Exhibit (c)(2)
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PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of this 30th
day of June, 1999, by and among GTS Duratek, Inc., a Delaware corporation
("Buyer"), HakeTenn, Inc., a Delaware corporation ("HakeTenn"), Xxxxxx X.
Xxxxxxxx, an individual residing in the State of Tennessee ("Xxxxxxxx"), and
Xxxxxxx Xxxxxx, an individual residing in the State of Tennessee ("Xxxxxx")
(hereinafter, each of HakeTenn, Xxxxxxxx and Xxxxxx shall be referred to
individually as a "Seller" and collectively as "Sellers").
BACKGROUND
WHEREAS, Xxxxx X. Xxxx Associates, L.L.C., a Delaware limited liability
company (the "Company"), is engaged in the business of storing, transporting,
handling and processing radioactive waste emanating from nuclear power
generation plants, government facilities, other commercial facilities and
storing and servicing power generation equipment (the "Business");
WHEREAS, Sellers own, directly or indirectly, one hundred percent (100%) of
the limited liability interests of the Company (the "LLC Interests"); and
WHEREAS, Sellers desire to sell to Buyer and Buyer desires to purchase from
Sellers the LLC Interests on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the respective
agreements, covenants, representations, warranties and indemnifications herein
contained, the parties hereto do hereby agree as follows:
1. Sale and purchase of interests. Subject to the terms and conditions
of this agreement, upon the consummation of the transactions contemplated under
this agreement (the "closing") on the closing date (as defined in section 2):
(a) HakeTenn shall sell, transfer, convey and assign to Buyer and Buyer
shall purchase from HakeTenn one hundred percent (100%) of the issued and
outstanding capital stock of Xxxx Partners, Inc., a Delaware corporation ("HPI")
(the "HPI Stock"). HPI owns eighty percent (80%) of the LLC Interests (the "HPI
Interest"). Notwithstanding the above, at Closing, the claim for business
interruption insurance filed with Xxxx & Xxxxxx relating to the June 1998 shut
down (which has not been reflected on the Company's financial statements) shall
be transferred to and shall remain the property of Sellers;
(b) Xxxxxxxx shall sell, transfer, convey and assign to Buyer and Buyer
shall purchase from Xxxxxxxx all of the LLC Interests owned by him. Xx.
Xxxxxxxx owns fifteen percent (15%) of the LLC Interests (the "Xxxxxxxx
Interest"); and
(c) Xxxxxx shall sell, transfer, convey and assign to Buyer and Buyer shall
purchase from Xxxxxx all of the LLC Interests owned by him. Xx. Xxxxxx owns
five percent (5%) of the LLC Interests (the "Xxxxxx Interest").
At the Closing, each of the HPI Stock, the HPI Interest, the Xxxxxxxx Interest
and the Xxxxxx Interest shall be free and clear of any and all liens, claims,
charges, pledges, security interests, voting and other agreements and other
encumbrances of any nature whatsoever ("Liens"). The HPI Interest, the Xxxxxxxx
Interest and the Xxxxxx Interest constitute 100% of the outstanding equity
interests of the Company.
2. Closing date. The closing shall take place at 9 a.m. At the offices
of piper & marbury l.l.p., 00 x. Xxxxxxx xxxxxx, xxxxxxxxx, xxxxxxxx 00000 on
the later of (i) june 30, 1999, or (ii) on such other date as the parties may
mutually agree (the "closing date").
3. Closing deliveries.
(a) closing deliveries by the sellers. At the closing, sellers shall
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deliver to buyer the following:
(i) certificates or other evidence of ownership representing the llc
interests, each certificate to be duly endorsed in blank or with such other
instruments of conveyance as may be reasonably acceptable to buyer and its
counsel and sufficient to transfer full, marketable title to the llc interests
to buyer, free and clear of any liens;
(ii) certificates representing the HPI Stock, each certificate to be
duly endorsed in blank or with such other instruments of conveyance as may be
reasonably acceptable to Buyer and its counsel and sufficient to transfer full,
marketable title to the HPI Stock to Buyer, free and clear of any Liens;
(iii) duly executed resignations of each of the directors and officers of
the Company and HPI as may be requested by the Buyer;
(iv) good standing certificates of each of the Company, HakeTenn and
HPI, dated no earlier than five (5) calendar days prior to the Closing Date,
certifying that each is in good standing in the jurisdiction of its organization
and for the Company and HPI certificates of qualification to do business as a
foreign corporation or LLC in each of the jurisdictions in which such entity is
qualified;
(v) the recorded certificate of incorporation, as amended or
supplemented to date, (or comparable instrument) of HakeTenn, Company and HPI,
recently certified by the Secretary of State of the jurisdiction in which such
entity is organized;
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(vi) a certificate of the secretary of HakeTenn concerning (i) its
organizational documents, (ii) the adoption of resolutions by its board of
directors and stockholders authorizing the transactions contemplated by this
Agreement and (iii) the incumbency of its officers, all in form and substance
satisfactory to Buyer;
(vii) a receipt for the payment of the Purchase Price;
(viii) the opinions of counsel for the Sellers and HPI, dated as of
the Closing Date, in form reasonably acceptable to Buyer, as to the matters set
forth in Exhibit "A"; and
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(ix) certificates executed on behalf of the Company, HakeTenn and
HPI to the effect that the conditions contained in Section 12 have been
satisfied.
(b) Closing Deliveries by the Buyer. At the Closing, Buyer shall
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deliver to the Sellers the following:
(i) the Purchase Price (as defined below); and
(ii) certificate executed on behalf of the Buyer to the effect that
the conditions contained in Section 13 have been satisfied.
4. Purchase Price. The aggregate purchase price (the "Purchase Price")
for all of the HPI Stock and all of the LLC Interests (collectively, the
"Purchased Ownership Interests") shall consist of: (i) the initial purchase
price as described in Section 4.1 below (the "Initial Purchase Price"), (ii) the
mortgage assumption as described in Section 4.2 below (the "Mortgage
Assumption") and (iii) the additional consideration described in Section 4.3
below (the "Additional Consideration"). The Purchase Price will be adjusted for
the equity adjustment pursuant to Section 4.4 below (the "Equity Adjustment").
In no event will the Purchase Price, including the Equity Adjustment, exceed
$14.5 million. All cash consideration shall be paid by wire transfer of
immediately available funds to a single bank account for each Seller as such
Seller shall designate in writing to Buyer not less than three (3) business days
prior to the Closing Date. Each of the Seller's proportionate share of the
Purchase Price for all of the Purchased Ownership Interests shall be paid to
each Seller pro rata based on the percentages (the "Percentage Interests") set
forth opposite each Seller's name on Exhibit "B" hereto.
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4.1 Initial Purchase Price. The Initial Purchase Price for the Purchased
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Ownership Interests shall be Twelve Million Nine Hundred Twenty-Five Thousand
Dollars (USD $12,925,000) in cash. Notwithstanding the foregoing, Three Million
Dollars ($3,000,000) of the Initial Purchase Price will be deposited into an
escrow account with Wilmington Trust Company as escrow agent pursuant to Section
16.9 hereof pursuant to the terms of the Escrow Agreement substantially in the
form of Exhibit E hereto and One Hundred Fifty Thousand Dollars ($150,000) of
the Initial Purchase Price will be deposited into an escrow account with
Wilmington Trust Company as escrow agent pursuant to the terms of the Escrow
Agreement substantially in the form of Exhibit D hereto.
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4.2 Mortgage Assumption. Buyer shall assume, and discharge or relieve the
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Company from liability with respect to, the mortgage note and mortgage due to
Northwestern Mutual Life Insurance Company with respect to the premises located
at 0000 Xxxx Xxxxxx and the related real estate held by the Company, in an
amount not to exceed Five Hundred Thousand Dollars ($500,000) as of Closing.
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Notwithstanding any other provision of this Agreement, Buyer shall not assume
any other long-term debt of Company, HPI or of any of the Sellers. If the
balance due under the Mortgage note is less than $500,000 on the Closing Date,
Buyer shall pay Sellers, as additional cash consideration, an amount equal to
the difference between $500,000 and the balance due under the Mortgage note on
the Closing Date.
4.3 Additional Consideration. Buyer shall pay to Sellers an amount of up
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to Three Hundred Thousand Dollars ($300,000) in cash as Additional
Consideration, under the following terms:
4.3.1 If, for the period commencing the first day of the month after
the Closing Date, and ending twenty-four (24) months thereafter (the "Twenty-
Four Month Period"), the aggregate net revenues recognized from the
SAFESTORE/SAFESHOP ("SAF") and Inventory Management Services ("IMS") product
lines shall be at least Five Million Dollars ($5,000,000), then Buyer shall pay
to Sellers additional consideration of One Hundred Thousand Dollars ($100,000).
If the aggregate net revenues recognized from the SAF and IMS product lines
shall be less than Five Million Dollars ($5,000,000) during the Twenty-Four
Month Period, then Buyer shall not pay to Sellers any Additional Consideration
pursuant to this Section 4.3.1. For purposes of this Agreement, "net revenues"
means gross revenues less discounts, allowances, or credits.
4.3.2 In addition to the additional consideration described in
Section 4.3.1 above, if, for the Twenty-Four Month Period, the cumulative net
revenues recognized from the SAF and IMS product lines exceed Five Million
Dollars ($5,000,000) in the aggregate (the excess of such net revenues over
$5,000,000 being referred to as "excess revenues"), then Buyer shall pay to
Sellers Additional Consideration of twenty percent (20%) of excess revenues,
subject to a maximum additional consideration under this Section 4.3.2 of Two
Hundred Thousand Dollars ($200,000).
4.3.3 Within sixty (60) days after the end of the Twenty-Four Month
Period, Buyer shall prepare and deliver to Sellers a schedule setting forth its
calculation of the SAF and IMS net revenues recognized. The Sellers shall have
the right, at their expense, to have an independent certified public accountant
("CPA") selected by the Sellers and approved by Buyer, such approval not to be
unreasonably withheld provided that the CPA has signed an appropriate
confidentiality agreement, review Buyer's internal work papers or other back-up
detail and substantiation relating to each such calculation. Buyer will make
its books and records relating solely to the calculation available to such CPA
during reasonable business hours. The CPA shall agree to advise the Sellers
only of the accuracy or inaccuracy of the Buyer's schedule and, if not accurate,
the actual amounts as computed by such CPA. Sellers shall notify Buyer of any
differences regarding any such calculation within sixty (60) days following
Sellers' receipt thereof. Any disagreement as to the computation shall be
settled in accordance with Section 18.11 hereof. Such calculation shall be
deemed final upon: (i) the expiration of the foregoing
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sixty (60) day review period if Sellers have not notified Buyer of any
differences regarding the calculation, or (ii) the resolution of any differences
relating thereto. Buyer shall pay the amounts described in Subsections 4.3.1,
and 4.3.2 above within five (5) days after the applicable schedule becomes
final.
4.3.4 Buyer acknowledges that timely capital expenditures may be
required and incurred by Buyer in order to meet the target aggregate net
revenues as set forth in Subsections 4.3.1 and 4.3.2 above. The projected
capital expenditures are set forth in Schedule 4.3.4.
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4.3.5 If either line of business (SAF or IMS) is discontinued, or
both of them are discontinued, for any reason, during the Twenty-Four Month
Period, or if any material change in the form, structure, lines or delivery of
services that could materially alter the opportunity to achieve the Additional
Consideration occurs, or if required capital expenditures, as set forth in
Schedule 4.3.4, are not made timely in accordance with the reasonable needs of
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the Business then the Additional Consideration as described in Subsections 4.3.1
and 4.3.2, above, shall be deemed earned by Sellers and Buyer shall immediately
pay to Sellers such Additional Consideration in the amount of $300,000.
Notwithstanding the foregoing or any other provision in this Agreement to the
contrary, if either the SAF or the IMS business incurs cumulative operating
losses (as measured by net earnings before interest and taxes and reflecting a
reasonable corporate overhead allocation) over any six (6) month period during
the Twenty-Four Month Period or if either the SAF or the IMS business incurs a
material adverse effect after the date hereof, then the Buyer shall have the
right to discontinue such business or to refuse to incur the capital
expenditures contemplated by Section 4.3.4 without having any obligation to pay
the Additional Consideration pursuant to this Section 4.3.
4.4 Equity Adjustment.
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4.4.1 Within sixty (60) days after the Closing, the Sellers and the
Buyer shall jointly determine the Company's Net Equity (as defined below). In
the event that the Net Equity is less than $2,800,000, Sellers shall pay to
Company (or the Buyer if it so directs) the amount by which the Net Equity is
less than $2,800,000. In the event that the Net Equity is greater than
$2,800,000, Buyer or the Company shall pay to Sellers the amount by which the
Net Equity is greater than $2,800,000, but in no event shall the Buyer or the
Company be required to pay more than $500,000 to the Sellers pursuant to this
Section 4.4. Any payments due hereunder shall be made within fifteen (15) days
after the Net Equity is finally determined without interest. In the event that
the Sellers and the Buyer are unable to agree upon the Net Equity at Closing,
such dispute shall be resolved by an unaffiliated "Big Five" accounting firm to
be selected and agreed upon by the Sellers on the one hand and the Buyer on the
other hand (the "Unaffiliated Accounting Firm"). The dispute over the Net
Equity at Closing shall be resolved by the Unaffiliated Accounting Firm no later
than ninety (90) days after the Closing. The costs, expenses and fees of the
Unaffiliated Accounting Firm shall be borne equally by the Buyer on the one hand
and the Sellers on the other hand. Any payments to be made hereunder shall be
deemed an adjustment to the Purchase Price.
4.4.2 For purposes of this Section 4.4, "Net Equity" shall mean the
excess of the Company's total assets over the Company's total liabilities, each
as determined in accordance
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with United States Generally Accepted Accounting Principles ("GAAP"),
consistently applied, without regard to any deferred tax asset or liability. For
purposes of the calculation of the Net Equity, the total liabilities shall
include, among other things, (i) all accrued liability for processed or
unprocessed waste that is in the possession of the Company as determined by the
methodology agreed to by the parties and defined on Schedule 4.4.2 (ii) all
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accrued liability relating to any loss contingency, if any, on the KAPL
contract.
5. Confidentiality; Noncompetition.
5.1. Confidentiality. Each of the Sellers acknowledges and agrees that it
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may possess certain data and knowledge of the Company, its business and its
operations which are proprietary in nature and confidential. Each of the
Sellers agrees that neither it nor any of its affiliates will, at any time
hereafter, use for his or its own benefit, or reveal, divulge or make known to
any other person, firm, corporation or entity, any confidential information or
trade secrets regarding the Company, its business or its operations. At the
Closing, Sellers shall deliver to the Company all lists of customers, books,
records and all other property constituting confidential information belonging
to the Company; provided, however, that the restrictions of this Section 5.1
shall not extend to any information which can be demonstrated to have been in
the public domain or thereafter entered the public domain other than through
disclosure by any of the Sellers or their agents or affiliates. If at any time
a Seller is requested or required (by oral questions, interrogatories, requests
for information or documents, subpoenas or similar legal process) to disclose
any such information, the Seller (to the extent reasonably practical) shall
notify Buyer immediately and shall refrain from making such disclosure so that
Buyer may, at its own expense, seek an appropriate protective order and/or waive
compliance with the provisions hereof. If, in the absence of a protective order
or the receipt of a waiver hereunder, in the reasonable opinion of the relevant
Seller's counsel, Sellers are compelled to disclose such information to any
tribunal or any governmental agency to avoid being liable for contempt or
suffering any other loss or penalty, such Seller may disclose such information
to such tribunal or agency without liability hereunder; provided, however, that
said Seller shall give Buyer prompt notice of such decision. Sellers shall use
their best efforts to prevent their respective directors, officers,
stockholders, partners, owners, employees, agents and representatives from
violating the provisions of this Section 5.1. For the purposes hereof, the term
"confidential information" shall include, but not be limited to, information
related to the production, product specifications, intellectual property,
pricing policies, bid strategies, cost structure, personnel policies, customer
and marketing relationships, method or practice of soliciting business, and
business and financial information of the Company.
