ASSET PURCHASE AGREEMENT
between
DRY BRANCH KAOLIN COMPANY
"Purchaser"
and
NORD KAOLIN COMPANY
"Seller"
DATED AS OF MARCH 5, 1997
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TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF ASSETS................................... 1
1.1 Purchase and Sale of Assets ................................. 1
1.2 Excluded Assets ............................................. 4
ARTICLE 2 ASSUMPTION OF LIABILITIES..................................... 5
2.1 Assumption ................................................... 5
2.2 Excluded Liabilities ......................................... 5
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE..................... 7
3.1 Purchase Price ............................................... 7
3.2 Transfer Expenses ........................................... 9
3.3 Allocation of Purchase Price ................................. 9
ARTICLE 4 PROCEDURE FOR CLOSING......................................... 9
4.1 Time and Place of Closing..................................... 9
4.2 Transactions at the Closing................................... 9
4.3 Conveyance of Title to Real Property and Assignment of
Real Property Leases ......................................... 12
4.4 Survey and Inspection of Property............................. 13
4.5 Environmental Liabilities..................................... 14
4.6 Certain Consents ............................................. 14
4.7 Eminent Domain ............................................... 15
4.8 Further Assurances............................................ 15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER ..................... 15
5.1 Organization and Qualification ............................... 15
5.2 Authority..................................................... 16
5.3 Subsidiaries; Joint Ventures ................................. 17
5.4 Balance Sheets ............................................... 17
5.5 Inventory..................................................... 17
5.6 Personal Property............................................. 18
5.7 Real Property; Leased Real Property........................... 18
5.8 Contracts..................................................... 21
5.9 Intellectual Property......................................... 23
5.10 Insurance..................................................... 24
5.11 Environmental Matters and Employee Safety and Health ......... 24
5.12 Litigation ................................................... 26
5.13 Absence of Changes ........................................... 26
5.14 Brokers and Finders........................................... 28
5.15 Labor Matters................................................. 28
5.16 Governmental Approval and Consents ........................... 29
5.17 Taxes......................................................... 29
5.18 Employee Benefit Plans ....................................... 30
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Page
5.19 Compliance with Laws ......................................... 32
5.20 Transaction Approval and Consents............................. 33
5.21 Adequacy of Acquired Assets................................... 33
5.22 Compliance with the Immigration Reform and Control Act........ 33
5.23 Mineral Reserves ............................................. 33
5.24 Correctness of Representations ............................... 34
5.25 Definition of "knowledge"..................................... 34
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 34
6.1 Organization and Qualification ............................... 34
6.2 Authority..................................................... 34
6.3 Litigation ................................................... 35
6.4 Correctness of Representations ............................... 35
6.5 Brokers and Finders........................................... 35
6.6 Governmental Approval and Consents ........................... 35
6.7 Financing..................................................... 35
ARTICLE 7 COVENANTS OF SELLER........................................... 36
7.1 Conduct of Business Prior to Closing ......................... 36
7.2 Access and Information ....................................... 36
7.3 Notification of Changes....................................... 37
7.4 Certain Acts Prohibited....................................... 37
7.5 Other Transactions ........................................... 37
7.6 Consents ..................................................... 37
7.7 Supplemental Disclosure....................................... 38
7.8 Additional Reports ........................................... 38
7.9 Conditions Precedent ......................................... 38
7.10 Environmental Permits......................................... 38
7.11 Capital Expenditures ......................................... 38
7.12 Discharge of Liens and Encumbrances........................... 39
7.13 Environmental Fines........................................... 39
7.14 Renegotiation of Equipment Leases............................. 39
7.15 Transferred Benefit Plans/Plan Information ................... 39
7.16 Payoff of Debts............................................... 40
7.17 Funding of Plans ............................................. 40
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER ............. 41
8.1 Certificate Regarding Schedules and Representations and
Warranties ................................................... 41
8.2 Compliance by Seller ......................................... 41
8.3 No Injunction................................................. 41
8.4 Operation in the Ordinary Course ............................. 42
8.5 Consents; Authorizations; Approval of Legal Matters........... 42
8.6 Transfer of Environmental Permits............................. 42
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Page
8.7 Incumbency ................................................... 42
8.8 Certified Resolutions......................................... 42
8.9 Basic Corporate Documents..................................... 43
8.10 Satisfaction of Title Objections and Release of Certain
Liens......................................................... 43
8.11 Accuracy of Schedules......................................... 43
8.12 No Adverse Change............................................. 43
8.13 Instruments of Transfer....................................... 43
8.14 Acquisition Documents......................................... 43
8.15 Opinion of Seller's Counsel................................... 43
8.16 Proceedings................................................... 43
8.17 Names......................................................... 44
8.18 Condition of Acquired Assets ................................. 44
8.19 Antitrust..................................................... 44
8.20 Guaranty...................................................... 44
8.21 Royalty Agreement ............................................ 44
8.22 Noncompetition Agreement...................................... 44
8.23 Norplex Name.................................................. 45
8.24 License Agreement ............................................ 45
8.25 Sales/Resale Exemption Certificates .......................... 45
8.26 Releases...................................................... 45
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER................. 45
9.1 Certificate Regarding Representations and Warranties.......... 45
9.2 Compliance by Purchaser ...................................... 45
9.3 Certified Resolutions ........................................ 46
9.4 Basic Corporate Documents .................................... 46
9.5 No Injunction; Etc............................................ 46
9.6 Incumbency.................................................... 46
9.7 Certificates.................................................. 46
9.8 Acquisition Documents ........................................ 46
9.9 Opinion of Purchaser's Counsel................................ 46
9.10 Xxxx-Xxxxx-Xxxxxx ............................................ 46
9.11 Proceedings .................................................. 47
9.12 Release from Guarantees ...................................... 47
9.13 Royalty Agreement ............................................ 47
ARTICLE 10 MUTUAL COVENANTS ............................................. 47
10.1 Governmental Filings.......................................... 47
10.2 Further Mutual Covenants...................................... 47
10.3 Prorations.................................................... 47
ARTICLE 11 POST CLOSING MATTERS ......................................... 49
11.1 Employment of Employees ...................................... 49
11.2 Seller Benefit Plans.......................................... 50
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Page
11.3 Use of Name .................................................. 51
11.4 Employee Files................................................ 51
11.5 Non-Solicitation.............................................. 51
11.6 Maintenance of Books and Records.............................. 51
11.7 Payments Received ............................................ 52
11.8 UCC Matters .................................................. 52
11.9 Cooperation .................................................. 52
11.10 Titanium Dioxide Supply Agreement ............................ 52
ARTICLE 12 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS......................... 52
12.1 Confidentiality .............................................. 52
12.2 Public Announcements.......................................... 53
ARTICLE 13 TERMINATION................................................... 54
13.1 Termination .................................................. 54
13.2 Effect of Termination ........................................ 54
ARTICLE 14 INDEMNIFICATION............................................... 54
14.1 Agreement of Seller to Indemnify.............................. 54
14.2 Agreement of Purchaser to Indemnify Seller.................... 55
14.3 Procedures for Indemnification................................ 56
14.4 Defense of Third Party Claims ................................ 56
14.5 Settlement of Third Party Claims.............................. 57
14.6 Duration; Limitations ........................................ 58
ARTICLE 15 GENERAL PROVISIONS ........................................... 58
15.1 Fees and Expenses ............................................ 58
15.2 Notices ...................................................... 58
15.3 Assignment; Binding Effect.................................... 60
15.4 No Benefit to Others.......................................... 60
15.5 Headings, Gender, and Person.................................. 60
15.6 Counterparts.................................................. 60
15.7 Integration of Agreement...................................... 60
15.8 Time of Essence .............................................. 60
15.9 Governing Law ................................................ 60
15.10 Partial Invalidity............................................ 61
15.11 Investigation ................................................ 61
15.12 Arbitration .................................................. 61
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TABLE OF EXHIBITS
Exhibit A Seller Opinion
Exhibit B Purchaser Opinion
Exhibit C Guaranty
Exhibit D Royalty Agreement
Exhibit E Noncompetition Agreement
Exhibit F Titanium Dioxide Supply Agreement
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SCHEDULES
Schedule 1.1(a) Noncurrent Assets
Schedule 1.1(b) Timber Harvesting Contracts
Schedule 1.2(k) Capital Credits
Schedule 1.2 Additional Excluded Assets
Schedule 3.3 Allocation of Purchase Price
Schedule 4.3(b) Key Properties
Schedule 4.3(b)(ii) Valuation of Nord Properties
Schedule 4.5 Environmental Liabilities
Schedule 5.1.1 Jurisdictions Where Qualified
Schedule 5.1.2 Locations of the Acquired Assets and Trade Names
Schedule 5.4 Balance Sheets
Schedule 5.5 Inventories
Schedule 5.6.1 Owned Personal Property
Schedule 5.6.2 Encumbrances on Owned Personal Property
Schedule 5.6.3 Leased Personal Property
Schedule 5.6.4 Leased Personal Property Defaults
Schedule 5.7.1 Real Property
Schedule 5.7.2 Leased Real Property
Schedule 5.7.3 Tenants
Schedule 5.8.1 Contracts
Schedule 5.8.2 Excluded Contracts
Schedule 5.8.3 Commitments for Capital Expenditures
Schedule 5.8.4 Customer List
Schedule 5.9 Intellectual Property
Schedule 5.11.1 Environmental Matters
Schedule 5.11.2 Environmental Permits and Licenses
Schedule 5.11.3 Storage Tanks
Schedule 5.11.4 Employee Health and Safety Matters
Schedule 5.12 Litigation Matters
Schedule 5.15 Employees
Schedule 5.16 Governmental Approvals and Consents
Schedule 5.17.1 Tax Bills
Schedule 5.17.2 Federal and State Tax Disputes
Schedule 5.18 Company Benefit Plans
Schedule 5.23 Mineral Reserves
Schedule 7.14 Equipment Leases Subject to Renegotiation
Schedule 11.1 Salaried Employees
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
Acceptance Notice Section 3.1(b)
Accounts Receivable Section 1.1(i)
Acquired Assets Section 1.1(b)
Acquisition Documents Section 5.2
Acquisition Proposal Section 7.5
Aggregate Value Section 3.1(b)(i)
Agreement Preamble
Assumed Liabilities Section 2.1
Balance Sheets Section 5.4
Beneficiary Section 10.3(d)
Bonds Section 2.2(k)
Books and Records Section 1.1(b)(vii)
Business Recital A
Closing Section 4.1
Closing Date Section 4.1
Closing Statement Section 3.1(b)
Code Section 2.2(j)
Contract(s) Section 1.1(b)(iii)
CPA Firm Section 3.1(b)
Deductible Amount Section 14.6
Due Diligence Book Section 4.5(a)
Effective Time Section 4.1
Electric Service Agreement Section 1.2(j)
Employees Section 5.18(a)
Environmental Consultants Section 4.5(a)
Environmental Liabilities Section 4.5(a)
Environmental Permits Section 5.11(a)(v)
Environmental Site Assessment Section 4.5(a)
Equipment Section 1.1(b)(ii)
Equipment Charges Section 10.3(b)(iii)
ERISA Section 5.18(a)(i)
Escrow Amount Section 3.1(a)
Estimated Purchase Price Section 3.1(a)
Excluded Assets Section 1.2
Excluded Contracts Section 5.8(a)(vi)
Excluded Liabilities Section 2.2
Furniture and Fixtures Section 1.1(b)(ix)
GAAP Section 3.1(b)
General Partner Section 5.1
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Hired Employee(s) Section 11.1(a)
Immigration Laws Section 5.22
Indemnification Claim Section 14.3(a)
Indemnitee Section 14.3
Indemnitor Section 14.3
Information Section 12.1
Intellectual Property Section 1.1(b)(vi)
Inventory Section 1.1(b)(iv)
IRS Section 5.18(b)(i)
Kemira Section 2.2(k)
Knowledge Section 5.25
Labor Claims Section 5.15
Latest Balance Sheet Section 3.1(b)
Leased Real Property Section 1.1(b)(i)
License Agreement Section 5.9
Losses Article 14
Material Changes Section 3.1(b)(ii)
Negotiation Period Section 14.3(c)
Not Actively Employed Section 11.1(a)
Notice Period Section 14.4(a)
Payor Section 10.3(d)
Payee Section 10.3(d)
Permits Section 1.1(b)(viii)
Permitted Encumbrances Section 1.1
Person Section 15.5
Personal Property Taxes Section 10.3(b)(v)
Proration Items Section 10.3(a)
Purchase Price Section 3.1(a)
Purchaser Preamble
Purchaser Indemnitees Section 14.1
Purchaser Opinion Section 4.2(b)(v)
Real Property Section 1.1(b)(i)
Real Property Leases Section 5.7(b)
Real Property Taxes Section 10.3(b)(iv)
Recipient Section 10.3(d)
Rental Charges Section 10.3(b)(ii)
Resources Section 2.2(k)
Review Period Section 3.1(b)
Royalty Payments Section 10.3(b)(vi)
Seller Preamble
Seller Benefit Plans Section 5.18(a)
Seller Indemnitees Section 14.2
Seller Opinion Section 4.2(a)(iv)
Seller USTs Section 14.1(e)
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Settlement Period Section 3.1(b)
Taxes Section 2.2(j)
Third Party Claim Section 14.4
Transferred Benefit Plans Section 5.18(b)
Utility Charges Section 10.3(b)(i)
Valuation Report Section 3.1(b)
Vehicles Section 1.1(b)(v)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of this 5th day of March, 1997, between DRY BRANCH KAOLIN COMPANY, a Delaware
corporation ("Purchaser"), and NORD KAOLIN COMPANY, a Georgia limited
partnership ("Seller").
A. Seller is engaged in the mining and processing of kaolin in the state
of Georgia and in the production of kaolin-based pigments (the "Business"). The
Business has been conducted under the names "Nord Kaolin Company" and "Norplex".
B. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase substantially all of the assets of
Seller used in the Business.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS.
(a) At the Closing (as hereinafter defined), on and subject to the terms
and conditions of this Agreement, Seller shall sell, assign, transfer, convey,
and deliver to Purchaser, and Purchaser shall purchase, acquire, and accept from
Seller, all of the right, title, and interest of Seller in and to the Acquired
Assets (as hereinafter defined).
(b) Except as provided in Section 1.2, "Acquired Assets" shall mean all of
the right, title and interest of Seller in and to all of the following assets,
properties, contracts and rights of Seller, as the same shall exist on the
Closing Date (as hereinafter defined), which shall be delivered free and clear
of any and all liens, encumbrances, security interests, options and other
adverse claims:
(i) All real property owned by Seller, and all of Seller's
right, title, and interest in the buildings, fixtures, improvements, timber
and mineral rights and reserves (including but not limited to kaolin) located
thereon or thereunder, together with all water lines, rights of way, uses,
licenses, easements, hereditaments, tenements, and appurtenances belonging or
appertaining thereto and any and all assignable warranties of third parties
with respect thereto (the "Real Property") and, by assignment of leases, all
of Seller's rights in, to, and under all real estate leases (including,
without limitation, any assignment of a real estate lease or sublease) to
which Seller is a party, together with all of Seller's right, title, and
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interest in the buildings, fixtures, improvements and mineral reserves
(including but not limited to kaolin), including construction-in-progress,
and appurtenances thereto, located on or under the real property subject to
such real estate leases, and any and all assignable warranties of third
parties with respect thereto (the "Leased Real Property");
(ii) All machinery, equipment, tools, computers, terminals,
computer equipment, office equipment, business machines, telephones and
telephone systems, parts, accessories, and the like, wherever located, and
any and all assignable warranties of third parties with respect thereto (the
"Equipment");
(iii) To the extent permitted by applicable law and the terms of
such instruments, and except for the Excluded Contracts (as hereinafter
defined), all of the contracts, collective bargaining agreements, leases,
warranties, commitments, agreements, arrangements, and purchase and sales
orders, whether oral or written, together with the right to receive income in
respect of such contracts, leases, warranties, commitments, agreements,
arrangements, and purchase and sales orders on and after the Closing Date
(individually, a "Contract" and collectively, the "Contracts");
(iv) All raw materials, in-process kaolin and finished kaolin
products (including without limitation products in transit or on
consignment), goods held for resale, samples, promotional literature,
supplies, chemicals, in-ground clay, spare parts, bags and pallets, wherever
located (the "Inventory"), together with all rights of Seller against
suppliers of the Inventory including, without limitation, Seller's rights to
receive refunds or rebates in connection with its purchase of such Inventory;
(v) All motor vehicles, trucks, forklifts, rail cars and other
rolling stock and all assignable warranties of third parties related thereto
(the "Vehicles");
(vi) All patents, designs, art work, designs-in progress,
formulations, know-how, prototypes, inventions, trademarks, trade names, trade
styles, service marks, and copyrights; all registrations and applications
therefor, both registered and unregistered, foreign and domestic; all trade
secrets, technology or processes; all computer software (including documentation
and related object and, if applicable, source codes); and all confidential or
proprietary information that are either (A) owned by or negotiated in the name
of Seller or (B) as to which Seller has rights as licensee, constituting all of
the intellectual property of Seller used or contemplated for use in the Business
(the "Intellectual Property");
(vii) All existing data, data bases, books, records,
correspondence, business plans and projections, records of sales, customer
and vendor lists, files, papers, and, to the extent permitted under
applicable law or regulation, copies of historical personnel payroll and
medical records of each of the Hired Employees (as defined in Section 11.1
hereof) in the possession of Seller, including without limitation, employment
applications, corrective action reports, disciplinary reports, notices of
transfer, notices of rate changes, other similar documents, and any summaries
of such documents regularly prepared by Seller; all reported
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medical claims made for each Hired Employee; and all manuals and printed
instructions of Seller relating to the Acquired Assets and to the business
operations of Seller (the "Books and Records");
(viii) To the extent permitted under applicable law or regulation,
all licenses, permits, certificates, and other governmental or
quasi-governmental authorizations of Seller (the "Permits");
(ix) All furniture, fixtures, and leasehold improvements, wherever
located, and any and all assignable warranties covering such furniture,
fixtures, and leasehold improvements owned by Seller or in which Seller has an
interest ("Furniture and Fixtures");
(x) All credits, utility rebates or rate adjustments, or prepaid
expenses; all causes of action (except for those causes of action which are not
related to the Acquired Assets), claims, and demands of Seller; all security
deposits and utility deposits; and all other assets (other than Excluded Assets
as defined in Section 1.2 hereof) used by Seller and necessary to operate the
Business, wherever located, tangible or intangible, provided, however, that the
Acquired Assets shall not include, and Purchaser shall not acquire, any right,
title, or interest of Seller in or to the Excluded Assets;
(xi) All noncurrent assets identified on SCHEDULE 1.1(a);
(xii) The assets of the Transferred Benefit Plans; and
(xiii) Any rights to any condemnation proceeds and any proceeds
from Seller's insurance coverages relating to the Acquired Assets.
