1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
among
Armco Inc.,
Flour City Architectural Metals, Inc.
and
Flour City International, Inc.
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Dated as of January 1, 1997
-------------------------------------
Sale of Stock
of
Flour City Architectural Metals, Inc.
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITION OF TERMS................................................. 1
1. Certain Definitions................................................ 1
1.1 Bonds......................................................... 1
1.2 Business Day.................................................. 1
1.3 Closing and Closing Date....................................... 1
1.4 Code........................................................... 1
1.5 Company....................................................... 1
1.6 Effective Date................................................ 1
1.7 Effective Date Schedule of Working Capital.................... 2
1.8 Effective Date Schedule of GPC Projected Cash Flow............ 2
1.9 Financial Statement........................................... 2
1.10 Guaranteed Project Contracts or GPC........................... 2
1.11 Knowledge..................................................... 2
1.12 Leased Real Property.......................................... 2
1.13 Purchaser's Bonds............................................. 2
1.14 Liens or Encumbrances......................................... 2
1.15 Material Adverse Effect....................................... 2
1.16 Other Seller's Agreements..................................... 2
1.17 Permitted Liens............................................... 3
1.18 Person........................................................ 3
1.19 Pre-Effective Date Periods.................................... 3
1.20 Project Contracts............................................. 3
1.21 Promissory Note.............................................. 3
1.22 Property..................................................... 3
1.23 Shares....................................................... 3
1.24 Tax or Taxes................................................. 3
1.25 Tax Returns.................................................. 3
ARTICLE II. PURCHASE AND SALE OF SHARES....................................... 4
2.1 Purchase and Sale............................................ 4
2.2 Consideration................................................ 4
2.3............................................................... 5
2.4 Closing...................................................... 6
2.5 Transactions to be Effected at Closing....................... 6
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER......................... 7
3. Representations and Warranties of Seller......................... 7
3.1 Organization, Standing and Authority of Seller............. 7
3.2 Execution and Delivery..................................... 7
3.3 Consents and Approvals..................................... 7
3.4 No Breach.................................................. 8
3.5 Outstanding Capital Stock, Options or Other Rights......... 8
3.6 Transfer of the Shares..................................... 8
3.7 Organization and Qualification............................. 8
3.8 No Violation of Company Instruments........................ 8
3.9 Financial Statement........................................ 8
3.10 Assets..................................................... 9
3.11 Judgments, Decrees and Orders in Restraint of Business..... 10
3.12 Litigation and Proceedings................................. 10
3.13 Permits, Licenses and Franchises........................... 11
3.14 Other Sale Arrangement..................................... 11
3.15 Employee Benefit Plans..................................... 11
3.16 Contracts and Binding Commitments.......................... 13
3.17 Taxes...................................................... 14
3.18 Accounts; Directors and Officers........................... 15
3.19 Compliance with Applicable Law............................. 15
3.20 Conflict of Interest....................................... 16
3.21 Brokers, Finder's or Similar Fees.......................... 16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
PURCHASER........................................................ 16
4. Representations and Warranties of Purchaser..................... 16
4.1 Due Incorporation and Authority........................... 16
4.2 Consents.................................................. 17
4.3 No Breach................................................. 17
4.4 Actions and Proceedings................................... 17
4.5 Broker's, Finder's or Similar Fees........................ 18
4.6 Purchase for Investment................................... 18
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ARTICLE V. COVENANTS AND AGREEMENTS.....................................18
5. Covenants and Agreements.....................................18
5.1 Confidentiality; Return of Documents.................18
5.2 Fees and Expenses....................................19
5.3 Employee Benefit Plans...............................19
5.4 Taxes................................................19
5.5 Seller's Access to Records...........................21
5.6 Litigation or Claim Defense Assistance...............22
5.7 Bonds and Purchaser's Bonds..........................22
5.8 Guarantees...........................................22
5.9 Manufacturing Agreement..............................23
5.10 Services Agreement...................................23
5.11 Disclaimer of Other Representations and Warranties...23
5.12 Further Assurances...................................23
5.13 Intellectual Property Assignment.....................24
5.14 Preservation of Company's Financial Position.........24
5.15 Change of Control Agreements.........................24
ARTICLE VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
INDEMNITY............................................24
6.1 Survival of Representations and Warranties and
Indemnities..........................................24
6.2 Indemnity............................................24
6.3 Indemnification for Environmental Claims.............28
ARTICLE VII. AMENDMENT AND WAIVER.................................30
7.1 Amendment............................................30
7.2 Extension; Waiver....................................30
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ARTICLE VIII. MISCELLANEOUS.................................................31
8.1 Notices..............................................31
8.2 Interpretation.......................................32
8.3 Governing Law........................................32
8.4 Publicity............................................32
8.5 Assignment; Binding Effect...........................32
8.6 Entire Agreement; Third Party Beneficiaries..........32
8.7 Construction.........................................32
8.8 Counterparts.........................................33
EXHIBITS
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A - Flour City Architectural Metals Balance Sheet
B - Non-Interest Bearing Promissory Note
C - Personal Guarantee
D - Parent Guarantee
E - Manufacturing Agreement
F - Services Agreement
SCHEDULES
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1.7 Effective Date Schedule of Working Capital
1.8 Effective Date Schedule of Guaranteed Projects Contracts (GPC)
Projected Cash Flow
1.10 Guaranteed Project Contracts
1.20 Project Contracts
3.10(a)(i) Leased Real Property
3.10(a)(iii) Hazardous Materials
3.10(b) Other Property
3.10(c) Intangible Property
3.11 Judgments, Decrees and Orders in Restraint of Business
3.12 Litigation
3.13 Permits, Licenses and Franchises
3.15(a) Employee Benefit Plans
3.15(c) Determination Letters
3.15(e) Multiemployer Plans Contributed During 1996
3.16 Contracts and Binding Commitments
3.17 Tax Returns
3.18 Accounts; Directors and Officers
3.19 Compliance with Applicable Law
3.3 Consents and Approvals
4.3 No Breach
4.4 Actions and Proceedings
5.8(a) Guarantees
5.15 Change of Control Agreements
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This STOCK PURCHASE AGREEMENT made and entered into this 24th day of
January 1997, but effective as of January 1, 1997, by and among Armco Inc., an
Ohio corporation ("Seller"), Flour City Architectural Metals, Inc., a Delaware
corporation ("Company"), and Flour City International, Inc., a Nevada
corporation ("Purchaser"):
W I T N E S S E T H
WHEREAS, Seller is the beneficial and record owner of all of the issued
and outstanding shares of capital stock ("the Shares") of Company; and
WHEREAS, Seller wishes to sell to Purchaser and Purchaser wishes to buy
from Seller the Shares on the terms and conditions set forth in this Stock
Purchase Agreement (the "Agreement");
NOW, THEREFORE, in reliance upon the representations and warranties
contained herein and in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be bound, agree as follows:
ARTICLE I.
DEFINITION OF TERMS
1. Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context requires otherwise:
1.1 "Bonds" has the meaning set forth in Section 5.7(a).
1.2 "Business Day" means a day on which Seller, Purchaser and
national banks doing business in New York City are open for business.
1.3 "Closing" and "Closing Date" have the meanings set forth in
Section 2.4.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
1.5 "Company" means Flour City Architectural Metals, Inc., a
Delaware corporation.
1.6 "Effective Date" means January 1, 1997.
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1.7 "Effective Date Schedule of Working Capital" means the schedule
of trade receivables, other receivables (including any cost incurred in excess
of xxxxxxxx) and other current assets less trade payables and xxxxxxxx in
excess of revenue earned directly related to the Project Contracts prepared in
accordance with the accounting principles and procedures of Company
consistently applied (Schedule 1.7).
1.8 "Effective Date Schedule of GPC Projected Cash Flow" means the
schedule which reflects the cash flow status of the Guaranteed Project
Contracts as of the Effective Date (Schedule 1.8).
1.9 "Financial Statement" means the balance sheet of Company as of
December 31, 1996 set forth on Exhibit A.
