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Exhibit 2.1
ASSET PURCHASE AGREEMENT
among
TACC INTERNATIONAL CORPORATION
AMERICAN CHEMICAL COMPANY
and
COHESANT TECHNOLOGIES INC.
November 30, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE I-PURCHASE AND SALE...................................................................5
SECTION 1.01 Transfer of Assets.....................................................5
SECTION 1.02 Assumption of Liabilities..............................................6
SECTION 1.03 Purchase Price; Allocation of Purchase Price...........................7
SECTION 1.04 Post-Closing Adjustments...............................................8
SECTION 1.05 Closing................................................................9
SECTION 1.06 Further Assurances....................................................11
ARTICLE II-REPRESENTATIONS AND WARRANTIES OF THE SELLERS.....................................11
SECTION 2.01 Organization and Qualification........................................11
SECTION 2.02 Corporate Power and Authority; Title..................................11
SECTION 2.03 No Conflict...........................................................11
SECTION 2.04 Financial Statements..................................................12
SECTION 2.05 Absence of Undisclosed Liabilities....................................13
SECTION 2.06 Absence of Adverse Change; Conduct of Business........................13
SECTION 2.07 Inventories...........................................................15
SECTION 2.08 Environmental Matters.................................................15
SECTION 2.09 Taxes.................................................................16
SECTION 2.10 Litigation............................................................16
SECTION 2.11 Certain Practices.....................................................17
SECTION 2.12 Compliance with Law...................................................17
SECTION 2.13 Licenses and Permits..................................................17
SECTION 2.14 No Liens Arising From Employee Benefits...............................18
SECTION 2.15 Insurance.............................................................18
SECTION 2.16 Outstanding Commitments...............................................18
SECTION 2.17 Intangibles and Intellectual Property.................................19
SECTION 2.18 Significant Suppliers.................................................20
SECTION 2.19 Significant Customers.................................................20
SECTION 2.20 Governmental Approvals................................................20
SECTION 2.21 Transactions With Affiliates..........................................21
SECTION 2.22 No Broker or Finder...................................................21
SECTION 2.23 Claims................................................................21
SECTION 2.24 Disclosure............................................................21
ARTICLE III-REPRESENTATIONS AND WARRANTIES OF BUYER..........................................22
SECTION 3.01 Organization..........................................................22
SECTION 3.02 Buyer Power and Authority.............................................22
SECTION 3.03 No Conflict...........................................................22
SECTION 3.04 Litigation............................................................22
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SECTION 3.05 No Broker or Finder...................................................22
ARTICLE IV-COVENANTS OF THE SELLERS..........................................................23
SECTION 4.01 Best Efforts Cooperation..............................................23
SECTION 4.02 Access................................................................23
SECTION 4.03 Insurance.............................................................23
SECTION 4.04 Compliance with Laws..................................................23
SECTION 4.05 Keeping of Books and Records..........................................24
SECTION 4.06 Actions Prior to Closing..............................................24
SECTION 4.07 Notice of Changes.....................................................24
SECTION 4.08 Preservation of Business..............................................24
SECTION 4.09 Litigation............................................................24
SECTION 4.10 Continued Effectiveness of Representations and Warranties.............24
SECTION 4.11 No Negotiations.......................................................25
SECTION 4.12 Confidentiality.......................................................25
SECTION 4.13 Regulatory and Other Authorizations; Consents.........................25
SECTION 4.14 Risk of Loss..........................................................25
SECTION 4.15 Sale of Name..........................................................26
SECTION 4.16 Transfer of Formulations..............................................26
ARTICLE V-CONDITIONS TO THE BUYER'S OBLIGATIONS..............................................26
SECTION 5.01 Consents and Approvals................................................26
SECTION 5.02 Representations and Warranties to be True and Correct.................26
SECTION 5.03 Performance...........................................................26
SECTION 5.04 No Adverse Change.....................................................27
SECTION 5.05 Opinion of Counsel....................................................27
SECTION 5.06 Lien Obligations of the Company.......................................27
SECTION 5.07 No Actions, Suits or Proceedings......................................27
SECTION 5.08 Due Diligence Review..................................................27
SECTION 5.09 Noncompetition Agreement..............................................27
SECTION 5.10 Organizational Documents..............................................27
SECTION 5.11 Good Standing; Qualification to do Business...........................28
SECTION 5.12 Tolling Agreement.....................................................28
ARTICLE VI-CONDITIONS TO THE SELLER'S OBLIGATIONS............................................28
SECTION 6.01 Representations and Warranties to be True and Correct.................28
SECTION 6.02 Performance...........................................................28
SECTION 6.03 No Actions, Suits or Proceedings......................................28
SECTION 6.04 Organizational Documents..............................................29
SECTION 6.05 Good Standing; Qualification to do Business...........................29
SECTION 6.06 Tolling of Operations.................................................29
SECTION 6.07 Buyer's Financial Condition...........................................29
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ARTICLE VII-INDEMNIFICATION..................................................................29
SECTION 7.01 Indemnification by Buyer..............................................29
SECTION 7.02 Indemnification by the Sellers........................................30
SECTION 7.03 Limitations on Indemnification........................................31
SECTION 7.04 Claims for Indemnification............................................31
SECTION 7.05 Miscellaneous.........................................................32
ARTICLE VIII-TERMINATION.....................................................................33
SECTION 8.01 Termination...........................................................33
SECTION 8.02 Effect of Termination.................................................34
ARTICLE IX-ADDITIONAL AGREEMENTS.............................................................35
SECTION 9.01 Tax Matters...........................................................35
SECTION 9.02 Payment of Liabilities................................................35
SECTION 9.03 Bulk Sales Laws.......................................................36
SECTION 9.04 Accounts Receivable...................................................36
SECTION 9.05 Contact with Customers and Suppliers..................................36
ARTICLE X-MISCELLANEOUS......................................................................36
SECTION 10.01 Notices..............................................................36
SECTION 10.02 Entire Agreement.....................................................37
SECTION 10.03 Modifications and Amendments.........................................38
SECTION 10.04 Waivers and Consents.................................................38
SECTION 10.05 Assignment...........................................................38
SECTION 10.06 Parties in Interest..................................................38
SECTION 10.07 Governing Law........................................................38
SECTION 10.08 Jurisdiction and Service of Process..................................38
SECTION 10.09 Severability.........................................................39
SECTION 10.10 Interpretation.......................................................39
SECTION 10.11 Headings and Captions................................................39
SECTION 10.12 Enforcement..........................................................39
SECTION 10.13 Reliance.............................................................40
SECTION 10.14 Expenses.............................................................40
SECTION 10.15 Survival.............................................................40
SECTION 10.16 Announcements........................................................40
SECTION 10.17 Counterparts.........................................................40
EXHIBITS ....................................................................................42
SCHEDULES....................................................................................43
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ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement") is entered as of
November 30, 1997, by and among TACC International Corporation, a Delaware
corporation (the "Buyer"), American Chemical Company, a Missouri corporation
(the "Company"), and Cohesant Technologies Inc., a Delaware corporation (the
"Parent" and together with the Company, the "Sellers").
WHEREAS, the Company is engaged in the business of manufacturing,
distributing, developing, marketing and selling certain adhesives, sealants, and
coatings (the "Business");
WHEREAS, the Parent owns all of the outstanding capital stock (or
securities or rights convertible into capital stock) of the Company; and
WHEREAS, the Company desires to sell to Buyer, and Buyer desires to
purchase from the Company, certain assets used in the Business on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Buyer and Sellers hereby agree as follows:
ARTICLE I
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PURCHASE AND SALE
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SECTION 1.01 TRANSFER OF ASSETS. On the terms and subject to the
conditions of this Agreement, the Company agrees to sell, convey, transfer,
assign and deliver to Buyer, and Buyer agrees to purchase from the Company, on
the Closing Date (as hereinafter defined) the following assets owned by the
Company or in which the Company has a right or interest, as the same shall exist
at the close of business on the Closing Date (the assets being transferred
hereunder are collectively referred to as the "Assets"):
(a) To the extent their transfer is permitted by law or by contract,
all right, title and interest in and to the permits and licenses and third party
qualifications and approvals relating to the Assets listed on SCHEDULE 2.13 (the
"Approvals");
(b) All Claims, causes of action, chose in action, rights of recovery
and rights of set-off of any kind to the extent transferable (including rights
under and pursuant to all warranties,
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representations and guarantees made by suppliers of inventory), pertaining to,
arising out of, and inuring to the benefit of the Company in connection with the
Business;
(c) All of the Company's inventory of samples, finished goods, raw
materials, packaging materials and shipping and other supplies with respect to
the Business which are good and usable within 120 days after the Closing (or, in
the case of packaging materials only, 180 days), together with such additional
inventories, if any, as Buyer elects to purchase (collectively, the "Purchased
Inventory");
(d) All rights, title and interest of the Company in, to and under the
Intellectual Property (as defined in Section 2.18 below), including, but not
limited to, product formulations, and the trade names "KINGCO", "King
Adhesives", "American Chemical", "MagicNails" and "GlenKote", and all goodwill
associated therewith (the "Intangible Assets");
(e) All invoices, shipping records, sales cost production records,
customer and supplier lists, correspondence and other documents, records and
files relating to customers or suppliers and all computer software and programs
to the extent transferable and any rights thereto owned, associated with or
employed by the Company or used in, or relating to, the Business;
(f) All personnel records of those individuals, if any, hired by the
Buyer; and
(g) All sales and promotional literature, customer lists and other
sales-related materials owned, used, associated with or employed by the
Business.
At Closing, the Assets shall be conveyed to the Buyer free and clear of
all claims, charges, liens, contracts, rights, options, security interests,
mortgages, encumbrances and restrictions whatsoever (collectively, "Claims") or
encumbrances pursuant to a Xxxx of Sale in the form of EXHIBIT 1.01(a) attached
hereto and other instruments of transfer reasonably requested by the Buyer.
SECTION 1.02 ASSUMPTION OF LIABILITIES.
(a) The only obligations and liabilities to be assumed by the Buyer in
connection with its acquisition of the Assets are the obligations of the Company
under those sales representative agreements specifically listed on SCHEDULE
1.02(a) (the "Sales Rep Agreements"), together with the other agreements listed
on Schedule 1.02(a) (collectively, the "Assumed Contracts"). The Buyer is not
assuming any other obligations or liabilities of the Sellers hereunder. These
other assumed contracts include only the obligation under Paragraph 2 of the
Agreement for Settlement of Dispute, dated October 3, 1991 and the
month-to-month public warehouse leases.