5.2. Non-Solicitation. Each of the Sellers agrees that it will not, at
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any time during the period of two (2) years following the Closing Date, solicit,
employ or retain, or otherwise participate in the solicitation, employment or
retention of, in any capacity, any employee or consultant (where, if such
consultant were so employed or retained, Buyer or the Company would be put at a
competitive disadvantage) currently employed, retained or paid by the Company
and who the Buyer or the Company wishes to retain as an employee after the
acquisition hereunder. Sellers shall use their best efforts to prevent their
respective directors,
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officers, stockholders, partners, owners, employees, agents and representatives
from violating the provisions of this Section 5.2.
5.3 Non-Interference. Each of the Sellers agrees that it will not, during
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the period of three (3) years following the Closing Date, directly or
indirectly, for whatever reason, whether for its own account or for the account
of any other person, firm, corporation or other entity: (i) solicit, deal with
or otherwise interfere with any of the Company's existing or potential contracts
or relationships with any customer or prospective customer, (ii) solicit, deal
with or otherwise interfere with the continuance of supplies to the Company (or
the terms relating to such supplies) or the Company's existing or potential
contracts or relationships with any supplier or vendor to the Company, or (iii)
solicit or otherwise interfere with any existing or proposed contract between
the Company and any other party whatsoever. Sellers shall use their best
efforts to prevent their respective directors, officers, stockholders, partners,
owners, employees, agents and representatives from violating the provisions of
this Section 5.3. Notwithstanding the foregoing, the parties recognize that the
Sellers and their affiliates, through other business ventures, not engaged in
competition (defined in Section 5.4), engage in business dealings and ongoing
business connections with suppliers, vendors, and other contracting parties
serving the Company. The continuation or establishment of any such
relationships are not in any way limited or precluded by this Section 5.3.
5.4 Non-Competition.
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5.4.1 The following terms when used in this Section 5.4 shall have
the following meanings:
A. "Competition" means (i) the treatment and disposal of nuclear,
hazardous and other wastes, and (ii) any business which is competitive with the
Company's Business as it is now operated, excluding, however, any business
carried on directly by or indirectly through HakeTenn, Inc., Rivergate Terminal
Company, L.P., Global Material Systems, L.L.C. f\k\a Mid South Terminal Company,
L.P. or by Xxxx Group, Inc. or any of its affiliates that are expressly set
forth and described on Schedule 5.4 attached hereto, provided, however, that
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with respect to the entities listed earlier in this sentence that the Sellers do
not control, the Sellers (other than Xxxxxx who is an officer of Global Material
Systems, LLC, solely in such capacity) will use commercially reasonable efforts
to encourage such entities not to engage in Competition after the Closing Date
and will not actively participate in conducting Competition by such entities
after the Closing Date.
B. "Directly or Indirectly" means either for one's own account or as
a partner, stockholder, director, officer, principal, agent or employee of
another person or entity.
C. "Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or other entity.
D. "Restricted Territory" means the United States, Canada and all
other jurisdictions worldwide in which the Company is conducting or has
conducted the Company's Business at or prior to the Closing.
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5.4.2 The Sellers shall not, for a period of three (3) years after
the date hereof, Directly or Indirectly, engage in any Competition in the
Restricted Territory; provided, that the Sellers may, without violating this
covenant own as a passive investment not in excess of 5% of the outstanding
capital stock of a corporation which engages in Competition if such capital
stock or other equity is a security which is actively traded on an established
national securities exchange.
5.4.3 Each of the Sellers acknowledges and agrees that in view of the
nature of the Company's Business and the business objectives of the Buyer in
acquiring it, the foregoing territorial and time limitations are reasonable and
properly required for the adequate protection of Buyer and that in the event
that any such territorial or time limitation is deemed to be unreasonable, then
such limitations shall be automatically reduced to the maximum extent permitted
by a court of competent jurisdiction and, as reduced, the territorial and/or
time limitation shall be enforced.
5.5. Specific Performance. Sellers acknowledge that a violation of the
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foregoing covenants of this Section 5 may cause irreparable injury to the
Company and Buyer and that the Company and Buyer shall be entitled, in addition
to any other rights and remedies they may have, to injunctive relief without
being required to prove actual damages or post bond.
5.6 Agreement with Xxxxxxxx. The provisions of Section 5.4 shall not be
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applicable to Xxxxxxxx whose terms of employment with Buyer are set forth in an
employment agreement dated the date hereof (the "Xxxxxxxx Employment Agreement")
and the provisions of Sections 5.2 and 5.3 hereof shall only apply to Xxxxxxxx
for the period specified in the applicable subsection of Section 5 of the
Xxxxxxxx Employment Agreement.
6. Representations and warranties of HakeTenn with respect to HPI. HakeTenn
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represents and warrants to Buyer effective as of the date hereof and at the
closing as follows:
6.1. Organization. HPI is a corporation duly organized, validly existing
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and in good standing under the laws of the State of Delaware, its jurisdiction
of incorporation, and has all requisite corporate power and authority and all
necessary licenses and permits to carry on its business as it has been and is
now being conducted and to own, lease and operate the properties used in
connection therewith. True and correct copies of the certificate of
incorporation and bylaws of HPI, as amended to the date hereof, have been
delivered to the Buyer and such documents are in full force and effect. HPI is
not in violation, breach or default of any of the provisions of its Certificate
of Incorporation or By-Laws.
6.2. Capitalization. The HPI Stock comprises all of the authorized, issued
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and outstanding shares of capital stock of HPI. All of the HPI Stock has been
duly authorized and validly issued and is fully paid, nonassessable and free of
preemptive rights with no liability attaching to the ownership thereof. None of
the HPI Stock has been issued in violation of the preemptive rights of any
stockholder of HPI. The HPI Stock was issued in compliance with all
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applicable Federal and state securities laws and regulations. HPI has no
obligation (contingent or other) to purchase, redeem or otherwise acquire any of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
6.3. Options. On the Closing Date, there are no existing agreements,
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subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever granting to any person or entity
any interest in or the right to purchase or otherwise acquire from HPI, at any
time, or upon the happening of any stated event, any securities of HPI, whether
or not presently issued or outstanding, nor are there any outstanding securities
of HPI or any other entity which are convertible into or exchangeable for shares
of capital stock or other securities HPI, nor are there any agreements,
subscriptions, options, warrants, calls, commitments or rights of any kind
whatsoever granting to any person or entity any interest in or the right to
purchase or otherwise acquire from HPI or any other entity any securities so
convertible or exchangeable. There are no voting agreements, voting trusts,
stockholders' agreements, proxies or other agreements or understandings that are
currently in effect or that are currently contemplated with respect to the
voting of any capital stock of HPI.
6.4. Title to the Shares; Options. HakeTenn is the lawful record holder
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and the beneficial owner of the HPI Stock and has good and marketable title to
the HPI Stock. HakeTenn owns the HPI Stock free and clear of any and all Liens,
and there are no existing agreements, subscriptions, options, warrants, calls,
commitments, trusts (voting or otherwise), or rights of any kind whatsoever
granting to any person or entity any interest in or the right to purchase or
otherwise acquire any of the HPI Stock from HakeTenn at any time or upon the
happening of any stated event. At the Closing Date, there shall be no
agreements, instruments, understandings, orders or decrees that would restrict
the transfer by HakeTenn of the HPI Stock pursuant to this Agreement.
6.5. Subsidiaries and Affiliates. HPI does not own, directly or
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indirectly, any capital stock of any corporation or any ownership interest in
any limited liability company, general or limited partnership or any other
entity or any joint venture interest in any entity other than its ownership of
the Company.
6.6 Other Representations and Warranties. The representations and
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warranties set forth in Section 9 below relating to the Company, other than
Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.10 and 9.11, are true and correct
with respect to HPI, solely as they relate to HPI, as if all references to the
Company therein were changed to HPI. Any exceptions to such representations and
warranties, solely as they relate to HPI, are disclosed on Schedule 6.6 hereto.
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6.7 HPI's Names, Business and Location of HPI Assets. HPI has conducted
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business under the name "Xxxx Partners, Inc." and no other names. HPI has not
engaged in and does not currently engage in any other business other than
holding securities or equity interests in the Company, Rivergate Terminal
Company, L.P. and Global Material Services, L.L.C. HPI's chief executive office
and principal place of business is located at 0000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxx 00000. Substantially all of HPI's assets are located at the same
address as its chief executive office and HPI does not currently have any places
of business other than at such address. Set forth on Schedule 6.6 hereto is a
complete and accurate listing of all locations at
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which HPI has conducted business as owner, operator, lessor or otherwise over
the last ten (10) years.
7. Representations and Warranties of HakeTenn with Respect to HakeTenn.
HakeTenn represents and warrants to Buyer, effective as of the date hereof and
at the Closing as follows:
7.1. Organization. HakeTenn is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware, its
jurisdiction of incorporation, and has all requisite corporate power and
authority and all necessary licenses and permits to carry on its business as it
has been and is now being conducted and to own, lease and operate the properties
used in connection therewith. HakeTenn is not in violation, breach or default
of any of the provisions of its Certificate of Incorporation or By-Laws.
7.2. Power and Capacity. HakeTenn has all requisite corporate right,
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power and authority to (i) execute, deliver and perform this Agreement and each
of the instruments, documents and agreements contemplated herein to be executed
and delivered by HakeTenn pursuant to this Agreement, (ii) sell, transfer and
deliver the HPI Stock owned by it to Buyer hereunder and (iii) perform all other
transactions contemplated to be performed by it hereby. HakeTenn, a
corporation, has duly authorized the execution, delivery and performance of this
Agreement by all necessary corporate actions and the Person signing this
Agreement on behalf of HakeTenn has been duly authorized to do so. This
Agreement constitutes a valid and legally binding obligation of HakeTenn,
enforceable against HakeTenn in accordance with its terms.
7.3. Freedom to Contract; No Consents Required. The execution and
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delivery of this Agreement by HakeTenn does not, and the performance by it of
its obligations hereunder will not, (a) violate or conflict with any provision
of its Certificates of Incorporation or By-laws or any amendments thereto or
restatements thereof, (b) violate any of the terms, conditions or provisions of
any law, rule, regulation, order, writ, injunction, judgment or decree of any
court, governmental authority, or regulatory agency, (c) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, indenture, debenture, security agreement, trust agreement, lien, mortgage,
lease, agreement, license, franchise, permit, guaranty, joint venture agreement,
or other agreement, instrument or obligation, oral or written, to which
HakeTenn is a party (whether as an original party or as an assignee or
successor) or by which HakeTenn or any of its respective properties is bound or
(d) result in the creation of any Lien upon any of the properties of HakeTenn.
No governmental authorization, approval, order, license, permit, franchise or
consent, and no registration, declaration or filing with any court, governmental
department, commission, authority, board, bureau, agency or other
instrumentality, is required in connection with the execution, delivery and
performance of this Agreement by HakeTenn and the consummation of the
transactions contemplated hereby. No other third party authorization, approval,
license, permit, franchise or consent is required in connection with the
execution, delivery and performance of this Agreement by HakeTenn and the
consummation of the transactions contemplated hereby.
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7.4 Litigation. There is no litigation, arbitration, mediation, or other
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investigation or proceeding pending nor, to the best of HakeTenn's knowledge,
threatened against HakeTenn relating to the transactions contemplated by this
Agreement or which seeks to prohibit, restrict or delay consummation of the
transactions contemplated by this Agreement and there is no judgment, decree,
injunction, ruling or order of any court, governmental authority or arbitrator
outstanding against HakeTenn having any such effect.
8. Representations and Warranties of Xxxxxxxx and Xxxxxx. Each of Xxxxxxxx
and Xxxxxx severally, in accordance with their respective Percentage Interests,
represent and warrant to Buyer effective as of the date hereof and at the
Closing that:
8.1. Competency. Each is legally competent.
----------
8.2. Title to LLC Interests. Each owns his respective LLC Interests free
----------------------
and clear of any and all Liens or limitations on the voting or transfer rights
thereof, except as set forth in the LLC Operating Agreement, and there are no
existing agreements, subscriptions, options, warrants, calls, commitments,
trusts (voting or otherwise), or rights of any kind whatsoever granting to any
person or entity any interest in or the right to purchase or otherwise acquire
any of his respective LLC Interests at any time or upon the happening of any
stated event. At the Closing Date, there will be no agreements, instruments,
understandings, orders or decrees that would restrict the transfer by either of
the LLC Interests owned by him pursuant to this Agreement.
8.3. Power and Capacity. Each has full right, power and capacity to: (i)
------------------
execute, deliver and perform his respective obligations under this Agreement,
(ii) sell, transfer and deliver his respective LLC Interests to Buyer hereunder
and (iii) to perform all other transactions contemplated to be performed by him
hereunder.
8.4. Binding Obligation. This Agreement and the other instruments,
------------------
documents or agreements executed by him pursuant to this Agreement constitute
valid, binding and enforceable obligations against him in accordance with their
terms.
8.5 Freedom to Contract; No Consents Required. The execution, delivery
-----------------------------------------
and performance of this Agreement and the other instruments, documents and
agreements executed by him pursuant to this Agreement will not (i) conflict with
or violate any law, rule, regulation, ordinance, order, writ, injunction,
judgment or decree applicable to him or by which any of his properties or assets
are bound or (ii) conflict with, or result in any breach of or constitute a
violation or default of (with or without notice or lapse of time or both) any
note, bond, indenture, mortgage, agreement, contract or other instrument to
which he is a party or by which he or any of his properties or assets are bound.
8.6 No Waivers. No waiver, approval, authorization, order, license,
----------
permit, franchise or consent of or registration, declaration, qualification or
filing with any governmental authority or any other person or entity is required
to be obtained or made by him in connection with the execution, delivery and
performance by him of this Agreement and the other instruments, documents and
agreements executed by him pursuant to this Agreement.
19
8.7 Litigation. There is no claim, action, suit or proceeding pending or,
----------
to his knowledge, threatened against him or any of his properties relating to
the transactions contemplated by this Agreement or which seeks to prohibit,
restrict or delay consummation of the transactions contemplated by this
Agreement and there is no judgment, decree, injunction, ruling or order of any
court, governmental authority or arbitrator outstanding against him having any
such effect.
8.8. Interim Transfer Restrictions. None of his respective LLC Interests
-----------------------------
shall be offered, sold, assigned, pledged, hypothecated, transferred, or
otherwise disposed of except after full compliance with all of the applicable
provisions of the this Agreement.
