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Exhibit 10.44
STOCK PURCHASE AGREEMENT
BETWEEN
SUSI CORPORATION
AND
OM GROUP, INC.
DATED
DECEMBER 20, 1996
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TABLE OF CONTENTS
Page
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1. Sale and Purchase of Shares ........................................... 1
2. Purchase Price ....................................................... 1
2.1 Purchase Price ................................................. 1
2.2 Adjustment of Purchase Price ................................... 2
2.3 Payment of Purchase Price ...................................... 4
3. Closing .............................................................. 6
3.1 Date of Closing .................................................. 6
3.2 Termination .................................................... 6
4. Representations and Warranties of Seller ............................. 7
4.1 Organization, Standing and Authority of Seller ................. 7
4.2 Authorization of Agreement ..................................... 7
4.3 Consents of Third Parties ...................................... 7
4.4 Capitalization of the Subsidiary and Equity Investments ........ 8
4.5 Ownership of Shares ............................................ 9
4.6 Financial Statements and Preliminary Balance Sheet ............. 9
4.7 Absence of Certain Liabilities and Changes ..................... 10
4.8 Inventory ...................................................... 12
4.9 Receivables .................................................... 12
4.10 Taxes .......................................................... 13
4.11 List of Material Contracts ..................................... 14
4.12 Labor Matters .................................................. 15
4.13 Employee Benefit Plans and Benefit Arrangements ................ 16
4.14 Litigation; Compliance with Laws ............................... 20
4.15 Real Property ................................................... 21
4.16 Tangible Personal Property ..................................... 22
4.17 Proprietary Rights ............................................. 22
4.18 Environmental Matters .......................................... 24
4.19 Permits and Licenses ........................................... 26
4.20 Insurance ...................................................... 26
4.21 Suppliers and Customers ........................................ 26
4.22 Experience Matters ............................................. 26
4.23 Intercompany Accounts .......................................... 27
4.24 Divestiture Agreements ......................................... 27
4.25 Disclosure ..................................................... 27
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Page
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5. Representations and Warranties of Buyer ........................... 27
5.1 Buyer's organization ....................................... 27
5.2 Authorization of Agreement ................................. 27
5.3 Consents of Third Parties .................................. 28
5.4 Litigation ................................................. 28
5.5 Financing .................................................. 29
5.6 Investment ................................................. 29
6. Further Agreements of the Parties .................................. 29
6.1 Access to Information ...................................... 29
6.2 Conduct of the Business Pending the Closing ................ 30
6.3 Employee and Employee Benefit Matters ...................... 31
6.4 Other Action ............................................... 34
6.5 Notices .................................................... 34
6.6 HSR Act ..................................................... 34
6.7 Expenses ................................................... 35
6.8 Publicity .................................................. 35
6.9 Transfer Taxes ............................................. 35
6.10 Supplement to Disclosures .................................. 35
6.11 Preservation of Records .................................... 35
6.12 Certain Post-Closing Assistance by the Buyer ............... 36
6.13 Treasury Matters............................................ 36
6.14 SCM Name ................................................... 37
7. Conditions of Closing .............................................. 38
7.1 Conditions Precedent to Obligations of Buyer ............... 38
7.2 Conditions Precedent to Obligations of Seller .............. 39
8. Documents to be Delivered at the Closing ........................... 40
8.1 Documents to be Delivered by Seller ........................ 40
8.2 Documents to be Delivered by Buyer ......................... 41
9. Indemnification and Related Matters ................................ 42
9.1 Indemnification............................................. 42
9.2 Determination of Damages and Related Matters ............... 43
9.3 Time and Manner of Certain Claims .......................... 44
9.4 Defense of Claims by Third Parties ......................... 45
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Page
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9.5 Environmental Matters ................................... 45
10. Miscellaneous .................................................... 49
10.1 Finders ................................................. 49
10.2 Entire Agreement ........................................ 50
10.3 Jurisdiction and Governing Law .......................... 50
10.4 Schedules; Tables of Contents and Headings .............. 50
10.5 Notices ................................................. 50
10.6 Separability ............................................ 51
10.7 Waiver .................................................. 52
10.8 Binding Effect; Assignment .............................. 52
10.9 Best Knowledge .......................................... 52
10.10 Counterparts ............................................ 52
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT
The parties to this Stock Purchase Agreement dated December 20, 1996
(this "Agreement") are SUSI Corporation, a Delaware corporation ("Seller"), and
OM Group, Inc. a Delaware corporation ("Buyer").
Seller owns all of the issued and outstanding shares of common stock,
par value $.10 per share (the "Shares"), of SCM Metal Products Inc., a Delaware
corporation ("Subsidiary"). Subject to the terms and conditions stated herein,
Seller wishes to sell and Buyer wishes to purchase from Seller all of the shares
of the Subsidiary owned by Seller which constitute 100% of the issued and
outstanding shares of the capital stock of the Subsidiary. The term "Business"
shall mean the business and operations conducted by the Subsidiary.
It is therefore agreed as follows:
1. Sale and Purchase of Shares.
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Subject to the terms and conditions of this Agreement, at the closing
referred to in Section 3 (the "Closing"), Seller shall sell, assign, transfer,
convey and deliver to Buyer and Buyer shall purchase, acquire and accept from
Seller, the Shares.
2. Purchase Price.
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2.1 Purchase Price.
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(a) The purchase price for the Shares shall be $122,000,000 subject to
post-closing adjustment pursuant to Section 2.2. The Purchase Price shall be
payable as provided in Section 2.3.
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2.2 Adjustment of Purchase Price.
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(a) The Purchase Price shall be adjusted as follows:
(i) For purposes hereof "Final Net Worth" shall mean the
assets of the Business less the liabilities of the Business, as reflected in the
Final Balance Sheet referred to in Section 2.2(b). "Target Net Worth" shall mean
the assets of the Business less the liabilities of the Business as reflected on
the Preliminary Balance Sheet referred to in Section 4.6.
(ii) If the amount of the Final Net Worth determined in
accordance with this Section is less than the Target Net Worth, the Purchase
Price shall be decreased by an amount equal to the difference between the Final
Net Worth and the Target Net Worth but in no event shall the decrease be greater
than $750,000.
(iii) If the amount of the Final Net Worth is greater than the
Target Net Worth, the Purchase Price shall be increased by an amount equal to
the difference between the Final Net Worth and the Target Net Worth but in no
event shall the increase be greater than $750,000.
(b) The Final Net Worth shall be determined as of the close of business
on the day immediately preceding the day of the Closing (the "Determination
Time") on the basis of the balance sheet of the Business as of the Determination
Time (the "Final Balance Sheet"). The Final Balance Sheet shall be prepared by
Seller in accordance with generally accepted accounting principles as
supplemented by the principles set forth in SCHEDULE 2.2 (the "Accounting
Principles") and shall be reported upon by Price Waterhouse LLP ("PW"); PROVIDED
HOWEVER that should PW be unable or unwilling to provide the report described
above, Seller shall promptly engage another independent public accounting firm
of national reputation (the "Alternate Firm") to provide such report, or Buyer
and Seller may agree to the amount of Final Net Worth and the amount of any
required adjustment
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to the Purchase Price as contemplated by this Section 2.2. PW or the Alternate
Firm, as the case may be, shall hereinafter be referred to as the ("Auditor").
Seller shall be responsible for the fees and expenses of the Auditor.
(c) Seller shall engage the Auditor to examine the Final Balance
Sheet and shall use its best efforts to deliver to Buyer the Final Balance Sheet
within sixty (60) days after the Closing (or; in the event the Auditor is the
Alternate Firm, within sixty (60) days after the Alternate Firm is engaged),
together with a report of the Auditor thereon (i) setting forth the amount of
Final Net Worth reflected in the Final Balance Sheet, (ii) stating that (y) the
examination has been made in accordance with generally accepted auditing
standards, and (z) the Final Balance Sheet has been prepared in conformity with
the Accounting Principles, and (iii) setting forth the amount of any required
adjustment to the Purchase Price pursuant to this Section 2.2. Buyer and Seller
shall take such actions as are necessary to cause the Auditor's audit of the
Final Balance Sheet to be performed expeditiously. During the period from the
Closing Date (as defined in Section 3.1) until the date of delivery of the Final
Balance Sheet, Buyer shall give Seller, the Auditor and other appropriate
personnel such assistance and access to the assets and books and records of the
Subsidiary as Seller and the Auditor shall reasonably request during normal
business hours in order to enable them to prepare and examine, respectively, the
Final Balance Sheet. Ernst & Young LLP or such other independent accounting firm
engaged by Buyer at Buyer's sole expense (which shall not be the Unrelated
Accounting Firm referred to below) ("Buyer's Auditor") shall have the
opportunity to observe the taking of the inventory of the Seller in connection
with the preparation of the Final Balance Sheet, and to examine the work papers,
schedules and other documents prepared by Seller in connection with its
preparation of the Final Balance Sheet. Seller shall use its reasonable efforts
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to cause the Auditor to permit Buyer and Buyer's Auditor to examine the
Auditor's work papers used in connection with its audit of the Final Balance
Sheet.
(d) Within thirty (30) days following the delivery of the Final
Balance Sheet and the related report of the Auditor, Buyer shall deliver to
Seller a notice of objection (an "Objection Notice") or a notice of acceptance
(an "Acceptance Notice") with respect to the Final Balance Sheet and related
auditor's report. Such Final Balance Sheet and related auditor's report shall be
final and binding on the parties if an Acceptance Notice is delivered to Seller
or if no Objection Notice is delivered to Seller within such thirty (30) day
period. Any Objection Notice shall specify in reasonable detail the items on the
Final Balance Sheet disputed and shall describe in reasonable detail the basis
for the objection and all information in the possession of the objecting party
which forms the basis thereof, as well as the amount in dispute. If an Objection
Notice is given, the parties shall consult with each other with respect to the
objection. If the parties are unable to reach agreement within fifteen (15) days
after an Objection Notice has been given, any unresolved disputed items shall be
promptly referred to Coopers and Xxxxxxx (the "Unrelated Accounting Firm"). The
Unrelated Accounting Firm shall be directed to render a written report on the
unresolved disputed issues with respect to the Final Balance Sheet as promptly
as practicable and to resolve only those issues of dispute set forth in the
Objection Notice. The resolution of the dispute by the Unrelated Accounting Firm
shall be final and binding on the parties. The fees and expenses of the
Unrelated Accounting Firm shall be borne equally by Seller and Buyer.
