ASSET PURCHASE AGREEMENT
Dated as of December 12, 1997,
Among
MMI PRODUCTS, INC. ("PURCHASER")
and
THE XXXXX GROUP, L.L.C. ("SELLER")
TABLE CONTENTS
LIST OF SCHEDULES iv
LIST OF EXHIBITS v
ARTICLE I
SALE AND PURCHASE OF ASSETS 1
1.1 Agreement to Sell and Purchase 1
1.2 Purchase Price; Assumed Liabilities, Etc. 2
1.3 Indemnification Fund 5
1.4 Prorations 5
1.5 Allocation of Consideration 5
1.6 Post-Closing Adjustment 5
1.7 Uncollectible Accounts 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES 7
2.1 Representations and Warranties of Seller 7
2.1.1 Organization 8
2.1.2 Authorization and Effect of Agreement 8
2.1.3 Conflicts 8
2.1.4 Consents 9
2.1.5 Financial Statements 9
2.1.6 Absence of Certain Changes and Events 10
2.1.7 Inventory 10
2.1.8 Real Property 10
2.1.9 Physical Assets and Properties 12
2.1.10 Intangible Assets and Properties 12
2.1.11 Contracts 13
2.1.12 Contract Defaults 13
2.1.13 Sufficiency of Acquired Assets 13
2.1.14 Compliance With Laws 13
2.1.15 Environmental Matters 14
2.1.16 Insurance 15
2.1.17 Litigation; Decrees 15
2.1.18 Employee Matters 15
2.1.19 Labor Matters 18
2.1.20 Customers and Suppliers 18
2.1.21 Warranty and Product Liability Claims 18
2.1.22 Licenses, Permits, Etc. 19
2.1.23 Employees and Consultants 19
2.1.24 Disclosure 19
2.1.25 Taxes and Fees 19
2.1.26 Accounts Receivable 20
2.1.27 Interest in Competitors, Suppliers, Customers, Etc 20
2.1.28 Finders 20
2.1.29 Books of Account 20
2.2 Representations and Warranties of Purchaser 20
2.2.1 Corporate Organization 20
2.2.2 Authorization and Effect of Agreement 20
2.2.3 Conflicts 21
2.2.4 Consents 21
2.2.5 Adequate Funds 21
2.2.6 Disclosure 21
ARTICLE III
COVENANTS 21
3.1 Covenants of Seller 21
3.1.1 Employees and Business Relations 22
3.1.2 Update Representations and Warranties 22
3.1.3 Satisfaction of Conditions 22
3.1.4 Sale of Acquired Assets; Negotiations 22
3.1.5 Access 23
3.1.6 Operation of the Business 23
3.1.7 WARN Act Compliance 24
3.1.8 Environmental Inspections 25
3.1.9 Employees 25
3.1.10 1997 Financial Statements 25
3.1.11 HSR Notification 25
3.1.12 Physical Inventory 26
3.1.13 Environmental Matters 26
3.2 Covenants of Purchaser 26
3.2.1 Closing 26
3.2.2 Employees 26
3.2.3 Employee Benefits 26
3.2.4 Collective Bargaining Agreements 27
3.2.5 Surveys; Title Commitments 27
ARTICLE IV
CLOSING 27
4.1 Closing 27
4.2 Conditions to Closing 27
ARTICLE V
SURVIVAL AND INDEMNIFICATION 31
5.1 Survival of Representations, Warranties and Covenants 31
5.2 Indemnification by Seller 32
5.3 Indemnification by Purchaser 33
5.4 Indemnification Procedures 33
5.5 Limitations 35
5.6 Remedies Cumulative 35
5.7 Adjustment to Purchase Price 35
ARTICLE VI
POST-CLOSING COVENANTS 35
6.1 Payment Received 35
6.2 Copies of Records 35
6.3 Use of Name 35
6.4 Further Assurances 36
ARTICLE VII
MISCELLANEOUS PROVISIONS 36
7.1 Termination 36
7.2 Transfer Taxes 37
7.3 Expenses 37
7.4 Contents of Agreement; Parties in Interest; etc. 37
7.5 Assignment and Binding Effect 38
7.6 Waiver 38
7.7 Non-Assignable Contracts 38
7.8 Notices 38
7.9 Governing Law 39
7.10 Confidentiality and Press Release 39
7.11 No Benefit to Others 40
7.12 Headings; Gender; Certain Terms 40
7.13 Schedules and Exhibits 40
7.14 Risk of Loss and Casualty Damage 40
7.15 Severability 41
7.16 Counterparts 41
7.17 Attorney Fees 41
LIST OF SCHEDULES
Schedule 1.1 Excluded Assets
Schedule 1.2A Critical Expenditures
Schedule 1.2F Certain Assumed Liabilities
Schedule 2.1.1 Jurisdictions of Qualification
Schedule 2.1.4 Consents
Schedule 2.1.6 Certain Changes and Events
Schedule 2.1.7 Inventory
Schedule 2.1.8A Owned Real Property
Schedule 2.1.8B Real Property Leases
Schedule 2.1.8C Additional Real Property
Schedule 2.1.8D Real Property Disputes
Schedule 2.1.8E Property Condition
Schedule 2.1.9A Physical Assets and Properties
Schedule 2.1.9B Leases
Schedule 2.1.10A Owned Intangible Properties
Schedule 2.1.10B Licensed Intangible Properties
Schedule 2.1.11 Contracts
Schedule 2.1.12 Contract Defaults
Schedule 2.1.13 Other Assets
Schedule 2.1.14 Legal Matters
Schedule 2.1.15A Environmental Matters
Schedule 2.1.15B Environmental Circumstances
Schedule 2.1.15C Certain Environmental Concerns
Schedule 2.1.15D Environmental Proceedings
Schedule 2.1.15E Hazardous Waste Matters; Permits
Schedule 2.1.16 Insurance Policies
Schedule 2.1.17 Litigation; Decrees
Schedule 2.1.18 Employee Benefit Plans
Schedule 2.1.19 Labor Matters
Schedule 2.1.20 Customers and Suppliers
Schedule 2.1.21 Warranty and Product Liability Claims
Schedule 2.1.22 Licenses and Permits
Schedule 2.2.23 Employment and Consulting Agreements
Schedule 2.2.27 Interest in Competitors, Suppliers,
Customers
Schedule 2.2.4 Consents
LIST OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Xxxx of Sale and Assignment
Exhibit C Assumption Agreement
Exhibit D Noncompetition Agreement
Exhibit E Limited Power of Attorney
Exhibit F Opinion of Counsel of Seller
Exhibit G Opinion of Counsel of Purchaser
1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
on December 12, 1997, between MMI Products, Inc, a Delaware corporation
("Purchaser") and The Xxxxx Group, L.L.C., a Delaware limited liability company
("Seller").
RECITALS:
WHEREAS, Seller presently operates a concrete accessories plant in
Converse, Texas (the "Texas Plant"), a chemical processing plant in Carson,
California (the "California Plant"), and an engineering services firm in
Sacramento, California (such operations, together with all activities of the
Seller relating thereto, being referred to herein as the "Business");
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the
Acquired Assets (hereinafter defined), on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, Seller wishes to delegate to Purchaser, and Purchaser is willing
to assume, specified Assumed Liabilities (hereinafter defined), on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the terms and provisions
set forth herein, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Agreement to Sell and Purchase. Subject to the provisions
of this Agreement, Seller hereby agrees to sell to Purchaser and Purchaser
hereby agrees to purchase from Seller, all the assets and properties of every
kind and nature, real, personal or mixed, tangible or intangible, wherever
situated, of Seller, including all land, buildings, improvements, fixtures,
machinery, tooling, furniture, vehicles, equipment, tools, inventory, accounts
receivable, raw materials, work in process, finished goods, supplies, pre-paid
expenses, indemnification rights, technology, know-how, patents, trademarks,
tradenames, proprietary information, trade secrets, computer programs,
copyrights, customer lists, goodwill and other intangible property rights of
any kind whatsoever, licensing agreements and other contractual rights, and all
of Seller's books and records relating to the operations of the Business, as
each of the foregoing exists as of the Closing Date, as hereinafter defined
(such assets being sold being collectively referred to as the "Acquired
Assets"); excluding, however, cash, cash equivalents, marketable securities,
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income tax refunds, accrued interest receivables, insurance policies and claims
thereunder (other than the proceeds of any claims which relate to the Acquired
Assets), and the other assets listed on Schedule 1.1 (collectively, the
"Excluded Assets"). The Acquired Assets shall be sold and transferred to
Purchaser free and clear of all liens, pledges, mortgages, charges, burdens,
options or other rights to acquire the same, security interests, easements,
restrictive covenants and other restrictions on use, adverse claims, or other
encumbrances of any character whatsoever ("Encumbrances"), other than Permitted
Encumbrances (hereinafter defined).
