay the Deferred Consideration, (i) there are no
Liabilities between the Company and any current or former officer, director,
stockholder, Affiliate of the Company or any Affiliate of any such officer,
director, stockholder or Affiliate, and (ii) the Company does not provide or
cause to be provided any assets, services or facilities to any such current or
former officer, director, stockholder or Affiliate.
2.17 Employees; Labor Relations. Sellers have not received written
notice after January 1, 1996 of (i) any pending or threatened unfair labor
practice complaints against the company before the National Labor Relations
Board or comparable or similar state agency, or any grievance or arbitration
proceeding arising out of under collective bargaining agreements, (ii) no
strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the
Sellers, threatened against the Company, and (iii) no union representation
question exists with respect to the employees of' the Company or, to the actual
written knowledge of the Sellers, no union organization activities are taking
place.
2.18 Environmental Matters.
2.18.1 Except as disclosed in Section 2.18.1 of the Disclosure
Schedule:
2. 18. 1. 1 The Sellers have not received, since January 1, 1996, any
citation, directive, inquiry, notice, order, summons, warning, or other similar
communications that relates to any alleged, actual, or potential uncured
violation or failure to comply with any Environmental Law, or of any written
Environmental, Health, and Safety Liabilities with respect. to any of the
Facilities or any other Assets in which the Company had an interest since
January 1, 1996, or with respect to any Facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used, or processed by
the Sellers, the Company, or any other Person f or whose conduct it or they are
or may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
2.18.2 The Sellers have not received, since January 1, 1996, written
notice that there has been any Release since January 1, 1996 of any Hazardous
Materials at or from the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, in violation
of any Environmental Law where the Company would be liable, or from or by any
other properties and assets (whether real, personal, or mixed) in which the
Company has Dr had an interest.
2.18.3 The Sellers do not have in their possession any written reports,
studies, analyses, tests, and monitoring pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning
non-compliance by the Company or any other Person for whose conduct it or they
are or may be held responsible, with Environmental Laws, with respect to the
Facilities.
2.18.4 There have been no known written environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, on behalf of, or
which are in the possession of the Sellers, arising since January 1, 1996, with
respect to any Asset of the Company prior to execution of this Agreement.
2.19 Substantial Customers and Suppliers. Section 2.19.1 of the
Disclosure Schedule lists the ten (10) largest customers of the Company on the
basis of revenues for goods sold or services provided for the twelve mont*..11
period ending July 31, 1998. Section 2.19.2 of the Disclosure Schedule lists the
ten (10) largest suppliers of the company on the basis; of cost of goods or
services purchased during the twelve month period ending July 31, 1998.
2.20 Accounts Receivable. Except as set forth in section 2.20 of the
Disclosure Schedule, the accounts and notes receivable of the Company reflected
on the balance sheets included in the Interim Financial Statements for the
period ended December 31, 1998, and all accounts and notes receivable arising
subsequent to such date, (i) arose from bona fide sales transactions in the
ordinary course of business consistent with past practice and are payable on
customary trade terms, (ii) are not subject to any known valid set-off or
counterclaim, (iii) do not represent obligations for goods sold on consignment,
on approval or on a sale-or-return basis or subject to any other repurchase or
return arrangements, and (iv) are not subject of any Actions or Proceedings
brought by or on behalf of the Company to which Sellers have actual written
notice since January 1, 1996.
2.21 Other Negotiations; Brokers. No agent, broker, finder, investment
banker, financial advisor or other Person will be entitled, by or through the
Sellers or the Company, to any fee, commission or other compensation in
connection with the transactions contemplated by this Agreement on the basis of
any act or statement made by the Sellers, the Company or any of their respective
Affiliates, or any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of the Sellers, the Company,
or any such Affiliate.
2.22 Holding Company Act and Investment Company Act Status. The Company
is not a "holding company" or a "public utility company" as such terms are
defined in the Public Utility Company Act of 1935, as amended. The Company is
not an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
2.23 Bank and Brokerage Accounts. Section 2.23 of the Disclosure
Schedule sets; forth (a) a list of the names and locations of all banks,
securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other
similar relationship; and (b) a true and complete list and description of each
such account, box and relationship, indicating in each case the account number
and the names of all persons having signatory power and respect thereto.
2.24 Exemption from Registration. Except to the extent attributable,
directly or indirectly, to Purchaser, or Laws applicable to Seller, the offer
and sale of the Purchased Stock made pursuant to this Agreement are exempt from
the registration requirements of the Securities Act. Neither any the Sellers,
nor the Company nor any Person authorized to act on behalf of any of the
foregoing has, to Sellers, actual written knowledge, in connection with the
offering of the Purchased Stock, engaged in (i) any form of general solicitation
or general advertising (as those terms are used within the meaning of Rule 501
(c) under the Securities Act) , (ii) any action involving a public offering
within the meaning of section 4(2) of the Securities Act, or (iii) any action
that would require the registration under the Securities Act of the offering and
sale of the Purchased Stock pursuant to this Agreement or that would violate
applicable state securities or "blue sky" laws.
2.25 Disclosure. The representations and warranties contained in this
Agreement, and the statements contained in the Disclosure Schedule or in the
certificates, lists and other writings furnished to Purchaser pursuant to any
provision of this Agreement (including the Sellers' Financial Statements and the
Interim Statements), when taken together, do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements herein and therein, in the light of the circumstances under which
they were made, not misleading.
2.26 Limited Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any provision to the contrary: (i) except as
provided in the first grammatical paragraph of Section 2 to the contrary,
Sellers make no representation beyond their actual knowledge and have assumed no
duty of independent investigation of any kind pursuant to the numbered
subsections of this Section 2 (2.1 through 2.24) ; (ii) even though the
Purchaser may investigate the affairs of the Company and attempt to confirm the
accuracy of the representations and warranties of the Sellers, the Purchaser,
nonetheless, shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the Sellers contained in this Agreement,
but only to the extent not discovered, by the Purchaser, to be inaccurate prior
to the Closing; and (iii) all such representations, warranties, covenants and
agreements will survive the Closing, for a period `of eighteen (18) months only.
Any such claim must be timely pursued pursuant to Article IX only.
ARTICLE III
3 REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to Sellers that: (i) the
Purchaser has full authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby;
and (ii) this Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligations of the
Purchaser, enforceable against Purchaser in accordance with its terms.
In addition, Purchaser, to its best knowledge, represents and warrants
to the Sellers as follows:
3.1 No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby, do
not and will not:
3.1.1 conflict or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws of
Purchaser;
3.1.2 subject to obtaining the consents, approvals and actions, making
the filings and giving- the notices disclosed in Section 3.4 of the Disclosure
Schedule, if any, conflict with or result in a violation or breach of any term
or provision of any Law or order applicable to Purchaser or its Assets and
Properties; or
3.1.3 (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under, or
(iii) require Purchaser to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of
any Contract or License to which Purchaser is a party, or by which it is bound.
3.2 Governmental Approvals and Filings. No consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority on the
part of Purchaser is required in connection with the execution, delivery and
performance of this Agreement to which it is a party or the consummation of the
transactions contemplated herein.
3.3 Legal Proceedings. There are no Actions or Proceedings pending or,
to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets which (i) could reasonably be expected to result
in the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, or (ii) could reasonably be expected, individually or in the
aggregate with other such Actions or Proceedings, to have a material adverse
effect on the business or condition of Purchaser.