1.10 "Guaranteed Project Contracts" or "GPC" means the contracts for
projects substantially complete which are listed on Schedule 1.10.
1.11 "Knowledge" means, with respect to Seller and Company, the
knowledge of Company's current officers after having made due inquiry of the
appropriate individuals employed by Company.
1.12 "Leased Real Property" means all real property being leased by
Company, a list of which is set forth in Schedule 3.10(a)(i).
1.13 "Purchaser's Bonds" means letter(s) of credit and/or bonds as
described in Section 5.7(b) of this Agreement.
1.14 "Liens or Encumbrances" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other similar restriction or limitation.
1.15 "Material Adverse Effect" means an effect which is materially
adverse to the business, financial condition or results of operations of
Company.
1.16 "Other Seller's Agreement" means each agreement to be executed
in connection with the transactions contemplated hereunder to which Seller is a
party.
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1.17 "Permitted Liens" means those Liens or Encumbrances affecting
real or personal property which (i) are for taxes, assessments or other
governmental charges, or the claims of materialmen, carriers, landlords or like
persons, all of which are not yet due or payable or which are being contested
in good faith by appropriate proceedings and for which an appropriate reserve
has been established, (ii) are zoning, building or other similar governmental
restrictions, (iii) are easements, covenants, rights-of-way or other similar
restrictions, or (iv) arise in the ordinary course of business.
1.18 "Person" means any individual, corporation, partnership, firm,
joint venture, association, joint stock company, trust, unincorporated
organization, governmental or regulatory authority or other entity.
1.19 "Pre-Effective Date Periods" means all tax periods ending on or
before the Effective Date.
1.20 "Project Contracts" means the contracts for projects in
progress which are listed on Schedule 1.20.
1.21 "Promissory Note" means the non-interest bearing note described
in Section 2.2(b)(i) of this Agreement.
1.22 "Property" means personal property, tangible or intangible.
1.23 "Shares" means all of the issued and outstanding capital stock
of Flour City Architectural Metals, Inc. consisting of 1,000 shares of common
stock, par value $1.00 per share.
1.24 "Tax" or "Taxes" means any federal, state, local, foreign or
other income, premium, profits, estimated, franchise, license, impost,
transfer, sales, use, ad valorem, customs, payroll, withholding, employment,
wage, occupation, value added, property (real or personal), excise or other
taxes, fees, duties, assessments, withholdings or governmental charges of any
nature (including interest, penalties or additions to such items).
1.25 "Tax Returns" means all returns, reports, estimates,
declarations, information returns and statements of any nature regarding taxes
for any period required to be filed by Seller or Company and relating to the
income, properties or operations of Company.
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ARTICLE II.
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale. Upon the terms and subject to the conditions
set forth in this Agreement, Seller shall sell, assign, transfer, convey and
deliver to Purchaser and Purchaser shall purchase from Seller, on the Closing
Date, the Shares.
2.2 Consideration.
(a) In consideration for the Shares, Purchaser (i) shall
pay Seller the sum of One Hundred and 00/100 U.S. Dollars (U.S. $100), (ii)
agrees to cause Company to fully, diligently, competently and completely
perform and (iii) guarantees the full, diligent, competent and complete
performance of all the obligations of Company, including but not limited to the
Project Contracts and the Guaranteed Project Contracts.
(b) At the Closing, Seller shall deliver to Purchaser the
Effective Date Schedule of Working Capital (Schedule 1.7) directly related to
the Project Contracts prepared consistent with the accounting principles and
procedures of Company consistently applied.
Schedule of Working Capital
(i) To the extent that the Effective Date Schedule
of Working Capital reflects the working capital of Company directly related to
the Project Contracts to be less than three million dollars ($3,000,000),
Seller shall deliver a non-interest bearing promissory note to Purchaser in an
amount equal to the difference between three million dollars ($3,000,000) and
the working capital related to the Project Contracts ("Promissory Note"). The
Promissory Note shall become due and payable upon delivery to Seller by
Purchaser of the Purchaser's Bond as required by Section 5.7(b) of this
Agreement. The Promissory Note shall be in the form of Exhibit B.
(ii) At the Closing, Seller shall deliver to
Purchaser the Effective Date Schedule of GPC Projected Cash Flow (Schedule 1.8)
which reflects the cash flow status of the GPC as of the Effective Date. Seller
represents that the GPC Projected Cash Flow after the Effective Date shall not
be less than two million dollars ($2,000,000) ("Total Cash Flow Projection").
In the event that, (i) upon expiration of each annual period following
the Effective
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Date, (ii) upon delivery of an updated Schedule of GPC Projected Cash Flow by
Purchaser to Seller, as provided below, which indicates a "Shortfall," as
defined below, equal to or in excess of one million dollars ($1,000,000); or
(iii) upon final completion and closing out of the GPC, the actual GPC cash flow
is less than the Total Cash Flow Projection, (the difference between such actual
GPC cash flow and the Total Cash Flow Projection shall be the "Shortfall"),
Seller shall pay to Purchaser an amount equal to fifty percent (50%) of the
Shortfall, up to a total payment by Seller of two million dollars ($2,000,000).
In the event the Shortfall exceeds four million dollars ($4,000,000), Seller
shall pay to Purchaser one hundred percent (100%) of the amount by which the
Shortfall exceeds four million dollars ($4,000,000) ("Excess Shortfall").
Purchaser shall provide Seller with an updated Schedule of GPC Projected Cash
Flow at three (3) month intervals following the Effective Date until Purchaser
and Seller agree that all of the GPC have been completed and closed out. Any
Shortfall payments required to be made to Purchaser by Seller hereunder shall be
made within thirty (30) days from the date of the determination of the amount of
the Shortfall. In calculating the actual GPC cash flow, all amounts incurred by
Purchaser in defending or satisfying any actual or potential liability
associated with the GPC shall be included.
(iii) At the Closing, Purchaser shall deliver to
Seller Purchaser's calculation of the Interim Cash Adjustment Schedule which
shall reflect the amount of cash, if any, required to be transferred to
Purchaser by Seller for the period commencing on the Effective Date and ending
on the Closing Date (the "Interim Period"). The Interim Cash Adjustment Schedule
shall reflect all cash receipts by the Company, or for the benefit of the
Company, and all cash disbursements made by the Company, or for the benefit of
the Company, during the Interim Period. The amount of cash, if any, required to
be transferred as set forth in the Interim Cash Adjustment Schedule and as
agreed to by Seller, shall be transferred by Seller to Purchaser not later than
two (2) business days after Purchaser and Kasion Contracting Company have
completed the requirements of a Letter of Representation executed by Kasion
Contracting Co. Ltd. concurrently with execution of this Agreement.
2.3 (a) Each of the parties shall have access to the books and
records of Company for purposes of the review of the Schedule of Working
Capital, Schedule of GPC Projected Cash Flow, the calculation of the amount of
the Promissory Note, and the calculation of the Shortfall or any Excess
Shortfall (collectively the "Financial Schedules").
(b) In the event that any party disagrees with any
calculation performed by another party related to any of the Financial
Schedules, the disagreeing party shall notify the other party within thirty
(30) days of receipt of such Financial Schedule or calculation, provided that
the
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disagreeing party has had reasonable access to the relevant books and records.
If the disagreeing party timely delivers the notice setting forth the
disagreement and the items to which it objects. Seller and Purchaser shall have
fifteen (15) Business Days to resolve the disagreement. If the disagreement is
unable to be resolved within such fifteen (15) day period, Seller and
Purchaser agree to retain a nationally recognized accounting firm (the
"Accounting Firm"), to arbitrate and resolve the disputed items in the
Financial Schedule within sixty (60) days of such retention. The Accounting
Firm shall make such determination as an arbitrator by reviewing the disputed
items, such underlying documentation as it deems appropriate, and such written
materials as shall be presented to it by either Seller or Purchaser within 30
days of its retention. On or before the 60th day after its retention, the
Accounting Firm shall deliver a written report to Seller and Purchaser stating
whether each disputed item is calculated as required by this Agreement and
providing the corresponding adjustment to the Financial Schedule, if any. For
the purposes of this engagement, the Accounting Firm shall assume that all
items not being disputed are fairly presented as required by this Agreement. The
determinations by the Accounting Firm shall be final and binding on the parties
hereto for all purposes of this Agreement. The fees and expenses of the
Accounting Firm shall be borne equally by Seller and Purchaser.