(b) The Buyer shall not assume or be responsible for any Excluded
Liability and the Company and/or the Parent, as the case may be, shall promptly
pay or shall cause their affiliates to pay for all Excluded Liabilities as they
become due and payable. "Excluded Liability" means any liability or obligation
of the Company or the Parent, or with respect to the Business or the Assets
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whatsoever, except for those liabilities incurred by the Buyer in connection
with the ownership of the Assets after the Closing Date, whether accrued,
absolute, contingent or otherwise, whether due or to become due, whether
existing as of the date hereof or arising out of any act or omission occurring
on or before the Closing Date and whether or not disclosed on any Schedule or
Exhibit hereto, including, without limiting the generality of the foregoing, the
following:
(i) all Taxes (as defined in Section 2.09) imposed or
hereafter owed by the Company, the Parent or any of the other
subsidiaries of the Parent, or attributable to the Business or the
Assets, relating to any period, or any portion of any period, ending on
or prior to the Closing Date;
(ii) all liabilities and obligations relating to employees of
the Company and any employee benefit plans and other employee matters;
(iii) breaches or defaults or events that occurred with
respect to products sold or services provided (including, without
limitation, any product liability or claim for injury) by or on behalf
of the Company prior to the Closing Date ("Product Liability Claims");
(iv) all accounts payable of the Company;
(v) any environmental liability or obligation of the Sellers,
whether now in existence or hereafter arising, including, but not
limited to those arising from the EnviroChem Sites, the Great Lakes
Asphalt Site or any other site, as defined in and further described on
SCHEDULE 2.08; and
(vi) any amounts payable as of the Closing Date under any of
the Sales Rep Agreements or other Assumed Contracts relating to
services provided prior to the Closing Date;
(vii) all liabilities and obligations arising from any action,
claim, proceeding, arbitration or governmental inquiry;
(viii) all liabilities, obligations, damages, costs and
expenses payable to judgment creditors or other third parties,
including, but not limited to, those resulting from the verdict
rendered in and subsequent settlement of the case of AMERICAN CHEMICAL
CO. v. SUPERIOR COATINGS, INC., No. 912-00332, Missouri Circuit Court,
22nd Judicial Circuit (1997) (collectively, the "Superior Coatings
Verdict"); and
(ix) all other liabilities or obligations of the Company,
contingent or otherwise, relating to or arising out of the ownership of
the Assets prior to the Closing Date or the operation or conduct of the
Business, including, without limitation, all sums due or other
liabilities payable to Parent or any of Parent's affiliates.
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The parties hereto acknowledge that the Buyer shall not be obligated to
offer to hire any employees of or consultants to the Company or any of its
subsidiaries or affiliates.
SECTION 1.03 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE.
(a) In consideration of the transfer, conveyance and assignment by the
Company to the Buyer of the Assets to be sold and the execution of the
additional related agreements specified in this Agreement, Buyer agrees that the
aggregate purchase price (the "Purchase Price") shall be the sum of the
following:
(i) The value of the Purchased Inventory determined at the
lower of cost or market in accordance with GAAP; plus
(ii) Three Hundred Fifty Thousand Dollars ($350,000) for the
Intangible Assets.
On the Closing Date, or on such prior date as the parties shall
mutually agree, the parties shall estimate the Closing Date value of the
Purchased Inventory (the "Preliminary Value").
(b) The Purchase Price (based on the Preliminary Value) shall be paid
to the Company at the Closing in cash, provided, however, that (i) only ninety
percent (90%) of the value of the Purchased Inventory shall be paid at Closing
(with the balance paid pursuant to Section 1.04 hereof) and (ii) Three Hundred
Thousand Dollars ($300,000) of the Purchase Price shall be payable pursuant to a
three (3) year promissory note with interest at the fixed rate of eight percent
(8%) per annum in the form attached hereto as EXHIBIT 1.03(b)(ii) (the
"Promissory Note"). The Promissory Note shall be payable as follows:
(i) interest only, paid quarterly in arrears, through December 31,
1998,
(ii) a principal payment of $100,000 on December 31, 1998, and
(iii) thereafter in eight (8) equal quarterly installments of
principal and interest commencing on March 31, 1999 with the
last payment due December 31, 2000.
(c) For all tax purposes, the Buyer and the Sellers agree to report the
transactions contemplated in this Agreement in a manner consistent with the
terms of this Agreement, and agree that none of them will take any position
inconsistent therewith in any tax return, in any refund claim, in any
litigation, or otherwise.
SECTION 1.04 POST-CLOSING ADJUSTMENTS. The Purchase Price shall be
subject to adjustment as follows:
(a) The Company shall cause to be taken a physical count of the
Purchased Inventory as of the Closing Date and the Buyer shall have the right,
at its expense, to observe or have its representatives observe such physical
count. Such count will be used as the definitive basis for the
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Purchased Inventory quantities for purposes of the Closing Inventory Statement
(as such term is defined below). The Company shall cooperate with the Buyer in
connection with taking such physical count prior to the Closing Date, including,
without limitation, to stop production during the taking of the physical count
and to have the employees of the Company, at the Company's expense, organize the
inventory and take the physical count thereof.
(b) Within a period of sixty (60) days after the Closing Date, Xxxxx
Xxxxxxxx LLP (the "Accountant") shall cause to be prepared and delivered to the
Buyer and the Sellers a statement of the Net Asset Value purchased hereunder
(the "Closing Inventory Statement") prepared in accordance with generally
accepted accounting principles ("GAAP") except as otherwise provided herein.
"Net Asset Value" means an amount equal to the sum of (i) the Purchased
Inventory determined in accordance with GAAP on a basis consistent with the
Statements (as such term is defined in Section 2.04 herein) as of the Closing
Date, provided, however, that the Purchased Inventory shall be valued at the
lower of cost or market, determined on a first-in, first-out basis, with market
being determined based on the inventory being good and saleable within one
hundred twenty (120) days of the Closing Date, and (ii) $350,000 for the
Intangible Assets. The Buyer and the Accountant shall have reasonable access
during normal business hours to all of the Company's current accountant's books,
records and work papers containing financial information of the Company. The
Company shall be entitled, at its cost and expense, to have its representative
observe all procedures conducted by the Accountant at the Company's premises or
warehouse locations. The fees and expenses of the Accountant shall be borne
solely by the Buyer.
The Closing Inventory Statement shall be conclusive and binding upon
the parties hereto unless the Company or the Buyer objects in writing to any
item or items shown on the Closing Inventory Statement within fifteen (15) days
after delivery of the Closing Inventory Statement. Such writing, which shall be
delivered to the Accountant and to the other parties, shall assert that the
Closing Inventory Statement is in error specifying in reasonable detail the
amount in dispute and the basis for such dispute. If the parties shall not agree
within fifteen (15) days thereafter as to the amount, such amount or amounts
shall be conclusively determined in accordance with this Agreement within thirty
(30) days by Ernst & Young (the "Arbiter") or, if the Arbiter does not accept
such engagement, another of the six largest United States accounting firms, to
be mutually agreed to by the parties hereto. The Arbiter shall only determine
amounts that have been disputed in the manner provided herein. The fees and
expenses of the Arbiter shall be borne proportionately by the Sellers, jointly
and severally, on the one hand, and the Buyer, on the other hand, on the basis
of the Arbiter's determination of the amounts in dispute and the relation
thereof to such amounts respectively asserted by the Buyer and the Sellers to
exist as of the Closing Date.
(c) In the event that as of the Closing Date, the Net Asset Value as
set forth on the Closing Inventory Statement as finally determined in the manner
provided in Paragraph (b) above is less than or greater than the portion of the
Purchase Price (based on the Preliminary Value) paid at the Closing; the
Purchase Price shall be adjusted to reflect such decrease or increase, as the
case may be, on a dollar for dollar basis. Any decrease will be promptly repaid
by the Sellers, jointly and
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severally, to the Buyer in cash within five (5) business days thereafter. Any
increase will be promptly paid by the Buyer to the Company in cash within five
(5) business days thereafter.
(d) The Sellers shall jointly and severally promptly reimburse the
Buyer for any and all of the Buyer's costs and expenses incurred in connection
with returns of products sold by the Company on or prior to the Closing Date,
including, without limitation, costs and expenses related to shipping, materials
and refunds on credits, provided that the Sellers shall receive a credit for
such returned products, to the limited extent that the Buyer is able to recover
value through the resale of such returned products. Such reimbursement shall be
made within ten (10) business days of the Company's receipt of an invoice
therefore.
SECTION 1.05 CLOSING. Upon the terms and subject to the conditions of
this Agreement, the sale, transfer, conveyance and assignment of the Assets
contemplated by this Agreement shall take place at a closing (the "Closing") to
be held at the offices of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., One
Financial Center, Boston, Massachusetts at 10:00 A.M. Boston time on December
30, 1997, or at such other place or at such other time or on such other date as
the Company and the Buyer may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date").
At the Closing:
(a) The Company shall deliver to the Buyer or cause to be delivered to
the Buyer the following:
(i) The Xxxx of Sale in the form attached hereto as EXHIBIT
1.01(a) and such other instruments of transfer and assignment,
in form and substance satisfactory to the Buyer.
(ii) An opinion of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A.,
counsel to the Sellers, in the form attached hereto as EXHIBIT
5.05;
(iii) All of the consents, approvals or authorizations of
Governmental Authorities (as such term is defined in Article
II) and other third parties, if any, necessary in connection
with the consummation of the transactions contemplated hereby;
(iv) The certificates and other documents and instruments required
by Article V herein;
(v) The Noncompetition Agreement among the Company, the Parent and
the Buyer in the form attached hereto as EXHIBIT 5.10 (the
"Noncompetition Agreement");
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(vi) The Tradename and Trademark Transfer Agreement in the form
attached hereto as EXHIBIT 1.05;
(vii) The Toll Manufacturing Agreement in the form attached hereto
as EXHIBIT 5.12 (the "Tolling Agreement");
(viii) An Assignment and Assumption of the Sales Rep Agreements and
Other Assumed Contracts.
(b) Simultaneously with the execution hereof, the Buyer shall deliver
or cause to be delivered to the Sellers:
(i) The Purchase Price (based on the Preliminary Value) and
$350,000 required pursuant to the Noncompetition Agreement,
less the Promissory Note, shall be paid by the Buyer to the
Company by wire transfer in accordance with wire transfer
instructions provided by the Company to the Buyer at least two
(2) Business Days prior to the Closing Date;
(ii) The Noncompetition Agreement;
(iii) The certificates and other documents and instruments required
by Article VI hereto;
(iv) The Tradename and Trademark Transfer Agreement;
(v) The Tolling Agreement;
(vi) The Promissory Note;
(vii) An Agreement and Assumption of the Sales Rep Agreement and
Other Assumed Contracts.
