STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION
OF
THE SHANNON GROUP, INC.
BY
THE MANITOWOC COMPANY, INC.
Dated as of October 24, 1995
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 1
1.1 Agreement Sections 1
1.2 Defined Terms 3
1.3 Other Definitional Provisions 8
ARTICLE 2 SHARE PURCHASE; CLOSING; OTHER AGREEMENTS 8
2.1 Sale and Purchase of Shares 8
2.2 Warrants of the Company 8
2.3 Share and Warrant Consideration; Surrender of Certificates 8
2.4 Earnout 9
2.5 Post-Closing Adjustment 11
2.6 Closing 12
2.7 Escrow Agreement 13
2.8 Borrowed Money Debt; Preferred Stock Amounts 13
2.9 Duties Concerning Representation 14
2.10 Deliveries of Information; Consultation; Schedule Updates 14
2.11 Acquisition Proposals 15
2.12 Noncompetition 15
2.13 Company Stockholders' Agent 16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER 17
3.1 Organization and Standing 17
3.2 Authorization of Agreement 17
3.3 No Violation or Conflict 17
3.4 Consent or Approval of Authorities 17
3.5 Litigation 17
3.6 Brokers 18
3.7 Investment 18
3.8 Disclosure 18
3.9 Financial Capacity 18
3.10 No Other Representations or Warranties 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY STOCKHOLDERS
WITH RESPECT TO THE COMPANY AND THE SUBSIDIARY 18
4.1 Organization and Standing 18
4.2 Authority to do Business 19
4.3 Articles and Certificates of Incorporation and Bylaws;
Corporate Records 19
4.4 No Subsidiaries 19
4.5 Capitalization 19
4.6 Rights; Warrants or Options; Dividends 19
4.7 Financial Statements 20
4.8 Undisclosed Liabilities 20
4.9 Personal Property 20
4.10 Real Property 21
4.11 Insurance 21
4.12 Labor Relations 22
4.13 Permits; Compliance With Law 22
4.14 Litigation 22
4.15 List of Accounts 23
4.16 List of Personnel 23
4.17 Employee Benefit Plans; ERISA 23
4.18 Absence of Changes 24
4.19 Tax Matters 25
4.20 Environmental Protection 25
4.21 Intellectual Property 27
4.22 Material Contracts 27
4.23 Transactions With Affiliates 27
4.24 Powers of Attorney 28
4.25 Inventory 28
4.26 No Pending Acquisitions 28
4.27 Accounts 28
4.28 Plant and Equipment 28
4.29 Borrowed Money Debt; Preferred Stock; Warrants 28
4.30 Customers 28
4.31 Transaction 28
4.32 Disclosure 29
4.33 No Other Representations or Warranties 29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
STOCKHOLDERS REGARDING SHARES AND OTHER MATTERS 29
5.1 Organization and Standing of Company Stockholders 29
5.2 Stock Ownership 29
5.3 Authorization of Agreement 29
5.4 No Violation or Conflict 30
5.5 Consent or Approval of Authorities 30
5.6 Litigation 30
5.7 Brokers 30
ARTICLE 6 PRE-CLOSING COVENANTS 30
6.1 Conduct of Business 30
6.2 Pre-Closing Activities 30
6.3 Best Efforts 32
6.4 Confidentiality 32
6.5 HSR Act; Consents and Approvals 33
6.6 Termination of Management Agreement 33
ARTICLE 7 CONDITIONS TO CLOSING 33
7.1 Conditions to Obligations of Purchaser 33
7.2 Conditions to Company Stockholders' Obligations 35
ARTICLE 8 ADDITIONAL AGREEMENTS 36
8.1 Further Assurances 36
8.2 Publicity 37
8.3 Certain Tax Matters 37
8.4 Further Assurances After Closing 37
8.5 Access 37
8.6 Dispute Resolution Mechanisms 38
8.7 Payment of 1995 Bonuses 40
8.8 Tax Audits 40
8.9 Specific Performance 42
ARTICLE 9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION 42
9.1 Company Stockholders Indemnification 42
9.2 Purchaser Indemnification 43
9.3 Junker Landfill Indemnification Claim 43
9.4 Specific Tax Indemnification Claims 43
9.5 Notice of Indemnification Claim 44
9.6 Defense by Indemnified Party 44
9.7 Consent to Entry of Judgment or Settlement 44
9.8 Defense Cooperation 44
9.9 Reduction in Adverse Consequences for Tax Benefits 44
9.10 Submission of Claims to Insurance Carriers 45
9.11 Indemnification Period 45
9.12 Termination of Indemnification Period 45
9.13 Exclusive Remedies 45
ARTICLE 10 MODIFICATION, WAIVERS AND TERMINATION 45
10.1 Modification 45
10.2 Waivers 45
10.3 Termination 46
10.4 Effect of Termination 46
ARTICLE 11 MISCELLANEOUS 46
11.1 Notices 47
11.2 Entire Agreement 46
11.3 Benefits; Binding Effect; Assignment 47
11.4 Waiver 47
11.5 No Third Party Beneficiary 47
11.6 Severability 47
11.7 Expenses 47
11.8 Section Headings 47
11.9 Counterparts 47
11.10 Litigation; Prevailing Party 48
11.11 Remedies Cumulative 48
11.12 Governing Law 48
11.13 Construction 48
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made and entered into as of
October 24, 1995, by and among THE MANITOWOC COMPANY, INC., a
Wisconsin corporation ("Purchaser"), and each of the individuals and
the entities listed on the signature pages hereto as COMPANY
STOCKHOLDERS (individually a "Company Stockholder" and collectively
"Company Stockholders"). TRIVEST, INC. is a party hereto solely for
the purpose of agreeing to the provision indicated above its signature.
PRELIMINARY STATEMENTS:
A. The Shannon Group, Inc., a Delaware corporation (the
"Company"), and its wholly owned subsidiary, Kolpak Manufacturing
Company, a Tennessee corporation (the "Subsidiary"), are producers of
walk-in refrigerators and freezers, reach-in refrigerators and
freezers, undercounter units and related products, with their
principal place of business in Brentwood, Tennessee.
B. All of the issued and outstanding shares of Common
Stock of the Company are owned by the Company Stockholders.
C. This Agreement contemplates a single, integrated and
definite plan whereby the Company Stockholders are disposing of all of
their shares of Common Stock of the Company by a sale of the Shares,
as such term is defined in Section 1.2, to Purchaser in exchange for
cash.
AGREEMENT:
In consideration of the premises and the respective mutual
agreements, covenants, representations and warranties herein
contained, the parties hereto agree as follows:
ARTICLE 1. Definitions
1.1 Agreement Sections. The following terms shall have the
meanings specified in the Sections of this Agreement listed in the
following table:
TERM SECTION
1995 Pro Forma Income Statements 2.4.2
Acquisition 2.11.1(a)
Acquisition Proposal 2.11.1(b)
Adjusted Net Working Capital 2.5.2
Aggregate Purchase Consideration 2.3.2
Aggregate Share Consideration 2.3.4
Aggregate Warrant Consideration 2.3.4
Arbitrating Accountant 2.4.4
Basket 9.1
Bid Balance Sheet 4.7.1
CERCLA 4.20.6
CPR 8.6.4
Cap 9.1
Closing 2.6
Closing Date Balance Sheet 2.5.1
Closing Income Statement 2.4.2
Company Preamble
Company Acquisition Date 4.3
Company's Consolidated Financial Statements 4.7.2
Company Stockholder(s) Preamble
Company Stockholders' Agent 2.13.1
Company Stockholders' Fees and Expenses 2.3.4
Dispute 8.6.1
Earnout 2.4.1
Environmental Claim 4.20.1(a)
Environmental Hazardous Materials 4.20.1(c)
Environmental Laws 4.20.1(b)
Environmental Permits 4.20.3
Environmental Release 4.20.1(d)
Escrow Agent 2.3.3
Escrow Agreement 2.3.3
Escrow Deposit 2.3.3
Final Closing Date Balance Sheet 2.5.3
Final Post Closing Adjustment 2.5.3
Final Earnout 2.4.4
Final Gross Profit 2.4.4
Financial Statements 4.7.2
Gross Profit 2.4.3
Indemnified Party 9.5
Indemnifying Party 9.5
Indemnitees 9.1
Interim Financial Statements 4.7.1
Intellectual Property 4.21
Junker Escrow Deposit 2.7.1
Junker Landfill Indemnification Claim 9.3
Negative Post Closing Adjustment Amount 2.5.6
Net Purchase Consideration 2.3.4
Net Working Capital 2.5.1
Permitted Personal Property Liens 4.9.1
Permitted Real Estate Liens 4.10.1
Positive Post Closing Adjustment Amount 2.5.6
Post Closing Adjustment 2.5.2
Purchaser Preamble
Replacement 8.6.6(g)
Request 8.6.4
Retained IRBs 2.8.3
Schedule Change 2.10.4
Specific Tax Indemnification Claims 9.4
Stub Period Income Statement 2.4.2
Subsidiary Preamble
Tax Escrow Deposit 2.7.2
Third Party Claim 9.5
Warrants 2.2
Warrant Purchase Agreement 2.2
1.2 Defined Terms. In addition to terms defined elsewhere
in this Agreement, the following terms when utilized in this
Agreement, unless the context otherwise requires, shall have the
meanings indicated, which meanings shall be equally applicable to both
the singular and plural forms of such terms:
"Adverse Consequences" means all liabilities, losses,
damages, expenses, liabilities, obligations and claims, including
court costs and reasonable attorneys' fees and expenses and other
reasonable legal costs and expenses.