2.3 Payment of Purchase Price.
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(a) At the Closing Buyer shall pay to Seller an amount equal to
the Purchase Price by wire transfer of immediately available funds to an
account designated by Seller.
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(b) If Buyer delivers to Seller the Acceptance Notice referred to in
Section 2.2(d) or fails to deliver an Objection Notice within the thirty (30)
day period required by Section 2.2(d), then (i) in the event the Final Net Worth
is less than the Target Net Worth, Seller shall within two (2) business days
after the delivery of such Acceptance Notice or the expiration of such thirty
(30) day period, as the case may be, pay to Buyer, the amount, if any, by which
the Target Net Worth exceeds the Final Net Worth, or (ii) in the event the Final
Net Worth exceeds the Target Net Worth, Buyer shall within two (2) business days
after the delivery of such Acceptance Notice or the expiration of such thirty
(30) day period, as the case may be, pay to Seller the amount, if any, by which
the Final Net Worth is greater than the Target Net Worth. Alternatively, if
Buyer delivers to Seller the Objection Notice referred to in Section 2.2(c),
within two (2) business days after such delivery, (y) Seller shall pay to Buyer
the amount, if any, by which the undisputed portion of the Final Net Worth is
less than the Target Net Worth, or (z) Buyer shall pay to Seller the amount, if
any, by which the undisputed portion of the Final Net Worth is greater than the
Target Net Worth provided that in no event shall the amount be greater than
$750,000. Within two (2) days after the resolution of any dispute by the parties
or the Unrelated Accounting Firm relating to the Objection Notice, Seller shall
pay to Buyer, or Buyer shall pay to Seller, as the case may be, the amount of
any further adjustment required.
(c) Any payment pursuant to Section 2.3(b) shall be made by
certified or bank cashier's check, or, at the recipient's option, by wire
transfer of immediately available funds and shall be accompanied by payment of
an amount determined by computing simple interest on the amount of that payment
at the rate of interest announced publicly by Bank of America in San Francisco
from time to time as its "reference rate" (on the basis of a 365-day year) from
the Closing Date to the date of payment.
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3. Closing.
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3.1 DATE OF CLOSING. The Closing shall take place at the offices of
Seller's Counsel (or at such other place as the parties may agree in writing)
five (5) business days after the date when each of the conditions specified in
Article 7 has been fulfilled (or waived by the party entitled to waive that
condition). The date on which the Closing is held is referred to in this
Agreement as the "Closing Date". At the Closing, the parties shall execute and
deliver the documents referred to in Section 8.
3.2 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written agreement executed by Seller and Buyer;
(b) by Buyer, if any of the conditions specified in Section 7.1
shall not have been satisfied or waived in writing by Buyer on or before
February 28, 1997; or
(c) by Seller, if any of the conditions specified in Section 7.2
shall not have been satisfied or waived in writing by Seller on or before
February 28, 1997.
(d) This Agreement may in any event be terminated by Seller or Buyer
if the Closing shall not have occurred by February 28, 1997.
Upon such termination neither of the parties shall have any liability or
further obligation arising out of this Agreement except for any liability
resulting from its breach of this Agreement prior to termination. Buyer's
obligations under Section 6.1 shall survive the termination of this Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer that:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF SELLER. Seller and the
Subsidiary are corporations duly organized, validly existing and in good
standing under the laws of the state of their incorporation, and have full
corporate power and authority to enter into and perform this Agreement. The
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it requires qualification, except where the failure to be so qualified
or in good standing would not have a material adverse effect upon the
businesses, operations, assets or financial condition of the Business ("Material
Adverse Effect"). Each state in which the Subsidiary is qualified to do business
is set forth on SCHEDULE 4.1. SCHEDULE 4.1 also sets forth each jurisdiction in
which assets of the Subsidiary are located and each jurisdiction in which the
Subsidiary has employees.
4.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
of this Agreement by Seller has been duly authorized by all necessary corporate
action of Seller and this Agreement constitutes the valid and binding obligation
of Seller enforceable against it in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
4.3 CONSENTS OF THIRD PARTIES. Subject to receipt of the consents and
approvals referred to in SCHEDULE 4.3, the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
by Seller will not (i) violate or conflict with the certificate of incorporation
or by-laws of Seller or the Subsidiary, (ii) conflict with, or result in
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the breach of, or termination of, or constitute a default under (whether with
notice or lapse of time or both), or accelerate or permit the acceleration of
the performance required by, any indenture, mortgage, lien, lease, agreement,
commitment or other instrument, or any order, judgment or decree, to which the
Subsidiary is a party or by which Seller or the Subsidiary or any of their
properties are bound, (iii) constitute a violation of any law, regulation,
order, writ, judgment, injunction or decree applicable to Seller or the
Subsidiary, or (iv) result in the creation of any lien, charge or encumbrance
upon the capital stock, properties or assets of the Subsidiary, other than
violations, conflicts, breaches, terminations, accelerations and defaults
specified in the foregoing clauses (ii) through (iv) which could not reasonably
be expected to have a material adverse effect on Seller's ability to perform its
obligations under this Agreement. No consent, approval or authorization of any
governmental authority is required on the part of Seller or the Subsidiary in
connection with the execution, delivery and performance of this Agreement,
except for:
(a) filings with the Federal Trade Commission and the Department of
Justice, pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 0000
(xxx "XXX Xxx") with respect to the sale of the Shares to Buyer, and;
(b) filings with the Pension Benefit Guaranty Corporation, the Internal
Revenue Service, the Department of Labor and any other similar governmental
entity with respect to the transfer of assets and liabilities of Employee
Benefit Plans (defined below) pursuant to this Agreement.
4.4 CAPITALIZATION OF THE SUBSIDIARY AND EQUITY INVESTMENTS. The
capitalization of the Subsidiary is set forth on SCHEDULE 4.4. All of the
outstanding shares of capital stock of the Subsidiary were duly authorized for
issuance and are validly issued, fully paid and non-assessable and none of such
shares are held in treasury. Except for this Agreement, there are no outstanding
options
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or rights of any kind to acquire any shares of any class of securities or any
securities convertible into any shares of any class of securities of the
Subsidiary, nor are there any obligations to issue any such options, rights or
securities. There are no restrictions of any kind on the transfer of the shares,
except as may be imposed by applicable federal and state securities laws. Except
as set forth on SCHEDULE 4.4 the Subsidiary does not own any capital stock or
other interest in any other corporation or business entity, nor is the
Subsidiary subject to any obligations or requirements to make any investment in
any entity.
4.5 OWNERSHIP OF SHARES. Seller is, and at the Closing will be, the
record and beneficial owner of the Shares, free and clear of any claim, lien,
security interest or other encumbrance ("Lien"), and the Shares will not be
subject to any agreement or understanding with respect to voting or transfer
thereof. At the Closing, Seller will transfer and deliver to Buyer valid title
to all the Shares, free and clear of any Lien.
4.6 Financial Statements and Preliminary Balance Sheet.
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(a) FINANCIAL STATEMENTS. Seller has delivered to Buyer the
following internally reported (for consolidation into the returns of Seller's
Parent) financial information for the Subsidiary:
(i) balance sheets as of the last day of the Subsidiary's fiscal
years ended as of September 28, 1995 and September 28, 1996, and
(ii) the related statements of operations for each of the three years in
the period ended as of September 28, 1996 (collectively, the "Financial
Statements"). Such Financial Statements are true and correct in all material
respects, are in accordance with the books and records of the Subsidiary and
present fairly, in all material respects, the financial position and results of
operations
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of the Subsidiary as of such dates and for such periods in conformity with
generally accepted accounting principles applied on a consistent basis, except
as indicated on SCHEDULE 4.6(a).
(b) PRELIMINARY BALANCE SHEET. The unaudited balance sheet of the
Business, dated as of September 28, 1996 (the "Preliminary Balance Sheet") was
prepared from the hooks and records of Subsidiary in accordance with GAAP on a
basis consistent with past practice and adjusted for those items set forth on
Schedule 2.2.
4.7 ABSENCE OF CERTAIN LIABILITIES AND CHANGES. Except to the extent
reflected or reserved for in the Preliminary Balance Sheet, to the best of
Seller's knowledge, there are no liabilities or obligations, secured or
unsecured, whether accrued, absolute, contingent or otherwise and whether known
or unknown, material to the Business that would normally be shown on a balance
sheet or related footnotes, if any, prepared in accordance with the Accounting
Principles except (i) liabilities or obligations incurred in the ordinary course
of business since the date of the Preliminary Balance Sheet, and (ii)
liabilities and obligations disclosed in the Schedules hereto and liabilities
and obligations not required to be so disclosed because of their failure to meet
the materiality thresholds set forth therein. Since the date of the Preliminary
Balance Sheet, the Subsidiary has operated the Business in the ordinary course
and, except as set forth on SCHEDULE 4.7 or contemplated by SCHEDULE 6 2 there
has not been:
(a) any change in the business, assets, financial condition or
results of operations of the Business that has had or could reasonably be
expected to have a Material Adverse Effect;
(b) any material change in the accounting methods or principles of
the Subsidiary that would be required to be disclosed under the Accounting
Principles;
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(c) any grant of any severance or termination pay by the Subsidiary to
any executive officer or director of the Subsidiary or any increase in
compensation or benefits payable by the Subsidiary under existing employment
agreements or severance or termination pay policies to any of their employees
other than (x) in the ordinary course of business consistent with past
practices, including without limitation normal merit increases for salaried
employees, (y) increases or grants required by contracts disclosed herein or by
applicable law, or (z) increases, agreements and bonuses disclosed in SCHEDULE
4.13;
(d) any employment, bonus or deferred compensation agreement entered
into between the Subsidiary and any of its directors, officers or other
employees, other than as disclosed in SCHEDULE 4.13;
(e) any entering into, amendment or termination of any material
contract, agreement, lease, franchise, security, instrument, permit or license
between the Subsidiary and any party, except in the ordinary course of business;
(f) any declaration or payment of a distribution of cash or any other
asset of the Subsidiary to the Seller (i) in the nature of a dividend, (ii) in
redemption or as the purchase price of any of its capital stock, or (iii) in
discharge or cancellation, whether in part or in whole, of any indebtedness
owing to Seller, except in the ordinary course of business;
(g) any purchase commitments in excess of its normal business
requirements; or
(h) any existing agreement or arrangement made by the Subsidiary to take
any action that would cause any representations or warranty in this Section 4.7
to be untrue or incorrect.
