Execution Copy
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I...................................................................1
ARTICLE II. PURCHASES.......................................................2
2.1 PURCHASE OF COMPANIES COMMON STOCK..................................2
2.2 PURCHASE PRICE......................................................2
2.3 WORKING CAPITAL ADJUSTMENT..........................................2
2.4 TAKING OF NECESSARY ACTION; FURTHER ACTION..........................4
2.5 ACCRUED BONUS PAYMENTS..............................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES.........5
3.1 ORGANIZATION OF THE COMPANIES.......................................5
3.2 CAPITALIZATION OF THE COMPANIES.....................................5
3.3 AUTHORIZATION.......................................................6
3.4 OFFICERS AND DIRECTORS..............................................6
3.5 BANK ACCOUNTS.......................................................6
3.6 SUBSIDIARIES........................................................6
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS................................7
3.8 TITLE TO ASSETS; REAL PROPERTY MATTERS..............................9
3.9 SUFFICIENCY OF ASSETS...............................................9
3.10 FIXTURES AND EQUIPMENT.............................................10
3.11 CONTRACTS..........................................................10
3.12 NO CONFLICT OR VIOLATION; CONSENTS.................................12
3.13 PERMITS............................................................12
3.14 FINANCIAL STATEMENTS; BOOKS AND RECORDS............................12
3.15 LIABILITIES........................................................12
3.16 LITIGATION.........................................................13
3.17 LABOR MATTERS......................................................13
3.18 EMPLOYEE BENEFITS..................................................14
3.19 TRANSACTIONS WITH RELATED PARTIES..................................16
3.20 COMPLIANCE WITH LAW................................................16
3.21 INTELLECTUAL PROPERTY..............................................16
3.22 TAX MATTERS........................................................17
3.23 INSURANCE..........................................................18
3.24 PURCHASE COMMITMENTS AND OUTSTANDING BIDS..........................18
3.25 PAYMENTS...........................................................18
3.26 CUSTOMERS AND SUPPLIERS............................................18
3.27 ENVIRONMENTAL MATTERS..............................................19
3.28 BROKERS; TRANSACTION COSTS.........................................19
3.29 NO OTHER AGREEMENTS TO SELL........................................20
3.30 YEAR 2000 MATTERS..................................................20
3.31 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.................20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES REGARDING THE STOCKHOLDERS......20
4.1 AUTHORITY..........................................................20
4.2 ORGANIZATION.......................................................21
4.3 OWNERSHIP OF SHARES................................................21
4.4 NO CONFLICTS.......................................................21
4.5 CONSENTS, APPROVALS, ETC...........................................21
4.6 BROKERS............................................................22
ARTICLE V. REPRESENTATIONS AND WARRANTIES REGARDING CORDANT................22
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TABLE OF CONTENTS
(Continued)
PAGE
5.1 ORGANIZATION OF CORDANT.............................................22
5.2 AUTHORIZATION.......................................................22
5.3 NO CONFLICT OR VIOLATION............................................23
5.4 CONSENTS............................................................23
5.5 NO BROKERS..........................................................23
5.6 LITIGATION..........................................................23
5.7 SEC REPORTS OF CORDANT..............................................23
5.8 APPROVAL............................................................24
ARTICLE VI. COVENANTS......................................................24
6.1 FURTHER ASSURANCES..................................................24
6.2 NO SOLICITATION.....................................................26
6.3 NOTIFICATION OF CERTAIN MATTERS.....................................26
6.4 ACCESS TO INFORMATION...............................................27
6.5 CONDUCT OF BUSINESS.................................................27
6.6 EMPLOYEES...........................................................28
6.7 RESIGNATIONS........................................................28
6.8 YEAR 2000 COMPLIANCE................................................29
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS.................29
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS...........................29
7.2 APPROVALS...........................................................29
7.3 NO ACTIONS OR COURT ORDERS..........................................30
7.4 CLOSING DOCUMENTS...................................................30
7.5 OPINION OF COUNSEL..................................................30
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF CORDANT.........................30
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS...........................30
8.2 APPROVALS; CONSENTS.................................................31
8.3 NO ACTIONS OR COURT ORDERS..........................................31
8.4 CLOSING DOCUMENTS...................................................31
8.5 OPINION OF COUNSEL..................................................31
8.6 MATERIAL ADVERSE CHANGE.............................................31
ARTICLE IX. CLOSING........................................................31
9.1 DELIVERIES BY THE COMPANIES OR THE STOCKHOLDERS TO CORDANT...........31
9.2 DELIVERIES BY CORDANT................................................32
ARTICLE X. SURVIVAL AND INDEMNIFICATION....................................33
10.1 SURVIVAL OF REPRESENTATIONS, ETC.; EXCLUSIVE REMEDIES..............33
10.2 INDEMNIFICATION BY STOCKHOLDERS....................................33
10.3 INDEMNIFICATION BY CORDANT.........................................35
10.4 NOTICE; COOPERATION; DEFENSE; ETC..................................35
10.5 TIME LIMITATIONS; RECOVERABLE DAMAGES..............................36
10.6 TAX INDEMNIFICATION................................................37
ARTICLE XI. MISCELLANEOUS..................................................37
11.1 TERMINATION........................................................37
11.2 BOOKS AND RECORDS;TAX MATTERS......................................38
11.3 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES...........................41
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TABLE OF CONTENTS
(Continued)
PAGE
11.4 NOTICES............................................................41
11.5 CHOICE OF LAW......................................................42
11.6 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS...........................43
11.7 COUNTERPARTS.......................................................43
11.8 INVALIDITY.........................................................43
11.9 EXPENSES...........................................................43
11.10 PUBLICITY..........................................................43
11.11 DEFINED TERMS......................................................43
11.12 TRUSTEE LIABILITY..................................................50
11.13 INTERPRETATION PROVISIONS..........................................50
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EXHIBIT INDEX
EXHIBIT A Ownership of Companies Common Stock
EXHIBIT B Allocation of Purchase Price
EXHIBIT C June 30, 1999 Balance Sheet for the Companies
EXHIBIT D-1 Form of Opinion of Counsel to Cordant
EXHIBIT D-2 Form of Opinion of Counsel to the Companies and the Stockholders
EXHIBIT E Form of Employment Agreement
EXHIBIT F Form of Senior Advisor and Employment Agreement
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is entered into
as of September 7, 1999 by and among (i) Cordant Technologies Inc., a
Delaware corporation ("CORDANT"), (ii) Continental/Midland, Inc., a
Delaware corporation ("Continental/Midland"), KORE, Inc., an Illinois
corporation ("KORE"), and KORE II, Inc., an Illinois corporation
("KORE II" and together with KORE and Continental/Midland, the
"COMPANIES"), (iv) Xxxxxx X. Xxxxxxxx, not individually, but solely as
trustee of the Xxxxxx X. Xxxxxxxx Revocable Trust dated June 17, 1988
(the "RSK TRUSTEE"), (v) Xxxx Xxx Xxxxxxxx and Xxxxxxxx X. Xxxxxxx,
not individually, but solely as co-trustees of (A) the Xxxxx Xxxxxxx
Xxxxxxxx Trust dated December 25, 1992 (in such capacity, the "DMK
TRUSTEES"), (B) the Xxxxxx Xxxxx Xxxxxxxx Trust dated December 25,
1992 (in such capacity, the "JMK TRUSTEES"), and (C) the Xxxxxx
Xxxxxxx Xxxxxxxx Trust dated December 25, 1992 (in such capacity, the
"RMK TRUSTEES"), and (vi) Xxxx Xxx Xxxxxxxx, an individual (Xx.
Xxxxxxxx, individually, together with the RSK Trustee, the DMK
Trustees, the JMK Trustees and the RMK Trustees, are herein
collectively referred to as the "STOCKHOLDERS."
RECITALS
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A. Upon the terms and subject to the conditions set forth in this
Agreement, the Stockholders desire to sell to Cordant, and Cordant desires
to purchase from the Stockholders all of the Companies Common Stock.
B. The Board of Directors of Cordant has determined that the
Purchases are advisable and fair to and in the best interests of Cordant's
stockholders and has approved this Agreement and the transactions
contemplated hereby. The respective Boards of Directors of each of the
Companies have approved this Agreement and the transactions contemplated
hereby.
C. The Stockholders collectively own all of the outstanding
common stock of the Companies in the amounts and percentages set forth on
EXHIBIT A hereto. Each of the Stockholders has approved this Agreement and
the transactions contemplated by this Agreement.
D. Cordant, the Companies and the Stockholders desire to make
certain representations, warranties, covenants and agreements in connection
with the Purchases and also prescribe various conditions to the Purchases
as set forth in this Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and for other good and valuable consideration,
the parties hereto agree as follows:
ARTICLE I.
[Intentionally Omitted]
ARTICLE II.
PURCHASES
2.1 PURCHASE OF COMPANIES COMMON STOCK. On and subject to the terms and
conditions of this Agreement, Cordant agrees to purchase from each of the
Stockholders, and each of the Stockholders agrees to sell to Cordant, all
of its or her shares of Companies Common Stock for the consideration
specified in this Article II (the "PURCHASES").
2.2 PURCHASE PRICE. The aggregate Purchase Price for the shares of
Companies Common Stock shall be $106 million LESS Debt as of the Closing
Date PLUS Cash as of the Closing Date, PLUS or MINUS the adjustment set
forth in Section 2.3 (the "PURCHASE PRICE"). The Purchase Price shall be
allocated among the Stockholders in the manner set forth on EXHIBIT B (to
be delivered at Closing) and will be paid by Cordant at the Closing to the
Stockholders by wire transfer of immediately available funds to accounts
designated by the Stockholders.
2.3 WORKING CAPITAL ADJUSTMENT. At the Closing, the parties shall calculate
an adjustment with respect to Consolidated Working Capital in accordance
with the following:
(a) ESTIMATED WORKING CAPITAL. At the Closing, the Companies
shall deliver to Cordant an estimated consolidating balance sheet setting
forth an estimate of the balance sheets of the Companies as of the Closing
Date, which are prepared using the same assumptions used in preparing the
June 30 Consolidating Balance Sheet (as defined in Section 2.3(b)) and an
estimation of Consolidated Working Capital, Debt and Cash as of the Closing
Date (the "ESTIMATED CONSOLIDATING BALANCE SHEET"). At the Closing, (i)
Cordant shall pay to the Stockholders (pro rata based on the Purchase Price
payable to the Stockholders of the Company with respect to which the
adjustment was made) the amount by which the Consolidated Working Capital
set forth on the Estimated Consolidating Balance Sheet is greater than the
Target Working Capital, or (ii) the Stockholders shall pay (pro rata based
on the Purchase Price payable to the Stockholders of the Company with
respect to which the adjustment was made) to Cordant the amount by which
the Consolidated Working Capital set forth on the Estimated Consolidating
Balance Sheet is less than the Target Working Capital (in either case, the
"ESTIMATED ADJUSTMENT AMOUNT"). The amount of the Consolidated Working
Capital set forth on the Estimated Consolidating Balance Sheet is referred
to herein as the "ESTIMATED WORKING CAPITAL." Amounts, if any, payable by
the Stockholders at the Closing pursuant to this Section 2.3(a) may be made
through a net wire transfer of the Purchase Price.
(b) DEFINITIONS. For purposes of this Agreement:
"CASH" shall mean cash and cash equivalents.
"DEBT" shall mean, with respect to any Person, any liability
(including, without limitation, accrued but unpaid interest) in respect of
(i) borrowed money, (ii) capitalized lease obligations and (iii)
obligations under interest rate agreements and currency agreements,
excluding intercompany debt; PROVIDED, HOWEVER, Debt shall not include
accounts payable or accrued liabilities.
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"CONSOLIDATED WORKING CAPITAL" shall mean as of the Closing Date
(i) the sum of Accounts Receivable, Inventory, Investments, Tooling, CSV
Life Insurance and Prepaid Assets, LESS (ii) the sum of Accounts Payable
and Accrued Liabilities, all as determined in the same manner and using the
same assumptions used in preparing the consolidating balance sheet dated
June 30, 1999 attached hereto as EXHIBIT C (the "JUNE 30 CONSOLIDATING
BALANCE SHEET"). The Estimated Consolidating Balance Sheet and the Closing
Consolidating Balance Sheet shall include an accrual for $1,854,328 for the
Deferred Compensation Plan (as defined in Section 3.15); PROVIDED, HOWEVER,
only $927,164 of that amount shall be included in Consolidated Working
Capital.
"TARGET WORKING CAPITAL" for the Companies (based on the June 30
Consolidating Balance Sheet) equals $13,262,000 (calculated as Current
Assets (excluding Cash) of $23,656,000 LESS Current Liabilities (excluding
the current portion of Debt) of $10,394,000).
(c) CLOSING WORKING CAPITAL; ADJUSTMENT NOTICE. Within 60 days
after the Closing, the Stockholders' Representative shall deliver to
Cordant a consolidating balance sheet as of the Closing Date, including the
Consolidated Working Capital, Debt and Cash as of the Closing Date (the
"CLOSING CONSOLIDATING BALANCE SHEET"). The Closing Consolidating Balance
Sheet shall not reflect any actions taken by the Companies or Cordant after
the Closing. The Closing Consolidating Balance Sheet also shall set forth
the difference, if any, between the Estimated Adjustment Amount and the
Final Adjustment Amount (as defined below) and any differences between the
amounts of Cash and Debt set forth on the Closing Consolidating Balance
Sheet and such amounts on the Estimated Consolidating Balance Sheet. The
"FINAL ADJUSTMENT AMOUNT" shall be the difference between the Consolidated
Working Capital and the Target Working Capital. The Closing Consolidating
Balance Sheet shall be prepared by the Stockholders' Representative, and
the Final Adjustment Amount will be determined, in the same manner and
using the same assumptions used in preparing the June 30 Consolidating
Balance Sheet. The Closing Consolidating Balance Sheet shall be final and
binding on the parties unless within 30 days after receipt thereof, Cordant
provides the Stockholders' Representative with written notice disputing the
calculation of Consolidated Working Capital, Debt or Cash on the Closing
Consolidating Balance Sheet (the "ADJUSTMENT NOTICE"). The Adjustment
Notice shall specify in reasonable and sufficient detail the nature of any
disagreement so asserted and the amount of Consolidated Working Capital,
Debt or Cash proposed by Cordant. If an Adjustment Notice is received by
the Stockholders' Representative in a timely manner, then the Closing
Consolidating Balance Sheet shall become final and binding upon the parties
on the earlier of (i) the date Cordant and the Stockholders' Representative
resolve in writing any differences they have with respect to the matters
set forth in the Adjustment Notice, or (ii) the date any disputed matters
are finally resolved in writing by the Arbitrator appointed pursuant to
Section 2.3(d).
(d) RESOLUTION OF DISPUTES; ARBITRATION. During the 30-day period
following the delivery of the Adjustment Notice, Cordant and the
Stockholders' Representative shall seek in good faith to resolve in writing
any differences which they may have with respect to any matter specified in
the Adjustment Notice. If, at the end of such 30-day period, Cordant and
the Stockholders' Representative have not reached agreement on such
matters, the matters which remain in dispute shall be submitted to an
arbitrator (the "Arbitrator") for review and resolution. The arbitrator
shall be PriceWaterhouseCoopers, or if such firm is unable or unwilling to
act,
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such other nationally recognized independent public accounting firm as
shall be agreed upon by Cordant and the Stockholders' Representative in
writing. The Arbitrator shall render a written decision resolving the
matters in dispute within 30 days following their submission to such
Arbitrator, which decision shall be final and binding upon the parties. In
the event the parties submit any matters to the Arbitrator pursuant to this
Section 2.3(d), Cordant and the Stockholders will share the expenses of the
Arbitrator as follows: (i) if the Arbitrator resolves all of such matters
in favor of Cordant, the Stockholders will be responsible for all of the
fees and expenses of the Arbitrator; (ii) if the Arbitrator resolves all of
such matters in favor of the Stockholders, Cordant will be responsible for
all of the fees and expenses of the Arbitrator; (iii) if the Arbitrator
resolves some of such matters in favor of Cordant and the rest of such
matters in favor of the Stockholders, (A) Cordant will be responsible for
that fraction of the fees and expenses of the Arbitrator equal to (x) the
difference between the Consolidated Working Capital amount proposed by
Cordant in the Adjustment Notice and the amount thereof determined by the
Arbitrator, DIVIDED BY (y) the difference between the Consolidated Working
Capital proposed by Cordant in the Adjustment Notice and the value set
forth in the Closing Consolidating Balance Sheet, and (B) the Stockholders
shall be responsible for the remaining fees and expenses of the Arbitrator.
