STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of March
11, 1998, is by and among Columbus XxXxxxxx Corporation, a New York corporation
("Buyer"), and the shareholders of LICO, Inc., which shareholders are identified
on the signature page of this Agreement (hereinafter sometimes referred to
individually as "Seller" and collectively as "Sellers").
WHEREAS, Sellers own all of the outstanding voting and
non-voting shares of capital stock of LICO, INC., a Missouri corporation (the
"Company");
WHEREAS, Automatic Systems, Inc., a Missouri corporation
("ASI"), Automatic Systems Conveyors, Ltd., a Canadian company ("AS-Canada"),
ASI of Australia Pty. Ltd., an Australian company ("AS-Australia"), LICO
Conveyor Company, a Missouri corporation ("LICO-Conveyor"), LICO Steel, Inc., a
Missouri Corporation ("LICO-Steel") and LICO International Corporation, a Virgin
Islands corporation ("LICO-International") are wholly-owned subsidiaries of the
Company (hereinafter sometimes referred to individually as "Subsidiary" or
collectively as "Subsidiaries");
WHEREAS, the Company and the Subsidiaries are engaged in the
business of designing, manufacturing, selling, installing and servicing material
handling systems for the automotive, steel and mining industries as well as
other heavy industries and in the business of structural steel erection and
general contracting for construction (collectively, the "Business"); and
WHEREAS, Sellers wish to sell all of the issued and
outstanding voting and non-voting shares of capital stock of the Company (the
"Shares") to Buyer and Buyer wishes to purchase such Shares, all on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.01. SALE OF STOCK. At the Closing (as defined in
Section 2.01 hereof) and subject to all other terms and conditions of this
Agreement, Sellers will sell, transfer, assign and convey to Buyer free and
clear of all liabilities, liens, pledges, security interests, encumbrances,
claims and
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other restrictions ("Liens") all of the Shares for the price determined in
Section 1.02 hereof.
SECTION 1.02. THE PURCHASE PRICE. In consideration of the sale
by Sellers to Buyer of the Shares and Sellers' performance of this Agreement,
Buyer shall pay to Sellers the aggregate amount equal to ONE HUNDRED FIFTY-FIVE
MILLION DOLLARS AND 00/100 ($155,000,000.00) less the greater of (x) the sum of
$2,183,000 and all costs or expenses paid by the Company or any Subsidiary
relating to or incurred in connection with this Agreement and the transactions
contemplated herein or (y) the Funded Debt (as hereinafter defined) (the
"Purchase Price"). For the purposes of this Agreement, "Funded Debt" shall mean
the sum of: (i) the aggregate amount, as of the Closing Date, of all obligations
of the Company and the Subsidiaries for borrowed money, including any accrual of
unpaid interest, any prepayment penalties which would be payable if the
indebtedness were to be repaid as of the Closing Date, (ii) any outstanding
checks or drafts on ASI's controlled disbursement account which have been
written but not cleared as of the Closing Date and (iii) any outstanding checks
or drafts on other accounts of the Company or the Subsidiaries which have been
written but not cleared as of the the Closing Date and which would, when
presented, create an overdraft on such account. The Purchase Price is subject to
the adjustments provided in Section 1.03 hereof. The Purchase Price as adjusted
shall be allocated among Sellers as specified in SCHEDULE 1.02 hereto. At the
Closing, Buyer shall pay the Purchase Price as follows:
(a) CASH. Buyer's wire transfer of funds to accounts
designated by Sellers in the aggregate amount of the Purchase Price less
$5,000,000.00; and
(b) ESCROW. Buyer's wire transfer of funds to an account
designated by United Missouri Bank, N.A. ("Escrow Agent") in an aggregate amount
of $5,000,000.00 (the "Escrow Amount"), to be held by Escrow Agent pursuant to
the terms and conditions of an escrow agreement ("Escrow Agreement") among
Buyer, Sellers and Escrow Agent in substantially the same form and on the same
terms as SCHEDULE 1.02(B) hereto.
SECTION 1.03. POST CLOSING ADJUSTMENT OF PURCHASE
PRICE.
(a) ADJUSTMENT. The adjustments to the Purchase Price as
provided below shall be made following the Closing. The adjustments will be
computed as follows and shall be cumulative:
(i) The Purchase Price shall be decreased by the
amount, if any, by which the consolidated shareholders' equity of the Company
and the Subsidiaries, as of the Closing Date, computed in accordance with
generally accepted accounting
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principles consistently applied on the same basis as used in the Base Balance
Sheet (as hereinafter defined) is less than $22,000,000.
(ii) The Purchase Price shall be decreased by any
costs or expenses which are incurred but not paid by the Company or the
Subsidiaries prior to or on the Closing Date which relate to or are incurred in
connection with this Agreement and the transactions contemplated hereby.
(b) SETTLEMENT OF ADJUSTMENT. Within sixty (60) days following
the Closing Date, Buyer will deliver to Sellers the proposed adjustments to the
Purchase Price pursuant to Section 1.03(a) as computed by Buyer's accountants.
In the course of Sellers' review of the proposed adjustments, Buyer's
accountants will cooperate fully with Sellers and Sellers' accountants,
including providing access to their work papers relating to the proposed
adjustments. If Sellers within twenty (20) days of receipt of the proposed
adjustments do not object thereto in writing, the proposed adjustments shall
become final and binding on the parties. If Sellers do not agree with the
proposed adjustments, Sellers shall, prior to the expiration of such twenty (20)
day period, deliver to Buyer a written statement of the matters with respect to
which there is disagreement specifying the particulars of the disagreement. If
the parties fail to resolve the disagreements within twenty (20) days
thereafter, the items of disagreement shall be immediately referred to a firm of
independent public accountants of recognized standing which the parties mutually
select or the firm of Xxxxxx Xxxxxxxx LLP in the event they fail to agree on a
firm, for its determination with respect to such items of disagreement. The
parties will use their best efforts to cause such firm to resolve all items of
disagreement within thirty (30) days after submission and such firm's
determination will be final and binding on the parties. The cost of such
referral and determination shall be borne 50% by Sellers and 50% by Buyer.
(c) PAYMENT OF ADJUSTMENT. Any adjustment to the Purchase
Price shall be settled by a cash payment by Sellers to Buyer which payment shall
include interest thereon at an annual rate of 7% computed from the Closing Date
to the date of payment. Such reduction or payment shall be made by Sellers
within five (5) business days after final determination of the adjustment. The
Representative (hereinafter defined in Section 12.05) shall be responsible for
causing any such cash payment to be made to Buyer as provided herein.
ARTICLE II
CLOSING
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SECTION 2.01 CLOSING. The sale and purchase of the Shares
referred to in Article I hereof shall be consummated at a closing (the
"Closing") to be held at the offices of Phillips, Lytle, Xxxxxxxxx, Xxxxxx &
Xxxxx LLP, 0000 Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 on March 31, 1998
at 10:00 a.m. or on a date selected by Buyer (upon reasonable notice to Sellers)
which is not less than three (3) days nor more than thirty (30) days after the
expiration of all applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended ("HSR Act") unless another date
or place is agreed to in writing by Sellers and Buyer (the "Closing Date").
SECTION 2.02 CLOSING DOCUMENTATION. At the Closing,
(a) Sellers will deliver to Buyer:
(i) the certificates evidencing the Shares duly endorsed in
blank for transfer or with such duly executed stock powers, with Sellers being
responsible for the payment of any applicable stock transfer taxes or similar
taxes;
(ii) the duly executed Escrow Agreement required pursuant to
Section 1.02(b) hereof;
(iii) the duly executed releases required pursuant to Section
8.01(d) hereof;
(iv) the duly executed resignations required pursuant to
Section 8.01(e) hereof;
(v) the duly executed estoppel certificates required pursuant
to Section 8.01(g) hereof;
(vi) if applicable, the evidence of payment and discharge of
Funded Debt (as hereinafter defined) and releases of all security interests on
the assets of the Company and the Subsidiaries securing the Funded Debt pursuant
to Section 8.01(h) hereof;
(vii) the opinion of counsel to Sellers required pursuant to
Section 8.01(c) hereof;
(viii) the duly executed certificates of Sellers required
pursuant to Sections 8.01(a) and (b) hereof;
(ix) the duly executed officers' certificates required
pursuant to Sections 8.01(a) and (b) hereof;
(x) the complete minute and stock books and corporate seals of
the Company and the Subsidiaries;
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(xi) duly executed agreements terminating the Second Amended
and Restated Stock Redemption Agreement dated February 17, 1995, as amended, and
the Cross Purchase Agreement dated February 17, 1995, as amended (collectively,
the "Termination Agreements");
(xii) the duly executed written acknowledgements of the
Related Parties (as hereinafter defined) pursuant to Section 7.7 hereof;
(xiii) the duly executed written guaranties required pursuant
to Section 12.13 hereof; and
(xiv) such other documents as Buyer may reasonably request.
(b) Buyer will deliver to Sellers:
(i) the wire transfer funds constituting the Purchase Price as
required pursuant to Section 1.02 hereof;
(ii) the duly executed Escrow Agreement required pursuant to
Section 1.02(b) hereof;
(iii) the duly executed certificate of Buyer required pursuant
to Sections 9.01(a) and (b) hereof; and
(iv) the opinion of counsel to Buyer required pursuant to
Section 9.01(c) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers jointly and severally represent and warrant to Buyer
as follows and confirm that Buyer is relying on the accuracy of each such
representation and warranty in connection with the purchase of the Shares and
completion of the transactions contemplated hereby:
SECTION 3.01 ORGANIZATION. The Company and each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of their respective states or jurisdictions of
incorporation, and has all requisite power and authority, corporate and other,
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now and heretofore conducted. The
Company and each of the Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the
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nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not have a material adverse effect on the Company or the
Subsidiaries.
SECTION 3.02 CAPITAL STOCK; SUBSIDIARIES.
(a) As of the date hereof, the authorized capital stock of the
Company consists of (i) 300,000 shares of Class A Voting Common Stock of the
Company with $.10 par value, of which 253,850 shares are issued and outstanding
and 2,400 shares are held in treasury, and (ii) 2,700,000 shares of Class B
Non-Voting Common Stock with $.10 par value, of which 2,284,650 shares are
issued and outstanding and no shares are held in treasury. All of the
outstanding shares of the Company's capital stock are duly authorized, validly
issued, fully paid and non-assessable and, except as set forth on SCHEDULE 3.02
hereto, free of any preemptive or similar rights with respect thereto. SCHEDULE
3.02 hereto sets forth a complete and accurate list showing the record and
beneficial ownership of the outstanding capital stock of the Company including
the percentage of all outstanding shares of each class of capital stock owned by
each owner. There are no bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into securities having the right to vote) on
any matters on which shareholders of the Company may vote ("Voting Debt") issued
or outstanding. There are no options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character relating to the
issued or unissued capital stock of the Company or obligating the Company to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interests in, the Company or
securities convertible into or exchangeable for such shares or equity interests
or obligating the Company to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement or commitment. Except as
set forth in SCHEDULE 3.02 hereto, there are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company. Except as set forth in SCHEDULE 3.02 hereto,
all of the Shares listed opposite each Seller's name on SCHEDULE 3.02 hereto are
owned beneficially and of record by such Seller free and clear of any Liens. At
the Closing, each Seller shall effectively transfer to Buyer good and marketable
title to all of the Shares owned by such Seller free and clear of any Liens.
(b) The authorized capital stock and the issued and
outstanding capital stock of each of the Subsidiaries is shown on SCHEDULE 3.02
hereto, and all of the outstanding shares of capital stock of each of the
Subsidiaries have been and are validly issued, fully paid and non-assessable and
free of any preemptive or similar rights with respect thereto, all of which are
owned by the Company free and clear of any Liens, except for
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the outstanding shares of LICO-International, all of which are owned by ASI free
and clear of any liens. There are no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities having the
right to vote) on any matters on which shareholders of the Subsidiaries may vote
("Subsidiary Voting Debt") issued or outstanding. There are no options,
warrants, calls, subscriptions or other rights or other agreements or
commitments of any character relating to any of the issued or issued capital
stock of any of the Subsidiaries or obligating any of the Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Subsidiary Voting Debt of, or other equity interest in, any of
the Subsidiaries or securities convertible into or exchangeable for such shares
or equity interest or obligating any of the Subsidiaries to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement or commitment. There are no outstanding contractual obligations of any
of the Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of any of the Subsidiaries. No shares of the capital stock of any
of the Subsidiaries are held as treasury shares (except for ASI, which has 1300
treasury shares). Neither the Company nor any of the Subsidiaries have any
subsidiary or any ownership interest in any business, organization or entity,
except for the Company's interests in the Subsidiaries and ASI's interest in
LICO-International.
SECTION 3.03 AUTHORITY; ENFORCEABILITY. Sellers have the
requisite capacity, power and authority, corporate and other, to execute and
deliver this Agreement and all other agreements, instruments and certificates
contemplated hereby (the "Related Agreements") and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly and effectively
authorized by all necessary action, corporate and other, on the part of Sellers
and no other acts or proceedings on the part of Sellers are necessary to
authorize this Agreement or the Related Agreements or to consummate the
transactions contemplated hereby and thereby. This Agreement and the Related
Agreements have been duly executed and delivered by Sellers and constitute
legal, valid and binding obligations of Sellers, enforceable against each of
them in accordance with their respective terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
generally the enforcement of creditors rights and by the availability of
equitable remedies.