1.2 Purchase Price; Assumed Liabilities, Etc.
(a) In consideration for the sale of the Acquired Assets to the
Purchaser, and in consideration of the other agreements related thereto or
entered into in connection therewith, the Purchaser hereby agrees (a) to pay to
Seller the sum of (i) $18,000,000, plus (ii) $6.00 for each $1.00 that Seller's
EBITDA (hereinafter defined) for the year ended December 31, 1997 is greater
than $3.0 million; provided that such increase in the Purchase Price pursuant
to this clause (ii) shall not exceed $1,500,000, minus (iii) $6.00 for each
$1.00 that Seller's EBITDA for the year ended December 31, 1997 is less than
$3.0 million; provided that such decrease in the Purchase Price pursuant to
this clause (iii) shall not exceed $1,500,000, minus (iv) the principal amount
of capital lease obligations relating to Acquired Assets as of the Closing
Date, minus (v) the excess, if any, of the "projected benefit obligation" (as
defined in FASB 87) over the current value of the plan assets, determined with
respect to the Union Pension Plan (hereinafter defined) as of the Closing Date
in accordance with FASB 87, plus (vi) Net Working Capital (hereinafter defined)
as of the Closing Date minus the average Net Working Capital of Seller as of
the end of each of the 13 months from December 1996 through December 1997;
provided, however, that if such calculation under this clause (vi) results in a
negative number, the Purchase Price shall be reduced by such amount, plus (vii)
the amount equal to the actual cost expended to purchase and install the
Critical Expenditures (hereinafter defined) to the extent expended and
completed prior to the Closing; provided that such amount shall not exceed
$900,000 (the sum of clauses (i) through (vii) being referred to herein as the
"Purchase Price"); and (b) to assume at the Closing the payment, performance
and discharge of the Assumed Liabilities, as defined below. Subject to the
provisions of the last sentence of this subparagraph (a), the amount to be paid
at Closing (the "Closing Payment") shall be based on an estimate of the
Purchase Price, provided that, for the purpose of such estimate, clauses (ii)
and (iii) shall not be taken into account. Such Purchase Price estimate shall
be made in accordance with Section 1.2(b). The Closing Payment shall be
payable in cash or immediately available funds to an account designated by
Seller at least two business days prior to Closing; provided, however, that a
portion of the Closing Payment equal to the "Indemnification Fund" (as defined
in Section 1.3 hereof) will be paid by Purchaser into escrow and applied as
described in Section 1.3 hereof. At the election of Seller, and if agreeable
to Purchaser, the Purchase Price may be paid in the form of an installment note
on terms mutually satisfactory to Seller and Purchaser.
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(b) In order to facilitate the Closing, Seller shall prepare
and deliver to Purchaser, at least ten business days prior to the Closing Date,
a statement (an "Estimate Statement") showing the amount reasonably estimated
by Seller, in good faith, to be the Closing Payment, together with the
calculations made to arrive at such estimated Closing Payment. Prior to
Closing, Seller shall provide Purchaser (or any auditor designated by
Purchaser) with copies of or reasonable access to such books and records as are
reasonably necessary for purposes of verifying the amounts set forth in the
Estimate Statement, including (but not limited to) Seller's preliminary
financial statements for the year ended December 31, 1997. Seller and
Purchaser agree to work together in good faith to resolve on or before the
Closing Date any disagreement with respect to any matter set forth in the
Estimate Statement. The Closing Payment amount paid by Purchaser at Closing
shall be based on the Estimate Statement agreed to by Purchaser and shall be
adjusted post-Closing pursuant to Section 1.6 hereof.
(c) For purposes hereof, "EBITDA" shall mean earnings before
interest, income taxes, depreciation and amortization expense and before
management fees. Interest expense shall only include financing costs directly
associated with contracts or other agreements related to borrowed money,
including, but not limited to, capital lease obligations.
(d) For purposes hereof, "Net Working Capital" shall mean an amount
equal to the value of Seller's inventories measured at the lower of cost or
market (net of reserves for excess quantities and obsolescence in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved ("GAAP")), plus the accounts receivable (net of an
allowance for uncollectible accounts established in accordance with GAAP), plus
prepaid expenses, deposits, and other current tangible assets, minus the
accounts payable and accrued liabilities which relate solely to the Business
and which were incurred in the ordinary course of the Business consistent with
past practice (other than accounts payable or accrued liabilities relating to
the payment of salary or severance or provision of benefits with respect to the
employment by Seller of any employee or independent contractor of Seller or of
any former employee of Seller).
(e) For purposes hereof, "Critical Expenditures" shall mean (i)
the tilt up brace equipment and components identified on Schedule 1.2A
purchased by Seller for an aggregate cost of $681,956, which Purchaser has
approved as of the date hereof, and (ii) the tooling, the computer equipment,
the software and the leasehold improvements also listed on Schedule 1.2A but
only if and to the extent that Purchaser hereafter approves of such
expenditures.
(f) "Assumed Liabilities" means (i) accounts payable and accrued
liabilities recorded in Seller's financial statements as of the Closing Date
relating solely to the Business and incurred in the ordinary course of the
Business consistent with past practice and which are taken into account in the
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calculation of Net Working Capital as of the Closing Date, (ii) the specific
liabilities of Seller under the distributorship and dealer agreements listed on
Schedule 1.2F hereof, including those agreements with Whitecap Industries,
Inc., to the extent such obligations accrue following the Closing Date and
(iii) the specific liabilities of Seller under the contracts, purchase
commitments, sales orders and arrangements listed on Schedule 1.2F hereof to
the extent such obligations accrue following the Closing Date, and any other
liabilities which Purchaser otherwise agrees to assume; provided, however, that
"Assumed Liabilities" shall not include any liabilities for which (A)
assumption by Purchaser would be prohibited under the terms of such contracts
or arrangements or (B) the terms of such contracts or arrangements are not
individually the same or better than the terms of such contracts or
arrangements existing as of November 18, 1997, unless the changes to such terms
were approved in advance by Purchaser. Purchaser does not and shall not agree
to pay, assume, perform, or discharge any of Seller's debts, obligations, or
liabilities (whether known or unknown, direct or indirect, absolute or
contingent, matured or unmatured, or otherwise), whether the same currently
exist or come to exist in the future, except the Assumed Liabilities.
Notwithstanding the foregoing and except as provided for in Sections 3.2.3 and
3.2.4, Purchaser shall assume no liability or obligation with respect to the
payment of salary or severance or provision of benefits, including but not
limited to the benefits payable under any Employee Benefit Plan (hereinafter
defined) with respect to the employment by Seller of any employee or
independent contractor of Seller or of any former employee of Seller, and any
liabilities or obligations of the Seller arising out of or resulting from any
Employee Benefit Plan or any other employee benefit agreement, arrangement,
understanding, program or practice, including any liabilities or obligations
arising under section 4980B of the Internal Revenue Code of 1986, as amended
(the "Code"). Seller shall be responsible for compliance with the COBRA notice
and continuation coverage requirements under Part 6 of Title I of the
Employment Retirement Income Security Act of 1974, as amended ("ERISA"), with
respect to all employees (and their beneficiaries) experiencing a qualifying
event (as defined in Section 603 of ERISA) on account of the transactions
contemplated by this Agreement or occurring prior to the Closing.
Additionally, without limiting the foregoing, Assumed Liabilities shall not
include any of (a) Seller's liabilities for borrowed money or for interest on
such borrowed money, (b) Seller's liabilities or obligations for federal, state
or local income taxes, (c) Seller's liabilities or obligations under contracts
relating to Seller's equity or Seller's equityholders, (d) Seller's
liabilities or obligations with respect to goods and services received by
Seller prior to the Closing Date which were not included in Seller's recorded
balance of accounts payable and accrued expenses as of the Closing Date, (e)
Seller's liabilities or obligations with respect to any litigation or other
claims (including, but not limited to, product liability litigation or claims)
arising in connection with pre-Closing operations of the Acquired Assets or the
Business and (f) Seller's liabilities or obligations arising out of
Environmental Laws (as hereinafter defined) arising in connection with
pre-Closing operations of the Acquired Assets or the Business (including,
without limitation, any off-site disposal activities) or the Real Property or
any other real property (including previously-owned real property) owned,
leased or operated by Seller or any predecessor of Seller or any prior owner of
all or part of its business or assets (including without limitation the
Converse, Texas voluntary remediation plan described in Schedule 2.1.15B hereof
(the "Converse Remediation")).
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1.3 Indemnification Fund. To provide a fund (the "Indemnification
Fund") for certain of Seller's potential indemnification obligations hereunder,
$1,000,000 of the Closing Payment shall be delivered to an escrow agent in
Houston, Texas reasonably acceptable to the parties (the "Escrow Agent"), to be
held after the Closing Date in accordance with the terms of the Escrow
Agreement to be executed by Seller and Purchaser substantially in the form of
Exhibit A hereto (the "Escrow Agreement"), subject to any changes (reasonably
acceptable to Purchaser and Seller) which may be requested by the Escrow Agent.
The Indemnification Fund shall be held and disposed of in accordance with the
terms of the Escrow Agreement. All interest and other income on the
Indemnification Fund shall be the property of, and shall be paid to, Seller
upon final release of all funds held in escrow pursuant to the Escrow
Agreement; provided, however, that if Purchaser is entitled to any portion of
the Indemnification Fund, Purchaser shall be entitled to any interest or other
income attributable thereto.
1.4 Prorations. Utility charges, ad valorem taxes and property
taxes and personal property taxes on the Acquired Assets and rents and other
charges payable with respect to leases and other contracts assumed by Purchaser
will be prorated between Seller and Purchaser as of 12:01 a.m. on the Closing
Date. Rent for any leasehold estate also shall be prorated. Security deposits
shall be assigned to Purchaser. To the extent practicable, all such prorations
and payments will be made on the Closing Date, with the balance to be made as
soon as practicable following the Closing Date in one or more payments.
1.5 Allocation of Consideration. As used herein, the term
"Consideration" shall mean the sum of (i) the cash amounts paid by Purchaser
pursuant to Section 1.2(a), plus (ii) the Assumed Liabilities as defined in
Section 1.2(f). The parties hereto agree that the Consideration will be
allocated in accordance with a schedule to be agreed upon by the parties within
60 days following the Closing Date. Prior to the Closing, the parties will
arrive at an estimate of such allocation. All tax returns, reports and other
similar filings will be prepared and timely filed by each of Seller and
Purchaser consistently with one another with respect to the final allocation of
the Consideration and strictly in accordance with such allocation.