9. Representations and Warranties of Sellers. Sellers hereby represent and
warrant to the Buyer effective as of the date hereof and at the Closing as
follows:
9.1. Organization; Foreign Qualification. The Company is a limited
-----------------------------------
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, its jurisdiction of organization, and has all
requisite power and authority and all necessary licenses and permits to carry on
its business as it has been and is now being conducted and to own, lease and
operate the properties used in connection therewith. True and correct copies of
the organizational documents of the Company, as amended to the date hereof,
including, without limitation, the Company's operating agreement, have been
delivered to the Buyer and such documents are in full force and effect. The
Company is not in violation, breach or default of any of the provisions of its
organizational documents. The Company is duly qualified to do business in the
jurisdictions set forth in Schedule 9.1 hereto, which jurisdictions represent
------------
all of the jurisdictions where the Company is required to be qualified as the
result of the location of its assets or the conduct of its business, other than
where the failure to qualify would not have a material and adverse effect on the
Company's assets, properties, liabilities, business affairs, results of
operations, condition (financial or otherwise) or prospects (a "Material Adverse
Effect").
9.2. Capitalization. The LLC Interests comprise all of the authorized,
--------------
issued and outstanding equity interests of the Company. All of the LLC
Interests have been duly authorized and are validly issued and are fully paid,
nonassessable and free of preemptive rights with no liability attaching to the
ownership thereof. None of the LLC Interests have been issued in violation of
the preemptive rights of any holder of equity interests of the Company. The LLC
Interests were issued in compliance with all applicable Federal and state
securities laws and regulations. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of the interests of the
Company are as set forth in the organizational documents of the Company, copies
of which have been furnished to the Buyer.
9.3. Options. On the Closing Date, there are no existing agreements,
-------
subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever granting to any person or entity
any interest in or the right to purchase or otherwise acquire from the Company,
at any time, or upon the happening of any stated event, any interests
20
of the Company, whether or not presently issued or outstanding, nor are there
any outstanding interests of the Company or any other entity which are
convertible into or exchangeable for interests of the Company, nor are there any
agreements, subscriptions, options, warrants, calls, commitments or rights of
any kind whatsoever granting to any person or entity any interest in or the
right to purchase or otherwise acquire from the Company or any other entity any
interests so convertible or exchangeable. Upon the Closing, there are no voting
agreements, voting trusts, stockholders' agreements, proxies or other agreements
or understandings that are currently in effect or that are currently
contemplated with respect to the voting of any interests of the Company.
9.4. Title to the Interest and the Options. Sellers are the lawful record
-------------------------------------
holders and the beneficial owners of the LLC Interests and Sellers have good
and marketable title to the LLC Interests. Sellers own the LLC Interests free
and clear of any and all Liens, and there are no existing agreements,
subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever granting to any person or entity
any interest in or the right to purchase or otherwise acquire any of the LLC
Interests from the Sellers at any time or upon the happening of any stated
event. At the Closing, there shall be no agreements, instruments,
understandings, orders or decrees that would restrict the transfer by Sellers of
the LLC Interests pursuant to this Agreement.
9.5. Subsidiaries and Affiliates. The Company does not own, directly or
---------------------------
indirectly, any capital stock of any corporation or any ownership interest in
any limited liability company, general or limited partnership or any other
entity or any joint venture interest in any entity.
9.6. Company's Names, Business and Location of Company Assets. The Company
--------------------------------------------------------
has conducted business under the name "Xxxxx X. Xxxx Associates LLC" and
previously "Xxxxx X. Xxxx Associates", (a General Partnership) and no other
names. The Company has not engaged in and does not currently engage in any
other business other than the Business. The Company's chief executive office
and principal place of business is located at 0000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxx 00000. Substantially all of the Company's assets are located at the
same address as its chief executive office and the Company does not currently
have any places of business other than at such address. Set forth on Schedule
--------
9.6 hereto is a complete and accurate listing of all locations at which the
---
Company has conducted business as owner, operator, lessor or otherwise over the
last ten (10) years.
9.7. Financial Statements. Sellers have previously furnished to Buyer
--------------------
true and complete copies of the Company's financial statements listed on
Schedule 9.7 hereto (the "Company Financial Statements"), which: (a) were
------------
prepared in accordance with GAAP applied on a basis consistent with that of
preceding accounting periods (except as may be indicated therein or in the notes
thereto); (b) are correct and complete in all material respects and are in
accordance with the books and records of the Company; and (c) fairly present the
financial position of the Company as of the dates thereof and, if presented
therein, the results of operations, cash flows and changes in financial position
of the Company for each of the periods presented therein.
21
9.8. Books and Records. As of the date hereof, to the best of Sellers'
-----------------
knowledge, all accounts, books, ledgers, minute books and financial and other
records of whatever kind of the Company have been properly and accurately kept
in accordance with consistently applied business practices and are correct and
complete in all material respects and there are no inaccuracies or discrepancies
contained or reflected therein. At the Closing, all of such books and records
will be in the possession of the Company.
9.9. Absence of Undisclosed Liabilities. The Company has no liabilities
----------------------------------
or obligations (whether absolute, accrued, contingent or otherwise), except: (a)
normally recurring liabilities, obligations and contingencies incurred after the
date of the Company's audited balance sheet as of December 31, 1998 (the
"Company Balance Sheet") in the ordinary course of business consistent with past
practice, and also except as to advances or loans to the Company from members
and affiliates (listed on the financial statements as "Member Loans"), (b)
liabilities, obligations and contingencies properly accrued or reserved against
in the Company Balance Sheet and (c) any future contingent liabilities that
might be related to the decommissioning of the facilities operated by Company
pursuant to the laws of the State of Tennessee or federal law.
9.10. Accounts Receivable. The accounts and other receivables set forth
-------------------
on the Company Balance Sheet, or arising since the date thereof, have or shall
have arisen in the ordinary course of the business of the Company for goods sold
and invoiced or services performed. To the best of Sellers' knowledge, except
as otherwise reflected on the Company Balance Sheet, all said receivables are
collectible in amounts aggregating not less than the full recorded amounts
thereof (less allowance for doubtful accounts set forth in the Company Balance
Sheet or accrued after the date thereof in the ordinary course of business
consistent with past practice) and are subject to no offsets, except for normal
trade discounts.
9.11. Prepaids. The prepaid insurance, expenses and taxes as set forth on
--------
the Company Balance Sheet, or accrued after the date thereof in the ordinary
course of business consistent with past practice, represent amounts attributable
to future periods.
9.12. Title to Properties. The Company has good and marketable title to
-------------------
all properties and assets reflected on the Company Balance Sheet or acquired
after the date thereof (except for properties and assets sold or otherwise
disposed of in the ordinary course of business since the date of the Company
Balance Sheet and leasehold interests), and, in the case of any real property,
in fee simple absolute title, subject only to (a) statutory Liens arising or
incurred in the ordinary course of business with respect to which the underlying
obligations are not delinquent and that are reflected on the Company Balance
Sheet, (b) with respect to personal property, the rights of customers of the
Company with respect to inventory or work in progress under orders or contracts
entered into by the Company in the ordinary course of business, (c) Liens
reflected on the Company Balance Sheet or notes thereof, (d) Liens for taxes not
yet delinquent and governmental charges or claims not yet imposed, (e) Liens set
forth on Schedule 9.12 hereto, and (f) Liens and defects in title that are
-------------
immaterial and are not, individually or in the aggregate, result in a Material
Adverse Effect for the Company. The encumbrances that exist on the Company's
properties and assets pursuant to (a) through (f) of the previous sentence will
not in any material way adversely affect the Company's use or enjoyment of its
properties or assets and
22
will not in any material way adversely affect the Company's operations. None of
the properties owned by the Company is subject to any Liens which could
reasonably be expected to have a Material Adverse Effect on the Company.
Schedule 9.12 hereto sets forth an accurate and complete list of all real
-------------
properties owned by the Company. Except as described on Schedule 9.12, the
-------------
Company does not lease any real property. There are no defaults existing under
any of the leases pursuant to which the Company is leasing real property.
Existing public utility services (including, without limitation, all applicable
electric lines, sewer and water lines, gas and telephone lines) are available to
service each real property owned by the Company at the property line without the
need for easements over the land of others.
9.13. Contracts. Listed on Schedule 9.13 is a listing of all Material
--------- -------------
Contracts of the Company (as defined below). The Company has provided copies or
has made available to Buyer all of its Material Contracts, as defined below.
For purposes hereof, a "Material Contract" is one that falls into one or more of
the following categories:
9.13.1. Each executory contract to which the Company is a party not
made in the ordinary course of business and each other contract which as of the
date hereof has an current executory value of stated consideration exceeding One
Hundred Thousand Dollars (USD $100,000);
9.13.2. Each contract with or commitment to employees, advisors, and
consultants who are not employees of the Company which as of the date hereof has
an executory value exceeding Ten Thousand Dollars (USD $10,000);
9.13.3. Each debt instrument, including, without limitation, any
loan agreements, promissory notes, security agreements or other evidences of
indebtedness, where the Company, is a lender or borrower, in a principal amount
exceeding Ten Thousand Dollars (USD $10,000);
9.13.4. Each contract, commitment or arrangement restricting the
Company or any of its employees from engaging in business or from competing in
any line of business with any other parties;
9.13.5. Each contract, agreement or arrangement to which the Company
is a party (whether as an original party or an assignee or successor) for a line
of credit or guarantee, pledge or undertaking of the indebtedness of any other
person or entity;
9.13.6. Each outstanding performance bonds which have been delivered
to any person in connection with the business and operations of the Company;
9.13.7. Each loan agreement, security agreement, note, debenture, or
other contract or commitment (except for this Agreement) limiting or restraining
the Company from declaring, setting aside, authorizing or making payment of any
dividend or any distribution, whether in cash or property or from repurchasing
or redeeming the Company's outstanding ownership interests;
23
9.13.8. Each contract or commitment to which the Company is a party
(whether as an original party or an assignee or successor) for any charitable or
political contribution;
9.13.9. Each existing agreement, option, commitment or right with,
to or in any third party to acquire any assets or properties, real, personal or
mixed, or any interest therein, of the Company except for those contracts for
the sale of inventory entered into in the ordinary course of business;
9.13.10 Each contract creating a Lien (other than the Liens
permitted by (a) through (f) of section 9.12.
9.13.11 Each contract relating to capital expenditures in excess
of Fifty Thousand Dollars ($50,000);
9.13.12 Each lease, license or other agreement granting to the
Company possessory rights in real property not owned by the Company;
9.13.13 Each executory contract for the purchase or sale of real
property or any business or line of business or for any merger or consolidation;
9.13.14 Each lease of personal property involving annual rental
obligations exceeding Ten Thousand Dollars ($10,000);
9.13.15 Each joint venture or partnership agreement;
9.13.16 Each contract with any governmental authority; and
9.13.17 Each contract involving the settlement of any litigation or
litigation threatened, either in writing or orally to any officer of the
Company, involving in excess of Ten Thousand Dollars ($10,000).
9.14. Absence of Default. The Company has complied with and performed all
------------------
of its obligations required to be performed under all Material Contracts to
which it is a party (whether as an original party or as an assignee or
successor) as of the date hereof, and is not in default in any material respect
under any Material Contract; and no event has occurred which, with or without
the giving of notice, lapse of time or both, would constitute a default
thereunder in any material respect. Sellers have no knowledge that any party
has failed to comply with or perform all of its obligations required to be
performed under any Material Contract to which the Company is a party (whether
as an original party or as an assignee or successor) as of the date hereof, that
any event has occurred which, with or without the giving of notice, lapse of
time or both, would constitute a default by such party thereunder. Except as
noted on Schedule 9.14, the Company is not a party to or bound by any Material
-------------
Contract which the Company expects in the future to have a Material Adverse
Effect. Except as noted on Schedule 9.14, the Company is not a party to any
-------------
contract or agreement with any director, officer, owner or affiliate of the
Company.
24
9.15. Insurance. The Company maintains and has maintained all such
---------
insurance for its structures, facilities, fixtures, machinery, equipment, motor
vehicles, inventory and other properties and assets and with respect to its
employees and operations as are set forth on Schedule 9.15. All such insurance
-------------
policies continue to be in full force and effect and will remain in force and
effect up to and including the Closing Date, and the Company is in compliance
with all requirements and provisions thereof. True and correct copies of all
insurance policies relating to such coverage have been provided by the Company
to the Buyer. Except as stated on Schedule 9.15, the Company has received no
-------------
notice of cancellation or nonrenewal with respect to, or disallowance of any
claim under, any such insurance policies and no such policies are subject to any
retroactive rate or audit adjustments or coinsurance arrangements. Sellers have
no knowledge of any state of facts or the occurrence of any event which
reasonably might form the basis of any insurance claim against or relating to
the Company's business or operations or any of its assets or properties which
are covered by any such insurance. The Sellers have received no notices that
any of the Company's insurance policies will not be renewed upon expiration
thereof at premiums substantially equivalent to those currently being paid by
the Company. Set forth on Schedule 9.15 hereto is a list of all property
-------------
damage, personal injury claims and workers' compensation claims asserted against
the Company during the past five (5) years involving any claim in excess of
$10,000. Except as listed in Schedule 9.15, the Company has not received any
-------------
notice from any insurance company or insurance board of underwriters of the
existence of any default or unsafe condition with respect to the Company's
properties or the Business that remains unsatisfied or uncured or that will
remain unsatisfied or uncured as of the Closing Date. With respect to the
Company's insurance policies identified on Schedule 9.15 hereto, (i) all
-------------
premiums required to be paid with respect thereto covering all periods up to and
including the Closing Date have been paid, (ii) there has been no lapse in
coverage under such policies during the last [two] years for which the Company
conducted its operations and (iii) all such insurance policies will continue to
be in effect, unless replaced, immediately after the Closing, without limit as
to time, for occurrences prior to the Closing. Following the Closing, the
Company shall have the right to timely tender claims under all of its applicable
insurance policies resulting from events or occurrences arising prior to the
Closing and the Sellers warrant that they will utilize reasonable commercial
efforts to pursue such claims. None of the insurance policies applicable to the
Company contain change-of-control provisions that would impact the insurance
policies or the coverage following the transactions contemplated hereby.
9.16. Third-Party Options; No Other Pending Transactions. There are no
--------------------------------------------------
existing agreements, options, commitments or rights with, to or in any third
party to acquire or lease any assets or properties, real, personal or mixed, or
any interest therein, of the Company except for those contracts entered into by
any of them in the ordinary course of business. Except for the transactions
contemplated by this Agreement: (i) none of the Sellers is a party to or bound
by or the subject of any agreement, commitment or undertaking with respect to
the sale of LLC Interests or the HPI Stock, as applicable, and (ii) the Company
is not a party to or bound by or the subject of any agreement, undertaking or
commitment to merge or consolidate with, or acquire all or substantially all of
the property and assets of, any other person, corporation or entity.
25
9.17. Distributions, Satisfactions, Obligations. Since December 31, 1998,
-----------------------------------------
the Company has not issued any additional LLC Interests other than that as set
forth on Exhibit B, attached hereto or purchased or redeemed LLC Interests of
---------
the Company;
9.18. Capital Expenditures. Except as set forth in Schedule 9.18 hereto,
-------------------- -------------
the Company has not made any capital expenditures or commitments since December
31, 1998, whether or not contracted for, in an aggregate amount exceeding Fifty
Thousand Dollars (USD $50,000).