SECTION 1.06 FURTHER ASSURANCES. At any time and from time to time
after the date hereof and/or after the Closing Date, each of the parties hereto,
at the request of any other party hereto and without further consideration, will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment, confirmation and other instruments as may be reasonably requested in
order to more effectively transfer, convey and assign to the Buyer and to
confirm the Buyer's title to the Assets and to effectuate the transactions
contemplated herein.
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ARTICLE II
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REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Sellers hereby jointly and
severally represent and warrant to the Buyer as follows:
SECTION 2.01 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Missouri. The Company is not required to be licensed or
qualified to transact business as a foreign corporation in any other
jurisdiction. The Parent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
SECTION 2.02 CORPORATE POWER AND AUTHORITY; TITLE. The Company has all
of the 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 the
Business as it has been conducted and as it is proposed to be conducted. Each of
the Sellers has the corporate power and authority to execute, deliver and
perform this Agreement and the other documents and instruments contemplated
hereby. The execution, delivery and performance of this Agreement and the
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by each
of the Sellers. This Agreement, and each of the other agreements, documents and
instruments to be executed and delivered by the Company and the Parent have been
duly executed and delivered by, and constitute the legal, valid and binding
obligation of the Company and the Parent enforceable against the Company and the
Parent, as the case may be, in accordance with their terms. As of the Closing
Date, the Company will have good and marketable title to the Assets, free and
clear of all liens and encumbrances whatsoever.
SECTION 2.03 NO CONFLICT. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby by the
Sellers, the consummation of the transactions contemplated hereby or thereby,
nor the performance of this Agreement and such other agreements in compliance
with the terms and conditions hereof and thereof will (i) violate, conflict with
or result in any breach of any of the Sellers' Certificates of Incorporation, or
By-Laws or any judgment, decree, order, statute or regulation applicable to the
Company or the Parent, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, (iii) violate, conflict with or result in a breach, default or
termination or give rise to any right of termination, cancellation or
acceleration of the maturity of any payment date of any of the obligations of
the Company or of the Parent or increase or otherwise affect the obligations of
the Company or of the Parent under any law, rule, regulation or any judgment,
decree, order, governmental permit, license or order or any of the terms,
conditions or provisions of any mortgage, indenture, note, license, agreement or
other instrument or obligation related to the Company or the Parent or to the
Company's or the Parent's ability to consummate the transactions contemplated
hereby, except for such defaults (or rights of termination, cancellation or
acceleration) as to which
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requisite waivers or consents have been obtained in writing and provided to the
Buyer, (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or the Parent or (v) result in the creation
of any Claim upon any of the Assets.
SECTION 2.04 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.04 are
the unaudited financial statements, including the income statements of the
Company for the years ended November 30, 1996 and November 30, 1995, and the
balance sheet and income statement for the ten month period ended September 30,
1997 (collectively the "Statements"). The Statements have been prepared in
accordance with GAAP (exclusive of any footnotes) consistently applied and were
prepared from the books and records of the Company, which books and records are
complete and correct in all material respects and accurately reflect all
transactions of the Business. The Statements fairly and accurately present the
financial position of the Company as of the dates thereof and the results of its
operations for the periods ended on the dates thereof and have been prepared in
accordance with the Company's historical principles and practices consistently
applied except as to the impairment reserves set forth on the September 30, 1997
balance sheet and related expense shown on the income statement. The Statements
reflect reserves appropriate and adequate for all liabilities and anticipated
losses as required by GAAP, except as noted therein and subject to normal
year-end adjustments which are not material. Since the date of the September 30,
1997 Statement, (a) there has been no change in the assets, liabilities or
financial condition of the assets of the Company from that reflected in the
Statements except for changes in the ordinary course of business consistent with
past practice and which have not been materially adverse and (b) none of the
business, prospects, financial condition, operations, property or affairs of the
Company has been materially adversely affected by any occurrence or development,
individually or in the aggregate, whether or not insured against.
SECTION 2.05 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent of the amounts specifically reflected or reserved against in the
Statements or as set forth on SCHEDULE 2.05, the Company has no liabilities or
obligations of any nature whatsoever, due or to become due, accrued, absolute,
contingent or otherwise, except for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice. The Sellers do
not know of, and have no reason to know of, any basis for the assertion against
the Company of any liability or obligation not fully reflected or reserved
against in the Statements or incurred in the ordinary course of business and
consistent with past practice since the date thereof.
SECTION 2.06 ABSENCE OF ADVERSE CHANGE; CONDUCT OF BUSINESS. Except as
disclosed on SCHEDULE 2.06, since September 30, 1997, the Company has carried on
the Business only in the ordinary course and consistent with past practices and
there has been no material adverse change in the Business and there is no
condition or development or contingency of any kind existing or in prospect
which, so far as reasonably can be foreseen by the Company, may result in any
such material adverse change. Without limiting the foregoing, since September
30, 1997, there has not been, occurred or arisen:
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(a) Any damage, destruction or loss to any of the assets of the Company
(whether tangible or intangible and whether or not covered by insurance) that,
individually or in the aggregate, would have a material adverse effect on the
business or prospects of the Business;
(b) Any change in the business or operations of the Business including,
without limitation, practices and policies relating to manufacturing,
purchasing, inventories, marketing, selling and pricing; or in the manner of
conducting the Business or sale or other disposition of any right, title or
interest in or to any assets or properties used in the Business or any revenues
derived therefrom other than in the ordinary course of business;
(c) Any material adverse change in the Assets, Sales Rep Agreements,
Business, operations or prospects of the Company or any binding commitments
related to same in excess of $10,000 in any instance;
(d) Any loan, advance, agreement, arrangement or transaction between
the Company and any officers, employees or stockholders of the Company or its or
their affiliates, or any business or entity in which the Company, its
affiliates, officer or employee of either has any direct or indirect interest,
except for compensation at rates not exceeding the rates of compensation in
effect as of September 30, 1997, and advances made to employees of the Business
for ordinary and customary business expenses in reasonable amounts in the
ordinary course of the Business consistent with past practice;
(e) Any sale, assignment or transfer of any of the Assets used by the
Company except in a bona fide transaction to an unaffiliated party for fair
value and in the ordinary course of business consistent with past practice, or
cancellation of any debt or Claim owing to or owed by the Company;
(f) Any sale, assignment, transfer or grant of any license or
sublicense with respect to any trademark, trade name, service xxxx, copyright,
trade secret or other intangible asset used or useful in the Business;
(g) Any loans or the guarantee of any obligations of any person or
entity, including any employees, officers or stockholders of the Company or its
or their affiliates;
(h) The creation or sufferance to exist of any Claims on the Assets;
(i) Any institution, settlement or agreement to settle any litigation,
action or proceeding before any person, entity or Governmental Authority
relating to the Business or the Assets (excluding the Superior Coatings
Verdict);
(j) Any material transaction except in the ordinary course of business;
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(k) Any amendment or modification of, or waiver of any claim or right
of substantial value under, any of the Assumed Contracts;
(l) any writing up or writing down (or failure to write up or write
down on a basis consistent with past practices of the Company) the value of any
Purchased Inventory other than in the ordinary course of business consistent
with past practices of the Company;
(m) any change in any method of accounting or accounting practice or
policy used by the Company;
(n) any agreement to incur, assume or become subject to, any
liabilities or obligations for returns or allowances, other than in the ordinary
and usual course of business and consistent in nature of item and amount with
past practice, or increased, or experienced any change in any assumption
underlying, or methods of calculating, any bad debt, contingency or other
reserve;
(o) any agreement to pay, discharge or satisfy, any payment, discharge
or satisfaction of any material claim, liability or obligation (absolute,
accrued, contingent or otherwise), other than the payment, discharge or
satisfaction of liabilities and obligations reflected or reserved against in the
Statements or incurred in the ordinary and usual course of business consistent
with past practices;
(p) any prepayment of any obligation having a fixed maturity of more
than 90 days from the date such obligation was issued or incurred, or not paid,
when due, any account payable, or sought the extension of the payment date of
any account payable, other than any account payable which was (until paid) or is
being contested in good faith; or
(q) Any commitment (contingent or otherwise) to do any of the
foregoing.
SECTION 2.07 INVENTORIES. All of the Company's inventory reflected in
the Statements or thereafter acquired (and not subsequently sold in the ordinary
course of business) consist of items of quality and quantity usable or
merchantable in the ordinary course of the Company's Business as first quality
goods at prices at least equal to the amounts reflected in the Statements or,
with respect to after-acquired inventory, at least equal to the cost thereof
plus markups consistent with past practice. Each item of such inventory is
valued in the Statements at the lower of cost or market in accordance with GAAP
in accordance with historic inventory practices of the Company. Any item of the
Purchased Inventory that is, at the Closing Date, obsolete, damaged or
slow-moving (the "Slow-Moving Inventory") will be adequately reserved for on the
Statements. The Purchased Inventory now in existence and thereafter acquired are
expected to be used in the ordinary course of the Business within a period of
four (4) months from the date hereof (six (6) months in the case of packaging
materials), except for any Slow-Moving Inventory. The parties acknowledge Buyer
is not required to purchase any Slow-Moving Inventory. The current level of
inventories and supplies are at normal and adequate levels for the continuation
of the Business in the ordinary course and consistent with the Company's past
practices. The inventories do not and will not consist of any goods held on
consignment. The Company is not under any obligation or liability with respect
to
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accepting returns of items of inventory or merchandise in the possession of its
customers other than in the ordinary course of business consistent with past
practice and the policies of the Company. The Company has not committed and will
not commit to acquire inventory for sale which is not of a quality and quantity
usable in the ordinary course of the Business within a reasonable period of time
consistent with past practice, nor has the Company changed or will change the
price of any inventory except for (i) price reductions to reflect any reduction
in the cost thereof to the Company, (ii) reductions and increases responsive to
normal competitive conditions and consistent with the Company's past sale
practices, and (iii) increases to reflect any increase in the cost thereof to
the Company.