1.6 Post-Closing Adjustment
(a) Within 60 days after the Closing Date, Seller shall prepare
and deliver to Purchaser a statement (the "Final Statement"), setting forth
Seller's good faith determination of the difference between (x) the Purchase
Price (based on the actual amounts of the items in clauses (i) - (vii) of
Section 1.2(a)) and (y) the amount of the Closing Payment (the "Final
Adjustment Amount"). The Final Statement shall reflect, among other things, the
EBITDA for the year ended December 31, 1997 computed from Seller's 1997
Financial Statements (hereinafter defined), the Net Working Capital calculation
set forth in Section 1.2(a)(vi) and the actual cost to purchase or install the
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Critical Expenditures. During the 30-day period following delivery of the
Final Statement to Purchaser, Seller shall provide Purchaser (or any auditor
designated by Purchaser) with access during normal business hours to such
books, records, working papers or other information as is reasonably necessary
in the review of the Final Statement and the calculation of the Final
Adjustment Amount to enable Purchaser to verify the accuracy of the Final
Statement, including but not limited to the 1997 Financial Statements, the work
papers of KPMG Peat Marwick related thereto and access to authorized
representatives of KPMG Peat Marwick with respect thereto. The Final Statement
shall become final and binding upon all parties hereto on the thirty-first day
following delivery thereof (without counting such day of delivery) to Purchaser
unless the Purchaser gives written notice of disagreement with the Final
Statement (a "Notice of Disagreement") to Seller prior to such date. Any
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted, and relate solely to the review of the Final
Statement and the calculation of the Final Adjustment Amount, including (but
not limited to) any adjustments required as a result of the audit performed by
KPMG Peat Marwick on Seller's 1997 Financial Statements.
(b) If a Notice of Disagreement is given by Purchaser in a
timely manner, then the Final Statement shall become final and binding upon all
parties hereto on the earlier of (x) the date Seller and Purchaser resolve in
writing any differences they may have with respect to all matters specified in
the Notice of Disagreement and (y) the date all disputed matters are finally
resolved in writing by the Arbitrator (as hereinafter defined). During the
30-day period following the delivery of a Notice of Disagreement, Seller and
Purchaser shall seek in good faith to resolve any differences which they may
have with respect to any matter specified in the Notice of Disagreement and
each shall provide the other with reasonable access to such books, records,
working papers or other information as is reasonably necessary in the
preparation or calculation of (i) the Final Adjustment Amount, (ii) the Final
Statement, (iii) any Notice of Disagreement or (iv) otherwise with respect to
any thereof. At the end of such 30-day period if there has been no resolution
of the matters specified in the Notice of Disagreement, Seller and Purchaser
shall submit to an arbitrator (the "Arbitrator") for review and resolution any
and all matters arising under this Section which remain in dispute. The
Arbitrator shall be the Los Angeles, California office of a nationally
recognized independent public accounting firm mutually selected by Seller and
Purchaser that is not the principal outside accounting firm for Seller or
Purchaser. If Seller and Purchaser are unable to agree upon an Arbitrator,
their respective principal outside accounting firms shall mutually select
another nationally recognized independent public accounting firm to act as
Arbitrator hereunder. The Arbitrator shall be provided with all books,
records, working papers or other information, and access to authorized
representatives of Purchaser, Seller or KPMG Peat Marwick, as is reasonably
necessary for its review and resolution of such matters in dispute. The
Arbitrator shall render a decision resolving each of the matters submitted to
the Arbitrator within 30 days following submission thereto (or as soon
thereafter as reasonably practicable). All fees and expenses of the Arbitrator
pursuant to this Agreement with respect to such dispute shall be borne by the
party who the Arbitrator determines was not the one closer in the aggregate to
being correct with respect to the matters being disputed. All determinations
made by the Arbitrator pursuant to this Section 1.6 shall be set forth in
writing and shall be final, conclusive and binding on the parties hereto and
shall not be subject to any judicial review.
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(c) Within five business days after the Final Statement
becomes final and binding upon the parties, Seller or Purchaser, as the case
may be, shall pay the Final Adjustment Amount. All payments pursuant to this
Section 1.6 shall be by wire transfer of immediately available funds to an
account designated by the recipient at least two business days prior to the
date of payment.
1.7 Uncollectible Accounts. Purchaser shall use commercially
reasonable efforts to collect the trade and other receivables of Seller that
are included in the Acquired Assets; provided, however, that Purchaser shall
not be required to threaten or institute legal proceedings or to employ a
collection agency to collect such receivables. Promptly following the
expiration of the six-month period following the Closing Date, Purchaser shall
deliver to Seller a written notice setting forth the aggregate amount of such
trade and other receivables of Seller, less the recorded allowance for
collection losses as of the Closing Date, that were not paid in full prior to
the expiration of such six-month period (the "Receivable Amount"), together
with an itemized list thereof. Seller agrees to pay the Receivable Amount to
Purchaser in cash or immediately available funds within three business days
following the delivery by Purchaser of such notice to Seller. If the
Receivable Amount is not paid within such three business day period, such amount
shall accrue interest at the prime rate per annum (as published on such
date by the Wall Street Journal in the "Money Rates" column of such
publication), for the period commencing upon the expiration of such three
business day period and ending on the date the Receivable Amount, plus accrued
interest thereon, is paid. Upon receipt of the Receivable Amount by Purchaser,
Purchaser shall assign to Seller the uncollected receivables in respect of
which the Receivable Amount was paid and shall provide such records Seller may
reasonably request from time to time in connection with its collection of such
uncollected receivables. Purchaser and Seller agree that all sums collected by
Purchaser from any customer (who is obligated with respect to both Seller's and
Purchaser's accounts receivable) after the Closing shall be applied to the
specific invoice referenced on such customer's payment or remittance; provided,
however, that if no specific invoice is referenced on such payment or
remittance and Purchaser cannot otherwise reasonably determine in good faith
the intent of such customer, Purchaser shall make a good faith inquiry of such
customer who shall instruct Purchaser as to the appropriate invoice relating to
such payment or remittance. Neither Purchaser nor Seller shall instruct any
customer to pay such party's invoices in lieu of paying the other party's
invoices.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller represents
and warrants to Purchaser as follows:
2.1.1 Organization. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite limited liability company power and
authority to own, lease or otherwise hold the Acquired Assets owned, leased or
otherwise held by it and to carry on the Business as presently conducted by it.
Seller is in good standing and duly qualified to conduct business as a foreign
entity in every jurisdiction in which its ownership or lease of property or
conduct of the business makes such qualification necessary, except where the
failure to be so qualified (individually or in the aggregate) has not had and
would not reasonably be expected to have a Material Adverse Effect. As used
herein, the term "Material Adverse Effect" means any material adverse effect on
the operations, assets, properties or condition (financial or otherwise) of
Seller or the Business. All of the jurisdictions in which Seller is in good
standing and duly qualified to conduct business as a foreign entity are listed
on Schedule 2.1.1.
2.1.2 Authorization and Effect of Agreement. Seller has the
requisite limited liability company power and authority to execute, deliver and
perform its obligations under each of the Transaction Documents (hereinafter
defined). The execution, delivery and performance by Seller of each of the
Transaction Documents has been duly authorized by all requisite limited
liability company action. This Agreement has been duly executed and delivered
by Seller. This Agreement constitutes, and each of the other Transaction
Documents will constitute, the valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). As used herein,
the term "Transaction Documents" refers collectively to this Agreement, the
Xxxx of Sale and Assignment to be executed by Seller in the form of Exhibit B
hereto (the "Xxxx of Sale"), the Assumption Agreement to be executed by
Purchaser and Seller in the form of Exhibit C hereto (the "Assumption
Agreement"), the Noncompetition Agreement to be executed by Purchaser, Seller
and Xxxxxx X. Xxxxxxxx in the form of Exhibit D (the "Noncompetition
Agreement"), the Escrow Agreement, real property deeds to be executed by Seller
with respect to the Owned Real Property (hereinafter defined) and any other
documents executed and delivered by Seller pursuant to this Agreement.
2.1.3 Conflicts. Neither the execution, delivery nor
performance by Seller of any Transaction Document will (i) violate any material
Law (hereinafter defined) applicable to Seller or any of its respective
properties, (ii) assuming the receipt of third party consents referred to in
Section 2.1.4 below, violate, conflict with, permit the cancellation or
acceleration of, or give rise to a loss of any benefit under, any material
agreement or commitment to which Seller is a party or by which any of its
properties are bound, or (iii) violate or conflict with any provision of the
limited liability company agreement or certificate of formation, each as
amended to date, of Seller. Seller has not entered into, and is not aware of,
9
any agreement pursuant to which any person or entity has obtained the right to
acquire the Acquired Assets or the Business or engage in any transaction
similar to the transactions contemplated by this Agreement whereby any person
or entity can acquire all or a portion of the Acquired Assets or ownership
interests in Seller. As used herein "Law" means any domestic or foreign
statute, law, ordinance, rule, regulation, standards or guidelines.
2.1.4 Consents. Except for filings with the Federal Trade
Commission (the "FTC") and the U.S. Department of Justice pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration of the applicable waiting period thereunder, and
except as listed on Schedule 2.1.4, no actions, consents, or approvals of, or
filings with, any governmental authorities or any third parties are required in
connection with the execution, delivery or performance by Seller of the
Transaction Documents.
2.1.5 Financial Statements.
(a) Seller has delivered to Purchaser true and complete copies
of unaudited consolidating balance sheets of Seller at the end of each of the
ten months from December 1996 through September 1997 and related statements of
income and cash flow for the month ended September 30, 1997 and the nine months
ended September 30, 1997, all of which, with the exception of the absence of
notes, have been prepared in accordance with GAAP. Such balance sheets fairly
present in all material respects the financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Seller at the dates
indicated and such statements of income and cash flow fairly present in all
material respects the results of operations and cash flow of Seller for the
periods indicated, in each case in accordance with GAAP. Such unaudited
financial statements contain all adjustments, which are solely of a normal
recurring nature, necessary to present fairly in all material respects the
financial position and results at the dates and for the periods then ended. As
used herein, the term "Balance Sheet" refers to the unaudited balance sheet of
Seller at September 30, 1997 and the term "Balance Sheet Date" refers to
September 30, 1997.
(b) Seller shall deliver to Purchaser true and complete copies
of monthly balance sheets, statements of income, cash flow and changes in
members equity as soon as they are available. Upon delivery thereof, such
balance sheet will fairly present in all material respects the financial
position, assets and liabilities (whether accrued, absolute, contingent or
otherwise) of Seller at the date indicated and such statements of income, cash
flow and changes in members equity will fairly present in all material respects
the results of operations, cash flow and changes in members equity of Seller
for the period indicated.