2.4 Closing. The Closing of the sale and transfer of the Shares
(the "Closing") will take place at 10:00 a.m. on January 24, 1997 or such date
as the parties mutually agree, provided that the conditions precedent to
Closing set forth in this Agreement have been satisfied or waived (the
"Closing Date"), at the offices of Seller.
2.5 Transactions to be Effected at Closing. At the Closing:
(a) Seller shall deliver to Purchaser (i) one or more
certificates representing the Shares free and clear of any Liens or
Encumbrances, duly endorsed, blank or accompanied by duly executed instruments
of transfer, or registered in the name of Purchaser, and (ii) all documents and
instruments expressly required by this Agreement to be delivered by Seller at
the Closing.
(b) Purchaser and (Guarantor) shall deliver to Seller all
documents and instruments expressly required by this Agreement to be delivered
by Purchaser at the Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3. Representation and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
3.1 Organization, Standing and Authority of Seller. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio, and is in good standing as a foreign corporation in
all jurisdictions in which its failure to quality or be in good standing would
adversely affect the consummation or the validity of the transactions provided
for in this Agreement. Seller has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby to be consummated by Seller.
3.2 Execution and Delivery. The execution, delivery and performance
by Seller of this Agreement and the consummation of the transactions
contemplated hereby to be consummated by Seller have been duly and validly
authorized by all necessary corporate action on the part of Seller, and no
other corporate proceedings on the part of Seller are necessary to authorize
the execution, delivery and performance by Seller of this Agreement or the
consummation of the transactions contemplated hereby to be consummated by
Seller. This Agreement has been executed and delivered by Seller and (assuming
that such agreement is a valid and binding obligation of Purchaser) constitutes
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except that (i) such enforceability may be subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
rehabilitation, liquidation conservatorship, receivership or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.3 Consents and Approvals. The execution and delivery by Seller of
this Agreement, the performance by Seller of its obligations hereunder and the
consummation by Seller of the transactions contemplated hereby to be
consummated by Seller do not require Seller to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
public, governmental or judicial authority except (a) as set forth in Schedule
3.3; or (b) such as have been duly obtained or made, as the case may be, and
are in full force and effect on the Closing Date.
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3.4 No Breach. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated
hereby by Seller in accordance with the terms and conditions hereof will not
violate, conflict with, or result in the breach of any provision of the
Articles of Incorporation, Regulations or other charter organizational document
of Seller.
3.5 Outstanding Capital Stock, Options or Other Rights. The
outstanding capital stock of Company consists of 1,000 shares of common stock,
par value $1.00 per share. No other class of capital stock, warrant, option or
right to purchase any equity interest of Company is authorized or outstanding.
All of the outstanding shares are owned of record and beneficially by Seller
and constitute 100 percent of the issued and outstanding shares of capital
stock of Company. All of the shares are duly authorized, validly issued, fully
paid and nonassessable.
3.6 Transfer of the Shares. At the Closing, but effective as of
the Effective Date, Seller will convey good title thereto, free and clear of
any Liens or Encumbrances, other than the requirements of the Federal and state
securities laws with respect to limitations on the subsequent transfer thereof
and other than any Liens or Encumbrances thereon that may have been imposed or
consented to by Purchaser.
3.7 Organization and Qualification. Seller has delivered to
Purchaser true and complete copies of the Articles of Certificate of
Incorporation and Bylaws or comparable instruments, in each case, as in effect
on the date hereof, of Company. Company is duly qualified or licensed in all
jurisdictions in which the conduct of its business requires such qualification
or license and the failure so to qualify or be licensed would have a Material
Adverse Effect.
3.8 No Violation of Company Instruments. The execution and
delivery of this Agreement do not, and the sale of the Shares pursuant to this
Agreement will not, violate any provision of the Articles of Incorporation or
Bylaws of Company, or any provision of, or results in the acceleration of any
obligation under, any mortgage, note, lien, lease, franchise, license, permit,
agreement, instrument, order, arbitration award, judgment or decree or in the
termination of any license, franchise, lease, permit or other instrument to
which Company is a party or by which it is bound, except for such as to which
requisite waivers or consents either have been (or will be prior to the
Closing) obtained by Company or the obtaining of which has been waived by
Purchaser.
3.9 Financial Statement. Seller has heretofore delivered to
Purchaser a copy of Financial Statement for the year ended December 31, 1996.
such Financial Statement has been
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prepared in accordance with the accounting principles and procedures of Company
consistently applied.
(a) Seller has converted, as of the Effective Date, the
Intercompany Payable and Intercompany Corporate Control liability accounts
reflected on the December 31, 1996 Financial Statement to common equity
("additional paid in capital").
(b) Seller agrees to discharge or otherwise satisfy in full
the following liabilities reflected on the December 31, 1996 Financial
Statement, which are hereby assigned to, and assumed by Seller as of December
31, 1996: Employee Deductions Payable; Accrued Payroll Taxes; Accrued Taxes;
Other Current Employee Benefits; Workers' Compensation; Other Accruals, except
for accrued real estate taxes for 1996; and Noncurrent Workers' Compensation.
3.10 Assets.
(a) Leased Real Property.
(i) Schedule 3.10(a)(i) hereto contains a true and
correct list of all Leased Real Property. True, correct and complete copies of
all material leases relating to such Leased Real Property (the "Leases") have
been delivered or made available to Purchaser.
(ii) Company is in compliance with the material terms
and provisions of the Leases and except as disclosed in the Schedules hereto,
Company has not received any notice of any default under any Lease.
(iii) Except as set forth in Schedule 3.10(a)(iii),
Company does not use, treat, store or dispose of, or has not permitted any
other party to use, treat, store or dispose of, whether temporarily or
permanently, any hazardous materials at, on or beneath the Leased Real Property
in violation of any Federal, state or local law, regulation or ordinance.
Except as set forth in Schedule 3.10(a)(iii), Seller and Company have no
knowledge of the presence, use, treatment, storage, release or disposal of any
hazardous materials at, on or beneath the Leased Real Property which has
created or might reasonably be expected to create any liability of owners or
occupants of the Leased Real Property under any Federal, state or local law or
regulation or which would require remediation or reporting adverse impact on
the use, occupancy or operation of such Leased Real Property. Except as set
forth in Schedule 3.10(a)(iii), to the knowledge of Seller and
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Company, no asbestos or PCBs are contained in or stored on the Leased Real
Property and there are no storage tanks for petroleum or any other hazardous
materials located in, on or under the Leased Real Property. None of the
Company's current operations involve the generation, transportation, treatment
or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state equivalent except as permitted by law.
(b) Other Property. Company has good and valid title to all
material personal property owned by Company and that it acquired in the normal
and ordinary course of business free and clear of all Liens or Encumbrances
except for (i) Liens or Encumbrances issued on Schedule 3.10(b) or (ii)
Permitted Liens. Schedule 3.10(b) contains a schedule of all equipment, vehicles
and other tangible personal property of Company having an individual value of
ten thousand dollars ($10,000) or more. Except as otherwise provided herein.
Seller makes no representation or warranty, express or implied, with respect to
any of the assets or property of Company.
(c) Intellectual Property. Company owns or exclusively holds
all rights to, free and clear of all liens, claims or restrictions, the
intellectual property listed on Schedule 3.10(c). Company has not received any
notice with respect to any alleged infringements or unlawful use of any
trademark, service xxxx, trade name, patent or other intangible property right
owned or alleged to be owned by others.
3.11 Judgments, Decrees and Orders in Restraint of Business. Except
as set forth in Schedule 3.11. Company is not a party to or subject to any
judgment or decree or order entered in any suit, arbitration or proceeding
brought by a governmental agency or, to the knowledge of Seller or Company, by
any other Person enjoining or restricting Company in respect of any (a)
business practice, (b) the acquisition of any property or (c) the conduct of
business in any area, including any regulatory restrictions on writing
insurance.