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4.8 INVENTORY. The Inventory is of a quality and quantity usable in the
ordinary course of business of the Subsidiary, except for obsolete items or
items below standard quality as to which a provision determined in a manner
consistent with the prior practice of the Business has been made on the books of
the Subsidiary in accordance with the Accounting Principles. The value of all
inventory items, including finished goods, work-in-process and raw materials,
has been recorded on the books of the Subsidiary at the lower of cost
(determined in accordance with the accounting inventory valuation methods of the
Subsidiary) or fair market value.
4.9 RECEIVABLES. All accounts receivable of the Subsidiary which either
are reflected on the Preliminary Balance Sheet, or were created subsequent to
the date of the Preliminary Balance Sheet, have arisen in the ordinary course of
business. Allowances in accordance with the Accounting Principles have been
reflected in the Preliminary Balance Sheet with respect to the receivables shown
thereon, and, with respect to receivables created subsequent to the date of the
Preliminary Balance Sheet, allowances have been set up on the books of the
Subsidiary in accordance with the Accounting Principles.
4.10 TAXES. Except as set forth on SCHEDULE 4.10 (i) the Subsidiary has
filed (or caused to be filed) in a timely manner (or, where permitted or
required, the consolidated, combined or unitary group of which the Subsidiary is
a member has flied (or caused to be filed) in a timely manner) all material
Federal, state, local and foreign returns required by applicable law to be filed
(each a "Return") with respect to all Federal, state, local and foreign taxes
and assessments (including all interest, penalties and additions imposed with
respect to such amounts) of the Subsidiary ("Taxes") and has paid (or the
consolidated, combined or unitary group of which the Subsidiary is a member has
paid on its behalf) all Taxes shown due on such Returns for which the Subsidiary
may be liable, except for Taxes that are being contested in good faith by
appropriate proceedings and set forth on
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SCHEDULE 4.10; (ii) there is no outstanding agreement, waiver or consent
providing for an extension of the statutory period of limitations applicable to
the assessment of any Tax and no power of attorney granted by the Subsidiary
with respect to any tax matter is currently in force; (iii) there is no action,
suit, proceeding, investigation, audit or claim now pending against the
Subsidiary with respect to any Tax, nor is there any assessment asserted by any
Tax authority; (iv) the Subsidiary has not filed any agreement or consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code");
(v) no property of the Subsidiary is "tax-exempt use property" within the
meaning of Section 168(h) of the Code nor property that Buyer will be required
to treat as being owned by another person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (vi) Subsidiary has made timely
payments of all Taxes required to be deducted and withheld from the wages paid
to employees; (vii) Subsidiary has not been a party to any Tax allocation or
sharing agreement; (viii) Subsidiary has not received a claim made by an
authority in jurisdiction where it does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction; and (ix) Subsidiary has not
agreed to (nor is it required to make) any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise.
4.11 LIST OF MATERIAL CONTRACTS. SCHEDULE 4.11 includes lists, as of
the date of this Agreement, of: (a) all commitments and agreements for the
purchase or sale of any materials, supplies or services that involve an
expenditure by or payment to the Subsidiary of more than $50,000 for any one
contract or series of related contracts; (b) all personal property leases under
which the Subsidiary is either lessor or lessee that involve annual payments or
receipts of $50,000 or more; (c) all agreements, mortgages, indentures and other
instruments relating to indebtedness for borrowed money to which the Subsidiary
is a party or by which it or its properties are bound that require annual
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payments by the Subsidiary of more than $50,000, (d) all government contracts
and all other agreements with customers that involve an annual payment to the
Subsidiary of more than $50,000 for any one contract or services of related
contracts, and (e) all non-competition agreements, license, sales
representation, distributorship or consulting agreements, and non-disclosure
agreements pertaining to the Subsidiary which are material to the Business.
Seller has made available to Buyer complete and correct copies of all items
listed on SCHEDULE 4.11 that are in writing, and the descriptions contained in
SCHEDULE 4.11 of all items listed therein that are not in writing are complete
and correct. Except as disclosed in SCHEDULE 4.11, as of the date of this
Agreement, the Subsidiary is not in material default under the terms of any item
listed on SCHEDULE 4.11. Except as disclosed in SCHEDULE 4.11, between the date
of this Agreement and the Closing, the Subsidiary is not, or will not be, in
default under the terms of any item listed on SCHEDULE 4.11. which default will
have a Material Adverse Effect. To the best knowledge of Seller, as of the date
of this Agreement, no party is in default under any of the contracts,
arrangements, instruments or other agreements listed in SCHEDULE 4.11 and each
is valid and in full force and effect. No party has notified Seller or the
Subsidiary in writing of its intention to cease to perform any material services
required to be performed by it or withhold any material payment required to be
made by it thereunder.
4.12 Labor Matters.
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(a) During the two years ending on the date hereof, no petition
has been filed or proceedings initiated by any employee or group of employees
seeking recognition of a bargaining representative for the Subsidiary. During
the two years ending on the date hereof, no strike or work stoppage of any kind
has been called against the Subsidiary. To the best of Seller's knowledge, there
is no organizational effort currently being made or threatened to organize
employees of the Subsidiary for the purpose of forming or joining any labor
union. There are no
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controversies or disputes pending between the Subsidiary and any of its
employees other than controversies and disputes with individual employees
arising in the ordinary course of business which have not had and could not
reasonably be foreseen to have, individually or in the aggregate, a Material
Adverse Effect. Except as set forth on SCHEDULE 4.12 there are no unfair labor
practice or other administrative or court proceedings pending, or to the best of
Seller's knowledge, threatened, between the Subsidiary and its employees.
(b) No present or former employee of the Subsidiary has asserted any
claim of more than $50,000 against the Subsidiary (whether under federal or
state law) under any employment agreement, or otherwise, on account of or for
(i) overtime pay, other than overtime pay for the current payroll period, (ii)
wages or salary for any period other than the current payroll period, (iii)
vacation or time off (or pay in lieu thereof), other than that earned in respect
of the previous twelve months, or (iv) any violation of any statute, ordinance
or regulation relating to minimum wages or maximum hours of work.
(c) No persons or parties (including but not limited to, governmental
agencies of any kind) have asserted any claim, or, to the best of Seller's
knowledge, have any basis for any action or proceeding against the Subsidiary
which claim or basis for any action or proceeding would require a payment in
excess of $50,000 arising out of any breach or violation by the Subsidiary of
any statute, ordinance or regulation relating to discrimination in employment or
employment practices or occupational safety and health standards (including
without limitation, The Occupational Safety and Health Act, The Fair Labor
Standards Act, Title VII of the Civil Rights Act of 1964, or the Age
Discrimination in Employment Act of 1967) except as set forth on SCHEDULE 4.12
or SCHEDULE 4.18(b).
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4.13 Employee Benefit Plans and Benefit Arrangements.
-----------------------------------------------
(a) Definitions.
-----------
(i) The term "Employees" shall mean all current and former
employees of the Subsidiary, including employees on approved leaves of absence
(whether family leave, workers' compensation leave, medical leave, or
otherwise). A list of such former employees of the Subsidiary who are covered
under any retiree life insurance or medical program will be provided by Seller
to Buyer by 5:00 p.m. on December 24, 1996.
(ii) The term "Employee Benefits Plans" shall mean all "employee
benefit plans" as defined in Section 3(3) of ERISA, which are maintained or
contributed to by the Subsidiary or any predecessor for Employees or in which
the Subsidiary or any predecessor participates or participated and which are
listed and identified as such on SCHEDULE 4.13(b).
(iii) The term "Welfare Plans" shall mean all Employee Benefit Plans
which are employee welfare benefit plans as defined in Section 3(1) of ERISA and
which are listed on SCHEDULE 4.13(b).
(iv) The term "Pension Plans" shall mean all Employee Benefit Plans
which are employee pension benefit plans as defined in Section 3(2) of ERISA and
which are listed and identified as such on SCHEDULE 4.13(b).
(v) The term "Benefit Arrangements" shall mean all life and health
insurance, hospitalization, savings, bonus, deferred compensation, incentive
compensation, holiday, vacation, termination, severance pay, sick pay, sick
leave, disability, tuition refund, service award, company car, scholarship,
relocation, patent award, fringe benefit, contracts, collective bargaining
agreements, individual employment contract, consulting contract, termination
contract or severance contract and other policies or practices of the Subsidiary
providing employee or executive
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compensation or benefits to Employees (other than Employee Benefit Plans) which
are listed on SCHEDULE 4.13(b).
(vi) The term "Multiemployer Plan" shall mean a multiemployer pension
plan as defined in Section 3(37)(A) of ERISA.
(vii) The term "ERISA Affiliate" shall mean an entity that would be
treated as a single employer with the Subsidiary under Section 414 of the Code.
(b) Employee Benefit Arrangements.
-----------------------------
(i) SCHEDULE 4.13(b) sets forth a complete and accurate list of
all Employee Benefit Plans and all Benefit Arrangements. Seller has delivered or
made available to Buyer copies of each Employee Benefit Plan, all amendments
thereto, all related funding arrangements, all actuarial valuation reports for
the most recent three years, a copy of Forms 5500 with all schedules thereto for
the most recent three years, a copy of the most recent determination letter
issued by the Internal Revenue Service for each Pension Plan, and a copy of the
most recent summary plan description. Seller has delivered or made available to
Buyer copies of each Benefit Arrangement or description thereof Seller has
delivered or made available to Buyer all forms and notices being utilized in
conjunction with any Employee Benefit Plan with respect to any Employee,
including, but not limited to, any notices or informational material regarding
retiree medical and life insurance programs, joint and survivor annuity notices
and elections and spousal consent forms with respect to any Pension Plan, and
all notices and elections intended to comply with the requirements of Section
601 of ERISA.