(c) All of the financial statements referred to in this Section
2.1.5 are sometimes referred to herein collectively as the "Financial
Statements." The Financial Statements have been prepared in accordance with the
books and records and accounting methods of Seller. Since December 31, 1996,
there has been no material change in any financial reporting or accounting
methods, practices or policies or in any method of calculating any bad debt,
contingency or other reserve for financial reporting purposes or for any other
accounting purposes.
10
2.1.6 Absence of Certain Changes and Events. Except as set
forth on Schedule 2.1.6, since December 31, 1996, Seller has not conducted the
Business other than in the ordinary course, consistent with Seller's past
practice. Except as set forth on Schedule 2.1.6, since December 31, 1996,
there has not been any material adverse change in the Business or the financial
condition or results of operations of the Business.
2.1.7 Inventory. All inventory of Seller reflected on the
Balance Sheet and all inventory of Seller included in the Acquired Assets was
acquired and has been obtained in the ordinary course of the Business and
consistent with Seller's past practice; is of good and merchantable quality;
consists of a quality, quantity and condition usable or saleable in the
ordinary course of the Business. Except as indicated in Schedule 2.1.7, Seller
is not under any obligation with respect to returns or allowances relating to
any goods in the possession of wholesalers, retailers or other customers.
Seller has no obsolete inventory in excess of its recorded reserve for such
obsolescence as of the Closing Date.
2.1.8 Real Property.
(a) All of the real property owned by Seller and included in the
Acquired Assets (the "Owned Real Property") is listed, along with a legal
description of each parcel of such Owned Real Property and copies of all title
insurance policies issued to Seller or in Seller's possession relating thereto,
on Schedule 2.1.8A. Except as set forth in Schedule 2.1.8A, Seller owns, and
upon the Closing Purchaser will own, good, marketable and indefeasible fee
simple title to the Owned Real Property, free and clear of all Encumbrances,
other than Permitted Encumbrances (hereinafter defined). There are no leases
or other agreements granting to any other party the right to occupy or use any
of the Owned Real Property. Schedule 2.1.8B sets forth a true and complete
list of each lease or other agreement (the "Real Property Leases") under which
Seller leases, or otherwise occupies or uses any real property (other than
Owned Real Property) included in the Acquired Assets (the "Leased Real
Property" and together with the Owned Real Property, the "Real Property") and
copies of all title insurance policies issued to Seller or in Seller's
possession relating thereto. Seller has, and upon the Closing, Purchaser will
have, valid and enforceable leasehold interests in the Leased Real Property,
free and clear of all Encumbrances, other than Permitted Encumbrances. As used
in this Agreement, "Permitted Encumbrances" means liens for ad valorem taxes
and assessments not yet due and payable, mechanics liens incurred in the
ordinary course of the Business consistent with past practice, and other minor
encumbrances which do not and will not, in any material respect, adversely
affect the transferability, use or value of the Real Property as it is
currently being used in connection with the Business.
11
(b) Except as set forth on Schedule 2.1.8C, the Real Property
constitutes all real property used in connection with the Business. Except as
set forth in Schedule 2.1.8C, the Real Property, any improvements thereon, and
the use by Seller thereof conform, in all material respects, to (i) all
applicable Laws, including but not limited to zoning requirements and the
Americans With Disabilities Act, and (ii) all restrictive covenants, if any.
There are no eminent domain proceedings pending, or to Seller's knowledge,
threatened against the Real Property. The Real Property has adequate ingress
or egress to public streets and highways. All real estate taxes, assessments
and use charges pertaining to the Owned Real Property that have become due have
been paid in full.
(c) The Real Property is connected to and is served by water,
solid waste and sewage disposal, drainage, telephone, gas, electricity and
other utility equipment facilities and services necessary for the operation or
use of the Real Property or to Seller's knowledge required by law . Such
facilities and services are adequate for the present use and operation of the
Real Property on a fully occupied basis, and are installed and connected
pursuant to valid permits and are in material compliance with all governmental
regulations. To Seller's knowledge, no fact or condition exists which would
result in the termination or impairment in the furnishing of utility services
to the Real Property. With respect to the prior three sentences, Seller has
not received any written notice to the contrary.
(d) To Seller's knowledge, all material improvements (i) have
been constructed in a good and workmanlike manner, free from defects in
workmanship and material; and (ii) have been constructed, occupied, maintained
and operated in material compliance with all applicable Laws, insurance
requirements, contracts, leases, permits, licenses, ordinances, restrictions,
building set-back lines, covenants, reservations, and easements, and Seller has
received no notice, written or verbal, claiming any material violation of any
of the same or requesting or requiring the performance of any material repairs,
alterations or other work in order to so comply. The heating, air
conditioning, plumbing, ventilating, utility, sprinkler and other mechanical
and electrical systems, apparatus and appliances located on the Real Property
or in the improvements are in good operating condition.
(e) The Real Property has not been materially damaged by fire
or other casualty except for such damage which has been fully repaired and
restored prior to the date of this Agreement.
(f) Except as set forth in Schedule 2.1.8D, there has not been
(i) any threatened cancellation of any Real Property Leases, (ii) any
outstanding disputes, of a material nature, under any Real Property Leases or
(iii) to Seller's knowledge, any bases for any claim of breach or default
thereunder. Seller has no reason to believe that any of the Real Property
Leases that are renewable will not be renewed by the other party on reasonable
terms.
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(g) Except as set forth in Schedule 2.1.8E, the improvements on
the Real Property are in reasonable condition and are not in need of major
repair or renovation.
2.1.9 Physical Assets and Properties.
(a) Set forth on Schedule 2.1.9A is a listing of all physical
assets and properties, other than Real Property, owned by Seller as of the date
hereof and included in the Acquired Assets. Seller has (and, upon the Closing
Purchaser will have) good title to all tangible assets and properties, whether
personal or mixed, purported to be owned by Seller and included in the Acquired
Assets (the "Owned Tangible Property"), free and clear of all Encumbrances,
other than Permitted Encumbrances. Schedule 2.1.9B sets forth a true and
complete list and brief description of each lease or other agreement under
which Seller leases, licenses, holds, or operates any item of physical
property, other than the Owned Tangible Property, that is included in the
Acquired Assets (such leased tangible property being referred to herein as the
"Leased Tangible Property"). Seller has valid and enforceable leasehold
interests in the Leased Tangible Property, free and clear of all Encumbrances,
other than Permitted Encumbrances.
(b) Except as set forth on Schedule 2.1.9B, the Owned Tangible
Property and Leased Tangible Property, taken as a whole, and each material item
of Owned Tangible Property and Leased Tangible Property, is in good condition
and repair (normal wear and tear excepted), is fit for the purposes for which
it was intended to be used, is sufficient and adequate to carry on the Business
as now conducted, and complies in all material respects with all applicable
material Laws.
2.1.10 Intangible Assets and Properties. Set forth on Schedule
2.1.10A is a true and complete listing of all intangible assets and properties,
including, without limitation, all patents, copyrights, trademarks and service
marks, owned by Seller as of the date hereof (the "Owned Intangible
Properties"). Set forth on Schedule 2.1.10B is a true and complete listing of
all intangible assets and properties, including, without limitation, all
patents, copyrights, trademarks and service marks, which Seller licenses from
third parties (the "Licensed Intangible Properties"). The Owned Intangible
Properties and the Licensed Intangible Properties constitute all intangible
assets and properties used in connection with the operation of the Business.
Except as disclosed on Schedule 2.1.10A, Seller has (and, as of the Closing,
Purchaser will have) good and marketable title to the Owned Intangible
Properties, free and clear of all Encumbrances. Except as disclosed on
Schedule 2.1.10B, Seller has (and, as of the Closing, Purchaser will have), in
all material respects, the valid and enforceable right to use the Licensed
Intangible Properties in the manner the Licensed Intangible Properties are used
in connection with the Business as currently conducted, without the requirement
for any payment therefor and free and clear of all Encumbrances. The operations
of the Business do not, in any material respect, infringe on the intellectual
property rights of any other person or entity.
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2.1.11 Contracts. Set forth on Schedule 2.1.11 is a list of
each agreement (whether written or oral), arrangement, commitment, guarantee,
or other instrument to which Seller is a party or by which Seller or its assets
or the Business may be bound or affected that is included in the Acquired
Assets; provided, however, Seller shall not be required to list the leases or
other agreements relating to the Leased Real Property and the Leased Tangible
Property as set forth on Schedules 2.1.8B and 2.1.9B, respectively. All such
agreements, arrangements, commitments, guarantees and other instruments are
legal, valid and binding obligations of Seller, and to Seller's knowledge, of
the other parties thereto, enforceable in accordance with their terms; all
payments required to be made thereunder have been made by the parties required
to do so, except to the extent that any payments are being contested in good
faith and are listed as such on Schedule 2.1.11; and no defenses, offsets or
counterclaims thereto have been asserted in writing, or, to Seller's knowledge,
may be made by any party thereto other than Seller, nor has Seller waived any
substantial rights thereunder.
2.1.12 Contract Defaults. Except as disclosed on Schedule
2.1.12, Seller has not, since January 1, 1997, received written notice of any
default, and Seller is not in default, under any material agreement,
arrangement, commitment, guarantee or other instrument relating to, binding, or
affecting Seller or the assets used in the conduct of the Business to which
Seller is a party or by which Seller or such assets, Business, or operations
may be bound or affected, and there has not occurred any event which, with the
lapse of time or giving of notice, or both, would constitute a default under
any such material agreement. Except as set forth on Schedule 2.1.12, there has
not been (i) any threatened cancellation of any contract set forth on Schedule
2.1.11, (ii) any outstanding dispute under such contracts listed on Schedule
2.1.11 or (iii) to Seller's knowledge, any bases for any claim of breach or
default thereunder. Subject to the receipt of any consents listed on Schedule
2.1.4, the execution, delivery and performance of this Agreement will not
entitle any other party to a contract specified on Schedule 2.1.11 to cancel,
suspend or terminate such contract or cause a diminution of Seller's rights
thereunder. Except as set forth on Schedule 2.1.11, in the case of any such
contracts (specified on Schedule 2.1.11) which Seller was not an original
party, Seller's rights thereunder have been duly assigned to Seller by written
instrument, and where required, such assignment has been consented to in
writing by the other party or parties thereto, and Seller has furnished
Purchaser with true and complete copies of all such assignments and consents.
