EXHIBIT 1
STOCK PURCHASE AGREEMENT
DATED
AS OF SEPTEMBER 6, 2001
BY AND AMONG
AZZ INCORPORATED,
ARBOR-XXXXXXX, INC.,
CENTRAL ELECTRIC COMPANY,
XXXX X. XXXXXXXXXX,
XXXXXXX X. XXXXXXXXXX REVOCABLE TRUST,
XXXX XXXXXXX LIPPINCOTT REVOCABLE TRUST,
XXXXX X. XXXXX,
AND
XXXXXX X. XXXXXXX
TABLE OF CONTENTS
-----------------
ARTICLE I PURCHASE AND SALE OF STOCK................................................................... 1
1.1 Agreement to Purchase and Sell................................................................. 1
1.2 Closing Consideration; Adjustment; Allocation of Consideration................................. 1
1.2.1 Closing Consideration............................................................... 1
1.2.2 Adjustment.......................................................................... 2
1.2.3 Allocation of Consideration......................................................... 4
1.2.4 Covenants of Sellers................................................................ 4
1.3 Issuance of AZZ Shares and Securities Law Restrictions......................................... 4
1.3.1 Private Placement and Investment Matters............................................. 4
1.3.2 Legend.............................................................................. 5
1.3.3 Demand Registration................................................................. 6
1.3.4 Certain Delay Rights................................................................ 6
1.4 Closing........................................................................................ 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY..................................... 9
2.1 Existence; Good Standing; Corporate Authority; Compliance With Law............................. 9
2.2 Authorization; Validity and Effect of Agreements............................................... 10
2.3 Affiliated Entities............................................................................ 11
2.4 Capitalization and Ownership................................................................... 11
2.5 Jurisdictions.................................................................................. 11
2.6 Records........................................................................................ 11
2.7 Officers and Directors; Bank Accounts; Powers of Attorney...................................... 11
2.8 Financial Statements........................................................................... 12
2.9 Undisclosed Liabilities........................................................................ 12
2.10 Absence of Certain Changes or Events Since the Balance Sheet Date............................. 12
2.11 Taxes......................................................................................... 13
2.12 Title to Acquired Shares...................................................................... 15
2.13 Real Property................................................................................. 15
2.14 Condition of Assets........................................................................... 15
2.15 Title to Property; Encumbrances............................................................... 16
2.16 Insurance..................................................................................... 16
2.17 Business Property Rights...................................................................... 16
2.18 Employee Benefit Plans and Arrangements....................................................... 17
2.18.1 Certain Definitions................................................................ 17
2.18.2 Documents.......................................................................... 18
2.18.3 Operations......................................................................... 19
2.18.4 Welfare Benefits................................................................... 21
2.18.5 Termination........................................................................ 21
2.19 Employees..................................................................................... 21
2.20 Other Contracts............................................................................... 22
2.21 No Breach or Default.......................................................................... 22
2.22 Litigation.................................................................................... 22
2.23 Accounts Receivable........................................................................... 23
2.24 Inventory..................................................................................... 23
2.25 Environmental Matters......................................................................... 24
i
2.26 Customers and Suppliers....................................................................... 25
2.27 No Brokers.................................................................................... 26
2.28 Certain Transactions.......................................................................... 26
2.29 Accuracy of Information....................................................................... 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND AZZ.............................................. 27
3.1 Existence; Good Standing; Corporate Authority; Compliance with Law............................. 27
3.2 Authorization; Validity and Effect of Agreements............................................... 27
3.3 No Brokers..................................................................................... 28
3.4 Shares......................................................................................... 28
3.5 Public Information............................................................................. 28
ARTICLE IV SURVIVAL OF REPRESENTATIONS AND WARRANTIES/INDEMNIFICATION................................... 28
4.1 Survival of Representations and Warranties..................................................... 28
4.2 Indemnification by Sellers..................................................................... 28
4.3 Indemnification by Buyer....................................................................... 30
4.4 Limitations on Indemnification................................................................. 30
4.5 Conditions of Indemnification.................................................................. 31
4.6 Insurance Proceeds............................................................................. 32
4.7 Indemnity Escrow.............................................................................. 32
4.8 Exclusive Remedy............................................................................... 32
4.9 Claims Against the Company..................................................................... 33
ARTICLE V OTHER COVENANTS AND AGREEMENTS............................................................... 33
5.1 Restrictive Covenants/Proprietary Information.................................................. 33
5.1.1 Proprietary Information............................................................. 33
(a) Certain Definitions.......................................................... 33
(b) Protection of Proprietary Information........................................ 34
5.1.2 Restrictive Covenants............................................................... 34
(a) Customer Restriction......................................................... 34
(b) Non-Raid..................................................................... 35
(c) Noncompetition............................................................... 35
(d) Reformation.................................................................. 35
5.1.3 Injunctive Relief................................................................... 36
5.2 Conduct of the Business........................................................................ 36
5.2.1 Affirmative Covenants............................................................... 36
5.2.2 Negative Covenants.................................................................. 36
5.3 Access to Information and Customers............................................................ 37
5.4 Acquisition Proposals.......................................................................... 38
5.5 Public Announcements........................................................................... 38
5.6 Costs and Expenses............................................................................. 38
5.7 Notification of Certain Matters................................................................ 38
5.8 Best Efforts................................................................................... 39
5.9 Execution of Additional Documents.............................................................. 39
5.10 Guaranty of Receivables....................................................................... 39
5.11 Phantom Stock Plan and Certain Indebtedness.................................................... 39
ARTICLE VI CONDITIONS OF CLOSING........................................................................ 40
6.1 Buyer's Conditions of Closing.................................................................. 40
ii
6.2 Sellers' Conditions of Closing................................................................. 42
ARTICLE VII TERMINATION AND ABANDONMENT.................................................................. 43
7.1 Reasons for Termination........................................................................ 43
7.2 Procedure Upon and Effect of Termination....................................................... 44
ARTICLE VIII Tax Matters.................................................................................. 44
8.1 Sellers' Indemnity for Taxes................................................................... 44
8.1.1 Taxes Covered by Indemnity.......................................................... 44
8.1.2 Limitation on Indemnity; Refunds.................................................... 45
8.2 Apportionment of Taxes......................................................................... 45
8.3 Preparation of Tax Returns..................................................................... 46
8.4 Transfer and Conveyance Taxes.................................................................. 47
8.5 Contests....................................................................................... 47
8.6 Time of Payment................................................................................ 47
8.7 Termination of Sellers' Indemnity Obligations for Taxes........................................ 48
8.8 Tax Elections.................................................................................. 48
8.9 Tax Sharing Agreements......................................................................... 48
8.10 Resolution of Disagreements................................................................... 48
8.11 Exclusive Remedy.............................................................................. 48
ARTICLE IV MISCELLANEOUS................................................................................ 49
9.1 Notices........................................................................................ 49
9.2 Binding Effect; Benefits....................................................................... 51
9.3 Entire Agreement............................................................................... 51
9.4 Governing Law.................................................................................. 51
9.5 Counterparts................................................................................... 51
9.6 Headings....................................................................................... 52
9.7 Waivers........................................................................................ 52
9.8 Incorporation of Exhibits and Schedules........................................................ 52
9.9 Severability................................................................................... 52
9.10 Assignability................................................................................. 52
9.11 Drafting...................................................................................... 53
9.12 References.................................................................................... 53
9.13 Calendar Days, Weeks and Months............................................................... 53
9.14 Gender; Plural and Singular................................................................... 53
9.15 Cumulative Rights............................................................................. 53
9.16 No Implied Covenants.......................................................................... 53
9.17 Attorneys' Fees............................................................................... 53
9.18 Indirect Action............................................................................... 53
9.19 Schedules and Exhibits........................................................................ 54
9.20 Tax Treatment................................................................................. 54
iii
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (together with all Exhibits and Schedules
hereto, the "Agreement") is entered into as of the 6th day of September, 2001 by
---------
and among AZZ incorporated, a Texas corporation ("AZZ"), Arbor-Xxxxxxx, Inc., a
---
Delaware corporation ("Buyer"), Central Electric Company, a Missouri corporation
-----
(the "Company"), and Xxxx X. Xxxxxxxxxx ("JL"), the Xxxxxxx X. Xxxxxxxxxx
------- --
Revocable Trust ("CL"), the Xxxx Xxxxxxx Lippincott Revocable Trust ("GL"),
--
Xxxxx X. Xxxxx ("DR") and Xxxxxx X. Xxxxxxx ("NB"). JL, CL, GL, DR and NB are
-- --
hereinafter referred to each individually as a "Seller" and collectively as the
------
"Sellers". AZZ, Buyer, Sellers and the Company are hereinafter referred to each
-------
individually as a "Party" and collectively as the "Parties."
----- -------
WHEREAS, Buyer is a wholly-owned subsidiary of AZZ;
WHEREAS, Sellers own all of the issued and outstanding shares of capital
stock of the Company;
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares of capital stock of the Company for the
consideration and upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS, in order to induce AZZ and Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Company has agreed to
certain provisions of this Agreement, as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the provisions and the
respective covenants and agreements set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
conditions set forth herein and upon the representations and warranties
made herein by each of the Parties to the other, at the Closing (as such
term is hereinafter defined), Sellers shall sell, grant, convey, assign,
transfer and deliver to Buyer, and Buyer shall purchase and acquire from
Sellers, all of the issued and outstanding shares of capital stock of the
Company (collectively the "Acquired Shares"). The exact number of Acquired
---------------
Shares to be sold by Sellers hereunder is 1,015 shares of Company's common
stock, par value $5.00 per share.
1.2 Closing Consideration; Adjustment; Allocation of Consideration.
1.2.1 Closing Consideration. The total consideration for the
---------------------
Acquired Shares (the "Purchase Price") and for certain covenants of
--------------
the Sellers set forth below shall be Eighteen Million Dollars
($18,000,000.00), subject to adjustment as set forth
in this Section 1.2.1 and Section 1.2.2 below. The Purchase Price
shall be paid by Seller as follows:
(a) At the Closing, Buyer shall pay to Sellers the sum
of $14,900,000.00 (after adjustment as provided below, the
"Closing Payment"), by wire transfer to an account or accounts
---------------
designated by Sellers by written notice to Buyer given at least
two (2) business days prior to the Closing Date.
(b) At the Closing, Buyer also shall deposit One
Million Dollars ($1,000,000.00) (such amount, the "Deposit") with
-------
The Chase Manhattan Bank, as escrow agent (the "Escrow Agent"),
------------
consisting of a Five Hundred Thousand Dollar ($500,000.00) fund
(the "Adjustment Escrow") and a second Five Hundred Thousand
-----------------
Dollar ($500,000.00) fund (the "Indemnity Escrow"), to be held
----------------
and disposed of pursuant to the terms of this Agreement and an
Escrow Agreement in substantially the form attached hereto as
Exhibit A (the "Escrow Agreement"). The Escrow Agreement shall be
--------- ----------------
executed and delivered by Buyer and Sellers to the Escrow Agent
at the Closing. Notwithstanding anything contained herein to the
contrary, as between Sellers and Buyer, the fees, costs and
expenses of the Escrow Agent under the Escrow Agreement shall be
borne by Sellers and by Buyer as set forth in the Escrow
Agreement.
(c) At the Closing, AZZ shall issue and deliver, or
cause Buyer to deliver, to Sellers a number of duly authorized,
validly issued, fully paid and nonassessable shares of common
stock, par value $1.00 per share, of AZZ (rounded upward to the
nearest whole number of shares) (the "AZZ Shares") equal to the
----------
quotient obtained by dividing $1,800,000.00 by the average
closing price of the Common Stock as reported for New York Stock
Exchange Composite Transactions for the thirty trading days
ending on the date on which Buyer makes a public announcement
concerning the transaction contemplated by this Agreement (the
"Average Price"). Notwithstanding the foregoing, Sellers shall
-------------
receive $1,800,000.00 in cash in lieu of the common stock of AZZ
if the Average Price is less than $18.50 per share or is more
than $28.00 per share (after appropriately adjusting for any
stock splits, reverse stock splits, stock dividends and similar
transactions, if any, occurring between the date of this
Agreement and the Closing Date).
1.2.2 Adjustment.
----------
(a) No later than January 31, 2002, Sellers shall
deliver to Buyer, at Sellers' expense, consolidated financial
statements of the Company as of, and for the short period ending
on, the Closing Date, which shall have been prepared on a
consolidated basis in accordance with generally accepted
accounting principles applied consistently with those used in
preparing the Financial Statements and audited by Xxxxxxxx-
Xxxxxxx, LLC (the "Audited Financial Statements"). Following the
----------------------------
Closing Date, the Buyer shall permit the Sellers and such
independent accounting firm to have access to the books and
records of the Company and its Subsidiaries in order to enable
the
2
preparation of such Audited Financial Statements, it being
understood that Buyer's independent accounting firm Ernst & Young
LLP shall have the opportunity to observe and review the audit
procedures of Xxxxxxxx-Xxxxxxx, LLC. Promptly upon Buyer's
request, Sellers shall make available to Buyer copies of the work
papers and back-up materials used by Xxxxxxxx-Xxxxxxx, LLC in
preparing the Audited Financial Statements, and such other
documents as Buyer may reasonably request in connection with its
review of the Audited Financial Statements.
(b) Within 30 days after Buyer's receipt of the
Audited Financial Statements, Buyer shall review the Audited
Financial Statements and notify Sellers in writing whether or not
Buyer accepts the Audited Financial Statements. If Buyer accepts
the Audited Financial Statements, the Audited Financial
Statements shall become final and binding on all parties in
interest.
(c) If Buyer in good faith objects to any item set
forth on the Audited Financial Statements, Buyer shall give
written notice thereof to X. Xxxxxxx Lippincott, as
representative of the Sellers (in such capacity, the "Sellers'
--------
Representative") within 30 days after receipt of the Audited
--------------
Financial Statements, specifying in reasonable detail the nature
and extent of such disagreement and Buyer and Sellers'
Representative shall have a period of 30 days from Sellers'
Representative's receipt of such notice in which to resolve such
disagreement. If such notice of objection is not given to
Sellers' Representative within 30 days after receipt of the
Audited Financial Statements, it shall be deemed that Buyer has
accepted the Audited Financial Statements with respect to all
items set forth therein, and the Audited Financial Statements
shall become final and binding on all parties in interest. Any
disputed items which cannot be agreed to by the parties within 30
days from Sellers' Representative's receipt of Buyer's notice of
objection to any of the items set forth in the Audited Financial
Statements shall be submitted for resolution to the St. Louis,
Missouri office of KPMG, LLC. If for any reason KPMG, LLC is
unable to act in such capacity, such determination will be made
by any other nationally recognized accounting firm (excluding the
previously mentioned accounting firms) selected by the St. Louis,
Missouri office of KPMG, LLC. The engagement of and the
determination by KPMG, LLC (or other accounting firm designated
by KPMG, LLC, as applicable) shall be completed within 60 days
after such assignment is given to such firm and shall be final
and binding and shall be nonappealable by Sellers and Buyer. The
fees and expenses payable to such firm in connection with such
determination will be borne 50% by Sellers and 50% by Buyer.
(d) Once the Audited Financial Statements become final
and binding in accordance with Section 1.2.2(b) or 1.2.2(c), as
the case may be, the Buyer and Sellers' Representative shall
jointly calculate the Net Assets of the Company as of the Closing
Date from the Audited Financial Statements. As used herein, "Net
---
Assets" shall mean (x) the aggregate book value of the assets of
------
the Company, minus (y) the aggregate book value of the
-----
liabilities of the Company, each as reflected in the Audited
Financial Statements. If the
3
Net Assets reflected in the Audited Financial Statements exceed
$4,635,309.00, then Sellers shall be entitled to receive the
entire balance of the Adjustment Escrow, and Buyer shall pay an
additional amount equal to such excess to Sellers in cash by
means of federal funds wire or interbank transfer of immediately
available funds). If the Net Assets are less than $4,635,309.00,
then Buyer shall be entitled to receive from the Adjustment
Escrow an amount equal to such deficiency (and if the Adjustment
Escrow is insufficient to satisfy such amount, then Sellers shall
pay the shortfall to Buyer in cash by means of federal funds wire
or interbank transfer of immediately available funds); and the
balance of the Adjustment Escrow, if any, shall be distributed to
Sellers ratably in accordance with their ownership of the
Acquired Shares. All distributions and payments required by this
Section 1.2.2(d) shall be made within three (3) business days
after the Audited Financial Statements becomes final and binding
in accordance with Section 1.2.2(b) or 1.2.2(c), as the case may
be. Earnings on the principal of Adjustment Escrow shall be paid
to the Party (or Parties) receiving the distribution of
principal, on a pro rata basis if more than one Party is entitled
to receive a portion of the Adjustment Escrow. Buyer and Sellers
shall promptly execute and deliver a joint instruction letter to
the Escrow Agent, notifying it of the distribution to be made in
accordance with this Section 1.2.2(d).
1.2.3 Allocation of Consideration. The Closing Payment, the
---------------------------
AZZ Shares and the other consideration for the Acquired Shares shall be
allocated and paid to each of the Sellers in accordance with Schedule 1.2
------------
attached hereto.
1.2.4 Covenants of Sellers. As consideration for the
--------------------
covenants contained in Section 5.1.2(c), Buyer shall pay to Sellers an
aggregate amount equal to $300,000.00 (the "Noncompetition Consideration").
----------------------------
The Noncompetition Consideration shall be (i) payable to Sellers in five
equal annual installments of $60,000.00, commencing on the first
anniversary of the Closing Date and ending on the fifth anniversary of the
Closing Date, and (ii) allocated among Sellers in accordance with Schedule
--------
1.2 attached hereto.
---
1.3 Issuance of AZZ Shares and Securities Law Restrictions. Sellers
hereby, jointly and severally, represent and warrant to, and covenant and agree
with, Buyer as follows:
1.3.1 Private Placement and Investment Matters.
(a) Each Seller understands that the AZZ Shares are being issued to
such Seller in reliance on an exemption from the registration requirements of
the Securities Act for an offer and sale of securities that does not involve a
public offering and have not been registered under the Securities Act or with
any securities regulatory authority of any state of the United States or other
jurisdiction and, therefore, such AZZ Shares (and all securities issued in
exchange therefor or in substitution thereof) cannot be resold in the absence of
such registration except pursuant to an exemption from, or in a transaction not
subject to, such registration requirements. Each Seller acknowledges and agrees
that AZZ is relying
4
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Sellers set forth in this Section
1.3.1. in order to determine the applicability of such exemptions and the
suitability of the Sellers to acquire the AZZ Shares. Each Seller agrees that
he, she or it shall not transfer any of the AZZ Shares except in a transaction
registered under the Securities Act or unless such Seller shall have delivered
to AZZ an opinion of United States counsel, which counsel and opinion shall be
reasonably satisfactory to AZZ or other evidence reasonably satisfactory to AZZ,
that such transfer is being effected in accordance with an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act.