SECTION 2.08 ENVIRONMENTAL MATTERS. (a) To the Sellers' knowledge,
except as disclosed in Schedule 2.08 hereto:
(i) The Company and all real and leased property owned or
operated by it, are in compliance with all applicable statutes, rules,
regulations, orders, judgments and decrees of all federal, state and
local governmental authorities relating to pollution or protection of
human health or the environment ("Environmental Laws") and the Company
is not in violation of Environmental Laws with respect to the premises
in or near the real and leased property owned or operated by the
Company; and
(ii) The Company has not released Substances into the
environment in violation of Environmental Laws. The environment at the
real or leased property is not contaminated with Substances in amounts
or concentrations violative of Environmental Laws. Neither the real or
leased property owned or operated by the Company, nor, any property to
or at which the Company has arranged for transportation , treatment,
storage, or disposal of a hazardous substance, as defined in any
presently enacted Environmental Law, is listed or has been proposed for
listing on the National Priorities List, 40 C.F.R. Part 300, Appendix
B, or on similar lists established pursuant to state or other law. The
term "Substances" shall mean any pollutant, contaminant, hazardous
substance, hazardous material, oil (including petroleum or petroleum
products, crude oil, natural gas or synthetic gas useable for fuel)
hazardous waste or toxic waste, as defined in any presently enacted
Environmental Law.
(b) Except as disclosed in Schedule 2.08 hereto and except as would not
reasonably be expected to result in a material adverse effect, the Company has
obtained and holds and is in compliance with all registrations, permits,
licenses, and approvals issued by or on behalf of any federal, state or local
government body or agency ("Environmental Permits"), that are required under the
Environmental Laws in connection with the discharge or emission of Substances
from the facilities or plants operated by the Company or the generation,
treatment, storage, transportation, or disposal of any such Substances, in each
case as the facilities of the Company are currently operated. Such Environmental
Permits are listed on Schedule 2.08 hereto. Except as disclosed in Schedule 2.08
hereto, the Sellers have not received written notice of any claim, action, suit,
proceeding, hearing or investigation or of potential responsibility, based on or
related to Environmental Laws with respect to the Company.
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SECTION 2.09 TAXES. All federal, state, local and foreign tax returns
and tax reports required to be filed by the Company on or before the date hereof
have been timely filed with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed and all
amounts shown as owing thereon have been paid. All taxes including, without
limitation, income, accumulated earnings, property, sales, use, franchise, value
added, fuel, employees' income withholding and social security taxes ("Taxes"),
(i) which have become due or payable and all interest and penalties thereon,
whether disputed or not, have been paid in full and (ii) which are required to
be collected or withheld by the Company have been so collected or withheld. All
deposits required by law to be made by the Company with respect to employees'
withholding taxes have been duly made. The Company is not on the date hereof
liable for the payment of any taxes and the Buyer shall have no liability for
any taxes related to the ownership or operation of the Assets or the Company's
Business prior to the date hereof. The Company has delivered to the Buyer true
and complete copies of the Company's federal and state income tax returns for
the three prior fiscal periods and all reports and results of federal and state
income tax audits, if any, related thereto. The Company has not taken or failed
to take any action which could create any tax lien on any of the Assets. Except
as so reflected and provided for, no tax liabilities, disallowances, or
assessments have been assessed or proposed which remain unpaid and, to the best
knowledge of the Sellers, no fact or state of facts exists or has existed which
would constitute the grounds for the assessment of any tax liability other than
so reflected and provided for. No examinations of the Federal, state or other
tax returns, forms or information of the Company are currently in progress or,
to the best knowledge of the Sellers, are threatened. The Sellers have not given
any waiver of extension of any period of limitation governing the time of
assessment or collection of any Tax for any year which is still open for
assessment or remains in effect.
SECTION 2.10 LITIGATION. Except as set forth on SCHEDULE 2.10, there
has not been in the five (5) years prior to the date hereof and there is not
currently any (a) action, suit, claim, proceeding or investigation pending or,
to the Sellers' knowledge, threatened against or affecting the Company (whether
or not the Company is a party or prospective party thereto), at law or in
equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to the Company or (c) governmental
inquiry pending or threatened against or involving the Company, and there is no
basis for any of the foregoing. There are no outstanding orders, writs,
judgments, injunctions or decrees of any court, governmental agency or
arbitration tribunal against, involving or affecting the Company, and there are
no facts or circumstances which may result in institution of any action, suit,
claim or legal, administrative or arbitration proceeding or investigation
against, involving or affecting the Company or the transactions contemplated
hereby. The Company is not in default with respect to any order, writ,
injunction or decree known to or served upon them from any court or of any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. Except as set forth on
SCHEDULE 2.10, there is no action or suit by the Company pending or threatened
against others and there is no basis for any of the foregoing.
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SECTION 2.11 CERTAIN PRACTICES. Neither the Company nor any of the
officers, directors or employees of the Company has, directly or indirectly,
given or agreed to give any significant rebate, gift or similar benefit to any
supplier, customer, governmental employee or other person who was, is or may be
in a position to help or hinder the Company (or assist in connection with any
actual or proposed transaction) which (i) could subject the Company or the Buyer
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (ii) if not continued in the future, could have an adverse effect
on the Business.
SECTION 2.12 COMPLIANCE WITH LAW. The Company is not subject to any
judgment, order, writ, injunction, or decree that adversely affects,
individually or in the aggregate, its businesses, operations, properties, assets
or condition (financial or otherwise). The Company has complied, in all material
respects, with and is not in default under, any federal, state, local or foreign
laws (whether statutory or otherwise), ordinances, legal requirements, rules,
regulations and orders applicable to it, its operations, properties, assets,
products and services. There is no existing law, rule, regulation or order, and
the Sellers are not aware of any proposed law, rule, regulation or order,
whether federal, state, local or foreign which would prohibit or materially
restrict Buyer from, or otherwise materially adversely affect the Buyer in
conducting the Business in any jurisdiction in which such business is now
conducted.
SECTION 2.13 LICENSES AND PERMITS. SCHEDULE 2.13 contains a complete
and accurate list and description of all licenses, permits, pending
applications, consents, qualifications, approvals and authorizations of or from
any public or governmental agency or other third-parties, used in or otherwise
necessary for the operation of the Assets in the conduct of the Business
(collectively, the "Permits"). Schedule 2.13 shall designate those Permits that
may be validly transferred to the Buyer and those Permits, if any, that are not
transferable. No other Permits are required in connection with the operation of
the Assets. The Company has complied with all conditions and requirements
imposed by the Permits and the Company has not received any notice of, and none
of the Sellers have any reason to believe, that any appropriate authority
intends to cancel or terminate any of the Permits or that valid grounds for such
cancellation or termination exist. The Company owns or has the right to use the
Permits in accordance with the terms thereof without any conflict or alleged
conflict or infringement with the rights of others and subject to no Claim, and
each Permit is valid and in full force and effect, and will not be terminated or
adversely affected by the transactions contemplated hereby.
SECTION 2.14 NO LIENS ARISING FROM EMPLOYEE BENEFITS. No circumstance
exists, or as a result of the consummation of the transactions contemplated by
this Agreement, will exist that could result in the creation or existence of a
lien on any of the Assets or the imposition of any tax, penalty or other
liability on the Buyer or any assets of the Buyer under any provision of the
Internal Revenue Code, ERISA, or any other law applicable to any employee
benefit plan.
SECTION 2.15 INSURANCE.
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(a) SCHEDULE 2.15 contains an accurate and complete list of all
policies of casualty, general liability and products liability insurance owned
or held by or beneficially for the Company. All such policies are in full force
and effect and will not be canceled or modified by the Company prior to Closing
without the express written consent of the Buyer (except to extend the maturity
dates thereof), no premiums with respect thereto are past due and no notice of
cancellation or termination has been received by the Company with respect to any
such policy.
(b) The aforesaid policies are sufficient for Company's compliance with
all requirements of applicable law and of all agreements to which they are a
party; are valid, outstanding and enforceable policies; are in amounts
customarily deemed to be adequate and cover all risks customarily insured
against by companies conducting businesses similar to the Business; and have
been issued by reputable insurance companies which are in good standing,
adequately capitalized and actively engaged in the insurance business. The
insurance policies cover all incidents of loss which have occurred prior to the
date hereof or which may occur resulting from the Company's products sold prior
to the date hereof.
SECTION 2.16 OUTSTANDING COMMITMENTS. SCHEDULE 2.16 sets forth a
description of all existing contracts, agreements, commitments, licenses,
purchase orders, powers of attorney and franchises (collectively "Agreements")
relating to the Assets or the customers and suppliers of the Company. The
Company has delivered or made available to the Buyer true, correct and complete
copies of all of the Agreements specified on SCHEDULE 2.16 which are in writing,
and SCHEDULE 2.16 contains an accurate and complete description of all
Agreements which are not in writing. The Company has timely paid all amounts due
as of the date hereof under each Agreement identified in SCHEDULE 2.16 and, to
the best of its knowledge, the Company and each other party thereto have
performed all the obligations required to be performed by them to date, have
received no notice of default and are not in default (with due notice or lapse
of time or both) under any Agreement. The Company has no knowledge of any breach
or anticipated breach by the other party to any contract or commitment to which
the Company is a party. None of such Agreements has been terminated and the
Company is not aware of any intention or right of any party to default another
party to any such Agreement. There exists no actual or, to the knowledge the
Company, threatened termination, cancellation or limitation of the business
relationship of the Company with any party to any such Agreement.
SECTION 2.17 INTANGIBLES AND INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.17 lists all Proprietary Rights (as such term is defined
below) and sets forth any licenses related thereto and whether, where and when
each such Proprietary Right has been registered or filed with the United States
Patent and Trademark Office or the United States Copyright Office or the
corresponding office of any other jurisdictions. The Company owns or has a valid
right to use the Proprietary Rights being used and proposed to be used to
conduct the Business as now conducted and as proposed to be conducted free and
clear of any Claims. Except as specified on SCHEDULE 2.17, the Company has (i)
no obligation to compensate any person or entity for the use of any such
Proprietary Rights and (ii) not granted or assigned to, or become obligated to
grant or
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assign to, any person or entity, including any affiliate of the Company, any
license or other right to use any of the Proprietary Rights, or otherwise
licensed from others the Proprietary Rights of third parties, whether or not
requiring the payment of royalties or fees. All of the Proprietary Rights will
be owned or available for use by the Buyer on identical terms and conditions
immediately following the Closing Date.
(b) Except as set forth on SCHEDULE 2.17(b), no Claims have been made
or proceedings instituted or are pending or, to the best of the Company's
knowledge, after due inquiry, threatened which challenge the validity of the
ownership or use by the Company of any of the Proprietary Rights and, to the
best of the Company's knowledge, after due inquiry, no facts or circumstances
exist which would form the basis for such Claims or proceedings.
(c) The Company has the unencumbered right to use, free and clear of
any Claims, its Proprietary Rights. None of the Company's customer lists have
been sold, leased, licensed or otherwise disclosed either in whole or in part to
any person or entity and no person or entity has any right to use or interest in
the customer list or any information therein.