SECTION 3.04 NO VIOLATION. Except as contemplated by Section
3.05 hereof, the execution and delivery of this Agreement and the Related
Agreements by Sellers and the consummation of the transactions contemplated
hereby and thereby will not conflict with, or result in any violation of, or
default (with or without
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notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or the creation of any Lien on any Seller's or the Company's or any of
the Subsidiaries' properties or assets (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss or creation, shall be
referred to as a "Violation"), pursuant to (i) any provision of the Certificate
of Incorporation, as amended, or By-laws, as amended, or other charter document,
as amended of the Company or any of the Subsidiaries, (ii) any provision of any
loan or credit agreement, note, bond, mortgage, indenture, lease, Benefit Plans
(as defined in Section 3.18 hereof) or other agreement, obligation, instrument,
permit, concession, franchise or license, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
the Subsidiaries or any Seller or their respective properties or assets.
SECTION 3.05 CONSENTS AND APPROVALS. No consent, approval,
order or authorization of, or registration, declaration or filing with any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of the Subsidiaries or Sellers in
connection with the execution and delivery of this Agreement or the Related
Agreements or the consummation by Sellers of the transactions contemplated
hereby and thereby, except for the filing of a pre-merger notification report
and, if applicable, other documents, by the Company under the HSR Act.
SECTION 3.06 FINANCIAL STATEMENTS. The audited consolidated
balance sheets of the Company and the Subsidiaries as at September 30, 1997,
September 30, 1996, and September 30, 1995 and the related consolidated
statements of income, changes in stockholder's equity and cash flows for the
fiscal years then ended (including the notes thereto) and the unaudited
consolidated balance sheet of the Company and the Subsidiaries as at December
31, 1997 and the related unaudited statement of income for the three (3) month
period then ended delivered by the Company to Buyer: (i) present fairly the
financial position of the Company and the Subsidiaries as of such dates and the
results of their operations and changes in their financial position for such
periods, and (ii) have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with that of similar periods
for preceding years except that the unaudited consolidated balance sheet and
statement of income do not contain the usual year-end adjustments and notes.
Copies of all such financial statements are attached to SCHEDULE 3.06 hereto.
The Balance Sheet of the Company as of September 30, 1997 is referred to herein
as the "Base Balance Sheet", and September 30, 1997 is referred to herein as the
"Base Balance Sheet Date". The books and records of the Company and
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the Subsidiaries are complete and correct in all material respects and
accurately reflect the basis for the financial condition and results of
operations of the Company and the Subsidiaries as set forth in the financial
statements attached to SCHEDULE 3.06 hereto.
SECTION 3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the
Base Balance Sheet Date, except as specified in SCHEDULE 3.07 hereto, neither
the Company nor any of the Subsidiaries has: (i) undergone any change in its
condition (financial or other), properties, assets, liabilities, business,
operations or, to Sellers' Knowledge (hereinafter defined in Section 12.06),
prospects except changes in the ordinary and usual course of its business and
consistent with its past practice and which have not been, either in any case or
in the aggregate, materially adverse to the Company and the Subsidiaries on a
consolidated basis; (ii) engaged in any action, activity or practice
inconsistent with the ordinary and routine actions, activities and practices it
has previously followed, the effect of which is to reduce Funded Debt; (iii)
declared, set aside or paid any dividend or other distribution in respect of its
capital stock or made any direct or indirect redemption, purchase or other
acquisition of any shares of its capital stock or made any payment to any of its
shareholders except for employment compensation in the ordinary and usual course
of business and consistent with past practice; (iv) issued or sold any shares of
its capital stock or any options, warrants or other rights to purchase any such
shares or any securities convertible into or exchangeable for such shares or
taken any action to reclassify or recapitalize or split up its capital stock;
(v) mortgaged, pledged or subjected to any Lien, any of its properties or
assets; (vi) acquired or disposed of any interest in any material asset or
material property except the purchase of materials and supplies and the sale of
inventory in the ordinary and usual course of its business and consistent with
its past practice; (vii) forgiven or canceled any debt or claim, waived any
right, or, except in the ordinary and usual course of its business and
consistent with its past practice, incurred or paid any liability or obligation;
(viii) adopted or amended any profit sharing plan, agreement, arrangement or
practice for the benefit of any director, officer or employee or changed the
compensation (including bonuses) to be paid to any director, officer, or
employee; (ix) suffered any damage, destruction or loss (whether or not covered
by insurance) which has a material adverse effect on its condition (financial or
other), properties, assets, business, operations or, to Sellers' Knowledge,
prospects; (x) amended or terminated any contract, agreement, or lease involving
the payment of more than $100,000, or otherwise having a material effect on the
Company or the Subsidiaries; (xi) experienced any material labor difficulty or
loss of employees or customers; (xii) entered into any collective bargaining
agreement; (xiii) sold or granted or transferred to
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any party or parties any contract or license, or granted an option to acquire a
license, to manufacture or sell any of the products of the Company or any of the
Subsidiaries, or to use any trademark, service xxxx, trade name, copyright,
patent or any pending application for any foregoing, or any trade secret or
know-how of the Company or any of the Subsidiaries; (xiv) merged, consolidated
or entered into any binding share exchange or other business combination, or
acquired any stock, equity interest or business of any other person; (xv)
changed the accounting methods or practices followed by it; (xvi) without
limiting the generality of any of the foregoing, entered into any transaction
except in the ordinary and usual course of its business and consistent with its
past practice; or (xvii) agreed to, permitted or suffered any of the acts,
transactions or other things described in Subsections (i) through (xvi) of this
Section 3.07.
SECTION 3.08 LIABILITIES. Neither the Company nor any of the
Subsidiaries has any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, except (i) as set forth in the Base Balance
Sheet or identified as such in SCHEDULE 3.08 hereto; and (ii) those trade
payables incurred since the Base Balance Sheet Date in the ordinary and usual
course of its business and consistent, in type and amount, with its past
practice and experience.
SECTION 3.09 TAXES. Except as set forth in SCHEDULE 3.09
hereto, each of the Company and the Subsidiaries (including any predecessors)
has timely filed when due all Tax returns required to be filed by it and has
paid, or has made adequate provision for or set up in accordance with generally
accepted accounting principles an adequate accrual or reserve for the payment
of, all Taxes required to be paid in respect of all periods for which returns
have been filed or are due (whether or not shown as being due on any Tax
returns), and has established an adequate accrual or reserve for the payment of
all Taxes payable in respect of any period for which no return has been filed or
is due, and the Base Balance Sheet reflects in accordance with generally
accepted accounting principles a reserve for all Taxes payable by the Company or
any of the Subsidiaries accrued through the Base Balance Sheet Date. No material
deficiencies for Taxes have been proposed, asserted or assessed against the
Company or any of the Subsidiaries, and no audit of any of the Tax returns of
the Company or any of the Subsidiaries is currently being conducted by any
Taxing authority. SCHEDULE 3.09 hereto contains a list of all Tax returns
required to be filed by the Company and each of the Subsidiaries for the fiscal
years ended September 30, 1997 and 1996, respectively. SCHEDULE 3.09 hereto also
describes for each Tax return required to be filed by the Company or any
Subsidiary during the five fiscal years ended September 30, 1997, whether: (i)
such return has been examined by and settled with the applicable federal, state,
local or foreign taxing authority; and
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(ii) an extension of the applicable statute of limitations has been given with
respect to such return. Copies of all Federal and Missouri Income Tax returns
required to be filed by the Company and each of the Subsidiaries for each of the
last five years, together with all schedules and attachments thereto, have been
delivered by the Company to Buyer. Copies of all other Tax returns required to
be filed by the Company and each of the Subsidiaries for each of the last five
years, together with all schedules and attachments thereto, are available to
Buyer upon request. Neither the Company nor any of the Subsidiaries is a party
to, is bound by, and has any obligation under any Tax sharing or similar
agreement. For the purpose of this Agreement, the term "Tax" (including, with
correlative meaning, the terms "Taxes", "Taxing", and "Taxable") shall include
all Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, gains, transfer, recording,
license, value-added, withholding, excise and other taxes, duties or assessments
of any nature whatsoever (whether payable directly or by withholding), together
with any and all information reporting and estimated Tax, interest, penalties
and additions to Tax imposed with respect to such amounts and any obligations in
respect thereof under any Tax sharing, Tax allocation, Tax indemnity or similar
agreement as well as any obligations arising pursuant to Treasury Regulation
Section 1.1.502-6 or comparable state, local or foreign provision.
SECTION 3.10 TITLE TO AND CONDITION OF REAL ESTATE.
(a) GENERALLY. All of the real property presently owned,
occupied or used by the Company or any of the Subsidiaries or in which the
Company or any of the Subsidiaries otherwise has an interest and the owners
thereof are identified in SCHEDULE 3.10(A) hereto (the "Premises"). The
Premises, all improvements located thereon, and the use thereof, comply in all
material respects with all zoning, land use, building, health, safety and fire
laws, codes, permits, licenses and certificates, rules, orders, ordinances,
regulations and all restrictions and conditions (provided that compliance with
Environmental Laws (as hereinafter defined) is not addressed in this Section
3.10). To Sellers' Knowledge there are no actions, suits, proceedings or
investigations pending or, threatened before any federal, state, municipal,
regulatory or administrative authority affecting the Premises. The Company, any
Subsidiary and, to Sellers' Knowledge, the owners of the Leased Premises (as
hereinafter defined) are not in default with respect to any order, judgment,
injunction or decree of any court or other governmental authority with respect
to the Premises. The Premises are adequate for the purposes for which they are
and have been used and, to Seller's Knowledge, none of the Premises are in need
of maintenance or repairs except for maintenance or repairs that are either
routine or not material in nature or cost. All water, sewer, gas,
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electric, telephone and drainage facilities and all other utilities required for
the use and operation of the Premises are available, and such utilities enter
the boundaries of such facilities through adjoining public streets or easement
rights-of-way. To Sellers' Knowledge, such public utilities are all connected
pursuant to valid permits, are all in good working order and are adequate to
service the operations of the Premises as currently conducted and permit full
compliance with all requirements of law. The Premises have adequate access to
public streets. To Sellers' Knowledge, there are no pending or threatened
assessments for municipal improvements which may affect or become a Lien on the
Premises.
(b) OWNED PREMISES. SCHEDULE 3.10(B) hereto sets forth the
legal description of the Premises owned by the Company or any of the
Subsidiaries ("Owned Premises") and all fee title insurance policies, title
searches and surveys relating to the Owned Premises. The Company or its
Subsidiaries, as the case may be, has good and marketable fee simple title to
the Owned Premises, free and clear of all mortgages, liens, security interests,
easements, covenants, rights-of-way and other encumbrances or restrictions of
any nature whatsoever, except easements, covenants, rights-of-way, zoning
restrictions, and other encumbrances or restrictions identified on SCHEDULE
3.10(B), hereto ("Permitted Encumbrances"), none of which prohibit or in any
material respect interfere with the operations of the Company or any of the
Subsidiaries on the Owned Premises as heretofore conducted. Except as set forth
in SCHEDULE 3.10(B), all structures and other improvements on the Owned Premises
are within the lot lines and do not encroach on the properties of any other
person. No portion of the Owned Premises is located in a flood plain, flood
hazard area or designated wetlands area or is listed on the National Priorities
List, CERCLIS or any similar listing of contaminated sites. Neither the Company
nor any of its Subsidiaries has received any written notice of assessments for
public improvements against the Owned Premises (or any portion thereof) or any
written notice or order by any governmental or other public authority, any
insurance company which has issued a policy with respect to any of the Owned
Premises or any board of fire underwriters or other body exercising similar
functions that (A) relates to violations of building, safety or fire ordinances
or regulations, (B) claims any defect or deficiency with respect to any of the
Owned Premises or (C) requests the performance of any repairs, alterations or
other work to or in any of the Owned Premises or in the streets bounding the
same. There is no pending condemnation, expropriation, eminent domain or similar
proceeding against the Company or any of the Subsidiaries affecting all or any
portion of the Owned Premises. Except as set forth in SCHEDULE 3.10(C) hereto,
none of the Owned Premises is subject to any leases (oral or written).
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(c) LEASED PREMISES. Any of the Premises not owned by the
Company or any of the Subsidiaries ("Leased Premises") are leased pursuant to
leases ("Leases") that are valid and binding agreements, enforceable in
accordance with their respective terms subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to creditors' rights,
and (ii) the discretion of the courts to award equitable relief, and are in full
force and effect. The Company and each of the Subsidiaries has performed all
material obligations required to be performed by them to date under the Leases
and are not in material breach in any respect thereunder, and there has been no
event which, with the giving of notice or the lapse of time or both, would
become a material breach thereunder. Except as previously disclosed in writing
to Buyer, to Sellers' Knowledge, no other party to any of the Leases is in
material breach thereunder. Neither the Company nor any of the Subsidiaries has
received any notice of default under any of the Leases, and all rental and other
payments due under each of the Leases have been fully paid.
SECTION 3.11 ENVIRONMENTAL COMPLIANCE.