(b) Each Seller has, or has been given, access to or has been
furnished all information regarding AZZ that the Seller desires to receive or
review in order to evaluate the merits and risks of investing in the AZZ Shares,
and each Seller has had a reasonable opportunity to ask questions of and receive
answers from AZZ concerning AZZ, and to obtain any additional information
reasonably necessary to verify the accuracy of the information furnished to the
Sellers concerning AZZ and all such questions, if any, have been answered to the
full satisfaction of the Sellers.
(c) Each Seller acknowledges that no representations or warranties
have been made with respect to the AZZ Shares to such Seller by AZZ or any
agent, employee or affiliate of AZZ (other than those contained in this
Agreement).
(d) Each Seller is either an accredited investor within the meaning
of Regulation D of the Securities Act or, immediately prior to receipt of any
information regarding AZZ, had such knowledge and experience in financial and
business matters as to be able to evaluate the merits and risks of an investment
in AZZ.
(e) Each Seller will acquire the AZZ Shares for his, her or its own
account and not with a view to any distribution (within the meaning of the
Securities Act) thereof or with any present intention of offering or selling any
of the AZZ Shares in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other applicable
jurisdiction.
(f) Each Seller agrees not to engage in any hedging transactions with
regard to the AZZ Shares unless in compliance with the Securities Act.
(g) Each Seller acknowledges and agrees that any resale or other
transfer, or attempted resale or other transfer, which AZZ determines in good
faith was made other than in compliance with the restrictions stated herein
shall not be recognized by AZZ in respect of the AZZ Shares, and that AZZ may
deliver a corresponding stop-transfer order to AZZ's transfer agent to that
effect.
1.3.2 Legend. Sellers understand that a restrictive legend will be
placed on the certificates therefor in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"),
5
OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED
STATES OR OTHER JURISDICTION. NEITHER THE SHARES NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS. BY THE ACQUISITION
HEREOF, THE HOLDER AGREES THAT SUCH HOLDER WILL GIVE EACH PERSON TO WHOM
THE SHARES ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN THE CASE OF ANY TRANSFER OR OTHER DISPOSITION MADE OTHERWISE
THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, THE
HOLDER HEREOF SHALL BE REQUIRED TO PROVIDE TO THE COMPANY, PRIOR TO SUCH
TRANSFER, AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION UNDER THE ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS.
1.3.3 Demand Registration. Within 30 days after a written demand for
registration delivered by Sellers, AZZ shall, on only one occasion, file with
the SEC and use its reasonable commercial efforts to have declared effective as
promptly as practicable a registration statement (the "Shelf Registration
------------------
Statement") on Form S-3 that shall register the AZZ Shares for resale by the
---------
Sellers from time to time on the New York Stock Exchange at prices in effect at
the time of sale. AZZ shall be obligated to keep such Shelf Registration
Statement effective until the earliest of (i) such time as each Seller could
sell all AZZ Shares owned by him, her or it in a single transaction under Rule
144 under the Securities Act of 1933, as amended (the "Securities Act")
--------------
(provided, that a written opinion of counsel for AZZ to the effect set forth in
this clause (i) shall constitute conclusive evidence of the satisfaction of such
condition), and (ii) such time as all AZZ Shares have been sold or disposed of
thereunder or sold, transferred or otherwise disposed of to a Person (as defined
in the Securities Act) that is not a Seller or an heir or personal
representative of a deceased Seller.
1.3.4 Certain Delay Rights. If at any time while the Shelf
Registration Statement is effective AZZ provides a certificate of the chief
financial officer or chief executive officer of AZZ to the Sellers'
Representative to the effect that in AZZ's good faith and reasonable judgment
the sale of AZZ Shares covered by the Shelf Registration Statement or the
disclosure of information therein or in any related prospectus or prospectus
supplement would materially interfere with any acquisition, financing or other
material event or transaction in connection with which a registration of
securities under the Securities Act for the account of AZZ is then intended or
the public disclosure of which at the time would be materially prejudicial to
AZZ (a "Disadvantageous Condition") for sales of AZZ Shares by Sellers
-------------------------
thereunder to then be permitted, and setting forth the general reasons for such
determination, AZZ may refrain from maintaining current the prospectus contained
in
6
the Shelf Registration Statement until such Disadvantageous Condition no longer
exists (notice of which AZZ shall promptly deliver to the Sellers'
Representative; provided that AZZ may exercise this right for no more than 120
days in any twelve-month period). With respect to each Seller, upon the receipt
by the Sellers' Representative of any such notice of a Disadvantageous Condition
such Seller shall (i) forthwith discontinue use of the prospectus and any
prospectus supplement under such Shelf Registration Statement and shall suspend
sales of AZZ Shares until such time as AZZ has caused the prospectus to be made
current and (ii) as applicable, if so directed by AZZ by notice to the Sellers'
Representative as aforesaid, such Seller will deliver to AZZ all copies, other
than permanent file copies then in such Seller's possession, of the prospectus
and prospectus supplements then covering such Shares at the time of receipt of
such notice.
1.3.5 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions and fees and expenses of counsel to the
Sellers incurred in connection with registrations, filings or qualifications
pursuant to Section 1.3.3, including (without limitation) all registration,
filing and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for AZZ shall be borne by AZZ; provided, however, that
AZZ shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 1.3.3 if the registration request is subsequently
withdrawn at the request of the Sellers (in which case all Sellers shall bear
such expenses), unless the Sellers agree to forfeit their right to one demand
registration pursuant to Section 1.3.3.
1.3.6 Company Registration.
(a) If, prior to the first anniversary of the Closing Date, AZZ
proposes to register any of its equity securities either for its own
account or for the account of a security holder or holders, other than a
registration relating solely to a Securities Exchange Commission ("SEC")
Rule 145 Transaction (including any Form S-4 acquisition shelf registration
statement), or a registration on any registration form which does not
permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the AZZ Shares, AZZ will:
(i) promptly give to each Seller a written notice thereof,
describing such securities and specifying the form and manner and the
other relevant facts involved in such proposed registration
(including, without limitation, a list of the jurisdictions in which
AZZ intends to attempt to qualify such securities under applicable
blue sky or other state securities laws, and whether or not such
registration will be in connection with an underwritten offering of
its securities and, if so, the identity of the managing underwriter
and whether such offering will be pursuant to a "best efforts" or
"firm commitment" underwriting) if such disclosure is acceptable to
the managing underwriter, if any; and
(ii) include in such registration (and any related
qualification under blue sky laws), and in any underwriting involved
therein, all the AZZ Shares if a written request or requests is made
by any Seller delivered to AZZ
7
within 15 days after receipt of the written notice from AZZ described
in clause (i) above, except as set forth in Section 1.3.6(b) below.
Such written request shall specify the intended method of disposition
of the AZZ Shares.
(b) If the registration so proposed by AZZ involves an
underwritten offering of securities by AZZ, and the managing underwriter of
such underwritten offering shall advise AZZ that, in its judgment, the
number of AZZ Shares and any other securities held by other shareholders of
AZZ proposed to be included in such offering should be limited (i) due to
market conditions or (ii) because the inclusion of such AZZ Shares and
other securities held by other shareholders of AZZ could adversely impact
the purchase price obtained for the securities proposed to be included in
such offering by AZZ, then AZZ shall promptly advise each such Seller and
the managing underwriter may (subject to the allocation priority set forth
below) exclude from such registration and underwriting some or all of the
securities which would otherwise be underwritten pursuant hereto and the
distribution of such securities as are so excluded shall be deferred until
the completion of the distribution of securities by the underwriters.
1.3.7 Expenses of AZZ Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of AZZ Shares with respect to the registrations pursuant to Section 1.3.6,
including (without limitation) all registration, filing and qualification fees
and printers' and accounting fees relating or apportionable thereto, but
excluding underwriting discounts and commissions relating to the AZZ Shares and
fees and expenses of counsel for the Sellers.
1.3.8 Indemnification.
(a) To the extent permitted by law, AZZ will indemnify and hold
harmless each Seller, any underwriter (as defined in the Securities Act)
for such Seller and each person, if any, who controls such Seller or
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue
---------
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii)
the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by AZZ of the
Securities Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any state
securities law; and AZZ will pay to each such Seller, underwriter or
controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.3.8 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of AZZ (which
consent shall not be unreasonably withheld), nor shall AZZ be liable in any
such case for any such loss, claim, damage, liability or
8
action to the extent that it arises out of or is based upon a Violation
that occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
Seller, underwriter or controlling person.
(b) To the extent permitted by law, each Seller, severally but
not jointly, will indemnify and hold harmless AZZ, each of its directors,
each of its officers who has signed the registration statement, each
person, if any, who controls AZZ within the meaning of the Securities Act,
any underwriter, any other Seller selling securities in such registration
statement and any controlling person of any such underwriter or other
Seller, against any losses, claims, damages or liabilities to which any of
the foregoing persons may become subject, under the Securities Act, the
1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Seller expressly for use in
connection with such registration; and each such Seller will pay any legal
or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 1.3.8(b), in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 1.3.8(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Seller, which consent shall not be unreasonably
withheld
1.4 Closing. The closing of the purchase and sale of the Acquired
Shares provided herein (the "Closing") shall occur (i) at the office of
-------
Xxxxx, Xxxx & Xxxxxxx P.C. at 10:00 a.m., on the first business day
immediately following the day on or by which the last to be fulfilled or
waived of the conditions set forth in Article VI hereof shall be fulfilled
or waived in accordance herewith (but not earlier than October 17, 2001),
or (ii) at such other time as Sellers' Representative and Buyer may
mutually agree (such date and time of Closing being herein collectively
referred to as the "Closing Date"). Unless otherwise agreed by Buyer and
------------
the Sellers' Representative, the Closing shall be deemed to have occurred
effective as of the close of business on the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Sellers and the Company hereby, jointly and severally, represent and
warrant to Buyer as follows:
2.1 Existence; Good Standing; Corporate Authority; Compliance With
Law. The Company and each Subsidiary (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation; (ii) is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of
all other jurisdictions in which the character of the properties owned or
leased by it therein or in which the transaction of its business as it is
presently conducted makes such qualification necessary, except where the
failure to be so licensed or qualified has not had and will not have a
material adverse effect on the Company and its Subsidiaries or its assets,
9
operations or financial position (a "Material Adverse Effect"); (iii) has
-----------------------
all requisite corporate power and authority to own its properties and carry
on its business as now conducted; (iv) is not in default with respect to
any order of any court, governmental authority or arbitration board or
tribunal to which the Company or any Subsidiary is a party or is subject;
(v) is not in violation in any material respect of any laws, ordinances,
governmental rules or regulations to which it is subject; and (vi) to the
knowledge of Sellers, has obtained all licenses, permits and other
authorizations and has taken all actions required by applicable laws or
governmental regulations in connection with its business as now conducted.
2.2 Authorization; Validity and Effect of Agreements.
2.2.1 The execution, delivery and performance of this Agreement
and all agreements and documents contemplated hereby by the Company
and Sellers, and the consummation by the Company and Sellers of the
transactions contemplated hereby, have been duly authorized by all
requisite corporate, partnership, trust or other action.
2.2.2 This Agreement constitutes and all agreements and documents
contemplated hereby when executed and delivered pursuant hereto will
constitute, the valid and legally binding obligations of the Company
and Sellers enforceable against each of them in accordance with their
terms, except that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium, bulk sales, preference, equitable subordination,
marshalling or other similar laws of general application now or
hereafter in effect relating to the enforcement of creditors' rights
generally and except that the remedies of specific performance,
injunction and other forms of equitable relief are subject to certain
tests of equity jurisdiction, equitable defenses and the discretion of
the court before which any proceeding therefor may be brought.
2.2.3 The execution, delivery and performance of this Agreement
by the Company and by Sellers does not, and the consummation by the
Company and by Sellers of the transactions contemplated hereby will
not, except as set forth in Schedule 2.2 attached hereto, (i) require
------------
the consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or any
third party; (ii) result in the breach of any term or provision of, or
constitute a default under, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or
the lapse of time or both) any obligation under, or result in the
creation or imposition of any Encumbrances (as such term is
hereinafter defined in Section 2.12 hereof) on all or any part of the
property of the Company and its Subsidiaries pursuant to any provision
of, any order, judgment, arbitration award, injunction, decree,
indenture, mortgage, lease, license, lien, or other agreement or
instrument to which any Seller, any Subsidiary or the Company is a
party or by which any of them is bound; or (iii) violate or conflict
with any provision of the bylaws or articles of incorporation of the
Company as amended to the date hereof.
10
2.3 Affiliated Entities. Except as set forth in Schedule 2.3 hereto,
------------
neither Sellers nor the Company owns, directly or indirectly, a majority or
controlling interest in any corporation, business trust, joint stock
company, partnership or other business organization or association relating
to the business operations of the Company. With respect to each corporation
that is an issuer of any shares of capital stock owned beneficially or of
record by the Company (each a "Subsidiary" and collectively the
----------
"Subsidiaries"), Schedule 2.3 sets forth a true and complete list of (i)
------------ ------------
its name and jurisdiction of incorporation, (ii) each jurisdiction in which
it is duly qualified or licensed to do business as a foreign corporation,
(iii) its authorized capital stock, (iv) the number of shares of each class
thereof outstanding, and (v) the number of shares of each such class and
percentage of outstanding voting stock owned by the Company or any of its
Subsidiaries. Except as set forth in Schedule 2.3, no capital stock or
------------
other security (including any debt security) of any Subsidiary is held by
any person other than the Company or a Subsidiary. No part of the Company's
and its Subsidiaries' business is conducted through any entity other than
the Company and the Subsidiaries.
2.4 Capitalization and Ownership. The authorized capital stock of the
Company consists solely of ten thousand (10,000) shares of common stock,
par value $5.00 per share, of which 1,015 and no more are presently issued
and outstanding. Sellers own of record and beneficially all such presently
issued and outstanding shares of the Company. Schedule 2.4 attached hereto
------------
sets forth the number of shares of the Company held by each Seller. There
are no outstanding rights, warrants, options, subscriptions, agreements or
commitments giving anyone any right to require the Company and its
Subsidiaries to sell or issue, or to require any Seller to sell or
otherwise transfer, any capital stock or other securities of the Company.
2.5 Jurisdictions. Schedule 2.5 attached hereto contains a list of
------------
all jurisdictions in which the Company is presently licensed or qualified
to do business. Except for past violations which have been remedied or
settled, the Company and its Subsidiaries have complied in all material
respects with all applicable laws of each such jurisdiction and all
applicable rules and regulations of each regulatory agency therein.
Schedule 2.4 attached hereto sets forth each such past violation occurring
------------
since December 31, 1994. Neither the Company nor any Subsidiary (i) has
been denied admission to conduct any type of business in any jurisdiction
in which it is not presently admitted as set forth in such Schedule 2.5;
------------
(ii) has had its license or qualifications to conduct business in any
jurisdiction revoked or suspended; and (iii) has been involved in any
proceeding to revoke or suspend a license or qualification.
2.6 Records. Prior to the Closing, the Company and Sellers shall
deliver to Buyer true and complete copies of the Company's and the
Subsidiaries' articles of incorporation, bylaws, minutes of all meetings of
directors and shareholders and certificates reflecting all actions taken by
the directors or shareholders without a meeting, and other organizational
documents of the Company and its Subsidiaries.
2.7 Officers and Directors; Bank Accounts; Powers of Attorney. The
officers and directors of the Company and its Subsidiaries are as set forth
in Schedule 2.7 attached hereto. Schedule 2.7 attached hereto also sets
------------ ------------
forth (i) the name of each bank, savings institution or other person with
which the Company or its Subsidiaries has an account or safe
11
deposit box and the names and identification of all persons authorized to
draw thereon or to have access thereto, and (ii) the names of all persons,
if any, holding powers of attorney from the Company or its Subsidiaries
and a summary statement of the terms thereof.
2.8 Financial Statements.
2.8.1 Sellers have furnished to Buyer (i) a consolidated
balance sheet of the Company and its Subsidiaries as of September
30, 2000; (ii) a consolidated statement of operations of the
Company and its Subsidiaries as of September 30, 2000; (iii) a
consolidated balance sheet of the Company and its Subsidiaries as
of April 30, 2001 (the "Balance Sheet Date"); and (iv) a
------------------
consolidated statement of operations of the Company and its
Subsidiaries for the seven months ended on the Balance Sheet
Date; copies of which are attached hereto as Exhibit B. The
---------
consolidated financial statements referred to in (iii) and (iv)
above are herein collectively referred to as the "Interim
-------
Financial Statements". The consolidated financial statements
--------------------
referred to in (i) through (iv) above are herein collectively
referred to as the "Financial Statements".
--------------------
2.8.2 The Financial Statements fully and fairly set forth
the financial condition of the Company and its Subsidiaries as of
the dates indicated, and the results of its operations for the
periods indicated, in accordance with generally accepted
accounting principles consistently applied, except as otherwise
stated therein, and provided that the Interim Financial
Statements lack footnote disclosures and are subject to year end
adjustment consistent with past practice.
2.9 Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations whatsoever, either accrued,
absolute, contingent or otherwise, which are not reflected or provided for
in the Interim Financial Statements, except (i) those arising after the
Balance Sheet Date which are in the ordinary course of business, in each
case in normal amounts and none of which is material in amount, (ii) as
and to the extent specifically described in Schedule 2.9 and the other
------------
Schedules attached hereto, and (iii) contingent obligations which are
fully reimbursable through insurance maintained by the Company and its
Subsidiaries (net of customary deductibles).