3.4 Brokers. No agent, broker, finder, investment banker, financial
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made by Purchaser.
3.5 Purchase for Investment. The Purchased Stock will be acquired by
Purchaser for its own account for the purpose of investment and not with a view
to the resale or distribution of all or any part of the Purchased Stock in
violation of the Securities Act.
3.6 Survival of Representations, Warranties. Covenants and Agreements.
Even though the Sellers may investigate the affairs of the Purchaser and confirm
the accuracy of the representations and warranties of the Purchaser contained in
this Agreement, the Sellers, nonetheless, shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement. All such representations, warranties, covenants and
agreements will survive the Closing for a period of eighteen (18) months only.
Any such claim must be timely pursued pursuant to Article 10 only.
3.7 Existing Line of Credit. Purchaser, for itself and the Company, and
their successors and assigns, agree not to utilize the line of credit previously
available to the Company from Xxxxxxx Xxxxx Financial services or any affiliate.
3.8 The Company Obligations. The Purchaser will cause the Company to
perform all of its post-closing duties, liabilities and obligations hereunder.
ARTICLE IV
4 COVENANT'S BY THE SELLERS
4.1 Noncompetition; Non solicitation.
4.1.1 For a period of five (5) years from the Closing Date, each of the
Sellers, alone or in conjunction with any other Person, or directly or
indirectly through their present or future Affiliates, will not directly or
indirectly own, manage, operate, join, be employed by, have a financial interest
in, control or participate in the ownership, management, operation or control
of, or use or permit his name to be used in connection with any business or
enterprise engaged in the design, development, manufacture, distribution or sale
of any products, or the provision of any services involving, in a material way,
masonry tools and products (including, but not limited to, the manufacture, sale
and/or distribution of bagged and/or bulk masonry products such as mortar mix,
blended cement, stucco, acrylic finish), which the Company was designing,
developing, manufacturing, distributing, selling or providing at any time prior
to and up to and including the Closing Date anywhere in the United States of
America, provided that the foregoing restriction shall not be construed to
prohibit the ownership, in the aggregate, of not more than two percent (2%) of
any class of securities of any corporation which is engaged in any of the
businesses or enterprises described above, having a class of securities
registered pursuant to the Securities Exchange Act of 1934, as amended, which
securities are publicly owned and regularly traded on any national exchange or
in the over-the-counter market.
4.1.2 For a period of five (5) years from the closing Date, each of the
Sellers shall not knowingly and intentionally directly or through an Affiliate,
in a material and adverse way, (i) directly and intentionally influence any
individual who is an employee of the Company as of the Closing, to terminate his
or her employment with the Company, (ii) interfere in any other way with the
employment, of any employee of the Company (while employed by the Company) or
(iii) cause or attempt to cause (or participate in any way in any discussion or
negotiation concerning) (x) any client, customer or supplier of the Company or
(y) any prospective client, customer or supplier of the Company from engaging in
business with the Company. This Section 4.1.2 does not apply to conversations
between Xxxxxx Xxxxxx and the Sellers.
4.1.3 The Sellers agree that Purchaser's remedies at law for any breach
or threat of breach by it of any of the provisions of this section 4.1 will be
inadequate, and that, in addition to any other remedy to which Purchaser may be
entitled at law or in equity, Purchaser shall be entitled to a temporary or
permanent injunction or injunctions or temporary restraining orders or orders to
prevent breaches of the provisions of this Section 4.1 and to enforce
specifically the terms and provisions hereof, in each case without the need to
post any security or bond. Nothing herein contained shall be construed as
prohibiting Purchaser from pursuing, in addition, any other remedies available
to it for such breach or threatened breach. A waiver by the Purchaser of any
breach of any provision hereof shall not operate or be construed as a waiver of
a breach of any other provisions of this Agreement or of any subsequent breach
thereof. Any breach or purported breach of Sections 4.1.1 or 4.1.,2, or any
other provision of this Agreement, shall not be a basis to withhold any payment
due to Sellers pursuant to Article I, including the payment of the Deferred
Consideration, when due.
4.1.4 The parties hereto consider the restrictions contained in this
Section 4.1 hereof to be reasonable for the purpose of preserving the goodwill,
proprietary rights and going concern value of the Company, but if a final
judicial determination is made by a tribunal having jurisdiction that the time
or territory or any other restriction contained in this Section 4.1 is an
unenforceable restriction on the sellers, activities, the provisions of this
Section 4.1 shall not be rendered void but shall be deemed amended to apply as
to such maximum time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable. Alternatively, if the
tribunal referred to above finds that any restriction contained in this Section
4.1 or any remedy provided herein is unenforceable, and such restriction or
remedy cannot be amended so as to make it enforceable, such finding shall not
affect the enforceability of any of the other restrictions contained therein or
the availability of any other remedy. The provisions of this Section 4.1 shall
in no respect limit or otherwise affect the Seller's obligations under other
agreements with the Company.
4.2 Investigation by Purchaser.
4.2.1 Sellers afforded Purchaser and Purchaser's accountants, Ernst &
Young, and their respective representatives access to all contracts, books and
records, and all other documents and data of the Company, including formulas and
manufacturing procedural instructions; of the Company and certain other
documents and data that the Sellers disclosed prior to the Closing, such as
certain of the vendors of the Company or prices paid for certain products
connected with certain formulas, manufacturing processes, bagging operations and
acrylic stucco division processes and operations, as well as employee files and
records. Sellers do not endorse the Ernst & Young findings if and to the extent
in conflict with Sellers' books and records.
ARTICLE V
5 DELIVERABLES
5.1 Deliveries by Sellers. At the Closing, Sellers and the Company have
delivered or caused to be delivered to the Purchaser, all duly and properly
executed (where applicable) the following:
5.1.1 Representations and Warranties. A certification that each of the
representations and warranties made by the Sellers in this Agreement, except as
provided herein to the contrary (including results of Purchaser's due diligence)
shall, unless waived, be true and correct in all material respects as of the
date of this Agreement.
5.1.2 Regulatory Consents and Approvals. All consents, approvals and,
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and the Sellers to perform their obligations under
this Agreement and to consummate the transactions contemplated hereby, if any.
5.1.3 Third Party Consents. Any consents (or waivers) identified i-1-i
Section 2.5 of the Disclosure Schedule, and all other consents (or waivers) to
the performance by the Purchaser of its obligations under this Agreement, or to
the consummation for the transactions contemplated hereby as are required under
any Contract or License to which the Purchaser is a party or by which any of its
Assets are bound and where the failure to obtain any such consent (or in lieu
thereof waiver) could reasonably be expected, individually or in the aggregate
with other such failures, to materially adversely affect the Purchaser or the
business or condition of the Company or otherwise result in a material
diminution of the benefits of the transactions contemplated by this Agreement.
5.1.4 Sellers' Certificates. The Sellers shall have delivered tc
Purchaser (i) certificates, dated the Closing Date and executed by an executive
officer of the Company, in the form and to the effect of Exhibit B hereto and
(ii) certificates, dated the Closing Date and executed by the chief financial
officer of the Company, in the form of Exhibit C hereto.