(e) FINAL SETTLEMENT OF WORKING CAPITAL ADJUSTMENT. Once the
final Consolidated Working Capital, Cash and Debt amounts set forth on the
Closing Consolidating Balance Sheet, including the Final Adjustment Amount,
are established pursuant to this Section 2.3, then (i) Cordant shall
promptly pay to the Stockholders (pro rata based on the Purchase Price
allocated to the Stockholders) the amount by which the Final Adjustment
Amount is greater than the Estimated Adjustment Amount, or (ii) the
Stockholders shall promptly pay (pro rata based on the Purchase Price
allocated to the Stockholders) to Cordant the amount by which the Final
Adjustment Amount is less than the Estimated Adjustment Amount, in either
case by wire transfer of immediately available funds to an account
designated by the recipient of such funds.
(f) STOCKHOLDERS' REPRESENTATIVE. In order to administer the
provisions of this Section 2.3 and Article X on behalf of the Stockholders,
the Stockholders hereby appoint Xxxxxx X. Xxxxxxxx, or if he ceases to be
the Stockholders' Representative, Xxxx Xxx Xxxxxxxx, to act as their
representative (the "STOCKHOLDERS' REPRESENTATIVE").
2.4 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Cordant, the
Companies and the Stockholders shall take all such reasonable lawful action
as may be necessary or appropriate in order to effect the Purchases in
accordance with this Agreement as promptly as practicable and to execute
and deliver all such proper deeds, assignments, and assurances as are
reasonably necessary and do all other things reasonably necessary or
desirable to continue to vest, perfect or confirm title to such property or
rights in the Companies after the Closing and otherwise to carry out the
purpose of this Agreement, in the name of such Company or otherwise.
2.5 ACCRUED BONUS PAYMENTS. Cordant agrees to pay, or cause to be paid, at
the Closing or within 15 Business Days thereafter, an amount not to exceed
$5,000,000 representing accrued bonus and profit sharing contributions in
the manner, to the Persons and in the respective amounts set forth on a
schedule thereof to be provided by the Companies prior to the Closing
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Date. The amount shall be included on the Estimated Consolidating Balance
Sheet and the Closing Consolidating Balance Sheet.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
Except as set forth on the Companies Disclosure Schedule, each of
the Stockholders (severally, and not jointly and severally) and the
Companies jointly and severally makes the following representations and
warranties to Cordant:
3.1 ORGANIZATION OF THE COMPANIES. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Companies has full corporate
power and authority to conduct its Business as it is presently being
conducted and to own or lease, as applicable, its Assets. Each of the
Companies is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is
necessary under applicable law as a result of the conduct of its Business
or the ownership of its properties, except where the failure to be so
qualified would not have a Material Adverse Effect. Each jurisdiction in
which each of the Companies is qualified to do business as a foreign
corporation is set forth in Section 3.1 of the Companies Disclosure
Schedule. Copies of the Articles of Incorporation or the Certificate of
Incorporation and Bylaws of each of the Companies heretofore delivered to
Cordant are accurate and complete.
3.2 CAPITALIZATION OF THE COMPANIES
(a) The authorized capital stock of the Companies consists of (i)
56,047 shares of Continental/Midland Common Stock, of which 56,000 shares
constitute Series 1 Common Stock and 47 shares constitute Series 2 Common
Stock, (ii) 1,000,000 shares of KORE Common Stock, and (iii) 1,000 shares
of KORE II Common Stock, of which 10 shares constitute Class A Common Stock
and 990 shares constitute Class B Common Stock. As of the date hereof,
there are issued and outstanding (A) with respect to Continental/Midland,
55,813.14 shares of Series 1 Common Stock and 46.86 shares of Series 2
Common Stock, (B) with respect to KORE, 50,000 shares of KORE Common Stock,
and (C) with respect to KORE II, 10 shares of Class A Common Stock and 990
shares of Class B Common Stock. None of the Companies has any other capital
stock authorized, issued or outstanding.
(b) Except for this Agreement, there are no outstanding options,
warrants, convertible securities or rights of any kind to purchase or
otherwise acquire any shares of capital stock or other securities of the
Companies. No shares of capital stock of any of the Companies are reserved
for future issuance.
(c) All outstanding shares of the Companies Common Stock are
validly issued, fully paid and non-assessable and not subject to any
preemptive rights created by statute, the respective Articles or
Incorporation or Certificate of Incorporation or Bylaws of the Companies,
or any Contract, other than as set forth in Section 3.2(c) of the Companies
Disclosure Schedule. The shares of the Companies Common Stock have been or
will be issued in compliance with all federal and state corporate and
securities laws.
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(d) Except pursuant to this Agreement, there is outstanding no
vote, plan or pending proposal for any redemption of stock of the Companies
or merger or consolidation of the Companies with or into any other entity.
3.3 AUTHORIZATION. Each of the Companies has all necessary corporate power
and authority to enter into this Agreement and has taken or will take prior
to the Closing Date all corporate action necessary to consummate the
transactions contemplated hereby and to perform its obligations hereunder.
The execution and delivery of this Agreement by each of the Companies, and
the performance by each of the Companies of its obligations hereunder and
the consummation by each of the Companies of the transactions contemplated
hereby, have been duly authorized by its Board of Directors. This Agreement
has been duly executed and delivered by each of the Companies and, assuming
due authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of each of the Companies
enforceable against it in accordance with its terms, except as
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors and general principles of equity.
3.4 OFFICERS AND DIRECTORS. Section 3.4 of the Companies Disclosure
Schedule contains a list of all of the officers and directors of the
Companies as of the date hereof.
3.5 BANK ACCOUNTS. Section 3.5 of the Companies Disclosure Schedule
contains a list of all bank accounts and safe deposit boxes of the
Companies, MSD Stamping, Inc. ("MSD") and Patco, L.P. ("PATCO"), and
persons authorized to draw thereon or have access thereto.
3.6 SUBSIDIARIES
(a) Other than KORE II's equity interests in MSD and
Continental/Midland's equity interests in XXX Tool, Inc. ("XXX TOOL"),
International Pin and Patco, none of the Companies owns or holds, directly
or indirectly, any equity interest of any kind in any Person. Each of MSD,
Patco, International Pin and XXX Tool is referred to herein as a
"SUBSIDIARY" and collectively as the "SUBSIDIARIES."
(b) Section 3.6 of the Companies Disclosure Schedule sets forth
the jurisdiction and date of formation, any officers and directors,
authorized stock or other equity interests, the current owners of its
equity and their respective ownership interests therein of each Subsidiary
and any jurisdictions in which any such Subsidiary is qualified to do
business as a foreign corporation or partnership. Each Subsidiary that is a
corporation (i) is a corporation duly incorporated and validly existing
under the laws of its jurisdiction of incorporation, (ii) has all necessary
corporate power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its
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Business in all respects as currently conducted by it and (iii) is duly
qualified as a foreign corporation to do business and is in good standing,
in each jurisdiction where the character of its properties owned, operated
or leased or the nature of its activities requires such qualification,
except for such jurisdictions where failure to be so qualified would not
have a Material Adverse Effect. Patco (i) is duly formed and validly
existing under the laws of its jurisdiction of formation, (ii) has all
necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its Business in
all respects as currently conducted by it and (iii) is duly qualified to do
business and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
requires such qualification, except for such jurisdictions where failure to
be so qualified would not have a Material Adverse Effect. Copies of the
Articles of Incorporation and Bylaws (or similar organizational documents)
of each Subsidiary heretofore delivered to Cordant are accurate and
complete. Subject, in the case of Patco, to the Patco L.P. Limited
Partnership Agreement dated September 30, 1992, in the case of XXX Tool, to
the XXX Tool Shareholder Agreement dated September 30, 1992, and in the
case of International Pin, to the Amended and Restated Joint Venture
Agreement between CMI and Powers Products I, L.L.C. dated April 1, 1995,
(i) the shares of capital stock or other equity interests of each
Subsidiary that are owned by the Companies are owned free and clear of any
Encumbrances of any kind (except those of the Banks) and are fully paid and
nonassessable and (ii) there are no options, warrants or rights of
conversion or any other Contract relating to any Subsidiary obligating such
Subsidiary, directly or indirectly, to issue additional shares of its
capital stock or other securities or other equity interests.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Section
3.7 of the Companies Disclosure Schedule, since the Balance Sheet Date
there has not been any:
(a) Material Adverse Change;
(b) failure to operate the Business of any of the Companies, MSD
or Patco in the ordinary course of business or failure to use commercially
reasonable efforts to preserve such Business intact and to preserve the
continued services of the employees and independent contractors of the
Companies, MSD and Patco and the goodwill of suppliers, customers and
others having business relations with the Companies, MSD or Patco;
(c) resignation or termination of any officer or key employee, or
any increase (outside the ordinary course of business) in the rate of
compensation payable or to become payable to any officer, key employee or
consultant of any of the Companies, including the making of any loan to, or
the payment, grant or accrual of any bonus, incentive compensation, service
award or other similar benefit to, any such Person (outside the ordinary
course of business), or the addition to, modification of, or contribution
to any Employee Plan of the Companies or MSD other than the extension of
coverage under any such Employee Plan to others who became eligible after
the Balance Sheet Date;
(d) payment, loan or advance of any amount to or in respect of,
or the sale, transfer or lease of any properties or Assets of the Companies
or MSD to, or entering into of any Contract with, any Related Party of the
Companies or MSD, except (i) directors' fees, (ii) compensation to
employees in the ordinary course of business, (iii) intercompany
indebtedness, (iv) sales of Inventory in the ordinary course of business
for cash or on credit, (v) common paymaster arrangements, and (vi)
distributions to Stockholders of Cash;
(e) sale, assignment, license, transfer or encumbrance of any
Assets of the Companies or MSD, tangible or intangible, singly or in the
aggregate, other than sales of products and services and licenses in the
ordinary course of business;
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(f) new Contracts of the Companies or MSD, or extensions,
modifications,terminations or renewals thereof, except for such Contracts
(i) entered into, modified or terminated in the ordinary course of business
or (ii) entered into in connection with the transactions contemplated
hereby or by any Ancillary Agreement;
(g) to the Companies' knowledge, except with respect to
International Pin, actual or threatened termination of any material
customer account or group of accounts or actual or threatened material
reduction in purchases or royalties payable by any such customer or, to the
knowledge of the Companies, the occurrence of any event that is likely to
result in any such termination or reduction;
(h) to the Companies' knowledge, actual or threatened termination
by any material supplier to the Companies, MSD or Patco;
(i) disposition or lapsing of any Proprietary Rights of the
Companies or MSD, in whole or in part, or, to the knowledge of the
Companies, any disclosure of any material trade secret, process or know-how
to any Person not an employee or, to the extent bound by an agreement with
respect to the confidentiality and non-disclosure thereof, any other
Representative of the Companies or their Affiliates;
(j) material change in accounting methods or practices by the
Companies. MSD or Patco;
(k) damage, destruction or loss (whether or not covered by
insurance) that would likely have a Material Adverse Effect;
(l) except for intercompany distributions, declaration, setting
aside or payment of dividends or distributions in respect of any stock of
any of the Companies or MSD, or any redemption, purchase or other
acquisition of any equity securities of any of the Companies or MSD;
(m) issuance or reservation for issuance by any of the Companies
or MSD of any shares of stock or other equity securities or obligations or
securities convertible into or exchangeable for shares of stock or other
equity securities;
(n) commitment by or on behalf of any of the Companies or MSD to
issue or reserve for issuance, any shares of stock or other equity
securities or obligations or securities convertible into or exchangeable
for shares of stock or other equity securities (other than stock options
granted in the ordinary course of business);
(o) amendment of the charter or bylaws of any of the Companies or
MSD;
(p) capital expenditure or execution of any lease or any
incurring of liability therefor by any of the Companies or MSD outside the
ordinary course of business;
(q) cancellation of any material indebtedness or waiver of any
rights of substantial value to the Companies or MSD, except in the ordinary
course of business;
8
(r) indebtedness incurred by the Companies or MSD for borrowed
money or any commitment to borrow money entered into by the Companies or
MSD, except in the ordinary course of business, or any loans made or agreed
to be made by the Companies or MSD (excluding intercompany indebtedness and
advances to employees in the ordinary course of business);
(s) any increase or change in any assumptions underlying or
methods of calculating any bad debt, contingency or other reserves;
(t) acquisition by the Companies or MSD of any equity interest in
any other Person; or
(u) agreement by the Companies or MSD to do any of the foregoing.
3.8 TITLE TO ASSETS; REAL PROPERTY MATTERS
(a) The Companies and MSD have good and marketable title to, or a
valid leasehold interest in, their respective Assets reflected in the
Companies Balance Sheet. Except as set forth on Section 3.8 of the
Companies Disclosure Schedule, no Assets of the Companies or MSD are
subject to any Encumbrances, other than Permitted Encumbrances.
(b) Section 3.8 of the Companies Disclosure Schedule contains a
list of all real property and interests in real property owned or leased by
the Companies or MSD (the "REAL PROPERTY"). The Companies have delivered
true and complete copies of the most recent title insurance policies
covering the Real Property owned by the Companies and MSD which are in the
possession or control of the Companies (the "TITLE POLICIES"). To the
knowledge of the Companies, there are no Encumbrances on the Real Property
owned by Continental/Midland, other than Permitted Encumbrances and any
Encumbrances described in Section 3.8 of the Companies Disclosure Schedule.
The uses for which the buildings, facilities and other improvements located
on the Real Property (the "IMPROVEMENTS") are zoned do not materially
restrict, or in any manner materially impair, the use of the Improvements
for purposes of the Businesses of the Companies and MSD. Except as set
forth in Section 3.8 of the Companies Disclosure Schedule, the Companies or
MSD is the lessee and is in possession of each of the leased premises set
forth on Section 3.8 of the Companies Disclosure Schedule. Each such lease
pursuant to which such leasehold estate is granted is valid and without any
material Default thereunder by the Companies, or, to the knowledge of the
Companies, the landlord. Except as set forth in Section 3.8 of the
Companies Disclosure Schedule, there is no pending or, to the knowledge of
the Companies, threatened, condemnation, eminent domain or similar
proceeding with respect to the Real Property or the Improvements. Except as
set forth on Section 3.8 of the Companies Disclosure Schedule, there are no
capitalized leases of real or personal property.
3.9 SUFFICIENCY OF ASSETS. The Assets of the Companies and MSD constitute
all of the assets, rights and properties, tangible or intangible, real or
personal, which are required for the operation of their respective
Businesses.
9
3.10 FIXTURES AND EQUIPMENT. Section 3.10 of the Companies Disclosure
Schedule contains a schedule of all machinery and equipment of the
Companies and MSD where the value of an individual item exceeds $50,000 or
where an aggregate of similar items exceeds $100,000.