(a) Definition of "ENVIRONMENTAL LAWS". As used in this
Agreement, the term "Environmental Laws" shall mean any and all laws, statutes,
codes, rules, regulations, ordinances, permits, policy statements, guidance
documents and judicial decisions applicable to, affecting or relating to the
protection, preservation or remediation of the environment or public health
enacted, issued, promulgated, published, decided or required by any federal,
state, county or municipal legislative, executive, judicial or regulatory
authority, as the case may be, in existence and effective on the Closing Date,
including but not limited to: (1) Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 USCA 9601, ET SEQ., (2) Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, 42 USCA 6901, ET
SEQ., (3) Federal Water Pollution Control Act of 1972, as amended by the Clean
Water Act of 1977, as amended, 33 USCA 1251, ET SEQ., (4) Toxic Substances
Control Act of 1976, as amended, 15 USCA 2601, ET SEQ., (5) Emergency Planning
and Community Right-To-Know Act of 1986, 42 XXXX 00000, ET SEQ., (6) Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 USCA 7401,
ET SEQ., (7) National Environmental Policy Act of 1970, as amended, 42 USCA
4321, ET SEQ., (8) Rivers and Harbors Act of 1899, as amended, 33 USCA 401, ET
SEQ., (9) Endangered Species Act of 1973, as amended, 16 USCA 1531, ET SEQ.,
(10) Occupational Safety and Health Act of 1970, as amended, 29 USCA 651, ET
SEQ., (11) Safe Drinking Water Act of 1974, as amended, 42 USCA 300(f), ET SEQ.,
(12) Pollution Prevention Act of 1990, 42 XXXX 00000, ET SEQ., (13) Oil
Pollution Act of 1990, 33 USCA 2701, ET SEQ., and
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any rules, regulations, ordinances, permits, policy statements, guidance
documents and judicial decisions enacted, issued, promulgated, published,
decided or required by or under the laws referred to in Section 3.11(a)(1)-(13)
above, as well as any similar state, county or municipal statutes, codes, rules,
regulations, ordinances, permits, policy statements, guidance documents, and
judicial decisions, as the case may be.
(b) Definition of "ENVIRONMENTAL PERMITS". As used in this
Agreement, the terms "Environmental Permits" shall mean any and all permits,
licenses, approvals, authorizations, consents or registrations required by any
Environmental Laws in connection with the ownership, construction, equipping,
use and/or operation of the Business or the Premises, for the storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances or the sale, transfer or conveyance of the
Premises.
(c) Definition of "HAZARDOUS SUBSTANCE". As used in this
Agreement, the term "Hazardous Substance" shall mean, without limitation, any
flammable, explosive or radioactive materials, radon, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum
constituents, petroleum products, methane, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials, pollutants, and
toxic pollutants, as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 USCA Sections 9601, ET
SEQ.), the Hazardous Materials Transportation Act, as amended (49 USCA 1801, ET
SEQ.) the Solid Waste Disposal Act as amended by the Resource Conservation and
Recovery Act (42 USCA Section 6901, ET SEQ.), the Toxic Substances Control Act,
as amended (15 USCA Sections 2601, ET SEQ.), the Federal Waters Pollution
Control Act, as amended (33 USCA Sections 1251, ET SEQ.) and similar state laws
in the jurisdictions in which the Premises are located, as well as any rules,
regulations, ordinances, permits, policy statements, guidance documents and
judicial decisions issued, promulgated, published, decided or required
thereunder by any federal, state, county or municipal executive, judicial or
regulatory authority.
(d) Definition of "RELEASE". As used in this Agreement, the
term "Release" shall have the same meaning as given to that term in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 USCA Section 9601, ET SEQ.), and the regulations promulgated
thereunder.
(e) Definition of "CUSTOMERS". As used in this Agreement, the
term "Customers" shall mean those individuals, corporations, partnerships or
other entities or organizations with whom the Company or any of the Subsidiaries
enters into
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contractual arrangements and for whom the Company or any of the Subsidiaries
performs services on the Customers' Properties pursuant to or in connection with
any such contractual arrangement.
(f) Definition of "CUSTOMERS' PROPERTIES": As used in this
Agreement, the term "Customers' Properties" shall mean any real estate
(including, without limitation, any improvements thereon) owned, operated,
leased or otherwise under the control of the Company's Customers or the
Subsidiaries' Customers.
(g) REPRESENTATION AND WARRANTIES. Except as otherwise
disclosed on SCHEDULE 3.11 hereto:
(i) Neither the Owned Premises nor, to the best of
the Sellers' knowledge without independent
investigation, the Leased Premises is being or has
been used in violation of any Environmental Laws
for the storage, treatment, generation,
transportation, processing, handling, production
or disposal of any Hazardous Substance or as a
landfill or other waste management or disposal
site or for the manufacture or use of any form of
weapon or ammunition for military purposes.
(ii) Underground storage tanks are not and have
not been located on the Owned Premises nor, to the
best of the Sellers' knowledge without independent
investigation, on the Leased Premises.
(iii) There has been no Release or threat of a
Release of any Hazardous Substance on, at or from
the Owned Premises or, to the best of the Sellers'
knowledge without independent investigation, the
Leased Premises which through soil, subsoil,
bedrock, surface water, groundwater or airborne
migration have come to be located, or, in the case
of a threat of a Release could come to be located
on, at, in or under the Premises. Neither the
Company nor any Subsidiary has received any form
of notice or inquiry from any federal, state or
local Governmental Entity or authority, any prior
owner, operator, tenant, subtenant, licensee or
occupant of the Premises or any owner or operator
of property adjacent to or within the immediate
vicinity of the Premises or any other person with
regard to a Release or the threat of any Release
of any Hazardous Substance on, at or
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from the Premises. Neither the Company nor any
Subsidiary has received any form of notice or
inquiry from any Customer with regard to a Release
or a threat of a Release of any Hazardous
Substance on, at or from any of the Customers'
Properties resulting or allegedly resulting from
activities undertaken thereon by the Company or
the Subsidiaries.
(iv) All Environmental Permits necessary for the
construction, equipping, ownership, use or
operation of the Business or the Premises by the
Company and the Subsidiaries have been obtained
and are in full force and effect and the Company
and each of the Subsidiaries is in compliance
therewith.
(v) No event has occurred with respect to the
Business or the Owned Premises or, to the best of
the Sellers' knowledge without independent
investigation, the Leased Premises which, with the
passage of time or the giving of notice, or the
failure to give notice, would constitute a
material violation of or material non-compliance
with, any applicable Environmental Laws or
Environmental Permits.
(vi) To the best of Sellers' knowledge without
independent investigation, no act or omission of
the Company or the Subsidiaries at, upon or in any
of the Customers' Properties has been or is in
violation of any applicable Environmental Law.
(vii) There are no agreements, consent orders,
decrees, judgments, licenses or permit conditions
or other orders or directives of any federal,
state or local court, or Governmental Entity
relating to the past or present construction,
equipping, ownership, use, operation, sale,
transfer or conveyance of the Business or the
Premises which require any change in the present
condition of the Business or the Premises or any
work, repairs, construction, containment, clean
up, investigations, studies, removal or remedial
action or capital expenditures in order for the
Business or the Premises to be in compliance with
any Environmental Laws or Environmental Permits.
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(viii) There are no actions, suits, claims or
proceedings, pending or threatened, which could
cause the incurrence of expenses or costs of any
name or description or which seek money damages,
injunctive relief, remedial action or remedy that
arise out of, relate to or result from (1)
environmental conditions at, on, or under the
Premises, (2) a violation or alleged violation of
any Environmental Laws or non-compliance or
alleged non-compliance with any Environmental
Permits, (3) the presence of any Hazardous
Substance or a Release or the threat of a release
of any Hazardous Substance on, at or from the
Premises or property adjacent to or within the
immediate vicinity of the Premises, or (4) with
the exclusion of current or former employees of
the Company or the Subsidiaries in connection with
their employment with the Company or the
Subsidiaries, human exposure to any Hazardous
Substance, noises, vibrations or nuisances of
whatever kind to the extent, with respect to
Section 3.11 (g)(viii)(1)-(4), the same arise from
the Business or the condition of the Premises or
the acquisition, construction, equipping,
ownership, use, operation, sale, transfer or
conveyance thereof, or (5) to the knowledge of the
Company or the Subsidiaries without independent
investigation, the Release, threat of Release or
generation of any Hazardous Substance at, on, in
or from any of Customers' Properties resulting
from activities undertaken thereon by the Company
or the Subsidiaries.
SECTION 3.12 TITLE TO AND CONDITION OF PROPERTIES AND ASSETS.
All of the tangible assets owned or leased (which shall be designated as leased)
by the Company or any of the Subsidiaries including, without limitation, all
machinery, equipment, fixtures, furniture, office equipment, computer equipment,
tooling and vehicles are described in SCHEDULE 3.12 hereto (the "Fixed Assets").
Except as specifically described in SCHEDULE 3.12 hereto, the Company and each
of the Subsidiaries has good and marketable title to all of the properties and
assets reflected in the Base Balance Sheet, those listed in SCHEDULE 3.12
hereto, those located on or in the Premises and those used by the Company or any
of the Subsidiaries, subject to no Liens. The Fixed Assets are adequate for the
purposes for which they are and have been used and, to Sellers' Knowledge, none
of the Fixed Assets are in need of maintenance or repair except for
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maintenance or repairs that are either routine or not material in nature or
cost. To Sellers' Knowledge, the Fixed Assets conform with all applicable laws,
ordinances and regulations. To Sellers' Knowledge, there is no pending or
threatened change of any applicable ordinance, regulation or zoning or other
law, standard or requirement with which any of such property would not conform.
SECTION 3.13 PROPRIETARY RIGHTS. SCHEDULE 3.13 lists all
patents, registered trademarks, registered service marks, trade names and
copyright registrations (and all pending applications for any of the foregoing)
owned or used by the Company or any of the Subsidiaries. The Company has good
and marketable title to all patents, trademarks, trade secrets, service marks,
trade names, know-how, technology and copyrights used in, or necessary for, the
operation of the Business as heretofore conducted (collectively referred to as
"Proprietary Rights"). Except as set forth on SCHEDULE 3.13, the Proprietary
Rights are not subject to any outstanding material licenses, Liens or royalty
obligations. The Company and each Subsidiary, to Sellers' Knowledge, has taken
all action reasonably necessary to protect against and defend against any
material conflicting use of the Proprietary Rights. To Sellers' Knowledge,
neither the Company nor any of the Subsidiaries has received any notice to the
effect that the Business, Proprietary Rights or any use by the Company or any of
the Subsidiaries thereof, conflicts with or infringes on the rights of any other
person or entity.
SECTION 3.14 CONTRACTS; NO DEFAULTS; MAJOR CLIENTS.
(a) SCHEDULE 3.14 attached hereto contains a true, complete
and correct list and description of the following contracts and agreements,
whether written or oral:
(i) all loan agreements, indentures, mortgages and
guaranties to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or their respective property is
bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or any of their
respective property is bound;
(iii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which the Company or any of
the Subsidiaries is a party or by which any of their respective property is
bound which (A) involve payments or receipts by any of them of more than $50,000
in the case of any single contract, agreement, commitment, understanding or
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arrangement under which full performance (including payment) has not been
rendered by all parties thereto or (B) may materially adversely affect the
condition (financial or otherwise) or the properties, assets, business or, to
Sellers' Knowledge, prospects of the Business; provided, however, that SCHEDULE
3.14 may exclude any contract with a customer, vendor or subcontractor which is
on the Company's standard terms and conditions and which does not involve the
payment or receipt by the Company or any Subsidiary of an amount in excess of
$250,000.
(iv) all collective bargaining agreements, employment and
consulting agreements, non-competition agreements, trust agreements, executive
compensation plans, bonus, 401(k), or profit-sharing plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, memoranda of understanding, arrangements or
commitments to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties is bound;
(v) all material agency, distributor, sales representative
and similar agreements to which the Company or any of the Subsidiaries is a
party;
(vi) all material contracts, agreements or other
understandings or arrangements, whether written or oral, between the Company or
any of the Subsidiaries and any shareholder, employee, officer or director of
the Company or any of the Subsidiaries;
(vii) all material leases, whether operating, capital or
otherwise, under which the Company or any of the Subsidiaries is lessor or
lessee;
(viii) all contracts, agreements and other documents or
information relating to disposal of waste (whether or not hazardous);
(ix) all return policies and product warranties relating to
products, goods or systems manufactured, distributed or installed by the Company
or any Subsidiary as the same are currently in effect or may have been in effect
from time to time since January 1, 1994 as well as any exception to such
policies, all cooperative advertising arrangements and all rebate, discount or
allowance arrangements;
(x) all material contracts related to operation, maintenance
or management of the Premises;
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(xi) all material agreements relating to the licensing of
intellectual property under which the Company or any of the Subsidiaries is
licensor or licensee.
(b) With respect to each contract to which the Company or any
of the Subsidiaries is a party or pursuant to which it is bound (whether or not
identified in SCHEDULE 3.14 hereto):
(i) such contract is a valid and binding agreement of the
Company or any of the Subsidiaries that is a party thereto, enforceable against
the Company or the Subsidiary and the other parties thereto in accordance with
its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and the discretion of the courts to award equitable relief;
(ii) the Company and each of the Subsidiaries that is a
party thereto has fulfilled all material obligations required to have been
performed by it prior to the date hereof, and neither the Company nor any of the
Subsidiaries has any reason to believe that it will not be able to fulfill, when
due, all of its obligations under such contract which remain to be performed
after the date hereof to the Closing;
(iii) neither the Company nor any of the Subsidiaries is in
material breach of such contract, and no event has occurred which with the
passage of time or giving notice or both would constitute a default, result in a
loss of rights or result in the creation of any lien, charge or encumbrance,
thereunder or pursuant thereto;
(iv) to Sellers' Knowledge, there is no existing material
breach by any other party to such contract, and no event has occurred which with
the passage of time or giving of notice or both would constitute a default by
such other party, result in a loss of rights or result in the creation of any
lien, charge or encumbrance thereunder or pursuant thereto;
(v) neither the Company nor any of the Subsidiaries is
restricted or, so far as the Company or any of the Subsidiaries now reasonably
foresees, may be restricted in the future, by the provisions of such contract
from carrying on its respective business anywhere in the world (except for
restrictions in real estate leases which limit the use of the leased premises or
in licenses granted to the Company or any Subsidiary which limit the use of the
licensed property);
(vi) the continuation, validity and effectiveness of such
contract would not be affected by the transfer of the Shares to Buyer under this
Agreement and such contract does not require the consent or approval of any
party thereto in
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connection with this Agreement or the transactions contemplated hereby;
(vii) a true, correct and complete copy of such contract has
been heretofore made available to Buyer; and
(viii) Sellers have no reason to believe such contract will
not be renewed (if renewable) and neither the Company nor any of the
Subsidiaries has received any notification that such contract is not likely to
be renewed.