2.10 Absence of Certain Changes or Events Since the Balance
Sheet Date. Since the Balance Sheet Date, neither the Company nor any
Subsidiary, except as set forth on Schedule 2.10 attached hereto:
-------------
(i) incurred any obligation or liability (fixed or
contingent), except normal trade or business obligations incurred
in the ordinary course of business and consistent with past
practice, none of which is material in amount and except in
connection with this Agreement and the transactions contemplated
hereby;
(ii) discharged or satisfied any Encumbrance or paid
any obligation or liability (fixed or contingent), other than in
the ordinary course of business and consistent with past
practice;
12
(iii) mortgaged, pledged or subjected to any
Encumbrance any of its assets or properties (other than
mechanic's, materialman's and similar statutory liens arising in
the ordinary course of business as a matter of law between the
date of delivery and payment) and liens for taxes not yet due and
payable;
(iv) transferred, leased or otherwise disposed of any
of its assets or properties except for a fair consideration in
the ordinary course of business and consistent with past practice
or, except in the ordinary course of business and consistent with
past practice, acquired any assets or properties;
(v) cancelled or compromised any debt or claim,
except in the ordinary course of business and consistent with
past practice;
(vi) waived or released any rights of material value;
(vii) except pursuant to those contracts listed on the
Schedules attached hereto, transferred or granted any rights
under any concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, service marks or copyrights
or with respect to any know-how;
(viii) made or granted any wage or salary increase
applicable to any group or classification of employees generally
(other than normal merit and/or cost of living increases granted
in the ordinary course of business consistent with past
practice);
(ix) entered into any employment contract with, or
made any loan to, or entered into any material transaction of any
other nature with, any officer or employee, except as listed on
the Schedules attached hereto;
(x) entered into any transaction, contract or
commitment, except (a) contracts listed on the Schedules attached
hereto, (b) contracts not required to be listed on the Schedules
attached hereto because of the disclosure limitations in Section
2.20, and (c) this Agreement and the transactions contemplated
hereby;
(xi) suffered any casualty loss or damage (whether or
not such loss or damage shall have been covered by insurance)
which affects in any material respect its ability to conduct
business;
(xii) declared any dividends or bonuses, or authorized
or affected any amendment or restatement of its articles of
incorporation or bylaws or taken any steps looking toward
dissolution or liquidation;
(xiii) lost any major customer or had any material order
cancelled or knows of any threatened cancellation of any material
order; or
(xiv) had any labor trouble, strike or work stoppage or
knows of any threatened labor trouble, strike or work stoppage.
2.11 Taxes.
13
(a) Since December 31, 1995, the Company and each of the Subsidiaries
have filed or caused to be filed timely all Tax Returns (including estimated Tax
Returns) required to be filed by the Company and the Subsidiaries. All such Tax
Returns are complete and accurate in all material respects. All Taxes required
to be shown on such Tax Returns or otherwise due or payable and all additional
assessments of any Taxes received prior to the date hereof have been paid in
full on the due date for payment thereof. Except as disclosed on Schedule 2.11
-------------
attached hereto, neither the Company nor any of its Subsidiaries is required to
file any income or franchise tax returns in any jurisdiction other than the
United States and the State of Missouri. The amounts set up as accruals for
Taxes on the financial books of the Company and its Subsidiaries on the Closing
Date will be sufficient for the payment of all Taxes of the Company and its
Subsidiaries, whether or not disputed, for all periods ended on and prior to the
Closing Date. Except as disclosed in Schedule 2.11 attached hereto, since
-------------
December 31, 1995, the United States federal, state and local income tax returns
of the Company and each of the Subsidiaries have not been audited by the
Internal Revenue Service ("IRS") or other Tax Authority or are closed and, to
---
the best knowledge of Sellers, there are no proceedings or claims relating
thereto or any facts that could give rise to the reopening thereof. No
deficiency in the payment of Taxes by the Company or any of the Subsidiaries for
any period has been asserted or, to the best knowledge of Sellers, threatened
against the Company and its Subsidiaries or Sellers by any Tax Authority that
remains unsettled as of the date of this Agreement. All Taxes required to be
withheld, collected or deposited by the Company or any of the Subsidiaries have
been timely withheld, collected or deposited and, to the extent required, have
been paid to the relevant Tax Authorities. Except as set forth on Schedule 2.11
-------------
attached hereto, neither the Company nor any Subsidiary owes any amount pursuant
to any written or unwritten Tax sharing agreement or arrangement, nor will the
Company or any Subsidiary have any liability after the date hereof in respect of
any written or unwritten Tax sharing agreement or arrangement executed or agreed
prior to the date hereof. There are no Tax liens on any of the assets of the
Company or any of the Subsidiaries, other than liens for current Taxes which are
not yet due or payable. Except as set forth in Schedule 2.11 attached hereto,
-------------
since December 31, 1995, neither Sellers nor the Company or its Subsidiaries has
made any agreement, waiver or other arrangement providing for an extension of
time with respect to the assessment or collection of any Tax against the Company
and its Subsidiaries. Neither the Company nor any Subsidiary is a party to any
agreement or arrangement that would result, either separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of Section 280G of the Code. No consent under Section 341(f) of the Code has
been filed with respect to the Company or its Subsidiaries.
(b) For purposes of this Agreement, the term "Tax" or "Taxes" shall
--- -----
mean all taxes, charges, fees, levies, penalties or other assessments imposed by
any United States federal, state, local or foreign Tax Authority, including, but
not limited to, income, service, leasing, occupation, excise, property, sales
and use, transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable thereto.
(c) For purposes of this Agreement, the term "Tax Return" or "Tax
---------- ---
Returns" shall mean any return, report, information return or other document
-------
(including any related or supporting information) filed or required to be filed
with any Tax Authority with respect to Taxes.
(d) For purposes of this Agreement, the term "Tax Authority" or "Tax
------------- ---
Authorities" shall mean the IRS and any similar state, local or foreign
-----------
authority having
14
jurisdiction over Taxes.
2.12 Title to Acquired Shares. The Acquired Shares are duly
authorized, validly issued, fully paid and nonassessable and are owned by
Sellers free and clear of all options, mortgages, restrictions (other than
restrictions under applicable securities laws), liens, charges,
assessments, pledges, security interests, adverse claims, equities,
limitations or other encumbrances (collectively, "Encumbrances"). Upon
------------
transfer of the Acquired Shares by Sellers, Buyer will, as a result,
receive good title to all of the Acquired Shares, free and clear of all
Encumbrances.
2.13 Real Property.
2.13.1 Neither the Company nor any of its Subsidiaries
has ever owned any real property.
2.13.2 Schedule 2.13B attached hereto identifies the real
--------------
property leased or subleased by the Company and its Subsidiaries
(the "Leases"). Neither the Company nor any Subsidiary has
------
received any written notification that it is in default with
respect to any of the Leases nor are there any disputes between
any landlord and the Company nor any Subsidiary with respect to
the Leases that would affect the right of the Company and/or its
Subsidiaries to remain in possession or otherwise affect the
current use of the property leased or the rental amount then due.
Except as set forth in Schedule 2.13B attached hereto, either the
--------------
Company or a Subsidiary has performed all material obligations
required to be performed by it to date under, and is not in
default in respect of, any Lease, and no event has occurred
which, with due notice or lapse of time or both, would constitute
such a default. To the best of Sellers' knowledge, no other party
to any Lease is in default in respect thereof, and no event has
occurred which, with due notice or lapse of time or both, would
constitute such a default. Except as set forth on Schedule 2.13B
--------------
attached hereto, the Company and its Subsidiaries will not have
any obligations or liabilities arising out of the early
termination of any of the Leases.
2.13.3 Except as set forth on Schedule 2.13B attached
--------------
hereto, true and complete copies of all Leases have been, or
prior to Closing will be, made available to Buyer or its
representatives.
2.13.4 Except as set forth on Schedule 2.13B attached
--------------
hereto, the consummation of the transactions contemplated by this
Agreement will not affect in any way, or result in the
termination of, any of the Leases.
2.14 Condition of Assets. Schedule 2.14 lists all of the
-------------
Company's and its Subsidiaries' fixed assets including, but not limited
to, all motor vehicles, machinery, equipment, furniture, fixtures,
inventory and other tangible personal property owned, leased or used by
the Company or its Subsidiaries, having an original cost of $1,000 or
more; except as set forth on Schedule 2.14, to the Sellers' knowledge, all
-------------
of such fixed assets are sufficient and adequate to carry on the Company's
business as presently conducted and to the extent in use, are in good
operating condition and repair (normal "wear and tear" excepted) and are
suitable for the purposes for which they are used.
15
2.15 Title to Property; Encumbrances.
2.15.1 The Company and its Subsidiaries have good, valid
and marketable title to all of their properties and assets
(including those assets and properties shown on the Interim
Financial Statements or thereafter acquired) (except for (i)
inventory subsequently sold or otherwise disposed of for fair
value in the ordinary course of business consistent with past
practice, (ii) accounts receivable subsequently collected in the
ordinary course of business consistent with past practice and
(iii) immaterial amounts of inventory, machinery and equipment
that have been determined to be obsolete or otherwise not
necessary and have been disposed of in the ordinary course of
business consistent with past practice), in each case free and
clear of all Encumbrances except for any Encumbrance reflected in
Schedule 2.15 attached hereto.
-------------
2.15.2 All buildings, structures, improvements and
fixtures owned, leased or used by the Company and its
Subsidiaries in the conduct of the Company's and its Subsidiaries
businesses conform in all material respects to all applicable
codes and rules adopted by national and local associations and
boards of insurance underwriters; and all such buildings,
structures, improvements and fixtures are in good condition and
repair, normal "wear and tear" excepted.
2.16 Insurance. Schedule 2.16 attached hereto sets forth a
-------------
complete list of all policies of or binders for fire, liability, worker's
compensation and other forms of insurance owned or held by the Company and
its Subsidiaries. All such policies, or binders thereof, are in full force
and effect, all premiums with respect thereto covering all periods up to
and including the respective dates set forth in Schedule 2.16 attached
-------------
hereto have been paid, and no notice of cancellation or termination has
been received with respect to any such policy or binder. Such policies or
binders (i) are sufficient for compliance with all material requirements
of law currently applicable to the Company and its Subsidiaries and of all
agreements to which the Company or any Subsidiary is a party or by which
it is bound; (ii) to Sellers' knowledge are in such amounts and types of
coverage as are customarily maintained by businesses of the size and type
as the Company's and its Subsidiaries' businesses; (iii) provide insurance
coverage adequate for the assets and present operations of the Company and
its Subsidiaries; (iv) will remain in full force and effect through the
respective dates set forth in Schedule 2.16 attached hereto without the
-------------
payment of additional premiums; and (v) will not in any way be affected
by, or terminate or lapse by reason of, the sale of the Acquired Shares
contemplated by this Agreement. Schedule 2.16 attached hereto also
-------------
identifies all risks which the Company and its Subsidiaries have
designated as being self-insured. Neither the Company nor any Subsidiary
has been refused any insurance with respect to its assets or operations,
nor has its coverage been limited, by any insurance carrier to which it
has applied for any such insurance or with which it has carried insurance
during the last five years.
2.17 Business Property Rights.
2.17.1 Schedule 2.17 attached hereto sets forth (i) all
-------------
patents, and registrations for trademarks, trade names, service
marks and copyrights which are
16
unexpired as of the date hereof and which are used in connection
with the operation of the Company's and its Subsidiaries'
businesses, as well as all applications pending on said date for
patents or for trademark, trade name, service xxxx or copyright
registrations, (ii) all licenses granted by or to the Company and
its Subsidiaries and all other agreements to which the Company or
any Subsidiary is a party and which relate, in whole or in part,
to any items of the categories mentioned in (i) above or to other
proprietary rights owned or held by the Company or any Subsidiary
which are reasonably necessary to, or used in connection with,
the businesses of the Company and its Subsidiaries.
2.17.2 The property referred to in Section 2.17.1 hereof,
together with (i) all designs, methods, inventions, know-how,
related thereto and (ii) all trademarks, trade names, service
marks, and copyrights claimed or used by the Company and its
Subsidiaries which have not been registered (collectively
"Business Property Rights"), constitute all such proprietary
------------------------
rights owned or held by the Company and its Subsidiaries and
which are reasonably necessary to, or used in the conduct of the
businesses of the Company and its Subsidiaries.
2.17.3 The Company and its Subsidiaries own or have valid
rights to use all such Business Property Rights without conflict
with the rights of others. Except as set forth in Schedule 2.22
-------------
attached hereto, no person or corporation has made or, to the
knowledge of Sellers or the Company and its Subsidiaries,
threatened to make any claims that the operation of the
businesses of the Company and its Subsidiaries is in violation of
or infringes any other proprietary or trade rights of any third
party. To the knowledge of Sellers and the Company, no third
party is in violation of or is infringing upon any Business
Property Rights.
2.18 Employee Benefit Plans and Arrangements.
2.18.1 Certain Definitions. As used herein, the
-------------------
following terms shall have the respective meanings indicated:
(a) "Employee" means any employee of the
--------
Company and its Subsidiaries.
(b) "ERISA" means the Employee Retirement
-----
Income Security Act of 1974, as amended, and the
regulations and rulings thereunder.
(c) "Pension Plan" means a pension plan
------------
within the meaning of Section 3(2) of ERISA.
(d) "Plan" means all present and prior
----
(including terminated and transferred) plans, programs,
agreements (other than collective bargaining agreements
covering one or more Employees), and methods of
contribution or compensation, whether written or
unwritten (including all amendments to and components of
the same, such as a trust with respect to a Plan),
providing any remuneration or benefits (other than any
current cash compensation) to any current or former
Employee and/or any current or former officer or
17
director of the Company and its Subsidiaries, whether or
not such plan or plans, programs, agreements and methods
of contribution or compensation are subject to ERISA, and
whether or not such plan or plans, programs, agreements
and methods of contribution or compensation are qualified
under the Code. The term "Plan" includes, but is not
limited to, pension, retirement, profit sharing, stock
bonus, nonqualified deferred compensation, incentives,
bonuses, subsidies, complimentary or discounted rooms or
food and beverage, stock, stock option, health and
welfare, severance pay and vacation plans.
(e) "Welfare Plan" means a welfare plan
------------
within the meaning of Section 3(1) of ERISA.
2.18.2 Documents.
---------
(a) Schedule 2.18 attached hereto
-------------
identifies all the Plans which relate to or affect the
business of the Company and its Subsidiaries. Except as
identified on Schedule 2.18 attached hereto, the Company
-------------
and its Subsidiaries do not have, and since December 31,
1995 have not participated in, any other Plan, nor do the
Company and its Subsidiaries have any formal plan or
commitment, whether legally binding or not, to create any
additional Plan or modify or change any Plan that would
affect any Employee or terminated Employee. Each Plan is
now and has always been established in writing to the
extent required to be in writing. Except as identified on
Schedule 2.18 attached hereto, no oral representation has
-------------
been made to any Employee or any former Employee
regarding the provision of any benefit, including without
limitation any benefit upon retirement, other than in
accordance with a Plan.
(b) True and complete copies of all current
and prior documents, including all amendments thereto,
with respect to each Plan identified on Schedule 2.18
-------------
attached hereto have been provided to Buyer and its
counsel. These documents include, but are not limited to,
the following: Plan documents, trust agreements,
insurance contracts, summary annual reports and summary
Plan descriptions; filings with, applications to and
correspondence with any governmental entity; disputed
claims made by or against any Plan; investment manager
and investment advisory contracts; evaluations of
investment performance; administration contracts;
actuarial reports; audit reports; financial statements;
legal advice; agreements concerning Plan mergers,
spin-offs, reversions or transfers; determination letters
and private letter rulings from the Internal Revenue
Service; advisory opinion letters from the Department of
Labor or the Pension Benefit Guaranty Corporation
("PBGC"); prohibited transaction exemptions; minutes or
----
other records of the meetings of any Plan committee; and
reports of trustees or custodians and appraisals of
assets. The participant and beneficiary records with
respect to each Plan are in the custody of the persons
identified on Schedule 2.18 attached hereto.
-------------
18
2.18.3 Operations.
----------
(a) Except as set forth in Schedule 2.18,
-------------
all Plans are now, and have always been, established,
maintained and operated in substantial compliance with
all applicable laws, including but not limited to ERISA
and the Code, and the relevant Plan documents. Each Plan
which is intended to be qualified within the meaning of
Subchapter D of the Code is and has always been so
qualified. The Company and its Subsidiaries, and each of
its officers, directors, agents and employees, acts and
have always acted with respect to each Plan in
substantial compliance with the requirements of all
applicable laws, including but not limited to ERISA and
the Code, and in substantial compliance with the terms
and conditions of each Plan as provided in its Plan
documents.
(b) All communications with respect to each
Plan by the Company and its Subsidiaries, and their
officers, directors, agents and authorized employees,
reflect and have always reflected accurately the
documents and operations of each Plan. The Company and
its Subsidiaries, and their officers, directors, agents
and employees, have no, and have had no, material
liability under any applicable law, including but not
limited to federal and state securities laws, on account
of any communication or failure to communicate with
respect to or in connection with any Plan.
(c) No Plan, administrator of a Plan,
fiduciary with respect to a Plan or the Company and its
Subsidiaries or any of their officers, directors, agents
or employees, has taken any action, or failed to take any
action, that could subject it or any other person to any
liability for any excise tax or for a breach of fiduciary
duty with respect to or in connection with any Plan.
(d) All reports, forms and other documents
required to be filed, or advisable to be filed, with any
governmental entity with respect to any Plan have been
timely filed and are accurate and complete.
(e) All contributions required to be made
to or with respect to each Plan have been completely and
timely made. All such contributions have been fully
deducted or can be currently deducted by the Company and
its Subsidiaries for income tax purposes; such deductions
have not been challenged or disallowed by any
governmental entity; and neither the Company nor any
Subsidiary has reason to believe that such deductions are
not allowable. The Company and its Subsidiaries have not
incurred any "accumulated funding deficiency" as defined
in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, with respect to any Plan subject
to Title I of ERISA and/or Subchapter D of the Code.
(f) All benefits and other payments
required to be made under any Plan have been completely
and timely paid. No actual, or to the best of Sellers'
knowledge, anticipated, threatened, or expected
litigation or arbitration concerning or involving any
Plan has existed except as described
19
in Schedule 2.18 attached hereto. No complaints by any
-------------
governmental entity have been filed, are threatened or
are expected with respect to any Plan. No claims have
been made or, to the best of Sellers' knowledge, are
expected to be made with respect to any bond or any
fiduciary liability or other similar insurance with
regard to the actions of any person in connection with
any Plan, and no notice to any insurer under any such
bond or policy with regard to any Plan has been given or,
to the best of Sellers' knowledge, is expected to be
given. No insurance policy with respect to any Plan has
been rejected nor is any such bond or policy now subject
to any qualification, condition or exclusion.