"Affiliate" with respect to any Person means any Person
(a "Controlling Person") which, directly or indirectly, through one or
more intermediaries, controls the subject Person or any Person which
is controlled by or is under common control with a Controlling Person.
For purposes of this definition, "control" (including the correlative
terms "controlling", "controlled by" and "under common control
with"), with respect to any Person, means possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise.
"Agreement" means this Stock Purchase Agreement,
together with all Exhibits and Schedules contemplated hereby.
"Authority" means any federal, state, local or foreign
governmental regulatory agency, commission, bureau or authority.
"Bethel Springs IRB" means all liabilities and
obligations of the Company to the Industrial Development Board of the
City of Selmer, Tennessee under or securing that certain Lease dated
November 26, 1984, as amended, between The Industrial Development
Board of the City of Selmer, Selmer, Tennessee and Kolpak Industries,
Inc., as assigned by The Industrial Development Board of the City of
Selmer, Selmer, Tennessee to First National Bank of Selmer pursuant to
that certain Assignment of Lease dated November 26, 1984, and
pertaining to that certain real property located at Route 2, Highway
45, Bethel Springs, Tennessee.
"Borrowed Money Debt" means all liabilities and
obligations of the Company or the Subsidiary, or both: (a) under
contracts and agreements governing or securing the GECC Debt; and
(b) for, or under contracts or agreements governing or securing any
other indebtedness for money borrowed or capitalized lease
obligations; and (c) secured by Liens on any assets of the Company or
the Subsidiary, excluding, however, the Retained IRBs.
"Closing Date" means December 1, 1995 or such other
date as Purchaser and the Company Stockholders shall agree in writing.
"Code" means the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Common Stock of the Company" means the Common Stock of
the Company, par value $0.01 per share.
"Common Stock of the Subsidiary" means the Common Stock
of the Subsidiary, no par value.
"Confidential Information" means any data or other
information pertaining to the financial condition, results of
operations, business or products of the Company and the Subsidiary,
including, without limitation, customer lists, policies, techniques
and know-how, and other facts relating to sales, advertising,
promotions, financial matters, customers and prospective customers,
suppliers and agents (including, without limitation, the independent
sales agents of the Company and the Subsidiary); provided, however,
that Confidential Information does not include information (a) that is
or becomes generally available to the public other than as a result of
a disclosure by Purchaser or its Representatives, (b) that was
available to Purchaser on a nonconfidential basis prior to its
disclosure to Purchaser and its Representatives, (c) that becomes
available to Purchaser or its Representatives on a nonconfidential
basis from a third Person who is not bound by a confidentiality
agreement with the Company, the Subsidiary or their Representatives or
(d) that is known to Purchaser on a nonconfidential basis prior to
disclosure to the Purchaser by the Company.
"Employee Benefit Plan" means any (a) nonqualified
deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer
Plan), (d) Employee Welfare Benefit Plan or (e) any other pension
plan, profit sharing plan, bonus plan, incentive compensation plan,
stock purchase plan, stock option plan, stock appreciation plan,
employee benefit plan, employee benefit policy, retirement plan,
fringe benefit program, insurance plan, severance plan, disability
plan, death benefit plan, or any other plan or program to provide
retirement income, fringe benefits or other benefits to former or
current employees of the Company or the Subsidiary, or both.
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Section 3(1).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated thereunder.
"GAAP" means United States generally accepted
accounting principles as in effect from time to time and as
consistently applied by the Company.
"GECC" means General Electric Capital Corporation.
"GECC Debt" means all liabilities and obligations of
the Company or the Subsidiary, or both, to GECC under the GECC Loan
Agreement.
"GECC Loan Agreement" means the Loan Agreement, dated
as of November 29, 1990, as amended, among the Company and the
Subsidiary, as Borrowers, and GECC, as Agent and Lender, and all other
agreements, instruments and documents, including, without limitation,
guaranties, mortgages, deeds to secure debt, deeds of trust, chattel
mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements and all other written matters
executed by or on behalf of the Company or the Subsidiary, or both,
and delivered to GECC with respect to the transactions contemplated by
the GECC Loan Agreement.
"General Electric Agreements" means (a) the Agreement
dated November 1, 1991, between General Electric Company and Kolpak
Manufacturing Co. and (b) the Tooling Reimbursement Agreement dated
September, 1994, between General Electric Company and Kolpak
Manufacturing Co.
"Greeneville IRB" means all liabilities and obligations
of the Company to the Industrial Development Board of the Town of
Greeneville, Tennessee under or securing (a) that certain Lease dated
December 31, 1991, between The Industrial Development Board of the
Town of Greeneville, Tennessee and Tonka Coolers South Partners, and
(b) the Assumption, Assignment and Amendment Agreement, dated as of
May 5, 1994, among The Shannon Group, Inc., Tonka Coolers South
Partners, The Industrial Development Board of the Town of Greeneville,
Tennessee, Greene County Bank, Minnesota Store Equipment Co., Mark E.
Hegman, Jacqueline B. Hegman, Tommie P. Chelmo and Joan M. Chelmo.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Income Tax" means any federal, state, local or foreign
tax based on, measured by or with respect to income, net worth or
capital, including any interest, penalty or addition thereto.
"IRS" means the Internal Revenue Service.
"Knowledge" means, when applied to the Company
Stockholders, the actual knowledge of the Company Stockholders after
review of the Company Stockholders' own files and inquiry of Gary L.
Hainley and Douglas P. Bennett.
"Law" means any law, statute, rule or regulation, and
any judgment or order of any court or Authority.
"Lien" means any mortgage, reservation, easement,
imposition, title defect, lease, encroachment lien, charge, claim,
restriction, encumbrance, security interest or pledge of any kind
whatsoever.
"Management Agreement" means the Management Agreement,
dated as of November 29, 1990, between the Company and Trivest
Analysts, Inc.
"Material Adverse Effect" means a material adverse
effect on the business, assets, properties, results of operations or
financial condition of the Company and the Subsidiary, taken as a
whole.
"Material Contract" means any contracts, agreements,
relationships and commitments, written or oral, to which either the
Company or the Subsidiary is a party or by which either the Company or
the Subsidiary is bound, which constitute:
(a) an agreement to purchase or sell any capital
assets involving an amount in excess of $25,000.00;
(b) any union labor contracts;
(c) any management, consulting, employment, personal
service, agency or other contract or contracts providing for
employment or rendition of services at an annual compensation of
$50,000 or more (including deferred compensation, bonuses, incentives
and employee benefits) and which: (i) are in writing, or (ii) create
other than an at will employment relationship, or (iii) provide for
any commission, bonus, profit sharing, incentive, severance,
retirement, consulting or additional compensation;
(d) any agreements or notes evidencing any liabilities
or obligations of either the Company or the Subsidiary, whether
primary or secondary or absolute or contingent: (A) for borrowed
money; or (B) evidenced by notes, bonds, debentures or similar
instruments; or (C) secured by Liens on any assets of either the
Company or the Subsidiary;
(e) an agreement for the storage, transportation,
treatment or disposal of any Environmental Hazardous Materials;
(f) a power of attorney (whether revocable or
irrevocable) given to any Person by either the Company or the
Subsidiary that is in force;
(g) an agreement by either the Company or the
Subsidiary not to compete in any business or in any geographical area;
(h) an agreement restricting the right of either the
Company or the Subsidiary to use or disclose any information in its
possession;
(i) a partnership, joint venture or similar
arrangement;
(j) an Intellectual Property license;
(k) an agreement or arrangement with any Company
stockholder or any subsidiary or Affiliate of any Company Stockholder
(other than the Company or the Subsidiary);
(l) an agreement with an agent, dealer, distributor,
sales representative or franchisee; or
(m) any other agreement which: (A) involves an amount
in excess of $200,000.00; or (B) is not in the ordinary course of
business of the Company or the Subsidiary.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"Opinion of Counsel to Purchaser" means the opinion of
Quarles & Brady, counsel to Purchaser, dated as of the Closing Date,
addressed to the Company Stockholders and in the form of Exhibit A
hereto.