Seller has no reason to believe that any of the contracts specified on Schedule
2.1.11 that are renewable will not be renewed by the other party on reasonable
terms.
2.1.13 Sufficiency of Acquired Assets. Except as set forth on
Schedule 2.13, the Acquired Assets constitute all properties and assets used by
Seller in the conduct of the Business as currently conducted.
14
2.1.14 Compliance With Laws. Except as set forth in Schedule
2.1.14, Seller is not in violation of, in any material respect, nor, since
November 20, 1996, has Seller, or to Seller's knowledge since January 1, 1996
has Seller (or any predecessor of Seller), received any written notice of any
alleged violation of, any Law in the conduct of the Business. Seller is not in
default of or in violation with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental authority.
2.1.15 Environmental Matters.
(a) Except as set forth in Schedule 2.1.15A, Seller has not
received notice alleging violation of any applicable federal, state, or local
statutes, codes, rules, regulations, licenses or permits relating to the
environment, natural resources or public or employee health or safety
("Environmental Laws") and none of the Real Property is in violation of any
applicable Environmental Laws, to the extent that any violation of the
Environmental Laws would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.1.15B, there are no facts
or circumstances or conditions known to Seller relating to, arising from,
associated with or attributable to the Real Property or the facilities or
operations thereon that will give rise to an environmental claim, an
obligation, current or contingent, to clean up or remediate contamination or
result in Environmental Costs and Liabilities. "Environmental Costs and
Liabilities" shall mean any and all losses, liabilities, obligations, damages,
fines, penalties, judgments, actions, claims, costs and expenses (including
fees, disbursements and expenses of legal counsel, experts, engineers and
consultants and the costs of investigation and feasibility studies, remedial or
removal actions and cleanup activities) arising from or under any Environmental
Law now in effect, order or agreement now in effect with any governmental
authority or other person in connection with any action or inaction by Seller
prior to the Closing.
(c) Except as set forth on Schedule 2.1.15C, (i) there is no
asbestos contained in or forming a part of any building, building component,
structure or office space included in the Real Property, (ii) no
polychlorinated biphenyls or related compounds are used or stored on any Real
Property, (iii) there are no underground storage tanks or surface impoundments
located on, under or at any Real Property; and (iv) except in compliance with
Environmental Laws, Seller in operating the Business, has not generated,
stored, treated or disposed of any Hazardous Wastes (as defined under 40 C.F.R.
Parts 260-270 or analogous state law) nor, to the knowledge of Seller, has any
predecessor done so on any Real Property.
(d) Except as disclosed on Schedule 2.1.15D, none of the
operations of the Business is subject to any judicial or administrative civil
or criminal proceeding (including potentially responsible party notices or
information requests issued pursuant to the federal Superfund law or any
analogs pursuant to Environmental Laws) nor, to the knowledge of Seller, has
such a proceeding been threatened.
15
(e) Without limiting the generality or effect of the foregoing
subsections, Schedule 2.1.15E contains a true and correct list of (i) all
on-site and off-site locations where Seller or, to the knowledge of Seller, any
predecessor or affiliate thereof has stored, disposed or arranged for the
disposal of any hazardous wastes relating to the Business, including all
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products, and (ii) all material permits, variances, authorizations
or approvals issued to Seller and necessary for the continued operation of the
Business.
2.1.16 Insurance. The assets, properties and operations of Seller
are insured under various policies of general liability and other forms of
insurance listed on Schedule 2.1.16, which policies are, in full force and
effect on the date hereof, valid and enforceable in accordance with their
terms.
2.1.17 Litigation; Decrees. Except as disclosed on Schedule
2.1.17, there are no lawsuits, claims or administrative or other proceedings or
investigations pending or, to Seller's knowledge, threatened by, against or
affecting Seller and relating to the Acquired Assets, the Business, this
Agreement or the transactions contemplated hereby. Seller is not a party to or
subject to the provisions of any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority relating to the Acquired Assets or the Business.
2.1.18 Employee Matters.
(a) Schedule 2.1.18 sets forth each "employee benefit plan,
"as defined in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and all other employee compensation and benefit
arrangements or payroll practices, including, without limitation, all severance
pay, sick leave, vacation pay, salary continuation for disability, consulting
or other compensation agreements, retirement, deferred compensation, bonus,
long-term incentive, stock option, stock purchase, hospitalization, medical
insurance, life insurance, and scholarship plans or programs maintained by the
Seller or any trade or business (whether or not incorporated) which is under
common control, or which is treated as a single employer, with the Seller under
section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which the
Seller or an ERISA Affiliate has contributed or is obligated to contribute (all
such plans or arrangements being hereinafter referred to as the "Employee
Benefit Plans") on account of any person presently employed by Seller (an
"Employee") or formerly so employed by Seller (a "Former Employee"), or under
which any Employee or Former Employee participates or has accrued any rights.
The terms Employee and Former Employee will include, where applicable, the
beneficiaries and dependents of an Employee or Former Employee. Except as
disclosed on Schedule 2.1.18, neither the Seller nor any ERISA Affiliate has
ever contributed to any plan subject to section 413 of the Code or to any
multiple employer welfare arrangement, as defined in section 3(40) of ERISA.
The Seller has no commitment or obligation to establish or adopt any new or
additional Employee Benefit Plans or to materially increase the benefits under
any existing Employee Benefit Plan.
16
(b) The Seller will promptly deliver to Purchaser (i) a true,
correct, and complete copy of each Employee Benefit Plan, including copies of
all amendments, or, in the case of any unwritten Employee Benefit Plan,
descriptions thereof. Seller will also promptly deliver to Purchaser (i) a
copy of the determination letter with respect to the Xxxxx Chemicals Pension
Plan for Members of the Oil, Chemical & Atomic Workers International Union
AFL-CIO, Long Beach Local 1-128 (the "Union Pension Plan") and The Xxxxx Group
L.L.C. 401(k) Plan and Trust (the "Xxxxx 401(k) Plan"); (ii) copies of the most
recent Form 5500 filed with the Service with respect to the Union Pension Plan
and the Xxxxx 401(k) Plan; (iii) the most recent summary plan description for
the Union Pension Plan and the Xxxxx 401(k) Plan and any summaries of material
modifications; and (iv) copies of the trust agreements and any insurance or
annuity contracts relating to the Union Pension Plan or the Xxxxx 401(k) Plan.
(c) Each of the Union Pension Plan and the Xxxxx 401(k) Plan has
been maintained and administered in compliance with its terms and with
applicable law. Each of the Union Pension Plan and the Xxxxx 401(k) Plan is
intended to qualify under section 401 of the Code and the trust maintained
pursuant to each such plan is intended to be exempt from federal
determination letter from the Internal Revenue Service to the effect that each
of the Union Pension Plan and the Xxxxx 401(k) Plan and the respective trusts
are so qualified and exempt. Neither of the determination letters has been
revoked, and to the knowledge of the Seller, revocation has not been
threatened. Nothing has occurred with respect to the operation of the Union
Pension Plan or the Xxxxx 401(k) Plan that could reasonably be expected to
cause such revocation. Neither the Union Pension Plan nor the Xxxxx 401(k)
Plan has been amended since the effective date of each respective determination
letter in any respect that might adversely affect its qualification, increase
its cost or require security under section 307 of ERISA.
(d) With respect to the Union Pension Plan and the Xxxxx 401(k)
Plan, to the best of Seller's knowledge, there are no investigations by any
governmental agency, termination proceedings or other claims (except for claims
for benefits payable in the normal operation), suits or proceedings against or
involving the Union Pension Plan or the Xxxxx 401(k) Plan or asserting any
rights or claims to benefits under the Union Pension Plan or the Xxxxx 401(k)
Plan that could give rise to any liability.
(e) All contributions to, and payments from, the Union Pension
Plan and the Xxxxx 401(k) Plan that have been required to be made in
accordance with the terms of such plans, any applicable collective bargaining
agreement, and section 302 of ERISA or section 412 of the Code have been timely
made. There has been no application for or waiver of the minimum funding
standards of section 412 of the Code with respect to the Union Pension Plan.
The Union Pension Plan does not have an "accumulated funding deficiency" within
the meaning of section 412(a) of the Code as of the end of the most recently
completed plan year.
17
(f) With respect to each of the Union Pension Plan and the Xxxxx
401(k) Plan: (1) no "prohibited transaction" (as defined in section 4975 of
the Code or section 406 of ERISA) has occurred that involves the respective
assets of such plans, which is not exempt under section 408 of ERISA and 4975
of the Code, and with respect to which there is a reasonable likelihood of a
material liability to the Purchaser; (2) neither the Union Pension Plan nor the
Xxxxx 401(k) Plan has been terminated nor has either been the subject of a
"reportable event" (as defined in section 4043 of ERISA and the regulations
promulgated thereunder) other than a reportable event with respect to which the
30-day notice requirement has been waived or which may result from the
consummation of the transactions contemplated by the Agreement; and (3) neither
the Seller nor any trustee, administrator or other fiduciary of the Union
Pension Plan or the Xxxxx 401(k) Plan or any agent of any of the foregoing has
engaged in any transaction or acted in a manner that could, or failed to act so
as to, subject the Seller or the Purchaser or any trustee, administrator or
other fiduciary to any material liability for breach of fiduciary duty under
ERISA or any other applicable law.
(g) With respect to the Union Pension Plan, all premium payments
due to the Pension Benefit Guaranty Corporation pursuant to ERISA section 4007
prior to the date hereof have been timely paid.
(h) The Seller has provided Purchaser with a copy of the most
recent actuarial report for the Union Pension Plan, prepared as of August 1,
1997, and with a study from the Union Pension Plan's actuary regarding such
plan's funded status on a termination basis, as of January 15, 1997. The
information supplied to the actuary by Seller for use in preparing these
valuations was complete and accurate and Seller has no reason to believe that
the conclusions expressed therein are incorrect.