(c) The sale and transfer of the Shares contemplated by this
Agreement will not create a default under or permit the termination of or
otherwise have any materially adverse effect on any material contract of the
Company or any Subsidiary.
(d) SCHEDULE 3.14 hereto includes a complete and correct list
of the ten (10) largest customers of the Company and each of the Subsidiaries in
terms of revenue recognized in respect of such customers during the fiscal year
ended September 30, 1997 showing the amount of revenue recognized for each such
customer during such period. To Sellers' Knowledge, no customer so listed in
SCHEDULE 3.14 hereto will or is likely to terminate or reduce in any material
respect, or otherwise materially and adversely change, the business or
relationship between such customer and the Company or any of the Subsidiaries.
(e) Neither the Company nor any Subsidiary has accrued for a
loss in respect of any uncompleted customer contract nor is such an accrual
warranted under generally accepted accounting principles or anticipated based
upon current information.
SECTION 3.15 INVENTORIES; ORDER BACKLOG. The inventory of the
Company and each of the Subsidiaries consists of items of good and merchantable
quality, salable at normal prices or usable in the ordinary and usual course of
its business, subject to the reserve for unsalable or unusable inventory
specified in the Base Balance Sheet. The amounts at which inventories are
carried on the Base Balance Sheet and on the books of the Company reflect the
normal inventory valuation policy of the Company and each of the Subsidiaries of
valuing inventory at the lower of cost or market value in accordance with
generally accepted accounting principles. SCHEDULE 3.15 sets forth the aggregate
amounts of all binding and unfilled orders for the sale of goods and services by
the Company and each Subsidiary as of January 31, 1998, all of which orders have
been made and accepted in the ordinary course of the Business and are on terms
consistent with past practice.
SECTION 3.16 ACCOUNTS RECEIVABLE. All accounts receivable of
the Company and each of the Subsidiaries have arisen only through sales in the
ordinary course of business
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consistent with past practice for goods sold or services performed. The accounts
receivable of the Company and each of the Subsidiaries shown on the Base Balance
Sheet and all accounts receivable of the Company and each of the Subsidiaries
which have arisen subsequent to the Base Balance Sheet Date are, subject to the
reserve for uncollectible accounts specified in the Base Balance Sheet, good and
collectible in the ordinary and usual course of its business without resort to a
collection agency or litigation and are not subject to any claims or offsets and
Sellers have no reason to believe that such accounts receivable will not be
collected.
SECTION 3.17 LABOR MATTERS. There are no strikes,
arbitrations, material grievances, other labor disputes or union organizational
drives pending or threatened between the Company and any of its employees or
between any of the Subsidiaries and any of its employees. Except as described in
SCHEDULE 3.17 hereto, neither the Company nor any of the Subsidiaries is party
to any union, collective bargaining or other similar agreements. The Company and
each of the Subsidiaries has paid or accrued in full all wages, salaries,
commissions, bonuses and other compensation (including severance pay and
vacation benefits) for all services performed by its employees. Neither the
Company nor any of the Subsidiaries is liable for any arrears of wages or any
payroll taxes or any penalties or other damages for failure to comply with any
applicable foreign, federal, state and local laws relating to the employment of
labor.
SECTION 3.18 OTHER EMPLOYEE MATTERS.
(a) "CONTROLLED GROUP". For purposes of this Section,
"Controlled Group" shall mean the Company and the Subsidiaries and any trade or
business, whether or not incorporated, which is part of a controlled group,
under common control or affiliated with the Company within the meaning of
Section 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Sections 414(b), (c), (m) or (o) of the Code.
(b) SCHEDULE 3.18(B) hereto sets forth the name, title, total
annual compensation for the most recently completed calendar year (including
bonus and commissions), current base salary rate, accrued bonus, accrued sick
leave, accrued severance pay and accrued vacation benefits, of each present
employee of the Company and the Subsidiaries and each other member of the
Controlled Group.
(c) EMPLOYEE BENEFIT PLANS.
(i) DELIVERY OF BENEFIT PLAN MATERIALS. With
respect to each of the plans, funds, arrangements or practices, set forth in
SCHEDULES 3.18(C)(II) and (III) below ("Benefit Plans"), the Company has
heretofore delivered to Buyer true and
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complete copies of: (A) all plan documents relating to the Benefit Plan and all
amendments thereto and, where applicable, related trust agreements and group
annuity contracts, and all amendments thereto, and insurance policies,
certificates and related documents, and current financial statements, (B) all
material contracts relating to the Benefit Plan, including, without limitation,
insurance contracts, investment management agreements, subscription and
participation agreements and record keeping agreements; (C) the most recent
Summary Plan Description of the Benefit Plan and any Summary of Material
Modifications or other writings furnished to employees with respect to the
Benefit Plan; (D) except as provided on SCHEDULE 3.18(C)(I), the most recent
annual returns/reports in the Form 5500 series relating to the Benefit Plan, and
any amendments thereto, as filed with the Internal Revenue Service, together
with all enclosures and attachments thereto, including, without limitation,
audited financial statements, and related Summary Annual Reports; (E) except as
provided on SCHEDULE 3.18(C)(I), with respect to each Pension Plan (as defined
below) intended to qualify under the Code, the most recent Internal Revenue
Service determination letter determining that the Benefit Plan is qualified for
federal income tax purposes under Section 401(a) or Section 403(a) of the Code
and that any related trust is exempt from taxation under Section 501(a) of the
Code; (F) except as disclosed in SCHEDULE 3.18(C)(I), any and all collective
bargaining agreements under which the Benefit Plan is maintained; and (G) with
respect to each Pension Plan (as defined below) that is intended to qualify
under the Code, true and complete employee census information that will permit
Buyer to complete item 21 of the Form 5500 or Form 5500-C/R for such Benefit
Plan in a manner that satisfies the requirements of Section 410(b) of the Code,
the Treasury Regulations issued thereunder, and the Treasury Regulations
currently proposed to be issued thereunder, and which identifies by name each
employee of the Company or any other member of the Controlled Group who is a
"highly compensated employee" (as defined in Section 414(q) of the Code and
Treasury Regulations issued thereunder) for the most recently completed plan
year.
(ii) EMPLOYEE WELFARE BENEFIT PLANS. Except as disclosed in
SCHEDULE 3.18(C)(II) hereto, neither the Company nor any other member of the
Controlled Group directly or indirectly maintains, or is a party to or
contributes to, or is obligated to maintain or be a party to or contribute to,
or has ever maintained or been a party to or contributed to, any employee
welfare benefit plan, fund, arrangement or practice, whether or not in writing,
which provides or promises to provide employee benefits (other than benefits
provided by a Pension Plan or a Multiemployer Plan as defined below) to
employees or former employees of the Company or any other member of the
Controlled Group or their dependents or other individuals, including, without
limitation, health, accident, disability, cafeteria,
- 24 -
dependent care, employee assistance, unemployment severance benefits, fringe
benefits, or life insurance or other death benefits, or any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, whether formal or informal,
written or unwritten, and whether or not legally binding, or any plan, fund,
arrangement or practice which provides benefits for employees, former employees,
dependents of former employees, or other individuals or which commits either the
Company or any other member of the Controlled Group to provide benefits (other
than benefits provided by a Pension Plan as defined below) for any person upon
or following retirement or other termination of employment.
With respect to each plan, fund, arrangement or practice
listed in SCHEDULE 3.18(C)(II) ("Welfare Plan"), except as disclosed in SCHEDULE
3.18(C)(II): (A) the Welfare Plan is, and has at all times been, operated in all
respects in material compliance with its governing documents (except as
otherwise required by applicable law), ERISA, the Code, all regulations, rulings
and announcements promulgated or issued under ERISA and the Code, and all other
applicable law, including, without limitation, the reporting and disclosure
requirements of ERISA; (B) neither the Company, nor any other member of the
Controlled Group, nor the Welfare Plan, nor, to Sellers' Knowledge, any "party
in interest" (as defined in Section 3(14) of ERISA) or "disqualified person" (as
defined in Section 4975 of the Code), nor any fiduciary with respect to the
Welfare Plan, nor any other party, has engaged in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) other than a
transaction subject to a statutory or administrative exemption; (C) all
contributions, premiums or claim payments required to be made to or on behalf of
the Welfare Plan by law, contract or the terms of the Welfare Plan have been
made, and all expenses relating to contributions, premiums or claim payments due
or owing with respect to the Welfare Plan have been properly accrued and
reflected in the Base Balance Sheet; (D) except for the processing of routine
claims in the ordinary course of administration, there is no pending,
anticipated or, to Sellers' Knowledge, threatened litigation, arbitration, or
claim, by or against or otherwise involving the Welfare Plan or any fiduciary
thereof in respect of the Welfare Plan, nor is there any judgment, decree,
injunction, rule or order of any court, governmental body, commission, agency or
arbitrator, outstanding against or in favor of or otherwise involving the
Welfare Plan or any fiduciary thereof in respect of the Welfare Plan; (E) to
Sellers' Knowledge, the Welfare Plan and any related trust, including, without
limitation, any "voluntary employees' beneficiary association" (as defined in
Section 501(c)(9) of the Code ("VEBA")) and any other trust or arrangement
described in Section 501(c) of the Code which is intended to be exempt from
taxation under Section 501(a) of the Code, has been determined by the Internal
Revenue Service to be so exempt, and there exists no
- 25 -
fact or circumstance which would adversely affect the exempt status of each such
Welfare Plan, VEBA, trust or arrangement; (F) to Sellers' Knowledge, the Welfare
Plan, if funded, and any related trust, is in material compliance with Sections
419 and 419(A) of the Code and, if intended to be a VEBA, is in material
compliance with Section 501(c)(9) of the Code; (G) the Welfare Plan, if a group
health plan within the meaning of Section 607(1) of ERISA or Section 5000(b)(1)
of the Code, is and at all times has been in material compliance with Sections
601 through 608 of ERISA and Section 4980B of the Code; (H) to Sellers'
Knowledge, there is no "disqualified benefit" (as such term is defined in
Section 4976(b) of the Code) which would subject the Company or any other member
of the Controlled Group or Buyer to a tax under Section 4976 of the Code; (I) to
Sellers' Knowledge, if the Welfare Plan is intended to meet the requirements for
tax favored treatment under Subsection B of Chapter 1 of the Code, it meets such
requirements; (J) the Welfare Plan may be amended or terminated by Buyer on or
at any time after the Closing Date, and neither any Seller, the Company nor any
other member of the Controlled Group has taken any action as to any Welfare Plan
which limits the right of Buyer to amend or terminate such Welfare Plan without
incurring additional liability other than for benefit claims accruing prior to
the effective date of such amendment or termination; and (K) the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder will not result in any obligation or liability of the Company or any
other member of the Controlled Group, or of Buyer to the Welfare Plan or to any
employee, former employee or other person.
Except as required by applicable state or local statutes or
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and except
as disclosed in SCHEDULE 3.18(C)(II), neither the Company nor any other member
of the Controlled Group provides health benefits to any retiree, other former
employee or dependent or survivor of a retiree or other former employee.
(iii) EMPLOYEE PENSION BENEFIT PLANS. Except as
disclosed in SCHEDULE 3.18(C)(III) hereto, neither the Company nor any other
member of the Controlled Group directly or indirectly maintains, or is a party
to or contributes to, or is obligated to maintain, be a party to or contribute
to, or has ever maintained or been a party to or contributed to, any deferred
compensation plan or any plan, fund, arrangement or practice, whether formal or
informal, whether or not in writing, and whether or not legally binding, that is
or may be an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) other than a "Multiemployer Plan" (a "multiemployer plan", as defined in
Section 3(37) or 4001(a)(3) of ERISA, which is an "employee pension benefit
plan", as defined in Section 3(2) of ERISA). Neither any Seller, the Company nor
any other current or former member of the Controlled Group sponsors or
contributes to,
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or has ever sponsored or contributed to, any "employee pension benefit plan",
other than a Multiemployer Plan, which is or was subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code.