(d) The Company has no knowledge of the infringing use of any
Proprietary Rights or the infringement of any such Proprietary Rights by any
other person.
(e) "Proprietary Rights" means (a) trademarks, service marks, trade
dress, logos, trade names and corporate names, whether or not registered,
including all common law rights, and registrations and applications for
registration thereof, including, but not limited to, all marks registered in the
United States Patent and Trademark Office, the Trademark Offices of the States
and Territories of the United States Patent and Trademark Office, the Trademark
Offices of the States and Territories of the United States of America, and the
Trademark Offices of other nations throughout the world, and all rights therein
provided by multinational treaties or conventions, (b) copyrights (registered or
otherwise) and registrations and applications for registration thereof, and all
rights therein provided by multinational treaties or conventions, (c) computer
software, including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (d) trade secrets and confidential,
technical or business information (including ideas, formulas, compositions,
inventions and conceptions of inventions whether patentable or unpatentable and
whether or not reduced to practice), (e) whether or not confidential, technology
(including know-how and show-how), manufacturing and production processes and
techniques, research and development information, 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, (f) copies and
tangible embodiments of all the foregoing, in whatever form or medium, (g)
issued patents and patent applications, (h) all rights to obtain and rights to
apply for patents, and to register trademarks and copyrights, and (i) all rights
to xxx and recover and retain damages and costs and attorneys' fees for present
and past infringement of any of the Proprietary Rights hereinabove set out.
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SECTION 2.18 SIGNIFICANT SUPPLIERS. Set forth on SCHEDULE 2.18 is a
list of the ten largest suppliers to the Company for the twelve-month period
ended November 30, 1996 and for the eleven month period ended October 31, 1997,
together with the amount of purchases attributable to such suppliers expressed
in dollars and as a percentage of total purchases. No supplier, including,
without limitation, the suppliers listed on SCHEDULE 2.18 which were significant
to the Company during the past three years, has terminated, materially reduced
or threatened to terminate or materially reduce its provision of merchandise or
services to the Company. The Company has no reason to believe that the
transactions contemplated hereby will adversely affect the existing relationship
with any of the Company's suppliers.
SECTION 2.19 SIGNIFICANT CUSTOMERS. Set forth on SCHEDULE 2.19 is a
list of the ten largest customers of the Company for the twelve-month period
ended November 30, 1996 and for the eleven month period ended October 31, 1997,
together with the amount of purchases attributable to such customers expressed
in dollars and as a percentage of total sales. No customer, including, without
limitation, the customers listed on SCHEDULE 2.19 which were significant to the
Company during the past three years, has terminated, materially reduced or
threatened to terminate or materially reduce its purchases of the products or
services of the Company. The Company has no reason to believe that the
transactions contemplated hereby will adversely affect the existing relationship
with any of the Company's customers. The Company has not participated in any
trade programs, whether or not in the ordinary and usual course of business or
consistent with past practice, which may result in Claims against the Company
for money, credit or goods, including but not limited to bonuses, billback's
in-house programs, accruals, other sales and commission incentives or
allowances, discounts, returns, credits, allowances and contests.
SECTION 2.20 GOVERNMENTAL APPROVALS. No registration or filing with, or
consent or approval of or other action by, any Governmental Authority is or will
be necessary for the valid execution, delivery and performance by either of the
Sellers of this Agreement or the operation of the Business immediately after the
Closing in a manner consistent with its operations as of the date hereof.
"Governmental Authority" means any public body, governmental, administrative or
regulatory authority, agency, instrumentality or commission, including courts of
competent jurisdiction and arbitral tribunals, whether federal, state, local or
foreign.
SECTION 2.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.21, no director, officer or employee of the Company or the Parent, or
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or any member of the family of any
such person, has a substantial interest or is an officer, director, trustee,
partner or holder of any equity interest, is a party to any transaction with the
Company.
SECTION 2.22 NO BROKER OR FINDER. No broker, finder or other financial
consultant has acted on behalf of the Company in connection with this Agreement
or the transactions contemplated hereby in such a way as to create any liability
on the Buyer.
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SECTION 2.23 CLAIMS. The Company has not extended or granted any
warranties whether express or implied, other than standard terms and conditions
summarized in SCHEDULE 2.23. Except as set forth on SCHEDULE 2.23, neither of
the Sellers has received any written notice, nor has any knowledge of any oral
notice, of any claim (actual or threatened) in connection with any product
manufactured, sold, leased or delivered by the Company other than Claims in the
ordinary course of business and not in excess of $5,000 and, after due inquiry,
none of the Sellers has knowledge of any fact or circumstance which would form
the basis for any liability arising out of injury to individuals or property as
a result of the ownership, possession or use of any product manufactured, sold,
leased or delivered by the Company. SCHEDULE 2.23 also sets forth each material
pending claim against the Company in connection with any product manufactured,
sold, leased or delivered by the Company.
SECTION 2.24 DISCLOSURE. All documents and schedules delivered or to be
delivered by or on behalf of the Sellers in connection with this Agreement and
the transactions contemplated hereby are true, complete and correct. Neither the
Company nor the Parent is aware of any facts pertaining to the Company, the
Assets or the Business which is reasonably likely to have a material adverse
effect on the Assets and the Business and which have not been disclosed in this
Agreement, the Schedules or the Statements or otherwise disclosed to the Buyer
by the Company or the Parent in writing. Neither this Agreement, nor any
Schedule or other documents in connection herewith contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which made, not
misleading.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
The Buyer represents and warrants to the Sellers as follows:
SECTION 3.01 ORGANIZATION. The Buyer is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
SECTION 3.02 BUYER POWER AND AUTHORITY. The Buyer has the corporate
power and authority to execute, deliver and perform this Agreement and the other
documents and instruments contemplated hereby. The execution, delivery and
performance of this Agreement by the Buyer and the documents contemplated hereby
and the consummation of the transactions contemplated hereby have been duly
authorized and approved by the Buyer. This Agreement, and each of the other
agreements, documents and instruments to be executed and delivered by the Buyer
have been duly executed and delivered by, and constitute the valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with their
terms.
SECTION 3.03 NO CONFLICT. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby by the
Buyer, the consummation of the
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transactions contemplated hereby or thereby, nor the performance by the Buyer of
this Agreement and such other agreements in compliance with the terms and
conditions hereof and thereof will (i) conflict with or result in any breach of
the Certificate of Incorporation, as amended, or By-Laws of the Buyer or any
judgment, decree, order, statute or regulation applicable to the Buyer, (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, (iii) result in a
breach of or default (or give rise to any right of termination, cancellation or
acceleration) under any law, rule or regulation or any judgment, decree, order,
governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument to which the Buyer is a party which would materially impair the
Buyer's ability to consummate the transactions contemplated hereby or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer.
SECTION 3.04 LITIGATION. There is no (a) action, suit, claim,
proceeding or investigation pending or, to the best of the Buyer's knowledge,
threatened against or affecting the Buyer (whether or not the Buyer is a party
or prospective party thereto), at law or in equity, or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (b) arbitration proceeding
relating to the Company or (c) governmental inquiry pending or threatened
against or involving the Buyer, which in each case would materially impair the
Buyer's ability to consummate the transactions contemplated hereby.
SECTION 3.05 NO BROKER OR FINDER. Other than Xxxxxxx Associates, Inc.
(whose fees shall be paid by the Buyer), no broker, finder or other financial
consultant has acted on behalf of the Buyer in connection with this Agreement or
the transactions contemplated hereby in such a way as to create any liability on
the Sellers.
ARTICLE IV
----------
COVENANTS OF THE SELLERS
------------------------
The Sellers covenant and agree with the Buyer as follows:
SECTION 4.01 BEST EFFORTS COOPERATION. The Sellers shall use their best
efforts to perform and fulfill, all conditions and obligations to be fulfilled
or performed by them hereunder, to the end that the transactions contemplated
hereby will be fully and timely consummated.
SECTION 4.02 ACCESS. Until the Closing, the Company shall give the
Buyer, its attorneys, accountants and other authorized representatives complete
access, upon reasonable notice and at reasonable times, to each of the Company
offices, properties, customers, suppliers, employees, products, technology,
business and financial records, contracts, business plans, budgets and
projections, agreements, commitments and other documents and information
concerning the Company and persons employed by or doing business with the
Company. Following the Closing, the Company shall provide the Buyer with access
to any and all records relating to the Company
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which remain in the possession of accountants, attorneys and other third parties
and which the Buyer may reasonably require to carry out the Business. In order
that the Buyer may have full opportunity to make such examination and
investigation as it may desire of the business and affairs of the Company, the
Company will furnish the Buyer and its representatives during such period with
all such information as such representatives may reasonably request and cause
the respective officers, employees, consultants, agents, accountants and
attorneys of the Company and the Parent to cooperate fully with the
representatives of the Buyer in connection with such review and examination and
to make full disclosure to the Buyer of all material facts affecting the
Company's financial condition, business operations, properties and prospects;
PROVIDED, however, that the Buyer will hold the documents and information
concerning the Company confidential in accordance with the provisions of the
Non-Competition Agreement and Letter of Intent, dated September 9, 1997, as
amended.
SECTION 4.03 INSURANCE. Until the Closing, the Company shall maintain
with financially sound and reputable insurers, insurance against such casualties
and contingencies and of such types and in such amounts as is customary for
companies similarly situated.
SECTION 4.04 COMPLIANCE WITH LAWS. Until the Closing, the Company shall
conduct the Business in compliance, in all material respects, with all
applicable laws, rules, regulations and orders.
SECTION 4.05 KEEPING OF BOOKS AND RECORDS. Until the Closing, the
Company shall keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions and in which all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made.
SECTION 4.06 ACTIONS PRIOR TO CLOSING. The Company shall conduct the
Business pending the Closing only in the ordinary and usual course of business
consistent with past practice. Without limiting the generality of the foregoing,
the Company shall keep in full force and effect its insurance coverage, continue
advertising its business in accordance with past practice, use reasonable best
efforts to maintain in accordance with good business practice its present
employees and its relationships with its suppliers and customers so that they
will be preserved for the Buyer after the Closing, maintain its inventory at
levels consistent with its past practices, and continue to pay its accounts
payable and collect its accounts receivables in a manner consistent with its
past practices.
SECTION 4.07 NOTICE OF CHANGES. Until the Closing, the Sellers shall
notify the Buyer of any material change in the business of the Company as soon
as it becomes apparent to any of the Sellers that any such change has occurred
or may occur.