For purposes of this Agreement, "Permitted Encumbrances" shall mean, as to
all or any portion of the Real Property and the Leased Real Property: (A) ad
valorem real property taxes for 1997 and subsequent years which are a lien but
not yet due and payable; (B) such matters as are or would be revealed by a
current and accurate survey and inspection and which are not objected to by
Purchaser; provided, however, that Purchaser shall not have the right to object
to any such matter if the same will not (i) materially adversely affect the
ability of Purchaser to mine or operate the facility or run the Business as
currently operated or otherwise use for its intended use the tract or parcel
encumbered thereby or (ii) otherwise materially adversely affect the
marketability of such tract or parcel; (C) such matters as are ultimately listed
in Schedule B-Section 2 of Purchaser's Title Commitments and which are not
objected to by Purchaser; provided, however, that Purchaser shall not have the
right to object to any such matter if the same will not (i) materially adversely
affect the ability of Purchaser to mine or operate the facility or the Business
as currently operated or otherwise use for its intended use the tract or parcel
encumbered thereby, or (ii) otherwise materially adversely affect the
marketability of such tract or parcel; and (D) the timber harvesting contracts
set forth on SCHEDULE 1.1(b).
1.2 EXCLUDED ASSETS. Seller shall not sell and Purchaser shall not
purchase or
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acquire and the Acquired Assets shall not include:
(a) All cash and cash equivalents;
(b) Subject to Section 11.3 hereof, any right, title, or interest of
Seller in or to any right to use the name "Nord";
(c) The assets of any employee benefit plan other than the
Transferred Benefit Plans maintained by Seller for the benefit of the employees
of the Seller or to which Seller has made any contribution;
(d) The assets and properties used by Seller which have been disposed
of since the date of this Agreement, provided such disposition has been made in
accordance with the terms hereof;
(e) Seller's partnership record books, tax returns and records, books
of account and ledgers, and such other records having to do with Seller's
organization or capitalization;
(f) Any rights which accrue or will accrue to Seller under this
Agreement;
(g) Subject to Section 1.1(b)(xiii), any rights to any of Seller's
insurance policies or premiums (except as provided in Section 8.19 hereof);
(h) Any rights to any of Seller's claims for any federal, state,
local, or foreign tax refund;
(i) The assets, properties, and rights (including rights to insurance
proceeds) specifically listed and described on SCHEDULE 1.2;
(j) All accounts, notes and other receivables of Seller (including
without limitation the excess mileage credits receivable) (the "Accounts
Receivable"); and
(k) All rights to receive payments of capital credits for the years
through 1996, which capital credits are listed on SCHEDULE 1.2(k), pursuant to
the Agreement for Electric Service dated May 24, 1989 between Oconee Electric
Membership Corporation and Seller (the "Electric Service Agreement").
The assets described in this Section 1.2 are hereinafter collectively
referred to as the "Excluded Assets".
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 ASSUMPTION. Subject to Section 2.2 hereof, as of the Effective Time,
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Purchaser shall assume responsibility for the performance and satisfaction of
the following, and only the following, liabilities of Seller relating to the
Business (collectively, the "Assumed Liabilities"):
Except as described in Section 2.2(c), all of the executory obligations and
liabilities of Seller arising from and after the Closing Date, pursuant to
(i) the terms of the Real Property Leases (as defined in Section 5.7(b))
identified in SCHEDULE 5.7.2, (ii) the Contracts identified in SCHEDULES 5.6.3,
5.8.1, 5.9 OR 5.15, (iii) the Transferred Benefit Plans (as defined in
Section 5.18(b)), and (iv) all reclamation expenses for the Real Property and
Leased Real Property.
2.2 EXCLUDED LIABILITIES. Purchaser shall not assume or become liable for
any obligations, commitments, or liabilities of Seller, whether known or
unknown, absolute, contingent, or otherwise, and whether or not related to the
Acquired Assets, except for the Assumed Liabilities (the obligations and
liabilities of Seller not assumed by Purchaser are hereinafter referred to as
the "Excluded Liabilities"). Without limiting the generality of the preceding
sentence, the Excluded Liabilities include all obligations and liabilities of
Seller (i) whether or not reflected in, reserved, or accrued against in the
Latest Balance Sheet, and (ii) not specifically described in Section 2.1 hereof,
including without limitation, the following:
(a) Any liability or obligation arising out of any Seller Benefit
Plans (as defined in Section 5.18) which are not Transferred Benefit Plans;
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable attorneys' and other professional fees) related to, arising out of,
or in connection with Seller's failure to comply with the Bulk Transfer Act or
any similar statute as enacted in any jurisdiction, domestic or foreign;
(c) Any liability or obligation arising or accruing under any
Contract, Transferred Benefit Plan or Real Property Lease prior to the Effective
Time (as hereinafter defined), and any liability or obligation arising from or
related to any breach or violation by Seller of or default by Seller under any
provision of any Contract, Transferred Benefit Plan or Real Property Lease and
any facilities abandonment charge which may become due or payable after the
Effective Time relating to any termination of the Electric Service Agreement
under the terms of the Electric Service Agreement; provided, however, that the
parties agree that the capital credits of Seller thereunder shall be used to the
extent permitted under that agreement to pay any such charge;
(d) Any liability of Seller with respect to any claim or cause of
action, regardless of when made or asserted, which arises (i) out of or in
connection with the operation of the Business by Seller prior to the Effective
Time, (ii) with respect to any product purchased, produced or manufactured or
any service provided by Seller on or prior to the Effective Time, including
without limitation, any liability or obligation (A) pursuant
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to any express or implied representation, warranty, agreement, or guarantee made
by Seller or (B) imposed or asserted to be imposed by operation of law, in
connection with any service performed or product produced, manufactured, sold,
or leased by or on behalf of Seller prior to the Effective Time, including
without limitation, any claim related to any product delivered in connection
with the performance of such service or product produced, manufactured, sold or
leased, and any claims seeking to recover for consequential or punitive damages,
lost revenue, or income, including pursuant to any doctrine of product
liability, or (iii) out of or in connection with the operations of the Business
prior to the Effective Time under any federal, state, or local law, rule, or
regulation or under any contractual obligation relating to (A) environmental
protection or clean-up, (B) taxation, or (C) employment or termination of
employment;
(e) Any liability of Seller for any actual or alleged breach of or
noncompliance with any federal, state, or local law, rule, regulation, order or
decree applicable to any Contract, Real Property Lease, Transferred Benefit Plan
or otherwise applicable to the Seller prior to the Effective Time;
(f) Any liabilities or obligations of Seller relating to the Excluded
Assets;
(g) Any liabilities or obligations of Seller relating to sales and
use, transfer, documentary, income or other taxes levied on the transfer of the
Acquired Assets;
(h) Any liability or obligation, arising prior to or as a result of
the Closing, to any employee, agent, or independent contractor of Seller,
whether or not employed by Purchaser after the Closing, or under any benefit
arrangement with respect thereto;
(i) Any Environmental Liabilities (as hereinafter defined);
(j) Any liability or obligation for all taxes, charges, fees, levies
or other assessments, net income, gross income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, social
security, unemployment, excise, estimated, severance, property or other taxes,
duties, fees, assessments or charges of any kind whatsoever (including without
limitation the Michigan Single Business Tax), including any interest, penalties
or additional amounts attributable thereto imposed by any federal, state, local
or foreign governmental authority ("Taxes") payable by Seller or any member of
any Affiliated group (within the meaning of Section 1504(e) of the Internal
Revenue Code of 1986, as amended (the "Code")) or any combined or consolidated
group for state or other tax purposes of which the Seller is or has been a
member, whenever incurred, for all periods through and including the period
ending immediately prior to the Effective Time, including, without limitation,
income Taxes arising as a result of the transactions contemplated herein; and
(k) Any (i) trade accounts payable of the Business as of the Closing
Date, (ii) the wages, commissions, vacation for the calendar year in which the
Closing Date occurs,
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holiday, and sick pay obligations with respect to the Hired Employees accrued
through the Closing Date, (iii) long-term debt, (iv) the current portion of and
accrued interest on any long-term indebtedness (excluding the Contracts which
constitute capital equipment leases) and loans payable, (v) obligations under
the $1,900,000 Jeffersonville-Xxxxxx County Georgia Variable Rate Demand
Pollution Control Revenue Refunding Bonds Dated 6/21/94 Due 7/1/2004 (Nord
Kaolin Company Project) (the "Bonds"), (vi) amounts payable by Seller to Nord
Resources Corporation ("Resources"), Kemira Holdings, Inc. ("Kemira") or any of
their respective Affiliates and (vii) all other liabilities reflected on the
Latest Balance Sheet (as hereinafter defined).
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 PURCHASE PRICE.
(a) Subject to adjustment pursuant to this Section 3.1 and to the
conditions of this Agreement, the cash consideration to be paid to Seller for
the sale, transfer, and conveyance of the Acquired Assets and the assumption of
the Assumed Liabilities shall be an amount equal to Twenty Million and No/100
Dollars ($20,000,000.00), less $735,000 in consideration for Purchaser's
obligation to assume all reclamation expenses of Seller as described in
Section 2.1(iv) (the "Estimated Purchase Price"). At Closing, Purchaser shall
pay to Seller in immediately available funds an amount equal to $17,338,500 and
shall pay into escrow $1,926,500 (the "Escrow Amount") pursuant to the terms of
an escrow agreement to be agreed upon by the parties. The Estimated Purchase
Price after any adjustments have been made pursuant to this Section 3.1 plus the
aggregate amount of the Assumed Liabilities is referred to herein as the
"Purchase Price."
(b) No later than five (5) days after the Closing Date, the Seller
will prepare and deliver to the Purchaser a statement (the "Closing Statement")
setting forth (i) Seller's best estimation of the aggregate value (the
"Aggregate Value") as of the Closing Date of the Inventory, and (ii) Seller's
quantified best estimation of any material adverse change in the value or
condition of any of the other Acquired Assets from the date of the Latest
Balance Sheet through the Closing Date (collectively, "Material Changes"). The
calculation of the Aggregate Value set forth in the Closing Statement shall be
prepared in accordance with generally accepted accounting principles ("GAAP")
applied in a manner consistent with the preparation of the unaudited balance
sheet of Norplex, Inc. as of October 31, 1996 (the "Latest Balance Sheet") and
shall include the supporting schedules and backup for the calculation of the
Aggregate Value.
Purchaser shall have fifteen (15) days from receipt of the
Closing Statement (the "Review Period") to review the Closing Statement and to
agree or disagree as to the Aggregate Value and Material Changes reflected
thereon. Purchaser may accept Seller's computation of the Aggregate Value and
Material Changes reflected on the Closing Statement by giving Seller written
notice of such acceptance ("Acceptance Notice") at any time during the Review
Period. If Purchaser does not so accept such computation,
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representatives of Seller and Purchaser shall meet as often as necessary during
the ten (10) day period immediately following the Review Period (the "Settlement
Period") in an attempt to agree upon a final computation of the Aggregate Value
and Material Changes. During the Settlement Period, each of Purchaser and
Seller shall give the other reasonable access to their respective premises,
systems, and books and records with respect to the Acquired Assets as is
reasonably necessary to make such computation.
If Purchaser and Seller are unable to agree on such computation
during the Settlement Period, all matters in dispute shall be referred to a
nationally recognized public accounting firm (other than the respective
independent auditors of Purchaser and Seller) upon which Purchaser and Seller
mutually agree in writing (the "CPA Firm"), within five (5) business days after
the expiration of the Settlement Period. The CPA Firm shall, acting as experts
and not as arbitrators, determine all matters in dispute related to the
calculation of the Aggregate Value and Material Changes (to the extent such
changes can be valued by the CPA Firm) and report thereon (the "Valuation
Report") to Purchaser and Seller within ten (10) business days from the date
such matters are referred to it, or such other period of time (not to exceed
twenty (20) calendar days) as the CPA Firm shall determine that it needs to
render such Valuation Report, and such Valuation Report shall be final and
binding on the parties hereto. If the CPA Firm is unable to assess the value of
the Material Changes, the amount of Purchaser's estimated value of the Material
Changes in dispute shall be held back in the escrow, the remainder of the
adjustments and payments will be made as set forth in subsection (c) below, and
the parties shall resolve the dispute related to the held back amount in
accordance with the arbitration provisions of Section 15.12.
Purchaser and Seller each shall permit the CPA Firm and each
other such access to their respective premises and books and records relating to
the Acquired Assets as the CPA Firm or Purchaser or Seller may reasonably
request and shall render to the CPA Firm and each other all such reasonable
assistance as the CPA Firm or Purchaser or Seller may deem necessary or
advisable in connection with making its determinations. The fees and expenses
of the CPA Firm shall be shared equally by Purchaser and Seller.
(c) If (X) the Aggregate Value as of the Closing Date less (Y) the
Material Changes, is greater than the Aggregate Value reflected in the Latest
Balance Sheet, the escrow agent shall pay the Escrow Amount to Seller and the
Purchaser shall pay to Seller an amount equal to the difference between such
amounts. If (X) the Aggregate Value as of the Closing Date less (Y) the
Material Changes, is less than the Aggregate Value reflected in the Latest
Balance Sheet, the escrow agent shall pay to Seller the Escrow Amount minus the
difference between such amounts and the escrow agent shall pay the remaining
Escrow Amount to Purchaser. If the amount of the difference exceeds the Escrow
Amount, Seller shall pay Purchaser such excess. Any payment required by this
subsection shall be made by wire transfer to an account designated in writing by
the recipient on the third day (or the next succeeding business day if such day
is not a business day) following (i) Seller's receipt of the Acceptance Notice,
(ii) agreement by Purchaser and Seller as to the final computation of the
Aggregate Value as of the Closing Date and the Material Changes , (iii) the
delivery of the Valuation Report to Purchaser and Seller; or (iv) the date upon
which the arbitration is
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concluded.
3.2 TRANSFER EXPENSES. Seller shall pay any sales and use, transfer,
documentary, or other taxes levied on the transfer of the Acquired Assets. All
Acquired Assets shall be claimed as exempt from sales or use tax by both parties
and Purchaser shall furnish Seller at Closing with appropriate sales tax
exemption certificates as reasonably requested by Seller for the Inventory.
Seller shall timely report and remit any such taxes to the appropriate revenue
authorities.
3.3 ALLOCATION OF PURCHASE PRICE. The consideration paid for the Acquired
Assets and the assumption of the Assumed Liabilities that are taken into account
in determining the amount realized for tax purposes (which shall equal the
Purchase Price) shall be allocated among the Acquired Assets as set forth on
SCHEDULE 3.3. The parties agree to be bound by such allocation and to report
the transaction contemplated herein for federal income tax purposes in
accordance with such allocation; provided, however, that if adjustments are made
to the Estimated Purchase Price in calculating the Purchase Price, then
corresponding adjustments shall be made to the allocation. In furtherance of
the foregoing, the parties hereto agree to execute and deliver Internal Revenue
Service Form 8594 reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSING
4.1 TIME AND PLACE OF CLOSING. The closing for the purchase and sale
contemplated by this Agreement (the "Closing") shall be held at the offices of
Xxxxxx & Bird, One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, within three (3) days after the conditions precedent to the obligations
of the parties set forth in Articles 8 and 9 herein are satisfied, or at such
other time and place as the parties hereto may agree in writing (the date on
which the Closing actually occurs is hereinafter referred to as the "Closing
Date"). Subject to the consummation of the Closing on the Closing Date, the
sale, assignment, transfer, and conveyance to Purchaser of the Acquired Assets
will be effective as of 12:01 AM local time on the Closing Date (the "Effective
Time").
4.2 TRANSACTIONS AT THE CLOSING. At the Closing, each of the following
items shall be delivered:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale, motor vehicle titles, warranty deeds,
quitclaim deeds, assignments, endorsements, and other good and sufficient
instruments and documents of conveyance and transfer, in form reasonably
satisfactory to Purchaser and its counsel, as shall be necessary and effective
to sell, transfer and assign to and vest in Purchaser all of Seller's right,
title, and interests in and to the Acquired Assets, including without
limitation, good, marketable (insurable, subject to Permitted Encumbrances, as
to the Real Property), and valid title in and to all of the Acquired Assets
owned by Seller free
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and clear of all liens, and good, insurable (as to the Real Property Leases) and
valid leasehold interests in and to all of the Acquired Assets leased by Seller
as lessee, and all of Seller's rights under all Contracts;
(ii) a certificate of Seller with respect to the matters
described in Sections 8.1, 8.2, 8.5, 8.6, 8.12, and 8.18 hereof;
(iii) a certificate of the Secretary or Assistant Secretary
of the General Partner of Seller with respect to the matters described in
Sections 8.7 and 8.8 hereof;
(iv) the opinion of counsel in substantially the form of
EXHIBIT A hereto (the "Seller Opinion");
(v) copies of the consents and waivers described in
Section 8.5 hereof;
(vi) satisfactory evidence of the approvals described in
Section 8.5 hereof;
(vii) certificates of existence of Seller, as of a date
within twenty (20) days prior to the Closing Date, from the State of Georgia and
each jurisdiction listed in SCHEDULE 5.1.1 hereto;
(viii) affidavit(s) of title stating that (a) there are no
parties in possession of any of the Real Property or Leased Real Property other
than Seller (or otherwise specifically setting forth any such other parties'
rights and the source and extent of such parties' rights), and (b) Seller has
not caused any work to be performed on any of the Real Property or Leased Real
Property within one hundred (100) days of the date of such affidavit(s), or if
Seller has caused any such work to be performed within one hundred (100) days of
such date(s) that all such work has been completed and fully paid for, and such
other indemnities, lien waivers and other documentation as Purchaser's title
insurance company may reasonably request in order to permit Purchaser's title
insurance policy to be issued without exceptions as to matters arising in the
"gap", mechanic's or materialman's liens, third parties in possession (other
than specifically enumerated third parties as set forth above that are
reasonably acceptable to Purchaser pursuant to the terms of this Agreement), and
rights or claims of real estate brokers;
(ix) a 1099 certificate to the extent applicable;
(x) a duly executed certificate stating that Seller is a
Georgia resident, or that Seller is otherwise exempt from withholding under
O.C.G.A. Section 48-7-128, as applicable;
(xi) a duly executed certificate stating that Seller is
not a "foreign person" for United States income tax purposes, in accordance
with Section 1445 and
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Section 897 of the Internal Revenue Code of 1986, as amended;
(xii) recordable originals of any Real Property Leases, or
recordable short forms thereof, which have not previously been recorded in the
appropriate real property records; and
(xiii) such other evidence of the performance of all covenants
and the satisfaction of all conditions required of Seller by this Agreement at
or prior to the Closing Date as Purchaser or its counsel may reasonably require.
The documents and certificates to be delivered hereunder by or on behalf of
Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Purchaser shall deliver to Seller the following:
(i) wire transfer(s) in immediately available funds in
amounts aggregating $17,338,500 to Seller or as directed by Seller, and
$1,926,500 representing the Escrow Amount to the designated escrow agent;
(ii) an instrument or instruments of assumption of the
Assumed Liabilities, duly executed by Purchaser, and reasonably satisfactory
in form and substance to Seller and its counsel;
(iii) a certificate of Purchaser with respect to the matters
described in Sections 9.1 and 9.2 hereof;
(iv) a certificate of the Secretary or Assistant Secretary
of Purchaser with respect to the matters described in Sections 9.3 and 9.6
hereof;
(v) the opinion of counsel in substantially the form of
EXHIBIT B hereto (the "Purchaser Opinion");
(vi) a certificate of existence of Purchaser, as of a date
within twenty (20) days prior to the Closing Date, from the States of Delaware
and Georgia;
(vii) such other evidence of the performance of all covenants
and satisfaction of all of the conditions required of Purchaser by this
Agreement, at or before the Closing Date, as Seller or its counsel may
reasonably require; and
(viii) a 1099 certificate to the extent applicable.