(g) No Plan or any other person has or has
had any material liability to any Plan participant,
beneficiary or any other person under any provision of
ERISA or any other applicable law by reason of any action
or failure to act in connection with any Plan, including
but not limited to, any liability by reason of any
payment of, or failure to pay, benefits or any other
amounts, or by reason of any credit or failure to give
credit for any benefits or rights, including but not
limited to, vesting rights, in connection with any Plan.
(h) With respect to any Plan other than a
Multiemployer Plan: (A) each funded Plan (whether or not
subject to Title I of ERISA or Subchapter D of the Code)
has sufficient assets to fund all vested and nonvested
benefits earned or accrued thereunder, determined on a
termination basis and utilizing actuarial factors which
would be applied by the PBGC with respect to the
termination of a Plan which is subject to Titles I and IV
of ERISA and Subchapter D of the Code; and (B) for each
unfunded Plan the Company has accrued on its consolidated
financial statements sufficient reserves to fund all
vested and nonvested benefits thereunder, utilizing where
applicable such reasonable actuarial factors and
assumptions as set forth on Schedule 2.18 attached
-------------
hereto.
(i) The PBGC has not instituted any
proceeding to terminate any Plan which is subject to
Title IV of ERISA and, to the best of Sellers' knowledge,
no condition exists that presents a material risk that
any such proceeding will be instituted.
(j) No amount payable under any Plan will
fail to be deductible for federal income tax purposes by
virtue of Section 280G of the Code.
(k) With respect to each Plan that is
funded wholly or partially through an insurance policy,
there is no liability under any such insurance policy or
ancillary agreement with respect to such insurance policy
in the nature of a retroactive rate adjustment, loss
sharing arrangement or other contractual or contingent
liability arising wholly or partially out of events
occurring prior to the date hereof.
20
2.18.4 Welfare Benefits. Unless otherwise specified
----------------
herein or agreed to in writing by Buyer, through the Closing, the
Company and its Subsidiaries will maintain all Plans described in
Schedule 2.18 attached hereto and any related insurance policies
-------------
or other funding or administrative arrangements presently in
effect with respect to Employees, and will handle any claims or
benefits thereunder in the ordinary course of business. The
Company and its Subsidiaries shall be responsible for all claims
made under a Welfare Plan before the Closing, whether paid before
or after the Closing, and all claims made after the Closing Date
that arise out of services provided through Closing.
2.18.5 Termination. Buyer shall not be required to
-----------
continue any of the Plans following the Closing.
2.19 Employees.
2.19.1 Except as set forth on Schedule 2.19 attached
-------------
hereto, neither the Company nor any Subsidiary has entered into
any collective bargaining agreements covering one or more
Employees.
2.19.2 Except as set forth on Schedule 2.18 attached
-------------
hereto or Schedule 2.19 attached hereto, the employment of each
-------------
Employee may be terminated without such Employee becoming
entitled to any benefit whatsoever (except for wages and benefits
earned through the date of termination).
2.19.3 Except as set forth on Schedule 2.19 attached
-------------
hereto, during the past 12 months the Company and its
Subsidiaries have not, directly or indirectly, purchased, leased,
acquired any property or obtained any services from, or sold,
leased, disposed of any property or furnished any services to, or
otherwise dealt with any Employee or any person, firm or
corporation which, directly or indirectly, alone or together with
other, controls, is controlled by or is under common control with
any Employee, except with respect to remuneration for services
rendered as a director, officer or employee of the Company or its
Subsidiaries.
2.19.4 Except as set forth on Schedule 2.19 attached
-------------
hereto, no part of the property or assets of any Employee or any
person, individual or organization directly or indirectly related
to any Employee is used by the Company and its Subsidiaries.
2.19.5 Except as set forth on Schedule 2.19 attached
-------------
hereto, neither the Company nor any Subsidiary has encountered
any actual or threatened Employee strike, work stoppage, slowdown
or lockout, or had any material change in its relations with
Employees for the three years prior to the date of this
Agreement. No question concerning representation has been raised
or is threatened with respect to the Employees.
2.19.6 No "leased employee", as that term is defined
within the meaning of Section 414(n) of the Code, performs
services for the Company and its Subsidiaries.
21
2.19.7 Except as set forth on Schedule 2.19 attached
-------------
hereto, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former Employee or
current or former officer or director of the Company or any
Subsidiary to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement;
(ii) accelerate the time or payment or vesting, or increase the
amount of compensation due any such Employee, officer or
director; or (iii) result in any prohibited transaction described
in Section 406 of ERISA or Section 4975 of the Code for which an
exemption is not available.
2.19.8 The Company and each Subsidiary is currently and
has always been in compliance in all material respects with all
applicable laws respecting employment and employment practices,
terms and conditions of wages and hours, and have not engaged in
any unfair labor practice.
2.19.9 Neither the Company nor any Subsidiary (i) has
taken any action which, alone or in conjunction with actions
committed by the Company and its Subsidiaries prior to the
Closing Date to be taken in the future, would constitute a "plant
closing" or "mass layoff" within the meaning of the Worker
Adjustment and Retraining Notification Act ("WARN") or applicable
----
state law; or (ii) has issued any notification of a "plant
closing" or "mass layoff" required by WARN or by applicable state
law.
2.20 Other Contracts. Schedule 2.20 attached hereto sets forth a
-------------
purchase order backlog for the Company and its Subsidiaries as of August
31, 2001 and a list of all contracts, understandings and commitments
(including, without limitation, mortgages, indentures and loan agreements)
to which the Company or any Subsidiary is a party, or to which it or any
of its assets or properties are subject, and which are not specifically
referred to in the other Schedules attached hereto except for contracts
which either (i) entail the delivery or receipt by the Company and its
Subsidiaries of products or services having a value of $5,000 or less in
the aggregate, or (ii) may be canceled by the Company or such Subsidiary
without liability upon thirty (30) days or fewer written notice. True and
complete copies of all such purchase orders and other contracts and
complete descriptions of all oral understandings, if any, required to be
referred to in the Schedules attached hereto (collectively, the
"Contracts") have been provided to Buyer and its counsel.
---------
2.21 No Breach or Default. Neither the Company nor any Subsidiary
is in default under any Contract to which it is a party or by which it is
bound, nor has any event occurred which, after the giving of notice or the
passage of time or both, would constitute a default under any such
Contract. Except as set forth on Schedule 2.21 attached hereto, Sellers
-------------
have no reason to believe that the parties to such Contracts will not
fulfill their obligations under such Contracts in all material respects or
are threatened with insolvency.
2.22 Litigation.
2.22.1 Schedule 2.22 attached hereto sets forth a list
-------------
and a summary description of all pending or, to the knowledge of
Sellers, threatened actions, suits, proceedings, disputes or
investigations by or against Sellers, the Company or its
22
Subsidiaries or any of the Company's or its Subsidiaries'
officers, directors, employees, agents or affiliates involving,
affecting or relating to any assets, properties or operations of
the Company or its Subsidiaries or the transactions contemplated
by this Agreement, setting forth, with respect to each action,
suit, proceeding, dispute or investigation, (i) the reserves
reflected in the Interim Financial Statements, if any, and (ii)
the existence and extent of insurance coverage.
2.22.2 Except as set forth in Schedule 2.22 attached
-------------
hereto, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Sellers,
threatened before any federal, state or local court or
governmental or regulatory authority, domestic or foreign, or
before any arbitrator of any nature, brought by or against
Sellers, the Company or its Subsidiaries or any of their
respective officers, directors, employees, agents or affiliates
involving, affecting or relating to any assets, properties or
operations of the Company or its Subsidiaries or the transactions
contemplated by this Agreement, nor does there exist any fact
which might reasonably be expected to give rise to any such suit,
proceeding, dispute or investigation.
2.22.3 Except as set forth on Schedule 2.22 attached
-------------
hereto, neither the Company and its Subsidiaries nor any of their
assets or properties is subject to any order, writ, judgment,
award, injunction or decree of any federal, state or local court
or governmental or regulatory authority or arbitrator, which
adversely affects or might reasonably be expected to affect the
assets, properties, business operations, prospects, net income or
financial condition of the Company and its Subsidiaries or which
would or might reasonably be expected to interfere with the
transactions contemplated hereby.
2.23 Accounts Receivable. All trade accounts receivable of the
Company and its Subsidiaries reflected in the Interim Financial Statements
and all trade accounts receivable of the Company and its Subsidiaries
arising between the Balance Sheet Date and the date hereof or the Closing
Date have arisen or will arise in the ordinary course of business and
represent or will represent bona fide indebtedness incurred by the
applicable account debtor for goods held subject to delivery instructions
or heretofore shipped or delivered pursuant to a contract of sale or for
services heretofore performed by the Company and its Subsidiaries. To
Sellers' knowledge no customer has any right of setoff or other
counterclaim with respect to an account receivable. No customer obligated
on any such account receivable has made any material warranty claim, and,
to Sellers' knowledge, no such customer has any material warranty claim.
2.24 Inventory. Except as set forth on Schedule 2.24 attached
-------------
hereto, the inventories of the Company and its Subsidiaries reflected in
the Financial Statements, or acquired by the Company and its Subsidiaries
between the Balance Sheet Date and the date hereof or the Closing Date,
are or will be carried at not in excess of the lower of cost or fair
market value, and do not or will not include any such inventory which is
not usable or saleable in the ordinary course of business of the Company
and its Subsidiaries as heretofore conducted, in each case net of reserves
provided therefor on such Interim Financial Statements in accordance with
generally accepted accounting principles.
23
2.25 Environmental Matters. Except as set forth in Schedule 2.25
-------------
attached hereto,
(i) the Company and its Subsidiaries have all
licenses, permits, certificates, approvals, applications,
registrations and other authorizations (collectively
"Environmental Permits") which are required under all
---------------------
Environmental Laws (as such term is hereinafter defined, for the
operations of the Company and its Subsidiaries);
(ii) the Company and its Subsidiaries and their
operations are in compliance with applicable Environmental Laws;
(iii) the Company and its Subsidiaries are not and have
not been since December 31, 1995, subject to any judicial or
administrative proceeding alleging the violation of Environmental
Law;
(iv) none of the real property leased by the Company or
its Subsidiaries (the "Real Property") is on the "CERCLIS" list
-------------
of hazardous waste sites or the "National Priorities List" of the
U.S. Environmental Protection Agency, or any similar state list,
or, to the knowledge of Sellers, is the subject of any federal,
state or local investigation evaluating whether any remedial
action is needed to respond to a release of any Hazardous
Material (as such term is hereinafter defined);
(v) neither the Company nor any Subsidiary has filed
or provided any written or oral notice under any Environmental
Law, including Section 103(a) or 103(c) of CERCLA, indicating the
past or present treatment, storage or Release (as such term is
hereinafter defined) of a Hazardous Material or reported a
Release of a Hazardous Material;
(vi) to the Seller's knowledge, the Company and its
Subsidiaries have no contingent or actual liability arising out
of any Release of any Hazardous Material into the environment;
(vii) the Sellers know of no act by the Company or its
Subsidiaries or condition of the Real Property which could give
reasonably be expected to rise to liability of the Company and
its Subsidiaries to any person or entity under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA") or other Environmental Laws, nor has the Company nor
------
any Subsidiary received written notice or claim alleging such
liability;
(viii) to the Sellers' knowledge, no Hazardous Material
is present or has been Released on, at, beneath or near any of
the Company's or any Subsidiary's past or present facilities or
any surface waters or ground waters thereon or thereunder, in
violation of applicable Environmental Laws;
(ix) the Company and its Subsidiaries do not own or
operate, nor have they ever owned or operated, an underground or
aboveground storage tank containing Hazardous Materials, nor is
any such tank located on or in any of the Real Property;
24
(x) To Sellers' knowledge, the Company and its
Subsidiaries have not sold or manufactured any product containing
asbestos or polychlorinated biphenyls.
As used herein, the term "Environmental Laws" shall mean all laws
------------------
and regulations (federal, state, and local) relating to pollution or to
the protection of public health, applicable to the property or the
operations of the Company or any Subsidiary, or the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), as they relate to Hazardous Materials,
including without limitation (i) those laws and regulations relating to
the Release or threatened Release of Hazardous Materials and to the
manufacture, generation, management, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, (ii) duties or requirements arising out of common law with
respect to Hazardous Materials, and (iii) judicial and administrative
interpretations thereof.
As used herein, the term "Hazardous Material" shall mean (i) any
------------------
chemicals, materials, wastes or substances that are defined, regulated,
determined or identified as toxic or hazardous in any Environmental Law
(including, without limitation, substances defined as "hazardous
substances", "hazardous materials", or "hazardous waste" "pollutant or
contaminant", "petroleum" or "natural gas liquids" in CERCLA, the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, or comparable state and local statutes or in the regulations
adopted and publications promulgated pursuant to said statutes), and (ii)
any asbestos, polychlorinated biphenyls, urea formaldehyde, lead based
paint, petroleum, petroleum products, oil, solid waste, pollutants, and
other contaminants (whether or not regulated under any Environmental Law).
As used herein, the term "Release" shall mean emitting,
-------
depositing, leaking, spilling, pumping, pouring, emptying, discharging,
injecting, escaping, leaching, dumping or disposing.
2.26 Customers and Suppliers. Except as set forth in Schedule
--------
2.26 attached hereto,
----
(i) neither any Seller nor the Company and its
Subsidiaries has received notice that, nor does any Seller or the
Company and its Subsidiaries have any knowledge that, any
customer of the Company and its Subsidiaries that has paid the
Company and its Subsidiaries more than $50,000 in the aggregate
for products and services curing the twelve months preceding the
date hereof has discontinued or plans to discontinue doing
business with the Company and its Subsidiaries;
(ii) the Company and its Subsidiaries do not have any
outstanding purchase contracts or commitments or unaccepted
purchase orders which are in excess of the normal, ordinary and
usual requirements;
(iii) the Company and its Subsidiaries have not received
payment for any services that the Company and its Subsidiaries
will be required to perform after the Closing or for any products
that the Company and its Subsidiaries will be required to
manufacture or deliver after the Closing;
25
(iv) no supplier or subcontractor to the Company and its
Subsidiaries has reduced its shipments of orders issued by the
Company and its Subsidiaries, or threatened to discontinue
supplying such items or services to the Company and its
Subsidiaries on reasonable terms;
(v) neither any Seller nor the Company and its
Subsidiaries has received notice that, nor does any Seller or the
Company and its Subsidiaries have any knowledge that, any such
supplier or subcontractor has discontinued or plans to
discontinue doing business with the Company and its Subsidiaries
on substantially the same terms as are consistent with its past
practices; and
(vi) neither any Seller nor the Company and its
Subsidiaries has received notice that, nor does any Seller or the
Company and its Subsidiaries have any knowledge that, any such
supplier or subcontractor has added or plans to add any
additional distributors of such suppliers' or subcontractors'
products or services within the Company's and its Subsidiaries'
marketing areas.
2.27 No Brokers. Neither any Seller nor the Company and its
Subsidiaries have entered into any contract, arrangement or understanding
with any person or firm which may result in the obligation of Buyer or the
Company and its Subsidiaries to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, and neither any Seller nor the Company
and its Subsidiaries is aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
2.28 Certain Transactions. Except as set forth in Schedule 2.28,
-------------
there are no existing or pending transactions, nor are there any
agreements or understandings, between the Company or any Subsidiary and
any Seller or any of the officers or directors of the Company and its
Subsidiaries, or any entity in which any Seller has a significant equity
interest (an "affiliated entity"), or any person known by Sellers to be a
-----------------
family member of any officer or director of the Company or an affiliated
entity, including, without limitation, any transactions, arrangements or
understandings relating to the purchase or sale of goods or services or
the sale, lease, licensing or use of any of the assets of or by the
Company and its Subsidiaries, with or without adequate compensation, or to
any indebtedness owed to or by the Company and its Subsidiaries, in any
amount whatsoever. No existing or former shareholder, director or
executive officer of the Company and its Subsidiaries has any claims
against or disputed with the Company and its Subsidiaries which could
result in the imposition of any liability or judgment against the Company
and its Subsidiaries or require the Company and its Subsidiaries to make
any payment or cease or alter any activities or business in which it is
engaged.
2.29 Accuracy of Information. To Sellers' knowledge, none of
Sellers' representations, warranties or statements contained in this
Agreement, in the Schedules and Exhibits hereto or in any other document
delivered to Buyer in connection with the transactions contemplated by
this Agreement, contains or will contain any untrue statement of a
material fact or omits to state any material fact necessary in order to
make any of such
26
representations, warranties or statements, in light of the circumstances
under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND AZZ
Buyer and AZZ, jointly and severally, hereby represent and warrant to
Sellers as follows:
3.1 Existence; Good Standing; Corporate Authority; Compliance
with Law. Each of Buyer and AZZ (i) is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction
of incorporation; (ii) is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws of all other
jurisdictions in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so licensed or
qualified has not had and will not have a material adverse effect on AZZ
or the Buyer or their respective assets, operations or financial position;
(iii) has all requisite corporate power and authority to own its
properties and carry on its business as now conducted; (iv) is not in
default with respect to any order of any court, governmental authority or
arbitration board or tribunal to which Buyer or AZZ is a party or is
subject; (v) is not in violation in any material respect of any laws,
ordinances, governmental rules or regulations to which it is subject; and
(vi) to Buyer's and AZZ's knowledge, has obtained all licenses, permits or
other authorizations and has taken all actions required by applicable laws
or governmental regulations in connection with its business as now
conducted.
3.2 Authorization; Validity and Effect of Agreements.
3.2.1 The execution, delivery and performance of this
Agreement and all agreements and documents contemplated hereby by
Buyer and AZZ, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all requisite
corporate action.