"Opinion of Counsel to the Company Stockholders" means
the opinion of Gordon & Einstein, Ltd., counsel to the Company
Stockholders, dated as of the Closing Date, addressed to Purchaser and
in the form of Exhibit B hereto.
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under ERISA.
"Permits" means all licenses, permits, orders,
approvals, registrations, authorizations, qualification filings with
all Authorities and all industry or non-governmental self-regulatory
organizations required in connection with the operation of the
business of the Company and the Subsidiary as presently conducted.
"Person" means any natural person, corporation, limited
liability company, limited liability partnership, unincorporated
organization, partnership, association, joint-stock company, joint
venture, trust or government, or any agency or political subdivision
of any government.
"Pre-Closing Tax Period" means any tax period
(including partial periods) that ends on or prior to the Closing Date.
"Preferred Stock of the Company" means the Preferred
Stock of the Company, par value $0.01 per share.
"Preferred Stock Redemption Payment" means $5,000,000,
plus all accrued but unpaid dividends (including a prorated quarterly
dividend from the last dividend payment date for the Preferred Stock
of the Company to the Closing Date if not already paid).
"Pro Rata Percentage" means, as to each Company
Stockholder, the percentage set forth opposite such Person's name in
the applicable portion of Schedule 2.1.
"Pro Rata Portion" of an obligation or benefit means,
as to any Company Stockholder, the product of (a) the total amount of
the obligation or benefit, times (b) a fraction, the numerator of
which is the Pro Rata Percentage of the Company Stockholder and the
denominator of which is the sum of the Pro Rata Percentages of all of
the Company Stockholders liable with respect to a portion of the
obligation or entitled to a portion of the benefit.
"Representative" means, with respect to any Person,
such Person's officers, directors, partners, employees, agents,
attorneys, accountants, lenders or prospective lenders, Affiliates and
other representatives.
"Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto.
"Selmer IRB" means all liabilities and obligations of
the Subsidiary to McNairy County, Tennessee and the City of Selmer,
Tennessee under or securing that certain Lease dated November 26,
1984, as amended, between McNairy County, Tennessee and the City of
Selmer, Tennessee, as Lessor, and Kolpak Industries, Inc., as Lessee,
as assigned from Kolpak Industries, Inc. to Kolpak Manufacturing
Company, Inc. pursuant to that certain Assignment of Lease dated
August 7, 1986, pertaining to that certain real property located at
789 Peach Street, Highway 45, Selmer, Tennessee.
"Shares" means all of the issued and outstanding shares
of Common Stock of the Company.
"Tax" and "Taxes" means all federal, state, local and
foreign taxes (including, without limitation, income or profits taxes,
premium taxes, excise taxes, sales taxes, use taxes, gross receipts
taxes, franchise taxes, ad valorem taxes, severance taxes, capital
levy taxes, transfer taxes, employment and payroll-related taxes,
property taxes, business license taxes, occupation taxes, import
duties and other governmental charges and assessments), of any kind
whatsoever, including interest, additions to tax and penalties with
respect thereto.
1.3 Other Definitional Provisions
1.3.1 Unless otherwise defined herein, all
terms defined in this Agreement shall have the defined meanings when
used in any certificate, report or other document made or delivered
pursuant hereto.
1.3.2 The words "hereof", "herein",
"hereunder" and "hereto" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
ARTICLE 2. SHARE PURCHASE CLOSING; OTHER AGREEMENTS
2.1 Sale and Purchase of Shares. On the Closing Date, each
Company Stockholder Seller will sell, transfer, convey and deliver to
Purchaser, and Purchaser shall purchase and accept delivery of all of
the Shares shown opposite each such Company Stockholder's name in the
applicable portion of Schedule 2.1 hereto, for a purchase price
determined as provided in Section 2.3 hereof. In order to effectuate
the purchase and sale of all Shares, each Company Stockholder will
deliver to Purchaser upon such purchase and sale all of the
certificates evidencing such Company Stockholder's Shares, registered
in the Company Stockholder's name, duly endorsed in blank or with
appropriate stock powers separate from the certificates and duly
endorsed for transfer.
2.2 Warrants of the Company. Concurrently with the
execution of this Agreement, Purchaser and GECC shall enter into the
Warrant Purchase Agreement in the form of Exhibit C attached hereto
(the "Warrant Purchase Agreement"), providing for Purchaser's purchase
of GECC's warrants to purchase Common Stock of the Company (the
"Warrants") for the Aggregate Warrant Consideration referred to in
Section 2.3.4 in accordance with the terms of the Warrant Purchase
Agreement.
2.3 Share and Warrant Consideration; Surrender of
Certificates
2.3.1 At the Closing, simultaneously with the
delivery to the Company Stockholders of Aggregate Share Consideration
referred to in Section 2.3.2, each Company Stockholder will surrender
to Purchaser certificates that, immediately prior to the Closing Date,
represented all of the Shares shown opposite each such Company
Stockholder's name in the applicable portion of Schedule 2.1 hereto.
2.3.2 Subject to the provisions of Sections
2.4 and 2.5 hereof, the aggregate consideration to be received by the
Company Stockholders for the Shares and GECC for the Warrants (the
"Aggregate Purchase Consideration") shall be:
(a) $126,000,000; minus
(b) the sum of: (i) the aggregate principal
amount of the Borrowed Money Debt and the Retained IRBs
outstanding as of the Closing Date; plus (ii) all unpaid interest
accrued on the Borrowed Money Debt and the Retained IRBs through
the close of business on the Closing Date; plus (iii) the
Preferred Stock Redemption Payment.
2.3.3 At the Closing, Purchaser, the Company,
the Company Stockholders, the Company Stockholders' Agent and
NationsBank, N.A. (Carolinas) as escrow agent (the "Escrow Agent")
will be entering into an escrow agreement (the "Escrow Agreement") in
the form of Exhibit D hereto. At the Closing, $3,000,000 (the "Escrow
Deposit") shall be withheld from the Aggregate Purchase Consideration
and paid to the Escrow Agent, to be held and disposed of by the Escrow
Agent in accordance with the terms of the Escrow Agreement.
2.3.4 The Aggregate Share Consideration and
the Aggregate Warrant Consideration shall be determined by taking the
Aggregate Purchase Consideration and subtracting therefrom (a) the
Escrow Deposit and (b) all legal, accounting and other costs and
expenses incurred in connection with this Agreement and any of the
transactions contemplated hereby on behalf of the Company Stockholders
as directed by the Company Stockholders' Agent and GECC ("Company
Stockholders' Fees and Expenses"), which shall be paid as provided in
Section 2.3.5 (the "Net Purchase Consideration"). The Aggregate Share
Consideration shall equal the Net Purchase Consideration multiplied by
67.981% (the "Aggregate Share Consideration") and the Aggregate
Warrant Consideration shall equal the Net Purchase Consideration
multiplied by 32.019% (the "Aggregate Warrant Consideration").
2.3.5 The Aggregate Share Consideration and
the Company Stockholders' Fees and Expenses shall be paid at the
Closing by Purchaser effecting wire transfers of immediately available
funds to accounts designated by the Company Stockholders in writing.
2.4 Earnout.
2.4.1 As additional consideration to be
received by the Company Stockholders for the Shares and GECC for the
Warrants, the Company Stockholders and GECC will be entitled to
receive contingent purchase price payments in accordance with the
provisions of this Section 2.4 (the "Earnout"). The amount of the
Earnout will be equal to the following: for each dollar by which the
Company's Gross Profit for the 12 month period ending December 31,
1995 exceeds $35,083,573, the Company Stockholders and GECC will be
entitled to receive $6.27; provided, however, that in no event shall
the Earnout payment exceed the sum of $7,000,000.