With respect to each plan, fund, arrangement or practice
listed in SCHEDULE 3.18(C)(III) ("Pension Plan"), except as disclosed in
SCHEDULE 3.18(C)(III) hereto: (A) to the extent required the Pension Plan is,
and at all times has been, qualified under Section 401(a) or 403(a) of the Code
and any trust through which the Pension Plan is funded is exempt from federal
income tax under Section 501(a) of the Code, and no fact or circumstance exists
which would adversely affect the qualified status of the Pension Plan or any
trust; (B) the Pension Plan is, and at all times has been, operated in all
respects in material compliance with its governing documents (except as
otherwise required by applicable law), ERISA, the Code, all regulations, rulings
and announcements promulgated or issued under ERISA and the Code, and all other
applicable law, including, without limitation, the reporting and disclosure
requirements of ERISA; (C) a favorable determination letter under Section 401 or
403(a) of the Code has been issued by the Internal Revenue Service with respect
to the Pension Plan and all amendments thereto, and there exists no fact or
circumstance which would adversely affect such qualification; (D) neither the
Company nor any other member of the Controlled Group, nor the Pension Plan, nor,
to Sellers' Knowledge, any "party in interest" (as defined in Section 3(14) of
ERISA) or "disqualified person" (as defined in Section 4975 of the Code), nor
any fiduciary with respect to the Pension Plan, nor any other party, has engaged
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) other than a transaction subject to statutory or
administrative exemption; (E) to Sellers' Knowledge, no termination or partial
termination of the Pension Plan within the meaning of Section 4042 of ERISA or
Section 411(d)(3) of the Code has occurred, and no condition exists that would
constitute grounds for the termination or partial termination of the Pension
Plan; (F) all contributions, premiums and claim payments required to be made to
or on behalf of the Pension Plan by law, contract or the terms of the Pension
Plan have been made, and all expenses relating to contributions, premiums or
claim payments due or owing with respect to the Pension Plan have been properly
accrued and reflected in the Company's financial statements as of the Closing
Date; (G) except for the processing of routine claims in the ordinary course of
administration, there is no pending, anticipated or, to Sellers' Knowledge,
threatened litigation, arbitration, or claim by or against or otherwise
involving the Pension Plan or any fiduciary thereof, nor is there any judgment,
decree, injunction, rule or order of any court, governmental body, commission,
agency or arbitrator, outstanding against or in favor of or otherwise involving
the Pension Plan or any fiduciary thereof in respect of the Pension Plan; (H) to
Sellers'
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Knowledge, the Pension Plan may be amended or terminated by Buyer on or at any
time after the Closing Date and shall, upon any such amendment or termination,
give rise to no additional benefit obligations other than those which had
accrued as of the effective date of the amendment or termination; and (I) the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder will not result in any obligation or
liability of the Company or any other member of the Controlled Group, or of
Buyer to the Pension Plan or to any employee, former employee or other person.
Neither the Company nor any other member of the Controlled
Group maintains an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code) or a tax credit employee stock ownership plan (within
the meaning of Section 409(a) of the Code).
Except as described in SCHEDULE 3.18(C)(III), neither the
Company nor any other member of the Controlled Group has any "leased employees"
(as defined in Section 414(n) of the Code) who must be taken into account for
the requirements of Section 414(n)(3) of the Code.
(iv) MULTIEMPLOYER PLANS. Except as disclosed on SCHEDULE
3.18(C)(IV), neither the Company nor any member of the Controlled Group
contributes to or is obligated to contribute to, or has ever contributed to or
been obligated to contribute to, any Multiemployer Plan, nor has the Company nor
any other current or former member of the Controlled Group withdrawn from any
such Multiemployer Plan in a complete or partial withdrawal. All contributions
and premiums required to be made by the Company and each member of the
Controlled Group to each such Multiemployer Plan have been made, and all
expenses relating to contributions and premiums due or owing with respect to
each such Multiemployer Plan have been properly accrued and reflected in the
Company's financial statements as of the Closing Date.
(v) OTHER COMPENSATION ARRANGEMENTS. Except as disclosed in
SCHEDULE 3.18(C)(V) hereto, neither the Company nor any other member of the
Controlled Group maintains or is a party to or contributes to, or is obligated
to maintain or be a party to or contribute to, or has ever maintained or been a
party to or contributed to, nor entered into an agreement with respect to, any
compensation plan, fund, arrangement or practice, whether or not in writing and
whether or not enforceable, including, without limitation, any retirement,
deferred compensation, incentive compensation, pension, profit sharing, thrift,
stock bonus, stock purchase, stock grant, stock option, phantom stock, bonus
program, which provides for or promises benefits to any current or former
officer, consultant, director or employee of the Company or of any other member
of the Controlled Group, that is not a Welfare Plan, a Pension Plan, or a
Multiemployer Plan.
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SECTION 3.19 LITIGATION AND CLAIMS. Except as summarized in
SCHEDULE 3.19 hereto, there is no pending or threatened action, suit,
proceeding, claim, investigation or notice by or against the Company or any of
the Subsidiaries (other than actions, suits, proceedings or claims, seeking
money damages only and involving no more than $25,000), whether or not covered
by insurance, and there is no outstanding order, notice, writ, injunction or
decree of any court, government or governmental agency against or affecting the
Company or any of the Subsidiaries. There are no incidents or occurrences,
(whether or not covered by insurance) of any kind which, to Sellers' Knowledge
and except for workers' compensation claims that arise from time to time in the
ordinary course of business, may give rise to material claims against the
Company or any of the Subsidiaries, whether or not covered by insurance.
SECTION 3.20 INSURANCE. Included in SCHEDULE 3.20 hereto is a
list of all policies of property, fire, liability, life and other forms of
insurance, and indemnity bonds, carried by the Company or any of the
Subsidiaries identifying the nature of risks covered and the amount of coverage
in each case and specifies any year or years since October 1, 1994 when any such
insurance was not in effect. The amount of coverage for each such policy has
been equal to or greater than the amount required by contracts entered into by
the Company or any of the Subsidiaries. All such policies are in full force.
Sellers believe the Company and each of the Subsidiaries are adequately insured
against the kinds of risks usually incurred by corporations engaged in the same
or similar business. The Company and each of the Subsidiaries has given due and
timely notice of any claim and of any occurrence known to the Company which may
give rise to a claim which may be covered by any such insurance and has
otherwise complied with the provisions of such policies.
SECTION 3.21 COMPLIANCE WITH APPLICABLE LAWS. The Company and
each of the Subsidiaries holds all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are material to the
operation of its business (the "Company Permits"). The Company and each of the
Subsidiaries is in compliance with the terms of the Company Permits. Except as
disclosed in SCHEDULE 3.21 hereto, neither the Company nor any of the
Subsidiaries is in material violation of any law, ordinance or regulation of any
Governmental Entity.
SECTION 3.22 FINDERS' FEES. Except for Xxxxxxxxx, Agio, Xxxxx
and Company, whose fee shall be paid by Sellers, no person acting on behalf of
Sellers has claims to, or is entitled to, under any contract or otherwise, any
payment as a broker, finder or intermediary in connection with the origin,
negotiation, execution or consummation of the transactions provided for in this
Agreement or the Related Agreements.
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SECTION 3.23 TRANSACTIONS WITH CERTAIN PERSONS. Except as
disclosed on SCHEDULE 3.23 and SCHEDULE 3.13, hereto, no current or former
director, officer, employee or shareholder of the Company, the Subsidiaries or
any of their Affiliates (as defined below) or family members or trusts for the
benefit of any such person or persons has any interest in any property, real or
personal, tangible or intangible, used in or pertaining to the business of the
Company or any of the Subsidiaries since October 1, 1994, and there have been no
transactions between the Company and any current or former director, officer,
employee or shareholder of the Company or any of the Subsidiaries or their
Affiliates except employment arrangements as disclosed in this Agreement or the
SCHEDULES hereto. As used in this Agreement, the word "Affiliate" shall have the
same meaning as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended.
SECTION 3.24 GENERAL REPRESENTATION AND WARRANTY. To Sellers'
Knowledge, neither this Agreement nor any SCHEDULE or other document or
information furnished by or on behalf of Sellers in connection with this
Agreement contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements contained herein or therein not
misleading.
Neither the Company, any Seller nor any of their respective
representatives, agents or affiliates shall be deemed to have made to Buyer or
any other person any representation or warranty other than as expressly made in
this Agreement, any SCHEDULE hereto or any Related Agreement. Except as set
forth in this Agreement, any SCHEDULE hereto or any Related Agreement neither
the Company, any Seller nor any of their respective representatives, agents or
affiliates makes any representation or warranty regarding any projections,
estimates, budgets or forward-looking information heretofore delivered to or
made available to Buyer or any other person regarding future revenues, expenses
or expenditures or future results of operations; provided, however, that Sellers
believe that all such forward-looking information is based on reasonable
assumptions and do not believe that any such information is misleading, but
further provided that in no event shall Sellers be deemed to give any
representation or warranty as to general economic conditions or otherwise be
liable therefor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
SECTION 4.01 ORGANIZATION. Buyer is a corporation
duly organized, validly existing and in good standing under the
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laws of the state of its incorporation and has all requisite power and
authority, corporate and other, and all other necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now and
heretofore being conducted except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not have a material adverse effect on Buyer.
SECTION 4.02 CORPORATE AUTHORITY. Buyer has all requisite
power and authority, corporate and other, to execute and deliver this Agreement
and the Related Agreements and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and effectively authorized by all necessary
corporate action on the part of Buyer and no other corporate proceedings on the
part of Buyer are necessary to authorize this Agreement and the Related
Agreements or to consummate the transactions contemplated hereby and thereby.
This Agreement and the Related Agreements have been duly executed and delivered
by Buyer and constitute valid and binding obligations of Buyer, enforceable
against it in accordance with their respective terms.
SECTION 4.03 NO VIOLATION. Except as described in SCHEDULE
4.03 hereto or as contemplated by Section 4.05 hereof, the execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby will not result in any
Violation pursuant to (i) any provision of the Restated Certificate of
Incorporation, as amended, or By-laws, as amended, of Buyer or (ii) any
provision of any loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit, concession,
franchise, license or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or its properties or assets.
Except as described in SCHEDULE 4.03, no material contract, indenture, mortgage
or loan agreement of Buyer requires the consent or approval of any party thereto
in connection with this Agreement or the transactions contemplated hereby.
SECTION 4.04 CONSENTS AND APPROVALS. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Buyer in connection with
the execution and delivery of this Agreement and the Related Agreements by Buyer
or the consummation by Buyer of the transactions contemplated hereby and
thereby, the failure to obtain which would have a material adverse effect on
Buyer or the transactions contemplated hereby, except for the filing of a
pre-merger notification report by Buyer under the HSR Act.
- 31 -
SECTION 4.05 FINDERS' FEES. No person acting on behalf of
Buyer has claims to, or is entitled to, under any contract or otherwise, any
payment as a broker, finder or intermediary in connection with the origin,
negotiation, execution or consummation of the transactions provided for in this
Agreement or the Related Agreements.
SECTION 4.06 INVESTMENT INTENT; NO MARKET FOR SHARES. Buyer is
purchasing the Shares for its own account and not with a view towards their
distribution within the meaning of Section 2(11) of the Securities Act of 1933,
as amended (the "Securities Act"). Buyer acknowledges that the Shares are not
registered under the Securities Act or any state securities laws, and that there
is no established trading market or exchange or other ready source of liquidity
for the Shares.
SECTION 4.07 FINANCING. Buyer is diligently pursuing financing
sufficient to pay the Purchase Price at Closing and has provided Sellers with a
copy of a letter from Fleet Bank with respect to such financing.
ARTICLE V
COVENANTS OF SELLERS
SECTION 5.01 CONDUCT OF BUSINESS PENDING CLOSING.
From the date of this Agreement to the Closing Date:
(a) NEGATIVE COVENANTS. Except as otherwise expressly provided
by this Agreement or as Buyer may otherwise consent to in writing, Sellers shall
cause the Company and each of the Subsidiaries not to engage in any activity or
enter into any transaction outside of the ordinary and usual course of its
business or which would be inconsistent with its past practice or with the terms
of this Agreement or which would render inaccurate as of the Closing Date any of
the representations and warranties set forth in Article III as if such
representations and warranties were made at and as of the Closing Date. Without
limiting the generality of the foregoing, Sellers shall cause the Company and
each of the Subsidiaries not to do any of the following: (i) undergo any change
in its condition (financial or other), properties, assets, liabilities, business
or operations except changes in the ordinary and usual course of its business
and consistent with its past practice and which have not been, either in any
case or in the aggregate, materially adverse to it; (ii) engage in any of
action, activity or practice inconsistent with the ordinary and routine actions,
activities and practices it has previously followed, the effect of which would
be to reduce Funded Debt; (iii) declare, set aside, or pay any dividend or other
distribution in respect of its capital stock or make any direct or indirect
redemption, purchase or other acquisition of
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any shares of its capital stock or make any payment to Sellers except payments
of employment compensation in the ordinary and usual course of the Business
consistent with past practice and payments under the LICO, Inc., ASI,
LICO-Conveyor and LICO-Steel Management Profit Sharing Plans and the ASI
Incentive Plan (the "Ongoing Plans"); (iv) issue or sell any shares of its
capital stock or any options, warrants or other rights to purchase any such
shares or any securities convertible into or exchangeable for such shares or
take any action to reclassify or recapitalize or split up its capital stock; (v)
mortgage, pledge or subject to any material lien, lease, security interest,
encumbrance, or other restriction, any of its properties or assets or to such
restriction outside of the ordinary course of its business whether or not
material; (vi) acquire or dispose of any interest in any asset or property
except the purchase of materials and supplies and the sale of inventory in the
ordinary and usual course of its business and consistent with its past practice;
(vii) forgive or cancel any debt or claim, waive any right, or, except in the
ordinary and usual course of its business and consistent with its past practice
incur or pay any liability or obligation; (viii) adopt or amend any profit
sharing plan, agreement, arrangement or practice for the benefit of any
director, officer or employee or change the compensation (including bonuses) to
be paid to any director, officer or employee; (ix) suffer any damage,
destruction or loss (whether or not covered by insurance); (x) amend or
terminate any material contract, agreement or lease; (xi) experience any
material labor difficulty, or loss of employees or customers; (xii) enter into
any collective bargaining agreement; (xiii) sell or grant or transfer to any
party or parties any license, or grant an option to acquire a license to
manufacture or sell any of the products of the Company or any of the
Subsidiaries, or to use any trademark, service xxxx, trade name, copyright,
patent or pending application for any of the foregoing, or any trade secret or
know-how of the Company or any of the Subsidiaries; (xiv) merge or consolidate
or enter into a binding share exchange or any other business combination or
acquire any stock, equity interest or business of any other person; (xv) declare
any bonus or increase in the salary or compensation of any employee except in
the ordinary course of business consistent with past practices; (xvi) change the
accounting methods or practices followed by it; (xvii) without limiting the
generality of any of the foregoing, enter into any transaction except in the
ordinary and usual course of its business and consistent with its past practice;
or (xviii) agree to, permit or suffer any of the acts, transactions or other
things described in Subsections (i) through (xvii) of this Section 5.01.