(i) No Employee or Former Employee of the Seller will be
entitled to any additional benefit or any acceleration of the time of payment
or vesting of any benefit under any of the Employee Benefit Plans set forth on
Schedule 2.1.18 as a result of the transaction contemplated by this Agreement.
(j) Notwithstanding anything to the contrary in this Agreement,
on the Closing Date, the Seller will provide the Purchaser with copies of all
records for any Employee or Former Employee that will be required to administer
the Union Pension Plan and warrants and represents that such records are
complete and accurate in all material respects. The Seller agrees to
reasonably cooperate with the Purchaser in the event that an Employee or Former
Employee challenges the accuracy of any record provided pursuant to this
Section in the course of a claim for benefits under the Union Pension Plan.
18
(k) Seller complies with the applicable requirements of Section
4980B of the Code with respect to each plan that it maintains, contributes to
or is required to maintain or contribute to for the benefit of any present or
former employees or their beneficiaries that is a group health plan as such
term is defined in Section 5000(b)(1) of the Code.
2.1.19 Labor Matters. Except as listed and described on
Schedule 2.1.18 and Schedule 2.1.19, with respect to Employees and Former
Employees, (i) Seller has no written personnel policy applicable to such
Employees, (ii) since November 20, 1996 and, to Seller's knowledge, since
January 1, 1995, Seller (or any predecessor of Seller) is and has been, in all
material respects, in compliance with all applicable Laws regarding employment
and employment practices, terms and conditions of employment, wages and hours,
occupational safety and health and workers' compensation and is not engaged in
any unfair labor practices, (iii) Seller has no grievances pending or, to
Seller's knowledge, threatened against it and (iv) Seller has no charges or
complaints pending or, to Seller's knowledge, threatened against it before the
National Labor Relations Board, the Equal Employment Opportunity Commission or
any other federal, state or local agency responsible for the prevention of
unlawful employment practices. There is no labor strike, slowdown, work
stoppage or lockout actually pending or, to Seller's knowledge, threatened
against or affecting the Business. Except as described on Schedule 2.1.19,
Seller is not a party to any collective bargaining agreement, no such agreement
determines the terms and conditions of any Employee or Former Employee, and no
collective bargaining agent has been certified as a representative of any of
the Employees or Former Employees. Except as described on Schedule 2.1.19, to
Seller's knowledge, no union organizational campaign is currently pending with
respect to any of the Employees or Former Employees.
2.1.20 Customers and Suppliers. Schedule 2.1.20 sets forth a true
and complete list of (i) the 10 largest customers of the Business based on
revenues during the ten months ended October 31, 1997, respectively, showing
the approximate total sales by Seller with respect to the Business to each such
customer during the ten months ended October 31, 1997 and (ii) the 10 largest
suppliers of the Business based on Seller's purchases during the ten months
ended October 31, 1997 showing the approximate total purchases by Seller with
respect to the Business from each such supplier during the ten months ended
October 31, 1997. Except as described on Schedule 2.1.20, since January 1,
1997, no customer or supplier listed on Schedule 2.1.20 has informed Seller
that it will materially change its business relationship with Seller and to
Seller's knowledge there are not any circumstances which are likely to cause
such a material change. Except as described on Schedule 2.1.20, Seller has no
reason to believe that, following the Closing, any particular customer or
supplier will fail to do business with Purchaser substantially as such customer
or supplier currently does business with Seller.
2.1.21 Warranty and Product Liability Claims. Except as set
forth on Schedule 2.1.21, Seller has not made any express warranties or
guarantees with respect to any products manufactured or sold or services
19
rendered in the operation of the Business. Except as described on Schedule
2.1.21, no claims have been asserted since November 20, 1996 that any product
of Seller, or to Seller's knowledge during the past two years that any product
of Seller (or any predecessor of Seller), was defective or caused any injury or
harm to any person, including all such claims and allegations relating to
returns, express or implied warranty violations, failure to warn or similar
matters. To Seller's knowledge, no basis exists for any person to make any
such claim, except as described on Schedule 2.1.21.
2.1.22 Licenses, Permits, Etc. Schedule 2.1.22 sets forth all
material governmental licenses, franchises, permits and other authorizations
held by Seller (other than those listed on Schedule 2.1.15). To the extent
transferable, all such governmental licenses, franchises, permits and other
authorizations (including those listed on Schedule 2.1.15) will be assigned to
Purchaser at the Closing. Such government licenses, franchises, permits and
other authorizations constitute all material government licenses, franchises,
permits and other authorizations necessary in the conduct of the Business.
2.1.23 Employees and Consultants. Seller has supplied Purchaser
with a true and complete list of each person employed by Seller and the total
current compensation and benefits of each such person. Schedule 2.1.23 sets
forth a true and complete list of all employment agreements between Seller and
any Employee. Schedule 2.1.23 also sets forth a true and complete list of all
consulting, service or commission agreements to which Seller is a party or
otherwise relating to the Business.
2.1.24 Disclosure. No representation or warranty by Seller
contained in this Agreement, and no statement contained in any document
(including the Financial Statements and the schedules hereto) furnished or to
be furnished by or on behalf of Seller or any affiliate thereof to Purchaser or
any of Purchaser's representatives in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
2.1.25 Taxes and Fees. Seller has paid and discharged, or has
caused to be paid and discharged, all taxes, assessments, excises, levies and
other obligations and liabilities for which it is obligated and will pay and
discharge all such items which will have become due and payable prior to or as
of the Closing Date with respect to the Acquired Assets or the Business.
Seller has duly filed or will file, or has caused or will cause to be duly
filed, with the appropriate federal, state and local governmental agencies all
returns and reports required to be filed by Seller as of the Closing Date and
with respect to any taxable period prior to or which includes the Closing Date
(each of which fairly present or will present the information purported to be
shown and reflect or will reflect, all tax liability of Seller for the periods
in question) and Seller has paid or will pay in full (or will contest in good
faith) all taxes, interest, penalties, assessments or deficiencies, if any, due
to, or claimed to be due by, any such taxing authority in respect of the
periods for which such returns and reports were filed. All necessary payments
20
required to be withheld for Seller's employees (including, without limitation,
for unemployment insurance) have been properly withheld and paid. There are no
tax liens affecting any of the Acquired Assets other than liens for current
taxes not yet due and payable.
2.1.26 Accounts Receivable. The accounts receivable of Seller
as set forth on the Balance Sheet or arising since the date thereof are valid
and genuine and have arisen solely out of bona fide sales and deliveries of
goods, performance of services and other business transactions in the ordinary
course of the Business consistent with past practices; and are not subject to
valid defenses, set-offs or counterclaims. The allowance for collection losses
on the Balance Sheet has been determined in accordance with GAAP consistent
with past practice. The Seller has no reason to believe that any accounts
receivable included in the Acquired Assets are not collectible at the full face
amount thereof in the ordinary course of the Business.
2.1.27 Interest in Competitors, Suppliers, Customers, Etc.
Except as set forth in Schedule 2.1.27, neither Seller nor any entity in which
Seller has any interest, has any direct or indirect ownership interest (other
than ownership of less than 5% of a class of equity securities of a publicly
held company) in any competitor, supplier, contractor or customer of the
Business or any property used in the operation of the Business.
2.1.28 Finders. Except for fees payable by Seller to Duff
Xxxxxxxx Xxxxxxxx & Associates, neither Seller nor any other affiliate of
Seller has made any agreement with any person or taken any action which would
cause any person to become entitled to an agent's, broker's, or finder's fee or
commission in connection with the transactions contemplated hereby.
2.1.29 Books of Account. Seller has not engaged in any
transaction, maintained any bank account or used any of the funds of Seller
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Business.
2.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
2.2.1 Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
2.2.2 Authorization and Effect of Agreement. Purchaser has
the requisite corporate power and authority to execute, deliver and perform its
obligations under each of the Transaction Documents executed or to be executed
by Purchaser. The execution, delivery and performance by Purchaser of each of
the Transaction Documents executed or to be executed by Purchaser has been duly
authorized by all requisite corporate action. This Agreement has been duly
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executed and delivered by Purchaser. This Agreement constitutes, and each of
the other Transaction Documents to be executed by Purchaser will constitute,
the valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
2.2.3 Conflicts. Neither the execution, delivery, nor
performance of any Transaction Document executed or to be executed by Purchaser
will (i) violate any material Law applicable to Purchaser, (ii) assuming
receipt of the third party consents referred to in Section 2.2.4, violate,
conflict with, permit the cancellation or acceleration of, or give rise to a
loss of any benefit under, any material agreement or commitment to which
Purchaser is a party or by which any of its properties are bound, or (iii)
violate or conflict with any provision of the certificate of incorporation or
bylaws, each as amended to date, of Purchaser.
2.2.4 Consents. Except for filings with the FTC and the U.S.
Department of Justice pursuant to the HSR Act, and the expiration of the
applicable waiting period thereunder, and except as listed on Schedule 2.2.4,
no actions, consents, or approvals of, or filings with, any governmental
authorities or any third parties are required in connection with the execution,
delivery or performance by Purchaser of the Transaction Documents executed or
to be executed by Purchaser.
2.2.5 Adequate Funds. Purchaser has available to it all funds
necessary to effect the purchase of the Acquired Assets in accordance with the
terms of this Agreement.
2.2.6 Disclosure. No representation or warranty by Purchaser
contained in this Agreement, and no statement contained in any document
furnished or to be furnished by or on behalf of Purchaser or any affiliate
thereof to Seller or any of Seller's representatives in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements herein or therein not misleading.
ARTICLE III
COVENANTS
3.1 Covenants of Seller. Seller covenants and agrees that, pending
the Closing and except as otherwise agreed to in writing by Purchaser:
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3.1.1 Employees and Business Relations. Seller shall use all
commercially reasonable efforts to keep available the services of the present
Employees (except normal separations of employees other than officers in the
ordinary course of the Business and consistent with past practice), agents and
consultants of the Business and to maintain the relations and goodwill with the
suppliers, customers, distributors and any others having business relations with
the Business.