(ii) Except as indicated on SCHEDULE 4.13(b), each Employee
Benefit Plan and related funding arrangements: (a) are in form and have been
administered in compliance with all applicable laws, including, without
limitation, ERISA and the Code; (b) each
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Pension Plan intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service with respect to
such qualification or has been submitted timely to the Internal Revenue Service
for such a favorable determination; (c) each trust maintained in conjunction
with a Pension Plan intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service with
respect to the exemption thereof under Section 501(a) of the Code; (d) none of
the Pension Plans or related trusts, or any administrator or trustee thereof, or
party-in-interest or disqualified person thereto has engaged in a transaction
that could cause any of them to be liable for a civil penalty under Section 409
or 502(i) or any other section of ERISA or result in a tax under Section 4975 or
4976 or any other section of Chapter 43 of Subtitle D of the Code; (e) all
amounts required to be paid by the Subsidiary to or pursuant to each of the
Employee Benefit Plans on or before the Closing Date have been paid; (f) no
Pension Plan has incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code; and (g) no "reportable event" within the meaning of
Title IV of ERISA has occurred with respect to any Pension Benefit Plan subject
thereto.
(iii) The Subsidiary does not currently contribute, and has not
contributed within the last five years, to any Multiemployer Plan and no event
has occurred that presents a risk of the occurrence of any withdrawal from any
Multiemployer Plan by the Subsidiary or an ERISA Affiliate of the Subsidiary
which could result in any liability of the Subsidiary to such Multiemployer
Plan. Except as set forth on SCHEDULE 4.13(b), no liability under Title IV of
ERISA has been incurred by the Subsidiary that has not been satisfied in full,
and no condition exists that presents a risk to the Subsidiary of incurring a
liability under such Title IV other than liability for premiums due the Pension
Benefit Guaranty Corporation ("PBGC"). Neither the Subsidiary or an ERISA
Affiliate of the Subsidiary, nor any respective directors, officers, employees,
or fiduciaries has
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committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law that would subject the Subsidiary to liability under ERISA or any
other applicable law, contract, agreement, or commitment. The PBGC has not
instituted proceedings to terminate any Pension Plan in which the Subsidiary
participates, and no condition exists that presents a risk that such proceedings
will be instituted.
(iv) Any Employee Benefit Plan designed to satisfy the requirements of
Section 125, Section 401(k), Section 409, Section 501(c)(9), Section 4975(e)(7),
and/or Section 4980B of the Code, satisfies such section.
(v) No "leased employee," as that term is defined in Section 414(n) of
the Code, performs services for the Subsidiary.
(vi) Notice of any Employee Benefit Plan or Benefit Arrangement
required to be given to the Department of Labor under Section 2520.104.23 of
Title 29 of the Code of Federal Regulations has been given.
(vii) Except as indicated on Section 4.13, there is no audit which is in
process by, or for which notification has been received from, the Internal
Revenue Service, the Department of Labor or the PBGC with respect to any
Employee Benefit Plan.
4.14 Litigation; Compliance with Laws.
--------------------------------
(a) There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Seller's knowledge,
threatened, that question the validity of this Agreement or any action taken or
to be taken by Seller in connection with this Agreement. There is no litigation,
proceeding or governmental investigation pending or, to the best of Seller's
knowledge, threatened, or any order, injunction or decree outstanding, against
the Seller that, if
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adversely determined, would individually or in the aggregate, adversely effect
the Seller's ability to perform its obligations under this Agreement.
(b) To the best of Seller's knowledge the Subsidiary is not in violation
of any applicable law, regulation, ordinance or any other applicable requirement
of any governmental body or court, which violations in the aggregate would have
a Material Adverse Effect. As of the date of this Agreement, no written notice
has been received by the Subsidiary since January 1, 1990 alleging any such
violations, except as set forth on SCHEDULE 4.14.
(c) Except as disclosed in SCHEDULE 4.14, these are no judicial or
administrative actions or proceeding pending against the Subsidiary or, to the
best knowledge of Seller, threatened against the Subsidiary or the Business.
4.15 Real Property.
-------------
(a) SCHEDULE 4.15(a) sets forth all of the real property used in
the Business and owned in fee by the Subsidiary (the fee property being
hereinafter referred to as the "Owned Property"). The Owned Property is all of
the real property used in the Business as presently conducted, and is, to the
best of Seller's knowledge, adequate for the uses to which it is being put and
sufficient for the conduct of the Business as presently conducted. The Seller
has provided to Buyer copies of title insurance commitments from Lawyers Title
Insurance Corporation with respect to the Owned Property (the "Title
Commitments"). The matters set forth at Items 4, 5, 6, 8 and 9 of the North
Carolina Title Commitment and at Items 6, 7, 8 and 10 of the Pennsylvania Title
Commitment do not materially and adversely affect the use of the Owned Property.
Except as set forth on SCHEDULE 4.15(a), the Subsidiary has, or as of the
Closing will have, good and marketable title to each parcel of Owned Property
free and clear of all Liens, other than (i) those reflected or reserved against
in the Preliminary Balance Sheet, (ii) those reflected in the title commitments
with
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respect to the Owned Property that are listed on SCHEDULE 4.15(a), copies of
which have been previously provided to Buyer, (iii) imperfections of title,
easements, pledges, charges, restrictions and encumbrances, including without
limitation, survey matters, landlord's liens, mechanics' liens, repairmen's
liens and other similar liens, if any, that do not materially detract from the
value of the property subject thereto or materially interfere with the manner in
which it is currently being used in the Business or materially impair the
operations of the Business, and (iv) taxes and general and special assessments
not in default and payable without penalty or interest (liens of the type
referred to in clauses (i) through (iv) above being hereinafter referred to as
"Permitted Liens").
(b) There are no real property leases in effect as of the date hereof
with respect to the Business under which the Subsidiary is a lessee, other than
leases with respect to public warehouses used by the Subsidiary.
(c) The Subsidiary has not received any notice of violation of any
ordinance, law or regulation of any government resulting from the current uses
of, or the buildings or improvements on, any of the parcels of real property
owned by the Subsidiary or used in the conduct of its business. No proceedings
are pending as of the date hereof or, to the best of Seller's knowledge,
threatened for condemnation of all or any part of such real property.
4.16 TANGIBLE PERSONAL PROPERTY. All of the fixtures, machinery and
equipment reflected in the Preliminary Balance Sheet (the "Tangible Personal
Property") are in existence (except for dispositions made since the date of the
Preliminary Balance Sheet in the ordinary course of business and minor items not
substantial in character). The Subsidiary has delivered to the Buyer a Fixed
Asset Listing by Tag Id. as of November 30, 1996. Substantially all of the
Tangible Personal Property is located at the Owned Property. Except as set forth
on SCHEDULE 4.16, the Subsidiary has good title to, or holds by valid and
existing lease, all of the Tangible Personal Property, free and clear
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of all Liens, other than Permitted Liens. The Tangible Personal Property is, to
the best of Seller's knowledge, adequate for the uses to which it is being put
and sufficient for the conduct of the Business as presently conducted.
4.17 Proprietary Rights.
------------------
(a) SCHEDULE 4.17(a) sets forth a list of all inventions which
are the subject of issued letters patent or an application therefor and all
trade and service marks which have been registered or for which an application
for registration is pending, in each case which are owned and used or held for
use by the Subsidiary in the Business (each a "Proprietary Right"), specifying
as to each, as applicable; (i) the nature of such Proprietary Right; (ii) the
owner of such Proprietary Right; (iii) the jurisdictions by or in which such
Proprietary Right has been issued or registered or in which an application for
such issuance or registration has been filed, including the respective
registration or application numbers, if available; and (iv) material licenses,
sublicenses and other agreements to which the Subsidiary is a party and pursuant
to which any person is authorized to use such Proprietary Right. The Proprietary
Rights include all proprietary rights that are used in the Business as presently
conducted.
(b) Except as set forth on SCHEDULE 4.17(b), the Subsidiary (i) is
not a defendant in any claim, suit, action or proceeding which involves a claim
of infringement of any Proprietary Rights, and (ii) does not have any knowledge
of any existing infringement by any other person of any Proprietary Right. To
the knowledge of Seller, (i) the Subsidiary has rights to use all Proprietary
Rights in the conduct of the Business and (ii) the Business as currently
conducted does not infringe on any proprietary right of any third party. Except
as disclosed on SCHEDULE 4.17(b), no Proprietary Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by the Subsidiary or restricting the licensing thereof by the
Subsidiary to
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any person. Buyer acknowledges that from time to time the products of the
Subsidiary are sold and services of the Subsidiary are rendered to customers
whose standard terms and conditions of their purchase orders sometimes contain
agreements under which the Subsidiary may be required to defend, indemnify and
hold the customer harmless against any charge of patent, trademark or copyright
infringement and that the Uniform Commercial Code imposes a similar obligation
where the products were and are made to the specifications of the customer. With
the exception of the foregoing, and except as may be provided in items disclosed
on SCHEDULE 4.16 and SCHEDULE 4.17(b), the Subsidiary has not entered into any
special agreement to indemnify any other person against any charge of
infringement of any patent, trademark, service xxxx or copyright of the
Business.