(b) CONDUCT OF BUSINESS. Sellers shall use their
commercially reasonable efforts to cause the Company and each of
the Subsidiaries to preserve intact its business organization, to
retain its present officers and employees and to preserve its
- 33 -
good will with all suppliers, customers, employees and others having business
relations with it.
(c) ACCESS TO INFORMATION. Sellers shall cause the Company and
each of the Subsidiaries to afford Buyer and its representatives access, during
normal business hours and upon reasonable notice, to all of the assets,
properties, books, records, and agreements of the Company or any of the
Subsidiaries, and shall furnish to Buyer and its representatives such
information regarding the Company or any of the Subsidiaries as Buyer may
reasonably request. Sellers shall cooperate with Buyer in visiting or contacting
employees and customers of, and persons having other business relationships
with, the Company or any of the Subsidiaries as Buyer shall specify prior to the
Closing. Sellers shall also cooperate with Buyer in an inspection of the
Premises and all improvements thereon, including, without limitation, an
environmental audit of the Premises. The investigation by Buyer and furnishing
of information to Buyer shall not affect the right of Buyer to rely on the
representations, warranties, covenants and agreements of Sellers in this
Agreement.
(d) TRANSFERS OR RESTRICTIONS. No Seller shall sell, transfer
or otherwise dispose of any of the Shares or any interest therein or subject the
same to any Liens.
(e) DEFERRED COMPENSATION ARRANGEMENTS. Prior to the Closing
Date, the Company and the Subsidiaries shall satisfy all deferred compensation
obligations to their officers pursuant to the agreements referred to in SCHEDULE
3.18(C)(V) hereto at a cost that shall not exceed the cash surrender value of
the life insurance policies owned by the Company or the Subsidiaries insuring
the lives of such officers.
SECTION 5.02 CHANGE IN REPRESENTATIONS AND WARRANTIES.
(a) NOTICE OF INACCURACY. In the event any Seller learns that
any of the representations and warranties of Sellers contained in or referred to
in this Agreement or any SCHEDULE hereto is or will become inaccurate, such
party shall give immediate detailed written notice thereof to Buyer.
(b) WAIVER OF BUYER DISCOVERED BREACH OF SELLERS. The failure
of Buyer to give written notice to Sellers, on or prior to the Closing Date, of
any breach or violation, of which it has actual knowledge at such time and which
is unknown to Sellers, of any representations, warranties or covenants of this
Agreement or any SCHEDULE hereto made by Seller shall constitute and be deemed a
waiver of any such breach, violation and claims arising therefrom which Buyer
might have otherwise asserted under this Agreement, but such waiver shall only
be to the extent of Buyer's
- 34 -
Damages (as hereinafter defined) of which Buyer had actual knowledge as of the
Closing Date.
SECTION 5.03 REPAYMENT OF FUNDED DEBT. At least three (3) days
prior to the Closing, Sellers shall notify Buyer of the amount necessary to
repay at the Closing all Funded Debt. If Buyer elects to repay all Funded Debt
at the Closing, the Sellers will arrange to have representatives of the lender
or lenders present to, or will otherwise make provision for, tender to Buyer at
the Closing evidence of the payment and discharge of the Funded Debt and
releases of all security interests on the assets of the Company and the
Subsidiaries securing the Funded Debt.
SECTION 5.04 REASONABLE EFFORTS TO CONSUMMATE TRANSACTIONS.
Subject to the terms and conditions herein provided, Sellers agree to use
commercially reasonable efforts to take, or to cause to be taken, all reasonable
actions and to do, or to cause to be done, all reasonable things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including the satisfaction of all conditions thereto set forth in this
Agreement. Such actions shall include, without limitation, exerting their best
efforts to obtain the consents of all persons or entities whose consent is
reasonably necessary to effectuate the transactions contemplated hereby, and
effecting all other necessary registrations and filings, including but not
limited to, filings under the HSR Act and all other necessary filings with any
Governmental Entity.
SECTION 5.05 FURTHER ASSURANCES. After the Closing, Sellers
shall assist and cooperate with Buyer in effecting a transition of ownership of
the Company to Buyer without a material disruption of the operations of the
Company or any of the Subsidiaries and in preserving the goodwill of its
customers and others having business relationships with it.
SECTION 5.06 TRANSITION ASSISTANCE. Xxxxxx X. Xxxxx and Xxxx
X. XxXxx each agree that, following the Closing, (i) Xxxxxx X. Xxxxx shall
continue in the full-time employ of the Company for a period of at least 12
months following the Closing and at least 3 months after giving Buyer written
notice of his intent to terminate his employment and (ii) Xxxx X. XxXxx shall
continue in the full-time employ of the Company for at least 3 months after
giving written notice of his intent to terminate his employment, for the purpose
of providing to Buyer such assistance as Buyer shall reasonably require in
transitioning the ownership of the Business to Buyer. While employed by the
Company, Buyer shall cause the Company to pay to Messrs. Xxxxx and XxXxx the
compensation specified on SCHEDULE 5.06 hereto. Messrs. Xxxxx and XxXxx each
acknowledge that his covenant to remain in the employ of the Company following
the Closing in accordance with
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this Section 5.06 is a material inducement to Buyer to enter into the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF BUYER
SECTION 6.01 CONDUCT OF BUSINESS PENDING THE CLOSING. Except
as otherwise provided in this Agreement, or as Sellers may otherwise consent to
in writing, Buyer shall not, pending the Closing, engage in any activity or
enter into any transaction (i) which would be inconsistent with the terms of
this Agreement; or (ii) which would render inaccurate as of the Closing Date any
of its representations and warranties set forth in this Agreement as if such
representations and warranties were made at and as of the Closing Date.
SECTION 6.02 REASONABLE EFFORTS TO CONSUMMATE TRANSACTIONS.
Subject to the terms and conditions herein provided, Buyer agrees to use its
commercially reasonable efforts to take, or to cause to be taken, all reasonable
actions and to do, or to cause to be done, all reasonable things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including the satisfaction of all conditions thereto set forth herein.
Such actions shall include, without limitation, exerting its best efforts to
obtain the consents of its lenders and others whose consent is reasonably
necessary to effectuate the transactions contemplated hereby, and effecting all
other necessary registrations and filings, including but not limited to, filings
under the HSR Act and all other necessary filings with any Governmental Entity.
SECTION 6.03 CHANGE IN REPRESENTATIONS AND WARRANTIES.
(a) NOTICE OF INACCURACY. In the event Buyer learns that any
of the representations and warranties of Buyer contained in or referred to in
this Agreement or any SCHEDULE hereto is or will become inaccurate, Buyer shall
give immediate detailed written notice thereof to Sellers.
(b) WAIVER OF SELLER DISCOVERED BREACH OF BUYER. The failure
of Sellers to give written notice to Buyer, on or prior to the Closing Date, of
any breach or violation, of which any Seller has actual knowledge at such time
and which is unknown to Buyer, of any representations, warranties or covenants
of this Agreement or any SCHEDULE hereto made by Buyer shall constitute and be
deemed a waiver of any such breach, violation and claims arising therefrom which
Sellers might have otherwise asserted under this Agreement, but such waiver
shall only be to the extent
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of damages of which any Seller has actual knowledge as of the Closing Date.
SECTION 6.04 BONUS PLANS. Buyer shall continue or cause to be
continued the Ongoing Plans for the benefit of the eligible participants therein
for the periods ending March 31, 1998 and, excluding Xxxxxx X. Xxxxx and Xxxx X.
XxXxx, March 31, 1999, on the same terms as provided (as of the date hereof) and
shall in good faith make all payments to such participants due thereunder.
SECTION 6.05. BUYER'S BENEFIT PLANS. To the extent permitted
under applicable law and except as otherwise expressly prohibited by the terms
of the relevant plans, Buyer shall treat service with the Company and the
Subsidiaries as if it were service with the Buyer but only for purposes of
eligibility and vesting under Buyer's pension plans. Buyer shall treat the time
insured under the Company's welfare benefit plans as if it were the same time
insured under Buyer's welfare benefit plans only for purposes of eligibility and
for determining pre-existing condition limitations. This covenant shall be
applicable only to employees of the Company and the Subsidiaries on the Closing
Date and does not represent a commitment by Buyer to offer any of its benefit
plans to any employees of the Company or the Subsidiaries.
ARTICLE VII
NON-COMPETITION AND NON-DISCLOSURE
SECTION 7.1 NON-COMPETITION AND NON-DISCLOSURE. Except as
provided in Section 7.2 below, following the Closing Date and for 10 years
thereafter, each Seller and each person who is a grantor, creator, member,
partner or beneficial owner of any Seller (a "Related Person") agrees not to:
(a) engage or become interested, directly or
indirectly, as owner, employee, partner, through stock ownership (except
ownership of less than three percent (3%) of the number of shares outstanding of
any securities which are listed for trading on any securities exchange),
investment of capital, lending of money or property, rendering of services, or
otherwise, whether alone or in association with others, in the operation of any
business or enterprise in any way competitive to the Business anywhere in the
world;
(b) solicit or accept orders for goods or
services competitive to those heretofore provided or sold by the Business from
any then or previous customer of the Business or otherwise induce or attempt to
induce any such customer to reduce such customer's patronage of the Business;
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(c) disclose the names of any such customers to
any other person, business organization or entity;
(d) solicit any employee of the Business to leave
the employ of the Business; and
(e) divulge, communicate, or utilize any
confidential information of or pertaining to the business or affairs of the
Company or any of the Subsidiaries.
SECTION 7.2 USE OF NAMES. Following the Closing, each Seller
and each Related Person shall not use the names "LICO, Inc.," "Automatic
Systems, Inc.," "LICO Conveyor Company," "LICO Steel, Inc.," "Automated Systems
Conveyors Ltd.," "ASI of Australia Pty Ltd.," "LICO International Corporation"
or any variation thereof in any organization or enterprise or business.
SECTION 7.3 CERTAIN LIMITATIONS. The provisions of Section
7.1(a) and (b) above shall only apply: (i) for a period of 10 years for Xxxxxx
X. Xxxxx and Xxxx X. XxXxx; (ii) for a period of 5 years for Xxxxxxx Xxxxx
Xxxxx, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx; (iii) for a period of 3 years
following termination of employment with the Company or any of its affiliates
(except for a termination by the Company or its affiliates without Cause as
defined below whereupon such obligations shall cease) for any other Seller or
Related Person who is employed by the Company or any of its affiliates on the
date hereof; and (iv) for no period after the Closing Date for an individual
Seller or a Related Person who is not an employee of the Company or its
Subsidiaries on the date hereof. For purposes of this Section "Cause" shall mean
any of the following:
(a) such employee's willful malfeasance or
misfeasance towards the Company or any of its affiliates;
(b) such employee's failure to discharge all or
any material part of his or her duties or obligations to the Company or any of
its affiliates as have been customarily performed by his or her position, after
notice thereof and a reasonable opportunity to cure such failure;
(c) such employee's conviction of a misdemeanor
involving moral turpitude or the conviction of any felony;
(d) misappropriation of funds or breach of
fiduciary duty against the Company or any of its affiliates or any customer,
vendor or affiliate of the Company or any of its affiliates, including but not
limited to any acts of material personal enrichment of such employee or
affiliates of such employee at the expense of the Company or any of its
affiliates or any customer, vendor or affiliate of the Company or any of its
affiliates; or
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(e) a failure by such employee to keep confidential the trade
secrets and other material proprietary information of the Company or any of its
affiliates.
SECTION 7.4 EQUITABLE REMEDIES. Each Seller specifically
acknowledges and agrees that the remedy at law for any breach of any provision
of this Article VII will be inadequate and that Buyer, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage.
SECTION 7.5 SEVERABILITY. If any provision of this Article VII
shall for any reason be held to be excessively broad as to any activity or
subject, it shall be construed, by limiting and reducing it, to be enforceable
to the extent compatible with applicable law. If any provision in this Article
VII shall, notwithstanding the preceding sentence, be held illegal or
unenforceable, such illegality or unenforceability shall not affect any other
provision of this Article VII but this Agreement shall be construed as if such
illegal or unenforceable provision had never been contained herein.
SECTION 7.6 NO WAIVER. The rights of Buyer and obligations of
Sellers set forth in this Article VII are in addition to, and not in lieu of,
all other rights and obligations provided by applicable law.
SECTION 7.7 ACKNOWLEDGEMENTS. At Closing, Sellers shall cause
each Related Party to execute a writing, in form and content satisfactory to
Buyer, acknowledging that he, she or it is bound by the terms of this Article
VII.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF
BUYER TO CONSUMMATE CLOSING
SECTION 8.01 CONDITIONS. The obligation of Buyer to consummate
the Closing is subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date and Buyer shall have received
a certificate signed by the chief executive officer and the chief financial
officer of the Company and each Seller to such effect.