3.1.2 Update Representations and Warranties. Seller shall promptly
disclose to Purchaser any information contained in its representations and
warranties herein or the schedules hereto which, because of an event occurring
after the date hereof, makes said representations and warranties or schedules
incomplete or incorrect as of any time after the date hereof until the Closing
Date; provided, however, that none of such disclosures shall be deemed to
modify, amend or supplement the representations and warranties of Seller herein
or the schedules hereto for any purposes of this Agreement, except as consented
to, in writing, by Purchaser, whose consent shall not be unreasonably withheld;
provided, however, that in no event shall Purchaser's failure to consent be
deemed to be unreasonably withheld if such disclosures would, individually or
in the aggregate, impair the value or the use of the Acquired Assets or the
Business.
3.1.3 Satisfaction of Conditions. Seller shall use all
commercially reasonable efforts to conduct the Business in such a manner that
on the Closing Date the representations and warranties of Seller contained in
this Agreement shall be true in all material respects as though such
representations and warranties were made on and as of such date. Furthermore,
Seller shall cooperate with Purchaser and use all commercially reasonable
efforts to satisfy promptly all conditions required hereby to be satisfied by
Seller in order to expedite the consummation of the transactions contemplated
hereby.
3.1.4 Sale of Acquired Assets; Negotiations. Seller shall not,
and Seller shall not cause or permit its respective affiliates, directors,
officers, employees, agents, representatives, legal counsel, and financial
advisors to, (i) solicit, initiate, accept, consider entertain or encourage the
submission of proposals or offers from any person or entity with respect to the
acquisition contemplated by this Agreement or any similar transaction wherein
such person or entity would acquire all or any portion of the Acquired Assets
or ownership interests in Seller, or any merger, consolidation, or business
combination, directly or indirectly, with or for Seller or all or substantially
all of the Business, or (ii) participate in any negotiations regarding, or,
except as required by legal process (including pursuant to discovery or
agreements existing on the date hereof), furnish to any person or entity (other
than Purchaser) information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate, or encourage, any effort or
attempt by any person or entity (other than Purchaser) to do or seek any of the
foregoing. Seller shall not enter into any agreement or consummate any
transactions that would interfere with the consummation of the transactions
contemplated by this Agreement. Seller shall promptly notify Purchaser if it
receives any written inquiry, proposal or offer described in this Section 3.1.4
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or any verbal inquiry, proposal or offer described in this Section 3.1.4 that
is competitive with the terms of the transactions contemplated by this
Agreement, and Seller shall inform such inquiring person or entity of the
existence of this Agreement and make such inquiring person or entity aware of
Seller's obligations under this Section 3.1.4. The notification under this
Section 3.1.4 shall include the identity of the person or entity making such
inquiry, offer, or other proposal, the terms thereof, and any other information
with respect thereto as Purchaser may reasonably request. Seller shall not
provide any confidential information concerning the Business or its properties
or assets to any third party other than in the ordinary course of the Business
and consistent with prior practice. Seller has ceased and caused to be
terminated any existing activities, discussions or negotiations with any person
or entity conducted heretofore with respect to any of the foregoing.
3.1.5 Access. Seller shall give to Purchaser's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours and at such other
times as may be agreed upon in advance with the officers and representatives of
Seller, all of the premises, properties, assets, records, contracts and other
documents relating to the Business and shall permit them to consult with the
officers, employees, accountants, auditors, counsel and agents of Seller for
the purpose of making such investigation of the Business, as Purchaser shall
desire to make, provided that such investigation shall not unreasonably
interfere with Seller's business operations, and shall permit them to consult
with any customers or suppliers of Seller regarding the Business, provided that
such consultation shall not unreasonably interfere with Seller's or such
customer's or supplier's business operations. Furthermore, Seller shall
furnish to Purchaser all such documents and copies of documents and records and
information with respect to the affairs of the Business and copies of any
working papers relating thereto as Purchaser shall from time to time reasonably
request and shall permit Purchaser and its agents to make such physical
inventories and inspections of the Acquired Assets as Purchaser may request
from time to time.
3.1.6 Operation of the Business. Seller will (unless the prior
written consent of Purchaser is obtained):
(a) Not take or permit to be taken or do or suffer to be done
anything other than in the ordinary course of business as presently conducted,
not move from its current location, sell or otherwise dispose of any asset of
Seller relating to the Business (other than Excluded Assets and other than
inventory or equipment sold in the ordinary course of the Business and
consistent with past practice) and will use commercially reasonable efforts to
keep the Business intact.
(b) Maintain the Acquired Assets in at least as good condition
as they were being maintained as of the date hereof, normal wear and tear
excepted.
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(c) Other than for cash distributions for partner tax purposes, not
declare or pay any distribution in respect of Seller's equity interests or make
any other payment, repurchase or distribution in respect of Seller's equity
interests.
(d) Except for the Critical Expenditures, not make, or commit to
make, any capital expenditures greater than $20,000 in the aggregate.
(e) Not create or amend any Employee Benefit Plan except as
required by law.
(f) Not grant any increases in officer compensation or, except in
the ordinary course of the Business and consistent with past practice, in the
compensation of any other Employees.
(g) Not make any write-downs or write-offs of assets outside the
ordinary course of the Business consistent with past practice.
(h) Operate the Business in material compliance with all
applicable Laws.
(i) Not enter into any new contract or arrangement outside the
ordinary course of the Business, consistent with past practice, with aggregate
payments due to or from Seller of $20,000 or more or modify or terminate any
existing contract or arrangement with aggregate payments due to or from Seller
of $20,000 or more.
(j) In connection with any contract or arrangement that expires
pursuant to its terms between the date hereof and the Closing Date, not renew
such contract or arrangement or enter into new terms (the "Renewal Contract")
with respect to such contract or arrangement without the prior written consent
of Purchaser.
(k) Not take any action which materially accelerates the
collection of the accounts receivable or decelerates the payment of accounts
payable.
(l) Maintain insurance covering the Acquired Assets on a basis
consistent with past practice.
(m) Pay all debts and obligations incurred by it in the operation
of the Business in the ordinary course of the Business consistent with past
practice.
3.1.7 WARN Act Compliance. Through the Closing Date, Seller
shall take all necessary actions to comply with the Federal Workers Adjustment
and Retraining Act to the extent applicable. Purchaser shall not have any
disclosure or announcement obligations under such act with respect to any
Employees or Former Employees of Seller, and Seller shall indemnify Purchaser
and hold Purchaser harmless from any action, claim, suit, proceeding or
assertion of liability with respect thereto.
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3.1.8 Environmental Inspections. Seller agrees to cooperate
with any reasonable request of Purchaser for a site assessment or site review
concerning any environmental matter, including the making available of such
personnel of Seller as Purchaser may reasonably request, so long as such
activities do not unreasonably interfere with the conduct of Seller's business.
At the discretion of Purchaser, Purchaser may arrange, at its sole expense, for
one or more independent contractors to conduct tests of the Real Property,
including tests of air, soil (including surface and subsurface materials),
surface water and ground water, or any equipment or facilities located thereon,
in order to identify any present or past release or threatened release of any
hazardous substances. Such tests may be done at any time, or from time to
time, upon reasonable notice and under reasonable conditions, which do not
impede the performance of such tests.
3.1.9 Employees. Seller acknowledges that notwithstanding any
benefits which Purchaser may offer or provide to any Employee to whom Purchaser
has extended an offer of employment, Seller has certain obligations with
respect to Seller's Employees under Section 4980B of the Code and Section 601
et seq. of ERISA and agrees to comply with those obligations. Seller shall be
responsible for and shall cause to be discharged and satisfied in full all
amounts owed to any Employee or Former Employee, including wages, salaries,
accrued vacation, any employment, incentive, compensation or bonus agreements
or other benefits or payments on account of termination of employment prior to
Closing by Seller, and shall indemnify Purchaser and hold Purchaser harmless
from any losses thereunder.
3.1.10 1997 Financial Statements. As soon as available, but in
no event later than 15 days prior to Seller's delivery of the Final Statement
pursuant to Section 1.6 hereof, Seller shall provide to Purchaser true and
complete copies of the audited balance sheet of Seller at December 31, 1997 and
the related statements of income, cash flow and changes in members equity for
the fiscal year then ended, with an audit report thereon issued by KPMG Peat
Marwick (the "1997 Financial Statements"). Such balance sheet, including the
related notes, will, upon its delivery to Purchaser, fairly present in all
material respects the financial positions, assets and liabilities (whether
accrued, absolute, contingent or otherwise ) of Seller at the date indicated
and such statement of income, cash flow and changes in members equity will,
upon its delivery to Purchaser, fairly present in all material respects the
results of operation, cash flow and changes in members equity of Seller for the
period indicated, in each case in accordance with GAAP.
3.1.11 HSR Notification. Purchaser and Seller shall use
commercially reasonable efforts (including the filing of a request for early
termination) to obtain the early termination of the waiting period under the
HSR Act. Seller shall reimburse Purchaser for one-half of the filing fees for
Purchaser's HSR Act filing.
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3.1.12 Physical Inventory. Purchaser may conduct a physical
inventory in conjunction with Seller's year-end inventory under the supervision
of Seller and each of the parties respective accounting firms; provided,
however, that upon Purchaser's reasonable request, Seller shall permit
Purchaser to conduct additional inventory procedures (including any additional
physical inventories) at any time following Seller's year-end inventory as
Purchaser deems reasonable to update and verify such physical inventory up to
and including the Closing Date. Any adjustment to the value of the inventory
to be acquired by Purchaser (as reflected in Net Working Capital) resulting
from such physical inventory shall be reflected in the Final Adjustment Amount
in accordance with Section 1.6.
3.1.13 Environmental Matters. At the request of Purchaser,
Seller shall cooperate with Purchaser, including use of all commercially
reasonable efforts, in causing Purchaser to be added, prior to the Closing
Date, as a co-applicant to Seller's application for participation in the Texas
Natural Resource Conversation Commission's Voluntary Cleanup Program covering
the Texas Plant.