2.4.2 As promptly as practicable after
December 31, 1995 (but in no event later than March 15, 1996), (a) the
Company Stockholders, with Purchaser's cooperation, will cause the
Minneapolis office of the accounting firm of Coopers & Lybrand to
prepare and deliver concurrently to Purchaser and the Company
Stockholders an income statement for the period beginning January 1,
1995 through the Closing Date (the "Closing Income Statement") and (b)
Purchaser will cause its auditors, Coopers & Lybrand, to prepare and
deliver concurrently to Purchaser and the Company Stockholders an
income statement for the period beginning the day after the Closing
Date through December 31, 1995 (the "Stub Period Income Statement")
(the Closing Income Statement and the Stub Period Income Statement are
collectively referred to herein as the "1995 Pro Forma Income
Statements"). The Pro Forma Income Statements will be prepared in
accordance with the accounting policies and procedures set forth on
Schedule 2.4. The fees and expenses of Coopers & Lybrand will be
shared equally by Purchaser and the Company Stockholders.
2.4.3 For purposes of this Agreement, "Gross
Profit" means the sum of (a) the Company's gross profit set forth in
the Closing Income Statement, plus (b) the Company's gross profit set
forth in the Stub Period Income Statement.
2.4.4 If either Purchaser or the Company
Stockholders' Agent claims that the either of the 1995 Pro Forma
Income Statements has not been prepared in accordance with the
accounting policies and procedures set forth on Schedule 2.4, it will
deliver to the other party a detailed statement describing the basis
for any such claim within 15 days after receiving the 1995 Pro Forma
Income Statements. Purchaser and the Company Stockholders will use
reasonable efforts to resolve any such claims themselves. If they do
not obtain a final resolution within 15 days after receiving the 1995
Pro Forma Income Statements, however, Purchaser and the Company
Stockholders' Agent will select an accounting firm (other than Coopers
& Lybrand) mutually acceptable to them to resolve any remaining such
claims. If Purchaser and the Company Stockholders' Agent are unable
to agree on the choice of an accounting firm, they will select a
nationally-recognized accounting firm by lot (after excluding Coopers
& Lybrand) (the "Arbitrating Accountant"). Upon submission to the
Arbitrating Accountant for resolution, Purchaser shall indicate in
writing its position on each disputed matter and the Company
Stockholders shall do likewise. The Arbitrating Accountant shall
choose one of the two positions on each disputed matter no later than
May 15, 1996 and such position will be conclusive and binding upon
Purchaser and the Company Stockholders with respect to that disputed
matter. Purchaser and the Company Stockholders will revise the
calculations of the Company's Gross Profit and the Earnout as
appropriate to reflect the resolution of any such claims pursuant to
this Section 2.4.4. The term "Final Gross Profit" means the Gross
Profit, together with any revisions thereto pursuant to this Section
2.4.4 and the term "Final Earnout" means the Earnout calculated based
upon the Final Gross Profit. The Arbitrating Accountant shall
determine the proportion of its fees and expenses to be paid by each
of the Purchaser and the Company Stockholders, the greater the degree
to which the Arbitrating Accountant has accepted the position of a
party, the smaller the proportion of fees and expenses assessed.
2.4.5 Purchaser, at its expense, will make the
work papers and back-up materials used in calculating the Stub Period
Income Statement, Gross Profit shown on the Stub Period Income
Statement and the Earnout, and any books, records and financial staff
of the Company available to the Company Stockholders and their
accountants and other Representatives and to the Arbitrating
Accountant resolving any claim concerning the 1995 Pro Forma Income
Statements, Gross Profit and the Earnout at reasonable times and upon
reasonable notice at any time during (a) the preparation of the 1995
Pro Forma Income Statements and the calculation of Gross Profit and
the Earnout, (b) the review by the Company Stockholders of such
calculations, and (c) the resolution by Purchaser and the Company
Stockholders of any objections thereto.
2.4.6 The Company Stockholders, at their
expense, will make the work papers and back-up materials used in
calculating the Closing Income Statement, Gross Profit shown on the
Closing Income Statement and the Earnout, and any books, records and
financial staff of the Company Stockholders and their accountants and
other Representatives, available to the Purchaser and its accountants
and other Representatives and to the Arbitrating Accountant resolving
any claim concerning such calculations at reasonable times and upon
reasonable notice at any time during (a) the preparation of the 1995
Pro Forma Income Statements and the calculation of the calculation of
Gross Profit and the Earnout, (b) the review by Purchaser of such
calculations, and (c) the resolution by Purchaser and the Company
Stockholders of any objections thereto.
2.4.7 The Final Earnout payment will be paid
by Purchaser by wire transfer of immediately available funds to an
account or accounts designated by the Company Stockholders and GECC in
writing, no later than three business days after the completion of the
calculations of the Final Gross Profit and Final Earnout, with the
Company Stockholders to receive 67.981% of the Final Earnout amount
and GECC to receive 32.019% of the Final Earnout amount, as directed
by the Company Stockholders' Agent and GECC.
2.5 Post-Closing Adjustment.
2.5.1 As promptly as practicable after the
Closing Date (but in no event later than March 15, 1996), the Company
Stockholders, with Purchaser's cooperation, will cause the Minneapolis
office of the accounting firm of Coopers & Lybrand to prepare and
deliver concurrently to Purchaser and the Company Stockholders a
consolidated balance sheet of the Company (the "Closing Date Balance
Sheet"), calculating the Company's and the Subsidiary's "Net Working
Capital" in accordance with and as defined in the accounting policies
and procedures set forth on Schedule 2.4. The fees and expenses of
Coopers & Lybrand will be shared equally by Purchaser and the Company
Stockholders.
2.5.2 For purposes of this Agreement, the
"Post Closing Adjustment" shall be calculated by subtracting the
"Adjusted Net Working Capital" of the Company from
the Company's Bid Balance Sheet, as determined in accordance with and
as defined in the accounting policies and procedures set forth on
Schedule 2.4, from the Net Working Capital.
2.5.3 If either Purchaser or the Company
Stockholders' Agent claims that the Closing Date Balance Sheet or the
calculation of the Post Closing Adjustment has not been prepared or
calculated in accordance with the accounting policies and procedures
set forth on Schedule 2.4, it will deliver to the other party a
detailed statement describing the basis for any such claim within 15
days after receiving the Closing Date Balance Sheet. Purchaser and
the Company Stockholders will use reasonable efforts to resolve any
such claims themselves. If they do not obtain a final resolution
within 15 days after receiving the Closing Date Balance Sheet,
however, Purchaser and the Company Stockholders' Agent will select
another accounting firm mutually acceptable to them to resolve any
remaining such claims. If Purchaser and the Company Stockholders'
Agent are unable to agree on the choice of an accounting firm, they
will select an Arbitrating Accountant. Upon submission to the
Arbitrating Accountant for resolution, Purchaser shall indicate in
writing its position on each disputed matter and the Company
Stockholders shall do likewise. The Arbitrating Accountant shall
choose one of the two positions on each disputed matter no later than
May 15, 1996 and such position will be conclusive and binding upon
Purchaser and the Company Stockholders with respect to that disputed
matter. Purchaser will revise the Closing Date Balance Sheet and the
Post Closing Adjustment as appropriate to reflect the resolution of
any such claims pursuant to this Section 2.5.3. The terms "Final
Closing Date Balance Sheet" and "Final Post Closing Adjustment" mean
the Closing Date Balance Sheet and the Post Closing Adjustment,
together with any revisions thereto pursuant to this Section 2.5.3 and
Schedule 2.4. The Arbitrating Accountant shall determine the
proportion of its fees and expenses to be paid by each of the
Purchaser and the Company Stockholders, the greater the degree to
which the Arbitrating Accountant has accepted the position of a party,
the smaller the proportion of fees and expenses assessed.
2.5.4 Purchaser, at its expense, will make the
work papers and back-up materials used in preparing their objections
to the Closing Date Balance Sheet and the calculation of the Post
Closing Adjustment, and any books, records and financial staff of
Purchaser, and Representatives of Coopers & Lybrand, available to the
Company Stockholders and their accountants and other Representatives
and to the Arbitrating Accountant resolving any claim concerning the
Closing Date Balance Sheet and the Post Closing Adjustment calculation
at reasonable times and upon reasonable notice at any time during (a)
the preparation of the Closing Date Balance Sheet and the calculation
of the Post Closing Adjustment, (b) the review by the Company
Stockholders of the Closing Date Balance Sheet and the calculation of
the Post Closing Adjustment, and (c) the resolution by Purchaser and
the Company Stockholders of any objections thereto.