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(b) PERFORMANCE OF OBLIGATIONS OF SELLERS. Sellers shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and Buyer shall have
received a certificate signed by the chief executive officer and the chief
financial officer of the Company and by each Seller to such effect.
(c) OPINION. Buyer shall have received an opinion from Xxxxx
Xxxx LLP, counsel to Sellers, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's counsel.
(d) RELEASES. Sellers shall each have furnished to Buyer at
the Closing duly executed general releases of liabilities and obligations in
favor of the Company and each of the Subsidiaries executed by each Seller and by
the directors and officers of the Company and each of the Subsidiaries, such
releases to be in the form attached hereto as SCHEDULE 8.01(D).
(e) RESIGNATIONS. Buyer shall have received the written
resignation of those directors of the Company and any of the Subsidiaries as may
be requested by Buyer at least three days prior to the Closing and revocations
of banking authorizations and powers of attorney in favor of such officers and
directors as Buyer shall have theretofore requested.
(f) ADEQUATE AND AVAILABLE FINANCING. Buyer shall have
obtained commitments in such amounts, and on such terms as are acceptable to
Buyer in its sole discretion, for financing of the transactions contemplated
hereby and funding shall be made available to Buyer on the Closing Date as
provided in such commitments.
(g) ESTOPPEL CERTIFICATES. Buyer shall have received from each
lessor of the Leased Premises certificates reasonably satisfactory in form and
substance to Buyer regarding the continuing validity of the leases of the Leased
Premises and the absence of any breach or basis for termination thereof.
(h) DISCHARGE OF FUNDED DEBT. If Buyer elects to repay Funded
Debt at Closing pursuant to Section 5.03, then Buyer shall have received from
the lender or lenders evidence of payment and discharge of the Funded Debt and
releases of all security interests on the assets of the Company and the
Subsidiaries securing the Funded Debt in form and substance reasonably
satisfactory to Buyer.
(i) CONSENTS. Buyer shall be assured that all permits,
licenses and other governmental and official authorizations necessary for the
Company or any of the Subsidiaries to continue to conduct its business as
heretofore conducted and to consummate the transactions contemplated by this
Agreement have been obtained and will be in effect including any
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necessary consents under all contracts, agreements and commitments to which the
Company or any of the Subsidiaries is a party. All applicable waiting periods,
if any, under the HSR Act shall have expired or have been terminated. Buyer
shall be reasonably satisfied that its acquisition of the Shares shall not
adversely affect the prospects of the Company or any of the Subsidiaries and
that material contractual relationships of the Company or any of the
Subsidiaries shall not be thereby adversely affected.
(j) NO ADVERSE CHANGE. There shall have been, in the good
faith reasonable judgment of Buyer, no material adverse change in the business,
properties, operations, financial condition, prospects or earnings of the
Company or any of the Subsidiaries since the date of this Agreement.
(k) OTHER CLOSING DOCUMENTS. Buyer shall have received, on and
as of the Closing Date, and such other agreements and instruments as Buyer shall
reasonably request, in each case reasonably satisfactory in form and substance
to Buyer.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLERS
TO CONSUMMATE CLOSING
SECTION 9.01 CONDITIONS. The obligation of Sellers to
consummate the Closing is subject to at or prior to the Closing Date of the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and Sellers shall have received a
certificate signed on behalf of Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and Seller shall have
received a certificate signed on behalf of Buyer to such effect.
(c) OPINION. Sellers shall have received an opinion from
Phillips, Lytle, Xxxxxxxxx, Xxxxxx & Xxxxx LLP, counsel to Buyer, dated the
Closing Date, in form and substance reasonably satisfactory to Sellers' counsel.
(d) RELEASE OF GUARANTIES. If Buyer does not discharge
the Funded Debt at the Closing, Buyer shall obtain
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releases of the personal guaranties of Xxxxxx X. Xxxxx and Xxxx X. XxXxx with
respect to the Funded Debt.
(e) HSR ACT. All applicable waiting periods, if any,
under the HSR Act shall have expired or have been terminated.
ARTICLE X
TERMINATION AND AMENDMENT
SECTION 10.01 TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by mutual consent of the parties hereto;
(b) by Buyer (i) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Sellers set forth
in this Agreement which breach has not been cured, in the case of a
representation or warranty, prior to the Closing or, in the case of a covenant
or agreement, within ten (10) business days following receipt by Sellers of
notice of such breach, or (ii) if any permanent injunction or other order of a
court or other competent authority preventing the consummation of the sale and
transfer of the Shares shall have become final and non-appealable;
(c) by Sellers (i) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Buyer set forth
in this Agreement which breach has not been cured, in the case of a
representation or warranty, prior to the Closing or, in the case of a covenant
or agreement, within ten (10) business days following receipt by Buyer of notice
of such breach, or (ii) if any permanent injunction or other order of a court or
other competent authority preventing the consummation of the sale and transfer
of the Shares shall have become final or non-appealable; or
(d) by either Buyer or Sellers if the Closing shall
not have been consummated before April 30, 1998.
SECTION 10.02 EFFECT OF TERMINATION. In the event of a
termination of this Agreement by either Sellers or Buyer as provided in Section
10.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Buyer or its officers or directors or
Sellers, except to the extent that such termination results from the breach by a
party hereto of any of such party's representations and warranties or a breach
of such party's covenants or agreements set forth in this Agreement or the Other
Agreements.
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SECTION 10.03 EXTENSION; WAIVER. At any time prior to the
Closing Date, Buyer and Sellers, by action duly taken, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of Buyer or
Sellers hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
SECTION 11.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS.
(a) SURVIVAL GENERALLY. The representations, warranties,
covenants, agreements and undertakings of Buyer and Sellers in this Agreement,
the SCHEDULES hereto and the Related Agreements and all rights of Buyer and
Sellers with respect thereto shall survive the Closing and the sale and transfer
of the Shares; provided, however, that survival of the representations and
warranties of the parties contained in this Agreement shall be subject to the
limitations provided herein. Except as provided in the context of the
representations and warranties set forth in Section 3.11 of this Agreement,
Buyer agrees to release all contribution claims against Sellers arising under
any Environmental Law, as well as any common law regarding the protection of
health, safety and the environment,including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time.
(b) (i) INDEMNITY OBLIGATIONS OF SELLERS. Each Seller hereby
agrees to indemnify and hold Buyer harmless from and against, and to reimburse
Buyer for or in respect of, any and all losses, damages, deficiencies,
liabilities, claims, economic injury, obligations, expenses (including, without
limitation, all out-of-pocket expenses, reasonable investigation expenses and
reasonable fees and disbursements of accountants and counsel) of any nature
whatsoever (collectively, "Buyer's Damages"), incurred by Buyer arising out of,
based upon, or by reason of (A) any breach of any representation and warranty of
any of Sellers which is contained in this Agreement or in any Related Agreement,
or in any SCHEDULE or certificate delivered pursuant thereto; or (B) any breach
or nonfulfillment of, or any failure to perform, any of the covenants,
agreements or undertakings of Sellers which are contained in or made pursuant to
this Agreement or any Related
- 43 -
Agreement. Buyer's Damages shall be reduced by an amount equal to one-half of
any recoveries actually received by the Company or its Subsidiaries (net of all
expenses, cross-claims, counter-claims or off-sets against the Company or the
Subsidiaries or taxes attributable to such recoveries) from the Rapid or
Xxxxxxxx AFB claims referred to in SCHEDULE 3.19. If any Buyer's Damages have
been paid to Buyer prior to the receipt by the Company or its Subsidiaries of
the recoveries referred to in the prior sentence, the amount of such reduction
in Buyer's Damages shall to the extent such Damages have been paid by Sellers,
be paid to Sellers. For example only, if there is a $5 million Buyer's Damage
Claim and Buyer is paid $4.25 million (net of the $750,000 Sellers'
Indemnification Threshold), and there is a net recovery on the Rapid Claim of
$2.0 million, then Sellers shall be paid $1.0 million. In order to provide for
Sellers' Indemnity Threshold (as hereinafter defined) the parties agree that for
the purposes of this Article XI, but except with respect to Sections 3.06 and
3.24, a representation shall be deemed false and a warranty, agreement, covenant
or undertaking shall be deemed breached or not fulfilled if the same would have
been false, breached or not fulfilled had such representation, warranty,
agreement, covenant or undertaking not been qualified by the words "materially",
"in all material respects" or words of similar import.
Subject to the limitations as set forth in Section 11.01(c)
hereof, Sellers agree to indemnify and hold Buyer harmless from and against and
reimburse Buyer for any and all Buyer's Damages, arising out of, attributable
to, resulting from or incurred with respect to any breach of the representations
and warranties set forth in Section 3.18 as to any benefit plan, fund,
arrangement or practice referred to in said Section 3.18 ("Section 3.18 Plan").
In determining whether there has been a breach of a representation or warranty
contained in Section 3.18 as to any Section 3.18 Plan, any deficiencies or
potential deficiencies disclosed in SCHEDULES 3.18(C)(I),(II), (III),(IV) AND
(V) as to any such Section 3.18 Plan which are referenced in a disclosure
labeled "List of Special Benefit Disclosures" included in Schedule 3.18, shall
be disregarded, and the representations and warranties of Section 3.18 shall be
deemed not qualified by such disclosures. The foregoing is to implement the
agreement of the parties that the risk of such deficiencies shall be borne by
Sellers. This provision shall be deemed to constitute notice to Sellers by Buyer
under Section 5.02(b) that some or all of the matters disclosed or referred to
in the List of Special Benefit Disclosures constitute or may constitute breaches
of representations and warranties contained in Section 3.18 for which Sellers,
by reason of this provision, will have indemnification obligations. Sellers'
indemnification obligation hereunder shall be fully applicable if Buyers'
Damages are incurred in connection with an application to or proceeding
involving the Internal Revenue Service or other
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governing legal authority for relief from any matter for which Sellers have an
indemnity obligation hereunder. In addition, notwithstanding that Section 3.18
does not contain a specific representation and warranty on potential withdrawal
liability from Multiemployer Plans, Sellers agree that to the extent incurred by
Buyer, Buyer's Damages shall include the excess of the sum of the aggregate
potential liability of the Company and all members of the Controlled Group (A)
if they were to withdraw from the Multiemployer Plans on the Closing Date and
(B) arising from any of the Multiemployer Plan's status as an insolvent plan,
being in reorganization or having an accumulated funding deficiency as of the
Closing Date, OVER $250,000.
(b) (ii) INDEMNITY OBLIGATIONS OF BUYER. Buyer hereby agrees
to indemnify and hold Sellers harmless from and against, and to reimburse
Sellers for or in respect of, any and all losses, damages, deficiencies,
liabilities, claims, economic injury, obligations, expenses (including, without
limitation, all out-of-pocket expenses, reasonable investigation expenses and
reasonable fees and disbursements of accountants and counsel) of any nature
whatsoever, (collectively "Sellers' Damages") incurred by Sellers arising out
of, based upon, or by reason of (A) any breach of any representation or warranty
of Buyer which is contained in this Agreement or in any Related Agreement, or in
any SCHEDULE or certificate delivered pursuant thereto; or (B) any breach or
nonfulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of Buyer which are contained in or made pursuant to this
Agreement or any Related Agreement.
(c) LIMITATIONS ON SELLERS' INDEMNIFICATION OBLIGATIONS.
Subject to the remaining provisions of this Section 11.01(c), notwithstanding
anything to the contrary herein, any claim by Buyer against Sellers under
Article XI of this Agreement for a breach of representation or warranty shall be
payable by Sellers only in the event and to the extent that the accumulated
amount of Buyer's Damages in respect of Sellers' obligations under this Article
XI for breaches of representations and warranties shall exceed in the aggregate
the amount of $750,000 (the "Sellers' Indemnification Threshold"); and at such
time as the aggregate amount of Buyer's Damages in respect of the obligations of
Sellers for breaches of representations and warranties shall exceed the Sellers'
Indemnification Threshold, Sellers shall thereafter be liable on a
dollar-for-dollar basis for the full amount of all Buyer's Damages for a breach
of representation or warranty in excess of the Sellers' Indemnification
Threshold, it being the intention of the parties that the initial $750,000 of
Buyer's Damages excluded by reason of the Sellers' Indemnification Threshold
would not be recoverable against Sellers but would be borne by Buyer, except
that Buyer's Damages for any breach of the representations and warranties of
Sellers set forth in Sections 3.02 through 3.05 and
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Section 3.22 of this Agreement or any knowing breach of a representation or
warranty shall not be subject to the Sellers' Indemnification Threshold but
shall be payable by Sellers on a dollar-for-dollar basis without any exclusion
therefor or reduction thereof.
Except as provided in subsections (A)(i) or (ii) below and
subject to Sellers' Indemnification Threshold and to the last sentence of this
paragraph, the Xxxxx Family LLC and the XxXxx Family Limited Partnership shall
each be liable for one-half of Buyer's Damages. The indemnification obligations
of Sellers other than the Xxxxx Family LLC and the XxXxx Family Limited
Partnership hereunder are subject to the limitation that each Seller other than
the Xxxxx Family LLC and the XxXxx Family Limited Partnership shall be liable
solely for such Seller's "Proportionate Share" of Buyer's Damages provided that
(A) such a Seller who has breached (i) representations and warranties regarding
such Seller's Shares in Section 3.02(a) hereof or such Seller's authority and
capacity in Section 3.03 hereof; or (ii) the covenants contained in Article VII
hereof, shall be solely liable for all Buyer's Damages arising out of such
breach and no other Seller shall be responsible for such breach and (B) Sellers
shall be jointly and severally liable to Buyer for any payment required pursuant
to Section 1.03(c) hereof. For the purposes hereof, the "Proportionate Share" of
any Seller shall mean a fraction equal to (x) the portion of the Purchase Price
paid to such Seller DIVIDED BY (y) the aggregate Purchase Price paid to all
Sellers. Except for Buyer's Damages resulting from a breach of a covenant, a
knowing breach of a representation or warranty or a breach of the warranties
regarding Sellers' shares in Section 3.02(b) hereto, the indemnification
obligations of Sellers, in the aggregate, hereunder are subject to the further
limitation that Sellers shall have no liability to pay Buyer's Damages in excess
of $15,000,000.