4.18 Environmental Matters.
---------------------
(a) For purposes of this Section 4.18, the following terms
shall have the indicated meaning:
"ENVIRONMENTAL LAW" means any federal, state, or local statute, law,
ordinance, rule, standard, or regulation and any order, consent decree, judicial
or administrative decision or directive to which Seller is a party or is
otherwise bound relating to pollution or protection of the health or
environment, including natural resources (provided that the term does not
include the Occupational Safety and Health Act or similar state laws governing
employee exposures);
"HAZARDOUS SUBSTANCE" means any substance, whether liquid, solid or
gas: (a) listed, identified or designated as hazardous or toxic under any
Environmental Law, (b) which, applying criteria specified in any Environmental
Law, is hazardous or toxic, or (c) which is regulated under any Environmental
Law, and includes without limitation asbestos and asbestos- containing material,
radioactive material and petroleum products;
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(b) Except as set forth in SCHEDULE 4.18(b), there are no pending, or to
Seller's knowledge, threatened claims, actions or proceedings against the
Subsidiary or Seller relating to:
(i) an asserted liability of Seller or the Subsidiary or, with
respect to the Owned Property, any prior owner, occupier or user of the Owned
Property, under any Environmental Law or the terms and conditions of any permit,
license, authority, settlement or other obligation arising under any
Environmental Law;
(ii) the handling, storage, use or disposal of Hazardous
Substances from, on or under or within Owned Property on or into the air, water,
surface water, ground water, land surface or subsurface strata;
(iii) the actual or threatened discharge, release or emissions of
Hazardous Substances from, on or under or within the Owned Property on or into
the air, water, surface water, ground water, land surface or subsurface strata;
or
(iv) actual or asserted claims for personal injuries or damages to
property related to or arising out of exposure to Hazardous Substances
discharged, released or emitted from or into, or transported from or to, the
Owned Property.
(c) Except as set forth in SCHEDULE 4.18(c), to the best of Seller's
knowledge, the Subsidiary has timely filed all required reports, obtained all
required approvals and permits, and generated and maintained all required data,
documentation and records under all applicable Environmental Laws.
Except as disclosed in SCHEDULE 4.18(c), to the best of Seller's
knowledge, there are no underground storage tanks present on the Owned Property
and, if there are
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such tanks, all tanks comply with applicable law and all required permits in
respect thereof are in full force and effect.
(d) Except as set forth in SCHEDULE 4.18(d), to the best of Seller's
knowledge, no Hazardous Substances have been, or have been threatened to be,
discharged, released or emitted on or into the air, water, surface water, ground
water, land surface or subsurface strata or transported to or from the Owned
Property except in accordance with Environmental Law (in particular, but without
limitation, in accordance with any permits issued pursuant thereto).
4.19 PERMITS AND LICENSES. Set forth in SCHEDULE 4.19 is a list of all
permits, licenses, franchises or other authorizations held by the Subsidiary.
Except as set forth on SCHEDULE 4.19 the Subsidiary has all material permits,
licenses, franchises and other authorizations necessary for the conduct of the
Business as currently conducted, all such permits, licenses, franchises and
authorizations are valid and in full force and effect and the Business is in
compliance with the terms and conditions of such permits except to the extent
that any such non-compliance, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.20 INSURANCE. SCHEDULE 4.20 lists all insurance policies pursuant to
which the Subsidiary is insured as of the date of this Agreement.
4.21 SUPPLIERS AND CUSTOMERS. Except for suppliers or customers who, as
of the date of this Agreement, have re-established their relationships with the
Subsidiary, no supplier or customer which accounted for more than five percent
(5%) of the sales or purchases of the Subsidiary since October 1, 1995 has
terminated or, to the knowledge of the Subsidiary, threatened to terminate,
its relationship with the Subsidiary. To the knowledge of Seller as of the date
hereof, there will not be any adverse effect on the relationship of the
Subsidiary with any of its suppliers or customers solely due to U.S. Industries,
Inc. ("Parent") ceasing to beneficially own the capital stock of the Subsidiary.
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4.22 EXPERIENCE MATTERS. SCHEDULE 4.22 contains a reasonably detailed
description of the history of the experience of the Business during the two (2)
years ending on the date hereof with respect to (i) product liability claims and
product warranty claims exceeding $10,000, and (ii) all workers' compensation
claims. SCHEDULE 4.22 also contains a reasonably detailed description, as of the
date of this Agreement, of all product warranty, product liability and workers'
compensation claims currently pending.
4.23 INTERCOMPANY ACCOUNTS. All intercompany accounts of the
Subsidiary will be discharged or canceled as of the Closing Date.
4.24 DIVESTITURE AGREEMENTS. The Subsidiary has no obligations or
liabilities under any other divestiture agreement or in connection with the
demerger of Parent from Xxxxxx PLC entered into by Parent or its subsidiaries.
4.25 DISCLOSURE. Neither this Agreement (including the Exhibits hereto)
nor the Financial Statements nor any certificate or information furnished by
Seller or the Subsidiary under this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
5.1 BUYER'S ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has the
full corporate power and authority to enter into and to perform this Agreement.
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5.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
by Buyer have been duly authorized by all necessary corporate action of Buyer
and this Agreement constitutes the valid and binding obligation of Buyer
enforceable against it in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3 CONSENTS OF THIRD PARTIES. The execution, delivery and performance
of this Agreement by Buyer will not (i) violate or conflict with the certificate
of incorporation, by-laws or other constitutional documents of Buyer; (ii)
conflict with, or result in the breach or termination of, or constitute a
default under (whether with notice or lapse of time or both), or accelerate or
permit the acceleration of the performance required by, any indenture, mortgage,
lien, lease, agreement, commitment or other instrument or any order, judgment
or decree, to which Buyer is a party or by which it or its properties are bound
other than certain credit agreements which will be amended prior to the Closing;
or (ii) constitute a violation of any law, regulation, order, writ, judgement,
injunction or decree applicable to Buyer, other than violations, conflicts,
breaches, terminations, accelerations and defaults specified in the foregoing
clauses (ii) and (iii) which could not reasonably be expected to have a material
adverse effect on Buyer's ability to perform its obligations under this
Agreement. No consent, approval or authorization of any governmental authority
is required on the part of Buyer in connection with the execution, delivery and
performance of this Agreement, except for filings with the Federal Trade
Commission and the Department of Justice pursuant to the HSR Act.
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5.4 LITIGATION. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken or
to be taken by Buyer in connection with this Agreement. There is no litigation,
proceeding or governmental investigation pending or, to the best of Buyer's
knowledge, threatened, or any order, injunction or decree outstanding, against
the Buyer that, if adversely determined, would have a material adverse effect
upon Buyer's ability to perform its obligations under this Agreement.
5.5 FINANCING. Buyer has all funds, or has delivered copies of a letter
from financial institutions as to the provision of funds, as necessary to pay
the Purchase Price and related fees and expenses, and (assuming the availability
of any such funding from financial institutions) Buyer has the financial
capacity to perform all of its other obligations under this Agreement and the
closing documents to be executed hereunder. Buyer, immediately after the
Closing, will be solvent, will be able to meet its obligations and debts as they
become due, will have arrangements in place for funding of the Subsidiary so
that it will be able to meet its obligations and debts as they come due, the
value of Buyer's assets at such time will exceed Buyer's liabilities, and Buyer
at such time will have, and will cause the Subsidiary to have, adequate capital
for the conduct of its business, including the Business.
5.6 INVESTMENT. Buyer is purchasing the Shares for investment purposes
and not with a view to the resale or distribution of the Shares, and will not
sell the Shares in violation of applicable federal and state securities laws.
6. FURTHER AGREEMENTS OF THE PARTIES.
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6.1 ACCESS TO INFORMATION. Prior to the Closing, Buyer may make such
investigation of the business and properties of the Subsidiary as Buyer may
desire, and upon reasonable notice, Seller shall give to Buyer and its counsel,
accountants and other representatives reasonable access, during normal business
hours throughout the period prior to the Closing, to the property, books,
commitments, agreements, records, files and personnel of the Subsidiary, and
Seller shall furnish to Buyer during that period all copies of documents and
information concerning the Business as Buyer may reasonably request subject to
applicable law. Buyer shall hold, and shall cause its counsel, accountants and
other agents and representatives to hold, all such information and documents in
accordance with, and subject to the terms of, the confidentiality agreement
previously executed by Buyer with respect to this transaction.
6.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING. Until the Closing,
except as otherwise set forth in SCHEDULE 6.2 or contemplated by this Agreement,
Seller shall, and shall cause the Subsidiary to, comply with the provisions set
forth below:
(a) the Subsidiary shall operate the Business in the ordinary
course;
(b) Seller shall promptly notify Buyer of, and furnish to Buyer, any
information that Buyer may reasonably request with respect to the occurrence of
any event or the existence of any state of facts that would result in any of
Seller's representations and warranties not being true if they were made at any
time prior to or as of the date of the Closing, except that any representation
or warranty which relates to a specific date in Sections 4.11 and 4.22 shall not
require such notice;
(c) Except as provided for under the existing Employee Benefit Plans and
Benefit Arrangements, as defined below, the Subsidiary shall not (i) grant or
agree to grant any bonuses to any employee, (ii) grant any general increase in
the rates of salaries or compensation of
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its employees or any specific increase to any employee except such as are in
accordance with regularly scheduled periodic increases, or (iii) provide for any
new pension, retirement or other employment benefits to any of its employees or
any increase in any existing benefits;
(d) the Subsidiary shall not amend its certificate of incorporation
or by-laws or enter into any merger or consolidation agreement;
(e) the Subsidiary shall use commercially reasonable efforts to
maintain and preserve the Business intact, to retain its present employees so
that they will be available to Buyer after the Closing and to maintain its
relationships with customers, suppliers and others so that those relationships
will be preserved after the Closing;
(f) the Subsidiary shall not sell, assign, voluntarily encumber,
grant a security interest in or license with respect to, or dispose of, any of
its material assets or properties, tangible or intangible, or incur any material
liabilities, except for sales and dispositions made, or liabilities incurred, in
the ordinary course of business;
(g) the Subsidiary shall maintain in full force and effect all
insurance currently maintained by the Subsidiary with respect to the Business;
and
(h) neither Seller nor the Subsidiary will talk to, or entertain
offers from, other potential purchasers of the Subsidiary, and Seller will
notify Buyer if there are any contacts
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from third parties who express an interest in purchasing the Subsidiary and
identity any such third party.