5.1.5 Resignations of Officers and Directors. The resignations of all
current officers and directors of the Company, effective as of the Closing Date.
5.1.6 Disclosure Schedule. The Disclosure Schedule, updated and current
through the Closing Date.
5.1.7 Receipt of Purchased Stock. Certificates representing the
Purchased Stock have been transferred to Purchaser in accordance with the terms
of this Agreement.
5.1.8 Payment of Indebtedness. A release executed by Sellers confirming
payment of the Consideration and the Additional Consideration acknowledging that
all Shareholder Debt has been cancelled or otherwise paid in full, and is of no
further force and effect. All other Indebtedness owing by the Company, and not
reflected by the Seller Financial Statements or the Interim Statements has been
retired, released or repaid except the Deferred Consideration shall be payable
following the Closing as provided in Section 1.5.
5.2 Deliveries by Purchaser. At the Closing, the Purchaser has
delivered or caused to be delivered to the Sellers, all duly and properly
executed (where applicable) the following:
5.2.1 Representations and Warranties. A certification that each of `
the representations and warranties made by Purchaser in this Agreement shall be
true and correct in all material respects as of the date of this Agreement.
5.2.2 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and the Sellers to perform their obligations under
this Agreement and to consummate the transactions contemplated hereby, if any.
5.2.3 officers' certificate. Purchaser shall have delivered to the
Sellers a certificate, dated the Closing Date and executed by the president or
vice-president or other officer of Purchaser, substantially in the form and to
the effect of Exhibit D hereto.
ARTICLE VI
6 INDEMNIFICATION; TAX MATTERS
6.1 Indemnification.
6.1.1 Except as provided in Section 6.1.3, the Sellers will indemnify
the Company, the Purchaser and its stockholders and the officers, directors,
employees, agents and Affiliates, in respect of, and hold each of them harmless
from and against, any and all Losses actually suffered, incurred or sustained by
any of them, or resulting from any misrepresentation or breach of warranty or
nonfulfillment of or failure to perform any covenant or written agreement on the
part of the Sellers contained in this Agreement (including, without limitation,
any certificate delivered in connection herewith or therewith).
6.1.2 Purchaser will indemnify the Sellers in respect of, and hold him
harmless from and against, any and all Losses actually suffered, incurred or
sustained by him or to which he becomes subject, resulting from, arising out of
or relating to any misrepresentation or breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of Purchaser
contained in this Agreement (including, without limitation, any certificate
delivered in connection herewith or therewith).
6.1.3 The indemnification obligations of the Sellers set forth in this
Article VI shall apply only after the aggregate amount of such obligations
exceeds the sum of $50,000.00. If, and only after, the aggregate amount of such
obligations exceeds the sum of $50,000-00, then such obligations shall include
the first $50,000.00.
6.2 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 6.1 will be asserted and resolved as follows:
6.2.1 In order for an Indemnified Party to be entitled to any
indemnification provided for under Section 6.1 in respect of, arising out of or
involving a claim or demand made against the Indemnified ?arty (a "Claim"), the
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party
promptly after receipt by such Indemnified Party of written notice of the Third
Party Claim; Provided, that failure to give such claim Notice shall not affect
the indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure.
6.2.2 If a Claim is made against an Indemnified Party, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof with counsel selected by the Indemnifying
Party, which counsel must be reasonably satisfactory to the Indemnified Party.
Should the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall not be liable to the Indemnified Party for
legal expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof, but shall continue to pay for any expenses of investigation
or any Loss suffered. If the Indemnifying Party assumes such defense, the
Indemnified Party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party. If, and during such period that (i) the Indemnifying Party
shall not assume the defense of a Third Party claim with counsel reasonably
satisfactory to the Indemnified Party within 10 Business Days of any Claim
Notice or (ii) legal counsel for the Indemnified Party notifies the Indemnifying
Party that there are or may be legal defenses available to the Indemnifying
Party or to other Indemnified Parties which are different from or additional to
those available to the Indemnified Party, which., if the Indemnified Party and
the Indemnifying Party were to be represented by the same counsel, would
constitute a conflict of interest for such counsel or prejudice prosecution of
the defenses available to such Indemnified Party, or (iii) if the Indemnifying
Party shall assume the defense of a Third Party Claim and fail to diligently
prosecute such defense, then in each such case the Indemnified Party, by notice
to the Indemnifying Party, may employ its own counsel and control the defense of
the Third Party Claim and the Indemnifying Party shall be liable for the
reasonable fees, charges and disbursements of counsel employed by the
Indemnified Party, and the Indemnified Party shall be promptly reimbursed for
any such fees, charges and disbursements, as and when incurred. Whether the
Indemnifying Party or the Indemnified Party control the defense of any Third
Party Claim, the parties hereto shall cooperate in the defense thereof. Such
cooperation shall include the retention and provision to the counsel of the
controlling party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation or any material provided
hereunder. The Indemnifying Party shall have the right to settle, compromise or
discharge a Third Party Claim (other than any such Third Party Claim in which
criminal conduct is alleged) without the Indemnified Party's consent if such
settlement, compromise or discharge (i) constitutes a complete and unconditional
discharge and release of the Indemnified Party, and (ii) provides for no relief
other than the payment of monetary damage and such monetary damages are paid in
full by the Indemnifying Party.
6.2.3 In the event any Indemnified Party should have a claim under
11;ection 6.1 against any Indemnifying Party that does not involve a third party
Claim, the Indemnified Party shall promptly deliver an Indemnity Notice to the
Indemnifying Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party's rights hereunder except to the extent that
an Indemnifying Party demonstrates that it has been prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim described in such Indemnity Notice or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes the
claim described in such Indemnity Notice, the Loss in the amount specified in
the Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under Section 6.1 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within thirty (30) days,
such dispute shall be resolved as provided in Article IX hereof.
6.3 Allocation of Tax Liability.
6.3.1. Except to the extent a reserve for Taxes is reflected on the
Sellers' Financial Statements or the Interim Statements, `the Sellers shall be
responsible for and pay and shall indemnify and hold harmless Purchaser and the
Company with respect to (i) any and all Taxes imposed on the Company, or for
which the Company is liable with respect to any periods ending on or before
December 31, 1998; provided, that in the case of any adjustment to any item of
loss or expense for any such years, which gives rise to corresponding and
offsetting items of loss or expense in subsequent years the benefit of which is
or will be actually realized by the Company or its successors or assigns
including by reason of any increase in a net operating loss, the Seller's
obligations shall be limited to the amount of interest (computed at the
appropriate statutory rates) and penalties actually paid to the appropriate
taxing authorities by the Company as a result of such timing differences in the
case of audit adjustments, or at a rate of eight percent (8~) per annum in the
case of other adjustments, (ii) without duplication (subject to the same
proviso) , all Taxes arising out of a breach of the representations, warranties
or covenants contained herein (to the extent not constituting a Non-Material
Claim), (iii) any Tax liability resulting from any ongoing state audits that
exceed, in the aggregate,, any reserve therefore set forth on the Sellers,
Financial Statements or the Interim Statements, and (iv) any reasonable
out-of-pocket costs or expenses with respect to Taxes indemnified hereunder.