3.11 CONTRACTS
(a) DISCLOSURE. Section 3.11 of the Companies Disclosure Schedule
sets forth a complete and accurate list of all Contracts of the Companies
and MSD of the following categories that are currently enforceable with
respect to any provision thereof (except for loan agreements with the Banks
and except for Contracts for the sale of product or purchase of raw
material in the ordinary course of business);
(i) Contracts not made in the ordinary course of business
(including partnership agreements);
(ii) Manufacturing or joint development agreements;
(iii) License agreements or royalty agreements, whether any
of the Companies or MSD is the licensor or licensee thereunder (other than
software licenses available to and used by businesses generally);
(iv) Multi-year sales contracts;
(v) Original equipment manufacturer agreements or
distributor agreements;
(vi) Research agreements;
(vii) Output or requirement agreements;
(viii) Contracts involving aggregate future expenditures by
the Companies or the receipt of funds by the Companies in excess of
$250,000 per Contract (or related Contracts) after the date hereof;
(ix) Material Contracts or commitments relating to
commission arrangements with others;
(x) Employment contracts, consulting contracts and severance
agreements, including contracts (A) to employ or terminate executive
officers or other personnel and other contracts with present or former
officers, directors or stockholders of any of the Companies or MSD, or (B)
that will result in the payment by, or the creation of any Liability to
pay, any severance, termination, "golden parachute," or other similar
payments to any present or former personnel following termination of
employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
10
(xi) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money in excess of $250,000,
whether the Companies or MSD shall be the borrower, lender or guarantor
thereunder (excluding loan documents with the Banks, credit provided by the
Companies or MSD in the ordinary course of business to purchasers of its
products, obligations to pay vendors and service providers in the ordinary
course of business generally and obligations to employees for accrued
salary, vacation, benefits or other compensation or for reimbursable
expenses);
(xii) Contracts containing covenants limiting the freedom of
the Companies or MSD or, to the knowledge of the Stockholders, any officer,
director, employee or Affiliate of the Companies or MSD, to engage in any
line of business or compete with any Person;
(xiii) Any material Contract with the federal, state or
local government or any agency or department thereof (excluding purchase
orders for off-the-shelf products);
(xiv) Any Contract with a Related Party of the Companies or
MSD (excluding employment Contracts, intercompany loans and guarantees and
intercompany sales of goods and services); and
(xv) Leases of real or personal property obligating the
Companies or MSD to pay in excess of $50,000 per year per lease.
True, correct and complete copies of all of the Contracts listed on
Schedule 4.11, including all amendments and supplements thereto, have been
made available to Cordant.
(b) ABSENCE OF DEFAULTS. All material Contracts of the Companies,
MSD and Patco, including all leases of real property, are valid and binding
obligations of, and enforceable in all material respects in accordance with
their terms against, the Companies, MSD, Patco and, to the knowledge of the
Companies, the other parties thereto, and there are no existing (or to the
knowledge of the Companies, threatened) material Defaults or disputes
thereunder or in connection therewith. No written notice of any claim of
material Default has been given to the Companies, MSD or Patco. Except for
delays in the ordinary course of business, the Companies have no reason to
believe that the products and services called for by any of the unfinished
Contracts of the Companies, MSD and Patco cannot be supplied substantially
in accordance with the terms of such Contract, including time
specifications.
(c) PRODUCT WARRANTY. To the knowledge of the Companies, there
has been no occurrence which is expected to give rise to a material product
liability or Liability for breach of warranty (whether covered by insurance
or not) on the part of any of the Companies, MSD or Patco, with respect to
products designed, manufactured, assembled, sold, repaired, maintained,
delivered or installed or services rendered prior to or on the Closing Date
other than as set forth in the Companies Financial Statements or as may
have occurred in the ordinary course of business.
11
3.12 NO CONFLICT OR VIOLATION; CONSENTS. Except as set forth on Section
3.12 of the Companies Disclosure Schedule, none of the execution, delivery
or performance by the Companies of this Agreement, the consummation by the
Companies of the transactions contemplated hereby, nor compliance by the
Companies with any of the provisions hereof, will (a) violate or conflict
with any provision of its governing documents, (b) to the knowledge of the
Companies, violate, conflict with, or result in a breach of or constitute a
default (with or without notice or passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a
right to terminate, accelerate, modify or cancel under or result in the
creation of any Encumbrance upon any of their respective Assets under, any
material Contract or other material arrangement to which the Companies or
MSD is a party or by which the Companies or MSD are bound or to which any
of their respective material Assets are subject, (c) violate any Regulation
or Court Order applicable to the Companies or MSD, or (d) impose any
Encumbrance on any of the material Assets of the Companies or MSD. Except
for (i) applicable requirements of the HSR Act and (ii) as set forth on
Section 3.12 of the Companies Disclosure Schedule, to the knowledge of the
Companies, no notices to, declarations, filings or registrations with,
approvals or consents of, or assignments by, any Persons (including any
federal, state or local governmental or administrative authorities) are
necessary to be made or obtained by the Companies or MSD in connection with
the execution, delivery or performance of this Agreement or the
consummation of the Purchases, except where the failure to obtain such
consent, approval, authorization or action, or to make such filing,
declaration, registration or notification would not, when taken together
with all other such failures by the Companies, have a material adverse
effect on the ability of the Companies to perform their respective
obligations under this Agreement or to consummate the transactions
contemplated hereby.
3.13 PERMITS. The Companies and MSD have, and during the past three years
have had, all Permits required under any applicable Regulation in the
operation of their Businesses or in their ownership of their Assets, and
own or possess such Permits free and clear of all Encumbrances, except, in
each case, where the failure would not have a Material Adverse Effect. None
of the Companies or MSD is in default, nor has any of the Companies or MSD
received any notice of any claim of default, with respect to any such
Permit except where the default would not have a Material Adverse Effect.
3.14 FINANCIAL STATEMENTS; BOOKS AND RECORDS. The Companies Financial
Statements fairly present in all material respects the Assets, Liabilities
and financial condition and results of operations of the respective
Companies (and, with respect to KORE II, of KORE II and MSD on a
consolidated basis) as of the respective dates or for the respective
periods set forth therein, all in conformity with GAAP consistently applied
throughout the periods covered thereby, except as otherwise indicated in
the notes thereto and subject, in the case of unaudited interim financial
statements, to normal year-end adjustments that are not expected to be
material in amount, and except that the Deferred Compensation Plan is not
reflected as a Liability on the Companies Financial Statements. The stock
records of the Companies and MSD heretofore made available to Cordant are
complete in all material respects and reflect all issuances, transfers and
redemptions of capital stock of the Companies and, to the Companies'
knowledge, MSD.
3.15 LIABILITIES. None of the Companies or MSD has any material Liabilities
or obligations (absolute, accrued, contingent or otherwise) that would be
required to be reflected on or reserved
12
against in a balance sheet prepared in accordance with GAAP except (i)
Liabilities which are reflected or disclosed in the Companies Financial
Statements (including the notes thereto), (ii) Liabilities incurred in the
ordinary course of business since the Balance Sheet Date, (iii) Liabilities
arising under the Contracts of the Companies and MSD and which have arisen
or been incurred in the ordinary course of business, (iv) Liabilities
(including Liabilities arising under any Contracts disclosed in the
Companies Disclosure Schedule) disclosed in this Agreement or in the
Companies Disclosure Schedule, (v) obligations under Continental/Midland's
Selective Executive Profit Sharing Program (the "DEFERRED COMPENSATION
PLAN"), (vi) obligations to pay the bonuses and profit-sharing
contributions referred to in Section 2.5, (vii) Liabilities that would not,
individually or in the aggregate, have a Material Adverse Effect, and
(viii) Liabilities of International Pin reflected on the financial
statements, including the notes thereto, of International Pin.
3.16 LITIGATION. Except as set forth on Section 3.16 of the Companies
Disclosure Schedule, there is no Action (or series of related Actions)
pending or, to the knowledge of the Companies, threatened or anticipated
(i) against, relating to or affecting the Companies, MSD or Patco or any of
their material Assets or any of their officers and directors as such
involving an amount in excess of $250,000, (ii) which seek to enjoin or
obtain damages in respect of the transactions contemplated hereby or (iii)
with respect to which there is a reasonable likelihood of a determination
which would prevent the Companies from consummating the transactions
contemplated hereby. Except for matters which are generally applicable to
companies engaged in a business comparable or similar to the Businesses of
the Companies, MSD or Patco and except as specified in Section 3.16 of the
Companies Disclosure Schedule, there are presently no outstanding
judgments, decrees or orders of any court or, to the knowledge of the
Companies, any governmental or administrative agency against or materially
adversely affecting the Companies, MSD or Patco or their Businesses or any
of their Assets.
3.17 LABOR MATTERS
(a) Except as set forth in Section 3.17 of the Companies
Disclosure Schedule, none of the Companies or MSD is a party to any labor
agreement with respect to its employees with any labor organization, group
or association and, to the knowledge of the Companies, has not been within
the past three years the subject of any formal attempt by organized labor
or its officials to make the Companies or MSD conform to demands of
organized labor relating to its employees or to enter into a binding
agreement with organized labor that would cover the employees of the
Companies or MSD. Except as set forth in Section 3.17 of the Companies
Disclosure Schedule, there is no unfair labor practice charge or complaint
against any of the Companies or MSD pending before the National Labor
Relations Board or any other governmental agency arising out of the
activities of the Companies or MSD, and none of the Companies has any
knowledge of any facts or information which would reasonably be expected to
give rise thereto; there is no labor strike or labor disturbance pending
or, to the knowledge of the Companies, threatened against the Companies or
MSD; and none of the Companies or MSD has experienced a work stoppage.
(b) Except as set forth in Section 3.17 of the Companies
Disclosure Schedule, none of the Companies or MSD has entered into any
severance or similar arrangement in respect
13
of any present or former employee that will result in any obligation
(absolute or contingent) to make any payment to any present or former
employee following termination of employment. Except as set forth in
Section 3.17 of the Companies Disclosure Schedule, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in the acceleration or the creation or
vesting of any rights of any Person to benefits under any of the Employee
Plans of the Companies or MSD, including but not limited to the
acceleration of the exercisability of any stock options, the acceleration
of the vesting of any restricted stock, the acceleration of the accrual or
vesting of any benefits under any Pension Plan or the creation of rights
under any severance, parachute or change of control agreement.
3.18 EMPLOYEE BENEFITS
(a) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND
OTHER INFORMATION. Section 3.18 of the Companies Disclosure Schedule
contains a complete list of Employee Plans covering any employees of the
Companies or MSD (with respect to their relationship with such entities).
True and complete copies of each of the following documents have been
delivered or made available to Cordant by the Companies: (i) each Welfare
Plan and Pension Plan (and, if applicable, related trust agreements) and
all amendments thereto, all written interpretations thereof and written
descriptions thereof which have been distributed to the employees of the
Companies or MSD and all annuity contracts or other funding instruments,
(ii) each Benefit Arrangement including written interpretations thereof and
written descriptions thereof which have been distributed to the Companies'
employees (including descriptions of the number and level of employees
covered thereby), (iii) the most recent determination letter issued by the
Internal Revenue Service with respect to each Pension Plan, (iv) for the
three most recent plan years, Annual Reports on Form 5500 Series required
to be filed with any governmental agency for each Pension Plan, (v) a
description of complete age, salary, service and related data as of the
last day of the last plan year for employees and former employees of the
Companies and MSD and (vi) a description setting forth the amount of any
Liability of the Companies or MSD as of the Closing Date for payments more
than 30 days past due with respect to each Welfare Plan.
(b) REPRESENTATIONS.
(i) PENSION PLANS. None of the Pension Plans of the
Companies or MSD is subject to the minimum funding requirements of ERISA or
the Code. Either (A) the Internal Revenue Service has issued determination
letters stating that each such Pension Plan is qualified and each related
trust agreement, annuity contract or other funding instrument is tax-exempt
under the provisions of Code Sections 401(a)(or 403(a), as appropriate) and
501(a) and have been so qualified and tax-exempt, respectively, or (B) each
such Pension Plan has been established under a standardized prototype plan
for which an Internal Revenue Service opinion letter has been obtained by
the plan sponsor and is valid as to the adopting employer, and in either
case, to the Companies' knowledge, nothing has occurred that would
adversely affect such qualified and tax-exempt status, respectively.
14
(ii) MULTIEMPLOYER PLANS. None of the Companies or any ERISA
Affiliate thereof contributes to, or within the past six years has been
obligated to, contribute to any Multiemployer Plan.
(iii) WELFARE PLANS. Except for the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) and the proposed regulations thereunder,
none of the Companies, any ERISA Affiliate thereof or any Welfare Plan has
any present or future obligation to make any payment to or with respect to
any present or former employee of the Companies or any ERISA Affiliate
thereof pursuant to any retiree medical benefit plan, or other retiree
Welfare Plan, and no condition exists which would prevent the Companies
from amending or terminating any such benefit plan or Welfare Plan.
(iv) COMPLIANCE WITH LAW. Each Welfare Plan of the Companies
which is a "group health plan," as defined in Section 607(1) of ERISA, has
been operated in material compliance with the provisions of Part 6 of Title
I of ERISA and Section 4980B of the Code at all times.
(v) BENEFIT ARRANGEMENTS. Each Benefit Arrangement which
covers or has covered employees or former employees of the Companies or MSD
(with respect to their relationship with such entities) has been maintained
in material compliance with its terms and with the requirements prescribed
by any and all Regulations which are applicable to such Benefit
Arrangement, including the Code.
(vi) AT-WILL EMPLOYMENT. Except as set forth in Section 3.18
of the Companies Disclosure Schedule, and except for employees covered by a
collective bargaining agreement or as otherwise provided by law, the
employment of all persons presently employed or retained by the Companies
or MSD is terminable at will, at any time and without advance notice.
(vii) UNRELATED BUSINESS TAXABLE INCOME. No Employee Plan of
the Companies (or trust or other funding vehicle pursuant thereto) is
subject to any Tax under Section 511 of the Code.
(viii) DEDUCTIBILITY OF PAYMENTS. Except as disclosed in
Section 3.18 of the Companies Disclosure Schedule, there is no Contract or
bonus plan covering any employee or former employee of the Companies or MSD
(with respect to their relationship with such entities) that, individually
or collectively, provides for the payment by the Companies or MSD of any
amount (i) that is not deductible under Section 162(a)(1) or 404 of the
Code or (ii) that is an "excess parachute payment" pursuant to Section 280G
of the Code.
(ix) FIDUCIARY DUTIES AND PROHIBITED TRANSACTIONS. None of
the Companies or, to the knowledge of the Companies, any plan fiduciary of
any Welfare Plan or Pension Plan which covers or has covered employees or
former employees of the Companies or any ERISA Affiliate has engaged in any
15
transaction in violation in any material respect of Sections 404 or 406 of
ERISA or any "prohibited transaction," as defined in Section 4975(c)(1) of
the Code, for which no exemption exists under Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Code.
(x) NO AMENDMENTS. None of the Companies or any ERISA
Affiliate thereof has any announced plan or legally binding commitment to
create any additional Employee Plans or to amend or modify any existing
Employee Plan.
(xi) CERTAIN CONTRACTS. None of the Employee Plans of the
Companies holds any interest in any annuity contract, guaranteed investment
contract or any other investment contract which is issued by an insurance
company which is the subject of bankruptcy, receivership or conservatorship
proceedings.
(xii) NO OTHER MATERIAL LIABILITY. To the knowledge of the
Companies, no event has occurred in connection with which the Companies or
any ERISA Affiliate or any Employee Plan, directly or indirectly, could
reasonably be expected to be subject to any material liability (i) under
any Regulation or governmental order or Court Order relating to any
Employee Plans or (ii) pursuant to any obligation of the Companies or MSD
to indemnify any Person against liability incurred under, any such
Regulation or order as they relate to the Employee Plans.
3.19 TRANSACTIONS WITH RELATED PARTIES. Except for (a) intercompany loans
and guarantees, (b) intercompany sales of goods and services in the
ordinary course of business, (c) compensation arrangements in the ordinary
course of business, (d) matters disclosed on Section 3.19 of the Companies
Disclosure Schedule, or (e) an aggregate amount per Person of less than
$50,000, no Related Party of the Companies or MSD (i) has borrowed or
loaned money or other property to the Companies or MSD which has not been
repaid or returned, (ii) has any currently enforceable contractual or other
claims, express or implied, of any kind whatsoever against the Companies or
MSD, or (iii) has or in the past three years had any interest in any
property currently used by the Companies or MSD.