3.12 Litigation and Proceedings. Except as set forth in Schedule
3.12, there are no actions, suits, arbitrations, investigations or legal,
administrative or other proceedings pending or, to the knowledge of Seller or
Company, threatened against Company, at law or in equity or before or by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. There is no material
default on the part of Company with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitration,
governmental department, commission, bureau, board, agency or instrumentality.
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(a) Seller agrees to immediately accept the tender of
defense and shall promptly pay all costs, expenses and liabilities associated
therewith, including but not limited to attorneys' fees, fines, costs of
compliance, settlement payments and judgments entered, if any, for all actions,
suits, claims, administrative or other proceedings (collectively the "Actions")
set forth in Schedule 3.12, or Actions arising in the future from the same facts
alleged in any of the Actions set forth in Schedule 3.12; with the sole
exception of the following suits and claim: Sky-Lift Corporation v. Flour City
Architectural Metals, Inc., Tubelite, Inc. v. Flour City Architectural Metals,
Inc., et al.; and the Gage Brothers Concrete Products, Inc. claim, which arise
from Project Contracts or GPC and for which liability remains with Company,
subject to the provisions of Section 2.2(b)(ii).
3.13 PERMITS, LICENSES AND FRANCHISES. Except as set forth in
Schedule 3.13, Company has all permits, licenses, franchises and other
authorizations necessary to, and has complied in all material respects with all
laws applicable to, the conduct of its business and operations in the manner and
in the areas in which such business and operations are presently being
conducted, and all such permits, licenses, franchises and authorizations are in
full force and effect and, to the knowledge of Seller or Company, valid.
3.14 OTHER SALE ARRANGEMENT. Seller and Company are not obligated
or liable, contingently or otherwise, for or in respect of negotiations,
letters of intent or commitments for the sale of all, substantially all or a
material portion of the assets of Company or the sale of the Shares of Company
to any person other than Purchaser.
3.15 Employee Benefit Plans.
(a) Set forth on Schedule 3.15 is a true, accurate and
complete list of all pension, retirement, profit-sharing, deferred
compensation, bonus, stock option or other incentive plan, or other employee
benefit program, arrangement, agreement or understanding, or medical, vision,
dental or other health plan, or life insurance or disability plan, or any other
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (whether or not legally
binding), adopted, established, maintained or contributed to by Seller or under
which it would otherwise be a party or have liability and under which employees
or former employees (whether or not retired employees) of Company (or their
beneficiaries) are eligible to participate or derive a benefit (collectively,
the "Employee Benefit
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Plans"). There shall be included within the meaning of Seller, for this purpose
and for the purpose of the representations in this Section 3.15(a), all
"affiliates," whether or not incorporated, within the meaning of Section
407(d)(7) of ERISA.
(b) Full payment has been made of all amounts which Seller
is required, under applicable law or under any Employee Benefit Plan or any
agreement relating to any Employee Benefit Plan to which it is a party, to have
paid as contributions to or benefits under any Employee Benefit Plan as of the
last day of the most recent fiscal year of such Employee Benefit Plan ended
prior to the date hereof. Seller has made adequate provisions in accordance
with generally accepted accounting principles for liabilities to meet current
contributions or benefit payments.
(c) Except as provided in Schedule 3.15(c), a favorable
determination letter has been issued by the Internal Revenue Service (the
"Service") with respect to the qualified status of each of the Employee Benefit
Plans intended to be qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and with respect to the tax exempt
status under Section 501(a) of the Code of (A) any trust through which such
Employee Benefit Plans are funded and (B) any trust or other entity established
with respect to any Employee Benefit Plan and intended to be qualified as a tax
exempt organization under Section 501(c) of the Code. Since the date of the
most recent determination letter, each such qualified Employee Benefit Plan has
been, or can be (within 120 days of Closing), filed with the Service within the
time required to preserve the rights of Seller to adopt such amendment as may
be required by the Service in order to issue a favorable determination letter
with respect to each such Plan's continued tax-qualified and/or exempt status.
To the best knowledge of Seller, no act or omission has occurred since the date
of the last favorable determination letter issued with respect to an Employee
Benefit Plan which resulted or is likely to result in the revocation of the
Plan's tax-qualified or exempt status.
(d) Seller has performed all obligations required to be
performed by it under the Employee Benefit Plans. Seller has not engaged in any
transaction with respect to the Employee Benefit Plans which would subject it
or Purchaser to a tax, penalty or liability for a prohibited transaction under
Sections 406, 407 or 502(i) of ERISA or Section 4975 of the Code, nor have its
directors, officers, employees or agents, to the extent they or any of them are
fiduciaries under Title I of ERISA. Excepting only changes necessary to
preserve an Employee Benefit Plan's tax-qualified or exempt status under the
Code or to otherwise comply with applicable provisions of ERISA and the Code
(and in each case effective only as of the date necessary to do so), Seller
will not, and has no plan or commitment, whether formal or informal, written or
oral, and whether or not legally binding, to modify or change any Employee
Benefit Plan in any material manner prior
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to the Closing. Seller and any "administrator(s)" (as described in Section
3(16)(A) of ERISA) of the Employee Benefit Plans have complied in all material
respects with the applicable requirements of ERISA, the Code and all other
statutes, orders, rules or regulations, specifically including but without
limitation, material compliance with all reporting and disclosure requirements
of Part 1 of Title 1 of ERISA and of the Code in a timely and accurate manner,
and no penalties have been or, to the best knowledge of Seller, will be
imposed, nor is Seller or any administrator liable for any penalties imposed,
under ERISA, the Code or otherwise with respect to the Employee Benefit Plans
or any related trusts.
(e) Except as set forth on Schedule 3.15(e), Company is not
contributing to any multiemployer plan within the meaning of Section 3(37) of
ERISA (the "Multiemployer Plans").
3.16 Contracts and Binding Commitments.
(a) Schedule 3.16 contains a list of all of the following
contracts, arrangements or agreements (true and complete copies or, if none
exist, written descriptions or identification of which have been made available
to Purchaser) to which Company is a party or by which any of the assets or
properties of the Company are bound and which are material to the operations of
Company (such listed contracts herein referred to as the "Contracts"), as such
Contracts may have been amended, modified or supplemented to the date hereof:
(i) all employment, bonus, incentive or deferred
compensation, termination, stay-put, agency, brokerage, consultation or
representation Contracts or similarly binding arrangements of any type
(including without limitation loans or advances) (where the potential liability
of Company exceeds $10,000) with any current or former employee, consultant,
representative, officer or director of Company;
(ii) all Contracts or similarly binding arrangements
with any Person containing any provision or covenant limiting the ability of
Company to engage in any line of business or compete with any Person or
limiting the ability of any Person to compete with the Company following the
Closing;
(iii) all partnership, joint venture or
profit-sharing Contracts with any Person excluding contingent commission or
other similar arrangements with agents and brokers in the ordinary course of
business;
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(iv) all Contracts representing obligations for
borrowed money or the direct or indirect guarantee or securing of any
obligation for, or Contract to service the repayment of, borrowed money or any
other liability in respect of indebtedness for borrowed money of any other
Person, including without limitation, any Contract relating to (A) any lines of
credit, (B) the payment for property, products or services which are not
conveyed, delivered or rendered, or (C) the guarantee of any lease or other
similar periodic payments to be made by any other Person other than any such
Contract for an amount less than fifty thousand dollars ($50,000);
(v) all Contracts relating to computer software
licensing or data processing services representing nonterminable future
liabilities in excess of fifty thousand dollars ($50,000);
(vi) all Contracts between Company and Seller or
their affiliates;
(vii) all Contracts relating to licenses of
trademarks, trade names, service marks or other similar property rights;
(viii) all other Contracts material to the operations
of the business of Company; and
(ix) any power of attorney which is presently
effective and outstanding other than the powers of attorney which exist as a
matter of law or which have been granted pursuant to requirements of applicable
state insurance regulatory authorities.