6.3.2 From and after January 1, 1999, Purchaser shall cause the Company
to prepare, or cause to be prepared, and shall file, or cause to be filed, all
reports and returns of the Company required to be filed, and timely and fully
pay all such Taxes. . Purchaser shall cause the Company to timely pay the
appropriate taxing authorities the Taxes shown to be due and payable on all Tax
Returns of the Company filed after the Closing Date, concurrent with the filing
of such Tax Returns. Tax: Returns of the company for a period ending on or
before the Closing Date shall be prepared on a basis consistent with the Tax
Returns filed. by the Company for previous taxable periods, subject to the
requirements of applicable law.
6.4 Tax Contests.
6.4.1 If any Taxing Authority or other Person asserts a Tax Claim, then
the party hereto first receiving notice of such Tax Claim shall promptly provide
written notice thereof to the other parties hereto. Such notice shall specify in
reasonable detail the basis for such Tax Claim and shall include a copy of any
relevant correspondence received, from time to time, as received from the Taxing
Authority or other Person.
6.4.2 If, within 30 calendar days after any the Sellers receives or
delivers, as the case may be, notice of a Tax Claim, the Sellers provide to the
Purchaser an Election Notice, then subject to the provisions of this Section
7.4, the Sellers shall defend or prosecute, at their S01E! Cost, expense and
risk, such Tax Claim by all appropriate proceedings, which proceedings shall
defended or prosecuted diligently by the Sellers to a Final Determination;
provided, that the Sellers shall not, without the prior written consent of the
Company, enter into any compromise or settlement of such Tax Claim that would
result in any Tax detriment to the Company. So long as the Sellers are defending
or prosecuting a Tax Claim with respect to the Company, or as otherwise
reasonably required by Sellers in conjunction with filing or amending of tax
returns, the Company shall promptly provide or cause to be provided to the
Sellers any information reasonably requested by the Sellers relating to such Tax
Claim, and shall otherwise cooperate with the Sellers and their representatives
in good faith in order to contest effectively such Tax Claim. The Sellers shall
inform the Company of all developments and events relating to such Tax claim
(including, without limitation, providing to the Company copies of all written
materials relating to such Tax Claim) and the Company or its authorized
representatives shall be entitled, at the expense of the Company, to attend, but
not to participate in or control, all conferences, meetings and proceedings
relating to such Tax Claim.
6.4.3 If, with respect to any Tax Claim, the Sellers fail to deliver an
Election Notice to the Company within the period provided in Section 6.4.2 or,
after delivery of such Election Notice to the Company, the Sellers fail
diligently to defend or prosecute such Tax Claim to a Final Determination, then
upon not less than ten (10) days written notice of its intention to do so (thus
giving the Sellers 10 days notice and opportunity to cure), the Company shall at
any time thereafter have the right (but not the obligation) to defend or
prosecute, at. the sole cost, expense and risk of the Sellers, such Tax Claim,
to the extent reasonably necessary. The Company shall have full control of such
defense or prosecution and such proceedings, including any settlement or
compromise thereof, provided they act reasonably and in good faith and keep
Sellers reasonably informed. If requested by the Company, the Sellers shall
cooperate in good faith with the Company and its authorized representatives in
order to contest effectively such Tax Claim. The Sellers may attend, but not
participate in or control, any defense, prosecution, settlement or compromise of
any Tax Claim controlled by the Company pursuant to this Section 6.4.3, and
shall bear their own costs and expenses with respect thereto. In the case of any
Tax Claim that is defended or prosecuted by the Company pursuant to this Section
6.4.3, the Company shall, from time to time, be entitled to receive current
payments from the Sellers with respect to costs and expenses incurred by the
Company, to the extent reasonable in amount, in connection with such defense or
prosecution (including, without limitation, reasonable attorneys', accountants"
and experts" fees and disbursements, settlement costs, court costs and any other
costs or expenses for investigating, defending or prosecuting such Tax Claim,
and any Taxes imposed on the Company as a result of receiving a payment from the
Sellers pursuant to this Section 6.4) (collectively "Associated Costs").
6.4 In the case of any Tax Claim that is defended or prosecuted to a
Final Determination by the Sellers pursuant to this Section 6.4, the Sellers
shall pay to the appropriate Tax Indemnitees, in immediately available funds,
the full amount of any Tax arising or resulting from such Tax Claim within five
Business Days after such Final Determination. In the case of any Tax Claim that
is defended or prosecuted to a Final Determination by the Company pursuant to
and in substantial compliance with the terms of this Section 6.4, the Sellers
shall pay to the appropriate Tax Indemnitee, in immediately available funds, the
full amount of any Tax arising or resulting from such Tax Claim, together with
any Associated Costs that have not theretofore been paid by the Sellers to the
Company, within five Business Days after such Final Determination, subject to
any right of appeal. In the case of any Tax Claim not: covered by the two
preceding sentences, the Sellers shall pay to the Company, in immediately
available funds, the full amount of any Tax arising or resulting from such Tax
Claim (calculated after taking into account any actual reduction in the current
liability for Taxes of such Tax Indemnitee for Tax arising out of or resulting
from such payment or such Tax Claim) , together with any Associated Costs that
have not theretofore been paid by the Sellers to the Company, at least five
Business Days before the-date payment of such Tax is due from any Tax
Indemnitee.
6.4.5 Notwithstanding anything contained in this Article VII to the
contrary, the rights of the Sellers under this Section 6.4 to defend or
prosecute,. or to control the defense or prosecution of, any Tax Claim shall be
no greater than those rights that the Company would have to defend or prosecute,
or to control the defense or prosecution of, such Tax Claim.
6.5 Cooperation Regarding Tax Matters. Each party hereto shall, and
shall cause its subsidiaries and Affiliates to, provide to the other parties
hereto and the Company such cooperation and information as any of them
reasonably may request related to the filing of any Tax Return, amended Tax
Return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant Tax Returns, together with relevant accompanying
schedules, workpapers and relevant documents relating to rulings or other
determinations by Taxing Authorities and relevant records concerning the
ownership and Tax basis of property, which any such party may possess. Each
party shall make its employees reasonably available on a mutually convenient
basis at its cost to provide explanation of any documents or information so
provided. Subject to the preceding sentence, each party required to file Tax
Returns pursuant to this Article VII shall bear all costs of filing such Tax
Returns.
6.6 Other Tax Covenants.
6.6.1 Without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld or delayed, neither the Sellers nor any
Affiliate of any the Sellers shall, to the extent it may affect or relate to the
Company, make or change any tax election, change any annual tax accounting
period, adopt or change any method of tax accounting, file any amended Tax
Return, enter into any method of tax accounting, enter into any closing
agreement, settle any Tax Claim, assessment or proposed assessment, surrender
any right to claim a Tax refund, consent to any extension or waiver of the
limitation period applicable to any Tax Claim or assessment or take or omit to
take any other action, if any such action or omission would have the effect of
increasing any post-closing Tax Liability of the Purchaser, of the Company or
any Affiliate of Purchaser.
6.6.2 Without the prior written consent of a Seller, neither the
Purchaser nor the Company shall, to the extent it may affect or relate tc the
Company, make or change any tax election, file any amended Tax Return, enter
into any closing Agreement, settle any Tax claim, assessment or proposed
assessment, surrender any right to claim a Tax refund, consent to any extension
or waiver of the limitation period applicable to any Tax claim or assessment or
take or omit to take any other action, if any such action or omission would
affect a Pre-Closing Tax Period, unless required by applicable law.