3.20 COMPLIANCE WITH LAW. The Companies and MSD have conducted their
Business in compliance with all applicable Regulations and Court Orders,
except where the failure to so comply would not have a Material Adverse
Effect. To the knowledge of the Companies, none of the Companies or MSD has
received any notice to the effect that, or has otherwise been advised that,
they are not in compliance with any Regulations or Court Orders, and the
Companies have no knowledge of any existing circumstances that are likely
to result in any material violation of any of the foregoing.
3.21 INTELLECTUAL PROPERTY
(a) GENERAL. Section 3.21 of the Companies Disclosure Schedule
sets forth with respect to the Proprietary Rights of the Companies and MSD:
(i) for each patent and patent application, the number, the grant date and
title or the application number, date of filing and title, (ii) for each
trademark, trade name or service xxxx, whether or not registered, the
application serial number or registration number and the expiration date,
and (iii) for each copyright for
16
which registration has been sought, whether or not registered, the date of
creation and first publication of the work, the number and date of
registration for each country in which a copyright application has been
registered. True and correct copies of all Proprietary Rights (including
all pending applications and application related documents and materials)
set forth on Section 3.21 of the Companies Disclosure Schedule have been
provided or made available to Cordant.
(b) ROYALTIES AND LICENSES. None of the Companies or MSD has any
obligation to compensate any Person for the use of any of its Proprietary
Rights nor have the Companies or MSD granted to any Person any license,
option or other rights to use in any manner any of its patents or
trademarks, whether requiring the payment of royalties or not, except in
connection with the licenses set forth in Section 3.11 of the Companies
Disclosure Schedule.
(c) OWNERSHIP. The Companies and MSD own or have a valid right to
use their Proprietary Rights free and clear of all Encumbrances, except
Permitted Encumbrances, and, in the case of Proprietary Rights used by the
Companies and MSD pursuant to a Contract, subject to the terms of the
Contract pursuant to which such Proprietary Rights are used.
(d) ABSENCE OF CLAIMS. Except as set forth in Section 3.21 of the
Companies Disclosure Schedule, there is no Action pending or to the
knowledge of the Companies threatened against the Companies or MSD with
respect to any of the Proprietary Rights of the Companies or MSD. To the
knowledge of the Companies, the use by the Companies and MSD of their
Proprietary Rights does not infringe upon or otherwise violate the valid
rights of any third party anywhere in the world.
3.22 TAX MATTERS
(a) FILING OF TAX RETURNS, ETC. The Companies have timely filed
or caused to be filed with the appropriate taxing authorities all Tax
Returns required to be filed by the Companies through the date hereof and
will timely file all Tax Returns required to be filed on or prior to the
Closing Date, in each case, subject to applicable extensions. Except as
disclosed in Section 3.22 of the Companies Disclosure Schedule, no
outstanding or unresolved deficiency for any Tax or claim for additional
Taxes by any taxing authority has been proposed, asserted or assessed in
writing against any Company and no audit, action, suit or claim is
currently pending against any Company in respect of any Tax or assessment.
Except as disclosed on Section 3.22 of the Companies Disclosure Schedule,
there are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any material Tax Returns required to be
filed by or with respect to any Company, and none of the Companies have
requested any extension of time within which to file any Tax Return (with
respect to Tax Returns that have not yet been filed). Except as disclosed
on Section 3.22 of the Companies Disclosure Schedule, none of the Companies
is a party to any agreement or arrangement (written or oral) providing for
the allocation or sharing of Taxes or Tax benefits.
(b) S CORPORATION ELECTION. Each of Continental/Midland and KORE
(and any predecessor) has been a validly electing S corporation within the
meaning of Sections 1361 and
17
1362 of the Code since January 1, 1987 and January 1, 1990, respectively,
and KORE II has been a validly electing S corporation at all times during
its existence, and each of the Companies will be an S corporation up to and
including the Closing Date. The ownership of the Companies Common Stock by
the RSK Trustee, the DMK Trustees, the JMK Trustees and the RMK Trustees
does not invalidate the election by the Companies as an S corporation. KORE
II has made a valid election to cause MSD Stamping, Inc. to be treated as a
"qualified subchapter S subsidiary" within the meaning of Section
1361(b)(3)(B) of the Code.
(c) QUALIFIED SUBCHAPTER S SUBSIDIARIES. Except for KORE II's
ownership of MSD Stamping, Inc., there is no "qualified subchapter S
subsidiary" within the meaning of Section 1361(b)(3)(B) of the Code with
respect to any of the Companies.
(d) SECTION 1374 OF THE CODE; STOCK OR ASSET ACQUISITIONS. None
of the Companies has in the past 10 years, (i) acquired assets from another
corporation in a transaction in which such Company's Tax basis for the
acquired assets was determined, in whole or in part, by reference to the
Tax basis of the acquired assets (or any other property) in the hands of
the transferor or (ii) except for KORE II's acquisition of equity interest
in MSD Stamping, Inc., acquired the stock of any corporation which is a
"qualified subchapter S subsidiary" within the meaning of Section
1361(b)(3)(B) of the Code.
3.23 INSURANCE. Schedule 3.23 of the Companies Disclosure Schedule contains
a complete and accurate list of all material policies or binders of
insurance (showing as to each policy or binder the carrier, policy number,
coverage limits, expiration dates, annual premiums, a general description
of the type of coverage provided and any pending claims thereunder) of
which the Companies or MSD is the owner, insured or beneficiary. Such
policies and binders are in full force and effect on the date hereof and
shall be kept in full force and effect through the Closing.
3.24 PURCHASE COMMITMENTS AND OUTSTANDING BIDS. To the knowledge of the
Companies, there are no claims against the Companies or MSD to return
merchandise by reason of alleged overshipments, defective merchandise or
otherwise, or of merchandise in the hands of customers under a written
agreement that such merchandise would be returnable, other than in the
ordinary course of business.
3.25 PAYMENTS. To the knowledge of the Companies, none of the Companies or
MSD nor any of their Representatives acting on their behalf have, directly
or indirectly, paid or delivered any fee, commission or other sum of money
or property, however characterized, to any finder, agent, government
official or other party, in the U.S. or any other country which the
Companies know or have reason to believe to have been illegal under any
federal, state or local laws of the U.S. or any other country having
jurisdiction. To the knowledge of the Companies, none of the Companies or
MSD nor any of their Representatives acting on their behalf have accepted
or received any unlawful contributions, payments, gifts or expenditures.
3.26 CUSTOMERS AND SUPPLIERS. Section 3.26 of the Companies Disclosure
Schedule sets forth a complete and accurate list of the names of (i) the
five customers who are expected to purchase from Continental/Midland the
greatest dollar volume of products during the fiscal year ending September
30, 1999, showing the approximate total sales in dollars to each such
customer during
18
such period; and (ii) the five suppliers with the greatest dollar amount of
sales to Continental/Midland during the period commencing on January 1,
1999 and ending on the Balance Sheet Date, showing the approximate total
purchases in dollars by Continental/Midland from each such supplier during
such period. Since the Balance Sheet Date, there has been no adverse change
in any material respect in the business relationship of the Companies or
MSD with the top five customers or suppliers named on Section 3.26 of the
Companies Disclosure Schedule. To the knowledge of the Companies, none of
the Companies or MSD has received any written communication from any
customer or supplier named on Section 3.26 of the Companies Disclosure
Schedule of any intention to terminate or materially reduce purchases from
or supplies to the Companies or MSD.
3.27 ENVIRONMENTAL MATTERS
(a) DEFINITION. The term "COMPANIES" for purposes of this Section
3.27 shall include, in addition to the Companies, (A) MSD, (B) any
partnership, joint venture and other entity or organization in which the
Continental/Midland or KORE was at any time or is a partner, joint
venturer, member or participant, and (C) any partnership, joint venture,
other entity or organization in which KORE II or MSD was at any time since
the formation of KORE II or in which it currently is a partner, joint
venturer, member or participant.
(b) NOTICE OF VIOLATION. To the knowledge of the Companies and
except as set forth on Section 3.27 of the Companies Disclosure Schedule,
none of the Companies has received any notice of alleged, actual or
potential responsibility for, or any inquiry or investigation regarding,
(i) any Release or threatened Release by the Companies of any Hazardous
Substance at any location or (ii) an alleged violation of or non-compliance
by the Companies with the conditions of any Permit required under any
Environmental Law or the provisions of any Environmental Law. To the
knowledge of the Companies and except as set forth on Section 3.27 of the
Companies Disclosure Schedule, none of the Companies has received any
notice of any other claim, demand or Action by any Person alleging any
actual or threatened injury or damage to any Person, property, natural
resource or the environment arising from or relating to any Release or
threatened Release by the Companies of any Hazardous Substances.
(c) ENVIRONMENTAL CONDITIONS. To the knowledge of the Companies
and except as set forth on Section 3.27 of the Companies Disclosure
Schedule, there are no present or past Environmental Conditions in any way
relating to the Companies or their Business or Assets, except for
Environmental Conditions which would not, individually or in the aggregate,
have a Material Adverse Effect.
(d) NOTICES, WARNINGS AND RECORDS. To the knowledge of the
Companies, the Companies have given all notices and warnings, made all
reports, and kept and maintained all records required by and in material
compliance with all Environmental Laws.
3.28 BROKERS; TRANSACTION COSTS. None of the Companies or MSD has entered
into or will enter into any contract, agreement, arrangement or
understanding with any Person which will result in the obligation of the
Companies, MSD or Cordant to pay any finder's fee, brokerage
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commission or similar payment in connection with the transactions
contemplated hereby. Cordant shall not otherwise be liable for any costs or
expenses pertaining to any finder's fees, brokerage commissions or similar
payments incurred by or on behalf of the Companies or MSD as a result of
the consummation of the transactions contemplated hereby.
3.29 NO OTHER AGREEMENTS TO SELL. Except as contemplated by this Agreement,
none of the Companies or MSD has any legal obligation, absolute or
contingent, to any other Person to sell all or substantially all of the
Assets of the Companies or MSD or to sell any capital stock of the
Companies or MSD or to effect any merger, consolidation or other
reorganization of the Companies or MSD or to enter into any agreement with
respect thereto.
3.30 YEAR 2000 MATTERS. Each of the computer systems, embedded computer
systems, hardware, firmware and software owned, operated or provided by or
on behalf of the Companies or MSD or by any Person for the benefit of the
Companies or MSD that materially affect the production and product delivery
functions (i.e., manufacturing and physical delivery of products to
customers as opposed to accounting, payroll and other administrative
functions) of the Companies or MSD (collectively, the "COMPUTER SYSTEMS")
will be Year 2000 Compliant. The Companies have made available to Cordant
all written studies, audits, analyses, surveys, reports and investigations
conducted by or on behalf of the Companies or MSD which are in the
possession of the Companies or MSD with respect to whether the Computer
Systems of the Companies and MSD are Year 2000 Compliant. Section 3.30 of
the Companies Disclosure Schedule lists all of the Computer Systems of the
Companies or MSD which are not Year 2000 Compliant.
3.31 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in Articles III and IV, the Companies and the
Stockholders make no representation or warranty, express or implied, at law
or in equity, in respect of the Companies, the Subsidiaries, or any of
their respective Business, Assets, Liabilities or operations, including,
without limitation, with respect to merchantability or fitness for any
particular purpose, and any such other representations or warranties are
hereby expressly disclaimed. Except to the extent specifically set forth in
Articles III and IV, Cordant is acquiring the inventory, fixtures,
machinery and equipment of the Companies and the Subsidiaries on an "as-is,
where-is" basis.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES REGARDING THE STOCKHOLDERS
Except as set forth on the Companies Disclosure Schedule, each of
the Stockholders hereby severally, but not jointly and severally,
represents and warrants to Cordant (with respect to herself or itself) as
follows:
4.1 AUTHORITY. Such Stockholder has all requisite power and authority (and,
if an individual, legal capacity) to enter into this Agreement, to perform
such Stockholder's obligations hereunder and to consummate the transactions
contemplated hereby. To the extent that such Stockholder is a trust or
other entity, the execution and delivery by such Stockholder of this
Agreement, the
20
performance by such Stockholder of its obligations hereunder, and the
consummation by such Stockholder of the transactions contemplated hereby,
have been duly authorized by the trustee(s), Board of Directors or other
managing body of such Stockholder and no other corporate or other action,
as the case may be, on the part of such Stockholder is necessary to
authorize the execution and delivery of this Agreement by such Stockholder,
the performance by such Stockholder of its obligations hereunder or the
consummation by such Stockholder of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such Stockholder
and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a legally valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its
terms, except as such enforceability may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and general principles of
equity.
4.2 ORGANIZATION. If such Stockholder is a trust or other entity, such
Stockholder is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization or incorporation, as
applicable.
4.3 OWNERSHIP OF SHARES. Such Stockholder is the sole record owner of the
shares of the Companies Common Stock set forth opposite such Stockholder's
name on EXHIBIT A hereto, free and clear of any Encumbrances other than
restrictions on the transfer of such shares imposed under federal and state
securities or "blue sky" Regulations, and such shares are the only shares
of the Companies Common Stock owned of record by such Stockholder. Such
Stockholder has no other options, warrants or other rights to purchase or
otherwise acquire any shares of the Companies Common Stock. Such
Stockholder is not a party to any Contract or subject to any Action
pursuant to which such Stockholder is or may be required to sell, deliver
or transfer any of the shares of the Companies Common Stock owned by such
Stockholder to any other Person, or otherwise dispose of such shares.
4.4 NO CONFLICTS. Neither the execution, delivery or performance of this
Agreement or any Ancillary Agreement to which such Stockholder is a party
or the consummation of the transactions contemplated hereby or thereby will
(i) violate or conflict with any provision of its governing documents, if
such Stockholder is an entity, or (ii) violate any Regulation or Court
Order applicable to such Stockholder.
4.5 CONSENTS, APPROVALS, ETC.. No consent, waiver, approval, authorization,
license, order or permit of, or declaration, filing or registration with,
or notification to, any governmental authority or third party is required
to be made or obtained by such Stockholder in connection with the execution
and delivery of this Agreement by such Stockholder, the performance by such
Stockholder of such Stockholder's obligations hereunder, or the
consummation by such Stockholder of the transactions contemplated hereby,
except where the failure to obtain such consent, approval, authorization or
action, or to make such filing or notification would not, when taken
together with all other such failures by such Stockholder, have a material
adverse effect on the ability of such Stockholder to perform such
Stockholder's obligations under this Agreement or to consummate the
transactions contemplated hereby.
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4.6 BROKERS. No broker, finder or investment banker has been retained by or
on behalf of such Stockholder in connection with the transactions
contemplated by this Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES REGARDING CORDANT
Cordant represents and warrants to the Companies and the Stockholders
as follows:
5.1 ORGANIZATION OF CORDANT. Cordant is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Cordant has full corporate power and authority to conduct its
Business as it is presently being conducted and to own or lease, as
applicable, its Assets. Cordant is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which
such qualification is necessary under applicable law as a result of the
conduct of its Business or the ownership of its properties, except where
the failure to be so qualified would not have a Cordant Material Adverse
Effect. The copy of the Certificate of Incorporation of Cordant heretofore
delivered to the Companies is accurate and complete.
5.2 AUTHORIZATION. Cordant has all necessary corporate power and authority
to enter into this Agreement and has taken or will take prior to the
Closing Date all corporate action necessary to consummate the transactions
contemplated hereby and to perform its obligations hereunder. The execution
and delivery of this Agreement, and the performance by Cordant of its
obligations hereunder and the consummation by Cordant of the transactions
contemplated hereby, have been duly authorized by its Board of Directors.
This Agreement has been duly executed and delivered by Cordant and,
assuming due authorization, execution and delivery by the other parties
hereto, constitutes a legal, valid and binding obligation of Cordant
enforceable against it in accordance with its terms, except as
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors and general principles of equity. After the
Closing, Cordant will cause each of Continental/Midland and KORE to enter
into the Ancillary Agreements to which it is a party and to take all
corporate action necessary to consummate the transactions contemplated
thereby and to perform its obligations thereunder. The execution and
delivery by each of Continental/Midland and KORE after the Closing of the
Ancillary Agreements to which it is a party, and the performance by each of
Continental/Midland and KORE of its obligations thereunder and the
consummation by each of Continental/Midland and KORE of the transactions
contemplated thereby, will be duly authorized by its Board of Directors.