The documents and certificates to be delivered hereunder by or on behalf of
the Purchaser on the Closing Date shall be in form and substance reasonably
satisfactory to the Seller and its counsel.
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4.3 CONVEYANCE OF TITLE TO REAL PROPERTY AND ASSIGNMENT OF REAL PROPERTY
LEASES.
(a) Seller shall convey title to the Real Property to Purchaser by
warranty deed in a form customarily used in the State of Georgia for all Real
Property located in Georgia. Each such deed shall be executed in accordance
with the requirements of the laws of the State of Georgia and shall be in such
form as will permit the deed to be recorded. Seller shall transfer and assign
to Purchaser its rights under the Real Property Leases (and its rights in and to
all deposits thereunder and all buildings, other structures, improvements and
mineral reserves permitted to be retained or removed by the lessee thereunder)
by transfer and assignment in form reasonably acceptable to Purchaser and its
counsel. Regardless of whether Purchaser objects to the same as provided
hereinbelow, the Real Property and the Leased Real Property shall not be subject
to (i) any mortgage, deed of trust, security deed, security agreement, judgment,
lien or claim of lien, or any other title exception or defect created, caused,
suffered or incurred by Seller that is monetary in nature, Seller hereby
agreeing to pay and satisfy of record any such monetary title defects or
encumbrances prior to or at Closing at Seller's expense, or (ii) any leases,
rental agreements or other rights of occupancy of any kind (other than the Real
Property Leases), whether oral or written, except as disclosed to and accepted
by Purchaser as provided elsewhere herein.
(b) Prior to the Closing Date, Purchaser shall have examined the
title and, at Purchaser's option, the survey, to each parcel of Real Property
and Leased Real Property and notified Seller in writing of any objections to,
defects in or encumbrances upon Seller's title to or interest in such Real
Property or Leased Real Property other than Permitted Encumbrances. If Seller
satisfies all such objections to title defects and encumbrances, then the
transaction contemplated hereby shall be closed in accordance with the terms and
conditions set forth herein. If Seller does not satisfy all such objections to
title defects and encumbrances prior to the Closing Date, then Purchaser shall
elect either: (i) if the Real Property or Leased Real Property is a key property
listed on SCHEDULE 4.3(b), not to close the transaction contemplated hereby, in
which event all parties shall be released from any further obligations or
liability, except as expressly set forth in Article 13 or otherwise; (ii) to
close the transaction contemplated hereby without regard to such unsatisfied
defects and encumbrances, in which event the transaction contemplated hereby
shall be closed in accordance with its terms, without a reduction in Purchase
Price, and all such unsatisfied title defects and encumbrances shall be
exceptions to Seller's warranty of title; or (iii) to close the transaction
contemplated hereby, excluding, however, the portion of the Real Property (or
the applicable Real Property Lease to the extent of an unsatisfied objection
with respect to the Leased Real Property) having such title defects and
encumbrances with a corresponding reduction in the Purchase Price applicable to
such Real Property or Real Property Lease so excluded for the value set forth on
SCHEDULE 4.3(b)(ii).
(c) Seller shall not transfer, assign, sublease or encumber the Real
Property or any part thereof, or its interest in the Leased Real Property or any
part thereof from the date hereof until the first to occur of the Closing Date
or the termination of this
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Agreement pursuant to Article 13 hereof. Notwithstanding anything in Section
4.3(b) hereof to the contrary, Purchaser shall have the right to object to any
title matters other than Permitted Encumbrances which come into existence after
the date of Purchaser's title examination but prior to Closing.
4.4 SURVEY AND INSPECTION OF PROPERTY.
(a) Purchaser and Purchaser's agents, employees and independent
contractors shall have the right and privilege on reasonable notice to enter
upon the Real Property and the Leased Real Property prior to the Closing Date to
inspect the Real Property and the Leased Real Property and to conduct soil
borings and other environmental, geological, engineering, percolation,
hydrologic, feasibility, or landscaping tests or studies, all at Purchaser's
sole cost and expense, provided such testing does not unreasonably interfere
with the operation of the Business at that location. Purchaser indemnifies
Seller from and against any liability or obligation arising out of such entry or
testing by Purchaser or Purchaser's agents, employees, or independent
contractors.
(b) Each parcel of Real Property shall be described in the deed
conveying such parcel and other closing documents either by (i) the metes and
bounds description set forth for such parcel (if any) on EXHIBIT A attached to
and incorporated into said SCHEDULE 5.7.1 by reference, or (ii) the metes and
bounds description of such parcel set forth in the deed vesting title to such
parcel in Seller, as said metes and bounds descriptions in item (i) or (ii) may
be modified by mutual agreement of the parties acting in good faith with respect
thereto; provided, however, in the event Purchaser causes a new survey of a
parcel of Real Property to be made by a land surveyor registered or licensed in
Georgia, and the resulting plat of survey accurately depicts the boundaries of
such Real Property and those characteristics of such Real Property that would be
revealed by a careful inspection of such Real Property and is otherwise
reasonably acceptable to Seller, then Seller shall also execute and deliver to
Purchaser at Closing a quitclaim deed for such parcel using the metes and bounds
legal description therefor depicted on such new survey.
4.5 ENVIRONMENTAL LIABILITIES.
(a) Purchaser has furnished Seller with a copy of the Xxxxxx
Associates (the "Environmental Consultants") Environmental Site Assessment of
Nord Kaolin, Jeffersonville, Georgia (the "Environmental Site Assessment")
conducted at the Purchaser's expense. Seller has furnished Purchaser with a
notebook containing environmental due diligence documents (the "Due Diligence
Book") received with the December 19, 1996 letter from Xxxxx X. Xxxxx, which
describes the environmental condition of the Jeffersonville, Georgia plant.
Purchaser has determined that certain Environmental Liabilities described in the
Due Diligence Book must be resolved by Seller pursuant to Section 4.5(b) below.
The environmental liabilities to be resolved are listed on SCHEDULE 4.5 hereto
("Environmental Liabilities").
(b) As soon as practicable following the date hereof, Seller shall,
for each
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Environmental Liability at Seller's sole cost and expense, begin the action
shown on SCHEDULE 4.5 hereto with respect to all Environmental Liabilities
listed on that Schedule utilizing the services of such firm as Seller selects,
subject to Purchaser's consent, which shall not be unreasonably withheld, and
indemnify and hold harmless Purchaser as provided in Section 14.1(f) hereof, for
all costs and expenses incurred by Purchaser in effecting any other action
required by any governmental agency or instrumentality or any court or
arbitration panel having jurisdiction over the parcel. Purchaser hereby grants
Seller, its employees and representatives the non-exclusive and unrestricted
right of access to such parcels requiring action, as necessary to allow Seller
to perform and complete such action, and Purchaser agrees that it shall not, and
shall cause its employees and representatives not to, interfere with such
actions. All such actions shall be completed in a manner so as not to
unreasonably interfere with Purchaser's use of the parcels being remediated.
Seller hereby covenants and agrees to indemnify and hold harmless Purchaser from
any and all loss, liability, costs, claims, demands, damages, actions, causes of
action and suits arising out of or in any manner related to the actions taken
under this subsection.
4.6 CERTAIN CONSENTS. To the extent that Seller's rights under any
agreement, Contract, commitment, lease, Permit, Real Property Lease or other
Acquired Asset to be assigned to Purchaser hereunder may not be assigned without
the consent of another person which has not been obtained prior to the Closing
Date, and which is important to the ownership, use or disposition by Purchaser
of an Acquired Asset, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller, at its expense, shall use its reasonable best efforts to
obtain any such required consent(s) as promptly as possible. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Purchaser's rights under the Acquired Asset in
question so that Purchaser would not in effect acquire the benefit of all such
rights, Seller, to the maximum extent permitted by law and the specific Acquired
Asset and at Seller's expense, shall act after the Closing as Purchaser's agent
in order to obtain for the Purchaser the benefits thereunder, and Seller shall
cooperate, to the maximum extent permitted by law and the specific Acquired
Assets with Purchaser in any other reasonable arrangement designed to provide
such benefits to Purchaser, including any sublease or subcontract or similar
arrangement. Purchaser shall continue to have the right to terminate this
Agreement as provided in Section 13.1(b) hereof if any condition in Article 8
becomes impossible of performance, or has not been satisfied in full or
previously waived by Purchaser in writing at or prior to the Closing Date.
4.7 EMINENT DOMAIN. If, after the date hereof and prior to the Closing,
Seller receives notice of the commencement or threatened commencement of eminent
domain or other like proceedings against the Real Property or the Leased Real
Property or any portion thereof, Seller shall immediately notify Purchaser, and
Purchaser shall elect within fourteen (14) days from and after such notice, by
written notice to Seller, either (a) only with respect to any property listed on
SCHEDULE 4.3(b), not to close the transaction contemplated hereby, in which
event except as expressly set forth in Article 13 or otherwise, this Agreement
shall be void and of no further force and effect; (b) to close the transaction
contemplated hereby
E-21
in accordance with its terms but subject to such proceedings, in which event the
Purchase Price shall not be reduced, and Seller shall assign to Purchaser
Seller's rights in any condemnation award or proceeds or (c) to close the
transaction contemplated hereby, excluding, however, the portion of the Real
Property or Leased Real Property subject to such proceedings with a
corresponding reduction in the Purchase Price applicable to such Real Property
or Leased Real Property so excluded. If Purchaser does not make such election
within the aforesaid fourteen (14) day period, Purchaser shall be deemed to have
elected to close the transaction contemplated hereby in accordance with clause
(b) of this Section 4.7.
4.8 FURTHER ASSURANCES. Seller from time to time after the Closing Date,
at Purchaser's request, will execute, acknowledge, and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications, and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Acquired Assets, or to better enable Purchaser to complete, perform, or
discharge any of the Assumed Liabilities. Each of the Parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that:
5.1 ORGANIZATION AND QUALIFICATION. Seller is a limited partnership duly
organized and validly existing under the laws of the State of Georgia. Norplex,
Inc., a Georgia corporation (the "General Partner") is the sole general partner
of Seller. Seller is duly qualified and is in good standing in each of the
jurisdictions set forth on SCHEDULE 5.1.1, which constitute all of the
jurisdictions where Seller owns or leases property or where Seller conducts
business operations. SCHEDULE 5.1.2 hereto contains the address (including
city, county, state, or other jurisdiction and zip code) of each location where
any of the Acquired Assets are located and each trade name under which Seller
operates at each such address and any additional business and trade names under
which the Seller has conducted business at each such address in the five (5)
years preceding the date of this Agreement.
5.2 AUTHORITY. Seller has full power and authority to enter into this
Agreement and the agreements to which it is a party contemplated hereby, or
executed in connection herewith (collectively, this Agreement and such other
agreements shall be referred to hereinafter as the "Acquisition Documents"), and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of each of the Acquisition Documents to which
Seller is a party has been duly and validly authorized and approved by any
necessary action on the part of Seller, Resources and the General Partner,
including without limitation the actions required by Section 3 of that certain
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Shareholder Agreement dated March 11, 1993 among the General Partner, Kemira,
Resources and Nord Kaolin Corporation. Each of the Acquisition Documents to
which Seller is a party is the legal, valid, and binding obligation of Seller
enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable equitable principles (whether
applied in a proceeding at law or in equity) or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, to the exercise of judicial discretion in accordance with general
equitable principles, and to equitable defenses that may be applied to the
remedy of specific performance. Neither the execution and delivery by Seller of
any of the Acquisition Documents to which Seller is a party nor, subject to
obtaining the consents and approvals described in SCHEDULES 5.6.3, 5.7.2, and
5.8.1, and the transfer of the Permits described in SCHEDULE 5.16, the
consummation by Seller of the transactions contemplated thereby will (i) violate
Seller's partnership documents or the General Partner's Certificate of
Incorporation or Bylaws, (ii) violate any provisions of law or any order of any
court or any governmental entity to which Seller or the General Partner is
subject, or by which the Acquired Assets may be bound, (iii) conflict with,
result in a breach of, or constitute a default under any indenture, mortgage,
lease, agreement, or other instrument to which either the Seller or the General
Partner is a party or by which it or any of the Acquired Assets may be bound, or
(iv) result in the creation of any lien, charge, or encumbrance upon any of the
Acquired Assets, or result in the acceleration of the maturity of any payment
date of any of the Assumed Liabilities, or increase or adversely affect the
obligations of Purchaser under any of the Assumed Liabilities. Seller has
complied with any and all options, repurchase agreements, and rights of first
refusal relating to the consummation of the transactions contemplated by the
Acquisition Documents such that all applicable rights of third parties
thereunder have either expired, lapsed or been terminated.
5.3 SUBSIDIARIES; JOINT VENTURES. No shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity
are included in the Acquired Assets.
5.4 BALANCE SHEETS. Attached as SCHEDULE 5.4 are true, correct, and
complete copies of the Latest Balance Sheet with supporting schedules and backup
for the period then ended, and the balance sheet of the Seller as of the end of
December of 1996, together with any monthly balance sheets prepared since the
December balance sheet prior to the date hereof (collectively, the "Balance
Sheets"). The Balance Sheets have been prepared from the books and records of
Seller. The Latest Balance Sheet presents fairly in accordance with GAAP the
financial position of the Seller at the date indicated. The monthly Balance
Sheets of the Seller have been prepared in accordance with Seller's historic
practice, consistently applied throughout the periods involved. Seller has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent or otherwise, and whether due or to
become due) which are not fully accrued or reserved against in the Balance
Sheets in accordance with GAAP. Seller has not received any advice or
notification from its independent certified public accountants that Seller has
used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting properties, assets or liabilities in the
Balance Sheets. The books, records, and accounts of
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Seller accurately and fairly reflect, in reasonable detail, the transactions and
the assets and liabilities of Seller. Seller has not engaged in any
transaction, maintained any bank account, or used any of the funds of Seller
except for transactions, bank accounts, and funds which have been and are
reflected in the normally maintained books and records of the Seller.
5.5 INVENTORY. Subject to sales in the ordinary course of business, all
Inventory, whether reflected on the Balance Sheets or subsequently acquired, is
now and at the Closing Date will be located (i) on the Real Property described
on SCHEDULE 5.7.1, (ii) on the Leased Real Property described on SCHEDULE 5.7.2
or (iii) in transit or on consignment as described in SCHEDULE 5.5 consistent
with past practices. The Inventory consists of items of a quality, quantity and
condition usable and salable in the ordinary course of business without discount
or reduction, conforms to GAAP, is valued at a reasonable amount in accordance
with GAAP and based on the ordinary course of business consistent with the
historical valuation policy of the Seller, is not subject to any write-down or
write-off in excess of the reserves stated on the Latest Balance Sheet, and has
been or will be acquired by Seller only in bona fide transactions entered into
in the ordinary course of business. Subject to sales in the ordinary course of
business, except as described in SCHEDULE 5.5 or SCHEDULE 5.6.2, Seller has now
and on the Closing Date will have valid legal title to its Inventory free and
clear of any consignments, liens, claims, charges, and encumbrances. Seller is
not under any liability or obligation with respect to the return of Inventory in
the possession of wholesalers, retailers, or other customers, except for the
Inventory described on SCHEDULE 5.5 as being on consignment.
5.6 PERSONAL PROPERTY.
(a) SCHEDULE 5.6.1 contains a true and correct list and a description
(including serial number, vehicle registration, and tag number) of all Vehicles,
Equipment and all Furniture and Fixtures and all other items of personal
property owned by Seller and valued in excess of Two Thousand Five Hundred
Dollars ($2,500.00). Seller has good and marketable title to all of its owned
Furniture and Fixtures, Equipment, Vehicles, and other items of personal
property included among the Acquired Assets (whether or not disclosed in
SCHEDULE 5.6.1), free and clear of all liens, claims, charges, security
interests, and other encumbrances of any kind and of any nature, except as
disclosed on SCHEDULE 5.6.2.
(b) SCHEDULE 5.6.3 contains a list of all leases for Vehicles,
Equipment, Furniture and Fixtures, or other items of personal property, which
leases are included among the Acquired Assets. True and correct copies of each
lease listed on SCHEDULE 5.6.3 and any amendments, extensions, and renewals
thereof have been delivered to Purchaser. Each of the leases described on
SCHEDULE 5.6.3 is in full force and effect and, except as set forth on
SCHEDULE 5.6.4, there are no existing defaults or events of default, real or
claimed, or events which with notice or lapse of time or both would constitute
defaults, the consequences of which, severally or in the aggregate, would have
an adverse effect on the operations of Seller. No rights of Seller under such
leases have been assigned or otherwise transferred as security for any
obligation of Seller. Except as described on SCHEDULE 5.6.3, all such leases
are fully assignable without the consent of any third party.
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(c) The Equipment currently used by Seller and included among the
Acquired Assets (i) is in working order and is usable in a manner consistent
with past use, reasonable wear and tear excepted, (ii) has been regularly and
properly maintained substantially in accordance with reasonable and customary
industry standards and applicable regulations, and (iii) contain no defects or
malfunctions which alone or in the aggregate are reasonably likely to result in
any disruption or interruption in the business operations of Seller.
5.7 REAL PROPERTY; LEASED REAL PROPERTY.
(a) SCHEDULE 5.7.1 contains a true and correct list of each parcel of
Real Property and a summary description of all plants and structures located
thereon. For ease of reference, metes and bounds descriptions have been
provided in Exhibit A to SCHEDULE 5.7.1, but Seller does not represent the
accuracy of such metes and bounds descriptions herein. Except as reflected in
the original or amended title insurance binders obtained by Purchaser or
otherwise revealed by Seller in SCHEDULE 5.7.1 or SCHEDULE 5.6.2, Seller has
good and marketable fee simple title to the Real Property, free and clear of all
mortgages, liens, charges, encumbrances, and purchase options and other rights
to or against such property. The conveyance of the Real Property to Purchaser
shall not cause a breach, default, or event of default under any of the
protective covenants or any other document or instrument encumbering the Real
Property.
(b) SCHEDULE 5.7.2 contains a true and correct list of each parcel of
Leased Real Property and a summary description of all plants and permanent
structures located on each parcel of Leased Real Property. True and correct
copies of each Lease pursuant to which Seller leases the Leased Real Property
and any amendments, extensions, assignments, and renewals thereof (the "Real
Property Leases"), as reflected on SCHEDULE 5.7.2, have been delivered to
Purchaser. Seller hereby represents that it is the lessee under each of the
Real Property Leases. Each Real Property Lease is in full force and effect and
there is no existing default or event of default, real or claimed, or event
which with notice or lapse of time or both would constitute a default thereunder
by Seller or, to the knowledge of Seller, any other party to such Real Property
Leases. Except as described in SCHEDULE 5.7.2 or SCHEDULE 5.6.2, Seller's
interest in the Real Property Leases is free and clear of any mortgages and
liens, and is not subject to any deeds of trust, assignments, subleases, or
rights of any third parties known to or created or permitted by Seller other
than the lessor thereof or any mortgagees of such lessors. The assignment of
any of the Real Property Leases to Purchaser shall not cause a breach, default,
or event of default under any of the Real Property Leases or any other lease or
mortgage relating to such parcel or Real Property Lease except for those leases
or mortgages identified on SCHEDULE 5.7.2 or SCHEDULE 5.6.2 as requiring
consents. Seller shall use its best efforts to obtain the necessary consents or
estoppels pursuant to Section 7.6.