9.19. Litigation. Except as set forth in Schedule 9.19 hereto, as of the
---------- -------------
date hereof, there are no actions, suits, labor disputes or arbitrations, legal
or administrative proceedings or investigations pending against the Company and,
to the best knowledge of Sellers, after due inquiry of the Company, no actions,
suits, labor disputes or arbitrations, legal or administrative proceedings or
investigations are contemplated or threatened against the Company or any of
their respective assets, properties or businesses, nor is any basis known by
Sellers, after due inquiry of the Company to exist for any such action or for
any governmental investigation relating to the Company or its properties or
business. Neither the Company, nor its assets, properties or business, is
subject to any judgment, order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal. There are no actions, suits,
arbitrations, legal or administrative proceedings or investigations pending
against or relating to the Company, the Sellers or HPI which seeks to prohibit,
restrict or delay consummation of the transactions contemplated under this
Agreement and there is no judgment, decree, injunction, ruling or order of any
court, applicable governmental authority or arbitrator outstanding against the
Company, the Sellers or HPI having any such effect.
9.20. Compliance with Law. The Company has complied with each, and is not
-------------------
in violation of any, law, ordinance, order, decree, rule or regulation to which
it or its business is subject and has not failed to obtain any license, permit,
certificate or other governmental authorization or inspection necessary to the
ownership or use of its assets and properties or to the conduct of its business,
which, in the event of any noncompliance, violation or failure to obtain, would
have a Material Adverse Effect on the Company. Except as set forth in Schedule
--------
9.20 hereto, the Company has not received any claim or notice of any violation,
----
within the past three (3) years, of any laws, ordinance, order, decree, rule or
regulation relating to the properties, premises, business, operations or
employees of the Company, which in the event of any noncompliance or violation
would have a Material Adverse Effect on the Company.
9.21. Transactions with Affiliates. Except as set forth in Schedule 9.21
---------------------------- -------------
or in the Company Financial Statements, none of the Sellers nor any current
shareholder, owner, director, officer or affiliate of the Company or HPI, during
the last three (3) years has controlled, directly or indirectly, any entity
which is or was a party to any agreement, business arrangement or course of
dealing with the Company or any property or asset which was the subject of any
agreement, business arrangement or course of dealing with the Company.
9.22. Prohibited Payments. To Sellers' knowledge, neither the Company,
-------------------
the Sellers, any of their directors, officers, stockholders, owners or
affiliates nor anyone acting on their behalf has (i) used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
26
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, (iii) established or maintained any
unlawful or secret fund of corporate monies or other assets of the Company, (iv)
made any false or fictitious entry on the books or records of the Company, (v)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment, (vi) given any favor or gift which is not deductible for federal income
tax purposes or (vii) made any bribe, kickback or other payment of a similar or
comparable nature, whether unlawful or not, to any person, entity or
governmental authority, whether in money, property or services, to obtain
favorable treatment in securing business or to obtain special concessions, or to
pay for favorable treatment for business secured or for special concessions
already obtained.
9.23. Tax Matters.
-----------
9.23.1 Except as set forth in the Balance Sheet of the Company or
HPI as of the Closing Date, neither the Company nor HPI has any liability for
any Taxes (hereinafter defined) imposed by law in respect of any taxable period
ending on or before the Closing Date, or any Taxes imposed by law in respect of
the portion of any Straddle Period (as hereinafter defined) which ends on the
Closing Date. As used in this Agreement, the term "Straddle Period" means any
taxable period beginning before and ending after the Closing Date. In the case
of any Straddle Period, the Taxes of the Company and HPI shall be computed as if
the actual taxable period ended on and included the Closing Date, except that
any election under Section 338 of the Internal Revenue Code shall be ignored, in
the case of ad valorem real or personal property Taxes, if any, of the Company
-- -------
or HPI, which shall be allocated to the portion of the Straddle Period ending on
the Closing Date in accordance with the ratio of the number of days in such
portion to the total number of days in the Straddle Period. As used in this
Agreement, the term "Pre-Closing Tax Period" shall mean (i) any taxable period
ending on or before the Closing Date or (ii) the portion of any Straddle Period
which ends or is deemed to end hereunder on the Closing Date.
9.23.2 The Company and HPI have each filed or will timely file all
Tax Returns required to have been filed prior to the Closing Date (subject to
any timely extensions permitted by law) by it with the appropriate taxing
authority with respect to Taxes for any period ending or deemed to end hereunder
on or before the Closing Date, and all Taxes shown to be payable on such Tax
Returns have been paid or will be paid prior to the Closing Date except as to
Taxes reserved on the Balance Sheet, payable as a result of an event or election
made after the Closing Date, or set forth on Schedule 9.23. The Company and HPI
-------------
will each deliver to the Buyer a draft copy of the Company's and HPI's Tax
Return for the years ended December 31, 1998 and January 31, 1999, respectively,
at least ten (10) business days prior to the filing of such returns (without
substantial revision) with the IRS, which returns shall be filed on a timely
basis.. No amendment, modification or change in any HPI tax return previously
filed or its 1998 Tax Return may be made without the consent of both Buyer and
Seller.
9.23.3 Except as set forth in Schedule 9.23, (i) no deficiency for
-------------
any amount of Tax has been asserted or assessed by a taxing authority against
the Company or HPI, which is still pending, and (ii) neither the Company nor HPI
has filed any waiver of the statute of
27
limitations applicable to the assessment or collection of any Tax imposed in
respect of a Pre-Closing Tax Period.
9.23.4 The Company and HPI have each withheld or otherwise collected
all Taxes or amounts they were required to withhold or collect under any
applicable federal, state or local law, including, without limitation, any
amounts required to be withheld or collected with respect to employee, state and
federal income tax withholding, social security, unemployment compensation,
sales or use taxes or workmen's compensation, and all such amounts have been
timely remitted to the proper authorities.
9.23.5 No consent under Section 341(f) of the Internal Revenue Code
of 1986 (the "Code") has been filed with respect to the Company or HPI.
9.23.6 Except as to its prior period of consolidation with Xxxx
Group, Inc., and affiliates, as listed in Schedule 9.23, neither the Company nor
-------------
HPI has any liability for the Taxes of any Person other than the Company under
Sections 1.1502-6 or 1.1502-78 of Title 26 of the Code of Federal Regulations
(or any similar provisions of state, local or foreign income tax law).
9.23.7 Except as set forth in Schedule 9.23, neither the Company nor
-------------
HPI is a party to any tax indemnity agreement, tax sharing agreement or other
agreement under which the Company or a subsidiary could become liable to another
person or entity as a result of the imposition of a Tax upon such person or
entity, or the assessment or collection of such a Tax.
9.23.8 Except as set forth in Schedule 9.23, neither the Company nor
-------------
any of its subsidiaries has agreed to make, or is required to make, any
adjustment under Section 481 of the Code (or any similar provision of state,
local or foreign income tax law) by reason of a voluntary change in accounting
methods or otherwise, arising through the Closing Date.
9.23.9 HPI has not been a member of an affiliated group filing a
consolidated federal income Tax Return other than a group the common parent of
which is Xxxx Group, Inc. or Xxxx Tenn, Inc.
9.23.10 Xxxx Group, Inc. and its subsidiaries have filed all income
Tax Returns that it was required to file for each taxable period during which
HPI was a member of the group. All such Tax Returns were correct and complete
in all material respects.
9.23.11 HPI has filed a tax return for the tax year ending January
31, 1998.
9.23.12 The Company is classified as a partnership for federal income
tax purposes.
9.23.13 Each of the Sellers is a United States person within the
meaning of Section 7701(a)(30) of the Code.
28
9.23.14 The gross revenues of Xxxx Group Inc. and its consolidated
entities (hereinafter referred to as "HGI") as reported on its consolidated
federal income tax return for its taxable year that ended January 31, 1998 was
in excess of $62,000,000.
9.23.15 For purposes of this Agreement,
(a) "Tax" or "Taxes" means all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all net income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
-- -------
added, transfer, transfer gains, inventory, intangibles, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, real or personal property, and estimated taxes,
water, rent and sewer service charges, customs duties, fees, assessments and
charges of any kind whatsoever, together with any interest and any penalties,
fines, additions to tax or additional amounts thereon, imposed by any taxing
authority (federal, state, local or foreign) and shall include any transferee
liability in respect of Taxes; and
(b) "Tax Return" means all returns, declarations, reports,
estimates, information returns and statements required to be filed in respect of
any Taxes.
9.24. ERISA.
-----
9.24.1. Schedule 9.24.1 annexed hereto lists all employee benefit
----------------
(including multiemployer) plans, funds, arrangements, practices or programs
(including, but not limited to, employee benefit plans within the meaning of the
Code or the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), whether or not they are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable law, (ii) written or
oral, (iii) funded or unfunded, or (iv) generally available to all employees of
the Company, which were or are established or maintained by the Company, or to
which the Company has contributed or is or was obligated to make payments, in
each case with respect to any current or former employee of the
Company("Plan"). For purposes of this Section 9.24.1, the term "Company" shall
include the Company and any corporation which is a member of a controlled group
of corporations (as defined in section 414(b) of the Code) which includes the
Company; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code) with the Company; any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in section 414(m) of the Code) which includes the
Company; and any other entity required to be aggregated with the Company
pursuant to regulations under section 414(o) of the Code.
9.24.2. The Company has delivered to Buyer (i) true and complete
copies of all Plan documents and other instruments and documents (including, but
not limited to, summary plan descriptions and trust agreements) relating
thereto, (ii) accurate and complete detailed summaries of any oral Plans and all
material non-written agreements relating to benefits under the Plans, (iii) true
and complete copies of the most recent financial statements with respect to the
Plans, (iv) true and complete copies of all annual reports prepared within the
past five (5) years, and (v) all filings submitted to and any correspondence
received from any government agency with respect to the Plans within the past
three (3) years (including, but not limited to,
29
Forms 5500, the schedules attached thereto, the most recently issued Internal
Revenue Service ("IRS") determination letter for each Plan that is or is
intended to qualify under section 401(a) of the Code, and the application
submitted to the IRS to request that determination letter).
9.24.3 Each Plan which is intended to be qualified under section
401(a) and the trust thereunder that is intended to be exempt from tax under
section 501(a) of the Code has been determined by the IRS to be so qualified and
exempt. Such determination letter, together with earlier determination letters
(if any), may be relied on through the date of the applications to which they
relate with respect to all tax-qualification requirements required under the
Code to be stated in the Plan as of the Closing Date. Such determination letter
remains in effect and has not been revoked. Nothing has occurred since the date
of any such determination which may adversely affect such qualification or
exemption, or result in the imposition of excise taxes or tax on unrelated
business income under the Code. No Plan is funded, through a trust is or is
intended to be exempt from tax under section 501(c) of the Code.
9.24.4. No reportable event (as defined in section 4043 of ERISA or
the regulations thereunder) for which the reporting requirements have not been
fully waived, or accumulated funding deficiency whether or not waived (as
defined in section 302 of ERISA), or liability to the Pension Benefit Guaranty
Corporation ("PBGC") under section 4062 of ERISA, nor any prohibited transaction
(as defined in section 406 of ERISA or section 4975 of the Code), has occurred
or exists with respect to any Plan. The Plans and provisions thereof, the trusts
created thereby, and the operation of the Plans are in compliance with and
conform to applicable provisions of the Code (including but not limited to
section 412), ERISA, other statutes, and governmental rules and regulations.
9.24.5. There is no matter, action, audit, suit or claim pending
before any court, tribunal or government agency or, to the best knowledge of
Sellers, after due inquiry of the Company, threatened relating to any Plan,
fiduciary of any Plan or assets of any Plan. To the best knowledge of Sellers,
no fact exists which could form the basis for any such action, audit, suit or
claim.
9.24.6 Each most recent Plan audit report, actuarial report and
annual report, certified by the Plan's actuaries and auditors, as the case may
be, fairly presents the actuarial status and the financial condition of the Plan
as of the date thereof and the results of operations of the Plan for the plan
year reflected therein and, subject to changes in amounts attributable to
investment performance and normal employee turnover, there has been no material
adverse change in the condition of the Plan since the date of the most recent
Form 5500, audited annual financial statement or actuarial valuation report.
9.24.7 Except for any indirect payments previously made through
Xxxxx X. Xxxx, Inc., as employer, or as otherwise described in Schedule 9.24.7,
---------------
the Company currently has no, and has never had any, obligation to contribute to
any multiemployer plan as defined in section 3(37) of ERISA. The Company has
not, with respect to any multiemployer plan, suffered or caused a complete
withdrawal or partial withdrawal (as such terms are respectively defined in
sections 4203 and 4205 of ERISA), and shall not become liable therefor as a
result of the transactions contemplated by this Agreement.
30
9.24.8. With respect to any Plan that is an employee welfare benefit
plan within the meaning of section 3(1) of ERISA (a "Welfare Plan"), (i) each
such Welfare Plan the contributions to which are claimed as a deduction under
any provision of the Code is in compliance with all applicable requirements
pertaining to such deduction, (ii) with respect to any welfare benefit fund
within the meaning of section 419 of the Code that comprises part of a Welfare
Plan, there is no disqualified benefit within the meaning of section 4976(b) of
the Code that would subject the Company to a tax under section 4976(a) of the
Code, and (iii) each Welfare Plan that is a group health plan as defined in
section 5000(b)(1) of the Code has been operated in compliance with the group
health plan continuation coverage requirements of section 4980B of the Code and
sections 601 through 608 of ERISA, Title XXII of the Public Health Service Act,
the provisions of the Social Security Act, and the health insurance portability
and accountability requirements of sections 9801 through 9806 of the Code and
sections 731 through 734 of ERISA.
9.24.9 To the best of the knowledge of Sellers, after due inquiry
of the Company, the consummation of the transaction contemplated herein shall
not give rise to or accelerate any liability under the Plans except previously
unvested rights of participants in their account under any employee retirement
or pension plan including, but not limited to, an acceleration of any other
rights or benefits to which any employee may be entitled thereunder.
9.24.10 Each Plan (including, without limitation, a Plan covering
retirees of the Company) may be terminated or amended by the plan sponsor, in
any manner and at any time, consistent with the Plan Documents and ERISA without
the consent of any person covered thereunder and may be terminated without any
further liability for benefits that may be accrued or expenses that may be
incurred after the date of such termination. To the best knowledge of Sellers,
after due inquiry of the Company, no oral or written statement has been made by
the Company or any officer, employee or agent thereof, regarding a Plan that was
not in accordance with the Plan and that could have a Material Adverse Effect on
the Company.
9.25. Executive Employees Schedule 9.25 annexed hereto is a correct and
------------------- -------------
complete list of the names and titles of all present officers and salaried
employees of the Company whose 1998 annual salary (including bonuses paid in or
payable for 1998) exceeded Fifty Thousand Dollars (USD $50,000) ("Executive
Employees").