6.6.3 So long as any books, records and files retained by the Sellers
or and his Affiliates relating to the business of the Company or the books,
records and files delivered to the control of the Purchaser pursuant to this
Agreement to the extent they relate to the operations of the Company prior to
the Closing Date, remain in existence and are available, each party (at its own
expense) shall have the right upon prior notice to inspect and to make copies of
the same at any time during business hours for any proper purpose. The Purchaser
and the Sellers and their respective Affiliates shall use reasonable efforts not
to destroy or allow the destruction of any such books, records and files without
first: providing 60 days' written notice of intention to destroy to the other,
and allowing such other party to take possession of such records. The Purchaser
shall cause the Company to maintain relevant tax records for all at least three
years following the end of the applicable tax year, or such greater period while
in dispute, or then subject to audit.
6.7 Conflict. In the event of a conflict between the provisions of
Sections 6.3 through 6.7 of this Article VI and any other provision of this
Agreement, such provisions of this Article VI shall control.
ARTICLE VII
7 DEFINITIONS
7.1 Definitions. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means, as applied to any Person, (a) any other Person
directly or indirectly owning, owned by, controlling, controlled by or under
common control with, that Person, (b) any director, partner, officer, agent,
employee or relative of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person.
"Agreement" means this Purchase Agreement, the Exhibits and the
Disclosure Schedule and the certificates delivered in connection herewith, as
the same may be amended from time to time in accordance with the terms hereof.
"Assets" of any Person means all assets and properties of every kind,
nature, character and description, including goodwill and other tangibles,
operated, owned or leased by such Person, including cash and cash equivalents,
investments, accounts and notes receivable, chattel paper, documents,
instruments, real estate, equipment, inventory, goods and intellectual property.
"Associated Costs" has the meaning ascribed to it in Section 7.4.3.
"Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by the
Company or under which any employee, former employee or director of the Company
or any beneficiary thereof is covered, is eligible for =overage or has benefit
rights.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Company, including financial statements, Tax
Returns and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans.
"Claim" has the meaning ascribed to it in Section 6.2-1.
"Claim Notice" means written notification pursuant to Section 7.2.1 of
a Third Party Claim as to which indemnity under Section 7.1 is sought by an
Indemnified Party.
"Closing" and "Closing Date" have the meaning ascribed to them in
Section 1.3.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Company" has the meaning ascribed to it in the first recital of this
Agreement (and shall include all predecessors and subsidiaries of the Company).
"Consideration" has the meaning ascribed to it in Section 1.2.1.
"Contract" means any agreement, lease, evidence of indebtedness,
mortgage, indenture, security agreement or other contract (whether written or
oral).
"Deferred Consideration" has the meaning ascribed to it in
"Disclosure Schedule" means the schedules delivered to Purchaser by or
on behalf of the Company and the Sellers, and the schedules delivered by or on
behalf of Purchaser, containing lists, descriptions, exceptions and other
information and materials as are required to be included therein pursuant to
this Agreement.
"Dispute Period" means the period ending thirty (30) calendar days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"Election Notice" means a written notice provided by the Sellers in
respect of a Tax Claim to the effect that (i) the Sellers acknowledge their
indemnity obligation under this Agreement with respect to such Tax Claim and
(ii) the Sellers elect to contest, and to control the defense or prosecution of,
such Tax Claim at their sole risk and sole cost and expense.
"Environment" means all air, surface water, groundwater, drinking water
supply, stream sediments, or land, including soil, land surface or subsurface
strata, all fish, wildlife, biota and all other environmental medium or natural
resources.
"Environmental, Health and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law and consisting of or
relating to (i) any environmental, health or safety matters or conditions
(including on-site or off-site contamination., occupational safety and health,
and regulation of chemical substances or products) ; (ii) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for clean-up costs or corrective action,
including any investigation, clean-up, removal, containment, or other
remediation or response actions required by Environmental Law or Occupational
Safety and Health Law (whether or not such clean-up has been required or
requested by any governmental body or any other Person) and for any natural
resource damages; or (iv) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law. The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended (CERCLA).
"Environmental Law" means all federal, state, local and foreign
environmental, health and safety laws, common law orders, decrees, judgments,
codes and ordinances and all rules and regulations promulgated thereunder, civil
or criminal, including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, pollutants, contaminants, chemicals, or industrial, solid,
toxic or hazardous substances or wastes.
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consent or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment (including motor vehicles, tank cars and rolling
stock) currently or formerly owned or operated by the Company.
"Final Determination" means (i) a decision, judgment, decree or other
order by any court of competent jurisdiction, which decision, judgment, decree
or other Order has become final after all allowable appeals by either party to
the action have been exhausted or the time for filing such appeals has expired,
(ii) a closing agreement entered into under Section 7121 of the Code or any
other settlement agreement entered into in connection with an administrative or
judicial proceeding, (iii) the expiration of the time for instituting suit with
respect to a claimed deficiency or (iv) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the expiration of
the time for instituting suit with respect thereto.
"GAAP" means generally accepted accounting principles of the United
States, consistently applied.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including-any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Material" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(ii) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances,11
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes,," "toxic substances," "toxic pollutants" or words
of similar import, under any Environmental Law; and (iii) any other chemical,
material, substance or waste, exposure to which is now or hereafter prohibited,
limited or regulated by any Governmental or Regulatory Authority.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business, as
reflected by the Books and Records), (iv) under capital (as opposed to real
estate) leases, (v) long term debt and (vi) in the nature of guarantees of the
obligations described in clauses (i) through (v) above of any other Person.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article VII.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article VII.
"Indemnity Notice" means written notification pursuant to Section 7.2.3
of a claim for indemnity under Article VII by an Indemnified Party, specifying
the nature of and basis for such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such claim.
"Interim Statements" has the meaning ascribed to it in Section 2.4.
"Laws" means all laws, statutes, rules, regulations, ordinances arid
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Leased Real Property" has the meaning ascribed to it in Section 2.15.
"Liabilities" means all Indebtedness, obligations and other liabilities
(or contingencies that have not yet become liabilities) of a Person (whether
absolute, accrued, contingent (or based upon any contingency) , known or
unknown, fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
diminution in value of investment, losses and expenses, including without
limitation, interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, such as
fees and expenses of attorneys, incurred in connection with (i) the
investigation or defense of any Third Party Claims or (ii) asserting or
disputing any rights under this Agreement against any party hereto or
otherwise).
"Net Book Value" has the meaning ascribed to it in Section
"Occupational Safety and Health Law" means any Law designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance companies)
, designed to provide safe and healthful working conditions.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person, or (ii) receive any benefits or
rights similar to those enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including without
limitation, any rights to participate in the equity, income or election of
directors or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Owned Real Property" has the meaning ascribed to it in Section 2.15.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Plan" means any bonus, compensation, pension, profit sharing,
retirement, stock purchase or cafeteria, life, health, accident, disability,
workmen's compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any kind, whether
written or oral, or whether for the benefit of a single individual or more than
one individual including, but not limited to, any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.
"Post-Closing Period" means any taxable period or portion thereof
beginning after the Closing Date. If a taxable period begins on or before the
Closing Date and ends after the Closing Date, then the portion of the taxable
period that begins on the day following the Closing Date shall constitute a
Post-Closing Period. `
"Pre-Closing Period" means any taxable period or portion thereof that
is not a Post-Closing Period.