(b) Company is not in material breach of, or default under
any of the Contracts and, to the knowledge of Seller and Company, no other
party to any Contract is claiming that Company is in material breach or
default. The sale for the Shares pursuant to this Agreement will not result in
the termination of any of the Contracts under the express terms thereof, will
not require further consents of any party thereto (other than those that will
have been obtained on or before the Closing Date) and will not bring into
operation any other provision thereof nor result in a breach or default
thereunder.
3.17 Taxes.
(a) Except as set forth in Schedule 3.17, all Tax Returns,
other than those which are not material to Company, required to be filed in
respect of Company either individually
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or on a consolidated basis that are due (after giving effect to any extensions)
on or prior to the Closing Date have been (or will have been by the closing
Date) filed in accordance with all applicable laws. All such Tax Returns set
forth with reasonable accuracy all material items required to be set forth
therein.
(b) Company has made all withholdings of Taxes required to
be made under all applicable Federal, state, local and foreign tax laws and
regulations, and such withholdings have either been paid to the respective
governmental agencies or set aside in accounts for such purpose or accrued
and entered upon the books of Company.
(c) No deficiencies, adjustments or changes in assessments
for any Taxes in respect of Company have been assessed or, to the knowledge of
Seller, proposed or asserted against Company.
(d) Except as set forth in Schedule 3.17, neither Seller
nor Company, has executed or filed with the Internal Revenue Service or any
other taxing authority any agreement or other document extending the period of
assessment or collection of any Taxes for which Company may be liable.
(e) Except as set forth in Schedule 3.17, Company is not a
party to, is bound by, or has any obligation under any tax sharing or similar
agreement.
3.18 Accounts; Directors and Officers. Schedule 3.18 sets forth a
list of all accounts holding assets of Company together with the names and
address of the applicable financial institution or other depository, the
account number and the names of all persons authorized to draw thereon or who
have access thereto and all safe deposit boxes of Company. Attached as Schedule
3.19 is a true and complete list, as of the date of this Agreement, showing the
names of all of the officers and directors of Company.
3.19 Compliance with Applicable Law. Except as set forth in Schedule
3.19, Company is presently complying in all material respects, in respect of
its business, with all applicable laws (whether statutory or otherwise), rules,
regulations, orders, ordinances, judgments, decrees, orders, writs and
injunctions of all governmental authorities (Federal, state, local, foreign or
otherwise) and Seller, and Company has not received notification from any
governmental authority of any asserted present or past failure to so comply
which has not been resolved or otherwise settled.
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3.20 Conflict of Interest. To the knowledge of Seller, no person who
is a director or officer of Company, (i) has any direct or indirect material
interest in any entity that does business with Company, or (ii) has any
contractual relationship with Company other than as an employee (other than in
the ordinary course).
3.21 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement
or understanding with Seller, or any action taken by Seller. Purchaser and
Company shall have no obligation or responsibility for the payment of said fee.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4. Representations and Warranties of Purchaser. Purchaser
represents and warrants Seller as follows:
4.1 Due Incorporation and Authority. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and has all requisite power and authority to own, lease and
operate its assets and business and to carry on its business as now being and
as heretofore conducted. Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement and each other agreement
required to be executed and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Purchaser of this
Agreement and each other agreement required to be executed and delivered by
Purchaser pursuant thereto, and the consummation by Purchaser of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Purchaser are necessary to authorize the execution,
delivery and performance by Purchaser of this Agreement and each of the other
agreements contemplated by this Agreement, or the consummation of the
transactions contemplated hereby and thereby. This Agreement has been duly and
validly executed and delivered by Purchaser and (assuming this Agreement is a
valid and binding obligation of Seller) constitutes valid and binding
obligation or Purchaser, enforceable against it in accordance with its terms,
except that (i) such enforceability may be subject to bankruptcy, insolvency,
fraudulent
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conveyance, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4.2 Consents. No consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body will be required for or in connection with the execution and
delivery of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated herein.
4.3 No Breach. Except as set forth in Schedule 4.3 the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby in accordance with the terms hereof will not
(a) violate, conflict with or result in the breach of any provision of the
Articles of Incorporation or Bylaws of Purchaser; (b)(i) require any consent,
approval or notice under (ii) violate, conflict with or result in the breach of
any of the terms of, (iii) result in a material modification of the effect of,
(iv) constitute a default under or (v) give rise to any right of termination,
cancellation or acceleration under, any contract or other agreement to which
Purchaser is a party or by or to which it or any of its assets may be bound or
subject, the impact of which, individually or in the aggregate, would be
materially adverse to the business, operations or financial condition of
Purchaser; (c) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory agency binding upon Purchaser
or upon the securities, assets or business of Purchaser, the violation of which
would have a material adverse effect on the business, operations or financial
condition of Purchaser; or (d) to the knowledge of Purchaser, violate any
statute, law, rule or regulation of any jurisdiction or governmental or
regulatory agency as relates to Purchaser or to the securities, assets or
business of Purchaser, which violation would have a material adverse effect on
the business, operations or financial condition of Purchaser.
4.4 Actions and Proceedings. To the knowledge of Purchaser, except
as set forth in Schedule 4.4, there are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory agency
or arbitration tribunal against or involving Purchaser or against or involving
any of its present directors, officers or employees in their capacities as such
that individually or in the aggregate, are likely to prevent Purchaser from
consummating the transactions contemplated hereby in accordance with the terms
hereof, or could affect the validity or enforceability of this Agreement. To
the knowledge of Purchaser, except as disclosed on
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Schedule 4.4, there are no actions, suits or claims or legal, administrative,
regulatory or arbitration proceedings or investigations pending or threatened
against or involving Purchaser or any of its present directors of officers, in
their capacities as such, or its assets that, individually or in the aggregate,
are likely to prevent Purchaser from consummating the transactions contemplated
hereby in accordance with the terms hereof, or could affect the validity or
enforceability of this Agreement.
4.5 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement
or understanding with Purchaser, or any action taken by Purchaser.
4.6 Purchase for Investment.
(a) Seller has provided Purchaser and its financial
advisors, legal counsel and independent auditors with access to the books,
records, facilities and personnel of Company in order for Purchaser to
investigate the business, affairs and properties of Company to make an informed
investment decision to enter into this Agreement and to purchase the Shares.
(b) Neither Seller nor any agent or other party acting on
behalf of either thereof has made any representation or warranty to Purchaser
with respect to the prospects of Company or its respective business or the
markets in which it operates.
(c) Purchaser represents that it is acquiring the Shares
for its own account for investment and not with a view to the resale or
distribution and will not sell or transfer such Shares in violation of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
ARTICLE V.
COVENANTS AND AGREEMENTS
5. Covenants and Agreements. The parties covenant and agree as
follows:
5.1 Confidentiality; Return of Documents. All information provided
pursuant hereto shall be subject to certain confidentiality agreements executed
by the parties and all documents (and
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copies thereof) provided to the other parties shall be promptly returned upon
termination of this Agreement, and each party shall be entitled to injunctive
relief to enforce the provisions of the confidentiality agreements referred to
above and of this Section.
5.2 Fees and Expenses. The parties shall each bear their
respective fees and expenses incurred in connection with this transaction.
5.3 Employee Benefit Plans.
(a) Effective as of the Closing Date, Company shall
withdraw completely from participation in the Employee Benefit Plans. Seller
shall file and give any and all required notices to employees, governmental
agencies or other Persons to effect the withdrawal of Company.
(b) Seller shall assume all obligations and pay, satisfy or
settle all claims, pursuant to the Employee Benefit Plans, arising before the
Closing Date, with respect to participants whether or not employees or former
employees, including without limitation pension benefits previously accrued and
medical, death, disability or other benefits being provided to retired or other
former employees or other participants. Seller shall indemnify Purchaser and
Company for any amounts paid on or after the Closing Date by Company in
connection with the Employee Benefit Plans, including any benefits and any
taxes, damages or expenses including attorney fees.