3.2.2 This Agreement constitutes, and all agreements and
documents contemplated hereby when executed and delivered
pursuant hereto will constitute, the valid and legally binding
obligations of Buyer and AZZ enforceable against Buyer and AZZ in
accordance with their terms, except that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium, bulk sales, preference,
equitable subordination, marshalling or other similar laws of
general application now or hereafter in effect relating to the
enforcement of creditors' rights generally and except that the
remedies of specific performance, injunction and other forms of
equitable relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
3.2.3 The execution, delivery and performance of this
Agreement by Buyer and AZZ does not, and the consummation by
Buyer and AZZ of the transactions contemplated hereby will not
(i) require the consent, approval or authorization of, or
declaration, filing or registration with, any governmental or
regulatory authority or
27
any third party; (ii) result in the breach of any term or
provision of, or constitute a default under, or result in the
acceleration of or entitle any party to accelerate (whether after
the giving of notice or the lapse of time or both) any obligation
under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any
part of the property of Buyer or AZZ pursuant to any provision
of, any order, judgment, arbitration award, injunction, decree,
indenture, mortgage, lease, license, lien, or other agreement or
instrument to which Buyer or AZZ is a party or by which it is
bound; or (iii) violate or conflict with any provision of the
bylaws or certificate of incorporation of Buyer or AZZ as amended
to the date hereof.
3.3 No Brokers. Neither AZZ, Buyer nor any of their respective
affiliates has entered into any contract, arrangement or understanding
with any person or firm which may result in the obligation of AZZ, of
Buyer, the Company, or Sellers to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, and neither AZZ, Buyer nor any of their
respective affiliates is aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
3.4 Shares. The AZZ Shares are duly authorized and, when issued
in accordance with this Agreement, will be (a) validly issued, fully paid
and nonassessable and (b) listed on the New York Stock Exchange.
3.5 Public Information. The periodic filings made by AZZ pursuant
to the 1934 Act since January 1, 2000 did not, at the time of filing
thereof, contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES/INDEMNIFICATION
4.1 Survival of Representations and Warranties. All
representations and warranties by the Parties in Articles II and III
hereof or in any other Article or Section hereof, shall survive delivery
by the Parties of the consideration to be given by them hereunder, and
shall survive the execution hereof, the Closing hereunder and the Closing
Date, for the applicable period set forth in Section 4.4, provided that
the representations and warranties in Section 2.11 shall expire on the
Closing Date, it being the Parties intention that matters relating to
Taxes shall be governed exclusively by Article VIII of this Agreement.
4.2 Indemnification by Sellers. Upon the terms and subject to the
conditions set forth in Sections 4.4 and 4.5 hereof and this Section 4.2,
the Sellers agree to indemnify, defend, protect, save and hold harmless
each Buyer Indemnitee (as such term is hereinafter defined) against, and
to reimburse each Buyer Indemnitee on demand for, any and all Losses
28
(as such term is hereinafter defined) made or incurred by or asserted
against such Buyer Indemnitee, at any time after the Closing Date,
directly or indirectly, arising out of, related to, caused by, or
resulting from any of the following ("Seller Indemnifiable Claims"):
---------------------------
(a) any inaccuracy or misrepresentation in, omission
from, or breach or nonfulfillment of a surviving representation,
warranty, term, provision, covenant or agreement on the part of
any Seller contained in this Agreement or in any certificate or
other instrument furnished or to be furnished by the Company or
Sellers to Buyer pursuant hereto; or
(b) any and all claims, liabilities or obligations that
arise out of, result from, or relate in any way to any or all
employment plans, practices, decisions, actions, agreements, or
proceedings undertaken by any Seller, the Company or any
Subsidiary prior to or on the Closing Date in connection with
persons employed or seeking to be employed by the Company or its
Subsidiaries, including without limitation any and all claims
liabilities or obligations that arise out of, result from, or
relate to (x) any agreement, practice, decision, action, plan or
proceeding described on Schedule 2.18 or Schedule 2.19 hereof, or
------------- -------------
(y) the termination of any employment agreements entered into
between the Company or any Subsidiary and any employee on or
prior to Closing; or
(c) the termination of the lease agreement covering the
real property located at 0000 Xxxxx 00xx Xxxx Xxxxxx, Xxxxx,
Xxxxxxxx; or
(d) any breach of the covenants contained in Section
5.11.
As used herein, the term "Losses" shall mean, with respect to any
------
person or party, any actual payment, loss, liability, obligation, damage
(including, without limitation, consequential, punitive, special or
otherwise), deficiency, lien, judgment, cost or expense (including,
without limitation, reasonable attorneys' and accountants' fees and
expenses and court costs) of any kind, nature or description.
As used herein, the term "Buyer Indemnitee" shall mean Buyer, any
----------------
affiliate of Buyer, any person, party, corporation, partnership, firm or
other entity with whom Buyer is affiliated or with whom Buyer has a
partnership or joint venture relationship (a "Buyer Partner"), and any
-------------
officer, director, shareholder, employee, agent, attorney, joint venturer,
partner (limited or general), servant, representative, trustee, successor
or assign of Buyer or of any Buyer Partner or of any affiliate of Buyer or
any Buyer Partner.
As used herein, the term "affiliate" shall mean, with respect to
---------
any person or Party, (i) any person or Party controlling, controlled by or
under common control with any such person or Party or (ii) any director or
executive officer of any such person or Party or of any person or Party
referred to in clause (i) of this paragraph.
As used herein, the term "control" shall mean the possession,
-------
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a person or Party, whether through the
ownership of voting securities or voting interests, by contract or
otherwise.
29
4.3 Indemnification by Buyer. Upon the terms and subject to the
conditions set forth in Sections 4.4 and 4.5 hereof and this Section 4.3,
Buyer agrees to indemnify, defend, protect, save and hold harmless Sellers
against, and will reimburse Sellers on demand for, any and all Losses made
or incurred by or asserted against Sellers, at any time after the Closing
Date, directly or indirectly, arising out of, related to, caused by, or
resulting from any inaccuracy or misrepresentation in, omission from, or
breach or nonfulfillment of a surviving representation, warranty, term,
provision, covenant or agreement on the part of Buyer contained in this
Agreement or in any certificate or other instrument furnished or to be
furnished by Buyer to Sellers pursuant hereto ("Buyer Indemnifiable
-------------------
Claims").
------
4.4 Limitations on Indemnification. Rights to indemnification
under Section 4.2 or 4.3 hereof are subject to the following limitations:
(a) Except for Losses incurred by the Buyer Indemnitees
with respect to Seller Indemnifiable Claims relating to any
representation or warranty of Sellers set forth in Section 2.12
hereof, no amount shall be payable by Sellers in indemnification
under Section 4.2 hereof until and unless the aggregate of all
Losses incurred by all Buyer Indemnitees with respect to one or
more Seller Indemnifiable Claims (other than Losses incurred by
the Buyer Indemnitees with respect to Seller Indemnifiable Claims
relating to any representation or warranty of Sellers set forth
in Section 2.12 hereof) shall exceed $50,000.00 (the
"Threshold"), and thereafter the Buyer Indemnitees shall be
---------
entitled to indemnification under Section 4.2 hereof for all such
Losses incurred by all Buyer Indemnitees in excess of the
Threshold, to a maximum indemnification obligation of Nine
Million Dollars ($9,000,000.00).
(b) With respect to any Losses incurred by any Buyer
Indemnitee with respect to any Seller Indemnifiable Claim
relating to any representation or warranty of Sellers set forth
in Section 2.12 hereof, such Buyer Indemnitee shall be entitled
to indemnification under Section 4.2 hereof for all such Losses
incurred by such Buyer Indemnitee with respect to such Seller
Indemnifiable Claim without limitation as to the amount of such
Losses.
(c) Subject to Section 4.4(g) hereof, the obligations of
Sellers under Section 4.2 hereof with respect to any Losses
incurred by any Buyer Indemnitee with respect to any Seller
Indemnifiable Claim relating to any representation or warranty of
Sellers set forth in Section 2.18 hereof or any matter referred
to in Section 4.2(b) hereof shall terminate on the fifth
anniversary of the Closing Date.
(d) The obligations of Sellers under Section 4.2 hereof
with respect to any Losses incurred by any Buyer Indemnitee with
respect to Seller Indemnifiable Claims relating to any
representation or warranty of Sellers set forth in Section 2.12,
or 2.15.1, hereof shall not expire.
(e) Subject to Section 4.4(g) hereof, the obligations of
Sellers under Section 4.2 hereof with respect to any Losses
incurred by any Buyer Indemnitee with respect to any Seller
Indemnifiable Claim relating to any representation or warranty of
Sellers hereunder (other than any representation or warranty of
Sellers set forth in
30
Section 2.11, 2.12, 2.15.1 or 2.18 hereof) or any matter referred
to in Section 4.2(c) or Section 4.2(d) hereof shall terminate on
the third anniversary of the Closing Date.
(f) Subject to Section 4.4(g) hereof, the obligations of
Buyer under Section 4.3 hereof with respect to any Losses
incurred by any Seller with respect to any Buyer Indemnifiable
Claim relating to any matter referred to in Section 4.3 hereof
shall terminate on the fifth anniversary of the Closing Date.
(g) The foregoing provisions of this Section 4.4
notwithstanding, if, prior to the termination of any obligation
to indemnify, written notice of a Seller Indemnifiable Claim or a
Buyer Indemnifiable Claim, as the case may be, is given by the
Party seeking indemnification (the "Indemnified Party") to the
-----------------
Party from whom indemnification is sought (the "Indemnifying
------------
Party") the Indemnified Party shall not be precluded from
-----
pursuing such claim breach, occurrence, other matter, or suit or
action, or from recovering from the Indemnifying Party (whether
through the courts or otherwise) on the Seller Indemnifiable
Claim or the Buyer Indemnifiable Claim, as the case may be, by
reason of the termination otherwise provided for above in this
Section 4.4, if any.
4.5 Conditions of Indemnification. With respect to any actual or
potential claim, any written demand, the commencement of any action, or
the occurrence of any other event which involves a Seller Indemnifiable
Claim or Buyer Indemnifiable Claim:
(a) Within twenty (20) days after the Indemnified Party
first receives written documents pertaining to the Claim, or if
such Claim does not involve a third party Claim (a "Third Party
-----------
Claim"), within twenty (20) days after the Indemnified Party
-----
first has actual knowledge of such Claim, the Indemnified Party
shall give written notice to the Indemnifying Party of such Claim
in reasonable detail and stating the amount involved, if known,
together with copies of any written documents.
(b) The obligation of the Indemnifying Party to indemnify
the Indemnified Party with respect to any Claim shall not be
affected by the failure of the Indemnified Party to give the
notice with respect thereto in the time frame specified in
Section 4.5(a) hereof unless the Indemnifying Party has been
materially prejudiced thereby.
(c) If the Claim involves a Third Party Claim, then the
Indemnifying Party shall have the right, at its sole cost,
expense and ultimate liability regardless of the outcome, and
through counsel of its choice (which counsel shall be reasonably
satisfactory to the Indemnified Party), to defend (by litigation,
settlement or other means of resolution) such Third Party Claim;
provided, however, that if the chosen counsel determines that a
-------- -------
conflict of interest exists such that the chosen counsel cannot
represent the Indemnified Party with respect to such Third Party
Claim, then the Indemnified Party shall be entitled to select
separate counsel of its own choosing, reasonably satisfactory to
the Indemnifying Party, in which event the Indemnifying Party
shall be obligated to pay the fees and expenses of such separate
counsel. Notwithstanding the preceding sentence, the Indemnified
Party may elect, at any time and at the Indemnified Party's sole
cost, expense and ultimate liability,
31
regardless of the outcome, and through counsel of its choice, to
defend (by litigation, settlement or other means of resolution)
such Third Party Claim. If the Indemnified Party so elects (for
reasons other than the Indemnifying Party's failure or refusal to
defend such Third Party Claim), then the Indemnifying Party shall
have no obligation to indemnify the Indemnified Party with
respect to such Third Party Claim. If the Indemnifying Party
fails or refuses to defend to any Third Party Claim, then the
Indemnified Party shall have the right to undertake the defense,
compromise or settlement of such Third Party Claim, through
counsel of its choice, on behalf of and for the account and at
the risk of the Indemnifying Party, and the Indemnifying Party
shall be obligated to pay the costs, expenses and attorney's fees
incurred by the Indemnified Party in connection with such Third
Party Claim; provided that the Indemnified Party shall not enter
into any settlement or compromise of such Third Party Claim
without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld or delayed. In any
event, the Parties shall, and shall cause their respective
affiliates to, fully cooperate with each other and their
respective counsel in connection with any such litigation,
defense, settlement or other attempted resolution.
4.6 Insurance Proceeds. Notwithstanding anything contained herein
to the contrary, the amount of any Losses incurred or suffered by any
Indemnified Party shall be calculated after giving effect to any insurance
proceeds received by the Indemnified Party with respect to such Losses. If
any such proceeds or recoveries are received by an Indemnified Party with
respect to any Losses after an Indemnifying Party has made a payment to
the Indemnified Party with respect thereto, the Indemnified Party (or such
Affiliate) shall pay to the Indemnifying Party the amount of such proceeds
or recoveries (up to the amount of the Indemnifying Party's payment).
4.7 Indemnity Escrow. If the Buyer Indemnitees are entitled to
indemnification for Losses under this Article IV, and the Sellers have not
reimbursed the full amount of indemnifiable Losses within ten (10) days
after written demand therefor from the Buyer, then the Buyer may demand
that it be distributed from the Indemnity Escrow an amount equal to such
unreimbursed Losses. Provided no dispute then exists as to any claim by
Buyer to all or a portion of the Indemnity Escrow, the Indemnity Escrow
will be released to Sellers on the final day of the eighteenth month
following the Closing Date, and the Escrow Agreement shall thereupon
terminate. To the extent a dispute does exist as to a good faith claim or
claims of Buyer on such final day of the eighteenth month following the
Closing Date, an amount equal to the actual or reasonably estimated Losses
associated with such claim or claims will continue to be held in
accordance with the provisions of this Agreement and the Escrow Agreement
until such claim or claims have been fully resolved, at which time the
balance of the Indemnity Escrow (if any) will be released to Sellers.
Sellers' obligations under this Agreement shall not be affected by any
termination of the Escrow Agreement. Earnings on the principal of the
Indemnity Escrow from time to time shall be added to and become part of
the Indemnity Escrow, and available for distribution to the Buyer to
satisfy indemnifiable Losses that have not been reimbursed by Sellers, and
to Sellers to the extent not so distributed to Buyer.
4.8 Exclusive Remedy. From and after the Closing Date, the
enforcement of the provisions of this Article IV shall be the sole and
exclusive remedy of AZZ, Buyer and all
32
other Buyer Indemnitees with respect to any claim against Sellers based on
a breach of a representation or warranty made in connection with the sale
of the Acquired Shares, or any liability or obligation of the Company or
its Subsidiaries that arises from or relates to, in whole or in part,
events occurring or circumstances existing as of or prior to the Closing;
and AZZ and Buyer hereby waive any and all other causes of action that may
otherwise exist at law or under applicable statutes and regulations.
4.9. Claims Against the Company. Sellers hereby waive any and all
claims or causes of action that they may have after the Closing Date at
law or under applicable statutes and regulations against the Company
relating in any way to the indemnities set forth in this Article IV.
ARTICLE V
OTHER COVENANTS AND AGREEMENTS
5.1 Restrictive Covenants/Proprietary Information.
5.1.1 Proprietary Information.
-----------------------
(a) Certain Definitions. As used herein,
-------------------
the term "Proprietary Information" means information,
-----------------------
knowledge or data not generally known in the relevant
trade or industry that was disclosed to or known by any
Seller as a consequence of or through such Sellers'
employment or any other relationship with the Company or
any Subsidiary (including, without limitation,
information conceived or developed by Sellers) about:
(i) the Company's or its Subsidiaries
activities, services, products, computer
programs and systems, trade secrets,
formulas, designs, patterns, methods,
machines, manufacturers, compositions,
inventions, discoveries, customer records,
processes, information relating to
research, development, inventions, work
performed or to be performed for Customers
(as such term is hereinafter defined),
contractual agreements, lists of past,
current or prospective Customers, lists of
employees and salary information, marketing
plans, strategies, and forecasts;
(ii) any Customers' activities, plans,
products, processes and services, including
without limitation information relating to
business operations, employee relations,
finance, and product or service marketing;
(iii) any Vendors' (as such term is
hereinafter defined) activities, plans,
services, products and processes including,
without limitation, information relating to
business operations, employee relations,
finance, and product or service marketing;
and
33
(iv) All information which any Seller has a
reasonable basis to know was created, modified or
used and held secret by the Company or its
Subsidiaries or that was accepted by the Company
or its Subsidiaries from any third party under an
obligation of confidentiality.
As used herein, the term "Customer" means any
--------
person or entity for whom the Company or any Subsidiary
provided a product or services within the two (2) year period
prior to the Closing Date.
As used herein, the term "Vendor" means any third
------
party selling or licensing a product or service to a Customer
or to the Company or any Subsidiary on or prior to the
Closing Date.
(b) Protection of Proprietary Information.
-------------------------------------
(i) Each Seller covenants and agrees that he,
she or it shall not, at any time prior to or after
the Closing Date, disclose any Proprietary
Information to any person or entity, except in the
course of such Seller's duties on behalf of Buyer
or the Company and its Subsidiaries, and shall not
use any Proprietary Information for the benefit of
anyone or any entity (other than Buyer or the
Company and its Subsidiaries) at any time.
(ii) Each Seller covenants and agrees that,
upon request by Buyer or the Company on or after
the Closing Date, he, she or it shall leave with
or return to the Company (or Buyer if Buyer so
requests) all documents, records, notebooks or any
other repositories of any Proprietary Information,
including any copies thereof that are then or
later discovered to be in such Sellers'
possession, whether such were developed or
prepared by such Seller or by others.
5.1.2 Restrictive Covenants.
---------------------
(a) Customer Restriction. Each Seller covenants
--------------------
and agrees that he, she or it shall not, for a period
beginning on the Closing Date and ending on the fifth
anniversary of the Closing Date, working alone or in
conjunction with one or more other persons or entities, for
compensation or not, (i) provide or offer to provide to any
Customer any product or service that is a competing product
or service to that offered by the Company or its Subsidiaries
immediately prior to the Closing, or (ii) induce or attempt
to induce any Customer to withdraw, curtail or cancel its
business with the Company or any Subsidiary or Buyer or in
any manner adversely modify any actual or potential business
relationship with Buyer, the Company or any Subsidiary.