"Consideration and Additional Consideration" have the meaning ascribed
to it in Section 1.2.
"Purchased Stock" has the meaning ascribed to it on the first page of
this Agreement.
"Purchaser" has the meaning ascribed to it in the first paragraph of
-this Agreement.
"Real Property" has the meaning ascribed to it in Section 2.15.
"Real Property Leases" has the meaning ascribed to it in Section 2.15.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the Environment.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller" and the "Sellers" have the meaning ascribed to them on the
first page of this Agreement.
"Seller Financial Statement" in Section 2.4.
"Sellers' Calculation" has the meaning ascribed to it in Section 1.2.2.
"Shareholder Debt" has the meaning ascribed to it in Section 1.2.1.
"Subsidiary" means any Person in which another Person, directly or
indirectly through Subsidiaries or otherwise, beneficially owns at least fifty
percent (50%) of either the equity interest in, or the voting control of, such
Person, whether or not existing on the date hereof. Unless the context otherwise
requires a different interpretation, references to a "Subsidiary" mean a
Subsidiary of the Company.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
"Tax Claim" means any written claim with respect to Taxes attributable
to a Pre-Closing Period made by any Taxing Authority or any Person that, if
pursued successfully, could serve as the basis for a claim for indemnification,
under this Agreement, of Purchaser the Company and other Indemnified Parties
specified in Section 7.1 of this Agreement.
"Tax Indemnity" means the Company, the Purchaser and their respective
stockholders, officers, directors, employees, agents and Affiliates of each of
them (other than the Sellers).
"Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
7.2 Interpretation of Agreement.
7.2.1 Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; (v) the word "including" does
not imply any limitation to the item or matter mentioned; and (vi) the phrases
"ordinary course of business" and "ordinary course of business consistent with
past practice" refer to the business and practice of the Company. All accounting
terms used herein and not expressly defined herein shall have the meanings given
to them under GAAP.
7.2.2 When used herein, the phrase "to the knowledge of" any Person,
11to the best knowledge of" any Person or any similar phrase, means (i) with
respect to any Person who is an individual, the actual knowledge of such Person,
(ii) with respect to any other Person, the actual knowledge of the directors,
officers, managers, and other similar Persons in a similar position or having
similar powers and duties, in either case without any duty of independent
investigation of any kind.
ARTICLE IX
8 MISCELLANEOUS
8.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or mailed by prepaid first class certified mail, return receipt
requested, or sent by prepaid courier, to the parties at the following
addresses:
If to Purchaser, to:
--------------------
ISG Resources, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000
Attn.: Sr. Vice President and General Counsel
If to the Sellers, to:
----------------------
Xx. Xxxxx X. Xxxxx and Xx. Xxxxx X. Xxxxx
134 Mockingbird X.X. Xxx 000
Xxxxxxxxxx, Xxxxx 00000 Xxxxxxxx, Xxxxx 00000
With copies to Sellers' attorney:
--------------------------------
Xxxxxxx X. Xxxxxxxxxx, Esquire
XXXXXXXXXX, XXXXXX & XXXXXXX, P.C.
Xxx Xxxxxxxx, Xxx. 0000
Xxxxxxx, Xxxxx; 77056
and to Sellers' accountant:
---------------------------
Xx. Xxxxxx X. Xxxxx
A.M. ROSSI, PLLC
0000 Xxxxxxxx Xx., Xxx. 000
Xxxxxxx, Xxxxx 00000
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given -upon
delivery, (ii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt and (iv) if delivered
by courier to the address as provided for in this Section, be deemed given on
the earlier of the second Business Day following the date sent by such courier
or upon receipt. Any party from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
8. 2 Entire Agreement. This Agreement (including the Exhibits hereto
and the Disclosure Schedule) supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof and thereof and
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof and thereof.
8.3 Expenses. Except as otherwise expressly provided in this Agreement
(including without limitation as provided in Article VII) , each party will pay
its own costs and expenses incurred in connection with this Agreement, and the
transactions contemplated hereby and thereby; provided, the Sellers will pay all
expenses relating hereto of the Company incurred in respect of the period prior
to the Closing; other than Ernst & Young.
8.4 Confidentiality. Purchaser and the Sellers will hold in strict
confidence from any Person (other than its Affiliates or representatives) all
documents and information concerning the other party hereto or any of its
Affiliates furnished to it by or on behalf of the other party in connection with
this Agreement or the transactions contemplated hereby, except to the extent the
disclosing party can demonstrate that such documents or information was (a)
previously known by the party receiving such documents or information, (b) in
the public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential. Such covenant of
confidentiality will remain in effect unless a party is compelled to disclose by
judicial or administrative process (including in connection with obtaining the
necessary approvals of this Agreement and the transactions contemplated hereby
of Governmental or Regulatory Authorities) or by other requirements of Law. This
section is meant to supplement the section entitled "Confidentiality" in that
certain Letter Agreement between the Purchaser and the Sellers dated November
13, 1998 (the "Letter Agreement"). Any conflict between the provisions of this
section and the "Confidentiality" section of the Letter Agreement shall be
resolved in accordance with the provisions of the Letter Agreement.
8.5 Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Closing, the Purchaser or the Sellers shall execute and
deliver to the other party such other documents and instruments, provide such
materials and information and take such other actions as the other party may
reasonably request to consummate the transactions contemplated by this Agreement
and otherwise to cause the Purchaser or the Sellers to fulfill their obligations
under this Agreement. The Sellers shall also, for a reasonable period of time
(not to exceed ninety (90) days), cooperate with Purchaser by continuing to
provide any welfare benefit plan, payroll services plan, operational service, or
other service of any nature being provided to the Company by the Sellers or any
business entity owned, managed or controlled, in any manner, by the Sellers. All
of such services shall be provided at the cost of Sellers, plus ten percent
(10%) , and be payable by Purchaser and the Company upon demand.
8.6 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
8.7 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of the parties
hereto.
8.8 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of t `
he parties to confer third-party beneficiary rights, and this Agreement: does
not confer any such rights, upon any other Person other than any Person entitled
to indemnity under Article VII.
8.9 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by either party without the prior written consent of the other
party(ies) and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and. assigns.
8. 10 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
8.11 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will. not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
8. 12 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Texas, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
Texas.
8.13 Limited Recourse of Purchaser. Regardless of anything in this
Agreement to the contrary, (i) obligations and liabilities of Purchaser
hereunder shall be without recourse to any stockholder of Purchaser or any of
such stockholder's Affiliates, directors, employees, officers or agents, except
and to the extent such third party is a successor or assign of Purchaser, and
shall be limited to the assets of such party and (ii) the stockholders of
Purchaser, except and to the extent such third party is a successor or assign of
Purchaser, have made no (and shall not be deemed to have made any)
representations, warranties or covenants (express or implied) under or in
connection with this Agreement or any other Operative Agreement, subject to
further written agreement by such obligor.
8. 14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.15 Limited Recourse of Sellers.