3.2 Covenants of Purchaser. Purchaser covenants and agrees that,
pending the Closing and except as otherwise agreed to in writing by Seller:
3.2.1 Closing. Purchaser will cooperate with Seller and use
commercially reasonable efforts to satisfy promptly all conditions required
hereby to be satisfied by Purchaser in order to expedite the consummation of the
transactions contemplated hereby.
3.2.2 Employees. Within 30 days following the date of this
Agreement, Purchaser will provide Seller with a list (the "Employee List") of
all Employees to whom Purchaser intends to make offers of employment.
Purchaser will offer employment as of the Closing to all Employees on such
Employee List, on terms of employment and conditions substantially similar to
those in effect immediately prior to Closing for other comparably situated
employees of Purchaser; provided, however, that nothing herein shall limit the
ability of Purchaser to change the level of compensation and other terms and
conditions of employment after the Closing Date.
3.2.3 Employee Benefits.
(a) Prior to the Closing, Seller and Purchaser will take all
action necessary so that Purchaser will, effective as of the Closing Date,
become the employer and plan sponsor of the Union Pension Plan. On or after
the Closing, Purchaser shall continue to maintain (for such period as may be
required by the applicable collective bargaining agreement) the Union Pension
Plan in accordance with its terms as in effect immediately prior to the Closing
and as may be required by the applicable collective bargaining agreement (with
such changes as may be required by law or the applicable collective bargaining
agreement).
27
(b) In connection with Purchaser's assumption of the Union
Pension Plan, Seller will cause the transfer of all of the assets attributable
to the Union Pension Plan to the extent not automatically transferred in
connection with Purchaser's assumption of such plan. Purchaser shall,
effective as of the Closing Date, assume all of the liabilities and obligations
of the Seller and its Affiliates in respect of the Union Pension Plan (i)
relating to benefits accrued as of the Closing Date, (ii) for all minimum
funding obligations payable after the Closing Date and (iii) all other
obligations of a plan sponsor arising after the Closing Date and Seller and its
Affiliates shall be relieved of all such liabilities and obligations with
respect to the Union Pension Plan.
(c) Purchaser will permit Employees who are hired by Purchaser and
who are eligible to participate in Purchaser's 401(k) plan to effect a direct
rollover of their accounts in the Xxxxx 401(k) Plan to the Purchaser's 401(k)
plan; provided that such rollover is permissible under the terms of Purchaser's
401(k) plan and the Code; provided, further that Seller shall have provided to
Purchaser such written representations and other evidence reasonably
satisfactory to Purchaser to permit Purchaser to conclude that such rollover is
permissible.
3.2.4 Collective Bargaining Agreements. Purchaser will assume
the Articles of Agreement between EDOCO, a subsidiary of The Xxxxx Group,
L.L.C., and Oil, Chemical & Atomic Workers, International Union, AFL-CIO, Long
Beach Local 1-128, which is currently in force at the California Plant and all
of Seller's obligations thereunder arising solely after the Closing.
3.2.5 Surveys; Title Commitments. Purchaser shall use
commercially reasonable efforts to obtain the surveys and title commitments
contemplated by clauses (xvi) and (xvii) of Sections 4.2(a), respectively as
promptly as reasonably practicable.
ARTICLE IV
CLOSING
4.1 Closing. Unless this Agreement is first terminated as provided
in Section 7.1 hereof, and subject to the satisfaction or waiver of all
conditions to the consummation of the transactions contemplated hereby, the
closing of the transactions contemplated hereby (the "Closing") shall take
place at the offices of Xxxxx & Xxxxx, L.L.P., in Houston, Texas, beginning at
9:00 a.m. (local time) on January 30, 1998 or at such other time or on such
other date as the Purchaser and Seller shall otherwise agree. The date on
which the Closing occurs is referred to herein as the "Closing Date." The
Closing shall not be deemed to have been completed until the last of the
conditions to be satisfied pursuant to this Agreement has been satisfied or
waived.
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4.2 Conditions to Closing.
(a) The obligations of Purchaser to effect the Closing are
subject to the fulfillment, satisfaction or waiver of each of the following
conditions precedent prior to the Closing:
(i) The representations and warranties of Seller contained
in this Agreement or in any schedule, certificate or document delivered by
Seller to Purchaser pursuant to the provisions hereof shall have been true in
all material respects (except that any representations and warranties of Seller
which contain materiality qualifiers shall have been true in all respects) on
the date hereof and shall be true in all material respects (except that any
representations and warranties of Seller which contain materiality qualifiers
shall be true in all respects) on the Closing Date with the same effect as
though such representations and warranties were made as of such date.
Purchaser shall have received a certificate of Seller, dated the Closing Date,
to the effect that the conditions specified in this clause (i) have been
fulfilled.
(ii) Seller shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
Purchaser shall have received a certificate of Seller, dated the Closing Date
to the effect that the conditions specified in this clause (ii) have been
fulfilled.
(iii) Seller shall have executed and delivered to Purchaser
the Xxxx of Sale and such other instruments of conveyance, all containing a
general warranty of title, as shall in Purchaser's reasonable opinion be
necessary or appropriate to convey to Purchaser all of the Acquired Assets free
and clear of all Encumbrances, other than Permitted Encumbrances.
(iv) Seller shall have executed and delivered to Purchaser
a Limited Power of Attorney in the form of Exhibit E hereto.
(v) Seller shall have executed and delivered to Purchaser the
Escrow Agreement.
(vi) Each of Seller and Xxxxxx X. Xxxxxxxx shall have executed
and delivered to Purchaser the Noncompetition Agreement.
(vii) All consents or approvals listed (or required to
be listed) on Schedule 2.1.4 shall have been obtained.
(viii) Purchaser shall have obtained from Seller
evidence satisfactory to Purchaser of the payment or release of any and all
Encumbrances against any of the Acquired Assets (other than Permitted
Encumbrances).
29
(ix) Seller shall have (A) furnished to Purchaser (x) copies
certified by the appropriate governmental official of the State of Delaware as
of a date not more than ten (10) days prior to the Closing Date, of Seller's
certificate of formation and all amendments thereto and (y) copies, certified
by the Secretary or an Assistant Secretary of Seller, as of the Closing Date,
of Seller's Limited Liability Company Agreement; (B) furnished to Purchaser a
certificate of good standing issued with respect to Seller by the appropriate
governmental official of the State of Delaware as of a date not more than ten
(10) days prior to the Closing Date; and (C) executed and delivered all such
other documents, including a secretary's certificate relating to incumbency and
corporate proceedings, and taken all such other actions as reasonably requested
by Purchaser in connection with the consummation of the transactions
contemplated hereby.
(x) Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Xxxxxx, a
Professional Corporation (and/or Texas counsel selected by Seller and
reasonably satisfactory to Purchaser), counsel for Seller, shall have delivered
to Purchaser a written opinion, dated the Closing Date, in substantially the
form of Exhibit F hereto.
(xi) No inquiry, action, claim, or proceeding which, in
the reasonable opinion of Purchaser, is material shall have been asserted,
threatened or instituted against Purchaser to restrain or prohibit the
consummation by Purchaser of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account or as a result thereof.
(xii) No inquiry, action, claim, or proceeding which, if
determined adversely to Seller, would reasonably be expected to have a Material
Adverse Effect on the Business shall have been asserted, threatened, or
instituted.
(xiii) There shall have been no material adverse change in
the Business or the Acquired Assets since December 31, 1996.
(xiv) [Intentionally Omitted].
(xv) All filings required under the HSR Act shall have been
made and the applicable waiting period shall have expired or been earlier
terminated without the receipt of any objection or the commencement or threat
of any litigation by a governmental authority of competent jurisdiction to
restrain the consummation of the transactions contemplated by this Agreement.
(xvi) Purchaser shall have obtained, at Purchaser's expense,
to the extent necessary to obtain a clean title commitment (with no survey
exception), a survey of the real property associated with the California Plant
30
that complies with the "Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys" jointly established and adopted by ALTA and ACSM in 1992,
including items 1, 2, 3, 5, 6, 8, 9, 10, 11 and 13 of Table A thereof, and the
Accuracy Standards (as adopted by ALTA and ACSM and in effect on the date of
the certification) of an Urban Survey, utilizing a form of survey certification
reasonably satisfactory to Purchaser.
(xvii) Purchaser shall have obtained, at Purchaser's expense,
a title insurance commitment issued by a title company that is reasonably
satisfactory to Purchaser with respect to the leasehold interest relating to
the California Plant conveyed hereunder evidencing a commitment to issue an
ALTA Leasehold Owner's title insurance policy on a form reasonably satisfactory
to Purchaser, insuring valid and enforceable leasehold interests, for such
amount as Purchaser reasonably directs subject only to Permitted Encumbrances
(xviii) Purchaser shall have received an update of Schedule
2.1.9A to reflect any changes occurring subsequent to the date of this
Agreement through and including the date immediately prior to the Closing Date.
Such update shall be marked to show the changes made from the original Schedule
2.1.9A.
(b) The obligations of Seller to effect the Closing are
subject to the fulfillment, satisfaction or waiver of each of the following
conditions precedent prior to the Closing:
(i) The representations and warranties of Purchaser
contained in this Agreement or in any schedule, certificate or document
delivered by Purchaser to Seller pursuant to the provisions hereof shall have
been true in all material respects (except that any representations and
warranties of Purchaser which contain materiality qualifiers shall have been
true in all respects) on the date hereof and shall be true in all material
respects (except that any representations and warranties of Purchaser which
contain materiality qualifiers shall be true in all respects) on the Closing
Date with the same effect as though such representations and warranties were
made as of such date. Seller shall have received a certificate of Purchaser,
dated the Closing Date, to the effect that the conditions specified in this
clause (i) have been fulfilled.
(ii) Purchaser shall have performed and complied in all
material respects with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by Purchaser prior to or at the
Closing. Seller shall have received a certificate of Purchaser, dated the
Closing Date to the effect that the conditions specified in this clause (ii)
have been fulfilled.