34
(b) Non-Raid. Each Seller covenants and agrees
--------
that he, she or it shall not, for a period beginning on the
Closing Date and ending on the fifth anniversary of the
Closing Date, working alone or in conjunction with one or
more other persons or entities, for compensation or not, (i)
recruit or otherwise solicit or induce any person or entity
who is, on the Closing Date or thereafter, an employee or
Vendor of the Company or any Subsidiary to terminate their
employment with, or otherwise cease their relationship with,
the Company, any Subsidiary or Buyer or any of their
respective subsidiaries or affiliates, or (ii) hire, recruit
or otherwise solicit any person who, within the six months
immediately preceding the Closing Date, had been an employee
of the Company or any Subsidiary.
(c) Noncompetition. Each Seller covenants and
--------------
agrees that he, she or it shall not, for a period beginning
on the Closing Date and ending on the fifth anniversary of
the Closing Date, working alone or in conjunction with one or
more other persons or entities, for compensation or not,
engage in or carry on, directly or indirectly, either for
herself or as a member of a partnership or other entity or as
a stockholder, investor, officer or director of a corporation
(other than Buyer or a subsidiary or affiliate of Buyer) or
as an employee, agent, associate or contractor of any person,
partnership, corporation or other entity (other than Buyer
and/or any of its subsidiaries or affiliates), any business
in competition with the business of the Company or any
Subsidiary as carried on by the Company or such Subsidiary
immediately prior to the Closing, but only for as long as
such business is carried on by (i) Buyer and/or any of its
subsidiaries or affiliates or (ii) any person, corporation,
partnership, trust or other organization or entity deriving
title from Buyer or any of its subsidiaries or affiliates to
the assets and goodwill of the business being carried on by
the Company or its Subsidiaries immediately prior to the
Closing, in any county in United States. The Parties intend
that the covenants contained in this Section 5.1.2(c) shall
be deemed to be a series of separate covenants, one for each
county in the United States set forth above and, except for
geographic coverage, each such separate covenant shall be
identical in terms to the covenant contained in this Section
5.1.2(c).
(d) Reformation. If, in any judicial proceeding,
-----------
the court shall refuse to enforce all of the separate
covenants contained in Section 5.1.2(a), 5.1.2(b) or 5.1.2(c)
hereof because the time limit is too long, it is expressly
understood and agreed between the Parties that for purposes
of such proceeding such time limitation shall be deemed
reduced to the extent necessary to permit enforcement of such
covenants. If, in any judicial proceeding, the court shall
refuse to enforce all of the separate covenants contained in
Section 5.1.2(a), 5.1.2(b) or 5.1.2(c) hereof because they
are more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business
and goodwill of Buyer or any of its subsidiaries or
affiliates, it is expressly understood and agreed between the
Parties that for purposes of such proceeding the geographic
area, scope of business or other aspect shall be deemed
reduced to the extent necessary to permit enforcement of such
covenants.
35
5.1.3 Injunctive Relief. Each Seller acknowledges that a
-----------------
breach of Section 5.1.1 or 5.1.2 hereof would cause irreparable
damage to Buyer, and in the event of any Seller's actual or
threatened breach of the provisions of Section 5.1.1 or 5.1.2
hereof, Buyer shall be entitled to a temporary restraining order
and an injunction restraining such Seller from breaching such
covenants without the necessity of posting bond or proving
irreparable harm, such being conclusively admitted by such Seller.
Nothing in this Agreement shall be construed as prohibiting Buyer
from pursuing any other available remedies for such breach or
threatened breach, including the recovery of damages from the
offending Seller. Each Seller acknowledges that the restrictions
set forth in Sections 5.1.1 and 5.1.2 hereof are reasonable in
scope and duration, given the nature of the business of the Company
and its Subsidiaries. Each Seller agrees that issuance of an
injunction will not pose an unreasonable restriction on such
Seller's ability to obtain employment or other work following the
Closing Date.
5.2 Conduct of the Business.
5.2.1 Affirmative Covenants. On and after the date hereof
---------------------
and until the Closing Date or the date, if any, on which this
Agreement is earlier terminated and the Closing abandoned pursuant
to Article VII hereof (the "Termination Date"), Company shall, and
----------------
each Seller shall cause the Company and each Subsidiary to:
(i) conduct its operations according to its
ordinary and usual course of business consistent with past
practice; and
(ii) use all commercially reasonable efforts to
preserve intact its business organization and goodwill, to
keep available the services of its officers and directors,
and to maintain satisfactory relationships with suppliers,
distributors, manufacturer's representatives, licensors,
licensees, customers, employees and others having business
relationships with it.
5.2.2 Negative Covenants. Without limiting the generality of
------------------
the foregoing, and except for actions listed on Schedule 5.2
------------
attached hereto, without Buyer's prior written consent, the Company
and its Subsidiaries shall not, and each Seller shall cause the
Company and its Subsidiaries not to, on or after the date hereof
and until the earlier of the Closing Date or the Termination Date:
(i) declare or pay any cash dividends on its
outstanding shares of capital stock;
(ii) merge with, consolidate with, sell its
assets to or acquire substantially all the assets or capital
stock of, any other corporation or person, or enter into any
other transaction not in the ordinary and usual course of its
business;
(iii) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any
36
debt securities of others, except that (A) it may incur trade
accounts payable and operating expenses consistent with prior
practice, (B) it may borrow under its existing revolving
credit facility consistent with past practice, and (C) it may
borrow under its existing revolving credit facility to
satisfy the Company's or any Subsidiary's obligations under
the Equity-Based Plans referenced in Section 5.11 below and
to pay the balance of the Company's indebtedness to Xxxxxxx
Xxxxx;
(iv) make any direct or indirect redemption,
purchase or other acquisition of any of its capital stock;
(v) create or amend any pension or profit
sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or any other fringe benefit plan or program;
(vi) amend its articles of incorporation or
bylaws, as amended to the date hereof, except as may be
necessary to carry out this Agreement or as required by law;
(vii) issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization
as it exists on the date hereof;
(viii) grant, confer or award any options,
warrants, conversion rights or other rights, not existing on
the date hereof, to acquire any shares of its capital stock;
(ix) enter into any agreement or make any
undertaking which could be violated, or create obligations
which could be accelerated, as a result of the sale of the
Acquired Shares;
(x) make any material changes in any of their
respective management employment arrangements; or
(xi) take any action that can reasonably be
expected to cause any material adverse alteration of their
assets, liabilities, customer relationships, supplier
relationships or other relationships; or
(xii) make or obligate itself to make any
capital expenditure in excess of $100,000 in the
aggregate.
5.3 Access to Information and Customers. Throughout the period
prior to the earlier of the Closing Date or the Termination Date, the
Company and each Subsidiary shall, and each Seller shall cause the Company
and each Subsidiary to, (i) afford to Buyer and to its officers,
employees, accountants, counsel and other authorized representatives
reasonable access upon prior notice, throughout the period prior to the
earlier of the Closing Date or the Termination Date, to the Company's and
its Subsidiaries books and records and, after the existence of this
Agreement has been publicly announced, to the Company's and its
Subsidiaries facilities and properties; (ii) use its best efforts to cause
its representatives to
37
furnish to Buyer and to its authorized representatives such additional
financial and operating data and other information in the Company's
possession, control or otherwise readily available to the Company as to
the Company's and its Subsidiaries' businesses and properties as Buyer or
its duly authorized representatives may from time to time reasonably
request; and (iii) after the existence of this Agreement has been publicly
announced, permit Buyer and its representatives reasonable access to the
Company's and its Subsidiaries' major customers, and Buyer and its
authorized representatives shall have the right to contact such customers
and conduct such due diligence investigation relating to customer
relations as Buyer deems reasonably necessary or appropriate.
5.4 Acquisition Proposals. None of the Company, any Subsidiary or
any Seller shall, directly or indirectly, through any officer, director,
agent, representative (including, without limitation, investment bankers,
attorneys and accountants) or otherwise, (i) solicit, initiate or
encourage submission of inquiries, proposals or offers from any person,
corporation, partnership or other entity or group other than Buyer and its
affiliates (a "Third Party"), relating to any acquisition or purchase of
-----------
all or a portion of the assets of, or any equity interest in, the Company
or any Subsidiary; or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any 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 Third Party to do or
seek any of the foregoing. The Company and each Seller shall promptly
notify Buyer of any such proposal or offer, or if any inquiry or contact
with any Third Party with respect thereto, is made, and shall in any such
notice set forth in reasonable detail the identity of the Third Party and
the terms and conditions of such inquiry, proposal or offer.
5.5 Public Announcements. Until the existence of this Agreement
has been publicly disclosed, neither any Seller nor Buyer shall disclose
the terms of this Agreement or the fact that negotiations have or will
take place to anyone except those officers, employees and professional
advisors who (i) have a need to know such information and (ii) are
informed of its confidentiality. After the existence of this Agreement has
been publicly disclosed, the Parties shall mutually agree as to the
timing, content and wording of any other public disclosure or press
release regarding the transactions contemplated hereby in a separate
writing signed by both parties; provided, however, upon execution of this
-------- -------
Agreement, Buyer shall be entitled to issue such press releases or make
any public statements concerning the Agreement or the transactions
contemplated hereby required or advisable under any applicable law or by
any governmental authority having jurisdiction over such matters with such
content and wording as Buyer shall in its sole discretion deem
appropriate.
5.6 Costs and Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
costs and expenses.
5.7 Notification of Certain Matters. The Company and Sellers
shall give prompt notice to Buyer, and Buyer shall give prompt notice to
Sellers and the Company, of either of the following which comes to the
attention of such Party: (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any
representation or warranty of such Party contained herein to be untrue or
inaccurate in any material respect
38
at any time from the date hereof to the Closing Date; and (ii) any
material failure of the Company, Sellers or of Buyer, as the case may be,
or of any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
5.8 Best Efforts. Each Party to this Agreement hereby agrees to
use all commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary,
proper or advisable to fulfill the conditions to Closing which are
reasonably within such Party's control.
5.9 Execution of Additional Documents. Each Party will at any
time, and from time to time after the Closing Date, upon request of any
other Party, execute, acknowledge and deliver all such further deeds,
assignments, transfers, conveyances, powers of attorney and assurances,
and take all such further action, as may be required to carry out the
intent of this Agreement, and to transfer and vest title to any Acquired
Shares being transferred hereunder, and to protect the right, title and
interest in and enjoyment of all of the Acquired Shares sold, granted,
assigned, transferred, delivered and conveyed pursuant hereto; provided,
--------
however, that this Agreement shall be effective regardless of whether any
-------
such additional documents are executed.
5.10 Guaranty of Receivables. At the Closing, Sellers shall
-----------------------
execute and deliver to Buyer a Guaranty in the form set forth as Exhibit C
---------
hereto (the "Receivables Guaranty"), under the terms of which Sellers
--------------------
shall unconditionally guarantee that all indebtedness represented by the
accounts and notes receivable of the Company and its Subsidiaries as of
the Closing Date (other than notes receivable from employees of the
Company or its Subsidiaries and net of the reserve for doubtful accounts)
as reflected on the Audited Financial Statements will be paid by the
respective account debtors to the Company and its Subsidiaries. In the
event such net indebtedness is not paid before the first anniversary of
the Closing Date, Sellers shall, jointly and severally, within ten days
following receipt from Buyer of written notice to such effect, make
payment to Buyer of an amount in cash equal to the difference between such
net indebtedness and the amount collected in respect of such accounts and
notes receivable, whereupon Buyer shall promptly cause the Company and its
Subsidiaries to assign to Sellers without recourse to Buyer (by an
instrument of assignment reasonably satisfactory to Sellers) all rights,
claims, actions or causes of action which Company may have relating to any
such unpaid receivables. If the Company or any Subsidiary thereafter
receives payment for any unpaid receivables which have been assigned to
Sellers, Buyer shall cause the Company or such Subsidiary to remit to
Sellers the amount of any such payment. Following the Closing Date, Buyer
shall cause the Company or its Subsidiaries to send statements to the
account debtors or note makers, write letters and make telephone calls
seeking payment in a manner reasonably consistent with the past practices
of AZZ. The Company and its Subsidiaries shall not be obligated to
commence a suit to enforce payment of any accounts or notes receivable or
undertake any extraordinary collection efforts.
5.11 Phantom Stock Plan and Certain Indebtedness. Prior to the
Closing, the Company shall, and each Seller shall cause the Company to,
(i) terminate the Company's and its Subsidiaries' phantom stock plan and
other equity-based compensation plans (collectively, the "Equity-Based
------------
Plans") and satisfy all of the Company's and its
-----
39
Subsidiaries' obligations under the Equity-Based Plans, and (ii) pay the
full amount of indebtedness of the Company and its Subsidiaries to Xxxxxxx
Xxxxx.
ARTICLE VI
CONDITIONS OF CLOSING
6.1 Buyer's Conditions of Closing. The obligations of Buyer to
purchase and pay for the Acquired Shares shall be subject to and
conditioned upon, at Buyer's option, the satisfaction at the Closing (or
prior thereto, to the extent provided below) of each of the following
conditions:
6.1.1 All representations and warranties of Sellers
contained herein shall be true and correct in all material respects
at and as of the Closing Date with the same effect as though made
as of the Closing Date and the Company and Sellers shall have
performed all agreements and covenants and satisfied all conditions
on their part to be performed or satisfied by the Closing Date
pursuant to the terms hereof, and Buyer shall have received a
certificates of Sellers, dated the Closing Date, to both such
effects.
6.1.2 As of the Closing, there shall have been no material
adverse change since the Balance Sheet Date in the financial
condition, business or affairs of the Company or any Subsidiary,
and neither the Company nor any Subsidiary shall have suffered any
material loss (whether or not insured) by reason of physical damage
caused by fire, earthquake, accident or other calamity which
substantially affects the value of its assets, properties or
business, and Buyer shall have received a certificate of Sellers,
dated the Closing Date, to such effect.
6.1.3 Sellers shall have delivered the written
resignations, effective on the Closing Date, of all members of the
Board of Directors and all officers of the Company and its
Subsidiaries.
6.1.4 Sellers shall have delivered to Buyer certificates
and other instruments representing all Acquired Shares, duly
endorsed for transfer or accompanied by appropriate stock powers
(in either case executed in blank or in favor of Buyer), together
with all other documents necessary or appropriate to validly
transfer the Acquired Shares to Buyer free and clear of all
Encumbrances.
6.1.5 Buyer shall have received from Xxxxxxxx Xxxxxx LLP,
counsel for Sellers, an opinion reasonably satisfactory to Buyer.
6.1.6 The approval and all consents from third parties and
governmental agencies required to consummate the transactions
contemplated hereby shall have been obtained (including, without
limitation, Bank of America, N.A.).
6.1.7 No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or
administrative proceeding shall have
40
been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
6.1.8 There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by
a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the
transactions contemplated hereby, which is unduly burdensome on
Buyer.
6.1.9 Sellers shall have delivered to Buyer a certificate,
dated the Closing Date, of the Company's corporate secretary
certifying:
(i) resolutions of the Company's Board of
Directors approving and adopting this Agreement and all
transactions contemplated hereby and authorizing the
Company's execution of this Agreement and the execution,
performance and delivery by the Company of all agreements,
documents and transactions contemplated hereby; and
(ii) the incumbency of the Company's officers
executing this Agreement and all agreements and documents
contemplated hereby.
6.1.10 Buyer shall have completed an investigation of the
business, contracts, legal documents, assets and financial books
and records of the Company and its Subsidiaries, and Buyer shall be
satisfied in its sole and absolute discretion with the results
thereof, provided that the condition shall expire September 30,
2001 if not previously invoked by Buyer.
6.1.11 GL shall have executed and delivered an Employment
and Noncompetition Agreement in the form attached hereto as Exhibit
-------
D ("GL Employment Agreement").
- -----------------------
6.1.12 Xxxx Xxxxxxx and Xxxxx Xxxxxx shall have executed and
delivered an Employment and Noncompetition Agreement in the form
attached hereto as Exhibit E (the "Other Employment Agreements").
--------- ---------------------------
6.1.13 Manufacturing Realty Associates, Inc. shall have
executed and delivered a Purchase Agreement for the real property
located at Highway 54 and Route BB, Fulton, Missouri in the form
attached hereto as Exhibit F (the "Xxxxxx Lease").
--------- ------------
6.1.14 Tiger Real Estate Investments, L.L.C. shall have
executed and delivered the Lease Agreement for the real property
located at 0000 Xxxxx Xxxxxxxx Xx, Xxxxx, Xxxxxxxx in the form
attached hereto as Exhibit G (the "Tulsa Lease").
--------- -----------
6.1.15 Sellers shall have executed and delivered the
Receivables Guaranty.
6.1.16 Buyer shall have obtained bank or other debt
financing from Bank of America, N.A. or other financial institution
in an amount sufficient to pay to Sellers
41
the consideration for the Acquired Shares and upon such other terms
and conditions satisfactory to Buyer, provided that this condition
shall expire October 15, 2001 if not previously invoked by Buyer.
6.1.17 The Company and its Subsidiaries shall have retired
all of their indebtedness to Xxxxxxx Xxxxx.
6.1.18 The Company shall have delivered evidence
satisfactory to Buyer that the Equity-Based Plans have been
terminated and all of the Company's and its Subsidiaries'
obligations thereunder have been satisfied.
6.1.19 Buyer shall have received a letter from Allegiant
Bank setting forth the aggregate amount due and owing by the
Company and its Subsidiaries to Allegiant as of the Closing Date
(including any accrued interest and prepayment penalties) and
wiring instructions for the payment of such indebtedness.
6.2 Sellers' Conditions of Closing. The obligation of Sellers to
sell the Acquired Shares shall be subject to and conditioned upon, at
Sellers' option, the satisfaction at the Closing of each of the following
conditions:
6.2.1 All representations and warranties of Buyer contained
herein shall be true and correct in all material respects at and as
of the Closing Date with the same effect as though made as of the
Closing Date and Buyer shall have performed all agreements and
covenants and satisfied all conditions on its part to the performed
or satisfied by the Closing Date pursuant to the terms hereof, and
Sellers shall have received a certificate of Buyer, signed by an
authorized officer of Buyer and dated the Closing Date, to both
such effects.
6.2.2 Buyer shall have effected payment of the Closing
Payment, as adjusted to the Closing Date, in accordance with
Section 1.2.1 hereof, and AZZ shall have issued and delivered to
Sellers certificates representing the AZZ Shares.