2.5.5 The Company Stockholders, at their
expense, will make the work papers and back-up materials used in
preparing the Closing Date Balance Sheet and the calculation of the
Post Closing Adjustment, and any books, records and financial staff of
the Company Stockholders and their accountants and other
Representatives, available to the Purchaser and its accountants and
other Representatives and to the Arbitrating Accountant resolving any
claim concerning the Closing Date Balance Sheet and the Post Closing
Adjustment calculation at reasonable times and upon reasonable notice
at any time during (a) the preparation of the Closing Date Balance
Sheet and the calculation of the Post Closing Adjustment, (b) the
review by Purchaser of the Closing Date Balance Sheet and the
calculation of the Post Closing Adjustment, and (c) the resolution by
Purchaser and the Company Stockholders of any objections thereto.
2.5.6 The Aggregate Purchase Consideration
will be adjusted if the Final Net Working Capital is greater or less
than the Adjusted Net Working Capital. If the Net Working Capital is
greater than the Adjusted Net Working Capital, then the Aggregate
Purchase Consideration will be increased on a dollar-for-dollar basis
by the amount of such increase (the "Positive Post Closing Adjustment
Amount"). In such event, the Positive Post Closing Adjustment Amount
will be paid by Purchaser to the Company Stockholders, by wire
transfer of immediately available funds to an account or accounts
designated by the Company Stockholders' Agent in writing, no later
than three business days after the completion of the Final Closing
Date Balance Sheet. If the Net Working Capital is less than the
Adjusted Net Working Capital, then the Aggregate Purchase
Consideration will be decreased on a dollar-for-dollar basis by the
amount of such deficiency (the "Negative Post Closing Adjustment
Amount"). In such event, each of the Company Stockholders will pay
its Pro Rata Portion of the Negative Post Closing Adjustment Amount to
Purchaser by wire transfer of immediately available funds to an
account or accounts designated by Purchaser in writing, no later than
three business days after the completion of the Final Closing Date
Balance Sheet.
2.6 Closing. Subject to the fulfillment or waiver of the
conditions precedent set forth in Article 7 hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Quarles & Brady, 411 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202 at 10:00 a.m. (local time) on the Closing
Date. Any breach of any representation, warranty, covenant or
agreement of any party hereto of which the other party has knowledge
on the Closing Date shall be deemed cured as of the Closing Date if
such party waives the conditions precedent set forth in Article 7
hereof and elects to close. Except as otherwise provided herein, all
proceedings to be taken and all documents to be executed at the
Closing shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and
executed.
2.7 Escrow Agreement. At the Closing, the Purchaser, the
Company Stockholders and the Escrow Agent shall execute and deliver
the Escrow Agreement and the Purchaser shall deliver the Escrow
Deposit to the Escrow Agent by a single wire transfer of immediately
available funds as described in the Escrow Agreement, to be held,
invested and disbursed by the Escrow Agent in accordance with the
terms and conditions of the Escrow Agreement and this Section 2.7
2.7.1 $500,000 of the Escrow Deposit (the
"Junker Escrow Deposit") shall be held until the seventh anniversary
of the Closing Date or until the earlier satisfaction of the Junker
Landfill Indemnification Claim in accordance with the provisions of
Section 9.3 hereof and the terms and provisions of the Escrow
Agreement.
2.7.2 $2,500,000 of the Escrow Deposit (the
"Tax Escrow Deposit") shall be held until September 16, 1999 for the
resolution of the Specific Tax Indemnification Claims in accordance
with the provisions of Section 9.4 hereof and the terms and provisions
of the Escrow Agreement; subject, however, to the release of certain
funds from the escrow on September 16, 1997 and September 16, 1998 in
accordance with the terms of the Escrow Agreement.
2.8 Borrowed Money Debt; Preferred Stock Amounts.
2.8.1 At the Closing, the Company Stockholders
will deliver to Purchaser:
(a) a certificate of the Company Stockholders,
together with such supporting information, documentation and
detail as the Purchaser requests, setting forth in reasonable
detail the calculations of the outstanding amounts of Borrowed
Money Debt and the Retained IRBs as of the Closing Date, all
accrued and unpaid interest on the Borrowed Money Debt and the
Retained IRBs as of the Closing Date and the Preferred Stock
Redemption Payment; and
(b) such documents executed by the holders of the
Borrowed Money Debt and the Preferred Stock of the Company as
Purchaser may reasonably request to evidence the consent to, and
participation in, the transactions described in this Agreement by
such Persons.
2.8.2 Contemporaneously with the Closing and
as of the Closing Date, Purchaser will cause the Company: (a) to
prepay the Borrowed Money Debt against appropriate releases and other
documentation from the holders thereof; and (b) redeem the Preferred
Stock of the Company by payment of the Preferred Stock Redemption
Payment against receipt of the duly endorsed stock certificates
representing the Preferred Stock of the Company. The Company
Stockholders will cooperate with Purchaser in all respects to effect
such transactions.
2.8.3 Within 15 days from the date hereof,
Purchaser will determine and provide notice to the Company
Stockholders of (a) which of the Bethel Springs IRB, the Greeneville
IRB and the Selmer IRB will be prepaid at Closing and (b) which of the
Bethel Springs IRB, the Greeneville IRB and the Selmer IRB will be
retained by the Company and/or the Subsidiary (the "Retained IRBs");
provided, however, that if Purchaser's determination is made too late
to allow for the necessary governmental approvals, title and/or survey
work to be completed prior to Closing with respect to any of such IRBs
which it has determined to prepay, those IRBs will be considered to be
Retained IRBs for purposes of this Agreement.
2.9 Duties Concerning Representations. Each party to this
Agreement shall: (a) to the extent within its control, use reasonable
efforts to cause all of its representations and warranties contained
in this Agreement to be true and correct in all respects on the
Closing Date with the same force and effect as if such representations
and warranties had been made on and as of the Closing Date; and (b)
use reasonable efforts to obtain any third party consents or approvals
required by this Agreement and to cause all of the conditions
precedent set forth in Article 7 of this Agreement to be satisfied.
2.10 Deliveries of Information; Consultation; Schedule Updates.
2.10.1 Prior to the Closing Date, the Company
Stockholders shall furnish promptly to the Purchaser: (a) the monthly
financial statements of the Company and the Subsidiary (as prepared by
the Company in accordance with its normal accounting procedures)
promptly after such financial statements are available; (b) copies of
any minutes of any meetings or unanimous consent actions and summaries
of any action taken by the shareholders or the Board of Directors, or
any committee thereof, of the Company or the Subsidiary; and (c) all
other information concerning the business, properties and personnel of
the Company and the Subsidiary as the Purchaser may reasonably
request.
2.10.2 Prior to the Closing Date, the Company
Stockholders shall confer and consult with Representatives of the
Purchaser on a regular and frequent basis to report on operational
matters and the general status of ongoing business operations of the
Company and the Subsidiary.
2.10.3 Prior to the Closing Date, the Company
Stockholders shall notify the Purchaser promptly: (a) of any
Acquisition Proposal, and (b) of any inquiry received from any Person
concerning an Acquisition or an Acquisition Proposal, and (c) of any
request from any Person for confidential information concerning the
Company or the Subsidiary, or both, and (iv) if any Person seeks to
initiate or continue any discussions or negotiations with the Company
Stockholders concerning an Acquisition or an Acquisition Proposal.
2.10.4 Prior to the Closing Date, the Company
Stockholders shall update the Schedules attached to this Agreement on
a biweekly basis by written notice to Purchaser to reflect any matters
which have occurred from and after the date of this Agreement which
(a) if existing on the date of this Agreement, would have been
required to be described in the Schedules and (b) individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect (a "Schedule Change"). If the parties cannot resolve any
differences regarding a Schedule Change within a reasonable period of
time (not to exceed 10 calendar days) Purchaser may terminate this
Agreement. If Purchaser elects to proceed with the transaction, the
Schedule Change will be deemed to cure any misrepresentation or breach
of warranty.
2.11 Acquisition Proposals.
2.11.1 As used in this Agreement, the following
terms shall have the meanings specified:
(a) "Acquisition" shall mean any or all of the
following, other than the transactions described in this
Agreement: (i) a merger, share exchange, consolidation,
reorganization, combination or similar transaction involving
either the Company or the Subsidiary; or (ii) a purchase,
exchange or tender offer for 50% or more of the outstanding
shares of capital stock of either the Company or the Subsidiary;
or (iii) a purchase, lease or other acquisition of all or any
significant portion of the assets of, or any equity interest (or
any option, warrant or securities convertible into any equity
interest) from, either the Company or the Subsidiary.