(c) All improvements on the Real Property and the Leased Real
Property constructed by Seller conform to all applicable state and local laws,
use restrictions, building
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ordinances, and health and safety ordinances the noncompliance of which would
have an adverse effect on Seller's current ownership or use of such property
by Seller, and the property is zoned for the various purposes for which the
Real Property and the Leased Real Property and improvements thereon are
presently being used by Seller.
(d) Seller has received no written notice of any pending or
threatened litigation, condemnations, planned public improvements, annexation,
special assessments, zoning or subdivision changes, or other adverse claims
affecting the Real Property or the Leased Real Property.
(e) There is no private restrictive covenant or governmental use
restriction (including zoning) known to Seller, on all or any portion of the
Real Property or the Leased Real Property which prohibits the current or
intended use of the Real Property and the Leased Real Property.
(f) All licenses, permits and approvals required for the occupancy
and operation of the Real Property and the Leased Real Property (with
appurtenant parking uses) as presently being or intended to be used have been
obtained and are in full force and effect and Seller has received no notices of
violations in connection with such items.
(g) Seller does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the Real Property or the Leased Real Property.
(h) Seller has not failed to pay any taxes, assessments, or other
charges so as to adversely affect the present or intended use of the Real
Property or Leased Real Property.
(i) There is no pending litigation or dispute, and Seller has
received no notice of any disputes, concerning the location of the lines and
corners of the Real Property, and Seller has not been served with any legal
action concerning the location of the lines and corners of the Real Property.
(j) No person or entity, other than Purchaser, has any right,
agreement, commitment, option, right of first refusal or any other agreement,
whether oral or written, with respect to the purchase, assignment or transfer of
all or any portion of the Real Property.
(k) The Real Property is not subject to or affected by any special
assessment for public improvements or otherwise, whether or not presently a lien
upon the Real Property. Seller has made no commitment to any governmental
authority, utility company, school board, church or other religious body,
homeowner or homeowner's association or any other organization, group or
individual relating to the Real Property which would impose an obligation upon
Seller or its successors or assigns to make any contributions or dedications of
money or land, or to construct, install or maintain any improvements of a public
or private nature as part of the Real Property or upon separate
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lands. No governmental authority has imposed any requirement that Seller pay,
directly or indirectly, any special fees or contributions or incur any expenses
or obligations in connection with the development of the Real Property or any
portion thereof, other than any regular and nondiscriminatory local real estate
or school taxes assessed against the Real Property. The parcels comprising the
Real Property are separately assessed for real property tax assessment purposes
and are not combined with any other real property for tax assessment purposes.
Seller has received no notice of any contemplated or actual reassessment of the
Real Property or any portion thereof for general real estate tax purposes. As
of the date hereof, all due and payable taxes, assessments, water charges and
sewer charges affecting the Real Property and, to Seller's knowledge, the Leased
Real Property, or any portion thereof have been paid.
(l) The parcels comprising the Real Property constitute separately
subdivided, legally distinct parcels of land. Seller has complied with all
applicable laws, ordinances, regulations, statutes, rules and restrictions
pertaining to and affecting the Real Property which relate to such subdivision.
(m) There is no default or breach by Seller nor, to the best of
Seller's knowledge, any other party thereto, under any covenants, conditions,
restrictions or easements which may affect the Real Property or the Leased Real
Property or any portion or portions thereof which are to be performed or
complied with by the owner of the Real Property or the Leased Real Property, and
no condition or circumstance exists which, with the giving of notice or the
passage of time, or both, would constitute a default or breach by Seller nor, to
the best of Seller's knowledge, any other party thereto, under any such
covenants, conditions, restrictions, rights-of-way or easements.
(n) There are no tenants of the Real Property or, except as set forth
on SCHEDULE 5.7.3, the Leased Real Property or any portion or portions thereof
and no person or entity now has, or at the time of Closing will have, any
possessory interest in the Real Property or, except as set forth on
SCHEDULE 5.7.3, the Leased Real Property, under a lease or otherwise, except for
Seller whose total interest in the Real Property and the Leased Real Property
will be transferred to Purchaser at Closing, and except as otherwise disclosed
to Purchaser as provided elsewhere herein.
5.8 CONTRACTS.
(a) SCHEDULE 5.8.1 contains a true and correct list of all Contracts
not otherwise listed on SCHEDULES 5.6.3, 5.7.2, 5.9 or 5.15 that (i) has a
duration of six (6) months or more, (ii) requires any party thereto to pay
$25,000 or more, or (iii) is between Seller and any officer, stockholder,
director, employee, or affiliate and all modifications, amendments, renewals, or
extensions thereof. Each of the Contracts (other than the Requirements Contract
between Seller and Kemira, Inc. dated March 11, 1993) was entered into prior to
the Closing Date in the ordinary course of business on terms substantially
consistent with Seller's practice prior thereto. A true and complete copy of
each contract has been provided to Purchaser. Except as listed on
SCHEDULES 5.6.3, 5.7.2, 5.8.1, 5.9 or 5.15,
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Seller is not a party to any written or legally binding oral:
(i) agreement, contract, or commitment with any present or
former employee or consultant or for the employment of any person, including any
consultant;
(ii) agreement, contract, or commitment for the future
purchase of, or payment for, supplies or products, or for the performance of
services by a third party which supplies, products or services involve in any
one case $25,000 or more;
(iii) agreement, contract or commitment to sell or supply
products or to perform maintenance, services or similar duties involving in any
one case $25,000 or more;
(iv) distribution, dealer, representative, or sales agency
agreement, contract, or commitment;
(v) lease under which Seller is lessor relating to the
Acquired Assets or any property at which the Acquired Assets are located;
(vi) note, debenture, bond, equipment trust agreement,
letter of credit agreement, loan agreement, or other contract or commitment for
the borrowing or lending of money or agreement or arrangement for a line of
credit or guarantee, pledge, or undertaking of the indebtedness of any other
person which will not be terminated at or prior to the Closing Date and is
currently listed on SCHEDULE 5.8.2 as an excluded contract (the "Excluded
Contracts");
(vii) agreement, contract, or commitment for any charitable
or political contribution;
(viii) agreement, contract, or commitment limiting or
restraining the business operations or Purchaser from engaging or competing in
any manner or in any business, nor, to Seller's knowledge, is any employee of
Seller subject to any such agreement, contract, or commitment;
(ix) material agreement, contract, or commitment not made
in the ordinary course of business; or
(x) agreement, contract or transaction with any Affiliate
of the Seller or the General Partner.
(b) SCHEDULE 5.8.3 contains a true and correct list of all
commitments for capital expenditures or repairs that have been approved or made
prior to the date of this Agreement in excess of $25,000 by Seller and that
remain outstanding as of the date hereof.
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(c) Each of the Contracts is in full force and effect and there
exists no material breach or violation of or default under any of such Contracts
by Seller or, to the knowledge of Seller, any other party to such Contracts or
any event which, with notice or the lapse of time, or both, will create a
material breach or violation thereof or default thereunder by Seller or, to the
knowledge of Seller, any other party to such Contracts. Except as set forth on
SCHEDULES 5.6.3, 5.7.2, 5.8.1, 5.9 or 5.15, each such Contract listed therein is
fully assignable without the consent of any third party.
(d) Except as indicated on SCHEDULE 5.13, there exists no actual or,
to the best knowledge of Seller, any threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have a material adverse effect on the business or condition, financial or
otherwise, of Seller, including without limitation, (i) the business
relationship of Seller with any customer, distributor, or related group of
customers or distributors whose purchases individually or in the aggregate are
material to the operations and financial condition of Seller, (ii) the
requirements of any customer or related group of customers of Seller whose
purchases individually or in the aggregate are material to the operations and
financial condition of Seller, or (iii) the business relationship of Seller with
any material supplier.
(e) Seller has not granted any power of attorney affecting or with
respect to the Acquired Assets that will remain outstanding as of the Closing
Date.
(f) SCHEDULE 5.8.4 contains a true and correct list of customers
which collectively accounted for eighty percent (80%) of Seller's revenues
during the fiscal year ended December 31, 1996, and for the period commencing
January 1, 1997 through the last day of the month preceding the date hereof,
together with the dollar amount of sales made to each customer for each such
period.
5.9 INTELLECTUAL PROPERTY. SCHEDULE 5.9 contains a true and correct list
of the Intellectual Property used or contemplated for use by Seller, containing
a brief description of each item of Intellectual Property and the nature of
Seller's interest therein. The Acquired Assets include and, upon the purchase
of those assets, Purchaser will own or have the uncontested right to use all,
patents, designs, art work, designs-in-progress, formulations, know-how,
inventions, trademarks, trade names, trade styles, service marks, copyrights,
manufacturing processes, and confidential or proprietary information necessary
for the conduct of the Business as presently conducted. No claim is pending or,
to the best of Seller's knowledge threatened, and Seller has received no notice
that the conduct of the Business (including without limitation, Seller's use of
any Intellectual Property) infringes upon or conflicts with any rights claimed
therein by any third party, nor is Seller aware of any unasserted claim the
assertion of which is probable. No use by Seller of any Intellectual Property
licensed to it violates the terms of any agreement pursuant to which it is
licensed. No claim is pending, or to the best of Seller's knowledge threatened,
which alleges that any Intellectual Property owned or licensed by Seller or
which Seller otherwise has the right to use is invalid or unenforceable by
Seller, nor is Seller aware of any such claim that is unasserted, but the
assertion of which is probable. Except as set forth on SCHEDULE 5.9,
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Seller does not manufacture products which are the subject of patents, patent
applications, copyrights, copyright applications, trademarks, trademark
applications, trade styles, service marks, or trade secrets owned by or licensed
from third parties. Except as shown on SCHEDULE 5.9, no royalties or fees are
payable by Seller to anyone for use of the Intellectual Property. True,
correct, and complete copies of all agreements (including without limitation the
License for Proprietary Pigment Technologies dated September 1, 1986 between
Seller and Industrial Progress, Inc., including any and all addenda, amendments,
supplements and modifications thereto (the "License Agreement")) pursuant to
which Seller has any license or right to use any Intellectual Property, are
attached to SCHEDULE 5.9. All such agreements are in full force and effect and
there are no existing defaults or events of default, real or claimed, or events
which with or without notice or lapse of time or both would constitute defaults
under such agreements that would give the non-defaulting party a right to
terminate such agreement or a right to receive any payment pursuant to such
agreement. Except for the obligation to pay future royalties on the sale of
licensed products and minimum royalties under the License Agreement, all other
financial obligations or obligations to issue stock options or equity under the
terms of the License Agreement have been satisfied and no other such obligations
of either kind of Seller remain outstanding. Seller has not received any notice
that the manufacture, use, or sale by Seller of its products, or any component
or part thereof, nor any manufacturing operation or machinery employed by
Seller, violates or infringes upon any claims of any United States or foreign
patent or patent application owned or held by any third party, nor is Seller
aware of any unasserted claim the assertion of which is probable. All Seller's
Intellectual Property and registrations, applications, and agreements related
thereto are fully assignable to Purchaser without the consent of any third party
except as shown on SCHEDULE 5.9.
5.10 INSURANCE. The Acquired Assets are insured under various policies of
general liability and other forms of insurance, which policies are in amounts
adequate in the reasonable judgment of Seller. Seller has not been refused any
insurance by any insurance carrier to which it has applied for insurance or with
which it has carried insurance during the past five (5) years. There are no
outstanding requirements or recommendations by any current insurer or
underwriter with respect to the Acquired Assets which require or recommend
changes in the conduct of the Business, or require any repairs or other work to
be done with respect to any of the Acquired Assets or operations of the
Business.
5.11 ENVIRONMENTAL MATTERS AND EMPLOYEE SAFETY AND HEALTH.
(a) Except as set forth in SCHEDULE 5.11.1 hereto, Seller,
(i) is in material compliance with all laws, rules, and
regulations relating to environmental protection. Seller has not (A) been
notified that it is potentially liable under or (B) received any requests for
information or other correspondence concerning any site or facility under, nor
has Seller any reason to believe that it is considered potentially liable under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any similar federal or state law;
E-30
(ii) has accurately prepared and timely filed with the
appropriate jurisdictions all reports and filings required pursuant to any
federal, state, or local law, regulation, statute, or order applicable to or
affecting the Seller or the Acquired Assets except where the failure to prepare
and file such reports and filings if not so performed and filed, would cause an
adverse effect on the ownership, operation or disposal of the Acquired Assets,
taken as a whole;
(iii) has not entered into or received any consent decree,
compliance order, or administrative order relating to environmental protection;
(iv) has not entered into or received nor is Seller in
default under any judgment, order, writ, injunction or decree of any federal,
state, or municipal court or other governmental authority relating to
environmental protection;
(v) has obtained all permits, licenses, approvals,
consents, orders, and authorizations relating to environmental protection
("Environmental Permits") which are required under federal, state, or local
laws, rules, and regulations in connection with Seller's business operations
or the ownership, use, or lease of the Acquired Assets, and which, if not so
obtained, would cause an adverse effect on the ownership, operation or
disposal of the Acquired Assets, taken as a whole, and SCHEDULE 5.11.2
contains a complete list and description of each such Environmental Permit.
Except as described in SCHEDULE 5.11.2, Seller is in compliance with each
such Environmental Permit (including any information provided on the
applications therefor) and no Environmental Permit prohibits or materially
restricts Seller from operating any Equipment covered by such Environmental
Permit as currently being conducted; and
(vi) has not been, and currently is not, a "generator" of
"hazardous waste" (as those terms are defined by the Resource Conservation and
Recovery Act of 1976 and the regulations promulgated thereunder), for the
purposes of obtaining an EPA identification number under 40 C.F.R. Section
262.12(a) or complying with the manifest system under Subpart 8 of 40 C.F.R.
Part 262.
(b) With respect to the Real Property or the Leased Real Property,
(i) there are no actions, suits, claims, arbitration
proceedings, or complaints pending or, to the best of Seller's knowledge,
threatened by any governmental authority, municipality, community, citizen, or
other entity, against Seller relating to environmental protection, compliance
with environmental laws, or the condition of the Real Property or Leased Real
Property, nor is Seller aware of any unasserted action, suit, claim, proceeding,
or complaint the assertion of which is probable;
(ii) except as set forth on SCHEDULE 5.11.1, there has
been no disposal, release, burial, or placement of hazardous or toxic
substances, pollutants, contaminants, petroleum, gas products, or
asbestos-containing materials (as any of such terms may be defined under
federal, state, or local law) or other Hazardous Materials by
E-31
Seller or, to the best of Seller's knowledge, by any other party on, in, at, or
about any of the Real Property or Leased Real Property or any facilities used
for or in connection with the business operations of Seller that could subject
Purchaser to damages, costs, penalties or expenses, or recovery or remediation
requirements under any federal, state or local law, rule or regulation;
(iii) all above-ground and, to Seller's knowledge, all
underground storage tanks located on the Real Property and the Leased Real
Property have been identified in SCHEDULE 5.11.3;
(iv) no lien has arisen on any of the Acquired Assets under
or as a result of any federal, state, or local law, rule, or regulation
relating to environmental protection; and
(v) except for the Environmental Assessment Reports, no
assessment or other investigation has been conducted as to environmental matters
at any of Seller's properties by any private party during or, to the best of
Seller's knowledge, prior to the period during which Seller owned, leased or
operated such properties.
(c) Except as set forth in SCHEDULE 5.11.4, Seller is in material
compliance with all applicable laws relating to employee health and safety
including the Mine Safety and Health Act and the Occupational Safety and Health
Act; and Seller has not received any notice that past or present conditions of
the Acquired Assets violate any applicable legal requirements or otherwise can
be made the basis of any claim, citations, proceeding, or investigation, based
on or related to violations of employee health and safety requirements.
5.12 LITIGATION. Except as listed and briefly described on SCHEDULE 5.12,
there are no claims, charges, arbitrations, grievances, actions, suits,
proceedings, or investigations pending or to Seller's knowledge threatened
against, or adversely affecting the Acquired Assets, at law or in equity or
admiralty, or before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, nor is Seller aware of any unasserted claim, charge, arbitration,
grievance, action, suit, proceeding or investigation, the assertion of which is
probable. Seller is not in default under or in violation of any order, writ,
injunction, or decree of any federal, state, municipal court, or other
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting the Acquired Assets or the business operations of
Seller as currently conducted.
5.13 ABSENCE OF CHANGES. Since the date of the Latest Balance Sheet, there
has not been any transaction or occurrence in which Seller has:
(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of Seller
nor, to Seller's knowledge, has there been any event which has had or may
reasonably be expected to have
E-32
a material adverse effect on any of the foregoing, except for any impairments
recorded as a result of the consummation of the transactions contemplated
hereunder;
(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of business, consistent with
past practice, or increased (or experienced any change in the assumptions
underlying or the methods of calculating) any bad debt, contingency, or other
reserve, other than in the ordinary course of business consistent with past
practice;
(c) paid, discharged, or satisfied any claim, lien, encumbrance,
obligation, or liability (whether absolute, accrued, contingent, and whether due
or to become due), other than the payment, discharge, or satisfaction in the
ordinary course of business consistent with past practice of claims, liens,
encumbrances, obligations, or liabilities of the type reflected or reserved
against in the Latest Balance Sheet or which were incurred since the date of the
Latest Balance Sheet in the ordinary course of business consistent with past
practice;
(d) permitted, allowed, or suffered any of the Acquired Assets (real,
personal or mixed, tangible, or intangible) to be subjected to any mortgage,
pledge, lien, encumbrance, restriction, or charge of any kind;
(e) written down or written up the value of any Inventory (including
write-downs by reason of shrinkage or markdowns), except for write-downs and
write-ups in the ordinary course of business consistent with past practice, none
of which is material in amount;
(f) canceled any debts or waived any claims or rights in excess of
$5,000.00 individually or $10,000.00 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of any
patent, trademark, assumed name, service xxxx, trade name, copyright, license,
or application therefor or disposed of or disclosed to any person not authorized
to have such information any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain;
(h) except for the capital expenditure commitments described on
SCHEDULE 5.8.3, made any significant capital expenditure, repair or commitment
for additions to property, plant, equipment, intangible, or capital assets or
for any other purpose, other than for emergency repairs or replacement;
(i) sold, transferred, or leased any Acquired Assets (real, personal
or mixed, tangible or intangible) to, purchased, leased, licensed, or otherwise
acquired any properties or assets which are included as Acquired Assets from
(i) any partner, officer, employee, or director of Seller or any stockholder of
the General Partner, (ii) any corporation or partnership in which any affiliate
is an officer, director, or holder directly or indirectly of five percent (5%)
or more of the outstanding equity or debt securities, or (iii) any person
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controlling, controlled by, or under common control with any such partner,
stockholder, officer, director, or affiliate;
(j) except as identified on SCHEDULE 5.8.1, entered into any
collective bargaining or labor agreement (oral and legally binding or written),
or experienced any organized slowdown, work interruption, strike, or work
stoppage;
(k) sold, transferred, or otherwise disposed of any of the Acquired
Assets except in the ordinary course of business consistent with past practice;
(l) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Seller (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business consistent with past practice;
(m) made any material change in any method of accounting or
accounting principle, practice, or policy;
(n) suffered any casualty loss or damage to the Acquired Assets in
excess of $25,000 in the aggregate (whether or not insured against);
(o) taken any other action other than in the ordinary course of
business and consistent with past practice except as provided for in this
Agreement; or
(p) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this Section 5.13 and not
otherwise permitted by this Agreement.