SECTION 4.08 PRESERVATION OF BUSINESS. Until the Closing, the Company
will use reasonable best efforts to preserve the Company's business organization
intact, and to preserve its goodwill. Without limiting the generality of the
foregoing, the Company will, and the Parent will
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cause the Company to, timely perform all obligations required of the Company
under the contracts and permits listed on the Schedules to this Agreement.
SECTION 4.09 LITIGATION. The Sellers will promptly notify the Buyers of
any lawsuits, Claims, proceedings or investigations which are threatened or
commenced against or by the Company, the Sellers or their affiliates, or against
any employee, consultant or director of the Company.
SECTION 4.10 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
From the date hereof up to and including the Closing Date, (i) the Company will
and the Parent will cause the Company to conduct the Business in a manner such
that the representations and warranties contained herein shall continue to be
true and correct on and as of the Closing Date as if made on and as of the
Closing Date, except for changes and the consequences of events arising in the
ordinary and usual course of business consistent with past practice after the
date hereof and none of which would have an adverse effect on the properties,
assets, operations or condition (financial or otherwise) or prospects of the
Company or its Business; and (ii) the Sellers will advise the Buyer promptly in
writing of any condition or circumstance occurring from the date hereof up to
and including the Closing Date which could cause any representations or warranty
of the Sellers to become untrue in any material respect.
SECTION 4.11 NO NEGOTIATIONS. Until the later to occur of December 31,
1997, or the termination of this Agreement in accordance with its terms, the
Sellers shall not and shall not permit any of their respective officers,
directors, employees, agents, or representatives to solicit, initiate or
encourage inquiries or proposals, or conduct any negotiations, concerning any
acquisition or purchase of all or any substantial portion of the Business,
assets or capital stock of the Company; provided that the Sellers may solicit
bidders for the equipment and real property of the Company. The Sellers shall
immediately advise the Buyer of his, its or their receipt of any such inquiry or
proposal. Each of the Sellers agree not to, without the prior written consent of
the Buyer, release any person from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party and
agree to require the return of all confidential information that may have been
provided to a third party involved with a potential sale or acquisition of the
Company.
SECTION 4.12 CONFIDENTIALITY. The Sellers agree not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement, or use to the detriment of the Buyer or for the benefit of
any other person or persons, or misuse in any way, any confidential information
of the Company and the Business (whether such confidential information relates
to the operation of the Business before or after the date hereof), including any
trade or business secrets with respect to the Business and any technical or
business materials that are confidential or proprietary, including without
limitation information (whether in written, oral or machine-readable form)
concerning: general business operations; methods of doing business; customer and
supplier relations; advertising and promotion plans; financial information
including costs, profits and sales; pricing and marketing strategies; names of
suppliers, personnel and customers (including customer
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lists); software programs, however embodied; and information obtained by or
given to the disclosing party about or belonging to third parties.
SECTION 4.13 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. (a) The
Sellers shall give promptly such notices to third parties and use their best
efforts to obtain such third party consents as are necessary in connection with
the transactions contemplated by this Agreement, including, without limitation,
all necessary approvals from the Missouri Department of Environmental Protection
in connection with the sale of the Assets and the Buyer's ability to operate the
Business on and after the Closing Date.
(b) The Buyer and the Sellers shall cooperate and use all reasonable
efforts to assist each other in giving such notices and obtaining such consents;
PROVIDED, HOWEVER, that the Buyer shall not have any obligation to give any
guarantee or other consideration of any nature in connection with any such
notice or consent or to consent to any change in the terms of any agreement or
arrangement which the Buyer in its sole and absolute discretion may deem adverse
to the interests of the Buyer, the Company or the Business.
SECTION 4.14 RISK OF LOSS. Prior to the Closing Date, the risk of loss
or damage to or destruction of any or all of the Business or the Assets shall
remain with the Company.
SECTION 4.15 SALE OF NAME. On the Closing Date, the Company shall
assign the name of "American Chemical Company" to the Buyer. The Company shall
execute such applications to governmental authorities, consents and other
documents and take such other action as the Buyer may reasonably request in
order (a) to change the Company's corporate name to one not involving the use of
the words "American Chemical Company" or "KINGCO", or any confusingly similar
variation thereof, and not descriptive of, or related to, the Business
thereafter being conducted by the Buyer with the Assets and (b) to enable the
Buyer to use and register, as the Buyer may desire, such name and any variation
thereof.
SECTION 4.16 TRANSFER OF FORMULATIONS. On the date hereof, the Company
shall provide to the Buyer copies of all product formulations necessary for the
Buyer to immediately after the Closing Date commence production of any or all
products of the Company. Buyer shall hold the formulations in confidence and
shall return them to the Company and not utilize them in the event, for any
reason, that the transaction contemplated by this Agreement fails to occur.
ARTICLE V
---------
CONDITIONS TO THE BUYER'S OBLIGATIONS
-------------------------------------
The obligation of the Buyer to pay the Purchase Price on the Closing
Date and to consummate the other transactions contemplated hereby is subject to
the satisfaction, on or before
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the Closing Date, of the following conditions each of which may be waived by the
Buyer in its sole discretion:
SECTION 5.01 CONSENTS AND APPROVALS. The Buyer shall have received,
each in form and substance reasonably satisfactory to the Buyer in its sole
discretion, all authorizations, consents, orders and approvals of all
Governmental Authorities and officials and all third party consents and estoppel
certificates which the Buyer deems necessary for the consummation of the
transactions contemplated by this Agreement.
SECTION 5.02 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. All
of the representations and warranties of the Sellers contained in this Agreement
or in any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all material respects on and as of
the Closing Date, as if made on and as of the Closing Date and the Sellers shall
have executed and delivered to the Buyer a certificate, in form and substance
reasonably satisfactory to the Buyer and its counsel, to such effect.
SECTION 5.03 PERFORMANCE. The Sellers shall have performed and complied
with all covenants and agreements contained herein required to be performed or
complied with by each of them prior to or at the Closing Date. The Sellers shall
have executed and delivered to the Buyer a certificate, in form and substance
reasonably satisfactory to the Buyer and its counsel, in writing to such effect
and to the further effect that all of the conditions set forth in this Article V
have been satisfied.
SECTION 5.04 NO ADVERSE CHANGE. There shall have been no material
adverse change in the Business, assets, liabilities, operations, prospects,
properties or condition, financial or otherwise, of the Company and no material
transactions involving the Company shall have occurred prior to the Closing Date
other than in the ordinary course of business.
SECTION 5.05 OPINION OF COUNSEL. The Buyer shall have received the
opinion of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., counsel to the
Sellers, in substantially the form attached hereto as EXHIBIT 5.05 dated as of
the Closing Date.
SECTION 5.06 LIEN OBLIGATIONS OF THE COMPANY. All liens against the
Assets shall have been released and appropriate UCC termination statements
filed.
SECTION 5.07 NO ACTIONS, SUITS OR PROCEEDINGS. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of any
of the parties to this Agreement, threatened, before any court or governmental
body (i) to restrain, prohibit, restrict or delay, or to obtain damages or a
discovery order in respect of this Agreement or the consummation of the
transactions contemplated hereby, or (ii) which has had or may have a materially
adverse effect on the Assets or the condition, financial or otherwise, or
prospects of the Business. No order, decree or judgment of any court or
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governmental body shall have been issued restraining, prohibiting, restricting
or delaying, the consummation of the transactions contemplated by this
Agreement. No insolvency proceeding of any character including without
limitation, bankruptcy, receivership, reorganization, dissolution or arrangement
with creditors, voluntary or involuntary, affecting the Company or the Parent
shall be pending, and neither the Company nor the Parent shall have taken any
action in contemplation of, or which would constitute the basis for, the
institution of any such proceedings.
SECTION 5.08 DUE DILIGENCE REVIEW. The results of the Buyer's due
diligence review, including, without limitation, the review of the all material
documents and discussions with the Company's suppliers and customers, shall be
satisfactory to the Buyer in its sole discretion. The due diligence review
period shall end on December 19, 1997. Unless Buyer gives Sellers written notice
of its intention to terminate this Agreement as a result of its due diligence on
or prior to December 19, 1997, this condition shall be deemed waived.
SECTION 5.09 NONCOMPETITION AGREEMENT. Each of the Company and the
Parent shall have entered into the Noncompetition Agreement with the Buyer in
the form attached hereto as EXHIBIT 5.09.
SECTION 5.10 ORGANIZATIONAL DOCUMENTS. The Buyer shall have received a
copy of (i) the Certificate of Incorporation, as amended (or similar
organizational document), of the Company, certified by the Secretary of State of
the jurisdiction in which the Company is incorporated or organized, as of a date
not earlier than five Business Days prior to the Closing Date and accompanied by
a certificate of the Secretary or Assistant Secretary of the Company, dated as
of the Closing Date, stating that no amendments have been made to such
Certificate of Incorporation (or similar organizational documents) since such
date; (ii) the By-laws (or similar organizational documents) of the Company,
certified by the Secretary or Assistant Secretary of the Company stating that no
amendments have been made to such By-laws; and (iii) such other closing
documents as the Buyer may reasonably require.
SECTION 5.11 GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Buyer
shall have received good standing certificates for the Company from the
Secretary of State of the jurisdiction in which the Company is incorporated or
organized and from the Secretary of State in each jurisdiction listed in
SCHEDULE 2.01, in each case dated not earlier than five Business Days prior to
the Closing Date. The Buyer shall also have received a tax good standing
certificate from the department of revenue of each jurisdiction in which the
Company has filed a Return.
SECTION 5.12 TOLLING AGREEMENT. The Company shall have entered into the
Tolling Agreement with the Buyer.
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ARTICLE VI
----------
CONDITIONS TO THE SELLER'S OBLIGATIONS
--------------------------------------
The obligation of the Company to sell the Assets to Buyer and to
consummate the other transactions contemplated hereby is subject to the
satisfaction, on or before the Closing Date, of the following conditions, each
of which may be waived by the Sellers in their sole discretion:
SECTION 6.01 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
Buyer's representations and warranties contained in Article III shall be true,
complete and correct in all material respects, on and as of the Closing Date, as
if made on and as of such date, and the Buyer shall have delivered to the
Sellers a certificate, in form and substance reasonably satisfactory to the
Sellers and its counsel, to such effect.
SECTION 6.02 PERFORMANCE. The Buyer shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Buyer shall have executed and
delivered a certificate to the Sellers, in form and substance reasonably
satisfactory to the Sellers and its counsel to such effect.