(b) "Acquisition Proposal" shall mean any
inquiries, or the making of any proposal, by any Person
concerning an Acquisition.
2.11.2 The Company Stockholders shall not, and
shall cause each of the Company and the Subsidiary and all of its and
their officers, directors, employees, agents and Representatives
(including, without limitation, any investment banker, attorney or
accountant retained or engaged by the Company Stockholders or the
Company and the Subsidiary) to not: (a) initiate or solicit any
inquiries concerning an Acquisition or an Acquisition Proposal; (b)
engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person
relating to an Acquisition or an Acquisition Proposal; or (c)
facilitate any effort or attempt to make or implement an Acquisition
Proposal; or (d) consummate, agree or commit to consummate any
Acquisition or Acquisition Proposal. The Company Stockholders shall,
and shall cause each of the Company and the Subsidiary to, immediately
cease or cause to be terminated any existing activities, discussions
or negotiations with any Person with respect to any of the foregoing
activities.
2.12 Noncompetition.
2.12.1 The Company Stockholders severally agree
that, if the transactions contemplated by this Agreement are
consummated, they will not (except in their capacities as employees of
the Company or the Purchaser, if applicable), directly or indirectly,
for the period of five (5) years from and after the Closing Date, in
the United States of America and such other countries in which the
Company or the Subsidiary has sold products in the two (2) year period
immediately preceding the Closing Date, own, manage, operate, control,
participate in, consult with, or be connected in any manner with, the
operation, ownership, management or control of any enterprise engaged
in the business of, or any business similar to, designing,
manufacturing, selling and distributing any walk-in refrigerators or
freezers, reach-in refrigerators or freezers and undercounter units.
2.12.2 Notwithstanding Section 2.12.1, the
Company Stockholders shall not be prohibited from owning or acquiring
securities of any corporation or other business enterprise that may be
engaged in activities described in the foregoing, provided that: (a)
no Affiliate of such Company Stockholder is an officer, director or
employee of, or consultant to, such corporation or business
enterprise; (b) such securities are held by such Company Stockholder
for investment purposes only and represent less than five percent (5%)
of the total equity interest of such corporation or business
enterprise; and (c) such securities are listed on a national
securities exchange or are regularly quoted in the over the counter
market by one or more members of the National Association of
Securities Dealers.
2.12.3 The parties agree that $3,000,000 of the
Aggregate Share Consideration shall be allocated to the agreements of
the Company Stockholders set forth in Section 2.12.1.
2.13 Company Stockholders' Agent.
2.13.1 Each of the Company Stockholders
irrevocably constitutes and appoints Trivest, Inc. as its or his agent
and attorney in fact (the "Company Stockholders' Agent") with full
power of substitution to do any and all things and execute any and all
documents which may be necessary, convenient or appropriate to
facilitate the consummation of the transactions contemplated by this
Agreement and the Escrow Agreement, including, but not limited to: (a)
amendments to this Agreement or the escrow Agreement or both, provided
that no such amendment shall reduce the Aggregate Purchase
Consideration or extend the Closing Date beyond December 15, 1995; (b)
waivers of or the satisfaction of any of the conditions set forth in
Article 7 of this Agreement; (c) execution of documents and
certificates pursuant to this Agreement and the Escrow Agreement; (d)
receipt of payments under or pursuant to this Agreement and the Escrow
Agreement as contemplated herein and therein; and (e) receipt and
forwarding of notices and communications pursuant to this Agreement.
2.13.2 In the event the Company Stockholders'
Agent, with the advice of counsel for the Company Stockholders, is of
the opinion that it requires further authorization or advice from the
Company Stockholders on any matters concerning this Agreement or the
Escrow Agreement, the Company Stockholders' Agent shall be entitled to
seek such further authorization from the Company Stockholders prior to
acting on their behalf.
2.13.3 If at any time there is no Person
serving as the Company Stockholders' Agent for any reason, the Company
Stockholders shall select a Person to act as the Company Stockholders'
Agent under this Agreement and the Escrow Agent.
2.13.4 In the event any advice from, or action
by, the Company Stockholders is required or sought from, or action by,
the Company Stockholders is required or sought pursuant to section
2.13.2 or Section 2.13.3 of this Agreement, each Company Stockholder
shall have shall have a number of votes equal to the number of Shares
owned by that Company Stockholder immediately prior to the Closing
Date and the authorization of a majority of such number of votes shall
be binding upon the Company Stockholders and shall constitute the
authorization or selection by the Company Stockholders.
2.13.5 Purchaser shall be fully protected in
dealing with the Company Stockholders' Agent under this Agreement and
the Escrow Agent and may rely upon the authority of the Company
Stockholders' Agent to act as the agent of the Company Stockholders.
Any payment by Purchaser to the Company Stockholders' Agent under this
Agreement or the Escrow Agreement shall be considered a payment by
Purchaser to the Company Stockholders. The appointment of the Company
Stockholders' Agent is coupled with an interest and shall not be
revocable by any Company Stockholder in any manner or for any reason.
This power of attorney shall no be affected by the disability or
incapacity of the principal pursuant to any applicable Law.
2.13.6 Trivest, Inc., by its signature to this
Agreement, hereby accepts appointment as the Company Stockholders'
Agent.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
In order to induce the Company Stockholders to enter into
this Agreement and to consummate the transactions contemplated hereby,
Purchaser represents and warrants to the Company Stockholders as
follows:
3.1 Organization and Standing. Purchaser is a corporation
duly organized, validly existing and in good standing under the Laws
of the state of its incorporation. Purchaser has all requisite
corporate right, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. Copies of the
Articles or Certificate of Incorporation and bylaws of Purchaser and
all amendments thereto as in effect on the date hereof have been
delivered to the Company Stockholders and are complete and correct as
of the date hereof.
3.2 Authorization of Agreement. The execution, delivery
and performance of this Agreement by Purchaser and the consummation by
it of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action and this Agreement
constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as
such enforceability may be limited by bankruptcy, moratorium,
fraudulent conveyance and other similar Laws affecting creditors'
rights generally and by general principles of equity.
3.3 No Violation or Conflict. Except for the requisite
notice and filing by Purchaser or an Affiliate of Purchaser under the
HSR Act, the execution and delivery of this Agreement by Purchaser and
the consummation by it of the transactions contemplated hereby, and
compliance by Purchaser with the provisions hereof, (a) does not and
will not violate or conflict with any provision of Law or any writ,
order of decree of any court or Authority, or any term or provision of
the Articles or Certificate of Incorporation or bylaws of Purchaser,
and (b) does not and will not, with or without the passage of time or
the giving of notice or both, result in the breach of, or constitute a
default or require any consent under, or result in the creation of any
Lien upon any property or assets of Purchaser pursuant to, any
instrument or agreement to which it is a party or by which it or its
properties may be bound or affected.
3.4 Consent or Approval of Authorities. Except for the
requisite notice and filing by Purchaser or an Affiliate of Purchaser
under the HSR Act, no consent, approval or authorization of, or
registration, qualification, designation, declaration or filing with,
any Authority is required in connection with the execution, delivery
of performance by Purchaser of this Agreement or any other agreement,
instrument or document contemplated hereby or thereby or the
consummation by Purchaser of the transactions contemplated hereby or
thereby.
3.5 Litigation. There are no actions, suits, claims or
proceedings pending or, to the knowledge of Purchaser, threatened
against or involving Purchaser or any of its assets or properties,
before any court or arbitration tribunal or by or before any Authority
that question the validity of this Agreement or seek to prohibit,
enjoin or otherwise challenge the consummation of the transactions
contemplated hereby. There are no outstanding orders, judgments,
injunctions, stipulations, awards or decrees of any Authority, court
or arbitration tribunal against Purchaser or any of its assets or
properties which prohibit or enjoin the consummation of the
transactions contemplated hereby.
3.6 Brokers. Except for Schroder Wertheim & Co.
Incorporated, the fees of which shall be the sole responsibility of
Purchaser, Purchaser has not employed any broker or finder and has not
incurred and will not incur any broker's, finder's or similar fees,
commissions or expenses payable by Purchaser in connection with the
transactions contemplated by this Agreement.