5.14 BROKERS AND FINDERS. Neither Seller nor any Affiliate of Seller has
incurred any obligation or liability to any party for any brokerage fees,
agent's commissions, or finder's fees in connection with the transactions
contemplated by the Acquisition Documents.
5.15 LABOR MATTERS. SCHEDULE 5.15 contains a true and correct and complete
list of all present employees and sales representatives employed or engaged by
Seller, their total remuneration for the year ended December 31, 1996, their
current remuneration, and a description of all perquisites and fringe benefits
they receive or are eligible to receive. Seller, within the last three (3)
years, has not experienced any organized slowdown, work interruption, strike, or
work stoppage by employees of Seller. Except as set forth on SCHEDULE 5.8.1,
Seller is not a party to nor does Seller have any obligation pursuant to any
oral and legally binding or written agreement, collective bargaining or
otherwise, with any party regarding the rates of pay or working conditions of
any of the employees of Seller engaged in the Business, nor is Seller obligated
under any agreement to recognize or bargain with any labor organization or union
on behalf of such employees. Neither Seller nor any of its officers, directors,
or employees has been charged or, to Seller's knowledge, threatened
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with the charge of any unfair labor practice within the last two (2) years.
Seller is in material compliance with all applicable federal, state, local and
foreign laws and regulations concerning the employer-employee relationship and
with all agreements relating to the employment of Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. Except as
described on SCHEDULE 5.15, there are no pending or, to Seller's knowledge,
threatened claims, investigations, charges, citations, hearings, consent
decrees, or litigation concerning: wages, compensation, bonuses, commissions,
awards, or payroll deductions; equal employment or human rights violations
regarding race, color, religion, sex, national origin, age, disability,
veteran's status, marital status, or any other recognized class, status, or
attribute under any federal, state, local or foreign equal employment law
prohibiting discrimination; representation petitions or unfair labor practices;
grievances or arbitrations pursuant to current or expired collective bargaining
agreements; occupational safety and health; workers' compensation; wrongful
termination, negligent hiring, invasion of privacy or defamation; immigration or
any other claim based on the employment relationship or termination of the
employment relationship (collectively, "Labor Claims"). Seller is not liable
for any unpaid wages, bonuses, or commissions (other than those not yet due) or
any tax, penalty, assessment, or forfeiture for failure to comply with any of
the foregoing. Except as described on SCHEDULE 5.15, there is no outstanding
agreement or arrangement with respect to severance payments with respect to any
Employee.
5.16 GOVERNMENTAL APPROVAL AND CONSENTS. Except as described on
SCHEDULE 5.16, Seller has obtained all governmental approvals, authorizations,
permits, licenses, and orders required for the lawful operation of the Business
as presently conducted, the absence of which would materially adversely affect
Purchaser's use or ownership of the Acquired Assets. SCHEDULE 5.16 contains a
true and correct copy of each such approval, authorization, permit, license, and
order.
5.17 TAXES.
(a) Except as set forth on SCHEDULE 5.17.1, Seller has timely filed,
and as of the Closing Date will have timely filed, all federal and foreign
income tax returns, and all state, county, and local income, franchise,
property, sales, use, unemployment, and other tax returns in the State of
Georgia and in each other state and jurisdiction where such returns are required
to be filed on or prior to the Closing Date, taking into account any extensions
of the filing deadlines which have been validly granted to Seller, and such
returns are and will be true and correct in all material respects. Seller has
paid, or by the Closing Date will have paid, all federal, state, county, and
local income, franchise, property, sales, use, and all other taxes and
assessments (including penalties and interest in respect of such taxes and
assessments, if any) that have become or are due with respect to any period
ended on or prior to the Closing Date whether shown as due on such returns or
not, or is contesting in good faith such taxes and assessments, in which event
Seller has disclosed the details of such contests on SCHEDULE 5.17.2. Attached
to SCHEDULE 5.17.1 are true and correct copies of all real estate, personal
property , ad valorem, and property tax bills of Seller for the years 1996 and
1997 which have been received by the Seller prior to the date hereof, relating
to the
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Acquired Assets, including the Real Property and Vehicles.
(b) SCHEDULE 5.17.2 provides a brief description of any pending
federal and state tax disputes in which Seller is alleged to be liable or in
which Seller is claiming a refund, including the nature and amount of the
controversy, the respective positions of the parties as to any amounts claimed
to be due thereunder, and the current status thereof.
(c) All taxes required to be withheld prior to the Closing Date from
employees of Seller for income taxes and social security taxes will have been
properly withheld and, if required prior to the Closing Date, will have been
deposited with the appropriate governmental agency.
(d) No claim or investigation is pending, or to the best of Seller's
knowledge, threatened, by any state, local, or other jurisdiction alleging that
Seller has a duty to file tax returns and pay taxes or is otherwise subject to
the taxing authority of any jurisdiction not included in SCHEDULES 5.17.1 or
5.17.2 with respect to any taxes covered by Section 10.3, nor has Seller
received any notice or questionnaire from any such jurisdiction which suggests
or asserts that Seller may have a duty to file such returns and pay such taxes,
or otherwise is subject to the taxing authority of such jurisdiction.
5.18 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.18 contains a true and complete list of all the
following agreements, plans, policies (written or unwritten) or programs which
are presently in effect or which have previously been in effect and which cover
employees of Seller ("Employees"):
(i) Any "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA") or under which
Seller, with respect to Employees, has any outstanding, present, or future
obligation or liability, or under which any Employee has any present or future
right to benefits which are covered by ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, stock appreciation, phantom stock or
other equity-based, incentive, bonus, performance, vacation, termination,
retention, change of control, severance, "golden parachute," disability,
hospitalization, medical, life insurance, or other employee benefit plan,
program, policy, agreement or arrangement, which Seller maintains or to which
Seller has any outstanding, present, or future obligations to contribute or make
payments under, whether voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements described in subparagraph (i) or
(ii) are hereinafter collectively referred to as the "Seller Benefit Plans."
(b) With respect to all Seller Benefit Plans to be assumed by or spun
off in whole or in part to Purchaser pursuant to Section 7.15 (the "Transferred
Benefit Plans"),
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Seller makes the following representations and warranties:
(i) The Transferred Benefit Plans have been made available to
Purchaser for review, including correct and complete copies of: (A) all trust
agreements or other funding arrangements for such Transferred Benefit Plans
(including insurance contracts), and all amendments thereto, (B) with respect to
any such Transferred Benefit Plans or amendments, all current determination
letters and, if any, rulings, opinion letters, information letters, or advisory
opinions issued by the United States Internal Revenue Service ("IRS"), the
United States Department of Labor, or the Pension Benefit Guaranty Corporation,
(C) annual reports or returns, audited or unaudited financial statements,
actuarial valuations and reports, and summary annual reports prepared for any
Transferred Benefit Plan with respect to the most recent three (3) plan years,
and (d) the most recent summary plan descriptions and any modifications thereto.
(ii) All the Transferred Benefit Plans and the related trusts
subject to ERISA comply with and have been administered in compliance with,
(A) the applicable provisions of ERISA, (B) all applicable provisions of the
Code relating to qualification and tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended tax consequences, (C) all
applicable state or federal securities laws, and (D) all other applicable laws
and collective bargaining agreements, and the Seller has not received any notice
from any governmental authority questioning or challenging such compliance. All
available determination letters and required registrations under federal and
state securities laws for the Transferred Benefit Plans have been obtained,
including, but not limited to, timely determination letters on the qualification
of the ERISA Plans and tax exemption of related trusts, as applicable under the
Code, and all such registrations continue in full force and effect. No event
has occurred which will or could give rise to disqualification of any such plan
or loss of intended Tax consequences under the Code or to any Tax under
Section 511 of the Code.
(iii) No oral or written representation or communication with
respect to any aspect of the Transferred Benefit Plans has been made to
Employees prior to the date hereof that is not in accordance with the written or
otherwise preexisting terms and provisions of such plans. Neither the Seller,
Resources nor any administrator or fiduciary of any Transferred Benefit Plan (or
any agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner that could subject the Purchaser to any direct or
indirect liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary or other duty under ERISA. There are no unresolved claims or
disputes under the terms of, or in connection with, the Transferred Benefit
Plans other than claims for benefits which are payable in the ordinary course
and no litigation has been commenced with respect to any Transferred Benefit
Plans.
(iv) All Transferred Benefit Plan documents and annual reports or
returns, audited or unaudited financial statements, actuarial valuations,
summary annual reports, and summary plan descriptions issued with respect to the
Transferred Benefit Plans are correct and complete, have been timely filed with
the IRS and the United States
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Department of Labor, have been timely distributed to participants in the
Transferred Benefit Plans, and there have been no changes in the information
set forth therein.
(v) No "party in interest" (as defined in Section 3(14) of
ERISA) or "disqualified person" (as defined in Code Section 4975) of any
Transferred Benefit Plan has engaged in any nonexempt "prohibited transaction"
(described in Code Section 4975 or ERISA Section 406). There has been no
(i) "reportable event" (as defined in Section 4043 of ERISA), or event described
in Sections 4041, 4042, 4062 (including ERISA Section 4062(e)), 4064, 4069 or
4063 of ERISA, or (ii) termination or partial termination, withdrawal or partial
withdrawal with respect to any of the Transferred Benefit Plans. Neither Seller
nor Resources has incurred any liability under Title IV of ERISA with respect to
the Transferred Benefit Plans.
(vi) For any Transferred Benefit Plan that is an employee pension
benefit plan as defined in ERISA Section 3(2), the fair market value of such
Plan's assets equals or exceeds the present value of all benefits (whether
vested or not) accrued to date by all present or former participants in such
Transferred Benefit Plan. For this purpose the assumptions utilized to value
the accumulated benefit obligation in the January 1, 1996 actuarial report shall
be applied and the term "benefits" shall include the value of all benefits,
rights and features protected under Code Section 411(d)(6) or its successors and
any ancillary benefits (including disability, shutdown, early retirement and
welfare benefits) provided under any such employee pension benefit plan and all
"benefit liabilities" as defined in ERISA Section 4001(a)(16). Since the date
of the most recent actuarial valuation, there has been (i) no material change in
the financial position of any Transferred Benefit Plan, (ii) no change in the
actuarial assumptions with respect to any Transferred Benefit Plan, and (iii) no
increase in benefits under any Transferred Benefit Plan as a result of
Transferred Benefit Plan amendments or changes in any applicable regulation
which is reasonably likely to have, individually or in the aggregate, a material
adverse effect on the funding status of such Transferred Benefit Plan. All
contributions with respect to an Transferred Benefit Plans of Seller or of an
ERISA Affiliate that is subject to Code Section 412 or ERISA Section 302 have
been, or will be, timely made and there is no lien or expected to be a lien
under Code Section 412(n) or ERISA Section 302(f) or Tax under Code
Section 4971. No Transferred Benefit Plan of the Company or of an ERISA
Affiliate has a "liquidity shortfall" as defined in Code Section 412(m)(5). No
event described in Code Section 401(a)(29) has occurred or can reasonably be
expected to occur with respect to the Transferred Benefit Plans. All premiums
required to be paid under ERISA Section 4006 for the Transferred Benefit Plans
have been paid by the Seller.
(vii) All individuals participating in (or eligible to
participate in) any Transferred Benefit Plans are common law employees.
(c) Seller has complied in all material respects with the
continuation coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608. Seller shall be responsible for complying with the requirements of Code
Section 4980 B and Part 6 of Title 1 of ERISA
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for its employees (including the Hired Employees, as hereinafter defined) and
their "qualified beneficiaries" whose "qualifying event" (as such terms are
defined in Code Section 4980 B) occurs on or prior to the Closing Date.
5.19 COMPLIANCE WITH LAWS. Seller is not engaging in any activity or
omitting to take any action with respect to the Acquired Assets that is or
creates a material violation of any law, statute, ordinance, or regulation
applicable to the Acquired Assets. The Acquired Assets are not subject to any
judgment, order, writ, injunction, or decree issued by any court or any
governmental or administrative body or agency which has a material effect.
Seller possesses all permits and licenses material to the operation of the
Business as presently conducted and is in compliance with all applicable laws,
regulations, and orders issued by any court or governmental or administrative
body or agency where a failure so to comply would have a material adverse effect
on the use or ownership of the Acquired Assets. Seller has not at any time
during the last five (5) years (i) made any unlawful contribution to any
political candidate, or failed to disclose fully any contribution in violation
of law, or (ii) made any payment to any federal, state or local governmental,
regulatory or administrative officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
5.20 TRANSACTION APPROVAL AND CONSENTS. Except for the filing of the
appropriate documents pertaining to the Xxxx-Xxxxx-Xxxxxx Act with the United
States Federal Trade Commission and the United States Department of Justice,
and, if applicable, the receipt of an order of termination of the waiting period
therefrom, no consent, approval, or authorization of or declaration, filing, or
registration with any governmental or regulatory authority is required in
connection with the execution, delivery, and performance of this Agreement by
Seller or the consummation by Seller of the transactions contemplated hereby.
5.21 ADEQUACY OF ACQUIRED ASSETS. The Acquired Assets include all rights,
properties, interests in properties, and assets necessary to permit Purchaser to
carry on business operations similar to the Business as presently conducted by
Seller.
5.22 COMPLIANCE WITH THE IMMIGRATION REFORM AND CONTROL ACT. To the best
of Seller's Knowledge, Seller is in full compliance with and has not violated
the terms and provisions of the Immigration Reform and Control Act of 1986, and
all related regulations promulgated thereunder (the "Immigration Laws"). With
respect to each employee (as defined in Section 274a.1(f) of Title 8, Code of
Federal Regulations) of the Seller for whom compliance with the Immigration Laws
by an employer (as defined in Section 274a.1(g) of Title 8, Code of Federal
Regulations) is required, the Seller, upon request of Purchaser, will make
available to Purchaser prior to the Closing Date, such employee's Form I-9
(Employment Eligibility Verification Form) and all other records, documents or
other papers which are retained with the Form I-9 by the employer pursuant to
the Immigration Laws. The Seller has never been the subject of any inspection
or investigation relating to its compliance with or violation of the Immigration
Laws, nor has it been warned, fined or otherwise penalized by reason of any
failure to comply with the Immigration Laws, nor is
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any such proceeding pending or, to the best of Seller's Knowledge, threatened.
5.23 MINERAL RESERVES. Other than as described in SCHEDULE 5.23, no
mineral reserves owned by or leased to Seller and included among the Acquired
Assets are subject to any agreement, contract or arrangement which imposes any
obligation on Seller, and all rentals, royalties, and taxes thereon or other
royalties or payments due with respect to such mineral reserves or under such
agreements and payable by Seller in respect of periods prior to the Closing Date
have been or will be timely, properly and fully paid.
5.24 CORRECTNESS OF REPRESENTATIONS. No representation or warranty of
Seller in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto, contains, or on the Closing Date will
contain, any untrue statement of material fact or omits, or on the Closing Date
will omit, to state any fact necessary in order to make the statements contained
therein not misleading in any material respect, and all such statements,
representations, warranties, Exhibits, certificates, and Schedules shall be true
and complete in all material respects on and as of the Closing Date as though
made on that date. True copies of all mortgages, indentures, notes, leases,
agreements, plans (including Seller Benefit Plans), Contracts, and other
instruments listed on the Schedules delivered or furnished to Purchaser pursuant
to this Agreement have been delivered to Purchaser.
5.25 DEFINITION OF "KNOWLEDGE". The phrases "to the knowledge of Seller",
"Seller has not received notice", "to Seller's knowledge", "Seller has not been
notified" and any other similar phrases as used in this Article 5 refer to the
knowledge of executive officers of Seller, General Partner and Resources and, as
to specific areas which are the subject of the representations and warranties,
those employees of Seller, General Partner, or Resources having management or
operational responsibilities related to such specific areas.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
6.1 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all corporate power and authority to conduct its business, to
own, lease, or operate its properties in the places where such business is
conducted and such properties are owned, leased, or operated.
6.2 AUTHORITY. Purchaser has full power and authority to enter into this
Agreement and each of the other Acquisition Documents to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each of the other
Acquisition Documents to which Purchaser is a party have been duly and validly
authorized and approved by all necessary action on the part of Purchaser. This
Agreement and each of the other Acquisition Documents to which Purchaser is a
party are the legal, valid, and binding obligations of
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Purchaser enforceable against Purchaser in accordance with their terms, except
as enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by the exercise of judicial discretion in
accordance with equitable principles, and to equitable defenses that may be
applied to the remedy of specific performance. Neither the execution and
delivery by Purchaser of this Agreement or any of the other Acquisition
Documents to which Purchaser is a party nor the consummation by Purchaser of the
transactions contemplated hereby or thereby will (i) violate Purchaser's
Certificate of Incorporation or Bylaws, (ii) violate any provisions of law or
any order of any court or any governmental unit to which Purchaser is subject,
or by which its assets are bound, or (iii) conflict with, result in a breach of,
or constitute a default under any indenture, mortgage, lease, agreement, or
other instrument which would prevent Purchaser from consummating the
transactions contemplated hereunder.
6.3 LITIGATION. There is no suit, action, proceeding, claim or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which could adversely affect Purchaser's ability to consummate the
transactions contemplated hereunder.
6.4 CORRECTNESS OF REPRESENTATIONS. No representation or warranty of
Purchaser in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto contains, or on the Closing Date will
contain, any untrue statement of material fact or omits or, on the Closing Date,
will omit, to state any fact necessary in order to make the statements contained
therein not misleading in any material respect, and all such statements,
representations, Exhibits, and certificates shall be true and complete on and as
of the Closing Date as though made on that date.
6.5 BROKERS AND FINDERS. Neither Purchaser nor any affiliate of Purchaser
has incurred any obligation or liability to any party for any brokerage fees,
agent's commissions, or finder's fees in connection with the transactions
contemplated by the Acquisition Documents.
6.6 GOVERNMENTAL APPROVAL AND CONSENTS. Except for the filing of the
appropriate documents pertaining to the Xxxx-Xxxxx-Xxxxxx Act with the United
States Federal Trade Commission and the United States Department of Justice,
and, if applicable, the receipt of an order of termination of the waiting period
therefrom, no consent, approval, or authorization of or declaration, filing, or
registration with any governmental or regulatory authority is required in
connection with the execution, delivery, and performance by Purchaser of this
Agreement or the consummation of the transactions contemplated hereby.
6.7 FINANCING. Purchaser represents that on the Closing Date it will have
the funds necessary to pay the Estimated Purchase Price.