8.15.1 No Reliance. Purchaser acknowledges and agrees that upon the
Closing Purchaser shall have had ample opportunity to review documents
concerning the Company and its Assets and Liabilities (collectively, the
"Property") and to conduct physical inspections, including specifically, without
limitation, inspections regarding the environmental condition of the Real
Property and the Assets, the Purchaser hereby represents, warrants and agrees
that as of the Closing, Purchaser shall have (a) examined the Property and will
be familiar with the physical condition thereof; and (b) conducted such
investigations of the Property (including without limitation the environmental
condition thereof) as Purchaser has deemed necessary to satisfy itself as to the
condition of the Property and the existence or nonexistence, or curative action
to be taken with respect to, any hazardous or toxic substances on or discharged
from the Property, (c) neither Sellers, nor any of their affiliates, agents,
officers, employees or representatives of any of the foregoing have made or will
make any verbal or written representations, warranties, promises or guarantees
whatsoever to Purchaser, expressed or implied, other than as provided in this
Agreement or in any other closing documents executed by the Seller to be bound
thereby, and in particular, that no such representations, warranties,
*guarantees or promises have been or will be made with respect to the physical
condition, operation, or any other matter or thing affecting or related to the
Property, and (d) Purchaser has not relied and will not rely upon any
representations, warranties, guarantees or promises or upon any statements made
or any information provided concerning the Property provided or made by Seller
or its predecessors, or any of their respective agents and representatives,
other than as provided in this Agreement or :-n the Closing Documents executed
by the Seller to be bound thereby and subject thereto. Purchaser has elected to
purchase the Company only after having made and relied solely on its own
independent investigation, inspection, analysis, appraisal and evaluation and
the facts and circumstances related thereto. ACCORDINGLY, AND SUBJECT TO THE
PROCEEDING PROVISIONS OF THIS SECTION 8.15, PURCHASER ACKNOWLEDGES AND AGREES
THAT THE PROPERTY IS ACCEPTED "AS IS, WHERE IS, WITH ALL FAULTS", AND SELLER
OTHERWISE EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY. WITHOUT
LIMITING THE GENERALITY OF THE PRECEDING SENTENCE OR ANY OTHER DISCLAIMER SET
FORTH HEREIN, BUT SUBJECT TO ANY EXPRESS REPRESENTATIONS MADE IN THIS AGREEMENT
OR IN ANY CLOSING DOCUMENTS EXECUTED BY THE SELLER TO BE BOUND THEREBY, SELLERS
AND PURCHASER HEREBY AGREE THAT SELLERS HAVE NOT MADE AND ARE NOT MAKING ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AS TO (A)
THE NATURE OR CONDITION, PHYSICAL OR OTHERWISE, OF THE PROPERTY OR ANY ASPECT
THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF HABITABILITY,
SUITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (B)
THE NATURE OR QUALITY OF CONSTRUCTION, STRUCTURAL DESIGN OR ENGINEERING OF THE
IMPROVEMENTS OR THE STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE
IMPROVEMENTS, (C) THE SOIL CONDITIONS, DRAINAGE CONDITIONS, TOPOGRAPHICAL
FEATURES, ACCESS TO PUBLIC RIGHTS-OF-WAY, AVAILABILITY OF UTILITIES OR OTHER
CONDITIONS OR CIRCUMSTANCES WHICH AFFECT OR MAY AFFECT THE PROPERTY OR ANY USE
TO WHICH PURCHASER MAY PUT THE PROPERTY, (E) ANY ENVIRONMENTAL, GEOLOGICAL,
METEOROLOGICAL, STRUCTURAL, OR OTHER CONDITION OR HAZARD OR THE ABSENCE THEREOF
HERETOFORE, NOW OR HEREAFTER AFFECTING IN ANY MANNER THE PROPERTY, INCLUDING BUT
NOT LIMITED TO, THE ABSENCE OF ASBESTOS OR ANY ENVIRONMENTALLY HAZARDOUS
SUBSTANCE ON, IN, UNDER OR ADJACENT TO THE PROPERTY, (I) THE COMPLIANCE OF THE
PROPERTY OR THE OPERATION OR USE OF THE PROPERTY WITH ANY APPLICABLE RESTRICTIVE
COVENANTS, OR WITH ANY LAWS, ORDINANCES OR REGULATIONS OF ANY GOVERNMENTAL BODY
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ANY ZONING LAWS OR REGULATIONS, ANY
BUILDING CODES, ANY ENVIRONMENTAL LAWS, AND THE AMERICANS WITH DISABILITIES ACT
OF 1990, 42 U.S.C. 12101 ET SEQ. PURCHASER RECOGNIZES AND AGREES TF~AT UPON
CLOSING PURCHASER SHALL OTHERWISE BEAR THE RISK THAT ADVERSE MATTERS, INCLUDING
BUT NOT LIMITED TO, VIOLATIONS OF ANY APPLICABLE LAWS, CONSTRUCTION DEFECTS, AND
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE
WAIVED, RELINQUISHED AND RELEASED SELLERS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF
ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLERS BY REASON OF OR ARISING OUT OF ANY
VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS),
CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY WITH THE
EXCEPTION OF THOSE MATTERS SET FORTH IN THIS AGREEMENT AND IN ANY CLOSING
DOCUMENT, SIGNED BY A SELLER.
ARTICLE IX
9 DISPUTE RESOLUTION
9.1 In the event there is a dispute under this Agreement, the
disagreeing parties shall meet with one another and diligently attempt to
resolve their disagreements. If they are unable to do so, then upon request of
either party to the dispute made within twenty (20) days of the failure of
negotiations, they will arbitrate the dispute, utilizing the process Set forth
below
9.2 Any dispute, controversy or claim arising out of or relating to
this Agreement, including those pertaining to indemnities and taxes, shall be
submitted for determination by a board of three (3) arbitrators to be selected
for each such controversy so arising as follows: The party desiring arbitration
(the "Petitioner") shall notify the other party (the "Respondent") to such
effect and shall submit the name of an arbitrator and state the "Question" or
"Questions". The Respondent shall within ten (10) business days thereafter
select an arbitrator and notify the Petitioner of the name of such arbitrator.
If Respondent shall fail to name an arbitrator within said ten (10) days, then
the Petitioner shall have the right to apply to the person who is then Senior
Judge (in term of service) of the United States District Court having
jurisdiction for the Southern District of Texas, Houston Division, for the
appointment of an arbitrator for or on behalf of the Respondent, and in such
case the arbitrator appointed by the person who is such Judge shall act as if
named by the Respondent. Within ten (10) days after the appointment of the
second arbitrator, the two arbitrators shall choose the third arbitrator. In the
event said two arbitrators should fail to choose the third arbitrator within
said ten (10) days, then either Petitioner or Respondent shall have the right,
upon reasonable notice to the other party, to apply to the person who is such
Judge for the appointment of a third arbitrator, and in such case the arbitrator
so appointed by such Judge shall act as the third arbitrator. Should any
arbitrator be or become unable or unwilling to act, another shall be selected in
the same manner.
9.3 The Question to be decided by the arbitrators shall be stated in
writing in the written request for arbitration, and the jurisdiction of the
arbitrators shall be limited to a decision of the Question so stated in writing.