9.26. Employees. Schedule 9.26 annexed hereto is a correct and complete
--------- -------------
list of all labor and collective bargaining agreements (whether written or oral)
to which the Company, is bound and all employment, profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consultant, retirement, severance, welfare or incentive agreements, plans or
contracts to which the Company is a party or by which it is bound. Sellers have
delivered copies of all such agreements, contracts and plans to Buyer. The
Company is not in default with regard to any of such agreements, plans or
contracts. The Company is in compliance in all material respects with all
applicable laws relating to the employment of labor including, without
limitation, the provisions thereof relating to wages, hours, collective
bargaining and the payment of social security and taxes and is not liable for
any arrears of wages or any tax or any penalty for failure to comply with any of
the foregoing. There are no claims,
31
cases, charges of discrimination or controversies (other than routine union
grievances) pending or, to the best knowledge of Sellers, threatened, between
the Company, and any of its employees or labor unions or other collective
bargaining units representing any of their employees. No unfair labor practice
complaints have been filed against the Company with the National Labor Relations
Board nor has the Company received any notice or communication reflecting an
intention or a threat to file any such complaint. Since December 31, 1998, there
has not been any payment or increase by the Company of any bonuses, salaries, or
other compensation to any director, officer, owner or employee except in the
ordinary course of business consistent with past practice.
9.27 Environmental Laws.
------------------
9.27.1 As used in this Environmental Laws Section, the following
terms shall have the definitions indicated:
(i) "Company's Properties" means any real property or facility
currently owned, leased or operated by the Company or previously owned, leased
or operated by the Company.
(ii) "Environmental Law" means any statute, regulation, rule,
code, relating to pollution, hazardous or radioactive substances, hazardous or
radioactive wastes, petroleum or otherwise relating to protection of the
environment, natural resources or human health, including, by way of example and
not by way of limitation, the Clean Air Act ("CAA"); Clean Water Act ("CWA");
Resource Conservation and Recovery Act ("RCRA"); Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"); Emergency Planning and
Community Right-to-Know Act ("EPCRA"); Federal Insecticide, Fungicide and
Rodenticide Act ("FIFRA"); Safe Drinking Water Act ("SDWA"); Toxic Substances
Control Act ("TSCA"); Hazardous Materials Transportation Act ("HMTA");
Occupational Safety and Health Act ("OSHA"); Endangered Species Act of 1973; the
Atomic Energy Act ("AEA"); each as currently amended;
(iii) "Regulated Substances" means any substance regulated under
Environmental Laws, including but not limited to: asbestos and asbestos-
containing materials ("ACMs"), polychlorinated biphenyls ("PCBs"); lead-based
paint debris; urea-formaldehyde in any of its forms; petroleum and its
fractions; and any substances defined as "hazardous waste", "hazardous
substances", "pollutants or contaminants", "toxic substances", "hazardous
chemicals", "hazardous air pollutants", "toxic chemicals" or "hazardous
materials", "radioactive waste", "radioactive materials" or "radioactive
substances" under the CAA, CWA, RCRA, CERCLA, EPCRA, SDWA, TSCA, HMTA, OSHA or
the AEA.
(iv) "Environmental Condition" means
(a) the Release or threatened Release of any Regulated
Substances into the environment in an amount and under circumstances that would
require notice, removal or remediation, or constitute a basis for a claim or
cause of action;
32
(b) the environmental, health or safety aspects of the
transportation, storage, processing, treatment, handling, use or disposal of
Regulated Substances in connection with the operations or past operations of the
Company's business; or
(c) the violation or alleged violation of any Environmental
Law, order, permit or license of or from any governmental authority, agency or
court relating to environmental, health or safety matters;
(v) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment of any Regulated Substance.
9.27.2 Except as set forth in Schedule 9.27, there has been no
-------------
Release at, on, under or from any of the Company's Properties.
9.27.3 Except as set forth in Schedule 9.27, to Seller's knowledge
-------------
there has been no Release within the meaning of Paragraph 9.27.1(iv)(a) at, on,
under or from any nearby properties that has migrated or threatened to migrate
onto or under the Company's Properties or that would or could otherwise affect
the Company's Properties, and, there is currently no threat of such Release at,
on, under or from any nearby properties that would or could migrate onto or
under the Company's Properties or that would or could otherwise affect the
Company's Properties.
9.27.4 Except as set forth in Schedule 9.27, to Seller's knowledge
-------------
no PCBs, asbestos or ACMs, or urea-formaldehyde are located on the Company's
Properties.
9.27.5 No storage tanks, underground or otherwise, were located on
any of the Company's Properties prior to the period of occupancy by Seller.
Except as set forth on Schedule 9.27, no storage tanks, underground or otherwise
-------------
were located on any of the Company's Properties during occupancy by Seller.
None of the storage tanks set forth in Schedule 9.27 is leaking or has ever
-------------
leaked. For the purpose of this section "Tank" means any container of 55-gallon
drum size or larger, holding liquids other than water.
9.27.6 Except as set forth in Schedule 9.27, the Company has
-------------
complied with all Environmental Laws in all material respects with respect to
any operations now or previously conducted by the Company. Except as set forth
in Schedule 9.27, the Company has no existing or potential liability under any
-------------
Environmental Laws. Except as set forth in Schedule 9.27, Seller has no
-------------
knowledge of claims or other alleged failure of the Company or its intended use
of Company's Property to comply with all applicable Environmental Laws,
administrative and judicial orders and rulings relating to recycling, use,
reuse, sale, storage, handling, transport, treatment and disposal of Regulated
Substances or the alleged effects such activities.
9.27.7 Except as set forth in Schedule 9.27, the Company has not
-------------
received any written notification initiated by a governmental authority or
private party that: (i) it has violated or is in violation of any Environmental
Law; (ii) there has been a Release or
33
threatened Release at or from the Company's Properties, or any property where
the Company's wastes or products have been sent; or (iii) it may be or is
liable, in whole or in part, for the costs of cleaning up, remediating, removing
or responding to a Release or threatened Release.
9.27.8 Except as set forth in Schedule 9.27, to Seller's knowledge,
-------------
no other party has received any notice, demand, suit, inquiry or information
request pursuant to CERCLA or any comparable state law relating to the Company,
the Company's Properties or any property where the Company's wastes or products
have been sent.
9.27.9 Except as set forth in Schedule 9.27, no environmental
-------------
approvals, clearances or consents are required under applicable law from any
governmental entity or authority in order for the parties to this Agreement to
consummate the transactions contemplated herein or for the Company to conduct
its business as presently conducted or proposed to be conducted. All
environmental permits currently held by the Company are identified in Schedule
--------
9.27, and the Company currently holds all such environmental permits necessary
----
to the conduct of the Business. Buyer understands that relevant governmental
authorities may be required to consent to the change of ownership to validly
transfer environmental permits, except as otherwise noted on Schedule 9.27. The
-------------
Company has not been notified by any relevant government authority that any
environmental permits will not be allowed to be transferred and the Company is
not aware of any intent on the part of the governmental authorities to refuse to
transfer the permits. The Company is further unaware of any notification or
intent for any governmental authority to modify the permits (other than as
necessary to reflect the change of ownership), suspend, cancel or revoke such
permits.
9.27.10 The Company has disclosed, prior to the date of this
Agreement, its waste management practices, its use of Regulated Substances and
all potentially material environmental matters, and has disclosed all reports,
audits assessments, studies, inspections, evaluations, surveys, remedial action
plans or other similar documents relating to any Environmental Condition,
whether or not material, of the Company's Properties or operations, received by
the Company or performed by Company or on the Company's behalf.
9.27.11 Except as set forth in Schedule 9.27, to Seller's knowledge
-------------
no location to which the Company transported or caused to be transported any
Regulated Substances for storage, recycling, treatment or disposal is or has
been the subject of any cleanup or remediation of such location pursuant to any
Environmental Law.
9.27.12 To Seller's knowledge, the Company's Properties are not
encumbered by any Lien of record in favor of any governmental entity or other
party for any liability, costs, or damages incurred by such governmental entity
or other party in response to a Release, nor has the Company received any notice
of intent to encumber any Company Property by any such lien.
9.27.13 Notwithstanding anything contained in this Agreement to the
contrary, Sellers make no representations and warranties nor take any
responsibility for, or costs related to, the remediation of any radiological
contamination of the Company's Properties after
34
the Closing Date and shall have no responsibility for radiological contamination
on the Company's Properties identified in the course of any third party or
governmental investigation occurring after the Closing Date (the "Excluded
Conditions"). For purposes of this Section 9.27.13, the term "remediation" is
limited to the remediation of property.
9.28 Customers and Suppliers. The Company has delivered to the Buyer a
-----------------------
complete and accurate list of the Company's ten largest customers and suppliers
(measured by revenues) during the fiscal year ended December 31, 1998. Neither
the Company nor any of the Sellers has received any oral or written notice that
any such supplier or, except as provided in Schedule 9.28, any customer of the
-------------
Company does not plan to continue to do business with the Company, or plans to
reduce its supplies to or volume of orders from the orders from the Company or
will not do business on substantially the same terms and conditions with Buyer
subsequent to the Closing Date as such supplier or customer did with the Company
before such date.
9.29 Licenses and Approvals. Attached hereto as Schedule 9.29 is a
---------------------- -------------
complete and accurate list of all certificates, licenses, permits or other
approvals required or obtained by the Company in connection with the use or
ownership of its assets and properties or the operation of the Business
(collectively, the "Licenses and Approvals"). The Company has provided Buyer
with true, correct and complete copies of all Licenses and Approvals. The
Company owns or possesses and holds free from restrictions or conflicts with the
rights of others all franchises, licenses, permits, consents, approvals and
other authority (governmental or otherwise), and all rights and privileges with
respect to the foregoing, as are necessary for the conduct of its business as
now being conducted, and as proposed to be conducted, except where the failure
to own or possess and hold such franchises, licenses, permits, consents,
approvals and other authority (governmental or otherwise) would not have a
Material Adverse Effect. All of the Licenses and Approvals are in full force
and effect and the Company is not in violation with respect to any of them that
would have a Material Adverse Effect. No proceedings are pending or, to the
knowledge of the Sellers, threatened by any applicable governmental authority to
revoke or limit the scope of any Licenses and Approvals. None of the Licenses
and Approvals would be rendered ineffective, except as noted on Schedule 9.29,
or be required to be reissued as a result of the consummation of the
transactions contemplated hereby.
9.30 Intellectual Property. There are no items of Intellectual Property
---------------------
(as defined below) that are material to the Company. To the best knowledge of
the Sellers after due inquiry, the rights of the Company in or to any
Intellectual Property do not conflict with or infringe on the rights of any
other person or entity and none of the Sellers or the Company has received any
claim or written notice from any person or entity to such effect. For purposes
hereof, "Intellectual Property" means all (i) trademarks and service marks
(registered or unregistered) and all applications or registrations in any
jurisdiction pertaining thereto, (ii) patents, patent applications, patentable
inventions, discoveries, improvements, ideas, know-how, formula methodology,
processes and technology, (iii) computer software, (iv) trade secrets, including
confidential and other non-public information and the right in any jurisdiction
to limit the use or disclosure thereof, (v) copyrights in writings, designs,
mask works or other works, and registrations or applications therefor in any
jurisdiction, (vi) licenses, immunities, governmental authorization, covenants
not to xxx and the like relating to any of the foregoing, and (vii) claims
35
or causes of action arising out of or relating to infringement or
misappropriation of any of the foregoing.
9.31 No Material Adverse Change. Since December 31, 1998, there has not
--------------------------
been any material adverse change in the Company, its financial condition,
business or customer or business prospects.
9.32 Brokers and Finders. Neither the Company, the Sellers, nor any of
-------------------
their officers, directors, owners, or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this Agreement other
than the fees payable to Berwind Financial, L.P., which shall be the exclusive
responsibility of the Sellers.
9.33 Full Disclosure. No representation or warranty by Sellers in this
---------------
Agreement, any Schedule annexed hereto or in any list, certificate, document or
written statement delivered by Sellers to Buyer pursuant hereto (and, if
corrected or updated, as so corrected or updated), contains any untrue statement
of a material fact or omits to state any material fact necessary to make any
statement herein or therein, in the light of the circumstances under which it
was made, not misleading. Except as described in the Schedules annexed hereto or
to be delivered, all documents and agreements described in such Schedules are
valid and effective in accordance with their respective terms, and there is not
under any of such documents or agreements, or any obligation, covenant or
condition contained therein, any existing default by the Company or, to Sellers'
knowledge, any other party or event which with notice, lapse of time, or both
constitute a default which would have a material adverse effect on the business
of the Company. There is no fact known to Sellers which Sellers have not
disclosed or shall not disclose to Buyer in the Schedules annexed hereto
provided for in this Agreement, which materially adversely affects the continued
operation of the Company. The Company or the Sellers have made available for
Buyer's review all information reasonably requested by Buyer in connection with
Buyer's due diligence examination of the Company and HPI.
9.34 Ventilation System and Electrical Systems. Notwithstanding any other
-----------------------------------------
provision of this Agreement to the contrary, Sellers make no representations as
to the adequacy for their intended purposes of the operation of the ventilation
system or the electrical systems. The parties acknowledge that the negotiated
purchase price has been reduced to reflect an adjustment in recognition of the
foregoing risks and exposures.
10. Representations and Warranties of Buyer. Buyer represents and warrants to
Sellers as follows:
10.1. Organization. Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware, its
jurisdiction of incorporation, and has all requisite corporate power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby to be performed by it.
36
10.2 Authorization. The execution and delivery by Buyer of this Agreement,
-------------
and the performance by it of its obligations hereunder, have been duly
authorized by all necessary corporate actions of Buyer.
10.3 Freedom to Contract. The execution and delivery of this Agreement by
-------------------
Buyer does not, and the performance by it of its obligation hereunder will not,
(a) violate or conflict with any provision of the certificate of incorporation
or by-laws of the Buyer or any amendments thereto or restatements thereof, (b)
violate any of the terms, conditions or provisions of any law, rule, regulation,
order, writ, injunction, judgment or decree of any court, governmental
authority, or regulatory agency, or (c) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, indenture, debenture,
security agreement, trust agreement, lien, mortgage, lease, agreement, license,
franchise, permit, guaranty, joint venture agreement, or other agreement,
instrument or obligation, oral or written, to which Buyer is a party (whether as
an original party or as an assignee or successor) or by which it or any of its
properties is bound. No approval of any governmental department, commission,
authority, board, bureau, agency or other instrumentality, is required with
respect to the Buyer in connection with Buyer's execution, delivery and
performance of this agreement and the consummation of the transactions required
hereby, except for those obtained prior to the Closing Date.
10.4. Litigation. There is no litigation, arbitration, mediation or other
----------
investigation or proceeding pending nor, to the best of Buyer's knowledge,
threatened against Buyer relating to the transactions contemplated by this
Agreement or which seeks to prohibit, restrict or delay consummation of the
transactions contemplated by this Agreement and there is no judgment, decree,
injunction, ruling or order of any court, governmental authority or arbitrator
outstanding against the Buyer having any such effect.
10.5. Investment. The acquisition of the HPI Stock and the LLC Interests
----------
by Buyer is being made for investment by Buyer and not with a view towards
resale in connection with any distribution thereof. Buyer has sufficient
capital and liquidity to complete the proposed transactions with Sellers, which
may include borrowings under its existing credit facility, and no financing
contingency is applicable to this transaction.