6.3 Employee and Employee Benefit Matters.
-------------------------------------
(a) EMPLOYMENT OF EMPLOYEES AT CLOSING; INDEMNIFICATION OF SELLER FOR
TERMINATION LIABILITY. On the Closing Date, Buyer agrees that the Subsidiary
will continue to employ the Employees at the same compensation levels and on
substantially the same terms and conditions of employment in effect as of the
Determination Time. Additionally, Buyer agrees to continue the Employee Benefit
Plans and Benefit Arrangements on substantially the same terms following the
Closing Date, with the exception of the Subsidiary's Long Term Incentive Plan
("LTIP"). Seller will fund the Subsidiary to discharge all obligations under the
LTIP in the event the LTIP is terminated at Closing. Buyer hereby agrees to
indemnify Seller from any and all termination or severance liability (including,
without limitation, any liability related to or arising out of the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. 2101 et seq., the
continuation coverage rules of Section 4980B of the Internal Revenue Code and
part 6 of Subtitle B of Title I of ERISA ("COBRA"), and any similar state and
local laws) with respect to the Employees.
(b) TRANSFER OF ASSETS OF THE PENSION PLANS. After the Closing Date,
Seller shall cause the assets of the Pension Plans listed on SCHEDULE 6.3 to be
transferred to a trust or trusts or other funding medium established by Buyer
(the "New Pension Trusts"). Any such transfer shall occur as soon as reasonably
practicable following receipt of Seller of (i) notification from Buyer that the
applicable New Pension Trust has been established and (ii) an opinion from
counsel to Buyer that such New Pension Trust meets the requirements of Section
501(a) of the Code. The amount of assets transferred from any trust in which a
Pension Plan is invested prior to the Closing Date shall be equal to the entire
interest of the Pension Plan on the date of transfer. The amount to be
transferred
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pursuant to this Section 6.3 with respect to any defined benefit plan shall be
in the form of cash and the amount transferred with respect to any defined
contribution plan shall be in the form agreed to by Buyer and Seller, except
with respect to the assets held in the fixed income fund, Seller shall direct
the trustee to spin off cloned contracts from such guaranteed investment
contracts and similar investments as will produce a substantially equivalent
rate of return as under the fixed income fund, to the extent practicable. If no
cloned contract can be obtained within three (3) months of the Closing Date, the
Seller shall transfer the aggregate then fair market value of the Pension Plans'
investment in such contract to the applicable New Pension Trusts in cash or in
such other marketable instruments as the Seller and Buyer mutually agree. To the
extent the process of obtaining the cloned contract extends beyond the date the
balance of the assets of such Pension Plan are transferred, Seller shall not
charge any administration expenses to the Buyer under Section 6.3(c) below.
(c) INTERIM ADMINISTRATION OF PENSION PLANS. Prior to the transfer of
the assets of the Pension Plans to the New Pension Trust pursuant to Section
6.3(b), Seller shall continue the administration of the Pension Plans. For
purposes of the preceding sentence, "administration" shall include all actions
required on a routine basis for the proper maintenance of the Pension Plans,
including, but not limited to, the payment of all benefits or other
distributions to participants required by the provisions of the Pension Plans;
provided, however, that "administration" shall not include the making of any
employer or sponsor contributions which are or may be required to be made to
such plans. As consideration for Seller's obligation to continue the
administration of such plans, Buyer agrees for a sixty (60) day period following
the Closing Date to reimburse Seller, upon the delivery of proper invoices
identifying the applicable Pension Plan and services provided, for all
out-of-pocket expenses incurred by Seller in administration of the plans
including, but not limited to, the routine fees charged by the Pension Plans'
trustees, actuaries or third-party administrators. If the transfer to the
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New Pension Trusts has not occurred by the end of the sixty (60) day period
referred to in the preceding sentence, Buyer shall continue to reimburse Seller
for the applicable portion of all fees incurred by the Seller in the
administration of the plans and, if the transfer has not occurred because of the
failure of Buyer to satisfy the requirements of Sections 6.3(b) above, the Buyer
shall in addition pay the Seller $5,000 for each month, pro-rated by calendar
days, after the date of the expiration of the sixty (60) day period until the
transfer to the New Pension Trusts has occurred, but in no event shall such
administration continue by Seller beyond May 31, 1997, unless the transfer has
not occurred through the failure of Seller to satisfy its responsibilities under
Section 6.3(b) of this Agreement.
(d) Seller shall prepare the financial statements of the trusts required
for Form 5500 for the plan year ended December 31, 1996 and shall provide copies
of such statements to Buyer. All expenses relating to such preparation of
financial statements shall be borne by Seller.
(e) Seller and Buyer agree to provide each other with such records and
information as they may reasonably request in order to carry out their
respective obligations under this Section 6.3. During the period following the
Closing and prior to the transfer of assets of the Pension Plans to the New
Pension Trusts pursuant to Section 6.3(b), Seller shall promptly forward to
Buyer any correspondence or written communications received from the IRS, the
Department of Labor, or the PBGC with respect to any Pension Plan.
6.4 OTHER ACTION. Each of the parties shall use its best efforts to
cause the fulfillment at the earliest practicable date but, in any event, prior
to the Closing Date, of all of the conditions to their respective obligations to
consummate the transactions under this Agreement.
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6.5 NOTICES. Each party shall promptly notify the other party in writing
of, and furnish to such party any information that such party may reasonably
request with respect to, the occurrence of any event or the existence of any
state of facts that would (a) result in the party's representations and
warranties not being true if they were made at any time prior to or as of the
Closing Date, except that any representation or warranty which relates to a
specific date in Sections 4.11 and 4.22 shall not require such notice, or (b)
impair the party's ability to perform its obligations under this Agreement.
6.6 HSR ACT. As promptly as practicable after the execution of this
Agreement, each party shall, in cooperation with the other, but at its own
expense, file any reports or notifications and pay any fees that may be required
to be paid by it under applicable law including filings under the HSR Act with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the other all such information in its possession
as may be necessary for the completion of the reports or notifications to be
filed by the other. Each party will use its good-faith beet efforts to obtain
any early termination of the applicable waiting period, and shall promptly make
any further filings pursuant thereto that may be necessary, proper or advisable.
6.7 EXPENSES. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred in
connection with this Agreement and in connection with all obligations required
to be performed by each of them under this Agreement.
6.8 PUBLICITY. Buyer and Seller shall consult with each other before
issuing any press release concerning the transactions contemplated by this
Agreement and, except as may be required by applicable law or any listing
agreement with or regulation or rule of any stock exchange on which the
securities of the Subsidiary's parent or Buyer (or its parent) are listed or
traded, will not
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issue a press release prior to such consultation. If Buyer or Seller is so
required to issue a press release it shall use its best efforts to inform the
other party hereto prior to issuing it.
6.9 TRANSFER TAXES. Any sales taxes, real property transfer or gains
taxes, recording fees or any other taxes payable as a result of the sale of the
Shares or any other action contemplated by this Agreement shall be paid by the
Buyer. Seller agrees to pay all costs associated with the transfer of the
Johnstown property to Subsidiary.
6.10 SUPPLEMENT TO DISCLOSURES. For purposes of determining the accuracy
of the representations and warranties of Seller contained in Article 4 and the
fulfillment of the conditions precedent set forth in Section 7.1(a), the
Schedules delivered by Seller shall be deemed to include only that information
contained therein on the date of this Agreement and as the same may be amended
or supplemented by Seller with Buyer's consent (which shall not be unreasonably
withheld) prior to the Closing Date.
6.11 PRESERVATION OF RECORDS. Buyer and Seller agree, at their own
expense that each (a) shall preserve and keep the records of the Subsidiary for
a period of seven years from the Closing, or for any longer periods as may be
required by any government agency or ongoing litigation, and (b) shall make such
records available to the other as may be reasonably required by the other. In
the event either party wishes to destroy such records after the time specified
above, it shall first give sixty (60) days' prior written notice to the other
and Seller shall have the right at its option and expense, upon prior written
notice given to the other within that sixty (60) day period, to take possession
of the records within thirty (30) days after the date of one party's notice to
the other.
6.12 Certain Post-Closing Assistance by the Buyer.
--------------------------------------------
(a) Buyer agrees to cause the appropriate personnel, at no
out-of-pocket cost or expense to Buyer, to prepare all customary accounting,
tax, employment, benefits-related and
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similar reports for the Subsidiary for periods up to the Closing Date which are
reasonably requested by Seller.
(b) Buyer agrees to cause the appropriate personnel to assist Seller in
the prosecution or defense of any claims and litigation (including counterclaims
and tax refund claims filed by the Seller) for which Seller has indemnified
Buyer hereunder or which Buyer has not assumed, provided that such assistance
does not unreasonably disrupt the ordinary business operations of the Business.
Such services shall be rendered by the Buyer to the Seller at no out-of-pocket
cost or expense to Buyer. Buyer agrees promptly to pay to Seller upon receipt of
any amount collected by Buyer in connection with any action, suit or proceeding
for which Seller has agreed to indemnify Buyer under Section 9.1(a).
6.13 Treasury Matters.
----------------
(a) Seller shall continue to cause the funding of the
Subsidiary's checks, in accordance with past practices, which are presented for
payment through the day prior to the Closing Date. Seller shall have no
obligation to fund checks which are presented for payment on and after the
Closing Date, provided that there is an accrual on the Final Balance Sheet
therefor. Buyer shall assume all of the bank accounts of the Business on the
Closing Date and be prepared to fund the above-mentioned checks which are
presented for payment on and after the Closing Date. Amounts received in the
lockbox and depository accounts of the Business through the Determination Time
shall be retained by Seller notwithstanding that, consistent with past
practices, such collections may not be credited to Seller or its affiliates
until or after the Closing Date.