(c) Company shall provide reasonable assistance and
information to Seller in its administration of the Employee Benefit Plans.
5.4 Taxes.
(a) Cooperation and Exchange of Information. Each party
shall provide each other with such cooperation and information as either of
them reasonably may request of the other in filing any Tax Return, amended
return or claim for refund, determining a liability for taxes or a right to
refund of taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of Tax Returns relating to Company, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by taxing authorities and records concerning the ownership
and tax basis of property, which either party may possess. Each party shall
make its employees or consultants available on a mutually convenient basis to
provide explanation of any
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documents or information provided hereunder. Notwithstanding the foregoing,
neither party shall be required unreasonably to prepare any document, or
determine any information not then in its possession, in response to a request
under this Section. Except as otherwise provided in this Agreement, the party
requesting assistance hereunder shall reimburse the other for any reasonable
out-of-pocket costs incurred in provided any Tax Return, document or other
written information, and shall compensate the other for any reasonable costs
(excluding wages and salaries) of making employees available, upon receipt of
reasonable documentation of such costs. Each party will retain all Tax Returns,
schedules and workpapers and all material records or other documents relating
thereto, until the expiration of the statute of limitations (including
extensions) of the taxable years to which such returns and other documents
relate and, unless such returns and other documents are offered to the other
party, until the final determination of any payments which may be required in
respect of such years under this Agreement. Any information obtained under this
Section shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
any audit or other proceeding. Without limiting the generality of the foregoing,
Purchaser and Company shall reasonably prepare and provide to Seller any
federal, state and local tax information requested by Seller for Seller's use in
preparing Tax Returns or in defending prior Tax Returns under audit for which
Seller is responsible. This information shall be completed by Purchaser and
Company within 90 days after receiving written request from Seller or such
earlier date if required by the taxing authority.
(c) Tax Proceedings. In the event Purchaser, or Company receives
notice, whether orally or otherwise, of any pending Tax examination, claim,
settlement, proposed adjustment or related matter that may affect Seller, or in
the event Seller receives any such notice which may affect Purchaser or
Company, the party receiving such notice shall notify the other party in
writing as soon as reasonably practicable. Seller shall be entitled at its
expense to contest, control, compromise, settle or appeal all proceedings with
respect to Company's Taxes for periods ending on or before the Effective Date,
provided that Purchaser shall have the right to participate in and employ its
own counsel, at its expense, with respect to any such proceeding that Purchaser
reasonably believes may cause Purchaser or Company to incur any liability for
payment of Taxes and Seller shall consult in good faith with Purchaser with
regard to any such proceeding. Purchaser agrees that it will cooperate fully
and will cause Company to cooperate fully with Seller in the defense against or
compromise of any claim asserted in any such proceeding.
(d) Indemnification. Seller shall be responsible for and shall
indemnify and hold Purchaser and Company harmless from all liability for all
Taxes attributable or related to any period ending prior to the Effective Date,
provided, however, that Purchaser shall indemnify Seller
26
for all taxes imposed (determined without regard to any available net operating
Loss Carryovers or other tax benefits) as a result of any election made, or
deemed to have been made by Purchaser under Code Section 338(g) (or any similar
provision of state or local law). Seller shall pay all Taxes imposed or
assessed against Company for any period ending before the Effective Date.
Purchaser and Company shall be responsible for and shall indemnify and hold
Seller harmless from, and Purchaser or Company shall pay all Taxes with respect
to Company attributable or related to periods ending on or after the Effective
Date.
(e) Refunds. Seller shall be entitled to all refunds of Taxes of
Company with respect to any and all periods prior to the Effective Date (and any
interest thereon). Company shall pay to Seller, within five Business Days after
receipt thereof, any such refunds received by Company. If Seller receives a
refund to which Company is entitled, Seller shall pay any such refund to Company
within five Business Days after receipt thereof. Purchaser shall be entitled to
all refunds of Taxes of Company attributable to periods ending after the
Effective Date. Seller shall pay Purchaser, within five Business Days after
receipt thereof, any such refunds received by Seller.
(f) Purchaser agrees to pay any stock transfer taxes in
connection with the transfer of the shares to Purchaser.
5.5 Seller's Access to Records.
(a) Purchaser agrees that after the Closing Date it shall, and
shall cause Company to, (i) provide Seller with reasonable access to the
employees of Purchaser and Company having knowledge of and responsibility for
such books and records (including information stored on electronic data
processing systems), (ii) retain the books and records of Company (including
back-up media for electronic data processing systems) for a period of at least
ten years from the Closing Date in a responsible manner and at a location
reasonably accessible and (iii) allow Seller to examine and make copies of the
books and records pertaining to the business conducted by Company pertinent to
this Agreement and the transactions contemplated hereby, for reasonable business
purposes including without limitation the preparation and examination of Tax
Returns and financial statements and conduct of any litigation or regulatory
dispute resolution, whether pending or threatened, concerning the business or
Company pertinent to this Agreement and the transactions contemplated hereby.
Access to and copying of such books and records shall be restricted to normal
business hours, shall be at Seller's expense and shall not unreasonably
interfere with the business operations of Purchaser or Company. If requested by
Seller
27
immediately prior to the end of the ten year period, the Purchaser will cause
Company to retain such books and records (at Seller's expense) for a reasonable
extended period of time.
5.6 Litigation or Claim Defense Assistance. When requested by
Seller, Purchaser shall and shall cause Company to assist Seller in the defense
of any claim, action, suit or proceeding instituted or threatened against
Seller or for which Seller has an obligation under this Agreement to indemnify
Purchaser or Company. Such assistance shall include the preparation of
discovery responses, giving depositions, assisting counsel and expert witnesses
of Seller attending all proceedings which Seller shall reasonably request be
attended. Purchaser and/or Company shall be reimbursed for all reasonable
out-of-pocket costs incurred in providing such assistance, but not for any
employee time expended in such litigation or claim assistance.
5.7 Bonds and Purchaser's Bonds.
(a) Subject to the provisions of Section 5.7(b) below, Seller
shall not cancel or terminate any of the outstanding guarantees, bonds or
letters of credit in effect as of the Closing Date with respect to projects of
Company ("Bonds"), except in the ordinary course of business as the obligations
to maintain bonds are (i) satisfied by Company, or (ii) released by the
beneficiaries, or (iii) otherwise expire.
(b) Not later than six (6) months after the Effective Date,
Purchaser shall deliver to Seller one or more letters or surety bonds, naming
Seller as beneficiary, in the principal amount of six million dollars
($6,000,000) to guarantee Purchaser's and Company's performance under this
Agreement including, but not limited to the obligation to perform the Project
Contracts and the Guaranteed Project Contracts ("Purchaser's Bonds"). The
Purchaser's Bonds shall be (i) issued by a bank or surety company acceptable to
Seller, (ii) be in a form reasonably satisfactory to Seller, and (iii) shall
remain in effect for not less than sixty (60) days after Company has fully and
finally performed all obligations under the Project Contracts and Guaranteed
Project Contracts, and all bonding and security obligations under such Project
Contracts have expired; provided that Purchaser's Bond may be reduced to an
amount equal to the aggregate amount of the outstanding Bonds of Seller at any
time upon the request of Purchaser.
5.8 Guarantees. On the Closing Date, Purchaser shall deliver or cause
to be delivered to Seller.
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(a) the personal guarantee of the key employees of Company
listed on Schedule 5.8(a) guaranteeing the obligation of Purchaser and Company
under this Agreement including, but limited to the obligations to perform the
Project Contracts and the Guaranteed Project Contracts. Such personal guarantee
shall be in the form of Exhibit C ("Personal Guarantee"), and shall terminate
upon compliance by Purchaser with the Purchaser's Bond delivery requirements of
Section 5.7(b) above.
(b) the guarantee of Flour City International, Inc.,
guaranteeing the obligations of Purchaser and Company under this Agreement
including, but not limited to the obligations to perform the Project Contracts
and the Guaranteed Project Contracts. Such guarantee shall be in the form of
Exhibit D ("Parent Guarantee").