10.6 Employee Benefits. Prior to the execution of this Agreement Buyer
-----------------
shall have disclosed to the Sellers its employee benefits as currently offered
by Company and Buyer agrees that it shall make such benefits available to all
employees on the Closing Date who are otherwise eligible under the applicable
plans of the Company, and having reviewed the Company's corresponding plans,
reasonably believes that Buyer's plans will, in the aggregate, result in no
material curtailment of benefits.
11. Covenants of Sellers. Sellers, jointly and severally, hereby covenant and
agree with Buyer as follows:
37
11.1. Conduct of Business Pending Closing. From the date hereof until the
-----------------------------------
Closing Date, Sellers shall cause each of the Company and HPI to:
11.1.1. maintain its existence in good standing;
11.1.2. maintain the general character of its business and conduct
its business in the ordinary and usual manner;
11.1.3. maintain proper business and accounting records;
11.1.4. maintain its properties in good repair and condition and
maintain all insurance on the properties in effect on the date of this
Agreement; and
11.1.5. use its best efforts to preserve its business intact and to
preserve for the Company the good of its customers and others having business
relations with the Company.
11.2. Prohibited Actions Pending Closing. Unless otherwise provided for
----------------------------------
herein or approved by Buyer in writing, from the date hereof until the Closing
Date, Sellers shall cause each of the Company and HPI not to do or enter into
the following, however Buyer's consent shall be deemed received if Buyer does
not object to any such action by Sellers within five (5) business days after
notice by facsimile thereof:
11.2.1. amend or otherwise change its Certificate of Formation or
Certificate of Incorporation or other organizational documents;
11.2.2. issue or sell, authorize for issuance or sale, grant any
options or make any other agreements with third parties with respect to the LLC
Interests or the HPI Stock;
11.2.3. authorize or incur any additional debt for money borrowed,
or incur any additional debt, liability or obligation other than in the ordinary
course of business for which Sellers shall not, after the Closing, be obligated;
11.2.4. mortgage, pledge or subject to Lien or other encumbrance
any of its properties or assets, or agree to do so;
11.2.5. establish or adopt any Plan; modify, amend, restate,
terminate or revise any Plan; take any action to deplete any asset of any Plan;
or distribute any communication to any employee relating to a Plan;
11.2.6. sell or otherwise dispose of, or agree to sell or dispose
of any of its assets or properties, except in the ordinary course of business
and except with respect to the pay-off of intercompany loans with the Company's
affiliates through assignment of specified accounts receivables identified pre-
Closing;
38
11.2.7. amend or terminate any lease, contract, undertaking or other
commitment listed in any of the Schedules annexed hereto to which it is a party,
or to take action or fail to take any action, constituting any event of default
thereunder;
11.2.8. assume, guarantee or otherwise become responsible for the
obligations of any other party or agree to so do;
11.2.9. invest any assets of the Company or HPI which are to be sold
and transferred to Buyer except the reinvestment of cash or cash equivalents in
U.S. Treasury Bills and/or certificates of deposit;
11.2.10. except as otherwise expressly provided herein, pay any
attorneys, accountants, finders or investment bankers' fees or other expenses in
connection with the transactions contemplated by this Agreement (the foregoing
covenant shall not prohibit the payment of any fees or expenses for services
rendered to the Company);
11.2.12. except for normal merit, cost of living and promotional
increases to employees in accordance with past practices, increase the rate of
compensation of any employee;
11.2.13. make any change in accounting methods or principles except
as may be prescribed by changes promulgated by the American Institute of
Certified Public Accountants;
11.2.14. compromise or settle any material claim except with respect
to the pay-off of intercompany loans with the Company's affiliates through
assignment of specified accounts receivables identified pre-Closing;
11.2.15. make a capital expenditure in excess of $50,000 for any
single item;
11.2.16. enter into any government contract or any customer contract
involving in excess of $100,000; 11.2.17. enter into any teaming agreement or
joint venture agreement;
11.2.18. submit a proposal involving in excess of $100,000;
11.2.19. acquire the capital stock of any other entity or acquire all
or substantially all of the assets of another entity;
11.2.20. take any action prior to the Closing Date which would breach
any of the representations and warranties contained in this Agreement;
11.2.21. enter into any other new lease, contract or commitment
(except as permitted pursuant to this Section 11.2), except in the ordinary
course of business; or
11.2.22. agree to take any of the actions described in this Section
11.2.
11.3 Consents; Cause Conditions to be Satisfied. The Sellers agree to take
------------------------------------------
all necessary corporate or other action (or to cause the Company to do the
same), and will use their
39
reasonable best efforts to complete (or to cause the Company to do the same) all
filings and obtain, or assist Buyer in obtaining, such licenses, permits,
consents, waivers, approvals and authorizations of third parties and applicable
governmental authorities as may be necessary or appropriate in connection with
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or the ownership or use of the Company's assets
or the operation of the Business. The Sellers shall use their best efforts to
cause all of the conditions contained in Section 12 of this Agreement to be
satisfied.
11.4 Certain Notifications. At all times prior to Closing, the Sellers
---------------------
shall as promptly as possible notify the Buyer in writing of the occurrence of
any event as to which any of them obtains knowledge that would make any of the
representations, warranties and disclosures made herein with respect to the
Sellers, the Company or HPI untrue or misleading or which is reasonably likely
to result in the failure of a condition specified in Section 12 hereof.
11.5 Furnish Information for Buyer's SEC Filings. The Sellers will as
-------------------------------------------
promptly as practicable furnish all data and information relating to the Company
or HPI as the Buyer may reasonably request in connection with its preparation of
disclosures relating to the transactions contemplated hereby for filing with the
Securities and Exchange Commission ("SEC") on a Current Report on Form 8-K or
any other filing required by the Securities Exchange Act of 1934, as amended.
In connection therewith, the Sellers shall use commercially reasonable efforts,
without paying any money to such accountants, to cause the Company's or HPI's
accountants to provide the requisite audited financial statements for inclusion
in such filings with the SEC and to cause the accountants to consent to the
incorporation of such financial statements, and their reports thereon, in such
filings with the SEC.
11.6 HGI Benefit Plans. As of Closing, Sellers are expressly authorized to
-----------------
cause the Company to terminate its participation in any employee benefit plan
sponsored and maintained by HGI or any direct subsidiary of HGI. Notwithstanding
the foregoing, Seller shall cooperate with Buyer in causing the trustee of the
Plan that is a defined contribution retirement plan covering, in part, employees
of the the Company (the "Seller 401(k) Plan"), to transfer, upon Buyer's request
within 30 days hereof, to a qualified defined contribution employee benefit
retirement plan designated by Buyer (the "Target 401(k) Plan") the account
balances in the Seller 401(k) Plan attributable to the employees of the Company
within 90 days of Buyer's request in a transaction that complies with Code
Section 414(l) and is described in Treasury Regulations issued thereunder as a
"spin-off" of a part of the Seller 401(k) Plan and a "merger" of that part into
the Target 401(k) Plan. The assets transferred to the Target 401(k) Plan under
this Section shall be in cash or other assets acceptable to the trustee of the
Target 401(k) Plan.
11.7 Termination of Obligations of Company and HPI. Sellers shall
---------------------------------------------
cause the Company and HPI to be terminated or released as guarantors or parties
to loan agreements between HGI (or its affiliates) and PNC Bank (or any other
lender) as of the Closing Date.
12. Conditions Precedent to Buyer's Obligations. All obligations of Buyer under
this Agreement are subject to the fulfillment or satisfaction, prior to or at
the Closing, of each of the
40
following conditions precedent (any of which may be waived in writing in whole
or in part by Buyer):
12.1. Representations and Warranties True as of Closing Date. Sellers'
------------------------------------------------------
representations and warranties contained in this Agreement, the Schedules
annexed hereto and in any list, certificate, document or written statement
specifically referred to herein or furnished by Sellers to Buyer at the Closing
shall be true on and as of the date hereof and shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
were made on and as of the Closing Date, except for changes in the ordinary
course of business which, individually or in the aggregate, do not constitute a
change to the Company having a Material Adverse Effect.
12.2. Compliance with this Agreement. Sellers shall have performed and
------------------------------
complied with all agreements and conditions contained in this Agreement that are
required to be performed or complied with by them prior to or at the Closing.
12.3. No Restraint. If the HSR Act is applicable, then the waiting period
------------
under the HSR Act shall have expired, and no suit, action, proceeding, or
investigation shall have been instituted or threatened by or before any court or
any governmental agency, and no injunction shall have been issued and then
outstanding, to restrain, prohibit, delay or otherwise challenge the legality or
validity of the transactions contemplated by this Agreement or seeks damages or
relief in connection therewith.
12.4. Notifications and Consents.
--------------------------
12.4.1. Sellers and the Company shall have timely given notice
required to be given by them to any third party in connection with the
consummation of the transactions contemplated hereby, including, without
limitation, required notices to the holders of any indebtedness of the Company,
the lessors of any real or personal property leased by the Company, and any
governmental bodies or regulatory agencies, where, in the reasonable judgment of
Buyer, the failure to give such notice would have a Material Adverse Effect on
the Company.
12.4.2. Sellers and the Company shall have received each consent or
approval required to be given by any governmental authority or any third party
in connection with the consummation of the transactions contemplated hereby and
required for the Company to engage in the Business, where, in the reasonable
judgment of Buyer, the failure to receive such consent or approval would have a
Material Adverse Effect on the Company without resulting in the acceleration or
renegotiations of any debt, the modification, cancellation or termination of any
lease, license, permit, authorization or other operating right or the subjection
of Buyer to any law, ordinance, rule, regulation or condition which, in the
reasonable judgment of Buyer, shall be burdensome. All such consents and
approvals shall be in form and substance satisfactory to the Buyer.
41
12.4.3 Sellers and the Company shall have made all filings and
taken all other actions necessary to cause the transactions contemplated hereby
to become effective under applicable law.
12.5. Resignations. Sellers shall have delivered to Buyer the written
------------
resignation of each director, if applicable, and officer of the Company and HPI
with respect to their respective positions as directors and officers but not
with respect to their employment by the Company as shall be requested by Buyer
to be effective upon the Closing.
12.6. No Damage to Business. The properties or business of the Company
---------------------
shall not have been and shall not be threatened to be materially adversely
affected as a result of fire, explosion, earthquake, disaster, accident, flood,
drought, embargo, riot, civil disturbance, uprising, activity of armed forces or
act of God or public enemy. There shall not be pending or threatened any strike
or any action by any governmental authority which would have a Material Adverse
Effect on the properties or business of the Company.
12.7 Closing Deliveries. The Buyer shall concurrently receive all the
------------------
documents, agreements, certificates and other items that are required to be
delivered pursuant to Section 3(a) hereof.
12.8 Xxxxxxxx Employment Agreement. The Buyer shall concurrently enter
-----------------------------
into an employment agreement with Xxxxxxxx in the form of Exhibit "C" hereto.
-----------
12.9 Escrow. At Closing, Sellers shall have executed and delivered the
escrow agreements as appended hereto as Exhibits "D" and "E".
12.10 Owners' Affidavit. The Company shall have executed and delivered an
-----------------
"owners" affidavit dated as of the Closing Date, in a form satisfactory to the
Buyer and Buyer's title insurance company, affirming as of the Closing Date that
no title defects, liens, claims or encumbrances exist against the real
properties owned by the Company other than as disclosed on Schedule 12.10
--------------
attached hereto (the "Permitted Real Property Encumbrances"), and that no
inchoate rights which may ripen into any defect, lien, claim or encumbrance
against the real properties owned by the Company exist as of the Closing Date
other than the Permitted Real Property Encumbrances.
13. Conditions Precedent to Sellers' Obligations. All obligations of Sellers
under this Agreement are subject to the fulfillment or satisfaction, prior to or
at the Closing, of each of the following conditions precedent (any of which may
be waived in writing in whole or in part by Sellers):
13.1. Representations and Warranties True as of Closing Date. The
------------------------------------------------------
representations and warranties of Buyer contained in this Agreement and in any
list, certificate, document or written statement specifically referred to herein
or furnished by it to Sellers at the Closing shall be true on and as of the date
hereof and shall be true on and as of the Closing Date with the same effect as
though such representations and warranties were made on and as of the Closing
Date.
42
13.2. Compliance with this Agreement. Buyer shall have performed and
------------------------------
complied with all agreements and conditions contained in this Agreement that are
required to be performed or complied with by it prior to or at the Closing.
13.3. No Restraint. If the HSR Act is applicable to this transaction,
------------
then the waiting period under the HSR Act shall have expired, and no suit,
action, proceeding or investigation shall have been instituted or threatened by
or before any court or any governmental agency, and no injunction shall have
been issued and then be outstanding to restrain, prohibit, delay or otherwise
challenge the legality or validity of any of the transactions contemplated by
this Agreement or seek damages or relief in connection therewith.
14. Cooperation.
14.1. HSR Act. If the HSR Act is applicable to this transaction, Sellers
-------
and Buyer shall, promptly after the execution and delivery of this Agreement, or
any earlier letter of intent acceptable for this purpose, file with the Federal
Trade Commission and the United States Department of Justice the notification
required to be filed with respect to the transactions provided in this Agreement
under the HSR Act and the rules and regulations promulgated thereunder (the
"Notification"). All parties hereto shall use their best efforts (i) to respond
promptly to any requests for additional information made by such agencies and
(ii) to resist vigorously at their respective cost and expense any assertion
that the transactions provided herein constitute a violation of the antitrust
laws, all to the end of expediting the Closing. All fees required to file the
Notification and any related filings shall be shared equally by the Buyer and
the Seller.
14.2. Further Assurances. From and after the Closing, each of Sellers and
------------------
Buyer agree to execute and deliver such further documents and instruments and to
do such other acts and things as the other may reasonably request in order to
expedite and effectuate the Closing. In the event any party shall be involved in
litigation, threatened litigation or government inquiries with respect to a
matter involving the Company, the other parties shall also make available to
such first party, at reasonable times and subject to the reasonable requirements
of its or his own business, such of its or his personnel as may have information
relevant to the matters provided such first party shall reimburse the providing
party for its or his reasonable costs for employee time incurred in connection
therewith if more than one business day is required. Each party shall provide to
the other and its employees, agents and representatives access at reasonable
times and upon reasonable notice to information and documentation relating to
pre-Closing insurance matters.
43
15. Tax Matters.
-----------
15.1 Tax Indemnity. (a) The Sellers agree to indemnify and hold harmless
-------------
the Buyer, the Company and HPI against Taxes imposed on the Company or HPI in
proportion to their direct or indirect ownership in the Company or HPI, with
respect to taxable periods or the portion of any taxable period ending on or
before the Closing Date (including any Tax imposed on the Company or HPI as a
result of the transfer of the claim for business interruption insurance
described in Section 1(a) hereof) and, except as otherwise provided in Section
15.4, against any loss, damage, liability or expense, including reasonable fees
for attorneys and other outside consultants, incurred in contesting or otherwise
in connection with any such Taxes. Notwithstanding the foregoing, the Sellers
shall not be required to indemnify Buyer for taxes payable as a result of any
election, amendment, or other change of any tax return made by Buyer, without
the consent of Seller. The Buyer shall be responsible for Taxes and associated
expenses not allocated to the Sellers pursuant to the first sentence hereof.