6.2.3 Buyer shall have delivered to the Company and Sellers
a certificate, dated the Closing Date, of Buyer's corporate
secretary certifying:
(i) resolutions of its Board of Directors
approving and adopting this Agreement and all transactions
contemplated hereby and authorizing Buyer's execution of this
Agreement and the execution, performance and delivery by it of all
agreements, documents and transactions contemplated hereby; and
(ii) the incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby.
6.2.4 Sellers shall have received from Xxxxx, Xxxx &
Xxxxxxx (a professional corporation), counsel for Buyer, an
opinion, reasonably satisfactory to Sellers.
42
6.2.5 The approval and all consents from third parties and
governmental agencies required to consummate the transactions
contemplated hereby shall have been obtained.
6.2.6 No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or
administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions
contemplated hereby.
6.2.7 There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by
a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the
transactions contemplated hereby, which is unduly burdensome on the
Company and Sellers.
6.2.8 Buyer shall have executed and delivered the GL
Employment Agreement.
6.2.9 Buyer shall have executed and delivered the Other
Employment Agreements for each of the individuals identified in
Section 6.1.12.
6.2.10 Buyer shall have executed and delivered the Xxxxxx
Lease.
6.2.11 Buyer shall have executed and delivered the Tulsa
Lease.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Reasons for Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned
at any time after the date hereof but not later than the Closing:
7.1.1 by the mutual written agreement of Buyer and a
majority-in-interest of the Sellers; or
7.1.2 by Buyer upon written notice to Sellers'
Representative at any time after November 30, 2001 if, by that
date, the conditions set forth in Section 6.1 hereof (other than
Sections 6.1.9 and 6.1.15) shall not have been fulfilled or waived;
or
7.1.3 by Buyer upon written notice to Sellers'
Representative at any time on or before September 30, 2001 if, by
that date, the conditions set forth in Section 6.1.9 shall not have
been fulfilled or waived; or
7.1.4 by Buyer upon written notice to Sellers at any time
on or before October 15, 2001 if, by that date, the conditions set
forth in Section 6.1.15 shall not have been fulfilled or waived; or
43
7.1.5 by Sellers upon written notice to Buyer at any time
after November 30, 2001 if, by that date, the conditions set forth
in Section 6.2 hereof shall not have been fulfilled or waived
through no fault of Sellers;
7.1.6 by Buyer at any time if there has been a material
adverse change in the business, financial condition, or results of
operations of the Company and its Subsidiaries after the date
hereof; or
7.1.7 by Buyer upon written notice to Sellers at any time if
there has been a material breach of any representation or warranty
made by the other Parties herein or in any certificate or other
document delivered pursuant hereto or if there has been any failure
by the other Parties to perform in all material respects all
obligations or to comply with all covenants and agreements on their
part to be performed hereunder, which breach or failure has
continued for a period of fifteen (15) days after delivery of
written notice from Buyer to Sellers specifying such breach or
failure; or
7.1.8 by a majority-in-interest of the Sellers upon written
notice to Buyer at any time if there has been a material breach of
any representation or warranty made by AZZ or Buyer herein or if
there has been any failure by AZZ or Buyer to perform in all
material respects all obligations or to comply with all covenants
and agreements on their part to be performed hereunder, which
breach or failure has continued for a period of fifteen (15) days
after delivery of written notice from a majority-in-interest of the
Sellers to Buyer specifying such breach or failure.
7.2 Procedure Upon and Effect of Termination. In the event of any
termination and abandonment pursuant to Section 7.1 hereof, written notice
thereof shall forthwith be given to the other Parties and the transactions
contemplated hereby shall thereupon be terminated and abandoned, without
further action by Buyer or by the Company and Sellers, and there shall be
no liability on the part of any of the Company, Sellers, Buyer or their
respective officers, directors or shareholders to proceed to the Closing.
Notwithstanding the foregoing, if the Closing does not occur because any
Party wrongfully fails to tender performance at the Closing or otherwise
materially breach this Agreement prior to the Closing, the non-breaching
Parties shall be entitled to receive from the breaching Party (or
breaching Parties, jointly and severally) all reasonable out-of-pocket
expenses (including reasonable attorneys' and accountants' fees and
expenses) incurred by the non-breaching Parties in connection with the
transactions contemplated hereby, and the non-breaching Parties shall have
available any and all legal or equitable remedies for breach of this
Agreement.
ARTICLE VIII
TAX MATTERS
8.1 Sellers' Indemnity for Taxes.
8.1.1 Taxes Covered by Indemnity. From and after the Closing
Date, Sellers shall jointly and severally indemnify and hold harmless each
Buyer Indemnitee
44
against the following Taxes and against any Losses incurred in contesting
or otherwise in connection with any such Taxes: (i) any Taxes imposed on
the Company or any of the Subsidiaries with respect to taxable years or
periods ending on or before the Closing Date; (ii) with respect to taxable
years or periods beginning before the Closing Date and ending after the
Closing Date, any Taxes imposed on the Company or any of the Subsidiaries
which are allocable, pursuant to Section 8.2 below, to the portion of such
taxable year or period ending on the Closing Date (an "Interim Period")
--------------
(Interim Periods and any taxable years or periods that end on or prior to
the Closing Date being referred to collectively hereinafter as "Pre-
----
Closing Periods"); (iii) any Taxes imposed on any member of any affiliated
---------------
group (other than the Company or the Subsidiaries) with which the Company
or any of the Subsidiaries files or has filed a Tax Return on a
consolidated, combined or unitary basis for a taxable year or period
ending on or before the Closing Date; (iv) any Taxes required to be paid
or reimbursed by Sellers under Section 8.3 or Section 8.4 hereof (to the
extent such Taxes have not been paid by Sellers); (v) any Taxes or
additional Taxes imposed on any Buyer Indemnitee as a result of a breach
of the representations and warranties set forth in Section 2.11 of this
Agreement or of the covenants contained in this Article VIII; and/or (vi)
any Taxes or other payments required to be made after the date hereof by
the Company or any of the Subsidiaries to any party under any Tax sharing,
indemnity or allocation agreement (whether written or unwritten).
8.1.2 Limitation on Indemnity; Refunds. Notwithstanding
anything in Section 8.1.1 to the contrary, to the extent that Sellers are
obligated to make payments of Taxes pursuant to Section 8.1.1, (i)
Sellers' obligation shall be reduced by any estimated Taxes paid by
Company prior to the Closing Date and any Taxes that have been fully
accrued or reserved for on the books and records of the Company and taken
into account in the Audited Financial Statements to the extent such items
apply to the Taxes that would otherwise be due from Sellers under Section
8.1.1, and (ii) Sellers shall have no indemnification obligation with
respect to Taxes that result from any Tax election made by the Company or
Buyer on or after the Closing Date. To the extent that Buyer, the Company
or any of the Subsidiaries receives any refund of Taxes paid by the
Company or any of the Subsidiaries or by Sellers to Buyer pursuant to
Section 8.1.1 for any Tax period or portion of a Tax period ending on or
before the Closing Date, Buyer shall pay, or cause to be paid, to Sellers
an amount equal to such refund. Any payments made pursuant to this Section
8.1.2 shall be treated for all purposes as an adjustment to the total
consideration for the Acquired Shares; provided, however, that if the
-------- -------
amount of such refund is subsequently redetermined, adjusted or
disallowed, Sellers shall return the amount by which the refund is
disallowed or reduced, plus applicable interest, if any, due and payable
with respect to such amount. In addition, Buyer shall retain, and shall
not be required to pay over to Sellers, the amount of any refund (or
portion thereof) that is accrued for on the books and records of the
Company or any of the Subsidiaries and taken into account in the Audited
Financial Statements.
8.2 Apportionment of Taxes. In order to apportion appropriately
any Taxes relating to any taxable year or period that includes an Interim
Period, the parties hereto shall, to the extent permitted under applicable
law, elect with the relevant Tax Authority to treat for all purposes, the
Closing Date as the last day of the taxable year or period of the Company,
and such Interim Period shall be treated as a short taxable year and a
Pre-Closing Period for purposes of this Article VIII. In any case where
applicable law does not permit the Company to treat the Closing Date as
the last day of the taxable year or period of the
45
Company with respect to Taxes that are payable with respect to an Interim
Period, the portion of any such Tax that is allocable to the portion of
the Interim Period ending on the Closing Date shall be:
(a) in the case of Taxes that are either (i) based upon or
related to income or receipts, or (ii) imposed in connection with
any sale or other transfer or assignment of property (real or
personal, tangible or intangible) (other than conveyances pursuant
to this Agreement, which are covered under Section 8.4 of this
Agreement), deemed equal to the amount which would be payable if
the taxable year or period ended on the Closing Date (except that,
solely for purposes of determining the marginal tax rate applicable
to income or receipts during such period in a jurisdiction in which
such tax rate depends upon the level of income or receipts,
annualized income or receipts may be taken into account, if
appropriate, for an equitable sharing of such Taxes); and
(b) in the case of Taxes not described in subparagraph (a)
above that are imposed on a periodic basis and measured by the
level of any item, deemed to be the amount of such Taxes for the
entire period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction the numerator of which
is the number of calendar days in the relevant Interim Period
ending on the Closing Date and the denominator of which is the
number of calendar days in the entire relevant period.
8.3 Preparation of Tax Returns. Sellers shall prepare and file,
or cause to be prepared and filed, any and all Tax Returns required to be
filed by the Company or any of the Subsidiaries on or prior to the Closing
Date (after giving effect to any valid extensions of the due date for
filing any such Tax Returns). All such Tax Returns shall be prepared in a
manner consistent with the prior Tax Returns of the Company or the
Subsidiaries, as the case, unless otherwise required under applicable law.
Sellers shall timely pay (or cause to be timely paid) all Taxes shown as
due and owing on all such Tax Returns. Buyer shall prepare and file, or
cause to be prepared and filed, any and all other Tax Returns required to
be filed by the Company. Subject to its right to indemnification under
Section 8.1 above, Buyer shall pay (or cause to be paid) all Taxes shown
as due and owing on all such Tax Returns. Sellers, the Company, the
Subsidiaries and Buyer shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors and other
representatives reasonably to cooperate, in preparing and filing all Tax
Returns, including maintaining and making available to each other all
records necessary in connection with Taxes and in resolving all disputes
and audits with respect to all taxable periods relating to Taxes. Buyer
and each of the Sellers recognize that Sellers and Sellers' agents and
other representatives will need access, from time to time, after the
Closing Date, to certain accounting and Tax records and information held
by the Company and/or the Subsidiaries to the extent such records and
information pertain to events occurring prior to the Closing Date;
therefore, each of Buyer, the Company and each of the Subsidiaries agree
(i) to use all reasonable efforts to properly retain and maintain such
records until such time as the Sellers' Representative agrees that such
retention and maintenance is no longer necessary (but in no event longer
than the later of six years after the Closing Date or the end of any
contest referred to in Section 8.5 below) and (ii) to allow Sellers and
Sellers' agents and other representatives, at times and dates mutually
acceptable to the parties, to inspect, review and
46
make copies of such records as Sellers, their agents and other
representatives may deem necessary or appropriate form time to time, such
activities to be conducted during normal business hours and at the
Sellers' expense.
8.4 Transfer and Conveyance Taxes. Sellers shall be jointly and
severally liable for and shall pay all applicable sales, transfer,
recording, deed, stamp and other similar taxes, including, without
limitation, any real property transfer or gains taxes (if any), resulting
from the consummation of the transactions contemplated by this Agreement.
8.5 Contests. Buyer shall promptly notify the Sellers'
Representative in writing of any written notice of a proposed assessment
or claim in an audit or administrative or judicial proceeding involving
the Company or any of the Subsidiaries which, if determined adversely to
the taxpayer, could be grounds for indemnification under Section 8.1.1
above; provided, however, that a failure to give such notice will not
-------- -------
affect a Buyer Indemnitee's right to indemnification hereunder, except to
the extent, if any, that, but for such failure, Sellers, the Company, the
Subsidiaries or the Buyer could have contested in timely fashion the Tax
liability in question. In the case of an audit or administrative or
judicial proceeding that relates to any Pre-Closing Period, provided that
within 30 days after the Sellers' Representative receives the written
notice from Buyer required under this Section 8.5 and prior to taking any
action with respect to such audit or administrative or judicial
proceeding, the Sellers' Representative acknowledges in writing the
Sellers' joint and several liability under Section 8.1 above to hold the
Buyer Indemnitees harmless against the full amount of any adjustment which
may be made as a result of such audit or proceeding, the Sellers'
Representative shall have the right at the Sellers' expense to control the
conduct of such audit or proceeding; provided, however, that neither the
-------- ------
Sellers nor the Sellers' Representative shall settle or otherwise
compromise (or agree to settle or compromise) any issue or matter without
Buyer's prior written consent, which consent shall not be unreasonably
withheld. Buyer also may participate in such audit or proceeding at its
own expense. If the Sellers' Representative does not assume the defense of
any such audit or proceeding, Buyer may, without any effect to its or any
other Buyer Indemnitee's right to indemnification under Section 8.1 above,
defend the same in such manner as it may deem appropriate, including, but
not limited to, settling such audit or proceeding. Except as provided
otherwise in this Section 8.5, Buyer shall control at its own expense any
and all audit, administrative and judicial proceedings related to the
Company, the Subsidiaries or their Taxes.
8.6 Time of Payment. Payment of any amounts due under Article
VIII in respect of Taxes shall be made by Sellers at least three business
days before the due date of the applicable estimated or final Tax Return
required to be filed by Buyer on which is required to be reported income
for an Interim Period for which Seller are responsible under Sections 8.3
or 8.4 of this Agreement, without regard to whether the relevant Tax
Return shows overall net income or loss for such period, or, with respect
to any other indemnity payments due under Section 8.1 of this Agreement,
within three business days following a settlement or compromise of an
assessment of a Tax by a Tax Authority or a "determination" as defined in
Section 1313(a) of the Code. If liability under this Article VIII is in
respect of costs or expenses other than Taxes, payment by Sellers of any
amounts due under this Article VIII shall be made within five business
days after the date that the Sellers' Representative has been notified by
Buyer that the Sellers are liable for a
47
determinable amount under this Article VIII and the Sellers'
Representative is provided with calculations or other materials supporting
such liability.
8.7 Termination of Sellers' Indemnity Obligations for Taxes.
Notwithstanding any provision herein to the contrary, the obligations of
Sellers to indemnify and hold harmless each Buyer Indemnitee pursuant to
Section 8.1 above shall terminate at the close of business on the 120th
day following the expiration of the applicable statute of limitations with
respect to the Tax liabilities in question (after giving effect to any
waiver, mitigation or extension thereof).
8.8 Tax Elections. From and after the date hereof, no Seller
shall, without the prior written consent of Buyer (which may not
unreasonably withhold such consent), make or revoke, or cause or permit to
be made or revoked, any Tax election, or adopt or change any method of
accounting, that would adversely affect the Company or any of the
Subsidiaries.
8.9 Tax Sharing Agreements. As of the Closing Date, any and all
Tax sharing, indemnity or allocation agreements shall terminate as between
the Company or any of the Subsidiaries, on the one hand, and any of the
Sellers and/or any affiliate of any Seller, on the other hand, and, after
the date hereof, no Taxes or other amounts shall be paid or reimbursed by
the Company under any such agreement, regardless of the taxable year or
period for which such Taxes are imposed, and the provisions of this
Article VIII shall govern thereafter.
8.10 Resolution of Disagreements. If the Sellers' Representative
and Buyer disagree as to the amount for which Buyer, the Company or the
Subsidiaries and the Sellers are liable under this Article VIII, the
Sellers' Representative and Buyer shall promptly consult with each other
in an effort to resolve such dispute. If any such point of disagreement
cannot be resolved within 30 days of the date of such consultation, such
dispute shall be submitted to a big-five accounting firm which is mutually
acceptable to Buyer and the Sellers' Representative to act as an
arbitrator to resolve all points of disagreement concerning Tax matters
with respect to this Agreement.
8.11 Exclusive Remedy. Any and all claims for the indemnification
of Taxes, or the indemnification of any costs or expenses related thereto
or incurred in respect thereof (collectively, "Tax Claims"), shall be
----------
governed solely by this Article VIII, and Article IV of this Agreement
shall not apply to such Tax Claims.
48
ARTICLE IX
MISCELLANEOUS
9.1 Notices. Any notice, consent, approval, request, demand,
declaration or other communication required hereunder shall be in writing
to be effective and shall be given and shall be deemed to have been given
if (i) delivered in person with receipt acknowledged, (ii) telexed or
telecopied and electronically confirmed to the numbers stated below, if
any, (iii) deposited into the custody of a nationally recognized overnight
courier for next day delivery, or (iv) placed in the federal mail, postage
prepaid, certified or registered mail, return receipt requested, in each
case addressed as follows:
If to Buyer, AZZ or (after the Closing) the Company:
Arbor-Xxxxxxx, Inc.
c/o AZZ incorporated
000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, Chief Executive Officer
Facsimile #: 817/297-4621
Confirming #: 817/297-4361
Copy to:
F. Xxxxxxx Xxxxxxxx, Esq.
Xxxxx, Xxxx & Xxxxxxx (a professional corporation)
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile #: 817/878-9280
Confirming #: 817/878-3509
If to Sellers:
Xxxx X. Xxxxxxxxxx
0000 Xxxx Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
00
Xxxx Xxxxxxx Xxxxxxxxxx Revocable Trust
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxxxxxx Revocable Trust
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Gar Lippincott, as Sellers' Representative
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
Confirming No.: 573-642-6811, Ext. 49
In each case with a copy to:
Xxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxx LLP
Xxx Xxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile #: 314-552-7000
Confirming #: 314-552-6000
If to the Company (prior to Closing):
Central Electric Company
X.X. Xxx 000
Xxxxxxx 00 xxx Xxxxx XX
Xxxxxx, Xxxxxxxx 00000
Attention: Gar Lippincott
Facsimile #: 000-000-0000
Confirming #: 573-642-6811, x49
or at such other address as may be substituted by giving the other Parties
not fewer than five business days' advance written notice of such change
of address in accordance with the provisions hereof. The giving of any
notice required hereunder may be waived in writing by the Party entitled
to receive such notice. Every notice, demand, request, consent, approval,
declaration or other communication hereunder shall be deemed to have been
duly served, delivered and received on the date on which personally
delivered with receipt acknowledged or telecopied or telexed and
electronically confirmed, or 48 hours after being deposited into the
custody of a nationally recognized overnight courier for next day
delivery, or five business days after the same shall have been placed in
the federal mail as aforesaid. Failure or delay in delivering copies of
any consent, notice, demand, request, approval, declaration or other
communication to the persons designated above to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
50
9.2 Binding Effect; Benefits. This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their respective
heirs, successors, executors, administrators and permitted assigns.