The Ancillary Agreements to which each of Continental/Midland and KORE is a
party, will be duly executed and delivered by each of Continental/Midland
and KORE, and, assuming due authorization, execution and delivery by the
other parties thereto, will be legal, valid and binding obligations of each
of Continental/Midland and KORE, enforceable against it in accordance with
their respective terms, except as enforceability may be limited by the
effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors and general
principles of equity.
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5.3 NO CONFLICT OR VIOLATION. None of the execution, delivery or
performance of this Agreement or any Ancillary Agreement to which Cordant
is a party, the consummation by Cordant of the transactions contemplated
hereby or thereby, nor compliance by Cordant with any of the provisions
hereof or thereof, will (a) violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of Cordant, (b) to the knowledge of
Cordant, violate, conflict with, or result in a breach of or constitute a
default (with or without notice or passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a
right to terminate, accelerate, modify or cancel under, or require a notice
under, or result in the creation of any Encumbrance upon any of its Assets
under, any material Contract or other arrangement to which Cordant is a
party or by which Cordant is bound or to which any of its material Assets
are subject, or (c) violate any Regulation or Court Order applicable to
Cordant.
5.4 CONSENTS. To the knowledge of Cordant, no notices to, declaration,
filing or registration with, approvals or consents of, or assignments by,
any Persons (including any federal, state of local governmental or
administrative authorities) are necessary to be made or obtained by Cordant
in connection with the execution, delivery or performance of this Agreement
or any Ancillary Agreements to which Cordant is a party, other than as
required pursuant to the HSR Act, except where the failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification would not, when taken together with all other such failures by
Cordant, have a material adverse effect on the ability of Cordant to
perform its obligations under this Agreement or the Ancillary Agreements to
which it is a party or to consummate the transactions contemplated hereby
or thereby.
5.5 NO BROKERS. Cordant has not entered into and will not enter into any
contract, agreement, arrangement or understanding with any Person which
will result in the obligation of the Companies, MSD, Cordant or the
Stockholders to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated hereby. None of
the Companies, MSD or the Stockholders shall otherwise be liable for any
costs or expenses pertaining to any finder's fees, brokerage commissions or
similar payments incurred by or on behalf of Cordant as a result of the
consummation of the transactions contemplated hereby.
5.6 LITIGATION. There are no Actions pending, or to Cordant's knowledge
threatened or anticipated, against Cordant (a) which seek to enjoin or
obtain damages in respect of the transactions contemplated by this
Agreement or by the Ancillary Agreements or (b) with respect to which there
is a reasonable likelihood of a determination which would prevent Cordant
from consummating the transactions contemplated hereby and by the Ancillary
Agreements.
5.7 SEC REPORTS OF CORDANT
(a) Cordant has delivered to the Companies true and complete
copies of each registration statement, proxy or information statement,
form, report and other documents required to be filed by it with the SEC
since December 31, 1998 (collectively, the "SEC Reports"). As of their
respective dates, the SEC Reports (i) complied in all material respects
with the applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
23
statements made therein, in the light of the circumstances under which they
were made, not misleading. Cordant has delivered to the Companies a
complete and correct copy of all amendments or modifications to any SEC
Report which has been filed prior to the date hereof or which is required
to be filed but has not yet been filed with the SEC.
(b) Each of the consolidated balance sheets of Cordant included
in or incorporated by reference into the SEC Reports (including the related
notes and schedules) presents fairly, in all material respects, the
consolidated financial position of Cordant and its consolidated
subsidiaries as of its date, and each of the consolidated statements of
income, retained earnings and cash flows of Cordant included in or
incorporated by reference into the SEC Reports (including any related notes
and schedules) presents fairly, in all material respects, the results of
operations, retained earnings or cash flows, as the case may be, of Cordant
and its consolidated subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein.
(c) Except as set forth in the SEC Reports, neither Cordant nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required
to be reflected on, or reserved against in, a consolidated balance sheet of
Cordant and its subsidiaries or in the notes thereto, prepared in
accordance with GAAP consistently applied, except for (i) liabilities or
obligations that were so reserved on, or reflected in (including the notes
to), the consolidated balance sheet of Cordant as of the Balance Sheet
Date, (ii) liabilities or obligations arising in the ordinary course of
business (including trade indebtedness) since the Balance Sheet Date, and
(iii) Liabilities or obligations which would not, individually or in the
aggregate, have a Material Adverse Effect on Cordant.
5.8 APPROVAL. The board of directors of Cordant has approved this Agreement
and the transactions contemplated hereby, and has not revoked or rescinded
such approvals. Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement requires the approval of the
stockholders of Cordant.
ARTICLE VI.
COVENANTS
The Companies, the Stockholders and Cordant each covenant with
the other as follows:
6.1 FURTHER ASSURANCES. Upon the terms and subject to the conditions
contained herein, each of the parties hereto agrees, both before and after
the Closing, (a) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, (b) to execute any documents, instruments
or conveyances of any kind which may be reasonably necessary or advisable
to carry out any of the transactions contemplated hereunder, and (c) to
cooperate with each other in connection with the foregoing, including using
their respective reasonable efforts (i) to obtain all necessary waivers,
consents and approvals from other parties to permit the consummation of the
transactions contemplated hereby; PROVIDED,
24
HOWEVER, none of the parties hereto shall be required to make any payments,
commence litigation or agree to modifications of the terms thereof in order
to obtain any such waivers, consents or approvals, (ii) to obtain all
necessary Permits as are required to be obtained under any federal, state,
local or foreign law or regulations to permit the consummation of the
transactions contemplated hereby, (iii) to defend all Actions challenging
this Agreement or the consummation of the transactions contemplated hereby,
(iv) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations
and filings, including without limitation submissions of information
requested by governmental authorities, and (vi) to fulfill all conditions
to this Agreement. For six years following the Closing, the Stockholders
shall cooperate with Cordant, in all reasonable respects, to provide
Cordant the benefits of all rights of the Companies and the Subsidiaries,
including rights of indemnification, against third parties thereto with
respect to the Assets, Liabilities, operations or conduct of the business
of the Companies; provided that Cordant shall reimburse the Stockholders,
in accordance with Cordant's policies with respect to reimbursement of its
employees (including those requiring the submission of expense reports),
for the reasonable out-of-pocket costs that the Stockholders incur in
providing such cooperation.
25
6.2 NO SOLICITATION. From the date hereof through the Closing or the
earlier termination of this Agreement, each of the Companies and the
Stockholders shall not, and shall cause each of their respective
Representatives (including without limitation investment bankers, attorneys
and accountants), not to, directly or indirectly, enter into, solicit,
initiate or continue any discussions or negotiations with, or encourage or
respond to any inquiries or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in
any other way with, any corporation, partnership, person or other entity or
group, other than Cordant and its Representatives, concerning any sale of
all or a portion of the Assets or the Business of the Companies or MSD, or
of any shares of capital stock of the Companies or MSD, or any merger,
consolidation, liquidation, dissolution or similar transaction involving
the Companies or MSD (each such transaction being referred to herein as a
"PROPOSED ACQUISITION TRANSACTION"). None of the Companies or the
Stockholders shall, directly or indirectly, through any officer, director,
employee, representative, agent or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person
(including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act) or entity relating to any Proposed Acquisition
Transaction or participate in any negotiations regarding, or furnish to any
other person any information with respect to the Companies for the purposes
of, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to seek
or effect a Proposed Acquisition Transaction. The Stockholders and the
Companies hereby represent that neither the Stockholders nor the Companies
is now engaged in discussions or negotiations with any party other than
Cordant with respect to any of the foregoing. The Stockholders and the
Companies agree not to release any third party from, or waive any provision
of, any confidentiality or standstill agreement to which the Stockholders
or the Companies is a party. This Section 6.2 does not apply to the winding
up, liquidation or sale of International Pin.
6.3 NOTIFICATION OF CERTAIN MATTERS
(a) From the date hereof through the Closing or the earlier
termination of this Agreement, the Stockholders and the Companies shall
give prompt notice to Cordant of (a) the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty of the Stockholders or the Companies contained
in this Agreement or in any exhibit or schedule hereto to be untrue or
inaccurate in any material respect and (b) any material failure of the
Companies, the Stockholders, or any of their respective Affiliates, or of
any of their respective Representatives, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement or any exhibit or schedule hereto; PROVIDED, HOWEVER,
such disclosure shall cure any breach of a representation, warranty,
covenant or agreement, unless the breach existed on the date hereof.
(b) From the date hereof through the Closing or the earlier
termination of this Agreement, Cordant shall give prompt notice to the
Stockholders' Representative and the Companies of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely
to cause any representation or warranty of Cordant contained in this
Agreement or in any exhibit or schedule hereto to be untrue or inaccurate
in any material respect and (b) any material failure of Cordant, or any of
its respective Affiliates, or of any of their respective Representatives,
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any exhibit or
schedule hereto; PROVIDED,
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HOWEVER, such disclosure shall cure any breach of a representation,
warranty, covenant or agreement, unless the breach existed on the date
hereof.
6.4 ACCESS TO INFORMATION. From the date hereof through the Closing or the
earlier termination of this Agreement, the Companies shall, and shall cause
their respective Representatives to, afford Cordant and its Affiliates and
Representatives complete access at all reasonable times, and in a manner so
as not to interfere with normal business operations, to the Companies, and
to the officers, employees, agents, attorneys, accountants, properties,
Books and Records and Contracts of the Companies, and shall furnish Cordant
and its Representatives all financial, operating and other data and
information as Cordant or its Representatives, may reasonably request. Such
access shall be subject to the terms of the letter agreement dated July 2,
1999 from Continental/Midland which was accepted by Cordant as of July 7,
1999 (the "CONFIDENTIALITY AGREEMENT").
6.5 CONDUCT OF BUSINESS. Except as otherwise expressly provided herein,
from and after the date of this Agreement and until the Closing, the
Companies and MSD shall operate the Business only in the ordinary course of
business and will promptly notify Cordant of any Material Adverse Change.
From the date hereof to the Closing, the Stockholders and the Companies
will not take, and will cause MSD not to take, any action or engage in any
transaction which would render the representations and warranties in
Article III or IV inaccurate in any material respect as of the Closing
Date. In addition, except as set forth on Section 6.5 of the Companies
Disclosure Schedule or otherwise expressly permitted by the terms of this
Agreement, the Companies shall not, and shall cause MSD not to, do any of
the following without the prior written consent of Cordant (such consent
not to be unreasonably withheld):
(i) amend its Certificate or Articles of Incorporation or Bylaws
or other organizational or governance documents;
(ii) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or any option, warrant or right relating
thereto;
(iii) grant to any officer or key employee any increase in
compensation or any severance or change of control benefits, or grant any
material increase in compensation to the Company's other employees
generally, except as may be required under existing agreements or in the
ordinary course of business;
(iv) incur any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business;
(v) cancel any material indebtedness owed to a Company, other
than in the ordinary course of business;
(vi) make any material change in any method of accounting or
accounting practice or policy;
27
(vii) acquire or agree to acquire by merging or consolidating
with, or by purchasing stock or a substantial portion of the Assets of, or
by any other manner, any material operating business, corporation,
partnership, association or other business organization (or division
thereof) or Person;
(viii) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets which are material,
individually or in the aggregate, to the Companies or MSD, except in the
ordinary course of business;
(ix) enter into any lease of real property;
(x) modify, amend or terminate any lease of, or other material
agreement pertaining to, real property (except modifications or amendments
associated with renewals of leases in the ordinary course of business);
(xi) make capital expenditures or purchases of machinery and
equipment in excess of $250,000 in the aggregate, except for the capital
expenditures set forth on Section 6.5 of the Companies Disclosure Schedule;
(xii) enter into or modify any collective bargaining agreements;
or
(xiii) agree, whether in writing or otherwise, to do any of the
foregoing.
6.6 EMPLOYEES
(a) Nothing contained in this Agreement shall confer upon any
employee of any of the Companies or MSD any right with respect to
continuance of employment by the Companies or MSD, Cordant or any Affiliate
of Cordant, nor shall anything herein interfere with the right of the
Companies or MSD, Cordant or any Affiliate of Cordant to terminate the
employment of any such employees at any time, with or without cause, or
restrict the Companies or MSD, Cordant or any Affiliate of Cordant in the
exercise of its independent business judgment in modifying any of the terms
and conditions of the employment of such employees.
(b) No provision of this Agreement shall create any third party
beneficiary rights in any employee of the Companies or MSD, any beneficiary
or dependents thereof, or any collective bargaining representative thereof,
with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any such employee by the Companies or MSD
under any benefit plan which the Companies or MSD may maintain.
(c) Cordant shall pay, or cause to be paid, Continental/Midland's
obligations under the Deferred Compensation Plan as they become due,
including all payments which become payable upon consummation of the
Purchases.
6.7 RESIGNATIONS. Each of the directors and officers of the Companies and
MSD shall tender their resignations from such positions effective as of the
Closing.
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6.8 YEAR 2000 COMPLIANCE. The Companies agree to reasonably cooperate with
Cordant to (a) analyze whether and to what extent the Computer Systems of
the Companies and MSD are Year 2000 Compliant, and (b) where applicable,
take all appropriate actions as mutually agreed upon to fix any such
Computer Systems which are identified as non-Year 2000 Compliant (including
those set forth on Section 3.30 of the Companies Disclosure Schedule) as
promptly as practicable.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF
THE STOCKHOLDERS
The obligations of the Stockholders to consummate the Purchases
and the other transactions contemplated by this Agreement are subject, in
the discretion of the Stockholders, to the satisfaction or waiver, on or
prior to the Closing Date, of each of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Each of the representations and warranties of Cordant set
forth in Article V that is qualified as to materiality shall have been true
and correct when made and shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date (other than any
representations and warranties that address matters only as of a certain
date, which shall be true and correct as of such certain date), and each of
the representations and warranties of Cordant set forth in Article V that
is not so qualified shall have been true and correct in all material
respects when made and shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date
(other than representations and warranties that address matters only as of
a certain date, which shall be true and correct as of such certain date);
PROVIDED, HOWEVER, that the conditions set forth in this Section 7.1(a)
shall be deemed satisfied so long as the events or occurrences that
resulted in the failures of such representations and warranties to be so
true and correct would not, individually or in the aggregate, have a
Cordant Material Adverse Change.
(b) Cordant shall have performed and complied with all agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are qualified as to materiality and shall
have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality.
(c) There shall be delivered to the Stockholders a certificate to
the foregoing effect signed by a duly authorized officer of Cordant.
7.2 APPROVALS. All Consents (including the expiration or early termination
of any waiting period applicable to the Purchases under the HSR Act and
shall have been obtained. The Stockholders shall be satisfied that all
Consents required under any Regulations to carry out the transactions
contemplated by this Agreement and the Ancillary Agreements shall have been
obtained and that the parties shall have complied with all Regulations
applicable to the transactions contemplated hereby and thereby.
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7.3 NO ACTIONS OR COURT ORDERS. No Action by any court, governmental
authority or other Person (other than the Companies, the Stockholders and
their respective Affiliates and Representatives) shall have been instituted
or threatened (and not resolved) and no Regulation shall have been enacted,
which questions the validity or legality of the transactions contemplated
hereby or by the Ancillary Agreements and which could reasonably be
expected to have a Material Adverse Effect if the transactions contemplated
hereby or thereby are consummated.
7.4 CLOSING DOCUMENTS. Cordant shall have delivered the documents and other
items to be delivered by such Persons pursuant to Section 9.2 of this
Agreement.
7.5 OPINION OF COUNSEL. Cordant shall have delivered to the Stockholders
opinions of the general counsel of Cordant and of Xxxxxx & Xxxxxxx, each
dated as of the Closing Date, in substantially the form attached hereto as
EXHIBIT D-1.