(b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, as provided
under Section 15.7), deemed equal to the amount which would be payable if the
taxable year ended with the Closing Date and Buyer shall prepare books and
working papers (including a closing of the books) which will clearly demonstrate
the income and activities of the Company and HPI for the period ending on the
Closing Date and such post-closing partial period; and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or otherwise measured by the level of any
item, deemed to be the amount of such Taxes for the entire period (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period), multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the Closing Date
and the denominator of which is the number of calendar days in the entire
period.
(c) Each of the Sellers agrees to indemnify the Buyer from and
against any Taxes Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any liability of any of the Company, HPI or any
of their subsidiaries for Taxes of any other person (i) under Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise; provided that
indemnity under clauses (iii) and (iv) shall be strictly limited to matters
disclosed by Buyer to Sellers on the Closing Date.
15.2 Returns and Payments. (a) From the date of this Agreement through
--------------------
and after the Closing Date, the Sellers shall prepare and file or otherwise
furnish in proper form to the appropriate governmental authority (or cause to be
prepared and filed or so furnished) in a timely manner all Tax returns, reports
and forms ("Returns") relating to the Company or HPI that are
44
due on or before or relate to any taxable period ending on or before the Closing
Date (and the Buyer shall do the same with respect to any taxable period ending
after the Closing Date). Returns of the Company or HPI not yet filed for any
taxable period that begins before the Closing Date shall be prepared in a manner
consistent with past practices employed with respect to the Company or HPI
(except to the extent counsel for the Sellers, the Company or HPI renders a
legal opinion that there is no reasonable basis in law therefor or determines
that a Return cannot be so prepared and filed without being subject to
penalties). With respect to any Return required to be filed by the Buyer with
respect to the Company or HPI and as to which an amount of Tax is allocable to
the Sellers under Section 15.1, the Buyer shall provide the Sellers and their
authorized representatives with a copy of such completed Return and a statement
certifying the amount of Tax shown on such Return that is allocable to the
Sellers pursuant to Section 15.1, together with appropriate supporting
information and schedules at least thirty (30) days prior to the due date
(including any extension thereof) for the filing of such Return, and the Sellers
and their authorized representatives shall have the right to review and comment
on such Return and statement prior to the filing of such Return. Each such
Return shall separately identify and reserve to the account of Buyer any Taxes
attributable to the exercise of any tax election, transfer, liquidation or other
event occurring or deemed to have occurred at or after the Closing Date and made
or effectuated by Buyer. With respect to any Return required to be filed by any
Seller with respect to the Company or HPI, the Sellers shall provide the Buyer
and its authorized representatives with a copy of such completed Return,
together with appropriate supporting information and schedules at least thirty
(30) days prior to the due date (including any extension thereof) for the filing
of such Return, and the Buyer and its authorized representatives shall have the
right to review and comment on such Return and statement prior to the filing of
such Return. Each party shall timely file any Return for which it is
responsible.
(b) The Sellers shall pay or cause to be paid when due and payable
all Taxes with respect to the Company or HPI for any taxable period ending on or
before the Closing Date, and the Buyer shall so pay or cause to be paid all
Taxes for any taxable period after the Closing Date (subject to its right of
indemnification from the Sellers by the date set forth in Section 15.5 for Taxes
attributable to the portion of any Tax period that includes the Closing Date
pursuant to Section 15.1).
15.3 Refunds. Any Tax refund (including any interest with respect
-------
thereto) relating to the Company or HPI for any taxable period prior to the
Closing Date and as to which there is no corresponding increase in a Tax
attributable to any Seller, HPI, the Company or any affiliates for any other
taxable period shall be the property of the Buyer, and if received by the
Sellers, the Company or HPI shall be paid over promptly to the Buyer. In
addition, any Tax refund (or equivalent benefit to any Seller through a
reduction in Tax liability) for a period before the Closing Date arising out of
the carryback of a loss or credit incurred by the Company or HPI in a taxable
year ending after the Closing Date shall be the property of the Buyer and, if
received by such Seller, shall be paid over promptly to the Buyer, provided that
the Buyer shall indemnify each such Seller and hold such Settler harmless as to
any future claims made with respect to such refund by any and all taxing
authorities.
15.4 Contests. (a) After the Closing, the Buyer shall promptly notify the
--------
Sellers in writing or any written notice of a proposed assessment or claim in an
audit or administrative or
45
judicial proceeding of the Buyer, the Company or HPI which, if determined
adversely to the taxpayer, would be grounds for indemnification under this
Section 15.
(b) In the case of an audit or administrative or judicial proceeding
that relates to periods ending on or before the Closing Date and provided that
the Sellers acknowledge in writing their liability under this Agreement to hold
the Buyer, the Company and HPI harmless against the full amount of any
adjustment which may be made as a result of such audit or proceeding that
relates to periods ending on or before the Closing Date (or, in the case of any
taxable year that includes the Closing Date, against an adjustment allocable
under Section 15.1(b) to the portion of such year ending on or before the
Closing Date) and is subject to indemnification under Section 15.1(a), the
Sellers shall have the right at their expense to participate in and control the
conduct of such audit or proceeding but only to the extent that such audit or
proceeding relates to a potential adjustment for which the Sellers have
acknowledged their liability; the Buyer also may participate in any such audit
or proceeding and, if the Sellers do not assume the defense of any such audit or
proceeding, the Buyer may defend the same in such manner as it may deem
appropriate, including, but not limited to, settling such audit or proceeding
after giving five (5) days' prior written notice to the Sellers setting forth
the terms and conditions of settlement. In the event that issues relating to a
potential adjustment for which the Sellers have acknowledged their liability are
required to be dealt with in the same proceeding as separate issues relating to
a potential adjustment for which the Buyer would be liable, the Buyer shall have
the right, at its expense, to control the audit or proceeding with respect to
the latter issues.
(c) With respect to issues relating to a potential adjustment for
which both the Sellers (as evidenced by its acknowledgment under this Section
15.4) and the Buyer, the Company or HPI could be liable, (i) each party may
participate in the audit or proceeding, and (ii) the audit or proceeding shall
be controlled by that party which would bear the burden of the greater portion
of the sum of the adjustment and any corresponding adjustments that may
reasonably be anticipated for future Tax periods. The principle set forth in the
immediately preceding sentence shall govern also for purposes of deciding any
issue that must be decided jointly (including, without limitation, choice of
judicial forum) in situations in which separate issues are otherwise controlled
under this Section 15 by the Buyer and the Sellers.
(d) Neither the Buyer nor any Seller shall enter into any compromise
or agree to settle any claim pursuant to any Tax audit or proceeding which would
adversely affect the other party for such year or a subsequent year without the
written consent of the other party, which consent may not be unreasonably
withheld. The Buyer and the Sellers agree to cooperate, and the Buyer agrees to
cause the Company or HPI to cooperate, in the defense against or compromise of
any claim in any audit or proceeding.
15.5. Time of Payment. Payment by the Sellers of any amounts due under
---------------
this Section 15 in respect of Taxes shall be made (i) at least five (5) days
before the due date of the applicable estimated or final Return required to be
filed by the Buyer on which is required to be reported income for a period
ending after the Closing Date for which any Seller is responsible under Sections
15.1(a) and 15.1(b) without regard to whether the Return shows overall net
income or loss for such period, and (ii) within five (5) days following an
agreement between the Sellers and
46
the Buyer that an indemnity amount is payable, an assessment of a Tax by a
taxing authority, or a "determination" as defined in Section 1313(a) of the
Code. If liability under this Section 15 is in respect of costs or expenses
other than Taxes, payment by any Seller of any amounts due under this Section 15
shall be made within five (5) days after the date on which the Sellers have been
notified by the Buyer that the Sellers have a liability for a determinable
amount under this Section 15 and is provided with calculations or other
materials supporting such liability.
15.6. Cooperation and Exchange of Information. Upon the terms set forth in
---------------------------------------
Section 14.2 of this Agreement, the Sellers and the Purchaser will provide each
other with such cooperation and information as either of them reasonably may
request of the other in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes, participating
in or conducting any audit or other proceeding in respect of Taxes or making
representations to or furnishing information to parties subsequently desiring to
purchase any of the Company or HPI or any part of the business from the Buyer.
Such cooperation and information shall include providing copies of relevant
Returns or portions thereof, together with accompanying schedules, related work
papers and documents relating to rulings or other determinations by Tax
authorities, as well as signing and delivering powers of attorney, information
authorization, closing or settlement agreements, and all other necessary or
appropriate documents. The Sellers shall make their employees available on a
basis mutually convenient to both parties to provide explanations of any
documents or information provided hereunder. Each of the Sellers and the Buyer
shall retain all Returns, schedules and work papers, records and other documents
in its possession relating to Tax matters of the Company and HPI for each
taxable period first ending after the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such Returns and other documents relate, without
regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods, or (ii) six years following
the due date (without extension) for such Returns. Any information obtained
under this Section 15.6 shall be kept confidential in accordance with Section
5.1 except as may be otherwise necessary in connection with the filing of
Returns or claims for refund or in conducting an audit or other proceeding.
16. Indemnification.
16.1. Indemnification by Sellers. Except as limited by Section 16.8 below,
-------------------------------------------------------------------
Sellers, in proportion to their respective Percentage Interests, shall severally
indemnify Buyer and its officers, directors, employees, agents and affiliates
and hold them harmless at all times from and after the Closing Date against and
in respect of any and all damages, losses, claims, liabilities, deficiencies,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable legal costs and expenses) suffered or incurred by
any of them (hereinafter, a "Loss") arising out of or resulting from:
16.1.1. Any breach of representation or warranty or non-fulfillment
of any covenant or agreement on the part of Sellers under this Agreement;
47
16.1.2. Any investigation, suit, action, claim or litigation
relating to the Company or HPI now pending or threatened or which may hereafter
be brought against Buyer based upon events occurring prior to the Closing Date
and not attributable to the acts or omissions of Buyer;
16.1.3 The matters related to Taxes pursuant to Section 9.23 or
Section 15 hereof;
16.1.4 Any Losses of the Company or HPI which are pending as of
the Closing Date which, consistent with past practice, have been recorded by or
reflected in the financial statements of an affiliate of the Company or HPI on
behalf of the Company or HPI;
16.1.5 The presence of any secondary waste generated by the
Company, or customer waste received by the Company prior to June 30, 1998 in the
case of radioactive waste or prior to March 31, 1999 in the case of hazardous or
mixed waste that is on any of the Company's properties or in the possession of
the Company other than as accrued and reflected as a liability, net of related
revenues, in the determination of Net Equity pursuant to Section 4.4 hereof;
16.1.6 The equity ownership or activities of HPI as a partner in
Rivergate Terminal Company, L.P. and Global Material Systems, L.L.C. or their
predecessors;
16.1.7 Any offsite radiological contamination resulting from the
activities or business of the Company prior to the Closing Date;
16.1.8 Any claims of indemnification by any officers or directors
of the Company or HPI with respect to conduct prior to the Closing Date.
16.1.9 Any long-term debt of the Company, HPI or any of the
Sellers other than the Mortgage Assumption pursuant to Section 4.2 hereof.
16.1.10. Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, losses, liabilities and reasonable legal and
other expenses incident to any of the foregoing.
Notwithstanding anything herein to the contrary, the fact that an item may
be disclosed on a schedule to this Agreement in response to a representation or
warranty contained herein shall not in any way limit any rights that an
indemnified party shall have to indemnification for any Losses resulting
therefrom, except to the extent a statement in such schedule expressly limits or
excludes any right to indemnity in respect thereof. The inclusion of an item on
a schedule attached hereto is merely for purposes of disclosure and not to
release any party from any liability therefor, except as may be otherwise
expressly provided on the schedule.
16.2. Indemnification by Buyer. Buyer shall indemnify each Seller and each
------------------------
of their officers, directors, employees, agents and affiliates and hold each of
them harmless at all times
48
from and after the Closing Date against and in respect of any Loss arising out
of or resulting from:
16.2.1. Any breach of representation or warranty or non-fulfillment
of any covenant or agreement on the part of the Buyer under this Agreement;
16.2.2. Any investigation, suit, action, claim or litigation
relating to the Company or HPI which may hereafter be brought against any of the
Sellers based upon events occurring subsequent to the Closing Date and not
attributable to the acts of Sellers and Excluded Conditions; and
16.2.3. Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, losses, liabilities and reasonable legal and
other expenses incident to any of the foregoing.
16.3. Period of Indemnity. The aforesaid indemnities of Buyer and Sellers
-------------------
shall remain in full force and effect: (a) as they relate to a third-party claim
against Buyer, each of the Sellers and the Company for a period equal to the
respective applicable statute of limitation for each such claim; and (b) as they
relate to breaches of representations, warranties or covenants made by Sellers
and Buyer, for the period provided in Section 17 hereof; provided, however, if
at the expiration of the appropriate period any claim or assessment for
indemnification has been asserted but not fully determined, or any audit or
other proceeding with respect to any tax matter has been initiated, such period
shall be extended as to such claim, assessment, audit or other proceeding until
it is finally determined or concluded.
16.4. Notice to the Indemnitor. Within a reasonable period after the
------------------------
assertion of any claim by a third party or occurrence of any event which may
give rise to a claim for indemnification from an Indemnitor (the "Indemnitor"`)
under this Section 16, an indemnified party (the "Indemnified Party") shall
notify the Indemnitor in writing of such claim together with a statement fully
describing the nature and amount of the claim and providing details with respect
thereto.
16.5. Rights of Parties to Settle or Defend. The Indemnitor may
-------------------------------------
participate in and, at its option upon written acknowledgement of the
Indemnified Party's right to indemnification for such matter, assume the defense
of the Indemnified Party against such claim, including the employment of
counsel, who shall be reasonably acceptable to the Indemnified Party. In such
case, any Indemnified Party shall have the right to employ separate counsel in
any such action or claim and to participate in the defense thereof, but the fees
and expenses of such counsel shall not be at the expense of the Indemnitor
unless (i) the Indemnitor shall have failed, within ten (10) days after having
been notified by the Indemnified Party of the existence of such claim as
provided in the preceding sentence, to assume the defense of such claim, (ii)
the employment of such counsel has been specifically authorized in writing by
the Indemnitee or (iii) the named parties to any such action (including
impleaded parties) include both the Indemnified Party and the Indemnitor and
such Indemnified Party shall have been advised in writing by such counsel that
there may be conflicting interests between the Indemnified Party and the
Indemnitor in the legal defense thereof. The Indemnified Party shall make
available to the Indemnitor and its
49
attorneys and accountants, at all reasonable times during normal business hours,
all books, records, and other documents in its possession relating to such
claim. The party contesting any such claim shall be furnished all reasonable
assistance in connection therewith by the other party. If the Indemnitor fails
to undertake the defense of or, settle or pay any such third-party claim within
ten (10) days after the Indemnified Party has given written notice to the
Indemnitor advising that the Indemnified Party does not intend to contest such
claim, or the Indemnitor, after having given such notification to the
Indemnified Party, fails forthwith to defend, settle or pay such claim, then the
Indemnified Party may take any and all necessary action to dispose of such claim
including, without limitation, the settlement or full payment thereof upon such
terms as it shall deem appropriate, in its sole discretion, subject to the
following with respect to any proposed settlement thereof.