3.7 Investment. Purchaser acknowledges that the Shares
have not been registered under the Securities Act of 1933, as amended,
or under the securities Laws of any state or other jurisdiction.
Purchaser is acquiring the Shares solely for Purchaser's own account
and not with a view to, or for resale in connection with, any
distribution prohibited by the Securities Act of 1933, as amended, or
the securities Laws of any applicable state or other jurisdiction.
Purchaser agrees not to resell or offer to resell the Shares except in
compliance with the Securities Act of 1933, as amended, and other
applicable securities Laws. Purchaser acknowledges that it has been
afforded the opportunity to ask questions of, and to receive answers
from, the Company Stockholders and Persons acting on behalf of the
Company Stockholders concerning the Shares, the Company and the
matters contemplated by this Agreement.
3.8 Disclosure. No statement of fact by the Purchaser
contained in this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein
contained, in the light of the circumstances under which they were
made, not misleading as of the date to which it speaks.
3.9 Financial Capacity. Purchaser has cash on hand and
definitive financing commitments sufficient to satisfy all of its
obligations under this Agreement.
3.10 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 3, neither
Purchaser nor any other Person makes any other express or implied
representation or warranty on behalf of Purchaser and Purchaser hereby
disclaims any such representation or warranty, whether by the
Purchaser or any of its officers, directors, employees, agents or
Representatives or any other Person, with respect to the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, notwithstanding the delivery or disclosure to the
Company, the Subsidiary or the Company Stockholders or any of their
officers, directors, employees, agents or Representatives or any other
Person of any documentation or other information by Purchaser or any
of its officers, directors, employees, agents or Representatives or
any other Person with respect to any one or more of the foregoing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY STOCKHOLDERS
WITH RESPECT TO THE COMPANY AND THE SUBSIDIARY
In order to induce Purchaser to enter into this Agreement,
and to consummate the transactions contemplated hereby, each of the
Company Stockholders severally represents and warrants to Purchaser as
follows. Items disclosed by the Company Stockholders in any Schedule
to this Agreement shall be deemed to be disclosed for the purposes of
any other Schedule to this Agreement.
4.1 Organization and Standing. The Company and the
Subsidiary are corporations duly organized, validly existing and in
good standing under the Laws of their states of incorporation.
Neither the Company nor the Subsidiary is in default under any
provision of its Articles or Certificates of Incorporation or bylaws.
4.2 Authority to do Business. Each of the Company and the
Subsidiary has all requisite corporate power and authority to own,
lease and operate its properties and to conduct its business in the
manner where now conducted and is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its properties and assets or the
conduct of its business requires it to be so licensed or qualified,
except where the failure to be in good standing or to be duly licensed
or qualified to do business would not have a Material Adverse Effect.
Schedule 4.2 hereto lists each jurisdiction in which the Company and
the Subsidiary are licensed or qualified to do business as a foreign
corporation.
4.3 Articles and Certificate of Incorporation and Bylaws;
Corporate Records. Copies of the Articles or Certificates of
Incorporation and bylaws of the Company and the Subsidiary and all
amendments thereto as in effect on the date hereof have been delivered
to Purchaser and are complete and correct as of the date of this
Agreement. The minute books of the Company and the Subsidiary contain
correct and complete records of all actions taken by the Company
Stockholders and the Board of Directors (including committees of the
Board) of the Company and the Subsidiary since November 29, 1990 (the
"Company Acquisition Date"), and all signatures contained therein are
the true signatures of the Persons whose signatures they purport to
be. Since the Company Acquisition Date, the share transfer books of
the Company and the Subsidiary are correct, complete and current in
all respects.
4.4 No Subsidiaries. Except for the Subsidiary and except
as set forth on Schedule 4.4, the Company has no direct or indirect
equity interest by stock ownership or otherwise in any other
corporation, partnership, joint venture, firm, association or business
enterprise.
4.5 Capitalization. The Company's authorized capital stock
consists solely of (a) 10,000 shares of Common Stock of the Company,
of which 1,000 shares are issued and outstanding and are owned by the
Company Stockholders and no shares are treasury shares; and (b) 1,000
shares of Preferred Stock of the Company, of which 50 shares are
issued and outstanding and are owned by GECC and no shares are
treasury shares. The Subsidiary's authorized capital stock consists
solely of 2,000,000 shares of Common Stock of the Subsidiary, of which
2,000 shares are issued and outstanding and are owned by the Company
and no shares are treasury shares. All of the issued and outstanding
shares of capital stock of the Company and the Subsidiary are duly
authorized, validly issued, fully paid and nonassessable, and were not
issued in violation of the preemptive rights of any Person or any
agreement or Law by which the Company or the Subsidiary at the time of
issuance was bound.
4.6 Rights; Warrants or Options; Dividends. Except as set
forth on Schedule 4.6 hereto, there are no outstanding subscriptions,
warrants, options or, except for this Agreement, other agreements or
rights of any kind to purchase or otherwise receive or be issued, or
securities or obligations of any kind convertible into, any shares of
capital stock or any other security of the Company or the Subsidiary.
Except as set forth on Schedule 4.6 hereto, there is no outstanding
contract or other agreement of any Company Stockholder, the Company,
the Subsidiary or any other Person to purchase, redeem or otherwise
acquire any outstanding shares of the capital stock of the Company or
the Subsidiary, or securities or obligations of any kind convertible
into any shares of the capital stock of the Company or the Subsidiary.
Except as set forth on Schedule 4.6 hereto, there are no dividends
which have accrued or been declared but are unpaid on the capital
stock of the Company or the Subsidiary.
4.7 Financial Statements.
4.7.1 The Company Stockholders have delivered
to Purchaser copies of the Company's unaudited consolidated balance
sheet (the "Bid Balance Sheet") and the related statements of income,
stockholders' equity and cash flow for the period ended June 30, 1995
(the "Interim Financial Statements"). The Interim Financial
Statements (a) are complete and correct in all material respects and
have been prepared in accordance with the books and records of the
Company and the Subsidiary, (b) present fairly the financial condition
of the Company and the Subsidiary and their results of operations as
at and for the respective periods then ended, and (c) except as set
forth on Schedule 4.7, have been prepared in accordance with GAAP;
provided, however, that the Interim Financial Statements are subject
to normal year-end adjustments and lack footnotes and other
presentation items.
4.7.2 The Company Stockholders have delivered
to Purchaser copies of the Company's audited consolidated balance
sheet and the related statements of income, stockholders' equity and
cash flow (with unaudited consolidating information) for the years
ended December 31, 1993 and December 31, 1994 (the "Company's
Consolidated Financial Statements"). The Company's Consolidated
Financial Statements (a) are complete and correct in all material
respects and have been prepared in accordance with the books and
records of the Company, and its subsidiaries, (b) present fairly the
financial condition of the Company and its subsidiaries and their
results of operations as at and for the periods ended on the dates
thereof, and (c) except as set forth on Schedule 4.7, have been
prepared in accordance with GAAP. The Interim Financial Statements
and the Company's Consolidated Financial Statements are referred to
herein collectively as the "Financial Statements".
4.8 Undisclosed Liabilities. Neither the Company nor the
Subsidiary has any material liabilities, material commitments or
material obligations of any nature, whether absolute, accrued,
contingent or otherwise, other than (a) those reflected, reserved
against or disclosed in the Financial Statements and not heretofore
paid or discharged, (b) obligations for borrowed money and guarantees
of obligations of third parties not required by GAAP to be reflected,
reserved against or disclosed in the Interim Financial Statements, all
of which are set forth on Schedule 4.8 hereto and none of which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect, (c) those incurred in the ordinary course
of business consistent with past practice since the date of the Bid
Balance Sheet and (d) those described on Schedule 4.8 hereto.
4.9 Personal Property.
4.9.1 Except for assets disposed of in the
ordinary course of business consistent with past practice since the
date of the Bid Balance Sheet, (a) the Company and the Subsidiary have
good and valid title to all of the personal property and assets which
are used in the operation of their respective businesses and which
they own or purport to own, and (b) valid leasehold interests in all
leases of tangible personal property which they lease or purport to
lease, free and clear of any Liens, other than Permitted Personal
Property Liens and such Liens or imperfections of title as (i) are
reflected, reserved against or otherwise disclosed in the Financial
Statements, (ii) arise out of Taxes not yet subject to penalties for
non-payment or being contested in good faith by appropriate
proceedings, (iii) are imposed by Law (including, without limitation,
mechanics', materialmen's, landlords' warehousemen's and carriers'
Liens) and are securing obligations incurred in the ordinary course of
business which are not past due or are being contested in good faith
by appropriate proceedings, or (iv) are set forth on Schedule 4.9
hereto. "Permitted Personal Property Liens" shall mean those Liens
set forth in item 2 of Schedule 4.9.