(d) DURATION. Except as otherwise provided below, all
representations and warranties of Buyer and Sellers contained in or made
pursuant to this Agreement and the rights of Buyer and Sellers to seek
indemnification or reimbursement with respect thereto, shall survive the Closing
and the representations and warranties contained in Sections 3.02, 3.03, 3.04,
4.02, 4.03 and 4.04 and any SCHEDULE relating thereto shall survive without
limitation. Except in respect of any claims for breach of warranty or
misrepresentation as to which a notice of claim for Buyer's Damages or Sellers'
Damages shall have been given prior to the Relevant Expiration Date (as
hereinafter defined) and except for a claim based upon a misrepresentation or
warranty contained in Sections 3.02, 3.03, 3.04, 4.02, 4.03 and 4.04 and any
SCHEDULE relating thereto which may be made at any time after the Closing Date,
all representations and warranties contained in Articles III and IV and all
rights with respect thereto shall
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expire on the Relevant Expiration Date. The Relevant Expiration Date shall be:
(i) in the event of a misrepresentation or breach of warranty
in Section 3.09 and any SCHEDULE relating thereto, until one
year following the date upon which liability for any claim by
any taxing authority which may result in Buyer's Damages may
be made is barred by all applicable statutes of limitation
(after taking into account any extensions); and
(ii) with respect to all other misrepresentations or breaches
of warranty, fifteen months after the Closing Date.
(e) INDEMNIFICATION PROCEDURES.
(i) In the event any claim, action, suit or
proceeding is made or brought by any third party against Buyer or Sellers (the
"Indemnified Party"), with respect to which an indemnifying party may have
liability under Article XI of this Agreement, the indemnifying party shall, at
its own expense, be entitled to participate in and, to the extent that it shall
wish, jointly and with any other indemnifying party, to assume the defense, with
independent counsel reasonably satisfactory to the Indemnified Party, provided
that in assuming the defense of any such third party claim, action, suit or
proceeding, the indemnifying party acknowledges in writing to the Indemnified
Party that the indemnifying party shall thereafter be liable for any Buyer's
Damages or Sellers' Damages, as the case may be, with respect to such claim,
action, suit or proceeding.
(ii) If the indemnifying parties elect to assume
control of such defense or settlement, they shall conduct such defense or
settlement in a manner reasonably satisfactory and effective to protect the
Indemnified Party fully; such indemnifying parties and their counsel will keep
the Indemnified Party fully advised as to their conduct of such defense or
settlement, and no compromise or settlement shall be agreed or made without the
written consent of the Indemnified Party. In any case, the Indemnified Party
shall have the right to employ its own counsel and such counsel may participate
in such action, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party, when and as incurred, unless (A) the
employment of counsel by the Indemnified Party has been authorized in writing by
the indemnifying parties, (B) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the Indemnified Party in the conduct of the defense of such action,
(C) the indemnifying parties shall not in fact have
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employed independent counsel reasonably satisfactory to the Indemnified Party to
assume the defense of such action and shall have been so notified by the
Indemnified Party, (D) the Indemnified Party shall have reasonably concluded and
specifically notified the indemnifying party either that there may be specific
defenses available to it which are different from or additional to those
available to the indemnifying party or that such claim, action, suit or
proceeding involves or could have a material adverse effect upon it beyond the
financial resources of the indemnifying parties or the scope of this Agreement,
or (E) the indemnifying parties fail to conduct such defense or settlement in a
manner reasonably satisfactory to protect the Indemnified Party fully. If clause
(B), (C), (D) or (E) of the preceding sentence shall be applicable, then counsel
for the Indemnified Party shall have the right to direct the defense of such
claim, action, suit or proceeding on behalf of the Indemnified Party and the
reasonable fees and disbursements of such counsel shall constitute Buyer's
Damages or Sellers' Damages hereunder.
(iii) If the indemnifying parties do not elect to assume the
defense or any such claim, or if they fail to conduct said defense or settlement
in a manner reasonably satisfactory to protect the Indemnified Party fully, the
Indemnified Party may engage independent counsel selected by the Indemnified
Party to assume the defense and may contest, pay, settle or compromise any such
claim on such terms and conditions as the indemnified party may determine. The
fees and disbursements of such counsel shall constitute Buyer's Damages or
Sellers' Damages hereunder.
(iv) The Indemnified Party and the indemnifying parties, as
the case may be, shall be kept fully informed of such claim, action, suit or
proceeding at all stages thereof whether or not such party is represented by its
own counsel.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Buyer, to
Columbus XxXxxxxx Corporation
000 Xxxx Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
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Attention: Xxxxxx X. Xxxxxxxxxx,
Executive Vice President and
Chief Financial Officer
with a copy to
Xxxxxxxxx X. Xxxxx, Esq.
Phillips, Lytle, Xxxxxxxxx, Xxxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
and
(b) If to a Seller, to
Xxxxxx X. Xxxxx and
Xxxx X. XxXxx, as Representatives
c/o LICO, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
with a copy to
Xxxxxx X. Xxx Xxxx, Esq.
Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxx 00000
SECTION 12.02 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation".
SECTION 12.03 COUNTERPARTS; EFFECTIVENESS. This Agreement may
be executed in two or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart. It is contemplated that several of the shareholders of the Company
may not have executed this Agreement on the date hereof. It is understood and
agreed that this Agreement shall nevertheless be fully binding upon all
signatories to this Agreement as soon as this Agreement is executed by persons
owning in excess of 80% of each class of stock of the Company.
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SECTION 12.04 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES;
RIGHTS OF OWNERSHIP. This Agreement (including the documents and the instruments
referred to herein) and the Related Agreements, (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
are not intended to and shall not confer upon any person other than the parties
hereto any rights or remedies hereunder.
SECTION 12.05 ACTION BY SELLERS. Sellers hereby irrevocably
authorize and appoint Xxxxxx X. Xxxxx and Xxxx X. XxXxx as their exclusive agent
and attorney ("Representative") who shall on behalf of Sellers make any
amendments or modifications of this Agreement and all other agreements and
documents contemplated hereby and to waive inaccuracies of representations and
warranties or performance or compliance with any of the provisions herein
contained that such Representative believes in such agent's sole discretion, to
be in the best interest of Sellers. The Representative shall take, and Sellers
agree that the Representative shall take, any and all actions which such
Representative believes are necessary or appropriate under this Agreement for
and on behalf of Sellers, as fully as if Sellers were acting on their own
behalf, including, without limitation, defending, consenting to, compromising or
settling all claims for Sellers' Damages or Buyer's Damages, conducting
negotiations with Buyer and its representatives regarding such claims, dealing
with Buyer and taking any and all actions specified in or contemplated by
Article XI of this Agreement and engaging counsel, accountants or other
representatives in connection with the foregoing matters. Buyer shall have the
right to rely upon all actions taken or omitted to be taken by the
Representative pursuant to this Agreement, all of which actions or omissions
shall be legally binding upon each of Sellers. Any action of the Representation
shall require the approval of Xxxxxx X. Xxxxx and Xxxx X. XxXxx.
SECTION 12.06 KNOWLEDGE. For the purposes of this Agreement,
"Sellers' Knowledge" shall mean actual knowledge of any Seller, any Related
Person or any officer or director of the Company or any Subsidiary and any
knowledge that any such person would have acquired upon reasonable inquiry.
SECTION 12.07 GOVERNING LAW. This Agreement shall be governed
and construed in accordance with the internal laws of the State of New York
without regard to any applicable conflicts of law.
SECTION 12.08 ASSIGNMENT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned or delegated by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, and any such purported assignment or
delegation shall be void, except that Buyer may assign or
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delegate, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any direct or indirect affiliate of Buyer or any person
to whom Buyer transfers any part of the Business being acquired hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION 12.09 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner, to the end that the transactions contemplated by this
Agreement are consummated to the extent possible.
SECTION 12.10 PUBLICITY. Buyer and Sellers shall promptly
consult with each other as to the form and substance thereof prior to the
release or issuance of any press release or other public disclosure related to
this Agreement or any other transactions contemplated hereby. Sellers and Buyer
agree not to release or issue any such press release or other public disclosure
without the approval of Sellers and Buyer unless otherwise required by
applicable law.
SECTION 12.11 ENFORCEMENT OF THIS AGREEMENT. The parties
hereto agree that irreparable damage would result in the event that any
provision of this Agreement is not performed in accordance with specific terms
or is otherwise breached. It is accordingly agreed that the parties hereto will
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof.
SECTION 12.12 EXPENSES. Buyer and Sellers shall each bear and
pay all costs and expenses respectively incurred by them in connection with this
Agreement, including, without limitation, fees and expenses of their own
financial consultants, accountants, and counsel. Without limiting the generality
of the foregoing, (i) Sellers shall be solely responsible for and shall pay all
fees of Xxxxxxxxx, Agio, Xxxxx and Company in connection with the transactions
contemplated by this Agreement, and (ii) Buyer shall be solely responsible for
and shall pay all fees and expenses of Ernst & Young LLP or such other
accounting firm as conducts the Closing (March 31, 1998) audit of the Company.
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SECTION 12.13 GUARANTY. Xxxxxx X. Xxxxx shall hereby
unconditionally guaranty all obligations of the Xxxxx Family LLC to Buyer,
including without limitation, obligations arising under this Agreement and any
Related Agreements . Xxxx X. XxXxx shall hereby unconditionally guaranty all
obligations of the XxXxx Family Limited Partnership to Buyer, including without
limitation, obligations arising under this Agreement and any Related Agreements.
Sellers shall cause Xxxxxx X. Xxxxx and Xxxx X. XxXxx to execute a writing, in
form and content satisfactory to Buyer, evidencing these guaranties.
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IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date first above written.
COLUMBUS XXXXXXXX CORPORATION
By ______________________________
(Title)
SELLERS
By ______________________________
Xxxxx X. Xxxxxx
By ______________________________
Xxxx X. Xxxxxxxxxx
By ______________________________
Xxxx Xxxxxxxxxx
By ______________________________
Xxxxx X. Xxxxxxx
Xxxxx Xxxxx Trust under Trust
Agreement dated April 6, 1990
By ______________________________
Xxxxx Xxxxx, as Trustee
Xxxxxxx X. Xxxxxx Self Employed
Retirement Trust
By ______________________________
Citruck & Co., as Trustee
By ______________________________
Xxxxx X. Xxxxx
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By ______________________________
Xxxxxxx X. Xxxxx
By ______________________________
Xxxxxx X. Xxxxx
By ______________________________
Xxxxxx X. Xxxxx
By ______________________________
Xxxx X. Xxxxx
By ______________________________
Xxxxxx X. Xxxxxxxxx
By ______________________________
XxXxx Xxxxxxxxx
Xxxxxx X. Xxxxx Declaration of
Trust dated 10/21/83, as amended
from time to time
By ______________________________
Xxxxxx X. Xxxxx, as Trustee
By ______________________________
Xxxxx X. Xxxxx
By ______________________________
Xxxxx X. Xxxxx
By ______________________________
Xxxxxxx X. Xxxxx
By ______________________________
Adelynne X. Xxxxx
By ______________________________
Xxxxxxx X. Xxxx
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Xxxx X. XxXxx Revocable Trust
dated January 28, 1993, as
amended from time to time
By ______________________________
Xxxx X. XxXxx, as Trustee
By ______________________________
Xxxxxxx Xxxxx Xxxxx
By ______________________________
Xxxxxxx Xxx Xxxxx
By ______________________________
Xxxxxx X. Xxxxxxx
By ______________________________
Xxxxxx X. Xxxxxxx
Xxx X. Xxxxxx Revocable Trust,
dated July 25, 1988
By ______________________________
Xxx X. Xxxxxx, as Trustee
By ______________________________
Xxxxxxx X. Xxxxxxxx
By ______________________________
Xxxxxx X. Xxxxxx
By ______________________________
Xxxx X. Xxxxxx
By ______________________________
Xxxxxx X. Xxx
By ______________________________
Xxxx X. Xxx
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Xxx Xxxx Enterprises, L.L.C.
By ______________________________
By ______________________________
Xxxxxx Xxx Xxx Xxxx
By ______________________________
Maida Xxx Xxx Xxxx
By ______________________________
Xxxxx X. Xxxxxxx
By ______________________________
Xxxxxx X. Xxxxxx, Xx.
By ______________________________
Xxxxxx X. Xxxxxx
By ______________________________
Xxxxx X. Xxxxxx
By ______________________________
Xxxxxx X. Xxxxxx
The Xxxxx Family LLC
By ______________________________
Member
Xxxxxxx X. Xxxxx Trust under Trust
Agreement dated December 28, 1992
By ______________________________
Xxxxxxx Xxxxxx, as Successor Trustee
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Xxxxxx X. Xxxxx Trust under Trust
Agreement dated December 28, 1992
By ______________________________
Xxxxxxx Xxxxxx, as Successor Trustee
The XxXxx Family Limited Partnership
By ______________________________
General Partner