SECTION 6.03 NO ACTIONS, SUITS OR PROCEEDINGS. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body to
restrain, prohibit, restrict or delay, or to obtain damages or a discovery order
in respect of this Agreement or the consummation of the transactions
contemplated hereby. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, affecting the Buyer shall be pending, and the Buyer
shall not have taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.
SECTION 6.04 ORGANIZATIONAL DOCUMENTS. The Sellers shall have received
a copy of (i) the Certificate of Incorporation, as amended (or similar
organizational document), of the Buyer, certified by the Secretary of State of
the State of Delaware, as of a date not earlier than five business days prior to
the Closing Date and accompanied by a certificate of the Secretary or Assistant
Secretary to the Buyer, dated as of the Closing Date, stating that no amendments
have been made to such Certificate of Incorporation (or similar organizational
documents) since such date; (ii) the By-laws (or similar organizational
documents) of the Buyer, certified by the Secretary or Assistant Secretary of
the Company stating that no amendments have been made to such By-laws since such
date; and (iii) such other Closing Documents as the Sellers may reasonably
require.
SECTION 6.05 GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Sellers
shall have received a good standing certificate for the Buyer from the Delaware
Secretary of State.
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SECTION 6.06 TOLLING OF OPERATIONS. The Company shall enter into the
Tolling Agreement with the Buyer.
SECTION 6.07 BUYER'S FINANCIAL CONDITION. Buyer shall have furnished to
Parent evidence, in such form as shall be reasonably acceptable to Parent,
showing Buyer's ability to pay the Promissory Note. BUYER AGREES THAT SUCH
EVIDENCE SHALL BE SUPPLEMENTED ON AN ANNUAL BASIS, UNTIL THE PROMISSORY NOTE IS
PAID IN FULL.
ARTICLE VII
-----------
INDEMNIFICATION
---------------
SECTION 7.01 INDEMNIFICATION BY BUYER. The Buyer hereby agrees to
indemnify, defend and hold harmless the Company and its Affiliates (as such term
is defined under Rule 405 of the Rules and Regulations of the Securities Act of
1933, as amended) and their respective officers, directors, employees,
shareholders and agents of the foregoing, and their successors and assigns,
from, against and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees and costs and expenses reasonably
incurred in investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand) of any kind or
character (hereinafter collectively referred to as "Damages") arising out of or
in any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of warranty of the
Buyer contained in this Agreement or in any certificate, instrument of transfer
or other document or agreement executed by the Buyer in connection with this
Agreement or otherwise made or given in connection with this Agreement;
(b) Any failure by the Buyer to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by it under this Agreement or under any certificates or
other documents or agreements executed by the Buyer in connection with this
Agreement; and
(c) Any liability arising directly from Buyer's operation of the Assets
after the Closing Date, subject to the terms and provisions of the Tolling
Agreement.
SECTION 7.02 INDEMNIFICATION BY THE SELLERS. Each of the Sellers agrees
jointly and severally to indemnify, defend and hold harmless the Buyer and its
Affiliates (as such term is defined under Rule 405 of the Rules and Regulations
of the Securities Act of 1933, as amended) and the respective officers,
directors, employees, shareholders and agents of the foregoing, and their
successors and assigns from, against and with respect to any and all Damages
arising out of or in any manner incident, relating or attributable to:
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(a) Any inaccuracy in any representation or breach of warranty of any
of the Sellers contained in this Agreement or in any certificate, instrument of
transfer or other document or agreement or any of the Sellers in connection with
this Agreement or otherwise made or given in connection with this Agreement;
(b) Any failure by any of the Sellers to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by any of them under this Agreement or under any
certificates or other documents or agreements executed by any of the Sellers in
connection with this Agreement;
(c) Reliance by the Buyer on any books or records of the Company or
reliance by the Buyer on any information furnished to the Buyer pursuant to this
Agreement by any Seller;
(d) The Excluded Liabilities;
(e) The operation by the Company of the Assets prior to the Closing and
all operations conducted by Seller with respect to the Business pre-closing and
post-closing; and
(f) The tolling obligations of the Company, subject to the terms of the
Tolling Agreement.
SECTION 7.03 LIMITATIONS ON INDEMNIFICATION. The provisions set forth
in this Article VII shall not be subject to any time limitations generally
governing this Agreement, except as specifically set forth in this Section 7.03
as follows:
(a) TIME LIMITATION. (i) The indemnification obligations of Buyer
contained in Section 7.01 shall expire on December 31, 1998, and (ii) the
indemnification obligations of Sellers contained in Section 7.02 shall expire on
December 31, 1998, except for the indemnity obligations arising out of a breach
by Sellers of any representation and warranty contained in (i) Section 2.01
(Organization), Section 2.02 (Authority and Title), and Section 2.09 (Taxes)
(collectively, the "Excluded Claims"), which shall have no time limitation and
(ii) Section 2.08 ("Environmental Claims") and "Product Liability Claims" which
shall survive for a period of three (3) years following the Closing Date. The
foregoing limitations shall not apply with respect to those pending Claims for
indemnification for which written notice was given by the Indemnified Party to
the Indemnifying Party on or prior to December 31, 1998 (December 31, 2000, in
the case only of an Environmental Claim), which written notice shall have the
effect of continuing the applicable indemnity obligations until such Claim(s)
are resolved and all required payments in respect thereof, as applicable, are
made.
(b) DOLLAR LIMITATIONS. Except with respect to Excluded Claims and
Excluded Liabilities (with respect to which there will be no "basket"), Buyer
shall not be entitled to indemnification from Sellers, and Sellers shall not be
required to pay to Buyer for, any Claims unless and until the aggregate amount
of all Claims exceeds Twenty-Five Thousand Dollars ($25,000) (the "Basket
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Amount"). In the event Buyer's Claims exceed the Basket Amount, subject to the
limitations in paragraph (a) above, Buyer shall be entitled to indemnification
for such Claims in excess of the Basket Amount; PROVIDED, FURTHER, that Sellers'
aggregate liability for any Claims by Buyer (i.e., the amount of such Claims in
excess of the Basket Amount) shall in no event exceed the unpaid principal
amount and accrued interest on the Promissory Note (the "Cap"), except as to
Excluded Claims and Environmental Claims which shall not be subject to the Cap.
(c) OTHER LIMITATIONS. Notwithstanding anything contained in this
Article VII to the contrary, neither Sellers nor Buyer shall be liable for
punitive damages.
SECTION 7.04 CLAIMS FOR INDEMNIFICATION. In the event of the occurrence
of any event which any party asserts is an identifiable event pursuant to this
Article VII, the party claiming indemnification (the "Indemnified Party") shall
provide prompt notice to the party required to provide indemnification (the
"Indemnifying Party"), specifying in detail the facts and circumstances with
respect to such claim and the basis for which indemnification is available
hereunder, PROVIDED, HOWEVER, that the failure to provide such notice shall only
release the applicable Indemnifying Party from any of its obligations under this
Article VII to the extent such Indemnifying Party is prejudiced by such failure.
If such event involves the claim of any third party and if the Indemnifying
Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Damages that may result from such third party claim, the
Indemnifying Party shall have the right to control the defense or settlement of
such claim; provided, however, that (a) the Indemnified Party shall be entitled
to participate in the defense of such claim at its own expense, (b) the
Indemnifying Party shall obtain the prior written approval of the Indemnified
Party (which approval shall not be unreasonably withheld or delayed) before
entering into any settlement of such claim if, pursuant to or as a result of
such settlement, injunctive or other non-monetary relief would be imposed
against the Indemnified Party, (c) the Indemnifying Party shall not be entitled
to control (but shall be entitled to participate at its own expense in the
defense of), and the Indemnified Party shall be entitled to have sole control
over, and shall assume all expense with respect to the defense or settlement of
any claim to the extent such claim seeks an order, injunction or other equitable
relief against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial or
otherwise) or prospects of the Indemnified Party, provided that the Indemnified
Party shall provide written notice to the Indemnifying Party of its election to
assume control over the defense of such claim pursuant to this Section 7.04(c),
(d) if there exists or is reasonably likely to exist a conflict of interest that
would make it inappropriate in the reasonable judgment of the Indemnified Party
for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel, in each jurisdiction for which the Indemnified Party determines
counsel is required, at the expense of the Indemnifying Party; PROVIDED,
HOWEVER, that in no event shall the Indemnifying Party be liable for the
expenses of more than one counsel in addition to local counsel and (e) if the
Indemnifying Party is entitled but fails to assume control over the defense of a
claim as provided in this Section 7.04, provided that the Damages associated
with such claim are covered by the indemnity provisions of Section 7.01 or 7.02,
the Indemnified Party shall have the right to defend such claim, provided,
further, that the Indemnified Party shall obtain the prior written approval of
the Indemnifying Party
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(which approval shall not be unreasonably withheld or delayed) before entering
into any settlement of such claim if, pursuant to or as a result of such
settlement, injunctive or other non-monetary relief would be imposed against the
Indemnifying Party.
In the event that the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this Article VII, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the claim to which such indemnification
relates.
SECTION 7.05 MISCELLANEOUS. The Sellers and the Buyer agree to treat
all payments made by any of them to or for the benefit of the other (including
any payments to the Company) under this Agreement and for any misrepresentations
or breaches of warranties of covenants as adjustments to the Purchase Price or
as capital contributions for tax purposes and that such treatment shall govern
for purposes hereof except to the extent that the Laws of a particular
jurisdiction provide otherwise, in which case such payments shall be made in an
amount sufficient to indemnify the relevant party on an after-tax basis.
ARTICLE VIII
------------
TERMINATION
-----------
SECTION 8.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) By mutual written consent duly authorized by the Buyer and the
Sellers;
(b) By the Buyer or the Sellers if:
(i) any court of competent jurisdiction or other governmental
body shall have issued an order, decree or ruling, or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby, provided that this Agreement shall not be
terminated pursuant to this paragraph unless the party terminating this
Agreement has utilized its reasonable best efforts to oppose the
issuance of such order, decree or ruling or the taking of such action;
(ii) the Closing has not occurred on or prior to December 31,
1997 for any reason other than the breach of any provision of this
Agreement by the party terminating this Agreement;
(iii) the other party breaches any of its representations,
warranties or covenants attached hereto.