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ARTICLE 7
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
7.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. From the date hereof to the
Closing Date, and except to the extent that Purchaser shall otherwise consent in
writing, Seller shall:
(a) operate the Business substantially as previously operated and
only in the regular and ordinary course;
(b) not purchase or acquire any assets or properties, whether real or
personal, tangible or intangible, that if acquired would be an Acquired Asset
hereunder, and not sell or otherwise dispose of any real or personal property or
asset that would have been an Acquired Asset hereunder, except in the ordinary
course of business and consistent with past practices;
(c) subject to casualty and normal wear and tear, maintain the
Acquired Assets in current operating condition and state of repair and deliver
the Acquired Assets to Purchaser on the Closing Date in such condition, and
maintain all policies of insurance covering the Acquired Assets in amounts and
on terms substantially equivalent to those in effect on the date hereof;
(d) take all steps reasonably necessary to maintain the Intellectual
Property and other intangible assets of Seller;
(e) pay all accounts payable in accordance with past practice and
collect all accounts receivable in accordance with past practice;
(f) comply with all laws applicable to the conduct of the Business of
Seller where the failure to comply would have a material adverse effect on the
conduct of the Business by Purchaser after Closing;
(g) maintain the Books and Records in the usual, regular, and
ordinary manner, on a basis consistent with past practices and prepare and file
all foreign, federal, state, and local tax returns and amendments thereto
required to be filed by Seller after taking into account any extensions of time
granted by such taxing authorities; and
(h) use reasonable best efforts to preserve the goodwill and
patronage of its customers, Employees, suppliers and others having a business
relationship with Seller.
7.2 ACCESS AND INFORMATION. Subject to the confidentiality restrictions
set forth in Section 12.1 hereof, from the date hereof to the Closing Date and
during normal business hours, Seller shall afford to Purchaser, its lenders,
counsel, accountants, and other representatives, reasonable access to the
offices, properties, books, contracts, commitments,
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records, vendors, and customers of Seller, insofar as the same relate to the
Acquired Assets, and shall furnish such persons with all information (including
financial and operating data) concerning the Acquired Assets as they reasonably
may request. Requests for such information shall be coordinated with Seller's
designated representatives, and Seller shall use its best efforts to assist
Purchaser, its lenders, counsel, accountants, and other representatives in their
examination. Purchaser shall, and shall use its best efforts to cause its
lenders, counsel, accountants, and representatives to, hold in strict confidence
all information so obtained from Seller.
7.3 NOTIFICATION OF CHANGES. Between the date hereof and the Closing
Date, Seller shall immediately notify Purchaser in writing of any material
adverse change in the affairs, condition (financial or otherwise) or prospects
of the Business or in its relationships with any material customer, supplier or
any employee listed on SCHEDULE 11.1, any material damage to or loss of any of
the Acquired Assets, or the institution of or, if known by Seller, the threat of
institution of legal, administrative, or other proceedings against Seller,
related to the Business, or the occurrence or existence of any unasserted
proceedings known to Seller that are probable of assertion.
7.4 CERTAIN ACTS PROHIBITED. Except as may be necessary to discharge or
deal with the Excluded Liabilities (subject to the limitations of Section 15.1
hereof ), from the date hereof to the Closing Date, Seller shall not, without
the prior written consent of Purchaser, take any of the actions described in
Section 5.13 hereof.
7.5 OTHER TRANSACTIONS. Seller shall deal exclusively and in good faith
with Purchaser with regard to the sale of the Acquired Assets to Purchaser and
will not, and will direct its officers, directors, financial advisors,
accountants, agents, and counsel not to (i) solicit submission of proposals or
offers from any person other than Purchaser relating to any acquisition of all
or any material part of the Acquired Assets (an "Acquisition Proposal"),
(ii) participate in any discussions or negotiations regarding, or furnish any
non-public information to any other person regarding the Business other than
Purchaser and its representatives or otherwise cooperate in any way or assist,
facilitate, or encourage any Acquisition Proposal by any person other than the
Purchaser or, (iii) enter into any agreement or understanding, whether in
writing or, if legally binding, oral, that would have the effect of preventing
the consummation of the transactions contemplated by this Agreement. If,
notwithstanding the foregoing, Seller, or its representatives or agents should
receive any Acquisition Proposal or any inquiry regarding such proposal from a
third party, such persons shall promptly inform Purchaser and its counsel
thereof.
7.6 CONSENTS. Seller shall use its best efforts to obtain, at its sole
cost and expense, prior to the Closing all consents which, in the reasonable
judgment of Purchaser, are necessary or appropriate for the transfer or
assignment of each of the Acquired Assets to Purchaser and the consummation of
the transactions contemplated hereby. All such consents shall be in writing and
in form and substance reasonably satisfactory to Purchaser, and executed
counterparts thereof will be delivered to Purchaser promptly after receipt
thereof but in no event later than the Closing. In any case where a necessary
consent or approval has
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not been obtained at or prior to the Closing, Seller shall assist Purchaser, at
Purchaser's request, after Closing in every reasonable effort to obtain such
consent or approval.
7.7 SUPPLEMENTAL DISCLOSURE. Seller shall have the continuing obligation
up to and including the Closing Date to supplement promptly or amend the
Schedules with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or listed in the Schedule; provided, however, that for the purpose of
the rights and obligations of the parties hereunder, any such supplemental
disclosure shall not be deemed to have been disclosed as of the date of this
Agreement unless so agreed to in writing by Purchaser which Purchaser agrees not
to unreasonably withhold.
7.8 ADDITIONAL REPORTS. Subject to the confidentiality restrictions set
forth in Section 12.1 hereof, promptly after they become available, Seller will
make available to Purchaser true and correct copies of all internal management
and control reports (including inventory control reports) and financial
statements related to the Acquired Assets and furnished to management of the
Seller or the General Partner. Each such report shall be in accordance with the
books and records of Seller, and, in the case of financial statements shall be
prepared in accordance with the past practices of the Seller as set forth in
Section 5.4.
7.9 CONDITIONS PRECEDENT. Seller shall use its best efforts to satisfy
the conditions enumerated in Article 8 hereof.
7.10 ENVIRONMENTAL PERMITS. Seller shall, at its cost and expense, use its
reasonable best efforts to cause the Environmental Permits, if any, to be
assigned or transferred and reissued at the Closing to Purchaser to the extent
permitted by law or the terms of such Environmental Permits. Purchaser shall
reasonably cooperate with Seller with respect to Seller's obligations under the
preceding sentence.
7.11 CAPITAL EXPENDITURES. Other than those matters listed on
SCHEDULE 5.8.3, Seller shall cause its management to discuss with Purchaser any
proposed significant capital expenditure or repair in excess of twenty five
thousand dollars ($25,000) or for a period in excess of six (6) months to be
made prior to the Closing Date prior to entering into any contract or commitment
for such capital expenditure or repair, other than emergency capital
expenditures or repairs. No such capital expenditure or repair (other than
emergency capital expenditures for repairs and maintenance of the Acquired
Assets) shall be made by Seller prior to the Closing Date without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld
or delayed. Seller will promptly notify Purchaser of the nature and extent of
emergency capital expenditures made by Seller without the prior written consent
of Purchaser.
7.12 DISCHARGE OF LIENS AND ENCUMBRANCES. All liens, claims, charges,
security interests, pledges, assignments, or encumbrances relating to the
Acquired Assets (including those described in Section 4.3(a)) shall be
satisfied, terminated, and discharged by Seller on or prior to the Closing Date
and evidence reasonably satisfactory to Purchaser and its counsel
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of such satisfaction, termination, and discharge shall be delivered to Purchaser
at or prior to the Closing.
7.13 ENVIRONMENTAL FINES. Seller shall upon demand, promptly pay all fines
and assessments that Seller is not disputing in good faith and by appropriate
proceedings, and that are attributable to (a) Seller's operation of Equipment
which was not in compliance with applicable federal, state, and local laws or
regulations relating to environmental protection or (b) Seller's failure to
possess all required Environmental Permits; such fine or assessment shall be
payable to any agency enforcing compliance with such laws and regulations or
payable to the Purchaser if the Purchaser has previously paid such fines or
assessments.
7.14 RENEGOTIATION OF EQUIPMENT LEASES. Seller shall provide reasonable
assistance to Purchaser as reasonably requested in connection with the
renegotiation of the equipment leases listed on SCHEDULE 7.14. The Purchaser
covenants that, in the event the payment obligations under any of the leases
listed on SCHEDULE 7.14 are successfully renegotiated at any time before Closing
or within six (6) months after Closing such that the Purchaser's total financial
obligations are reduced below an amount calculated as of the date of
renegotiation equal to the net present value of all future lease payments,
purchase options and sales taxes, if any, using a discount rate of eight percent
(8%) per annum (the "Current Value"), then Purchaser shall promptly pay to
Seller one-half (1/2) of the difference between the amount paid by Purchaser to
buy out an equipment lease or an interest therein and the Current Value of such
lease or interest.
7.15 TRANSFERRED BENEFIT PLANS/PLAN INFORMATION.
(a) Seller shall, within ninety (90) days of the Closing, take such
action as is reasonably necessary to transfer sponsorship, together with all
assets and liabilities, including but not limited to insurance contracts, of the
following Seller Benefit Plans to Purchaser:
(i) Nord Kaolin Company Pension Plan
for Hourly Rated and Collective Bargaining Employees
Jeffersonville, Georgia; and
(ii) Nord Kaolin Company Union Employee 401(k) Plan; and
(iii) Nord Kaolin Company Hourly Long Term Disability
Income Plan.
On or before the effective date of such transfer, Seller will provide to
Purchaser all records, data, and information maintained by Seller or its
affiliates relating to the foregoing Transferred Benefit Plans. Thereafter,
Seller will make its personnel available to Purchaser on reasonable terms to
answer questions regarding the administration or operation of the Transferred
Benefit Plans.
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(b) To the extent such actions would not materially adversely affect
such Plan, Seller shall, within one hundred eighty (180) days of the Closing,
cause to be transferred to the Dry Branch Kaolin Company 401(k) Savings and
Investment Plan all assets and liabilities associated with the accounts of
Employees Under the Nord Resources Corporation Nord Salaried Employees' 401(k)
Plan (also referred to herein as a Transferred Benefit Plan) who are employed by
Purchaser ninety (90) days following the date of the Closing.
(c) Prior to the Closing, Seller shall contribute to the Transferred
Benefit Plans identified above an amount equal to the employer contribution
accrued under such Transferred Benefit Plans through the Closing, assuming such
contribution accrued ratably over the Transferred Benefit Plan year and without
regard to requirements relating to minimum hours or employment on the last day
of such Transferred Benefit Plan year.
(d) Seller shall provide, or shall cause its agents to provide, such
information as Purchaser reasonably requests, regarding the Seller Benefit Plans
covering the Hired Employees, including but not limited to the claims experience
of such Hired Employees under the Seller Benefit Plans.
7.16 PAYOFF OF DEBTS. On or prior to Closing, Seller shall pay and
otherwise satisfy in full (a) all obligations under the Bonds or deposit with
the trustee of the Bonds funds sufficient to pay off the Bonds, and (b) all
obligations owed to Kemira as a supplier of products to Seller on bills received
at or before Closing. All other known financial obligations of Seller (both
secured and unsecured, including without limitation all indebtedness owed to
trade creditors) except for intercompany indebtedness owed to Resources shall be
paid or reserved against at Closing by Seller placing the full amount of the
financial obligations owed into a separate escrowed account pursuant to the
terms of an escrow agreement to be agreed upon by the parties and paying all
such obligations first out of such escrowed funds. Seller shall provide at
Closing to Purchaser a list of the payees or creditors to be paid and amounts
estimated to be owed thereunder. Seller shall pay all obligations owed in a
manner to avoid any disruption of the business operated by Purchaser after
Closing.
7.17 FUNDING OF PLANS. At Closing, Seller shall fully fund the Nord Kaolin
Company Pension Plan for Hourly Rated and Collective Bargaining Employees
Jeffersonville, Georgia, for all benefit liabilities as defined in ERISA
Section 4001(a)(16) accrued as of January 1, 1997. Seller covenants that it
will fully fund for all such benefit liabilities from January 1, 1997 through
the Closing Date within five (5) days from receipt of the actuarial valuation
performed as of the Closing Date. In any event, Seller shall fully fund all
such liabilities within thirty (30) days from the Closing Date. The value of
such benefit liabilities shall be determined by utilizing the actuarial
assumptions applied in the January 1, 1996 actuarial report to determine the
present value of accumulated plan benefits under such Plan. If the actuarial
valuation performed by Seller (utilizing the actuarial assumptions described in
the preceding sentence) as of the Closing Date shows that plan assets as of the
Closing Date exceed the benefit liabilities determined as of the Closing Date,
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Purchaser shall remit to Seller the difference within five (5) days of the
determination of such excess amount.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions all or any of which may be waived in
writing, in whole or in part, by Purchaser:
8.1 CERTIFICATE REGARDING SCHEDULES AND REPRESENTATIONS AND WARRANTIES.
All information required to be furnished or delivered by Seller pursuant to this
Agreement shall have been furnished or delivered as of the date hereof and as of
the Closing Date, as required hereunder; the representations and warranties made
by Seller in Article 5 shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date
(except that such representations and warranties may be untrue or incorrect as a
result of actions or transactions expressly permitted by this Agreement or
actions or transactions of Seller made with the prior written consent of
Purchaser or based upon updates of the Schedules approved by Purchaser pursuant
to Section 7.7 hereunder); and Purchaser shall have received a certificate dated
as of the Closing Date executed by an authorized officer of Seller to such
effect.
8.2 COMPLIANCE BY SELLER. Seller shall have duly performed in all
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Seller on or prior to the Closing Date, and
Purchaser shall have received a certificate, dated as of the Closing Date,
executed by an authorized officer of Seller, to such effect.
8.3 NO INJUNCTION; ETC. No action, proceeding, investigation, regulation,
or legislation shall be pending or threatened which seeks to enjoin, restrain,
or prohibit Purchaser, or to obtain substantial damages from Purchaser, in
respect of the consummation of the transactions contemplated hereby, or which
seeks to enjoin the operation of all or a material portion of the Acquired
Assets, which, in the reasonable judgment of Purchaser, would make it
inadvisable to consummate the transactions contemplated by this Agreement.
8.4 OPERATION IN THE ORDINARY COURSE. Since the date of the Latest
Balance Sheet, Seller shall have operated the Business of Seller in the ordinary
course (except as otherwise permitted by this Agreement or as agreed to by
Purchaser as evidenced by Purchaser's prior written consent).
8.5 CONSENTS; AUTHORIZATIONS; APPROVAL OF LEGAL MATTERS. Purchaser shall
have received a true and correct copy of each consent and waiver identified on
any Schedule hereto as being requested by Purchaser that is (a) required for the
assignment of the
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Contracts, the Transferred Benefit Plans, or the Real Property Leases
(including, without limitation, all documents evidencing Seller's interest in
the Leased Real Property, and all sidetrack and industrial track agreements
benefiting the Leased Real Property or the Real Property with respect to tracks
presently being used by Seller), Permits, Intellectual Property, and other
agreements and assets and (b) otherwise required for the execution, delivery,
and performance of this Agreement by Seller. All authorizations, orders, or
approvals of any governmental commission, board, or other regulatory body, shall
have been obtained. Purchaser shall have received a certificate dated as of the
Closing Date, executed by an authorized officer of Seller to the foregoing
effect, and Purchaser shall be satisfied with the terms, conditions, and
restrictions of and obligations under each such authorization, order, or
approval.
8.6 TRANSFER OF ENVIRONMENTAL PERMITS. The Environmental Permits shall
have been assigned to or transferred and reissued to Purchaser to the extent
permitted by law or the terms of the Environmental Permits in accordance with
Section 7.10, and Purchaser shall have received a certificate dated as of the
Closing Date, executed by an authorized officer of Seller to the foregoing
effect.
8.7 INCUMBENCY. Purchaser shall have received a certificate of incumbency
of Seller executed by a Vice President and Secretary or Assistant Secretary of
the General Partner listing the officers of the General Partner authorized to
execute the agreement and the instruments of transfer on behalf of Seller,
certifying the authority of each such officer to execute the agreements,
documents, and instruments on behalf of Seller in connection with the
consummation of the transactions contemplated herein.
8.8 CERTIFIED RESOLUTIONS. Purchaser shall have received a certificate of
the Secretary or Assistant Secretary of the General Partner and Resources,
respectively, containing a true and correct copy of the resolutions duly adopted
by the boards of directors of the General Partner and Resources, and a
certificate of the General Partner individually in its capacity as the general
partner of the Seller, containing a true and correct copy of the resolutions
duly adopted by the Seller, each set of resolutions approving and authorizing
each Acquisition Document and the transactions contemplated hereby and thereby.
The Secretary or Assistant Secretary of the General Partner shall also certify
that such resolutions have not been rescinded, revoked, modified, or otherwise
affected and remain in full force and effect.
8.9 BASIC CORPORATE DOCUMENTS. Seller shall have delivered to Purchaser
on the Closing Date copies of certificates from the Secretaries of State in
Georgia and Connecticut and in each jurisdiction listed on SCHEDULE 5.1.1,
indicating that, as of a date within twenty (20) days prior to the Closing Date,
Seller was in good standing and had paid all taxes required to have been paid as
of such date.
8.10 SATISFACTION OF TITLE OBJECTIONS AND RELEASE OF CERTAIN LIENS. Seller
shall have satisfied Purchaser's title objections to the extent required under
Section 4.3 and, in addition, Purchaser at its discretion shall have received
Uniform Commercial Code searches (which searches shall be made or caused to be
made by and at the expense of Purchaser) of
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filings made pursuant to Article 9 thereof in all jurisdictions where any of
the Acquired Assets are located, in form, scope, and substance reasonably
satisfactory to Purchaser and its counsel, which searches shall reflect the
release or termination of liens, claims, security interests, or encumbrances
against any of the Acquired Assets disclosed thereby, and to the extent any such
release or termination is not reflected of record, Purchaser shall have received
evidence satisfactory to it, that all such liens and encumbrances against the
Acquired Assets have been released or terminated prior to or at the Closing.
8.11 ACCURACY OF SCHEDULES. Examination by Purchaser shall not have
disclosed any material inaccuracy in the representations and warranties of
Seller, set forth in this Agreement or in the Schedules delivered to Purchaser
pursuant hereto.
8.12 NO ADVERSE CHANGE. There shall not have been any material adverse
change in the Acquired Assets or Seller's operation of the Business since the
date of the Latest Balance Sheet, and Purchaser shall have received a
certificate dated as of the Closing Date, executed by an authorized officer of
Seller to such effect.
8.13 INSTRUMENTS OF TRANSFER. Seller shall have delivered to Purchaser
such warranty deeds, quitclaim deeds, bills of sale, motor vehicle titles,
endorsements, assignments, licenses, and other good and sufficient instruments
of conveyance and transfer and any other instruments reasonably deemed
appropriate by counsel to Purchaser all in form and substance reasonably
satisfactory to counsel to Purchaser to vest in Purchaser all of Seller's
rights, title, and interest with respect to the Acquired Assets, free and clear
of all liens, charges, encumbrances, pledges, or claims of any nature.
8.14 ACQUISITION DOCUMENTS. Purchaser shall have received the Acquisition
Documents to which Seller is a party, duly executed by Seller.