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF CORDANT
The obligations of Cordant to consummate the Purchases and the
other transactions contemplated by this Agreement are subject, in the
discretion of Cordant, to the satisfaction or waiver, on or prior to the
Closing Date, of each of the following conditions:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Each of the representations and warranties of the Companies
and the Stockholders set forth in Articles III and IV that is qualified as
to materiality shall have been true and correct when made and shall be true
and correct on and as of the Closing Date as if made on and as of the
Closing Date (other than any representations and warranties that address
matters only as of a certain date, which shall be true and correct as of
such certain date), and each of the representations and warranties of the
Companies and the Stockholders set forth in Article III and Article IV that
is not so qualified shall have been true and correct in all material
respects when made and shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date
(other than representations and warranties that address matters only as of
a certain date, which shall be true and correct as of such certain date);
PROVIDED, HOWEVER, that the conditions set forth in this Section 8.1(a)
shall be deemed satisfied so long as the events or occurrences that
resulted in the failures of such representations and warranties to be so
true and correct would not, individually or in the aggregate, have a
Material Adverse Change.
(b) Each of the Companies and the Stockholders shall have
performed and complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality and shall have performed or complied in all
material respects with all other agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are not so qualified as to materiality.
(c) There shall be delivered to Cordant a certificate to the
foregoing effect signed by each Stockholder and a duly authorized officer
of the Companies.
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8.2 APPROVALS; CONSENTS. All Consents (including the expiration or early
termination of any waiting period applicable to the Purchases under the HSR
Act and (ii) all required third party consents under the Contracts of the
Companies, as listed on Schedule 3.12) shall have been obtained or waived.
Cordant shall be satisfied that all Consents required under any Regulations
to carry out the transactions contemplated by this Agreement and the
Ancillary Agreements shall have been obtained and that the parties shall
have complied with all Regulations applicable to the transactions
contemplated hereby and thereby.
8.3 NO ACTIONS OR COURT ORDERS. No Action by any court, governmental
authority or other Person (other than Cordant and its Affiliates and
Representatives) shall have been instituted or threatened (and not
resolved) and no Regulation shall have been enacted, which questions the
validity or legality of the transactions contemplated hereby or by the
Ancillary Agreements and which could reasonably be expected to have a
Material Adverse Effect if the transactions contemplated hereby or thereby
are consummated.
8.4 CLOSING DOCUMENTS. Cordant shall have received the documents and other
items described in Section 9.1 and such other documents and items as
Cordant may reasonably require.
8.5 OPINION OF COUNSEL. The Stockholders shall have delivered to Cordant an
opinion of counsel to the Stockholders, dated as of the Closing Date, in
substantially the form attached hereto as EXHIBIT D-2.
8.6 MATERIAL ADVERSE CHANGE. There shall not have been any Material Adverse
Change.
ARTICLE IX.
CLOSING
9.1 DELIVERIES BY THE COMPANIES OR THE STOCKHOLDERS TO CORDANT. On the
Closing Date at the Closing Place, the Companies and each Stockholder shall
deliver (or cause to be delivered) to Cordant:
(a) executed counterparts to the Ancillary Agreements, if any, to
which it is a party;
(b) certified copies of the charter and bylaws of each of the
Companies and the provisions of the trust instruments for the trusts for
which certain of the Stockholders hold shares of Companies Common Stock in
trust which relate to the identity and authority of the trustee thereof;
(c) a certificate of corporate good standing for each of the
Companies issued by (i) with respect to Continental/Midland, the Secretary
of State of Delaware, and (ii) with respect to KORE and KORE II, the
Secretary of State of Illinois, in each case dated not more than 10 days
prior to the Closing Date;
(d) certificates representing the Companies Common Stock,
endorsed in blank or accompanied by duly executed assignment documents;
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(e) the opinion of counsel described in Section 8.5;
(f) resolutions adopted by the respective Boards of Directors of
the Companies approving this Agreement and the transactions contemplated
hereby, certified by the corporate secretary or assistant secretary for the
respective Company;
(g) corporate minute books and stock transfer books of each of
the Companies;
(h) the Closing Certificates referenced in Section 8.1;
(i) any amounts payable to Cordant by the Stockholders pursuant
to Section 2.3(a); and
(j) evidence, in form and substance reasonably satisfactory to
Cordant, that the date of the Title Policies with respect to the Real
Property owned by the Companies and MSD have been brought down so as to be
effective as of a date no earlier than three (3) Business Days prior to the
Closing Date;
9.2 DELIVERIES BY CORDANT. On the Closing Date at the Closing Place,
Cordant shall deliver:
(a) to the Stockholders, the Closing Certificate referenced in
Section 7.1;
(b) to the applicable parties to the Ancillary Agreements,
counterparts to the Ancillary Agreements executed by each
Continental/Midland and KORE, in each case to the Ancillary Agreements to
which it is a party ;
(c) to the Stockholders, certificates of corporate good standing
issued by the Secretary of State of Delaware for Cordant, dated not more
than 10 days prior to the Closing Date;
(d) to the Stockholders, the Purchase Price (including, if
applicable, any amounts payable to the Stockholders pursuant to Section
2.3(a));
(e) to the Stockholders, the opinion of counsel referenced in
Section 7.7;
(f) to the Stockholders, resolutions adopted by the Board of
Directors of Cordant approving this Agreement and the transactions
contemplated hereby, certified by Cordant's corporate secretary; and
(g) to the Stockholders, resolutions adopted, effective after the
Closing, by the Board of Directors of Continental/Midland approving the
Ancillary Agreements to which it is a party and the transactions
contemplated thereby, certified by Continental/Midland's corporate
secretary.
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ARTICLE X.
SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, ETC.; EXCLUSIVE REMEDIES. The
representations, warranties, covenants and agreements contained in this
Agreement, and in any agreements, certificates or other instruments
delivered pursuant to this Agreement, shall survive the Closing and shall
remain in full force and effect, subject to all limitations and other
provisions contained in this Agreement (including Section 10.5). The
representations and warranties contained in this Agreement are exclusive
and the parties hereto confirm that they have not relied upon any other
representation or warranty as an inducement to enter into this Agreement
and the transactions contemplated hereby (even though information not
represented and warranted to may have been, or may hereafter be, given to
or obtained or developed by one or more of the parties hereto pertaining to
Cordant, the Companies or the Subsidiaries or the Stockholders, the
transactions contemplated hereby or otherwise). Subject to the following
sentence, the remedies contained in this Article X shall be the sole
recourse of the parties hereto and their respective Affiliates for all
losses, liabilities, claims, damages or expenses related to or arising,
directly or indirectly, out of this Agreement, the transactions
contemplated hereby or otherwise arising at law, under any statute or in
equity, and each party hereto has waived any and all rights, claims, causes
of action and other remedies such party or its Affiliates may have against
the other relating to the subject matter of this Agreement other than the
remedies expressly provided in this Article X. No party hereto shall be
deemed to have waived any rights, claims, causes of action or remedies if
and to the extent such rights, claims, causes of action or remedies may not
be waived under applicable law or fraud is proven on the part of a party by
another party hereto. The right to indemnification or other remedy based
upon such representations, warranties, covenants, and agreements will not
be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the
Closing, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant or agreement. The waiver of any
condition based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or agreement, will not
affect the right to indemnification or other remedy based on such
representations, warranties, covenants and agreements. On the Closing Date,
all representations and warranties contained in this Agreement and made by
the Companies for the benefit of Cordant shall expire as to the Companies
and thereafter will be deemed to have been made exclusively by the
Stockholders (severally, and not jointly and severally) and to the extent
set forth herein.
10.2 INDEMNIFICATION BY STOCKHOLDERS
(a) Subject to the other provisions of this Article X, the
Stockholders, jointly and severally, hereby agree to indemnify and hold
Cordant and its Affiliates, Representatives, successors and assigns
harmless from and against any and all claims, demands, orders, allegations,
actions, damages, liabilities, including liabilities arising under
principles of strict or joint and several liability, liens, losses or other
obligations whatsoever, together with costs and expenses, including fees
and disbursements of counsel and expenses of investigation (collectively,
"LOSSES"), arising out of, based upon or caused by (i) the inaccuracy of
any representation or the breach of any warranty of the Stockholders
contained in this Agreement
33
or in any agreement, certificate or other instrument delivered by the
Stockholders pursuant to this Agreement, or (ii) any breach or
nonperformance by the Stockholders of any of their covenants or agreements
contained in this Agreement or in any agreement, certificate or other
instrument delivered by the Stockholders pursuant to this Agreement;
PROVIDED, HOWEVER, Cordant and its Affiliates, Representatives, successors
and assigns shall be entitled to indemnification under Section 10.2(a)(i)
or Section 10.2(a)(ii) only if and to the extent the aggregate amount of
all Losses indemnified against under (1) Section 10.2(a)(i) or (2) Section
10.2(a)(ii) due to a breach of Section 6.5, exceed $500,000, and in no
event shall such indemnification exceed in the aggregate $5,000,000;
PROVIDED, FURTHER, that the limitation set forth in this Section 10.2(a)
shall not apply to a breach by the Stockholders of the representations and
warranties contained in Section 4.3. Notwithstanding the foregoing, any
indemnification relating to (A) Taxes or Section 3.22 shall be governed
solely by Section 10.6 and (B) Environmental Laws, Environmental
Conditions, Hazardous Materials or Section 3.27 shall be governed solely by
Section 10.2(b), and accordingly no claims may be made in respect of such
matters or the representations and warranties set forth in such sections
under this Section 10.2(a). An indemnified party shall not have the right
to indemnification under this Section 10.2(a) for a breach of the third
sentence of Section 3.8(b) unless Cordant or the Companies first exhaust
their remedies, including through litigation, to recover their Losses from
the issuer of the applicable Title Policy. Any amounts for which
indemnification is provided pursuant to Section 10.2(a)(i) as a result of a
breach of the third sentence of Section 3.8(b) shall be net of any amounts
recovered under such Title Policy.
(b) Subject to the other provisions of this Article X, the
Stockholders hereby agree to indemnify and hold Cordant and its Affiliates,
Representatives, successors and assigns harmless from and against any
Environmental Conditions only on the following terms and subject to the
following conditions: (i) for aggregate Environmental Conditions up to
$1,000,000, there shall be no indemnification obligation of the
Stockholders under this Article X; (ii) for aggregate Environmental
Conditions incurred prior to the fourth anniversary of the Closing Date in
excess of $1,000,000 but less than $3,000,000, there shall be full
indemnification by the Stockholders for such excess amounts pursuant to
this Article X; (iii) for aggregate Environmental Conditions incurred prior
to the fourth anniversary of the Closing Date in excess of $3,000,000 but
less than $5,000,000, there shall be indemnification for such excess
amounts by the Stockholders under this Article X limited to 50% of such
Environmental Conditions in excess of $3,000,000; and (v) for aggregate
Environmental Conditions in excess of $5,000,000, or any Environmental
Conditions incurred after the fourth anniversary of the Closing Date, there
shall be no indemnification obligation of the Stockholders under this
Article X or otherwise. The obligations set forth in this Section 10.2(b)
shall be limited to amounts paid to third parties or reimbursement to
Cordant or its Affiliates for such amounts. An indemnified party shall not
have a right to indemnification under this Section 10.2(b), unless Cordant
or the Companies, at Cordant's expense, first exhaust their remedies,
including through litigation, to recover for any Environmental Conditions
(including through enforcement of contractual rights) from third parties
with whom the Companies or the Subsidiaries have or may have a contractual,
legal or equitable right of indemnification, reimbursement or contribution,
including any prior owner of the property. Any amounts for which
indemnification is provided pursuant to this Section 10.2(b) shall be net
of any amounts recovered from such third parties. An indemnifying party
shall not be liable under this Section 10.2(b) (A) to the extent that the
Environmental Condition resulted from the enactment, modification or
amendment of an Environmental Law after the
34
Closing Date, or (B) to the extent that liability arises from or is due to
a change in the use of the property from that currently being used by
Continental/Midland.
10.3 INDEMNIFICATION BY CORDANT. Subject to the other provisions of this
Article X, Cordant hereby agrees to indemnify and hold the Stockholders and
their respective Affiliates, Representatives (including, where applicable,
their respective trustees, beneficiaries, grantors and heirs), successors
and assigns harmless, from and against any and all Losses arising out of,
based upon or caused by (a) the inaccuracy of any representation or the
breach of any warranty of Cordant contained in this Agreement or in any
agreement, certificate or other instrument delivered by Cordant pursuant to
this Agreement, (b) any breach or nonperformance by Cordant of any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Cordant pursuant to this
Agreement, (c) Cordant's ownership of the Companies and the Subsidiaries or
the operations of their respective Businesses after the Closing Date, or
(d) any failure by Cordant after the Closing Date to perform and discharge
all of the obligations of the Companies and the Subsidiaries under any
Contracts or other undertakings that were in effect and known to Cordant
prior to the Closing Date. In the event any claims are asserted against any
current or former shareholders (direct or indirect), officers, directors,
partners or employees of the Companies or the Subsidiaries in respect of
Environmental Conditions, Cordant shall indemnify and hold harmless such
shareholders, officers, directors, partners and employees, subject to the
provisions of Section 10.2(b) that may render the Stockholders (rather than
Cordant) liable for some or all of such Environmental Conditions.
10.4 NOTICE; COOPERATION; DEFENSE; ETC. The indemnified party agrees to
give the indemnifying party prompt written notice of any action, claim,
demand, discovery of fact, proceeding or suit (collectively, "CLAIMS") for
which such indemnified party intends to assert a right to indemnification
under this Agreement; PROVIDED, HOWEVER, the failure to give such
notification after such notice is required shall not adversely affect the
indemnified party's entitlement to indemnification hereunder except to the
extent that the indemnifying party shall have been actually prejudiced as a
result of such failure. The indemnified party shall take all reasonable or
necessary steps to resolve, defend or cooperate in the defense of such
Claims, including retaining and providing to the indemnifying party all
documents, records and other information that may be relevant to such
Claims and making employees available to the extent reasonably requested to
fully cooperate in the resolution or defense of such Claims and provide any
additional information (including explanations and interpretations of any
other materials or information provided) that they are able to provide with
respect thereto. The indemnifying party shall have the right to participate
jointly with the indemnified party in the indemnified party's defense,
settlement or other disposition of any Claim and, with respect to any Claim
that is not likely to result in the indemnified party's becoming subject
solely to injunctive or other similar relief, the indemnifying party shall
have the sole right (but not the obligation) to defend, settle or otherwise
dispose of such Claim on such terms as the indemnifying party, in its sole
discretion, shall deem appropriate. The indemnifying party shall obtain the
written consent of the indemnified party, which shall not be unreasonably
withheld or delayed, prior to ceasing to defend any Claim if it has
theretofore elected to exercise its sole right to defend, settle or
otherwise dispose of such Claim. For purposes of this Article X, the
Stockholder Representative
35
shall be entitled to receive notification and to administer on behalf of
the Stockholders all indemnification claims pursuant to Section 10.2.
10.5 TIME LIMITATIONS; RECOVERABLE DAMAGES
(a) Except as may elsewhere be specifically provided in this
Agreement, representations, warranties, covenants and obligations in this
Agreement and any other certificate or document delivered pursuant to this
Agreement will survive the Closing; PROVIDED, HOWEVER, that,
notwithstanding anything to the contrary contained herein, the obligation
of the Stockholders to indemnify or otherwise hold harmless Cordant and its
Affiliates, Representatives, successors and assigns (a) for any Losses
arising out of, based upon or caused by the inaccuracy of any
representation or the breach of any warranty which survives the Closing
shall, except as otherwise provided in the next sentence, terminate at
11:59 p.m., Chicago time, on the first anniversary of the Closing Date, (b)
for any Environmental Conditions pursuant to Section 10.2(b), shall, except
as otherwise provided in the following sentence, terminate at 11:59 p.m.,
Chicago time, on the fourth anniversary of the Closing Date, (c) for any
Losses relating to Taxes or Section 3.22 shall survive as set forth in
Section 10.6, and (d) for any Losses resulting from the breach by the
Stockholders of their representations and warranties contained in Section
4.3 shall survive until the expiration of the applicable statute of
limitations; PROVIDED, further, that, notwithstanding anything to the
contrary contained herein, the obligations of Cordant to indemnify or
otherwise hold the Stockholders and their respective Affiliates,
Representatives (including, where applicable, their respective trustees,
beneficiaries, grantors and heirs), successors and assigns harmless for any
Loss arising out of, based upon or caused by the inaccuracy of any
representation or the breach of any warranty which survives the Closing
shall, except as otherwise provided in the following sentence, terminate at
11:59 p.m. Chicago time, on the first anniversary of the Closing Date.