(b) the Subsidiary is party to or financially supported by
certain letters of credit, bonding arrangements and/or guarantees, related to
the Business, in respect of which the Subsidiary's affiliates are subject to
continuing obligations (the "Credit Support Documents"). The
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parties shall use their commercially reasonable efforts to terminate the Credit
Support Documents as soon as practicable after the Closing. Buyer shall cause
the obligations which are secured by the Credit Support Documents and which
relate to Buyer's operation of the Business after the Closing to be discharged
in such a manner that the Subsidiary and its affiliates will not be required to
make any payments under the Credit Support Documents in relation thereto. Should
any such payments be required and paid' Buyer shall reimburse the party making
payment upon demand. It is understood that the Subsidiary shall not have any
right to incur any new obligations secured or supported by the Credit Support
Documents after the Closing and Buyer shall cause the Subsidiary not to incur
any such obligations. Notwithstanding the foregoing, the guaranty by Parent of
the line of credit between NationsBank, N.A. and the Subsidiary will be
terminated prior to the Closing.
6.14. SCM NAME. Buyer acknowledges that Subsidiary's use of the name
"SCM" is limited. Notwithstanding any provisions of this Agreement to the
contrary, Seller's only obligation with respect to the name SCM is to provide
Subsidiary with the use of such name for one year after the Closing Date.
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7. Conditions of Closing.
---------------------
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation of
Buyer to consummate the purchase under this Agreement is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by Buyer):
(a) all representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects, at and as of the
time of the Closing with the same effect as though made again at, and as of,
that time (except that any representation or warranty that relates to a specific
date in Sections 4.11,4.12,4.15(c), 4.21 and 4.22 shall be true and correct on
and as of that date);
(b) Seller shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by Seller prior to or at the Closing;
(c) Buyer shall have been furnished with the documents referred to
in Section 8.1;
(d) the waiting period under the HSR Act, if applicable, shall have
expired or been terminated;
(e) no provision of any applicable law or regulation shall prohibit
Seller, and there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in any action or proceeding against
Seller regarding the consummation of the sale and purchase of the Shares
pursuant to this Agreement;
(f) between the date hereof and the Closing, there shall have been no
material damage or destruction to the assets of the Business by fire, flood,
windstorm or other Act of God;
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(g) there shall have been no material adverse change in the business
or properties of the Business; and
(h) before Closing, Buyer shall receive at Seller's expense a survey of
the Owned Property prepared after the date hereof by a registered land surveyor,
which survey will not show any encroachment of improvements on or from the
property or other matters that would materially and adversely affect the use of
such property.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation of
Seller to consummate the sale under this Agreement is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by Seller):
(a) all representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of the
time of the Closing with the same effect as though made again at, and as of;
that time;
(b) Buyer shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by Buyer prior to or at the Closing;
(c) Seller shall have been furnished with the documents referred to
in Section 8.2;
(d) the waiting period under the HSR Act, if applicable, shall have
expired or been terminated; and
(e) no provision of any applicable law or regulation shall prohibit
Buyer, and there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in any action or proceeding against
Buyer regarding the consummation of the sale and purchase of the Shares pursuant
to this Agreement.
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8. Documents to be Delivered at the Closing.
-----------------------------------------
8.1 DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller
shall deliver, or cause to be delivered, to Buyer the following:
(a) one or more executed stock powers or other instruments of
transfer, dated the Closing Date, transferring to Buyer all of the Seller's
right, title and interest in and to the Shares;
(b) a copy of resolutions of the hoard of directors of Seller
authorizing the execution, delivery and performance of this Agreement by Seller
and a certificate of the secretary or assistant secretary of Seller, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect;
(c) a certificate, dated the Closing Date, executed by an officer of
Seller certifying to the fulfillment of the conditions specified in Sections
7.1(a);
(d) a favorable opinion of the General Counsel to Seller, subject to
customary qualifications and limitations, as to the due execution and delivery
of this Agreement and the documents delivered by Seller at the Closing and as to
the matters set forth in Sections 4.1, 4.2. and 4.4, and, to the best of such
counsel's knowledge, Sections 4.3, 4.5 and 4.14;
(e) a Noncompete Agreement substantially in the form of EXHIBIT A
hereto; and
(f) a Tax Sharing and Indemnification Agreement substantially in the
form of EXHIBIT B hereto.
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8.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(a) payment and evidence of the wire transfer referred to in
Section 2.3(a);
(b) a copy of the resolutions of the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement by Buyer,
and a certificate of its secretary or assistant secretary, dated the Closing
Date, that such resolutions were duly adopted and are in full force and effect;
(c) a certificate, dated the Closing Date executed by an officer of
Buyer certifying to the fulfillment of the conditions specified in Section
7.2(a) and 7.2(b);
(d) a favorable opinion of General Counsel to Buyer as to subject to
customary qualifications and limitations, as to the due execution and delivery
of this Agreement and the documents delivered by Buyer at the Closing and as to
the matters set forth in Sections 5.1, 5.2 and, to the best of such counsel's
knowledge, Sections 5.3 and 5.4; and
(e) a Tax Sharing and Indemnification Agreement substantially in
the form of EXHIBIT B hereto.
9. Indemnification and Related Matters.
-----------------------------------
9.1 Indemnification.
---------------
(a) Subject to the provisions of this Article 9, Seller agrees to
indemnify and hold Buyer and its affiliates, predecessors, successors and
assigns (and their respective officers, directors, employees and agents)
harmless from and against all actions, suits, proceedings, claims, demands,
assessments, judgments, damages, costs and expenses, in excess of any reserves
or accruals on the Final Balance Sheet which have been specifically identified
in the books and records of the Subsidiary used for preparation of the
Preliminary Balance Sheet or which relate to events subsequent
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to September 28, 1996 for which specific reserves will be provided on the Final
Balance Sheet, including reasonable attorneys' fees arising or resulting from
the following:
(i) a breach of any representation or warranty on the part of
Seller under the terms of this Agreement or any other document other than the
Tax Sharing and Indemnification Agreement executed by Seller pursuant hereto;
(ii) non-fulfilment of any agreement on the part of Seller under
the terms of this Agreement or any other document executed by Seller pursuant
hereto; and
(iii) Environmental Damages, to the extent and in the manner set
forth in Section 9.5.
(b) Subject to the provisions of this Article 9, Buyer agrees to
indemnify and hold Seller and its affiliates, predecessors, successors and
assigns (and their respective officers, directors, employees and agents)
harmless from and against all actions, suits, proceedings, claims, demands,
assessments, judgments, damages, costs and expenses, including reasonable
attorneys' fees arising or resulting from the following:
(i) a breach of any representation or warranty on the part of
Buyer under the terms of this Agreement or any other document executed by Buyer
pursuant hereto;
(ii) non-fulfillment of any agreement on the part of Buyer under
the terms of this Agreement or any other document executed by Buyer pursuant
hereto;
(iii) Environmental Damages, to the extent and in the manner set
forth in Section 9.5;
(iv) any and all actions, suits and proceedings pending or
commenced, or any other claims or demands pending or asserted against Seller or
any affiliate of Seller before or after the Determination Time with respect to
the Business (excluding Environmental
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Damages) except for those actions, suits and proceedings which are the
responsibility of Seller under Section 9.1(a);
(v) any deductibles payable by Seller or Parent on or after the
Closing with respect to claims of the Subsidiary covered by insurance policies
listed in SCHEDULE 4.20; and
(vi) any and all claims or liabilities in relation to the Employee
Benefit Plans and Benefit Arrangements.
9.2 Determination of Damages and Related Matters.
(a) In calculating any amounts payable to Buyer pursuant to Sections
9.1(a) or 9.5 or payable to Seller pursuant to Sections 9.1(b) or 9.5, (i)
Seller or Buyer, as the case may be, shall receive credit for (y) any reduction
in actual tax liability as a result of the facts giving rise to the claim for
indemnification, and (z) any insurance recoveries, and (ii) no amount shall be
included for Buyer's or Seller's, as the case may be, special or consequential
damages.
(b) Seller or Buyer, as the case maybe, shall have no liability
under Sections 9.1 (a)(i) and 9.1 (b)(i) for breaches of representations and
warranties under Articles 4 and 5 of this Agreement, respectively, unless the
aggregate amount of the damages and losses to Seller or Buyer from all claims
finally determined to arise under Article 4 and 5, respectively, exceed an
amount equal to $750,000 and, in such event, Seller and Buyer shall be required
to pay only the amount by which such aggregate amount of claims exceeds said
amount in the aggregate; provided, further, that in no event shall the amount of
Seller's aggregate liability under this Section 9 exceed the Purchase Price.
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(c) The indemnification provided for in this Article 9 shall, from and
after the Closing, be the sole remedy for any of the matters referred to herein
and the indemnification under Section 9.5 shall be the sole remedy for any
Environmental Claims and for any breach of representation or warranty regarding
environmental matters.
9.3 TIME AND MANNER OF CERTAIN CLAIMS. Except as otherwise expressly
provided herein, Seller and Buyer shall be liable for damages for breach of
warranty set forth in Articles 4 or 5 of this Agreement respectively and
asserted under Section 9.1 (a)(i) or Section 9.1 (b)(i) respectively only to the
extent that notice of a claim therefor complying with the requirements of this
Section is asserted by the other in writing and delivered prior to the
expiration of a period ending eighteen (18) months from the Closing Date;
provided, how ever, that no claim may be made by Buyer against Seller with
respect to Sections 4.6(b), 4.8 and 4.9 after the resolution of the issues
related to the payment to be made pursuant to Section 2.3(c) or the receipt of
such payment. Any notice of a claim shall state specifically the facts giving
rise to the alleged basis for the claim and estimate the amount of liability
asserted against the other party by reason of the claim.
9.4 DEFENSE OF CLAIMS BY THIRD PARTIES. If any claim is made against
Buyer or Seller, as the case may be, that, if sustained, would give rise to a
liability of the other under this Agreement, Buyer or Seller, as the case may
be, shall promptly cause notice of the claim to be delivered to the other and
shall afford the other and its counsel, at the other's sole expense, the
opportunity to defend or settle the claim. If such notice and opportunity are
not given to the other, or if any claim is compromised or settled without its
consent, no liability shall be imposed upon the other by reason of such claim,
unless the party failing to provide such notice and opportunity can establish
that such failure did not prejudice the other party.
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9.5 Environmental Matters.