5.9 Manufacturing Agreement. On the Closing Date, Company and
Seller's affiliate, Xxxxxxx Dynamics, L.L.C. ("DDLLC") shall enter into a
Manufacturing Agreement for fabrication and assembly work in connection with
certain projects in the form of Exhibit E ("Manufacturing Agreement").
5.10 Services Agreement. On the Closing Date, Company and DDLLC
shall enter in a services agreement in the form of Exhibit F ("Services
Agreement").
5.11 Disclaimer of Other Representations and Warranties. The parties
agree that no party hereto makes nor has made any warranties or
representations, with respect to the transactions contemplated hereby, other
than those expressly set forth in this Agreement, including the exhibits and
schedules attached hereto. The parties agree that Seller makes no warranties or
representations with respect to the anticipated costs or profits on any Project
Contract or Guaranteed Project Contract.
5.12 Further Assurances. Seller and Purchaser agree that each will
from time to time at and subsequent to the Closing Date, at the reasonable
request of the other party and without further consideration, execute and
deliver such other instruments of conveyance, assignment and transfer, or
execute such other documents and provide such cooperation and take such other
actions as either Purchaser or Seller may reasonably request in order to more
effectively convey, assign, transfer to and vest in Purchaser the Shares and
the right to operate the business of Company and carry the intent and perform
the obligations under this Stock Purchase Agreement.
29
5.13 Intellectual Property Assignment. On or prior to the Closing,
the parties shall enter into Trademark Assignment Agreement and a Patent
Assignment Agreement covering trademarks and patents used by Company.
5.14 Preservation of Company's Financial Position. Purchaser agrees
that it will not cause or permit Company to make payment of any dividend, any
distribution, sale or disposition of assets, or otherwise diminish the
financial viability of Company through the payment of unreasonable employee
bonuses, salaries or otherwise prior to delivery of the Purchaser's Bond to
Seller without the express written consent of Seller, which consent shall not
be unreasonably withheld. Purchaser further agrees that until all Bonds have
been released or expired, Purchaser shall furnish Seller quarterly financial
statements and audited financial statements of the Purchaser, including balance
sheets, statements of income and statements of cash flow.
5.15 Change of Control Agreement. Purchaser agrees that it will
assume and perform all obligations under the employee severance agreements to
which Seller is a party listed on Schedule 5.15, which agreements relate to
employees of Company.
ARTICLE VI.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY
6.1 Survival of Representations and Warranties and Indemnitees.
Except to the extent otherwise provided, all representations and warranties of
the parties under this Agreement or in any exhibit, schedule, certificate or
other document delivered pursuant hereto shall survive the Closing Date for a
period of two (2) years. All agreements, covenants and contractual undertakings
shall survive the Closing Date until such provisions are satisfied. All
provisions shall survive the Closing Date subject to the foregoing terms and
conditions regardless of any investigation at any time made by or on behalf of
the parties or of any information the parties may have with respect to the
other parties, Company and the transactions contemplated hereby.
6.2 Indemnity.
(a) Subject to the provisions of this Section, Seller
hereby agrees, from and after the Closing Date, to defend, indemnify, and hold
Purchaser and Company, harmless from,
30
against and in respect of any Loss (as hereinafter defined) which may accrue to
or be sustained by Purchaser or Company arising out of, as a result of or in
respect of:
(i) any error, misstatement, omission or inaccuracy
in any representation or warranty of Seller or the breach of any warranty of
Seller under this Agreement, or under any schedule, certificate, agreement,
instrument or other document delivered pursuant thereto; or
(ii) any failure of Seller to duly perform or observe
any term, provision, instrument, covenant or agreement to be performed or
observed by Seller, prior to the Effective Date, pursuant to this Agreement, or
any schedule, certificate, agreement or other document entered into or
delivered pursuant hereto; or
(iii) the operations of Company prior to the
Effective Date, but which is not related to or does not arise from any Project
Contract or Guaranteed Project Contract, other than claims for personal injury
arising from an occurrence prior to the Effective Date; and with respect to the
GPC, subject to the provisions of Section 2.2(b)(ii).
(b) Subject to the provisions of this Section, Purchaser
hereby agrees, from and after the Closing Date, to defend, indemnify, and hold
Seller harmless from, against and in respect of any Loss (hereinafter defined)
which may accrue to or be sustained by Seller for such Loss arising out of, as
a result of or in respect of:
(i) any error, misstatement, omission or inaccuracy
in any representation or warranty of Purchaser or the breach of any warranty of
Purchaser under this Agreement, or under any schedule, certificate, agreement,
instrument or other document delivered pursuant thereto; or
(ii) any failure of Purchaser to duly perform or
observe any term, provision, instrument, covenant or agreement to be performed
or observed by Purchaser or Company after the Effective Date, pursuant to this
Agreement, or any schedule, certificate, agreement or other document entered or
delivered pursuant hereto; or
(iii) the operations of Company after the Effective
Date; or
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(iv) the performance of the Project Contracts or the
Guaranteed Project Contracts whether such liability arises before, on or after
the Effective Date, other than losses resulting from claims for personal injury
arising from an occurrence prior to the Effective Date, and with respect to the
GPC, subject to the provisions of Section 2.2(b)(ii);
(v) any withdrawal liability established under
Sections 4201, et seq. of ERISA resulting from a complete withdrawal or partial
withdrawal from the Multiemployer Plans or any other multiemployer plans as
defined in Section 3(37) of ERISA to which Company has been or will be a
sponsor, a contributor or under an obligation to contribute, only if such
withdrawal liability results from or relates to events occurring after the
Effective Date.
(c) The indemnification and hold harmless
("Indemnification") obligations under this Agreement to which any party is
entitled from any other party pursuant to this Section with respect to breaches
of representations or warranties shall become effective only after the
cumulative amount of such Loss exceeds in the aggregate fifty thousand dollars
($50,000), and such liability shall be limited to such cumulative amounts as
exceed fifty thousand dollars ($50,000).
(d) For purposes of this Agreement, "Loss" shall be deemed
to mean and include any and all losses, liabilities, costs, reasonable expenses,
judgments, assessments, penalties, damages, deficiencies, suits, actions,
claims, proceedings, demands, causes of action, economic loss, and attorneys'
fees and expenses and court costs and interest incident thereto. A Loss shall be
measured net of any insurance recover in respect of such Loss and such Loss
shall not include any incidental or consequential damages (including any loss of
anticipated profits).
(e) In order for a party seeking indemnification
("Indemnified Party") to be entitled to any Indemnification provided for under
this Agreement, such Indemnified Party must give a written demand for
Indemnification to the party against which Indemnification is sought
("Indemnifying Party") as soon as reasonable practicable after the Indemnified
Party has knowledge of the material facts underlying the Indemnification
demand. Such demand must set forth with reasonable specificity the factual and
legal basis of the Indemnification claim and must state as nearly as
practicable the amount of Indemnification sought. The Indemnifying Party shall
admit or deny liability for such Indemnification within 30 days of such demand.
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(f) Third Party Procedures.
(1) The Indemnified Party, promptly upon receipt of
notice of the commencement of any action by a third party against the
Indemnified Party in respect of which Indemnification may be sought hereunder,
shall notify the Indemnifying Party in writing of the commencement thereof.
Upon receipt of notice of the commencement of any such action, the Indemnifying
Party shall assume control of the defense, compromise or settlement thereof
(with counsel reasonably satisfactory to the Indemnified Party) at the
Indemnifying Party's expense. Nothing herein shall be construed so as to give
any insurance carrier a right of subrogation for claims paid except as such
right would otherwise exist in the absence of this Section. Further, nothing
herein shall be construed to create any rights enforceable by any person not a
party to this Agreement.
(2) The Indemnified Party shall be entitled to
participate in the defense of any action and to be represented by counsel of
its own selection at the expense of the Indemnified Party. If the attorneys
provided for the defense of the Indemnified Party by the Indemnifying Party
withdraw from or are removed by court order from the Indemnified Party's
representation, then the cost of counsel selected by the Indemnified Party
shall be part of its Loss, and the Indemnified Party shall have the right in
all respects to conduct its own defense. If the Indemnified Party otherwise
retains its own counsel, the cost thereof shall be borne by the Indemnified
Party.