8.15 OPINION OF SELLER'S COUNSEL. Purchaser shall have received the Seller
Opinion, executed by Xxxxxxx & Xxxxxxx, P.C.
8.16 PROCEEDINGS. The form and substance of all opinions, certificates,
assignments, orders, and other documents and instruments, hereunder shall be
satisfactory in all reasonable respects to Purchaser and its counsel.
8.17 NAMES. Seller and General Partner shall have ceased to use in any
manner whatsoever the trade names included among the Acquired Assets and
described on SCHEDULE 5.9, except in connection with tax returns, filings with
other governmental authorities, and similar purposes.
8.18 CONDITION OF ACQUIRED ASSETS. On the Closing Date, all of the
Acquired Assets shall be in substantially the same condition as at the close of
business on the date hereof, except for ordinary use and wear thereof and
changes occurring in the ordinary course of business or expressly permitted by
this Agreement between the date hereof and the Closing Date, and Purchaser shall
have received a certificate dated as of the Closing Date,
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executed by an authorized officer of Seller to such effect; provided, however,
if on or prior to the Closing Date any of the Acquired Assets shall have
suffered loss or damage on account of fire, flood, accident, act of war, civil
commotion, or any other cause or event beyond the reasonable power and control
of Seller (whether or not similar to the foregoing) to an extent which, in the
reasonable opinion of Purchaser, affects the value of the Acquired Assets in
excess of $100,000, Purchaser shall have the right either (a) to terminate this
Agreement and all of Purchaser's obligations hereunder without incurring any
liability to Seller as a result of such termination or (b) to consummate the
transactions provided for herein and be paid the full amount of all insurance
proceeds, if any, paid or payable to Seller, in respect of such loss plus an
amount equal to any deductible or co-insurance reserve applicable to such loss.
If under the circumstances described in the foregoing sentence, Purchaser shall
elect to consummate the transactions provided for herein, Seller shall, on
demand, pay to Purchaser the full amount of any insurance proceeds received by
Seller in respect of any such loss, together with any deductible or co-insurance
reserve applicable to such loss.
8.19 ANTITRUST. All applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Act shall have expired or been terminated and no action, proceeding or
investigation under any antitrust law shall be pending or threatened which seeks
to enjoin, restrain, or prohibit Purchaser, or to obtain damages from Purchaser,
in respect of the consummation of the transactions contemplated hereby, or which
seeks to enjoin, limit or impose conditions unacceptable to the Purchaser on the
ownership or the operation of all or any portion of the Acquired Assets, which,
in the sole judgment of Purchaser, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
8.20 GUARANTY. Resources shall have executed and delivered the Guaranty
substantially in the form attached hereto as EXHIBIT C.
8.21 ROYALTY AGREEMENT. Seller shall have executed and delivered the
Royalty Agreement substantially in the form attached hereto as EXHIBIT D.
8.22 NONCOMPETITION AGREEMENT. Resources shall have executed and delivered
a Noncompetition Agreement substantially in the form attached hereto as
EXHIBIT E.
8.23 NORPLEX NAME. On or prior to Closing, General Partner shall have
delivered to Purchaser for filing with the Secretary of State of Georgia an
appropriate amendment to General Partner's Articles of Incorporation to change
its corporate name to a name which does not include "Norplex" or any derivation
thereof, and the General Partner shall have conveyed to Purchaser all of its
rights in and to the "Norplex" name.
8.24 LICENSE AGREEMENT. Purchaser shall have received the consent of
Industrial Progress, Inc. to the assignment of the License Agreement on terms
and conditions reasonably satisfactory to Purchaser.
8.25 SALES/RESALE EXEMPTION CERTIFICATES. Purchaser shall have received
copies
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of executed sales or resale exemption certificates executed by Seller's current
customers and former customers representing at least eighty percent (80%) of
Seller's sales since January 1, 1996.
8.26 RELEASES. Resources shall have executed a release which releases
Purchaser from all claims of Resources as a creditor of Seller. Seller shall
have used its reasonable best efforts (the parties agreeing that best efforts
shall not include any consideration) to cause a release to be executed by Kemira
on terms and conditions satisfactory to Purchaser.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date hereunder, of each of the following conditions, all or any of which may be
waived, in whole or in part, by Seller.
9.1 CERTIFICATE REGARDING REPRESENTATIONS AND WARRANTIES. All information
required to be furnished or delivered by Purchaser pursuant to this Agreement
shall have been furnished or delivered as of the date hereof and the Closing
Date as required hereunder; the representations and warranties made by Purchaser
in Article 6 hereof shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date; and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser to such effect.
9.2 COMPLIANCE BY PURCHASER. Purchaser shall have duly performed in all
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Purchaser on or before the Closing Date, and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser, to such effect.
9.3 CERTIFIED RESOLUTIONS. Seller shall have received from Purchaser a
certificate executed by the Secretary or Assistant Secretary of Purchaser
containing a true and correct copy of resolutions duly adopted by Purchaser's
Board of Directors approving and authorizing this Agreement and each of the
other Acquisition Documents to which Purchaser is a party and each of the
transactions contemplated thereby. The Secretary or Assistant Secretary of
Purchaser shall also certify that such resolutions have not been rescinded,
revoked, modified, or otherwise affected and remain in full force and effect.
9.4 BASIC CORPORATE DOCUMENTS. Purchaser shall have delivered to Seller
on the Closing Date copies of certificates from the Secretary of State in
Georgia and Delaware, indicating that, as of a date within twenty (20) days
prior to the Closing Date, Purchaser was in good standing, and had paid all
taxes required to have been paid as of such date.
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9.5 NO INJUNCTION; ETC. No action, proceeding, investigation, regulation,
or legislation shall be pending or overtly threatened which seeks to enjoin,
restrain, or prohibit Seller, or to obtain substantial damages from Seller, in
respect of the consummation of the transactions contemplated hereby, which, in
the reasonable judgment of Seller, would make it inadvisable to consummate such
transactions.
9.6 INCUMBENCY. Seller shall have received a certificate of incumbency of
Purchaser executed by the Chairman or President and attested by the Secretary or
Assistant Secretary of Purchaser listing the officers of Purchaser authorized to
execute this Agreement and the other Acquisition Documents to which Purchaser is
a party and the instruments of assumption on behalf of Purchaser and certifying
the authority of each such officer to execute the agreements, documents, and
instruments on behalf of Purchaser in connection with the consummation of the
transactions contemplated herein.
9.7 CERTIFICATES. Seller shall have received from Purchaser all such
certificates, dated as of the Closing Date, as Seller shall reasonably request
to evidence the fulfillment by Purchaser, or such other satisfaction as the
Closing Date, of the terms and conditions of this Agreement.
9.8 ACQUISITION DOCUMENTS. Seller shall have received the Acquisition
Documents to which Purchaser is a party, executed by Purchaser.
9.9 OPINION OF PURCHASER'S COUNSEL. Seller shall have received the
Purchaser Opinion, executed by Xxxxxx & Bird, counsel for Purchaser, which
opinion may be based upon and incorporate the 1992 edition of the Interpretive
Standards applicable to Legal Opinions to Third Parties in Corporate
Transactions adopted by the Legal Opinion Committee of the Corporate and Banking
Law Section of the State Bar of Georgia, which Interpretive Standards shall be
attached to the Opinion.
9.10 XXXX-XXXXX-XXXXXX. All applicable waiting periods under the Xxxx-
Xxxxx-Xxxxxx Act shall have expired or been terminated.
9.11 PROCEEDINGS. The form and substance of all opinions, certificates,
assignments, orders and other documents and instruments hereunder shall be
satisfactory in all reasonable respects to Seller and its counsel.
9.12 RELEASE FROM GUARANTEES. Purchaser shall have caused Resources and
its affiliates to be released from any guarantees of Seller's obligations under
equipment leases included among the Acquired Assets. Purchaser covenants to use
reasonable efforts (which shall, if requested by an equipment lessor, include
substituting Purchaser as the guarantor in place of Resources) to cause
Resources to be so released. Purchaser shall provide to the equipment lessors
upon request financial and such other information regarding Purchaser as
reasonably requested by the equipment lessors.
9.13 ROYALTY AGREEMENT. Purchaser shall have executed and delivered the
Royalty
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Agreement substantially in the form attached hereto as EXHIBIT D.
ARTICLE 10
MUTUAL COVENANTS
10.1 GOVERNMENTAL FILINGS. Purchaser and Seller, to the extent legally
required, shall promptly prepare, file, and diligently prosecute within five (5)
business days from the date hereof all applications and filings required by
federal or state law in order to effect the transactions contemplated by this
Agreement. The parties agree to request acceleration under Xxxx-Xxxxx-Xxxxxx.
10.2 FURTHER MUTUAL COVENANTS. Purchaser and Seller shall each take all
actions contemplated by this Agreement, and, subject to Purchaser's and Seller's
right to terminate this Agreement pursuant to Article 13 hereof, do all things
reasonably necessary to effect the consummation of the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that nothing in this Agreement shall
require the Purchaser in order to consummate the transactions contemplated
hereby to sell or otherwise dispose of, license, hold separate or otherwise
divest itself of any portion of the Acquired Assets. Except as otherwise
provided in this Agreement, Purchaser and Seller shall each refrain from
knowingly taking or failing to take any action which would render any of the
representations or warranties made by such party as contained in Articles 5 or 6
of this Agreement, as applicable, in any material respect inaccurate as of the
Closing Date. Each party shall promptly notify the other party of any action,
suit, or proceeding that shall be instituted or threatened against such party to
restrain, prohibit, or otherwise challenge the legality of any transaction
contemplated by this Agreement.
10.3 PRORATIONS.
(a) Royalty Payments, Utility Charges, Rental Charges, Equipment
Charges, Real Property Taxes, Personal Property Taxes, and Service Contracts
including, without limitation, prepayments thereof (all as individually defined
below and collectively called the "Proration Items"), shall be prorated directly
between the Seller and the Purchaser as provided in this Section 10.3.
(b) For purposes of this Section 10.3, the capitalized terms set
forth below shall have the following meanings:
(i) "Utility Charges" shall mean water, sewer, electricity, gas
and other utility charges, if any, applicable to the Real Property and the
Leased Real Property;
(ii) "Rental Charges" shall mean common area maintenance charges,
merchant association dues, insurance reimbursement and rental charges payable or
receivable and other payments, or receipts (other than Real Property Taxes and
royalties or like payments) applicable to the Real Property and the Leased Real
Property;
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(iii) "Equipment Charges" shall mean rental charges payable
or receivable and other payments or receipts applicable to the Equipment;
(iv) "Real Property Taxes" shall mean ad valorem taxes imposed
upon the Real Property and any portion of the Leased Real Property owned by or
for which Seller, as lessee, is responsible for paying such taxes, general
assessments imposed with respect to the Real Property and any portion of the
Leased Real Property owned by or for which Seller, as lessee, is responsible for
paying such assessments, and special assessments upon the Real Property and any
portion of the Leased Real Property owned by or for which Seller, as lessee, is
responsible for paying such assessments;
(v) "Personal Property Taxes" shall mean ad valorem taxes
imposed upon the Acquired Assets other than the Real Property or the Leased Real
Property; and
(vi) "Royalty Payments" shall mean any charges applicable to the
licensing of any Intellectual Property, including without limitation, any
charges payable under the License Agreement.
(c) As soon as practicable after the Closing Date, all Utility
Charges, Rental Charges, Equipment Charges, Real Property Taxes, Personal
Property Taxes and Royalty Payments (including amounts owed pursuant to
transferable state licenses applicable to the Acquired Assets and transferred to
Purchaser hereunder) which are not included in the Assumed Liabilities shall be
apportioned to the Closing Date, and representatives of the Seller and Purchaser
will examine all relevant books and records as of the Closing Date in order to
make the determination of the apportionments, which determinations shall be
calculated in accordance with past practices. Payments in respect thereof shall
be made to the appropriate party by check within thirty (30) days after such
determination, except that payments for Real Property Taxes and Personal
Property Taxes shall initially be determined based on the previous year's taxes
and shall later be adjusted to reflect the current year's taxes when the tax
bills are finally rendered. The parties shall fully cooperate to avoid, to the
extent legally possible, the payment of duplicate Personal Property Taxes, and
each party shall furnish, at the request of the other, proof of payment of any
Personal Property Taxes or other documentation which is a prerequisite to
avoiding payment of a duplicate tax. No apportionment or payment shall be made
by Purchaser with respect to any amount credited to Seller under the License
Agreement, which amount is identified as a noncurrent asset included among the
Acquired Assets hereunder.
(d) In the event that either party (the "Payor") pays a Proration
Item (other than if and to the extent included in the Assumed Liabilities) for
which the other party (the "Payee") is obligated in whole or in part under this
Section 10.3, the Payor shall present to the Payee evidence of payment and a
statement setting forth the Payee's proportionate share of such Proration item,
and the Payee shall promptly pay such share to the Payor. In the event either
party (the "Recipient") receives payments of a Proration Item to which the other
party (the "Beneficiary") is entitled in whole or in part under this Agreement,
the Recipient
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shall promptly pay such share to the Beneficiary.
(e) In the event there exists as of the Closing Date any pending
appeals of ad valorem tax assessments with regard to any Acquired Assets, the
continued prosecution and/or settlement of such appeals shall be subject to the
direction and control of Purchaser with respect to assessments for the year
within which the Closing occurs.
ARTICLE 11
POST CLOSING MATTERS
11.1 EMPLOYMENT OF EMPLOYEES.
(a) On the Closing Date, Purchaser shall make offers of employment to
all of the hourly Employees and to those certain salaried Employees identified
on SCHEDULE 11.1, other than Employees who are "Not Actively Employed" by Seller
on the Closing Date for any reason whatsoever, including but not limited to a
leave of absence, long term or short term disability, or prior termination of
employment (an Employee shall be considered "Not Actively Employed" if the
Employee did not report to work with Seller for a period of at least six
consecutive business days which includes the Closing Date (excluding vacation
time or absences due to minor illness)). Employees who accept the offer of
employment made by Purchaser shall be referred to as "Hired Employees."
(b) Purchaser has confirmed to Seller that each Hired Employee shall
receive credit for the purposes of determining vesting service under Purchaser's
tax qualified deferred compensation plans applicable to the Hired Employees.
Purchaser has also confirmed to Seller that Hired Employees shall be entitled to
participate in Purchaser's group insurance plans and programs (subject to the
terms of such plans and programs) without regard to applicable waiting,
eligibility, or pre-existing condition limitation periods, except to the extent
that such eligibility, waiting, or pre-existing limitation periods would apply
under Seller's group insurance plans or programs. Purchaser has further
confirmed that Hired Employees shall receive credit under applicable severance
pay plans maintained by Purchaser as of the Closing Date for employment service
with Seller to the extent such Hired Employees are not entitled to payment under
Seller's severance pay (or similar) plans with respect to such service with
Seller. Notwithstanding any possible inferences to the contrary, neither of
Seller nor Purchaser intends for this Article 11 to create any rights or
obligations except as between the parties hereto, and no past, present or future
employees of Seller or Purchaser shall be treated as third-party beneficiaries
of this Article 11.
(c) Seller shall be responsible for the payment of all wages,
commissions, severance pay, accrued vacation, sick pay, and other employee
benefit plan obligations under ERISA Sections 601-609 (i) to Hired Employees to
the extent that such compensation or benefits are earned or accrued but not yet
paid through the Closing Date and (ii) to any Employees of Seller who are not
Hired Employees. Except for obligations specifically assumed by Purchaser
hereunder, Seller, General Partner or Resources shall be responsible for the
payment of any amounts due to its Employees (including the Hired Employees)
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pursuant to the Seller Benefit Plans as a result of the employment or
termination of employment of its Employees or as a result of the consummation of
the transactions contemplated hereunder, including actions taken by Purchaser
post-closing which subsequently cause payment obligations of Seller, General
Partner or Resources. Seller shall be responsible for reporting all
employee-related costs and liabilities of Hired Employees accruing prior to the
Closing Date, whether payable on or after the Closing Date. Seller is
responsible for all incurred but unreported or unpaid medical claims made,
occurring or arising prior to the Closing Date and for the cost associated with
any hospital confinement that commences prior to the Closing Date. Purchaser
shall become responsible for all costs and liabilities attributable to Hired
Employees accruing after the Closing Date; PROVIDED, HOWEVER, that Purchaser
shall not be responsible for (a) liabilities arising under the Seller Benefit
Plans (except as specifically assumed hereunder related to the Transferred
Benefit Plans) or (b) liabilities associated with any short term or long term
disabilities incurred, or leaves taken prior to the Closing Date. Effective on
the Closing Date, Seller shall, and hereby does, release all Hired Employees
from any employment and/or confidentiality agreement previously entered into
between Seller and such Hired Employees to the extent (but only to the extent)
necessary for Purchaser to operate the Business in substantially the same manner
as operated by Seller prior to the Closing Date.
11.2 SELLER BENEFIT PLANS. Except for obligations specifically assumed by
Purchaser hereunder related to the Transferred Benefit Plans, Purchaser shall
assume no responsibility with regard to any Seller Benefit Plans. To the extent
necessary, Seller may continue to communicate with the Hired Employees regarding
their rights and entitlement to any benefits under the Seller Benefit Plans,
subject to Purchaser's prior approval, which shall not be unreasonably withheld,
and the parties shall cooperate with each other in the administration of all
applicable employee benefit plans and programs.
11.3 USE OF NAME. Seller hereby grants to Purchaser a nonexclusive
royalty-free license to continue to use the "Nord" name for a one (1) year
period on any fixed Acquired Asset which at Closing bears the "Nord" name or
logo.
11.4 EMPLOYEE FILES. To the extent permitted by law, on the Closing Date,
or as soon as practicable thereafter, Seller shall deliver to a designee of
Purchaser a copy of all historical personnel and medical records of each of the
Hired Employees, including, but not limited to, employment agreements,
confidentiality and noncompete agreements, employment applications, corrective
action reports, disciplinary reports, notices of transfer, notices of rate
changes, other similar documents and all medical records.
11.5 NON-SOLICITATION. Seller shall terminate effective as of the Closing
Date all employment agreements it has with any of the Hired Employees. Until
the expiration of thirty-six (36) months after the month in which the Closing
Date occurs, Seller shall not directly or indirectly solicit or offer employment
to any Hired Employee who is then an employee of Purchaser, or who has
terminated such employment without the consent of Purchaser within 180 days of
such solicitation or offer, and Purchaser shall not directly or indirectly
solicit or offer employment to any person who, after the Closing Date is then an
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employee of Seller or who has terminated such employment without the consent of
Seller within 180 days of such solicitation or offer.
11.6 MAINTENANCE OF BOOKS AND RECORDS.
(a) Each of Seller and Purchaser shall preserve until the seventh
anniversary of the Closing Date all Books and Records possessed or to be
possessed by such party relating to any of the assets, liabilities or business
of the Business prior to the Closing Date. Seller shall give Purchaser written
notice of any Books and Records discovered by Seller that were not transferred
to Purchaser because such Books and Records were not located on the Real
Property or the Leased Property. After the Closing Date, where there is a
legitimate purpose, such party shall provide the other parties and their
representatives with access, upon prior reasonable written request specifying
the need therefor, during regular business hours, to (i) the officers and
employees of such party and (ii) the books of account and records of such party,
but, in each case, only to the extent relating to the assets, liabilities or
business of the Business prior to the Closing Date, and the other parties and
their representatives shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not be
exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party; and further, provided, that, as to so
much of such information as constitutes trade secrets or confidential business
information of such party, the requesting party, its affiliates, officers,
directors and representatives will use due care to not disclose such information
except (i) as required by law, (ii) with the prior written consent of such
party, which consent shall not be unreasonably withheld, or (iii) where such
information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 30th day after such notice is given unless another
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(b) Purchaser shall cooperate with Seller in Seller's preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Purchaser also shall make such other information available as may be
reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible under the terms of this
Agreement.