---------------------
(a) Seller will indemnify and hold harmless Buyer and its Affiliates,
as defined below, and the Subsidiary and will reimburse Buyer and its
Affiliates, as defined below, and the Subsidiary for any liability, damages,
costs and expenses including costs of investigation, analysis, cleanup,
containment or other environmental remediation (collectively, "Environmental
Damages") with respect to:
(i) fines and penalties incurred for violations of Environmental
Law arising out of operations of the Subsidiary on or prior to the Closing and
there shall be no time limit on claims by Buyer against Seller for such
liabilities;
(ii) fines, penalties or corrective action arising out of a
violation of the storage time limitations for Hazardous Materials under the
Resource Conservation and Recovery Act arising out of operations of the
Subsidiary on or prior to the Closing and there shall be no time limit on claims
by Buyer against Seller for such liabilities; and
(iii) the off-site disposal of Hazardous Materials by the
Subsidiary prior to the Closing with respect to any off-site locations not
listed on SCHEDULE 9.5(b) which liability shall terminate six (6) years after
the Closing Date.
(b) Buyer shall indemnify and hold harmless Seller and its Affiliates,
as defined below, for any Environmental Damages with respect to the off-site
disposal of Hazardous Materials by the Subsidiary prior to Closing with respect
to the off-site locations identified in SCHEDULE 9.5(b) (the "Listed Off-Site
Environmental Liabilities") provided, however, that Buyer, at or prior to
Closing, may elect in writing to require Seller to indemnify and hold harmless
Buyer and its Affiliates from any Environmental Damages with respect to the
Listed Off-Site Environmental Liabilities and the litigation set forth on
SCHEDULE 9.5(b).
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(c) (i) This Section 9.5(c) governs the allocation between Seller and
Buyer of Environmental Damages, other than as set forth in Section 9.5(a) and
(b) above, arising from or in connection with any environmental condition
existing as of the Closing (including any future spreading of contamination
existing at such time) on any real property owned or leased by the Subsidiary
with respect to any actions taken by the Buyer or the Subsidiary (y) in response
to a claim, demand, investigation or inquiry made against Buyer or the
Subsidiary by any governmental agency or any third party, or (z) to correct or
remediate any environmental condition, as required by applicable law or
regulations or a governmental agency, to achieve compliance with any
Environmental Law.
(ii) With respect to Environmental Damages arising out of the
matters set forth in Section 9.5(c)(i) pursuant to which a claim is made by
Buyer against Seller (A) before the first anniversary of the Determination Time,
Seller shall indemnify and hold Buyer harmless to the extent of ninety-five
percent (95%) of such Environmental Damages, and Buyer shall indemnify and hold
Seller harmless to the extent of five percent (5%) of such Environmental
Damages; or (B) after the first anniversary of the Determination Time but before
the third anniversary of the Determination Time, Seller shall indemnify and hold
Buyer harmless to the extent of ninety percent (90%) of such Environmental
Damages, and Buyer shall indemnity and hold Seller harmless to the extent often
percent (10%) of such Environmental Damages; or (C) after the third
anniversary of the Determination Time but before the fifth anniversary of the
Determination Time, Seller shall indemnify and hold Buyer harmless to the extent
of seventy-five percent (75%) of such Environmental Damages, and Buyer shall
indemnify and hold Seller harmless to the extent of twenty-five percent (25%) of
such Environmental Damages; or (D) after the fifth anniversary of the
Determination Time, or in the event
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the Environmental Damages are attributable solelY to a period after the
Determination Time, Buyer shall indemnify and hold Seller harmless to the extent
of 100% of such Environmental Damages.
(d) It is further agreed as follows:
(i) The parties agree to act in good faith in undertaking work to
remediate environmental matters that may give rise to a claim for
indemnification hereunder with a view to avoiding unnecessary or excessive
costs.
(ii) Environmental Damages shall be limited to damages directly
relating to rectifying the environmental matter to the minimum extent required
by applicable law. Each party agrees that, except as required by law or
regulations, it shall not by voluntary or discretionary action, accelerate the
timing, or increase the cost, of any obligations of the other party under this
Section 9.5.
(iii) The party having liability for at least 51% of any
Environmental Damages shall have the right to control and manage all discussions
with third parties and all proceedings and activities regarding the satisfaction
and discharge of the matter, provided that Buyer shall have the right to
participate in any discussions affecting the business of the Subsidiary or the
Owned Property, and in planning or performing any work at the Owned Property,
and the parties shall make commercially reasonable efforts to avoid interfering
with operations of the Business.
(iv) In the event that action is required by Seller under this
Section 9.5 to investigate, clean up or otherwise remedy a situation on the
Owned Property, it is agreed that Buyer, at no cost, shall give Seller and its
authorized representatives and agents access to and reasonable use of the
property, all natural materials (including, without limitation, water, dirt,
clay, rocks and dirt related materials) on the property and all equipment,
facilities and utilities on the property, all subject to Section 9.5(d)(iii).
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(v) For so long as Seller's indemnification contained in this
Section 9.5 shall be in effect, Buyer shall provide to Seller a copy of all
information or reports that are provided by Buyer to the National Response
Center or other federal, state or local agency which may affect Seller's
liability to Buyer under any claim made by Buyer under this Section 9.5. As soon
as practicable following request by Seller, Buyer shall provide to Seller copies
of all photographs in Buyer's possession with respect to each such matter.
(vi) If Environmental Damages are attributed to transactions or
occurrences that take place before and after the Closing and to which both
Seller and Buyer (or their affiliates) have contributed, liability shall be
further apportioned between Seller and Buyer on a reasonable basis, taking into
account, in addition to other relevant factors, the degree of contribution on
the part of Seller and Buyer before and after the Closing Date. Any disputes
regarding such apportionment will be discussed by the parties in good faith and,
if unresolved, will be referred to non-binding arbitration by a mutually
agreed-upon independent environmental professional to be conducted in accordance
with the rules then existing of the American Arbitration Association. The fees
and expenses of such arbitration shall be shared equally by Buyer and Seller.
10. Miscellaneous.
-------------
10.1 FINDERS. Except for the engagement of Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation ("DLJ") by Buyer, Buyer and Seller respectively represent
and warrant that they have not employed or utilized the services of any broker
or finder in connection with this Agreement or the transactions contemplated by
it. Seller shall indemnify and hold Buyer harmless from and against any and all
claims for brokers' commissions made by any party as a result of this Agreement
and the transactions contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or under
Seller. Buyer shall indemnify and
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hold Seller harmless from and against any and all claims for brokers'
commissions made by DLJ and/or any other party as a result of this Agreement and
transactions contemplated hereunder to the extent that any such commission was
incurred, or alleged to have been incurred, by, through or under Buyer.
10.2 ENTIRE AGREEMENT This Agreement (with its Schedules and Exhibits)
together with the existing confidentiality agreement between the parties
contains, and is intended as, a complete statement of all of the terms of the
arrangements between the parties with respect to the matters provided for,
supersedes any previous agreements and understandings between the parties with
respect to those matters (except as otherwise provided in Section 6.1), and
cannot be changed or terminated orally.
10.3 JURISDICTION AND GOVERNING LAW. Seller and Buyer each hereby
consent to personal jurisdiction in any action brought with respect to this
Agreement and the transactions contemplated hereunder in any federal or state
court within the State of New Jersey or the State of Ohio and agree that service
of process may be accomplished pursuant to the provisions of Section 10.6 below.
This Agreement shall be governed by and construed in accordance with the law of
the State of New Jersey without giving effect to conflicts of law principles
thereof.
10.4 SCHEDULES; TABLES OF CONTENTS AND HEADINGS. Any matter disclosed on
any Schedule to this Agreement shall be deemed to have been disclosed on all
other Schedules to this Agreement to the extent that it should have been
disclosed on such other Schedule. The table of contents and section headings of
this Agreement and titles given to Schedules to this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
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10.5 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally
(including by confirmed legible telecopier transmission) or mailed by certified
mail, return receipt requested, to the parties at the following addresses (or to
such address as a party may have specified by notice given to the other party
pursuant to this provision):
If to Seller, to:
SUSI Corporation
c/o U.S. Industries, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx P.L.L.
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxx Xxxxxxxx
Telecopy No.: (000)000-0000
If to Buyer, to:
OM Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention; General Counsel
Telecopy No.: (000) 000-0000
with a copy to;
Squire, Xxxxxxx & Xxxxxxx
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000)000-0000
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10.6 SEPARABILITY. In the event that any provision hereof would, under
applicable law, be invalid or enforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and permissible under, applicable law. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.
10.7 WAIVER. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement. No assignment of this Agreement or of any rights or obligation
hereunder may be made by either party (by operation of law or otherwise) without
the prior written consent of the other and any attempted assignment without the
required consent shall be void; provided, however, that no such consent shall be
required of Buyer or Seller to assign part or all of its rights under this
Agreement to one or more of its subsidiaries or affiliates, but no such
assignment by Buyer or Seller of its rights or obligations hereunder shall
relieve Buyer or Seller of any of its obligations under this Agreement to the
other.
10.9 BEST KNOWLEDGE. As used in this Agreement "to the best of Seller's
knowledge" or words of similar import shall mean actual knowledge possessed by
(i) an executive officer of Seller, (ii) an executive officer of the Subsidiary,
and (iii) those individuals set forth on
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SCHEDULE 10.9, and "to the best of Buyer's knowledge" or words of similar import
shall mean actual knowledge possessed by an executive officer of Buyer.
10.10 COUNTERPARTS. This Agreement maybe executed in counterparts, each
of which shall be an original, but which together shall constitute one and the
same Agreement.
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IN WITNESS WHEREOF, this Stock Purchase Agreement has been duly
executed by the parties as of the date first set forth above.
SUSI CORPORATION
By: /s/ Xxxxxx X. XxxXxxx
------------------------------
Xxxxxx X. XxxXxxx
OM GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
GUARANTY
--------
U.S. Industries, Inc., a Delaware corporation, hereby agrees to
unconditionally guaranty the obligations of Seller set forth in this Agreement
ACCEPTED AND AGREED:
-------------------
U.S. INDUSTRIES, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------
Xxxxxxxxx X. Xxxxxxx
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