(3) As to cases in which the Indemnifying Party has
assumed and is providing the defense for the Indemnified Party, the control of
such defense and the right to reach settlement in such action shall be vested
in the Indemnifying Party. Except with the written consent of the Indemnified
Party (which consent shall not be unreasonably withheld), no Indemnifying Party
shall consent to entry of any judgment or enter into any settlement, in respect
of any third party claim which provides for anything other than money damages
or other money payments for which the Indemnified Party is entitled to
indemnification hereunder (subject to the limitations specified in this Section
6.2c) or which does not include as a term thereof the giving by the claimant
or plaintiff to the Indemnified Party of a release from all liability in
respect of such third party claim. If the Indemnified Party, without the prior
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), consents to the entry of any judgment or enters into
any settlement with respect to a third party claim which is being defended by
the Indemnifying Party, the Indemnifying Party shall be discharged from any
such liability. As to any action, the party which is controlling such action
shall provide to the other party reasonable
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information (including reasonable advance notice of all proceedings in respect
thereto) regarding the conduct of the action and the right to attend all
proceedings and depositions in respect thereto through its agents and
attorneys, and the right to discuss the action with counsel for the party
controlling such action.
(4) If within 30 days after receipt by the
Indemnifying Party of notice from the Indemnified Party as to the commencement
of any action in respect of which Indemnification is sought hereunder, the
Indemnifying Party has not notified the Indemnified Party that the Indemnifying
Party assumes the defense of such action or has not actually assumed such
defense, then the Indemnified Party shall have the right to defend such action
and to proceed immediately against the Indemnifying Party to enforce all
Indemnification rights hereunder (including but not limited to the costs of
defense). The Indemnification obligations of the Indemnifying Party with
respect to such action shall, however, in no way be diminished by virtue of the
exercise by the Indemnified Party of its rights under this Section, and the
fact that the Indemnified Party shall have defended, settled or compromised
such action pursuant to Section 6.2f(1) shall not, in any circumstances, be
deemed to constitute any waiver, release or exoneration of the Indemnifying
Party from its indemnification obligations, regardless of the outcome of such
action.
6.3 Indemnification for Environmental Claims
(a) Definitions. For purposes of this Section 6.3 the
following terms shall have the meanings set forth in this Section 6.3(a):
"Environmental Claim" means any written accusation, allegation,
notice of violation, claim, demand, abatement or other order or direction
(conditional or otherwise) by any governmental authority or any person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the existence or release, or
continuation of the existence of any release (including without limitation,
sudden or nonsudden, accidental or nonaccidental leaks or spills) of, or
exposure to, any substance, chemical, material, pollutant, contaminate, or
audible noise or other release or emission in, into or onto the environmental
(including, without limitation, the air, ground, water or any surface); (ii)
the environmental aspects of the transportation, storage, treatment or disposal
of materials; or (iii) the violation, or alleged violation, of any statutes,
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ordinances, orders, rules, regulations, permits or licenses of or from any
governmental authority, agency or court relating to environmental matters.
"ENVIRONMENTAL LAW" means the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Sections 9601 et seq.) the
Hazardous Material Transportation Act (49 U.S.C. Sections 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the Clean
Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Sections 2601 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.), as such laws have been amended or supplemented,
and any analogous future federal, or present or future state or local statutes.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
obligations, responsibilities, deficiency, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest, removal, cleanup
and remedial costs incurred as a result of any claim or demand, by any person,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law, permit, order or
agreement with a governmental authority or other person, related to an
Environmental Claim.
(b) SELLER'S INDEMNIFICATION OF PURCHASE FOR ENVIRONMENTAL
CLAIMS. The Seller shall fully and promptly pay, perform, discharge, defend,
indemnify and hold harmless the Purchaser, its subsidiaries and affiliates, and
their respective directors, officers and employees from and against any action,
suit, Environmental Claim, Environmental Liabilities and Costs, suffered or
incurred by Purchaser: (i) associated with, or emanating from property owned,
operated, or which constituted a storage or disposal area for Seller, Company,
Cyclops Corporation, MSL/EGS Corporation, E.G. Xxxxx Construction Products,
Inc., Xxxxx X. Xxxxx, Inc. and Southwestern Materials & Supply, Inc. prior to
the Effective Date (collectively referred to herein as the "Subject
Corporations"); or (ii) resulting from, arising out of, or associated with the
operations of the Subject Corporations in the unlimited past up to, but
excluding the Effective Date; or (iii) resulting from, arising out of, or
associated with the following actions or proceedings: (a) USEPA v. Flour City
Architectural Metals, Inc. DOJ Number 90-7-1-628 and US AO File No. 96-1197; (b)
United States v. Armco, Inc. U.S. District Court for the Southern District of
Ohio
35
(Case No. C2-95-698); and (c) AT&T Global Information Solutions Company, et al,
v. Armco, Inc., et al., U.S. District Court for the Southern District of Ohio
(Case No.. C2-94-876).
(c) INDEMNIFICATION PROCEDURE. The Seller and Purchaser
agree that in the event any investigation, litigation or proceeding is asserted
or threatened in writing or instituted against Purchaser or any of its
respective subsidiaries or affiliates or any of their respective officers,
directors, employees or agents, or any remedial action is requested for which
Purchaser may desire indemnity or defense hereunder, the Purchaser shall
promptly notify the Seller in writing. The Seller at the request of Purchaser
shall have the obligation to promptly defend against such investigation,
litigation or proceeding or requested remedial action, and shall bear all costs
and expenses associated therewith, including, without limitation, all fees,
disbursements and expenses of counsel, expert and consulting fees and costs of
investigation; provided that, Purchaser at its election, may participate in the
defense thereof at its own expense.
(d) SURVIVAL AND BINDING EFFECT. Notwithstanding anything
contained in this Agreement to the contrary, the provisions of this Section 6.3
shall survive the Closing indefinitely and shall be binding on Seller, its
respective successors and assigns.
ARTICLE VII.
AMENDMENT AND WAIVER
7.1 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.
7.2 EXTENSION; WAIVER. At any time prior to the Closing, the
parties may, in the manner and to the extent legally allowed, (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto and (ii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
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ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given (i) upon delivery if delivered
personally, (ii) three days after mailing by registered or certified mail
(return receipt requested), or (iii) upon receipt if sent by an overnight
delivery service or sent by facsimile transmission to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Purchaser, to:
Flour City International, Inc.
000 Xxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
President
with a copy to:
Xxxxxxx, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
(b) If to Seller, to:
Armco Inc.
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopier Number: 000-000-0000
Attention: Xxxx X. Xxxxx
Vice President
with a copy to:
Armco Inc.
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopier Number: 000-000-0000
Attention: Law Department
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8.2 Interpretation. When a reference is made in this Agreement to
a section, schedule or exhibit, such reference shall be to a section, schedule
or exhibit of this Agreement unless otherwise indicated or unless the context
shall otherwise require. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation".
8.3 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Tennessee.
8.4 Publicity. So long as this Agreement is in effect, no party
shall issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of the other parties, unless, in the opinion of counsel,
such announcement is required by the provisions of applicable law or
regulations or by any governmental entity having jurisdiction over such party.
8.5 Assignment: Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
Purchaser may assign this Agreement to its Affiliates without prior written
consent; provided, however, that any such assignment will not relieve Purchaser
of its obligations or liabilities hereunder. This Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
8.6 Entire Agreement: Third Party Beneficiaries. This Agreement
(including exhibits, schedules and documents referred to herein) constitutes
the entire agreement between the parties relating to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
8.7 Construction. This Agreement is the result of arms-length
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or
that the Agreement shall be construed in favor of or against any one party.
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8.8 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 agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
ARMCO INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
FLOUR CITY ARCHITECTURAL METALS, INC.
By: [sig]
-----------------------------------------
FLOUR CITY INTERNATIONAL, INC.
By: [sig]
-----------------------------------------
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