11.7 PAYMENTS RECEIVED. Seller and Purchaser each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation, any insurance
proceeds, and will account to the other for all such receipts.
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11.8 UCC MATTERS. From and after the Closing Date, Seller will promptly
refer all inquiries with respect to ownership of the Acquired Assets to
Purchaser. In addition, Seller will execute such documents and financing
statements as Purchaser may reasonably request from time to time to evidence
transfer of the Acquired Assets to Purchaser, including any necessary
assignments of financing statements.
11.9 COOPERATION. Seller and Purchaser shall cooperate with each other in
all reasonable respects in connection with the defense of any claim included
within any Assumed Liability or Excluded Liability, as the case may be,
including making available records relating to such claim and furnishing,
management employees of the party as may be reasonably necessary for the
preparation of the defense of any such claim or for testimony as a witness in
any proceeding relating to such claim; provided, however, that the foregoing
right to cooperation shall not be exercisable by one party in such a manner as
to interfere unreasonably with the normal operations and business of the other
party.
11.10 TITANIUM DIOXIDE SUPPLY AGREEMENT. Purchaser shall enter into a
five (5) year Titanium Dioxide supply agreement substantially in the form of
Exhibit F attached hereto.
ARTICLE 12
CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS
12.1 CONFIDENTIALITY. Consummation of the transactions contemplated by
this Agreement has involved, and will continue to involve, the written or verbal
disclosure and communication of information or documentation owned by Seller or
Purchaser, which information may include, but is not necessarily limited to,
financial data, business plans, personnel information, drawings, samples,
devices, trade secrets, technical information, computer systems and software,
results of research and other data in either oral or written form (collectively
and individually referred to as the "Information"). Purchaser and Seller agree
that the following terms and conditions will apply:
(a) The Information is disclosed solely for use in completing
corporate investigation procedures incidental to this Agreement, and each party
agrees not to use the Information prior to the Closing Date for any other
purpose, nor to disclose or communicate the Information to any third party,
except to those employees, agents, attorneys, accountants, lenders, or
consultants who shall have a need to know the Information for the purpose
described above and for whom the appropriate party shall be responsible unless
(i) such Information is already known to such party or to others not bound by a
duty of confidentiality or such Information is or becomes publicly available
through no fault of such party, (ii) the use of such Information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby, or (iii) the
furnishing or use of such Information is required by or necessary or appropriate
in connection with a legal proceeding.
(b) Except to the extent contemplated by this Agreement, the
Information
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and all rights to the Information which have been or will be provided by each
party shall remain the exclusive world-wide property of such party prior to the
Closing Date and shall be held by such party in trust for the benefit of the
other. Neither party will directly or indirectly, deal with, use, exploit, or
disclose such Information to any person or entity for any purpose prior to the
Closing Date, except as described herein or unless and until expressly
authorized in writing to do so by the other. If the transactions contemplated
hereby are not consummated, each party will return or destroy as much of such
written Information as the party furnishing such Information shall reasonably
request.
(c) The restrictions of this Section 12.1 shall terminate on the
Closing Date solely with respect to the Information conveyed to Purchaser, and
thereafter, such Information conveyed to Purchaser may be used free of any
restriction imposed by this Agreement.
12.2 PUBLIC ANNOUNCEMENTS. Seller and Purchaser will consult with each
other before issuing any press releases or otherwise making any public
statements or filings with governmental entities with respect to this Agreement
or the transactions contemplated hereby and shall not issue any press releases
or make any public statements or filings with governmental entities prior to
such consultation and shall modify any portion thereof if the other party
reasonably objects thereto, unless the same may be required by applicable law or
based upon advice of counsel.
ARTICLE 13
TERMINATION
13.1 TERMINATION. This Agreement may be terminated:
(a) by the mutual consent of Purchaser and Seller;
(b) by Purchaser: (i) if any condition in Article 8 becomes
impossible of performance or has not been satisfied in full or previously waived
by Purchaser in writing at or prior to the Closing Date, and (ii) as provided in
Sections 4.3(b), 4.7, or 8.19 hereof;
(c) by Seller if any condition in Article 9 becomes impossible of
performance or has not been satisfied in full or previously waived by Seller in
writing at or prior to the Closing Date; or
(d) by either party (other than a party that is in material breach of
its obligations under this Agreement) if the Closing shall not have occurred on
or before July 1, 1997.
13.2 EFFECT OF TERMINATION. As to any damages of either party arising from
the effect of termination or abandonment of this Agreement by the other party,
such party is only entitled to pursue its rights or remedies against the other
party to the extent the termination or abandonment by a party is due to the
other party's willful action or refusal to act as
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required pursuant to the terms hereof.
ARTICLE 14
INDEMNIFICATION
For the purposes of this Article 14, "Losses" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, removal and remediation requirements and expenses, including
without limitation, interest, penalties, and reasonable attorneys' and other
professional fees and expenses.
14.1 AGREEMENT OF SELLER TO INDEMNIFY. Subject to the terms and conditions
of this Article 14, Seller agrees to indemnify, defend, and hold harmless
Purchaser and its officers, directors, shareholders, employees and agents
(collectively, the "Purchaser Indemnitees") from, against, for, and in respect
of any and all Losses asserted against, relating to, imposed upon, or incurred
by the Purchaser Indemnitees by reason of, resulting from, based upon, or
arising out of:
(a) the breach of any representation or warranty of Seller contained
in or made pursuant to this Agreement or any other Acquisition Document or in
any certificate, Schedule, or Exhibit furnished by Seller in connection herewith
or therewith;
(b) the breach of any covenant or agreement of Seller contained in or
made pursuant to this Agreement or any other Acquisition Document;
(c) any Excluded Liability;
(d) the failure to deliver good, valid and marketable title to any of
the Acquired Assets and the encroachment of any building, structures or other
improvements, including pavement, currently located on the Real Property onto
the property of others including public rights-of-way and the location of any
buildings or other structures currently located on the Real Property in
violation of any set back lines or requirements imposed pursuant to zoning or
other ordinances now existing or existing at the time of the construction of
buildings or structures;
(e) any act or omission of Seller (as to the Real Property and Leased
Real Property), or any previous owner or operator (as to the Real Property) of
the underground storage tanks that are now or previously have been located on
the Real Property or Leased Real Property (the "Seller USTs") that would prevent
Seller from qualifying for reimbursement by the [Georgia Petroleum Storage Tank
Remediation Fund] or any other state having similar remediation funds for costs
associated with contamination caused by the Seller USTs; and
(f) any Environmental Liabilities. Seller also indemnifies Purchaser
to the same extent Seller has indemnified the landlords under the Real Property
Leases being assumed by Purchaser hereunder relating to actions taken or
omissions occurring prior to
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Closing.
14.2 AGREEMENT OF PURCHASER TO INDEMNIFY SELLER. Subject to the terms and
conditions of this Article 14, Purchaser agrees to indemnify, defend, and hold
harmless Seller and its officers, directors, shareholders, employees and agents
(collectively, the "Seller Indemnitees") from, against, for, and in respect of
any and all Losses asserted against, relating to, imposed upon, or incurred by
the Seller Indemnities arising out of:
(a) the breach of any representation or warranty of Purchaser
contained in or made pursuant to this Agreement or any other Acquisition
Document or in any certificate, Schedule, or Exhibit furnished by Purchaser in
connection herewith or therewith;
(b) the breach of any covenant or agreement of Purchaser contained in
or made pursuant to this Agreement or any other Acquisition Document; and
(c) any (i) Assumed Liability and (ii) liability arising out of the
operation of the Business by Purchaser or ownership of the Acquired Assets by
Purchaser after the Closing Date, except for any liability against which
Purchaser is entitled to indemnification pursuant to Section 14.1.
14.3 PROCEDURES FOR INDEMNIFICATION. As used herein, the term "Indemnitor"
means the party against whom indemnification hereunder is sought, and the term
"Indemnitee" means the party seeking indemnification hereunder.
(a) A claim for indemnification hereunder ("Indemnification Claim")
shall be made by the Indemnitee by delivery of a written declaration to the
Indemnitor requesting indemnification and specifying the basis on which
indemnification is sought and the amount of asserted Losses and, in the case of
a Third Party Claim (as hereinafter defined), containing (by attachment or
otherwise) such other information as the Indemnitee shall have concerning such
Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim, the
procedures set forth in Section 14.4 hereof shall be observed by the Indemnitee
and the Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, the Indemnitor shall have thirty (30) business days to object to
such Indemnification Claim by delivery of a written notice of such objection to
the Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by the Indemnitor and the Indemnification Claim shall
be paid in accordance with Section 14.3(d) hereof. If an objection is timely
interposed by the Indemnitor, then the Indemnitee and the Indemnitor shall
negotiate in good faith for a period of sixty (60) business days from the date
(such period is hereinafter referred to as the "Negotiation Period") the
Indemnitee receives such objection prior to commencing any formal legal action,
suit or proceeding with respect to
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such Indemnification Claim.
(d) Upon determination of the amount of an Indemnification Claim that
is binding on both the Indemnitor and the Indemnitee, the Indemnitor shall pay
the amount of such Indemnification Claim by check within ten (10) days of the
date such amount is determined.
14.4 DEFENSE OF THIRD PARTY CLAIMS. Should any claim be made, or suit or
proceeding (including, without limitation, a binding arbitration or an audit by
any taxing authority) be instituted against the Indemnitee which, if prosecuted
successfully, would be a matter for which the Indemnitee is entitled to
indemnification under this Agreement (a "Third Party Claim"), Indemnitee shall
promptly notify the Indemnitor of such Third Party Claim, and the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) The Indemnitor shall have thirty (30) days (or such lesser time
as may be necessary to comply with statutory response requirements for
litigation claims) from receipt of the Indemnification Claim (the "Notice
Period") to notify the Indemnitee, (i) whether or not the Indemnitor disputes
its liability to the Indemnitee with respect to such claim, and
(ii) notwithstanding any such dispute, whether or not the Indemnitor desires, at
its sole cost and expense, to defend the Indemnity against such claim.
(i) In the event that the Indemnitor notifies the Indemnitee
within the Notice Period that it desires to defend the Indemnitee against such
claim then, except as hereinafter provided, the Indemnitor shall have the right
to defend the Indemnitee by appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by the Indemnitor to a final conclusion in such a
manner as to minimize the risk of the Indemnitee becoming subject to liability
for any other significant matter. If the Indemnitee desires to participate in,
but not control, any such defense or settlement, it may do so at its sole cost
and expense. If, in the reasonable opinion of the Indemnitee, any such claim or
the litigation or resolution of any such claim involves an issue or matter which
could have a material and adverse effect on the business, operations, material
assets, material properties or material prospects of the Indemnitee, including
without limitation the administration of the tax returns and responsibilities
under the tax laws of the Indemnitee, then the Indemnitee shall have the right
to control the defense or settlement of any such claim or demand and its
reasonable costs and expenses shall be included as part of the indemnification
obligation of the Indemnitor. If the Indemnitee should elect to exercise such
right, the Indemnitor shall have the right to participate in, but not control,
the defense or settlement of such claim at its sole cost and expense.
(ii) Except where the Indemnitor (A) timely elects to defend the
Indemnitee against such claim or demand (in which case Section 14.4(a)(i) shall
govern), or (B) Indemnitor disputes its liability in a timely manner under this
Section 14.4, the Indemnitor shall be conclusively liable for the amount of any
such claim or defense which is unsuccessful.
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(b) The Indemnitee and the Indemnitor shall cooperate with each other
in all reasonable respects in connection with the defense of any Third Party
Claim, including making available records relating to such claim and furnishing,
without expense to the Indemnitor, management employees of the Indemnitee as may
be reasonably necessary for the preparation of the defense of any such claim or
for testimony as witness in any proceeding relating to such claim.
14.5 SETTLEMENT OF THIRD PARTY CLAIMS. No settlement of a Third Party
Claim involving the asserted liability of the Indemnitee under this Article 14
shall be made without the prior written consent by or on behalf of the
Indemnitee, which consent shall not be unreasonably withheld or delayed.
Consent shall be presumed in the case of settlements of $20,000 or less where
the Indemnitee has not responded within twenty (20) business days of written
notice of a proposed settlement. In the event of any dispute regarding the
reasonableness of a proposed settlement, the party that will bear the larger
financial loss resulting from such settlement shall make the final determination
in respect thereto, which determination shall be final and binding on all
involved parties.
14.6 DURATION; LIMITATIONS. The indemnification rights of the parties
hereto for Losses resulting from a breach of representations and warranties or
for breaches of covenants contained in this Agreement or any other Acquisition
Document (other than for tax, employee benefit, and environmental matters) is
subject to the condition that the Indemnitor shall have received written notice
of the Losses for which indemnity is sought within two (2) years after the
Closing Date. The Indemnitor shall be obligated to indemnify the Indemnitee
only when, and only with respect to amounts by which the aggregate of all Losses
actually paid or suffered by the Indemnitee as to which a right of
indemnification is provided under this Article 14 exceeds Two Hundred Thousand
Dollars ($200,000.00) in the aggregate (the "Deductible Amount"). The
indemnification rights of the parties hereto for Losses resulting from a breach
of representations and warranties or for breaches of covenants that are related
to environmental matters is subject to the condition that the Indemnitor shall
have received written notice of the Losses for which indemnity is sought within
ten (10) years of the Closing Date. The indemnification rights of the parties
hereto for Losses resulting from a breach of representations and warranties or
for breaches of covenants that are related to tax or employee benefit matters is
subject to the condition that the Indemnitor shall have received written notice
of the Losses for which indemnity is sought prior to the expiration of the
applicable statute of limitations therefor. The indemnification rights of the
parties hereto for Losses resulting from a breach of any representation and
warranty with respect to title to any of the Acquired Assets, or with respect to
the breach of any agreement or undertaking with respect to payment of the
Excluded Liabilities or Assumed Liabilities shall be effective for all purposes
hereunder without limitation as to the time within which such notice may be
given and without deduction for the Deductible Amount. Indemnitee shall seek
indemnification for individual claims related to losses resulting from a breach
of representations and warranties or for breaches of covenants only where each
such claim is in excess of $4,000.
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ARTICLE 15
GENERAL PROVISIONS
15.1 FEES AND EXPENSES. Except as specifically provided in this Agreement,
Seller and Purchaser each shall pay their respective fees and expenses in
connection with the transactions contemplated by this Agreement.
Notwithstanding anything to the contrary set forth herein, Seller shall not pay
any Excluded Liabilities or any fees or expenses incurred by Seller in
connection with the transactions contemplated by this Agreement, using the
Acquired Assets or any portion thereof, and if prior to the Effective Time a
portion of the Acquired Assets is used to pay any Excluded Liabilities, or any
of such fees and expenses, Seller shall reimburse Purchaser by the amount of
Acquired Assets so used.
15.2 NOTICES. All notices, request, demands, and other communications
hereunder shall be in writing (which shall include communications by telex and
telecopy) and shall be delivered (a) in person or by courier or overnight
service, (b) mailed by first class registered or certified mail, postage
prepaid, return receipt requested, or (c) by facsimile transmission followed by
first class mail, as follows:
(a) If to Seller:
Nord Kaolin Company
c/o Nord Resources Corporation
0000 Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxx
Facsimile (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Facsimile (000) 000-0000
(b) If to Purchaser:
Dry Branch Kaolin Company
Xxxxx 0, Xxx 000-X
Xxx Xxxxxx, Xxxxxxx 00000-0000
Telephone (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Esq.
Facsimile (000) 000-0000
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 15.2. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
15.3 ASSIGNMENT; BINDING EFFECT. Except as provided in this Section 15.3,
prior to the Closing, this Agreement shall not be assignable by any of the
parties hereto without the written consent of the other; provided, however, that
(a) at the Closing and upon notice to Seller, Purchaser may assign all of its
rights to be indemnified as provided in Article 14 to any lender or lenders
providing financing to Purchaser subject to all of the provisions hereof, and
(b) after the Closing, Purchaser may assign its interest in this Agreement to
any person or entity without the consent of Seller. From and after any such
assignment, the word "Purchaser" shall mean such assignee; provided, however,
that notwithstanding such assignment Dry Branch Kaolin Company shall not be
relieved of any of its obligations hereunder.
15.4 NO BENEFIT TO OTHERS. The representations, warranties, covenants, and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article 14 hereof, the Purchaser Indemnitees and the
Seller Indemnitees and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
15.5 HEADINGS, GENDER, AND "PERSON". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
15.6 COUNTERPARTS. This Agreement may be executed in two (2) or more
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counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
15.7 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
15.8 TIME OF ESSENCE. Time is of the essence in this Agreement.
15.9 GOVERNING LAW. This Agreement shall be construed under the laws of
the State of Georgia.
15.10 PARTIAL INVALIDITY. Whenever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
15.11 INVESTIGATION. Any inspection, preparation, or compilation of
information or Schedules, or assessment of the inventories, properties,
financial condition, or other matters relating to Seller conducted by or on
behalf of Purchaser pursuant to this Agreement shall in no way limit, affect, or
impair the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller set forth herein. Any disclosure made on
one Schedule shall not be deemed made on any other Schedule, unless appropriate
cross-referencing is made. The covenants and representations and warranties of
Seller and Purchaser shall survive the Closing and the execution and delivery of
all instruments of conveyance for the periods set forth in Section 14.6.
15.12 ARBITRATION. The parties agree that any dispute between or among
them arising out of or based upon this Agreement, the remaining Acquisition
Documents or the consummation of the transactions provided for herein shall be
submitted to and resolved by arbitration in Washington, D.C. in accordance with
the rules and procedures of the American Arbitration Association, and the
decision of the arbiter(s) in such dispute shall be final and binding on the
parties to such arbitration proceeding. Except as the arbiter(s) may otherwise
award or assess the expenses of any such proceeding, each party shall bear its
own costs and expenses, including the expense of its counsel, in any such
arbitration proceeding. If the matter in dispute is under $100,000, the parties
shall agree upon one (1) arbiter. If the matter in dispute exceeds $100,000,
the parties shall agree upon three (3) arbiters. Notwithstanding the foregoing,
either party shall be entitled to seek and obtain specific performance and/or
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injunctive relief from a court of competent jurisdiction.
(signatures appear on the following page)
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed and sealed on its behalf by its duly authorized officer, all as of the
day and year first above written.
PURCHASER:
DRY BRANCH KAOLIN COMPANY
[CORPORATE SEAL] By:
---------------------------
---------------------------
---------------------------
SELLER:
NORD KAOLIN COMPANY
[CORPORATE SEAL] By: Norplex, Inc., its General Partner
By: ---------------------------
---------------------------
---------------------------
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