Notwithstanding anything contained herein to the contrary, nothing in this
Agreement is intended to confer on any person (other than the Parties, the
Indemnitees (but only with respect to Article IV hereof), or their
respective heirs, successors, executors, administrators and permitted
assigns) any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.3 Entire Agreement. This Agreement, together with the Exhibits,
Schedules and other agreements and documents contemplated hereby,
constitutes the final written expression of all of the agreements between
the Parties, and is a complete and exclusive statement of those terms.
Except as specifically included or referred to herein, this Agreement and
the Exhibits, Schedules and other agreements and documents contemplated
hereby supersede all prior understandings, negotiations and agreements
concerning the matters specified herein. Any representations, promises,
warranties or statements made by any Party that differ in any way from the
terms of this written Agreement, and the Exhibits, Schedules and other
agreements and documents contemplated hereby, shall be given no force or
effect (except as specifically included or referred to herein). The
Parties specifically represent, each to the others, that there are no
additional or supplemental agreements between them related in any way to
the matters herein contained unless specifically included or referred to
herein. No addition to or modification of any provision hereof shall be
binding upon any Party unless made in writing and signed by the Party
against which such modification or addition is to be enforced.
9.4 Governing Law. THIS AGREEMENT, AND ALL QUESTIONS RELATING TO
ITS VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT (INCLUDING,
WITHOUT LIMITATION, PROVISIONS CONCERNING LIMITATIONS OF ACTION), SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MISSOURI (EXCLUSIVE OF THE CONFLICT OF LAW PROVISIONS THEREOF) APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
THIS AGREEMENT HAS BEEN EXECUTED, ACCEPTED AND DELIVERED AND IS
PERFORMABLE IN TARRANT COUNTY, TEXAS, AND ANY SUIT, PROCEEDING OR ACTION
ARISING OUT OF OR INVOLVING THIS AGREEMENT SHALL BE IN TARRANT COUNTY,
TEXAS. SELLER EXPRESSLY WAIVES ANY OBJECTION AND RIGHT TO CONTEST SUBJECT
MATTER JURISDICTION, PERSONAL JURISDICTION, AND VENUE OF EITHER A TEXAS
STATE COURT OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF TEXAS, FORT WORTH DIVISION, TO DECIDE ANY CLAIMS BROUGHT BY BUYER OR
SELLER IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument; but in making proof of this
Agreement, it shall not be necessary to produce or account for more than
one such counterpart. It is not necessary that each Party execute the same
counterpart, so long as identical counterparts are executed by all
Parties.
51
Executed signature pages to any counterpart instrument may be detached and
affixed to a single counterpart, which single counterpart with multiple
signature pages affixed thereto constitutes an original counterpart
instrument. All of such counterpart signature pages shall be read as
though one and they shall have the same force and effect as if all of the
Parties had executed a single signature page.
9.6 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of reference only, and shall be given no
substantive or interpretive effect whatsoever.
9.7 Waivers. Any Party may, by written notice to the other
Parties, (i) extend the time for the performance of any of the obligations
or other actions of the other Parties hereunder; (ii) waive any
inaccuracies in the representations or warranties of the other Parties
contained herein or in any other agreement or document delivered pursuant
hereto; (iii) waive compliance with any of the conditions or covenants of
the other Parties contained herein; or (iv) waive performance of any of
the obligations of the other Parties hereunder. Except as provided in the
immediately preceding sentence, no action taken pursuant hereto, including
without limitation any investigation by or on behalf of any Party, shall
be deemed to constitute a waiver by the Party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. No failure or delay on the part of any Party in
exercising any right, privilege, power or remedy under this Agreement, and
no course of dealing among the Parties, shall operate as a waiver of such
right, privilege, power or remedy; nor shall any single or partial waiver
or exercise of any right, privilege, power or remedy under this Agreement
preclude any other or further exercise of such right, privilege, power or
remedy, or the exercise of any other right, privilege, power or remedy. No
notice to or demand on any Party in any case shall entitle such Party to
any other or further notice or demand in any similar or other
circumstances or constitute a waiver of the right of the Party giving such
notice or making such demand to take any other or further action in any
circumstances without notice or demand.
9.8 Incorporation of Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by this reference incorporated herein and
made a part hereof for all purposes as if fully set forth herein.
9.9 Severability. If for any reason whatsoever, any one or more
of the provisions hereof shall be held or deemed to be illegal,
inoperative, unenforceable or invalid as applied to any particular case or
in all cases, such circumstances shall not have the effect of rendering
such provision illegal, inoperative, unenforceable or invalid in any other
case or of rendering any of the other provisions hereof illegal,
inoperative, unenforceable or invalid. Furthermore, in lieu of each such
illegal, invalid, unenforceable or inoperative provision, there shall be
added automatically, as part of this Agreement, a provision similar in
terms of such illegal, invalid, unenforceable or inoperative provision as
may be possible and as shall be legal, valid, enforceable and operative.
9.10 Assignability. Neither this Agreement nor any of the Parties'
rights hereunder may be assigned or otherwise transferred by any Party
prior to the Closing without the prior written consent of the other
Parties; provided, however, that Buyer's, or its successors' or assigns',
-------- -------
rights hereunder may be assigned or otherwise transferred, in whole or in
part,
52
without any other Party's consent, (i) to any subsidiary or affiliate of
Buyer; (ii) to any successor by merger or consolidation; (iii) by way of
collateral assignment to any bank, financial institution, individual,
partnership, corporation or other entity providing any financing to Buyer,
its successors or assigns; or (iv) to any individual, partnership,
corporation or other entity deriving title from Buyer, or its successors
or assigns, to the Acquired Shares.
9.11 Drafting. The Parties acknowledge and confirm that each of
their respective attorneys have participated jointly in the review and
revision of this Agreement and that it has not been written solely by
counsel for one Party. The Parties therefore stipulate and agree that the
rule of construction to the effect that any ambiguities are to be or may
be resolved against the drafting party shall not be employed in the
interpretation of this Agreement to favor any Party against another.
9.12 References. The use of the words "hereof", "herein",
"hereunder", "herewith", "hereto", "hereby", and words of similar import
shall refer to this entire Agreement, and not to any particular article,
section, subsection, clause, or paragraph of this Agreement, unless the
context clearly indicates otherwise.
9.13 Calendar Days, Weeks and Months. Unless otherwise specified
herein, any reference to "day", "week", or "month" herein shall mean a
calendar day, week or month, and a "business day" shall mean any day other
than a Saturday, Sunday, or legal holiday in the State of Texas or
Missouri.
9.14 Gender; Plural and Singular. Unless the context clearly
indicates otherwise, the singular shall include the plural and vice versa.
Whenever the masculine, feminine or neuter gender is used inappropriately
in this Agreement, this Agreement shall be read as if the appropriate
gender had been used.
9.15 Cumulative Rights. Except as provided in Section 4.7 with
respect to claims after Closing, all rights and remedies specified herein
are cumulative and are in addition to, not in limitation of, any rights or
remedies the Parties may have by statute, at law, in equity, or otherwise,
and all such rights and remedies may be exercised singularly or
concurrently.
9.16 No Implied Covenants. Each Party, against the other, waives
and relinquishes any right to assert, either as a claim or as a defense,
that any other Party is bound to perform or liable for the nonperformance
of any implied covenant or implied duty or implied obligation.
9.17 Attorneys' Fees. The prevailing Party in any dispute between
the Parties arising out of the interpretation, application or enforcement
of any provision hereof shall be entitled to recover all of its reasonable
attorneys' fees and costs whether suit be filed or not, including without
limitation costs and attorneys' fees related to or arising out of any
trial or appellate proceedings.
9.18 Indirect Action. Where any provision hereof refers to action
to be taken by any person or Party, or which such person or Party is
prohibited from taking, such provision
53
shall be applicable whether the action in question is taken directly or
indirectly by such person or Party.
9.19 Schedules and Exhibits. The Parties acknowledge that, as of
the date this Agreement has been executed, the forms of Exhibits have not
been finalized and the final Schedules have not been delivered to or
accepted by the Buyer. The Parties shall continue to negotiate in good
faith to complete the Exhibits and Schedules hereto as promptly as
practicable. If for any reason the Parties, as of September 30, 2001, have
been unable to agree on the forms of any Exhibit or the Buyer is not
satisfied with the matters disclosed in the Schedules, then either the
Buyer or a majority-in-interest of the Sellers may terminate this
Agreement upon written notice to the other, with the effect set forth in
Section 7.2.
9.20 Tax Treatment. Buyer and Sellers agree to treat all payments
made by such party to or for the benefit of the other party under the
indemnity provisions of this Agreement (including, without limitation, the
indemnity provisions contained in Article IV and Article VIII) as
adjustments to the Purchase Price for Tax purposes and that such treatment
shall govern for purposes hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
54
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement and caused the same to be duly delivered on their behalf on the day
and year hereinabove first set forth.
BUYER:
ARBOR-XXXXXXX, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
----------------------------------
Title: Secretary
--------------------------------
THE COMPANY:
CENTRAL ELECTRIC COMPANY
By: /s/ X. Xxxxxxx Lippincott
------------------------------------
Name: X. Xxxxxxx Lippincott
---------------------------------
Title: President
---------------------------------
SELLERS:
/s/ Xxxx X. Xxxxxxxxxx
---------------------------------------
XXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxx
---------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
XXXXXX X. XXXXXXX
XXXX XXXXXXX LIPPINCOTT REVOCABLE TRUST
By: /s/ X. Xxxxxxx Lippincott
------------------------------------
X. Xxxxxxx Lippincott, as Trustee
XXXXXXX X. XXXXXXXXXX REVOCABLE TRUST
By: Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxxxx, as Trustee
55
AZZ:
AZZ INCORPORATED
By: /s/ Xxxx Xxxxx
-----------------------------------
Name: Xxxx Xxxxx
-------------------------------
Title: Secretary
------------------------------
56
Index of Defined Terms
----------------------
Acquired Shares........................................................... 1
Adjustment Escrow......................................................... 2
affiliate................................................................. 29
affiliated entity......................................................... 26
Agreement................................................................. 1
Audited Financial Statements.............................................. 2
Average Price............................................................. 2
AZZ....................................................................... 1
Balance Sheet Date........................................................ 12
Business Property Rights.................................................. 17
Buyer..................................................................... 1
Buyer Indemnifiable Claims................................................ 30
Buyer Indemnitee.......................................................... 29
Buyer Partner............................................................. 29
CERCLA.................................................................... 24
CL........................................................................ 1
Closing................................................................... 9
Closing Date.............................................................. 9
Closing Payment........................................................... 2
Company................................................................... 1
Contracts................................................................. 22
control................................................................... 29
Customer.................................................................. 34
Deposit................................................................... 2
Disadvantageous Condition................................................. 6
DR........................................................................ 1
Employee.................................................................. 17
Encumbrances.............................................................. 15
Environmental Laws........................................................ 25
Environmental Permits..................................................... 24
Equity-Based Plans........................................................ 39
ERISA..................................................................... 17
Escrow Agent.............................................................. 2
Escrow Agreement.......................................................... 2
Financial Statements...................................................... 12
Xxxxxx Lease.............................................................. 41
GL Employment Agreement................................................... 41
Hazardous Material........................................................ 25
Indemnified Party......................................................... 31
Indemnifying Party........................................................ 31
Indemnity Escrow.......................................................... 2
Interim Financial Statements.............................................. 12
Interim Period............................................................ 45
IRS....................................................................... 14
Index of Defined Terms
----------------------
JL........................................................................ 1
Leases.................................................................... 15
Losses.................................................................... 29
Material Adverse Effect................................................... 10
NB........................................................................ 1
Noncompetition Consideration.............................................. 4
OG........................................................................ 1
Other Employment Agreements............................................... 41
Parties................................................................... 1
Party..................................................................... 1
PBGC...................................................................... 18
Pension Plan.............................................................. 17
Plan...................................................................... 17
Pre-Closing Periods....................................................... 45
Proprietary Information................................................... 33
Purchase Price............................................................ 1
Real Property............................................................. 24
Receivables Guaranty...................................................... 39
Release................................................................... 25
Securities Act............................................................ 6
Seller.................................................................... 1
Seller Indemnifiable Claims............................................... 29
Sellers................................................................... 1
Sellers' Representative................................................... 3
Shares.................................................................... 2
Shelf Registration Statement.............................................. 6
Subsidiaries.............................................................. 11
Subsidiary................................................................ 11
Tax....................................................................... 14
Tax Authorities........................................................... 14
Tax Authority............................................................. 14
Tax Claims................................................................ 48
Tax Return................................................................ 14
Tax Returns............................................................... 14
Taxes..................................................................... 14
Termination Date.......................................................... 36
Third Party............................................................... 38
Third Party Claim......................................................... 31
Tulsa Lease............................................................... 41
Vendor.................................................................... 34
Violation................................................................. 8
WARN...................................................................... 22
Welfare Plan.............................................................. 18
AMENDMENT TO STOCK PURCHASE AGREEMENT
-------------------------------------
This Amendment to Stock Purchase Agreement (the "Amendment") is entered
---------
into as of the 31/st/ day of October, 2001 by and among AZZ incorporated, a
Delaware corporation ("AZZ"), Arbor-Xxxxxxx, Inc., a Delaware corporation
---
("Buyer"), Central Electric Company, a Missouri corporation (the "Company"), and
----- -------
Xxxx X. Xxxxxxxxxx ("JL"), the Xxxxxxx X. Xxxxxxxxxx Revocable Trust ("CL"), the
-- --
Xxxx Xxxxxxx Lippincott Revocable Trust ("GL"), Xxxxx X. Xxxxx ("DR") and Xxxxxx
--
X. Xxxxxxx ("NB"). JL, CL, GL, DR and NB are hereinafter referred to each
--
individually as a "Seller" and collectively as the "Sellers". AZZ, Buyer,
------ -------
Sellers and the Company are hereinafter referred to each individually as a
"Party" and collectively as the "Parties."
----- -------
WHEREAS, the parties have entered into a Stock Purchase Agreement dated as
of September 6, 2001 (the "Purchase Agreement"), pursuant to which Buyer has
agreed to acquire all of the issued and outstanding stock of the Company;
WHEREAS, the parties desire to memorialize certain modifications to the
terms of the Purchase Agreement; and
WHEREAS, capitalized terms used in this Amendment without definition shall
have the respective meanings ascribed thereto in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises, the provisions and the
respective covenants and agreements set forth in this Amendment and in the
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
1. The schedules annexed hereto as Exhibit A shall constitute the
final schedules to the Purchase Agreement.
2. Notwithstanding Section 1.2.1(c) of the Purchase Agreement, the
issue price of the AZZ Shares shall be $18.50 per share.
3. Notwithstanding the provisions of Section 5.2.2 or any other
provision of the Purchase Agreement, AZZ and Buyer hereby consent to the
distribution, prior to Closing, by Central Electric Manufacturing Company
("CEMCO") to the Company, and the subsequent distribution by the Company to the
Sellers, of all rights and claims of any kind that CEMCO may have against Xxxxxx
Xxxxxx & Xxxxxxx, of Columbia, Missouri, or any officer, director, partner or
professional associated with such firm, and the respective successors, assigns,
heirs and personal representatives of any of the foregoing.
4. Section 2.22.2 of the Purchase Agreement is hereby amended by the
addition of the following sentence at the end thereof: "Each claim or potential
claim set forth in Schedule 2.22 is covered by a policy of insurance listed in
Schedule 2.16, and the amount of such insurance is adequate to cover the
liability that may arise with respect to such claim or potential claim, net of
the applicable deductible."
1
5. Section 4.2 of the Purchase Agreement is hereby amended by the
addition of a new subparagraph (e), which shall read as follows:
(e) any liability or obligation of the Company or any Subsidiary
arising under any Environmental Law with respect to (i) the real
property and operations previously operated by the Company or any such
Subsidiary at 000 Xxxxxxxx Xxxxxxx 00, Xxxxxx, Xxxxxxxx, and at 0000
Xxxxx 00/xx/ Xxxx Xxxxxx, Xxxxx, Xxxxxxxx, and/or (ii) any Release of
Hazardous Materials or violation or potential violation of
Environmental Laws which is referenced in the Phase I Environmental
Assessment Report or in the consultant's letters identified in Part A)
of Schedule 2.25 attached to this Agreement.
For the avoidance of doubt, (i) the limitations of Section 4.4(a) shall apply
with respect to claims under Section 4.2(e), and (ii) any claim for
indemnification under Section 4.2(e) must be asserted within the three year time
frame specified in Section 4.4(e) of the Purchase Agreement.
6. Except as modified hereby, the Purchase Agreement remains in full
force and effect. This Amendment may be executed in counterparts, each of which
shall constitute an original and all of which shall constitute one instrument.
[The balance of this page has been left blank intentionally]
2
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
and caused the same to be duly delivered on their behalf on the day and year
hereinabove first set forth.
BUYER:
ARBOR-XXXXXXX, INC.
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
-------------------------------------
Title: Secretary
------------------------------------
THE COMPANY:
CENTRAL ELECTRIC COMPANY
By: /s/ X. Xxxxxxx Lippincott
---------------------------------------
Name: X. Xxxxxxx Lippincott
-------------------------------------
Title: President
------------------------------------
SELLERS:
/s/ Xxxx X. Xxxxxxxxxx
------------------------------------------
XXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxx
------------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
XXXXXX X. XXXXXXX
XXXX XXXXXXX LIPPINCOTT REVOCABLE TRUST
By: /s/ X. Xxxxxxx Lippincott
---------------------------------------
X. Xxxxxxx Lippincott, as Trustee
3
XXXXXXX X. XXXXXXXXXX REVOCABLE TRUST
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx, as Trustee
AZZ:
AZZ INCORPORATED
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
-------------------------------------
Title: Secretary
------------------------------------
4