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(c) By the Buyer if:
(i) Any of the conditions set forth in Article V hereof has
not been satisfied on or before December 31, 1997 (December 19, 1997 in
the case of the condition in Section 5.08) or shall have become
incapable of fulfillment and shall not have been waived by the Buyer,
for any reason other than a breach by the Buyer of any of its
representations, warranties or agreements hereunder;
(ii) If in the Buyer's good faith judgment there is any
inaccuracy in any representations or breach of any warranty contained
therein, or any failure by any the Sellers to perform any commitment,
covenant or condition contained in this Agreement, or there exists any
error, misstatement or omission with regard to any of the Exhibits,
Schedules or other documents referred to herein, or the Buyer in its
sole judgment is not satisfied with the results of its investigation or
the contents of any of the Exhibits, Schedules, information or other
documents, or with the results of its examination of the business and
condition (financial or otherwise) of the Company; or
(d) By the Sellers if any of the conditions set forth in Article VI
hereof have not been satisfied on or before December 31, 1997 or shall have
become incapable of fulfillment and shall not have been waived by the Sellers,
for any reason other than a breach by any Seller of any of its representations,
warranties or agreements hereunder;
Upon the occurrence of any of the events specified in this Section 8.01
(other than paragraph A hereof), written notice of such event shall forthwith be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate.
SECTION 8.02 EFFECT OF TERMINATION.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 8.01, this Agreement, except for the provisions of Section
4.11, Section 4.16 and Articles VIII and X shall forthwith become void and be of
no effect, without any liability on the part of any party or its directors,
officers or shareholders. Nothing in this Section 8.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
(b) If either of the Sellers fails to fulfill its obligations hereunder
for any reason not excused by an express provision of this Agreement, then the
Buyer shall, in addition to any other remedies that it may have, have the right
to bring an action in any court of competent jurisdiction to obtain specific
performance of this Agreement, it being understood that the parties agree that
failure of the Sellers to consummate the transactions contemplated hereunder or
failure of the Sellers to perform any of their obligations contemplated by this
Agreement (except for a failure excused by an express provision of this
Agreement) would cause irreparable injury to the Buyer and that money damages
would not provide an adequate remedy to the Buyer. The Sellers therefore waive
all objections to the award of equitable relief for such failure.
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(c) If Buyer fails to fulfill its obligations hereunder for any reason
not excused by an express provision of this Agreement, then the Sellers shall,
in addition to any other remedies that they may have, have the right to bring an
action in any court of competent jurisdiction to obtain specific performance of
this Agreement, it being understood that the parties agree that failure of the
Buyer to consummate the transactions contemplated hereunder or failure of the
Buyer to perform of its obligations contemplated by this Agreement (except for a
failure excused by an express provision of this Agreement) would cause
irreparable injury to the Sellers and that money damages would not provide an
adequate remedy to the Sellers. The Buyer therefore waives all objections to the
award of equitable relief for such failure.
ARTICLE IX
----------
ADDITIONAL AGREEMENTS
---------------------
SECTION 9.01 TAX MATTERS.
(a) The Company shall cause to be prepared and timely filed, at its
sole expense, all of its required tax returns for all periods up to and
including the Closing Date. The Sellers shall be jointly and severally
responsible for the payment of, and will indemnify, defend and hold the Buyer
harmless against all taxes due or assessed which relate to (i) the operations of
the Business for all periods up to and including the Closing Date and (ii) the
transactions contemplated by this Agreement.
(b) The Sellers and the Buyer will provide each other with such
cooperation and information as any of them reasonably may request of the other
in filing any return, amended return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes, participating in or
conducting any audit or other proceeding in respect of Taxes or making
representations to or furnishing information to parties subsequently desiring to
purchase any part of the Assets or the Business from the Buyer. The Sellers and
the Buyer shall retain all returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Business, or with
respect to the Assets, for each taxable period first ending after the Closing
Date and for all prior taxable periods until the later of (i) the expiration of
the statute of limitations of the taxable periods to which such returns and
other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax
periods, or (ii) six years following the due date (without extension) for such
returns. Any information obtained under this Section 9.02(b) shall be kept
confidential except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
(c) Neither the Sellers nor the Buyer shall file any return, or take a
position with a Tax authority, that is inconsistent with the allocation of the
Purchase Price set forth in Section 1.03, or that treats the transaction
contemplated in this Agreement in a manner inconsistent with the terms of this
Agreement.
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(d) The Company shall prepare and file any required Tax returns in
connection with all sales, use, or transfer or similar Taxes incurred as a
result of the sale of the Assets contemplated by this Agreement and shall pay
the amount of such Taxes required to be remitted with such Tax returns. The
Company shall provide the Buyer with copies of such returns and evidence of the
payment of Taxes thereunder.
SECTION 9.02 PAYMENT OF LIABILITIES. The Company and/or the Parent, as
the case may be, shall promptly pay and satisfy in full or shall cause their
affiliates to promptly pay and satisfy in full all of the Excluded Liabilities
as they become due and payable.
SECTION 9.03 BULK SALES LAWS. The Company shall take all actions
necessary before and after the Closing Date to comply with the applicable bulk
sales laws, and the Company shall provide the Buyer with reasonable
documentation evidencing such compliance.
SECTION 9.04 ACCOUNTS RECEIVABLE. The parties acknowledge that Buyer is
not acquiring any of Seller's accounts receivable. Buyer agrees to cooperate
with the Company in the Company's collection efforts of the Company's accounts
receivable, provided that Buyer shall not be obligated to pay any sums or
commence any legal action in connection with such assistance. Each party agrees
to promptly remit to the other, in precisely the form received, with
endorsement, if necessary, any and all payments received by such party that is
actually due and owing to the other party, and any such sums erroneously paid by
the customer to such party shall be held in trust for the other party. Each
party agrees to furnish the other access to customer correspondence and other
documents upon the reasonable request of such other party in order to verify the
prompt remittance of all sums required to be remitted to the other party
pursuant to this Section 9.04.
SECTION 9.05 CONTACT WITH CUSTOMERS AND SUPPLIERS. In conducting the
due diligence permitted under Section 5.08 hereof, Buyer shall not contact any
customers or suppliers of the Company, without prior notice to Xxxxx Xxxxxx,
President of the King Adhesive division of the Company. All such contacts shall
be coordinated with Xx. Xxxxxx and Xx. Xxxxxx shall provide all reasonable
assistance that Buyer deems necessary to complete such aspect of its due
diligence.
ARTICLE X
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MISCELLANEOUS
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SECTION 10.01 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
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If to the Buyer: TACC International Corporation
Air Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxxx X. X'Xxxxxx, President
Fax: (000) 000-0000
with a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
If to either of the Sellers: American Chemical Company
c/o Glas-Craft, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx #000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Chairman
Fax: (000) 000-0000
with copies to: Cohesant Technologies, Inc.
0000 X. 0xx Xx., Xxx. 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
and
Kahn, Kleinman, Xxxxxxxx &
Xxxxxx Co., L.P.A.
Xxx Xxxxx xx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telex, telecopy or facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
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SECTION 10.02 ENTIRE AGREEMENT. This Agreement together with the
Exhibits and Schedules hereto and the other documents executed in connection
herewith (together, the "Documents") embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof, including, without limitation, the Letter
of Intent between the Buyer and the Company dated September 9, 1997, other than
Section 9 thereof (with respect to confidentiality). No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in the Documents shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
SECTION 10.03 MODIFICATIONS AND AMENDMENTS. The terms and provisions of
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 10.04 WAIVERS AND CONSENTS. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
SECTION 10.05 ASSIGNMENT. Neither this Agreement, nor any right
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties, except that the Buyer may assign all or
part of its rights and obligations under this Agreement to one or more direct or
indirect subsidiaries or affiliates (in which event, representations and
warranties relating to the Buyer and the opinion of counsel to be delivered by
the Buyer shall be appropriately modified).
SECTION 10.06 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement shall be
construed to
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create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 10.07 GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of The Commonwealth of Massachusetts, without
giving effect to the conflict of law principles thereof.
SECTION 10.08 JURISDICTION AND SERVICE OF PROCESS. Any legal action or
proceeding with respect to this Agreement shall be brought in the courts of The
Commonwealth of Massachusetts or of the United States of America for the
District of Massachusetts. By execution and delivery of this Agreement, each of
the parties hereto accepts for itself or himself and in respect of its or his
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereby irrevocably waive any objection or defense that they
may now or hereafter have to the assertion of personal jurisdiction by any such
court in any such action or to the laying of the venue of any such action in any
such court, and hereby waive, to the extent not prohibited by law, and agree not
to assert, by way of motion, as a defense, or otherwise, in any such proceeding,
any claim that it or he is not subject to the jurisdiction of the above-named
courts for such proceedings. Each of the parties hereto irrevocably consents to
the service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered mail, postage prepaid,
to the party at its or his address set forth in Section 10.01 hereof and
irrevocably waive any objection or defense that it or he may now or hereafter
have to the sufficiency of any such service of process in any such action.
Nothing in this Section 10.08 shall affect the rights of the parties to commence
any such action in any other forum or to serve process in any such action in any
other manner permitted by law.
SECTION 10.09 SEVERABILITY. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
SECTION 10.10 INTERPRETATION. The parties hereto acknowledge and agree
that: (i) each party and its or his counsel reviewed and negotiated the terms
and provisions of this Agreement and the documents referred to herein and have
contributed to their revision; (ii) the rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement; and (iii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor of
or against any party, regardless of which party was generally responsible for
the preparation of this Agreement.
SECTION 10.11 HEADINGS AND CAPTIONS. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify,
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or affect, or be considered in construing or interpreting the meaning or
construction of any of the terms or provisions hereof.
SECTION 10.12 ENFORCEMENT. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.
SECTION 10.13 RELIANCE. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any schedule
or other document attached hereto or referred to herein or delivered by such
other party or pursuant to this Agreement.
SECTION 10.14 EXPENSES. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 10.15 SURVIVAL. The representations, warranties, covenants,
agreements and indemnifications set forth or otherwise provided for in this
Agreement shall survive the consummation of the transactions contemplated hereby
and shall not be deemed waived or otherwise affected by any investigation made
by or on behalf of any party hereto.
SECTION 10.16 ANNOUNCEMENTS. Prior to the Closing, the parties hereto
agree that there shall be no announcements, either publicly or internally,
regarding the transactions contemplated herein unless the parties hereto consent
in writing to the content, wording, timing and forum of such announcements.
SECTION 10.17 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the Buyer and the Sellers have executed
this Agreement under seal as of the day and year first above written.
TACC INTERNATIONAL CORPORATION
By:
--------------------------------------
Xxxxxxx X. X'Xxxxxx, President
AMERICAN CHEMICAL COMPANY
By:
--------------------------------------
Xxxxx X. Xxxxxxx, President
COHESANT TECHNOLOGIES, INC.
By:
--------------------------------------
Xxxxxx Xxxxxxx, President
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EXHIBITS
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SCHEDULES
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