Claims (with all relevant and necessary information and particulars to
support such Claims) properly made in accordance with the provisions of
this Article X on or prior to the expiration of the applicable survival
period specified above may continue to be asserted and shall be indemnified
against by the Stockholders (subject to any other applicable limitations
herein), but such Claims may not be supplemented, expanded, amended or
modified after the expiration of such time period in a manner that
fundamentally changes the Claim without the prior written consent of the
Stockholders.
(b) Any amounts required to be paid as damages or indemnification
by the indemnifying party pursuant to this Agreement shall be limited to
the actual, reasonable, direct and reasonably foreseeable damages sustained
by the indemnified party with respect to the Claim in question, net of
available insurance (which the indemnified party shall use its reasonable
efforts to pursue). In the event that the Losses for which indemnification
is provided under Section 10.2 would have been within the scope of coverage
provided in an insurance policy in effect at the Closing Date ("APPLICABLE
INSURANCE COVERAGE") and, at the time the indemnified party suffers the
Losses, Cordant carries Applicable Insurance Coverage (or comparable
insurance) with a higher deductible than that carried by the Companies or
MSD for such Applicable Insurance Coverage on the Closing Date, or if
Cordant has no Applicable Insurance Coverage (or comparable insurance),
then the amount of indemnification hereunder shall be reduced by (a) an
amount equal to the excess, if any, of (i) the amount of the higher
deductible or the amount of the indemnification claim, whichever is less,
over (ii) the amount of the deductible
36
as of the Closing Date, or (b) if Cordant has no Applicable Issuance
Coverage (or comparable insurance), the amount of the indemnification claim
in excess of the Closing Date deductible, respectively. In no event shall
any damages or indemnification be claimed, assessed or required to be paid
by the indemnifying party in respect of any actual or alleged lost profits,
lost opportunities or other consequential or speculative damages or
punitive or exemplary damages sustained by the indemnified party. Subject
to the foregoing, the term "LOSSES" is not limited to matters asserted by
third parties if the indemnified party can otherwise prove and calculate
its damages in the absence of a third party claim, and accordingly payments
by an indemnitee shall not be (except in the case of claims under Section
10.2 (b)) a condition precedent to recovery if damages can be otherwise
proven.
10.6 TAX INDEMNIFICATION. Notwithstanding the limitations on the indemnity
provided under this Article X, the Stockholders shall be responsible for
and shall pay and shall indemnify, save and hold harmless Cordant and the
Companies (and each of their respective Affiliates, successors and assigns)
from and against (i) all Taxes imposed on any of the Companies or the
Subsidiaries, or for which any of the Companies or the Subsidiaries is
liable, with respect to (A) all periods ending on or prior to the Closing
Date, or (B) any period beginning before the Closing Date and ending after
the Closing Date, but only with respect to the portion of such period up to
and including the Closing Date (such portion, a "PRE-CLOSING PARTIAL
PERIOD"), to the extent such Taxes are not reflected in the reserve for Tax
liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown on the face
of the Companies Balance Sheet, as such reserve is adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of the respective Companies; and (ii) any costs or expenses with
respect to the Taxes indemnified hereunder. For purposes of this Section
10.6, Taxes shall include the amount of Taxes which would have been paid
but for the application of any credit or net operating or capital loss
deduction attributable to any period (or portion thereof) ending after the
Closing Date, but shall not include amounts which would have been paid but
for the application of any credit or net operating or capital loss
deductions attributable to any period (or portion thereof) ending on or
before the Closing Date.
ARTICLE XI.
MISCELLANEOUS
11.1 TERMINATION
(a) This Agreement shall be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing as follows:
(i) By the mutual written consent of Cordant, the
Stockholders and the Companies;
(ii) By Cordant if there is a breach of any representation
or warranty of the Companies or the Stockholders set forth in Article III
or Article IV or any covenant or agreement to be complied with or performed
by the Companies or the Stockholders pursuant to the terms of this
Agreement, which breach shall not have been cured within five business days
after notice thereof has been given to the Companies;
37
provided that Cordant shall have a right of termination under this Section
11.1(a)(ii) only if the events or occurrences that resulted in such breach
would constitute a Material Adverse Change;
(iii) By the Companies or the Stockholders if there is a
material breach of any representation or warranty of Cordant set forth in
Article V hereof or of any material covenant or agreement to be complied
with or performed by Cordant pursuant to the terms of this Agreement, which
breach shall not have been cured within five business days after notice
thereof has been given to Cordant; provided that the Companies and the
Stockholders shall have a right of termination under this Section
11(a)(iii) only if the events or occurrences that resulted in such breach
would constitute a Cordant Material Adverse Change; or
(iv) If the Closing Date shall not have occurred by December
31, 1999 (the "TERMINATION DATE"); PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 11.1(a)(iv) shall not be
available until March 31, 2000 to any party whose breach of any obligation
under this Agreement has been the primary cause of the failure of the
Closing Date to occur on or before December 31, 1999,
(b) In the event of termination of this Agreement, no party
hereto shall have any liability to any other party to this Agreement,
except for any willful breach of, or intentional misrepresentation made in,
this Agreement occurring prior to the termination of this Agreement.
11.2 BOOKS AND RECORDS; TAX MATTERS
(a) FILING OF TAX RETURNS FOR TAX PERIODS ENDING ON OR BEFORE THE
CLOSING DATE. The Stockholders shall prepare or cause to be prepared and
file or cause to be filed, at the Stockholders' expense, all federal and
state income Tax Returns for the Companies and the Subsidiaries for all
periods (or portions thereof) ending on or prior to the Closing Date which
are filed after the Closing Date. The Stockholders shall permit Cordant to
review and comment on each such Tax Return described in the preceding
sentence prior to filing. To the extent permitted by applicable law, the
Stockholders shall include any income, gain, loss, deduction or other Tax
items for such periods on their Tax Returns in a manner consistent with the
Schedule K-1s furnished to the Stockholders for such periods.
(b) STRADDLE PERIODS. Any Taxes with respect to any of the
Companies that relate to a Tax period beginning on or before the Closing
Date and ending after the Closing Date (a "STRADDLE PERIOD") shall be
apportioned between the portion of such Straddle Period ending on the
Closing Date (the "PRE-CLOSING PARTIAL PERIOD") and the portion of such
Straddle Period beginning on the day after the Closing Date (the
"POST-CLOSING PARTIAL PERIOD"), (i) in the case of real or personal
property Taxes (and any other Taxes not measured or measurable, in whole or
in part, by net or gross income or receipts), on a per diem basis and, (ii)
in the case of other Taxes, on the "closing of the books" method. The
Companies or the Subsidiaries shall file any Tax Returns for any Straddle
Period, and Cordant, or such Subsidiaries, shall pay, or shall cause to be
paid, all Taxes shown as due on any such Tax Returns, subject to Section
11.2(h).
38
(c) REFUNDS AND TAX BENEFITS. Any tax refunds that are received
by Cordant or its Affiliates, and any amounts credited against Tax to which
Cordant or its Affiliates become entitled, that relate to Tax periods or
portions thereof ending on or before the Closing Date shall be for the
account of the Stockholders, and Cordant shall pay over to the Stockholders
any such refund or the amount of any such credit within 15 days after
receipt thereof. In addition, to the extent that a claim for refund or a
proceeding results in a payment or credit against Tax by a taxing authority
to Cordant or its Affiliates of any amount accrued or reserved against on
the Companies Balance Sheet or on the Closing Consolidating Balance Sheet,
Cordant shall pay such amount to the Stockholders within 15 days after
receipt or entitlement thereto.
(d) BOOKS AND RECORDS. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours,
all Books and Records, financial books and records, accounting ledgers,
payroll records and other information related to the business and
operations of the Companies prior to the Closing Date retained and
remaining in existence after the Closing which are necessary or useful in
connection with any tax inquiry, audit, investigation or dispute, any
litigation or investigation or any other matter requiring any such Books
and Records or information for any reasonable business purpose. The party
requesting any such Books and Records or information shall bear all of the
out-of-pocket costs and expenses (including without limitation attorneys'
fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and Records,
information or employees. Cordant agrees (i) to retain all Books and
Records with respect to Tax matters pertinent to the Companies and the
Subsidiaries relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and any extension
thereof) of such taxable periods and (ii) to give the Stockholders
reasonable written notice prior to transferring, destroying or discarding
any such Books and Records and, if the Stockholders so request, Cordant
will allow the Stockholders to take possession of such Books and Records.
(e) COOPERATION. The Stockholders shall cooperate with, and
provide assistance to, Cordant in connection with all Tax Returns and all
other filings or notices with governmental agencies with respect to the
Companies which relate to time periods or events which occurred on or prior
to the Closing Date.
(f) ADJUSTMENTS TO TAXES. The Stockholders, on the one hand, and
Cordant, on the other hand, agree to give prompt notice to each other of
any proposed adjustment to Taxes for (i) periods ending on or prior to the
Closing Date or (ii) any Pre-Closing Partial Period. The Stockholders and
Cordant shall cooperate with each other in the conduct of any audit,
investigation, inquiry, examination, litigation or administrative or
judicial proceeding (a "PROCEEDING") involving the Companies or the
Subsidiaries or any predecessors thereof, PROVIDED, HOWEVER, subject to the
provisions of Section 10.2, the Stockholders shall exercise complete
control over the handling, disposition, defense, investigation, conduct and
settlement of any Proceeding relating to any liability for, or claims with
respect to, Taxes subject to indemnification by the Stockholders under this
Agreement. Cordant shall, with reasonable promptness, notify the
Stockholders if, in connection with any such Proceeding, any governmental
authority proposes in writing to make any assessment or adjustment with
respect to any such Taxes covered by the Stockholders' indemnity
obligations under this Agreement and
39
shall consult with the Stockholders with respect to any such proposed
assessment and adjustment. Cordant and the Stockholders further agree, upon
request, to use their reasonable efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
(g) INFORMATION. As soon as practicable after a request by
Cordant or the Stockholders (the "REQUESTING PARTY"), for a period of seven
years from and after the Closing Date, the party of whom such request is
made (the "DELIVERING PARTY") shall deliver to the Requesting Party such
information and data concerning the Business, activities and Assets of the
Companies and the Subsidiaries, including providing the information and
data required by the Requesting Party's customary Tax and accounting
questionnaires, as are in the Delivering Party's possession or control,
and, if Cordant, or an entity that is in Affiliate, predecessor or
successor of Cordant, is the Delivering Party, it shall make available such
knowledgeable employees of the Delivering Party, or any Affiliate thereof,
or any predecessor or successor of the foregoing, as the Requesting Party
may reasonably request, in order to enable the Requesting Party to complete
and file all Tax Returns and all other federal, state or foreign forms and
reports that it may be required to file with respect to the business,
activities or assets of any of the Companies or the Subsidiaries or to
respond to audits by any taxing or other governmental authorities with
respect to such business, activities or assets. The obligations of Cordant
or the Stockholders as a Delivering Party under this Section 11.2 to permit
access to and review of the foregoing materials are conditioned upon the
execution by the Requesting Party of a confidentiality agreement reasonably
acceptable to the Delivering Party.
(h) POST-CLOSING TAX PAYMENTS. The Stockholders shall reimburse
Cordant and each of its Affiliates, successors and assigns for Taxes for
which any of the Companies or the Subsidiaries or any predecessor thereof
are or may be liable or that are or may become due or payable with respect
to all taxable periods ending on or prior to the Closing Date and with
respect to any Pre-Closing Partial Period that any of Cordant or any of its
Affiliates, successors or assigns is obligated to pay in excess of Taxes
paid by the Companies or the Subsidiaries prior to the Closing Date or
reflected in the accrual or reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Companies Balance
Sheet with respect to any of the Companies or the Subsidiaries liable for
such Taxes, as such accrual or reserve is adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
the Companies and the Subsidiaries or as adjusted on the Closing
Consolidating Balance Sheet. This Section 11.2(h) shall not have any effect
on, and in no way shall negate, the Stockholders' obligations under Article
X.
(i) TAX SHARING AGREEMENTS. All Tax sharing agreements or similar
agreements with respect to or involving any of the Companies or MSD shall
be terminated as of the Closing Date and, after the Closing Date, neither
Cordant nor MSD shall be bound thereby or have any liability thereunder.
(j) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with
40
this Agreement shall be paid by Cordant when due, and Cordant will, at its
own expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration
and other Taxes and fees, and, if required by applicable law, the
Stockholders will, and will cause their respective Affiliates to, join in
the execution of any such Tax Returns and other documentation.
(k) CHARACTERIZATION OF PAYMENTS. Any payments made to the
Stockholders or to Cordant pursuant to this Article XI shall constitute an
adjustment of the Purchase Price for Tax purposes and shall be treated as
such by Cordant, the Companies, the Subsidiaries and the Stockholders on
their Tax Returns to the extent permitted by law.
11.3 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither this Agreement nor
any of the rights or obligations hereunder may be assigned prior to the
Closing by the Companies or the Stockholders without the prior written
consent of Cordant, or by Cordant without the prior written consent of the
Companies and the Stockholders' Representative; provided that Cordant may
assign its rights and obligations hereunder to a wholly-owned subsidiary,
in which event Cordant shall remain responsible for the performance of all
of its obligations hereunder. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Nothing herein expressed
or implied shall give or be construed to give to any Person, other than the
parties hereto and such successors and assigns and the Persons indemnified
pursuant to Article X, any legal or equitable rights hereunder.
11.4 NOTICES. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy with receipt
confirmed (and, in the case of notices to Xx. Xxxxxxxx, by overnight
delivery service or registered or certified mail); the Business Day after
it is sent, if sent for next day delivery, freight prepaid, to a domestic
address by recognized overnight delivery service (E.G., Federal Express);
and upon receipt, if sent by certified or registered mail, postage prepaid,
return receipt requested, as follows:
(a) If to Cordant:
Cordant Technologies Inc.
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
41
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(b) If to the Companies or the Stockholders prior to the Closing:
Continental/Midland, Inc.
00000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Much Shelist Freed Xxxxxxxxx Xxxxx & Xxxxxxxxxx,P.C.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
(c) If to the Stockholders after the Closing:
c/o Xx. Xxxxxx X. Xxxxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
with a copy to:
Much Shelist Freed Xxxxxxxxx Xxxxx & Xxxxxxxxxx,P.C.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others given in the manner
set forth in this Section 11.4. Notice to the Stockholders shall be
satisfied upon giving one notice to the Stockholders' Representative as set
forth above.
11.5 CHOICE OF LAW. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the State
of Illinois, without giving effect to any choice of law or conflict of law
provision or rule that would cause the application of the laws
42
of any jurisdiction other than the State of Illinois; PROVIDED, HOWEVER,
with respect to matters of law concerning the internal corporate affairs of
any corporate entity which is a party to or the subject of this Agreement,
the law of the jurisdiction under which the respective entity derives its
powers shall govern.
11.6 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules hereto and the Ancillary Agreements,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provision hereof (whether or not similar), nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to 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 provision of this Agreement or any other such instrument.
11.9 EXPENSES. Except as otherwise provided in this Agreement, each of
Cordant, the Stockholders and the Companies will be liable for their own
expenses incurred in connection with the negotiation, preparation,
execution and performance of this Agreement and the transactions
contemplated hereby.