16.6. Settlement Proposals. In the event the Indemnified Party desires to
--------------------
settle any such third-party claim (whether or not contested by the Indemnitor),
the Indemnified Party shall advise the Indemnitor of the amount it proposes to
pay in settlement thereof (the "Proposed Settlement"). If such Proposed
Settlement is unsatisfactory to the Indemnitor, it shall have the right, at its
expense, to contest such claim by giving written notice of such election to the
Indemnified Party within ten (10) days after the Indemnitor has been advised of
the Proposed Settlement. If the Indemnitor does not deliver such written notice
within ten (10) days after the Indemnitor has been advised of the Proposed
Settlement, the Indemnified Party may offer the Proposed Settlement to the third
party making such claim. If the Proposed Settlement is not accepted by the party
making such claim, any new Proposed Settlement which the Indemnified Party may
wish to present to the party making such claim shall first be presented to the
Indemnitor who shall have the right, subject to the conditions hereinabove set
forth in this Section, to contest such claim. In all such events, the Indemnitor
shall indemnify the Indemnified Party and hold it harmless against and from any
and all costs of defense, payment or settlement, including reasonable attorneys'
fees incurred in connection therewith.
16.7. Reimbursement. At the time that the Indemnified Party shall suffer
-------------
an actual financial loss because of a breach of any warranty, representation or
covenant by the Indemnitor or at the time the amount of any liability on the
part of the Indemnitor under this Section is determined (which in the case of
payments to third persons shall be the earlier of (a) the date of such payments
or (b) the date that a court of competent jurisdiction shall enter a final
judgment, order or decree (after exhaustion of appeal rights establishing such
liability), the Indemnitor shall forthwith, upon notice from the Indemnified
Party, pay to the Indemnified Party, the amount of the indemnity claim. If such
amount is not paid forthwith, then the Indemnified Party may, at its option,
take legal action against the Indemnitor for reimbursement in the amount of its
indemnity claim. For purposes hereof the indemnity claim shall include the
amounts so paid (or finally determined to be owing) by the Indemnified Party
together with costs and reasonable attorneys' fees and interest on the foregoing
items at the prime rate in effect from time to time as published by the Wall
Street Journal, or any reasonable successor thereto during the period from the
date the obligation is due from the Indemnified Party to the Indemnitor, as
herein above provided, until the date paid.
16.8. Limitation on Indemnity. Notwithstanding anything herein to the
------------------------
contrary, Sellers shall be required to indemnify and hold harmless Buyer
hereunder only to the extent that
50
the aggregate amount of Buyer's claims hereunder exceeds the sum of Four Hundred
Thousand Dollars (USD $400,000). Notwithstanding anything herein to the
contrary, in no event shall Sellers be required to indemnify and hold harmless
Buyer hereunder for the amount, if any, by which the aggregate amount of Buyer's
claims hereunder exceeds the sum of Four Million Dollars (USD $4,000,000). The
limitations described in this Section 16.8 shall not apply to claims arising
under Sections 16.1.3 through 16.1.9 and any and all actions, suits,
proceedings, claims, demands, assesments, judgments, costs, losses, liabilities
and reasonable legal and other expenses incident to any items arising under
Sections 16.1.3 though 16.1.9. The duty of Sellers to indemnify Buyer shall not
apply at all to any Excluded Conditions as more fully described in Section
9.27.13.
16.9 Indemnification Escrow. In order to secure the obligations of
----------------------
Sellers under Section 16, Sellers agree to enter into an Escrow Agreement
substantially in the form of Exhibit "E" attached hereto with Wilmington Trust
Company as the escrow agent.
16.10 Waiver of Contribution. The Sellers shall not have any right to seek
----------------------
contribution from the Company or HPI in the event that any of the Sellers is
required to make any payments under this Section 16.
16.11 Indemnification Covenants. (a) Buyer covenants and agrees that it
------------------------
will pursue indemnification claims hereunder first against the indemnification
escrow described in Section 16.9 hereof, to the extent of such escrow, before
pursuing claims directly against the Sellers.
(b) HakeTenn covenants and agrees that it will maintain "tangible
net worth" (as defined below) of at least $3,000,000 until October 15, 2001, and
will maintain tangible net worth thereafter of at least $1,000,000 until October
15, 2002. Notwithstanding anything in this Agreement to the contrary, if Sellers
take any action, agree to take any action or fail to take any required action
that results in the extension of any statute of limitations for any liability
covered by Section 16.1.3 hereof beyond October 15, 2001, then the October 15,
2001 date for the permitted reduction of the tangible net worth shall be
extended to match the date to which the statute of limitations has been
extended. In order to assure compliance with this covenant, HakeTenn shall
provide upon request of Buyer unaudited financial statements of HakeTenn, which
shall include at least a balance sheet and income statement as of and for a
recent period, provided that such request shall be made no more frequently than
semi-annually. For purposes hereof, "tangible net worth" shall mean the excess
of HakeTenn's tangible assets over its total liabilities, each as determined in
accordance with GAAP.
17. Survival of Representations and Warranties. All representations,
warranties, covenants and agreements made by each party in this Agreement, in
any Schedule annexed hereto or in any list, certificate, document or written
statement furnished or delivered by any such party pursuant hereto shall survive
the Closing, and shall remain in full force notwithstanding any investigation
conducted before or after the Closing or the decision of any party to complete
the Closing for a period of two (2) years following the Closing Date, unless
otherwise expressly provided herein; provided, however, that (a) all
representations and warranties made by Sellers with respect to tax matters shall
survive until the relevant statute of limitations with respect to each such item
has run and (b) if at the expiration of the appropriate
51
period any claim or assessment for indemnification has been asserted but not
fully determined, or any audit or other proceeding with respect to any tax
matter has been initiated, such period shall be extended as to such claim,
assessment, audit or other proceeding until it is finally determined or
concluded, and each party hereto shall be entitled to rely upon the
representations and warranties of the other party set forth in this Agreement.
18. Miscellaneous.
18.1. Brokers' and Finders' Fees.
--------------------------
18.1.1 Sellers. Sellers represent and warrant to Buyer that all
-------
negotiations relative to this Agreement have been carried on by it directly
without the intervention of any person or entity other than Berwind Financial,
L.P., who or which may be entitled to a brokerage fee or other commission in
respect of the execution of this Agreement or the consummation of the
transactions contemplated hereby. Sellers agree to indemnify and hold Buyer
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of Sellers' or any of their affiliates'
dealings, arrangements or agreements with Berwind Financial, L.P. or any other
person or entity. All brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement on behalf of the Sellers,
the Company or HPI shall be the exclusive responsibility of the Sellers.
18.1.2. Buyer. Buyer represents and warrants to each of the Sellers
-----
that all negotiations relative to this Agreement have been carried on by it
directly without the intervention of any person or entity who or which may be
entitled to any brokerage fee or commission in respect of the execution of this
Agreement or the consummation of the transactions contemplated hereby, and Buyer
agrees to indemnify and hold each of the Sellers harmless against any and all
claims, losses, liabilities or expenses which may be asserted against them as a
result of Buyer's or any of its affiliates' dealings, arrangements or agreements
with any such other person or entity. All brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this Agreement
on behalf of the Buyer shall be the exclusive responsibility of the Buyer.
18.2. Expenses. Each party hereto shall pay its own expenses incidental to
--------
the negotiation and preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby.
18.3. Press Releases. Neither Buyer nor Sellers shall issue any press
--------------
release nor otherwise make public any information with respect to this Agreement
nor the transactions contemplated thereby, prior to the Closing Date, without
the prior written consent of the other; provided, however, that each party shall
be permitted, upon notice to the other, to make such disclosures to the public
or such governmental entities as its counsel reasonably should deem necessary to
maintain compliance with applicable law.
52
18.4. Assignment and Binding Effect. This Agreement may not be assigned
------------------------------
by either party hereto without the prior written consent of the other party;
provided, however, Buyer may assign this Agreement to any of its subsidiaries or
affiliates, without Sellers' consent, as long as, in such event, Buyer shall
remain liable for its obligations hereunder. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto.
18.5. Waiver. Any term or provision of this Agreement may be waived at
------
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
18.6. Termination. This Agreement shall not be terminated except:
-----------
18.6.1 Mutual Consent. By the consent of all the parties hereto;
--------------
18.6.2 By Buyer. Unless Buyer shall be in default hereunder or
--------
shall not have satisfied all of its obligations hereunder, by Buyer, if any of
the conditions provided in Section 12 have not been met or have not been waived
by the Closing.
18.6.3 By Sellers. Unless Sellers shall be in default hereunder or
----------
shall not have satisfied all of its obligations hereunder, by Sellers, if any of
the conditions provided in Section 13 have not been met or have not been waived
by the Closing; or
18.6.4 By Buyer. If, after the date hereof, there shall have been
--------
an event occur or condition change that has either individually, or in the
aggregate, a Material Adverse Effect.
18.6.5 Procedure; Effect. Any termination of this Agreement shall
-----------------
be made by the party electing to terminate this Agreement by written notice
thereof to the other party. Any such termination shall be without liability on
the part of any party to the other party hereto, except if such termination has
resulted by reason of a breach by such party of any of its material obligations
hereunder. Nothing in this Agreement shall be deemed to require any party to
terminate this Agreement in the event that a condition precedent to its
obligations hereunder is not met, rather than to waive such conditions precedent
and proceed to Closing.
18.7. Notices. Any notice, request, demand, waiver, consent, approval, or
-------
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given upon the earlier of: (i)
when it is personally delivered, (ii) three (3) days after having been mailed by
certified mail, postage prepaid, return receipt requested, (iii) two (2) days
after having been sent by recognized overnight delivery service or (iv) one (1)
day after having been sent by facsimile transmission with confirmation of
receipt, addressed as follows:
If to Buyer:
-----------
GTS Duratek, Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Chief Financial Officer
53
Phone: 000-000-0000
Fax: (000) 000-0000
With copies to Buyers' counsel:
------------------------------
Piper & Marbury, L.L.P.
Xxxxxxx Center South
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esquire
Phone: 000-000-0000
Fax: 000-000-0000
If to HakeTenn, Inc.:
--------------------
HakeTenn, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, XX, Chief Executive Officer
Phone:
Fax:
If to Xx. Xxxxxx X. Xxxxxxxx:
----------------------------
Xx. Xxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxx Xxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
If to Xx. Xxxxxxx X. Xxxxxx:
---------------------------
Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
With copies to Sellers' counsel:
-------------------------------
Xxxxx Xxxxxxxx & XxXxxxxx, LLP
Two Commerce Square
Suite 3410
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esquire
Phone: 000-000-0000
Fax: 000-000-0000
54
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
18.8. Governing Law. This Agreement shall be governed by and interpreted
-------------
and enforced in accordance with the laws of the State of Delaware as applied to
contracts made and fully performed in such state.
18.9. No Benefit to Others. The representations, warranties, covenants
--------------------
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective successors and assigns and they shall not be
construed as conferring, and are not intended to confer, any rights on any other
persons.
18.10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and Sellers and Buyer
may become a party hereto by executing a counterpart hereof. This Agreement and
any counterpart so executed shall be deemed to be one and the same instrument.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
18.11. Arbitration. Except as to a claim for specific performance under
-----------
Section 18.13 hereof, if any dispute arises under or in connection with this
Agreement or the performance or enforcement thereof, it shall be decided finally
by three arbitrators in an arbitration proceeding conforming to the Rules of the
American Arbitration Association applicable to commercial arbitration. The
arbitrators shall be appointed as follows: one by Sellers, one by Buyer and the
third by the said two arbitrators, or, if they cannot agree, then the third
arbitrator shall be appointed by the American Arbitration Association. The third
arbitrator shall be chairman of the panel and shall be impartial. The
arbitration shall take place in the jurisdiction chosen by the party defending
the action. The decision of a majority of the Arbitrators shall be conclusively
binding upon the parties, final and nonappealable, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. Each party
shall pay the fees and expenses of the arbitrator appointed by it, its counsel
and its witnesses. The parties shall share equally the fees and expenses of the
impartial arbitrator.
18.12. Enforcement. If at any time a party hereto retains one or more
-----------
attorneys to enforce any covenant or agreement of any other party hereto, or to
defend itself against any claim by any other party hereto, whether or not suit
is filed, the party who is wholly or partially successful shall be entitled to
damages inclusive of the amount of such party's reasonable attorney's fees,
expenses and costs.
18.13. Specific Performance. Seller and Buyer acknowledge and agree that
--------------------
the other would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, Seller and Buyer agree that the other shall
be entitled to an injunction or injunctions to prevent breaches
55
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter in addition to any other remedy to which it may be entitled hereunder, at
law or in equity.
18.14. Severability. If any provision of this Agreement shall be held to
-------------
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed modified to the extent necessary to render it legal,
valid and enforceable, and if no such modification shall render it legal, valid
and enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
18.15. Integration; Schedules and Exhibits; Headings. This Agreement states
---------------------------------------------
the entire agreement reached between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior or contemporaneous
agreements, understandings, representations and warranties between the parties,
and may not be amended except by written instrument executed by the duly
authorized officers of the parties hereto. The Exhibits and Schedules identified
in this Agreement and annexed hereto are incorporated herein by reference and
made a part hereof. All section headings are for convenience only and shall in
no way modify or restrict any of the terms or provisions hereof.
18.16. Ongoing Business Relationship. The parties acknowledge that they
-----------------------------
have had a long history of business working together, and will use their best
efforts to continue such business relationship. At Closing, the parties may
enter into a mutually satisfactory supply agreement for the services of Xxxxx X.
Xxxx, Inc., to supplant this provision.
18.17 Knowledge of the Company. For the purposes of Section 9 hereof, the
------------------------
knowledge of the Company shall be imputed to the knowledge of the Sellers
whenever a representation or warranty contained therein is made to the knowledge
of the Sellers.
18.18 Sales and Transfer Taxes. The Sellers, on the one hand, and the
------------------------
Buyer, on the other hand, shall each be responsible for and pay one-half of all
sales, transfer, deed, duties, stamp, notary public and other similar taxes,
duties and transfer fees applicable to the transactions contemplated by this
Agreement, including fees to record assignments.
[SIGNATURES ONLY APPEAR ON THE FOLLOWING PAGE]
56
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.
ATTEST: BUYER:
GTS Duratek, Inc.
a Delaware corporation
/s/Xxxxxx X. Xxxxxxx
___________________________ --------------------
BY: Xxxxx X. Xxxxxxxx BY: Xxxxxx X. Xxxxxxx
TITLE: Assistant Secretary TITLE: Executive Vice President
And Chief Financial Officer
ATTEST: SELLERS:
HakeTenn, Inc.,
a Delaware corporation
/s/ Xxxxx X. Xxxx, XX
___________________________ ---------------------
BY: BY: Xxxxx X. Xxxx, XX
TITLE: Secretary TITLE: Authorized Officer
WITNESS:
/s/ Xxxxxx X. Xxxxxxxx
___________________________ ----------------------
Xxxxxx X. Xxxxxxxx
WITNESS:
/s/ Xxxxxxx X. Xxxxxx
___________________________ ---------------------
Xxxxxxx X. Xxxxxx
57