The board of arbitrators so chosen shall proceed immediately, after reasonable
notice to the Parties hereto, to hear and determine the Question or Questions in
dispute. The arbitrators shall be impartial. The' arbitration shall be conducted
in Houston, Texas in accordance with the most recent commercial arbitration
rules promulgated by the American Arbitration Association, except as may be
provided for herein to the contrary. The arbitrators are relieved from judicial
formalities, and shall make their award with a view toward effecting the general
intent of this Agreement. The decision of the majority shall be final and
binding upon the Parties. The Petitioner shall submit its brief to the
arbitrators within fifteen (15) days after notice of the election of the third
arbitrator. Upon receipt of the Petitioner's brief, the Respondent shall have
fifteen (15) days to file a reply brief. On receipt of the Respondent's brief,
the Petitioner shall have seven (7) days to file a rebuttal brief. The
Respondent shall have seven (7) days. from the receipt of the Petitioner's
rebuttal to file its rebuttal brief. The arbitrators may extend the time for
filing of briefs at the request of either Party. The arbitration hearing shall
be concluded within three (3) days unless otherwise ordered by the arbitrators
and the award thereon shall be made within three (3) days after the close of the
submission of evidence. An award rendered by a majority of the arbitrators
appointed pursuant to this Agreement shall be final and binding on all Parties
to the proceeding, and judgment on such award may be entered by either party in
the highest court, state or federal, having jurisdiction.
9.4 The decision of the arbitrators shall be in writing and signed by
such arbitrators, or a majority of them, and shall be final and binding upon the
Parties hereto as to the Question or Questions so submitted to and determined by
such arbitrators. Each Party shall bear the fees and expenses of the arbitrator
selected by or for such Party, the fees and expenses of counsel, witness and
employees of the Parties hereof and all other costs and expenses incurred
exclusively for the benefit of the Party incurring the same shall be borne by
the Party incurring such fees or expenses. The Party to be responsible for
paying all other fees and expenses, including but without limitation,
compensation for the third arbitrator, shall be determined by the decision of
the arbitrators as a part of the award. The Parties stipulate that the
provisions hereof shall be a complete defense to any suit, action, or proceeding
instituted in any federal, state, or local court or before any administrative
tribunal with respect to any controversy or dispute arising during the period of
this Letter Agreement and which is arbitrable as herein set forth. The
arbitration provisions hereof shall, with respect to such controversy or
dispute, survive the termination or expiration of this Letter Agreement. Nothing
herein contained shall be deemed to give the arbitrators any authority, power,
or right to alter, change, amend, modify, add to, or subtract from any of the
provisions of this Letter Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth on the first page hereof.
PURCHASER
ISG RESOURCES, INC.
/s/ J. I. Everest II
-----------------------
By: J. I. Everest II
Its: Treasurer & CFO
SELLERS
XXXXX X. XXXXX
/s/Xxxxx X. Xxxxx
--------------------
Xxxxx X. Xxxxx
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
--------------------
Xxxxx X. Xxxxx
EXHIBIT A
Sellers' Financial Statements For Period Ending July 31, 1998
and the Interim Statements
EXHIBIT B
Sellers' Officer's Certificate
We, the undersigned, being the President and Vice President of J.
Xxxxxx Xxxxx Interests, Inc., d/b/a Best Masonry & Tool Supply, a Texas
corporation (the "Company"), do hereby certify that:
1. This Certificate is being delivered at the Closing today pursuant to
Section 5.1.8 of the Stock Purchase Agreement dated as of January 7, 1999 (the
"Agreement") between Xxxxx X. Xxxxx and Xxxxx X. Xxxxx (collectively the
"Sellers") and ISG Resources, Inc., a Utah corporation (the "Purchaser"). Unless
otherwise defined herein, capitalized terms used in this Certificate have the
meanings given to them in the Agreement.
2. Attached hereto as Exhibit B-1 is a correct and complete copy of the
Articles of Incorporation of the Company, as in effect on the date hereof.
3. Attached hereto as Exhibit B-2 is a correct and complete copy of the
By-Laws of the Company, as
in effect on the date hereof.
4. Attached hereto as Exhibit B-3 is a correct and complete copy of the
Certificate of Good
Standing of the Company, as in effect on the date hereof.
5. Attached hereto as Exhibit B-4 is a schedule of persons that have
been duly elected (or appointed) or qualified, and/or that have acted, as
officers of the Company (to and including the date hereof), each holding the
respective offices set forth opposite their names; and the signatures set forth
on Exhibit B-4 opposite their names are the genuine signatures of such officers
executing the Agreement and any other agreements or documents on behalf of the
Company in connection with the Closing under the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
as of January 7, 1999.
J. XXXXXX XXXXX INTERESTS, INC.,
d/b/a BEST MASONRY & TOOL SUPPLY
__________________
By:_______________
Its: President
J. XXXXXX XXXXX INTERESTS, INC.,
d/b/a BEST MASONRY & TOOL SUPPLY
__________________
By:_______________
Its: Vice President
EXHIBIT C
Officer's Certificate
We, the undersigned, the President and Vice President of J. Xxxxxx
Xxxxx Interests, Inc., d/b/a Best Masonry & Tool Supply, a Texas corporation
(the "Company"), do hereby certify that:
1. This Certificate is being delivered as of the Closing pursuant to
Section 5.1.8 of the Stock Purchase Agreement dated as of January 6, 1999 (the
"Agreement") between Xxxxx X. Xxxxx and Xxxxx X. Xxxxx (collectively the
"Sellers") and ISG Resources, Inc., a Utah corporation (the "Purchaser"). Unless
otherwise defined herein, capitalized terms used in this Certificate have the
meanings given to them in the Agreement.
2. We are familiar with the Company's finances and capitalization.
3. The Sellers have provided the Purchaser with Seller's Financial
Statements for the period Ending July 31, 1998 and Financial Statements for the
period August 1, 1998 through December 31, 1998 (the "Interim Statements"),
collectively, the "Statements".
4. The Statements fairly represent the Company's financial condition
and operations as of and through the respective dates and periods therein
delineated, and the results of the Company's operations and changes in financial
position for the periods then ended, and have been prepared as set forth in
Section 2.4 of the Agreement.
5. As of the Closing, no material adverse change in the financial
condition or operations of the Company has occurred from that shown on the
Statements, except as may be contemplated in the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
to be effective as of January 7, 1999.
J. XXXXXX XXXXX INTERESTS, INC.,
d/b/a BEST MASONRY & TOOL SUPPLY
______________________
By:___________________
Its: President
J. XXXXXX XXXXX INTERESTS, INC.,
d/b/a BEST MASONRY & TOOL SUPPLY
_______________________
By:____________________
Its: Vice President
EXHIBIT D
Purchaser's Officer's Certificate
The undersigned, the Vice President, Treasurer and Chief Financial
Officer of ISG Resources, Inc., a Utah corporation (the "Purchaser"), hereby
certifies that:
1. This Certificate is being delivered at the Closing today pursuant to
Section 5.2 of the Stock Purchase Agreement dated as of January 7, 1999 (the
"Agreement") between Xxxxx X. Xxxxx and Xxxxx X. Xxxxx (collectively the
"Sellers") and the Purchaser. Unless otherwise defined herein, capitalized terms
used in this Certificate have the meanings given to them in the Agreement.
2. Attached hereto is a correct and complete copy of the authorization
of the Board of Directors of the Purchaser authorizing the consummation of the
transactions described in the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
as of January 7, 1999.
ISG RESOURCES, INC.
_______________________
By: J.I. Everest, II