11.10 PUBLICITY. No party hereto shall issue any press release or make any
public statement regarding the transactions contemplated hereby without the
prior written approval of the other parties, and the parties hereto shall
issue a mutually acceptable press release as soon as practicable after the
date hereof, except as required by law (in which case, the party making
such announcement or issuing such press release will provide each other
party with a copy of any written statement or announcement that it proposes
to make prior to making such announcement and will consult with the other
parties with respect thereto).
11.11 DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
"ACTION" means any action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding or investigation.
"AFFILIATE" of a Person means any other Person which directly or
indirectly controls, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
43
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
"ANCILLARY AGREEMENTS" means the Senior Advisor Agreement, the
Employment Agreements and other agreements, certificates and documents
required hereunder to consummate the Closing.
"ASSETS" means with respect to any Person, all of its right,
title and interest in and to its properties, assets and rights of any kind,
whether tangible or intangible, real or personal.
"BALANCE SHEET DATE" means June 30, 1999.
"BANKS" means LaSalle Bank National Association and Xxxxxx Bank &
Trust Company.
"BENEFIT ARRANGEMENT" means with respect to any Person, any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life,
health, disability or accident benefits (including any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the
Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation
rights, stock purchases or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not a
Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, by such
Person, or an ERISA Affiliate thereof or under which such Person, or any
ERISA Affiliate thereof may incur any liability, and (C) covers any
employee or former employee of such Person, or any ERISA Affiliate thereof
(with respect to their relationship with such entities).
"BOOKS AND RECORDS" means, with respect to any Person, (a) all
product, business and marketing plans, sales and promotional literature and
artwork relating to its Assets or Business, (b) all books, records, lists,
ledgers, financial data, files, reports, product and design manuals, plans,
drawings, technical manuals and operating records of every kind relating to
its Assets or Business (including records and lists of customers,
distributors, suppliers and personnel) and (c) all telephone and fax
numbers used in its Business, in each case whether maintained as hard copy
or stored in computer memory and whether owned by such Person or its
respective Affiliates.
"BUSINESS" means, with respect to any Person, the business of
such Person as conducted on the date hereof.
"CLOSING" means the consummation of the transactions contemplated
by this Agreement on the Closing Date.
44
"CLOSING DATE" means the date to be specified by Cordant, the
Companies and the Stockholders, which shall be no later than the fifth
business day following the satisfaction or waiver of all of the conditions
set forth in Article VII and in Article VIII hereof.
"CLOSING PLACE" means such location agreed upon by the parties
or, in the absence of such an agreement, the offices of Xxxxxx & Xxxxxxx,
0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
"COMPANIES BALANCE SHEET" means the consolidated balance sheet of
each of the Companies as of the Balance Sheet Date.
"COMPANIES COMMON STOCK" means collectively the
Continental/Midland Common Stock, the KORE Common Stock and the KORE II
Common Stock.
"COMPANIES DISCLOSURE SCHEDULE" means the Disclosure Schedule
dated as of the date hereof delivered by the Companies to Cordant.
"COMPANIES FINANCIAL STATEMENTS" means, collectively, the audited
financial statements of (a) Continental/Midland for the twelve months ended
September 30, 1998, September 30, 1997 and September 30, 1996, (b) KORE for
the twelve months ended December 31, 1998, December 31, 1997 and December
31, 1996, and (c) KORE II for the period from its formation to September
30, 1998; and unaudited condensed consolidated financial statements of
Continental/Midland and KORE II for the nine months ended on the Balance
Sheet Date and of KORE for the six months ended on the Balance Sheet Date.
"CONSENTS" means, with respect to any Person, any and all
licenses, permits, franchises, approvals, authorizations, consents or
waivers from third parties (including governmental authorities and parties
to such Person's material Contracts) that are (i) required for the
consummation of the transactions contemplated by this Agreement or (ii)
necessary in order that Cordant can conduct the Businesses of the Companies
and MSD after the Closing in substantially the same manner as before the
Closing.
"CONTINENTAL/MIDLAND COMMON STOCK" means the common stock, par
value $.01 per share, of Continental/Midland.
"CONTRACTS" means, with respect to any Person, all agreements,
contracts, leases, purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations and commitments to which such Person is a party or by which
such Person or any of its Assets are bound or affected, whether written or
oral.
"CORDANT MATERIAL ADVERSE CHANGE" means a change which is, or is
reasonably likely to be, materially adverse to the condition (financial or
otherwise), business, results of operations, assets, liabilities or
operations of Cordant and its subsidiaries, taken as a whole, except for
such effects or changes resulting from changes in general economic
conditions.
45
"COURT ORDER" means, with respect to any Person, any judgment,
decision, consent decree, injunction, ruling or order of any federal, state
or local court or governmental agency, department or authority that is
binding on such Person or its property under applicable law.
"DEFAULT" with respect to any Person means (a) a breach of or
default under any Contract of such Person, (b) the occurrence of an event
that with the passage of time or the giving of notice or both would
constitute a breach of or default under any such Contract or (c) the
occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right of termination or
acceleration under any such Contract.
"EMPLOYEE PLANS" means, with respect to any Person, all of its
respective Benefit Arrangements, Multiemployer Plans, Pension Plans and
Welfare Plans. "EMPLOYMENT AGREEMENTS" means, collectively, the Employment
Agreements between Continental/Midland or KORE and the individuals
signatory thereto identified on Section 11.11 of the Companies Disclosure
Schedule, substantially in the form of EXHIBIT E hereto.
"ENCUMBRANCE" means any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other similar right of any third parties, whether
voluntarily incurred or arising by operation of law, and includes any
agreement to give any of the foregoing in the future, and any contingent
sale or other title retention agreement or lease in the nature thereof.
"ENVIRONMENTAL CONDITIONS" mean, with respect to any Person, the
Release on or prior to the Closing Date into the environment of any
contaminant, irritant or pollutant or other Hazardous Substance (whether or
not such pollution constituted at the time thereof a violation of any
Environmental Law) as a result of which such Person, has or may become
liable to any other Person or by reason of which any of its Assets may
suffer or be subjected to any Encumbrance.
"ENVIRONMENTAL LAWS" mean all Regulations which regulate or
relate to the protection or clean-up of the environment, the use,
treatment, storage, transportation, generation, manufacture, processing,
distribution, handling or disposal of, or emission, discharge or other
release or threatened release of, Hazardous Substances or otherwise
dangerous substances, wastes, pollution or materials (whether gas, liquid
or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the
health and safety of persons or property, including protection of the
health and safety of employees. Environmental Laws include the Federal
Water Pollution Control Act, Resource Conservation & Recovery Act, Clean
Water Act, Safe Drinking Water Act, Atomic Energy Act, Occupational Safety
and Health Act, Toxic Substances Control Act, Clean Air Act, Comprehensive
Environmental Response, Compensation and Liability Act, Hazardous Materials
Transportation Act and all analogous or related federal, state or local
law.
"ERISA" means the Employee Retirement Income Security Act of
1974.
46
"ERISA AFFILIATE" means, with respect to any Person, any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with or under "common control" with such Person as defined in
Section 414(b) or (c) of the Code.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may
be in general use by significant segments of the U.S. accounting
profession, which are applicable to the facts and circumstances on the date
of determination.
"HAZARDOUS SUBSTANCE" means any pollutants, contaminants,
chemicals, waste and any toxic, infectious, carcinogenic, reactive,
corrosive, ignitable or flammable chemical or chemical compound or
hazardous substance, material or waste, whether solid, liquid or gas,
including any quantity of asbestos in any form, urea formaldehyde, PCBs,
radon gas, crude oil or any fraction thereof, all forms of natural gas,
petroleum products or by-products or derivatives, radioactive substance,
waste waters, sludges, slag and any other substance, material or waste that
is subject to regulation, control or remediation under any Environmental
Laws.
"HSR ACT" means the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"INVENTORY" means, with respect to any Person, all merchandise
owned and intended for resale and all raw materials, work in process,
finished goods, wrapping, supply and packaging items and similar items,
whether or not located on the premises, on consignment to a third party, or
in transit or storage.
"KORE COMMON STOCK" means the common stock, no par value, of
KORE.
"KORE II COMMON STOCK" means the common stock, no par value, of
KORE II.
"LIABILITIES" means, with respect to any Person, any direct or
indirect liability, indebtedness, obligation, commitment, expense, claim,
deficiency, guaranty or endorsement of or by such Person of any type,
whether accrued, absolute, contingent, matured, unmatured, liquidated,
unliquidated, known or unknown.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any
effect or change which is, or is reasonably likely to be, materially
adverse to the condition (financial or otherwise), business, results of
operations, assets, liabilities or operations of the Companies and MSD,
taken as a whole, except for such effects or changes resulting from changes
in general economic conditions.
"MULTIEMPLOYER PLAN" means, with respect to any Person, any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA.
47
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent in all material respects with past custom and practice
of the Business as a whole (including with respect to quantity and
frequency).
"PENSION PLAN" means, with respect to any Person, any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) (A) which such Person or any ERISA Affiliate thereof
maintains, administers, contributes to or is required to contribute to, or,
within the five years prior to the Closing Date, maintained, administered,
contributed to or was required to contribute to, or under which such Person
or any ERISA Affiliate thereof may incur any liability and (B) which covers
any employee or former employee of such Person or any ERISA Affiliate
thereof (with respect to their relationship with such entities).
"PERMITS" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local.
"PERMITTED ENCUMBRANCES" means, to the extent applicable,
Encumbrances which (a) are liens for Taxes not yet due and payable, (b) do
not, individually or in the aggregate, materially detract from the value of
the assets to which they attach, (c) are mechanics', carriers',
materialmen's, landlords', workers' or other similar liens incurred in the
ordinary course of business, (d) relate to molds, equipment or similar
assets owned by customers or third parties that are used by the Companies
and MSD in their operations, (e) installments of special assessments not
yet delinquent, recorded easements, covenants, and other restrictions, and
utility easements, building restrictions, zoning restrictions, and other
easements and restrictions existing generally with respect to properties of
a similar character which do not affect materially and adversely the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto, and (f) encumbrances securing the obligations of
the Companies to the Banks.
"PERSON" means any person or entity, whether an individual,
trustee, corporation, limited liability company, general partnership,
limited partnership, trust, unincorporated organization, business
association, firm, joint venture, governmental agency or authority.
"PROPRIETARY RIGHTS" means (a) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, (b) U.S. and
foreign trademarks, service marks, trade dress, logos, trade names and
corporate names and the goodwill associated therewith and registrations and
applications for registration thereof, (c) U.S. and foreign copyrights and
registrations and applications for registration thereof, (d) trade secrets
and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or
not reduced to practice), know-how, research and development information,
software, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing
and cost information, business and marketing plans and customer and
supplier lists and information), (e) other proprietary rights, (f) copies
and tangible embodiments thereof (in whatever form or medium) and (g)
licenses granting any rights with respect to any of the foregoing.
48
"REGULATIONS" means any laws, statutes, ordinances, regulations,
rules, court decisions, principles of law and orders of any foreign,
federal, state or local government and any other governmental department or
agency, including Environmental Laws, energy, motor vehicle safety, public
utility, zoning, building and health codes, occupational safety and health
and laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours.
"RELATED PARTY" means as to any Person, any of such Person's
officers and directors, any Affiliate of such Person or the respective
officers and directors of any such Affiliate.
"RELEASE" means and includes any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment or the workplace of any Hazardous
Substance, and otherwise as defined in any Environmental Law.
"REPRESENTATIVE" means any officer, director, principal,
attorney, accountant, agent, employee or other representative of any
Person.
"SEC" means the Securities and Exchange Commission.
"SENIOR ADVISOR AGREEMENT" means the Senior Advisor and
Employment Agreement between Continental/Midland and Xxxxxx X. Xxxxxxxx,
substantially in the form of EXHIBIT F hereto.
"TAX RETURN" means any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including information returns, any documents with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information
"TAXES" mean any and all federal, state, local, foreign
and other taxes, levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income, estimated
income, business, occupation, franchise, real property, payroll, personal
property, sales, transfer, stamp, use, employment, commercial rent or
withholding, occupancy, premium, gross receipts, profits, windfall profits,
deemed profits, license, lease, severance, capital, production,
corporation, ad valorem, excise, duty or other Taxes, whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest whether paid or received, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to,
any Taxes.
"TO THE KNOWLEDGE OF THE COMPANIES" (or similar phrases) means to
the knowledge of the Stockholders (individually) and the officers and
directors of the Companies. "TO THE KNOWLEDGE OF CORDANT" (or similar
phrases) means to the knowledge of the chief executive officer, the chief
financial officer and the general counsel of Cordant.
49
"WELFARE PLAN" means with respect to any Person any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA, (i) which such
Person or any ERISA Affiliate thereof maintains, administers, contributes
to or is required to contribute to, or under which such Person or any ERISA
Affiliate thereof may incur any liability and (ii) which covers any
employee or former employee of such Person or any ERISA Affiliate (with
respect to their relationship with such entities) thereof.
"YEAR 2000 COMPLIANT" shall mean that such Computer Systems will
correctly process, provide and receive date data before, during and after
January 1, 2000 and that there will be no material loss of any
functionality of and no material disruption to any such Computer Systems
due solely to date data as a result of the introduction, processing, entry
or input of records containing any such date data.
11.12 TRUSTEE LIABILITY. When this Agreement or any Ancillary Agreement is
executed by the trustee of any trust, such execution is by the trustee, not
individually, but solely as trustee in the exercise of and under the power
and authority conferred upon and invested in such trustee, and it is
expressly understood and agreed that nothing herein contained shall be
construed as creating any liability on any such trustee personally to pay
any amounts required to be paid hereunder, or to perform any covenant,
either express or implied, contained herein, all such liability, if any,
being expressly waived by the parties hereto by their execution hereof. Any
liability of any Stockholder which is a trust, whether owing to Cordant or
to any other Person, shall be only that of such trust to the full extent of
its trust estate and shall not be a personal liability of any trustee,
grantor or beneficiary thereof, except to the extent that the Purchase
Price has been distributed to such grantor or beneficiary, in which case
such grantor or beneficiary shall be liable under this Agreement to the
extent that the Purchase Price has been distributed to such grantor or
beneficiary.
11.13 INTERPRETATION PROVISIONS
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, schedule and exhibit references are to this Agreement unless
otherwise specified. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. The term
"or" is disjunctive but not necessarily exclusive. The terms "include" and
"including" are not limiting and mean "including without limitation."
(b) References to agreements and other documents shall be deemed
to include all subsequent amendments and other modifications thereto
through the relevant date.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
50
(e) The language used in this Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
(f) The schedules and exhibits to this Agreement are a material
part hereof and shall be treated as if fully incorporated into the body of
the Agreement.
[Signature pages follow]
51
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be duly executed on its behalf by its
officer thereunto duly authorized, as of the day and year first above
written.
CONTINENTAL/MIDLAND, INC., a Delaware
corporation
By:______________________________________
Name:____________________________________
Its:_______________________________________
KORE, INC., an Illinois corporation
By:______________________________________
Name:____________________________________
Its:_______________________________________
KORE II, INC., an Illinois corporation
By:______________________________________
Name:____________________________________
Its:_______________________________________
CORDANT TECHNOLOGIES INC.,
a Delaware corporation
By:______________________________________
Name: Xxxxxx X. Xxxxx
Its: Senior Vice President and General Counsel
XXXXXX X. XXXXXXXX REVOCABLE TRUST
DATED JUNE 17, 1988
By:______________________________________
Xxxxxx X. Xxxxxxxx, Trustee
XXXXX XXXXXXX XXXXXXXX TRUST DATED
DECEMBER 25, 1992
XXXXXX XXXXX XXXXXXXX TRUST DATED
DECEMBER 25, 1992
XXXXXX XXXXXXX XXXXXXXX TRUST DATED
DECEMBER 25, 1992
By:______________________________________
Xxxx Xxx Xxxxxxxx, Co-Trustee
By:______________________________________
Xxxxxxxx X. Xxxxxxx, Co-Trustee
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Xxxx Xxx Xxxxxxxx, an individual
Agreed and accepted as to Section 11.12
as of the date first written above:
__________________________________________
Xxxxxx X. Xxxxxxxx, an individual