4.9.2 The Company and the Subsidiary enjoy
peaceful and undisturbed possession under all of such leases of
personal property under which they are operating. All of such leases
are valid, subsisting and in full force and effect and there are no
existing defaults, or events which with the passage of time or the
giving of notice, or both, would constitute defaults by the Company,
the Subsidiary or, to the Knowledge of the Company Stockholders, by
any other party thereto.
4.9.3 Schedule 4.9 hereto sets forth a
complete and correct list of all leases and subleases of any personal
property to which the Company or the Subsidiary is a party.
4.10 Real Property.
4.10.1 Schedule 4.10 hereto sets forth a
complete and correct list of all real property owned, beneficially or
of record, or leased, subleased or otherwise occupied by the Company
and the Subsidiary, indicating the nature of their respective
interests therein. The Company and the Subsidiary have good and
marketable title to all of the real property which they own or purport
to own, and valid leasehold interests in all leases of real property
which they lease or purport to lease, free and clear of any Liens,
other than Permitted Real Estate Liens and such Liens or imperfections
of title as (a) are reflected, reserved against or otherwise disclosed
in the Financial Statements, (b) arise out of Taxes not yet subject to
penalties for non-payment or being contested in good faith by
appropriate proceedings, (c) are imposed by Law (including, without
limitation, mechanics', materialmen's, landlords' warehousemen's and
carriers' Liens) and are securing obligations incurred in the ordinary
course of business which are not past due or are being contested in
good faith by appropriate proceedings, or (d) are set forth on
Schedule 4.10 hereto. "Permitted Real Estate Liens" shall mean those
Liens set forth in item 5 of Schedule 4.10. There are no pending
condemnation, expropriation, eminent domain or similar proceedings
affecting all or any portion of such owned real property and, to the
Knowledge of the Company Stockholders, no such proceedings are
threatened or contemplated. Complete and correct copies of the most
recent title insurance policies with respect to real property owned by
the Company and the Subsidiary, as well as the most recent survey for
such owned real property have previously been delivered to Purchaser.
4.10.2 The Company and the Subsidiary enjoy
peaceful and undisturbed possession under all of such real property
leases under which they are operating. All of such leases are valid,
subsisting and in full force and effect and there are no existing
defaults, or events which with the passage of time or the giving of
notice, or both, would constitute defaults by the Company, the
Subsidiary or, to the Knowledge of the Company Stockholders, by any
other party thereto.
4.11 Insurance. Schedule 4.11 hereto sets forth a complete
and correct list of all insurance policies providing insurance
coverage of any nature to the Company and the Subsidiary. All such
policies are in full force and effect and all premiums due and payable
in respect thereof have been paid. The Company and the Subsidiary
have complied in all material respects with the provisions of such
policies, and such policies are sufficient for compliance with all
requirements of Law and agreements to which the Company and the
Subsidiary are parties. Since the respective dates of such policies,
no notice of cancellation or non-renewal with respect to any such
policy has been received by the Company or the Subsidiary.
4.12 Labor Relations. Except as set forth on Schedule 4.12
hereto, neither the Company nor the Subsidiary is a party to or
otherwise bound by any labor or collective bargaining agreement.
Except as set forth on Schedule 4.12 hereto, as of the date hereof (a)
neither the Company nor the Subsidiary is involved in or, to the
Knowledge of the Company Stockholders, threatened with any labor
dispute, strike, slowdown, work stoppage, arbitration, suit or
administrative proceeding relating to labor matters involving its
employees, (b) there are no actions, proceedings or claims pending or,
to the Knowledge of the Company Stockholders, threatened against
either the Company or the Subsidiary under any Laws relating to
employment, including any provisions thereof relating to wages, hours,
collective bargaining, withholding or the payment of social security
or other Taxes, including any grievance or unfair labor practice
charge, (c) neither the Company nor the Subsidiary has conducted
negotiations with respect to any future contract with or commitment to
any labor union or association and, to the Knowledge of the Company
Stockholders, there are no current or threatened attempts to organize
or establish any labor union or association or employee association
with respect to the Company or the Subsidiary, (d) there is no present
or former employee of the Company or the Subsidiary who has any claim
against the Company or the Subsidiary (whether under Law or equity,
under any employee agreement or otherwise) on account of or for: (i)
overtime pay, other than overtime pay for the current payroll period;
(ii) wages or salaries or bonus, other than wages or salaries or bonus
for the current payroll period; or (iii) vacations, sick, family,
personal or other leave, holiday, time off or pay in lieu of vacation
or time off, other than vacation, sick, family, personal or other
leave, holiday, time off (or pay in lieu thereof) earned in the period
immediately preceding the date of this Agreement or incurred in the
ordinary course of business and appearing as a liability on the
Interim Financial Statements; (e) there is not now pending any charge
or complaint against the Company or the Subsidiary by or before the
National Labor Relations Board or any Representative thereof, or any
comparable state agency or authority and no such charge or complaint
is on appeal or subject to further appeal; and (f) neither the Company
nor the Subsidiary has committed any unfair labor practices which have
not heretofore been corrected and fully remedied.
4.13 Permits; Compliance With Law. The Company and the
Subsidiary hold and are in compliance with all Permits and, to the
Knowledge of the Company Stockholders, are in compliance with all
requirements of Law, except for any violation or failure to so hold or
comply which could not reasonably be expected to have a Material
Adverse Effect and except for the failure to hold Permits that are
routine in nature and for which application has been made or will be
made in a timely manner. Except as set forth on Schedule 4.13 hereto,
no notice, citation, summons or order has been received by either the
Company or the Subsidiary, no complaint has been filed and served on
either of them, no penalty has been assessed and, to the Knowledge of
the Company Stockholders, no investigation, proceeding or review is
pending or threatened (a) with respect to any alleged violation by the
Company or the Subsidiary of any Law or Permit, or (b) with respect to
any alleged failure by the Company or the Subsidiary to have any
Permit. A true and correct list of all Permits of the Company and the
Subsidiary is set forth on Schedule 4.13.
4.14 Litigation. Except as set forth on Schedule 4.14
hereto, there are no actions, suits, claims or proceedings pending or,
to the Knowledge of the Company Stockholders, threatened against or
involving the Company or the Subsidiary, or any of their respective
assets or properties, before any court or arbitration tribunal or by
or before any Authority. There are no outstanding orders, judgments,
injunctions, stipulations, awards or decrees of any Authority, court
or arbitration tribunal against the Company or the Subsidiary, or any
of their respective assets or properties which prohibit or enjoin the
consummation of the transactions contemplated hereby.
4.15 List of Accounts. Schedule 4.15 hereto contains a
complete and correct list of all bank, securities and custodial
accounts, and all safe deposit boxes, maintained by the Company and
the Subsidiary and a listing of the Persons authorized to draw thereon
or make withdrawals therefrom or, in the case of safe deposit boxes,
with access thereto.
4.16 List of Personnel. Schedule 4.16 hereto sets forth (a)
the name and total compensation of each officer and director of each
of the Company and the Subsidiary and each other employee of such
corporations whose total compensation during the year ended December
31, 1994 exceeded $75,000 and each other employee of such corporations
whose total compensation during the six month period ended June 30,
1995 exceeded $37,500, (b) all wage or salary increases or bonuses
received by such Persons since December 31, 1994, and any accrual for
such increases or bonuses, and (c) all commitments or agreements by
the Company to increase the wages or modify the conditions or terms of
employment of any of its employees, except for annual wage and salary
increases which are consistent with past practice.
4.17 Employee Benefit Plans; ERISA.
4.17.1 Schedule 4.17 hereto sets forth a
complete and correct list of all Employee Benefit Plans in effect as
of the date hereof that the Company and the Subsidiary maintain or to
which they contribute.
(a) Each such Employee Benefit Plan (and each
related trust, insurance contract or fund) complies in form and
in operation in all material respects with the applicable
requirements of ERISA and the Code.
(b) All contributions (including all employer
contributions and employee salary reduction contributions, if
any) which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(c) Except as set forth on Schedule 4.17 hereto,
each such Employee Benefit Plan which is an Employee Pension
Benefit Plan has received a favorable determination letter from
the IRS as to its qualification under Section 401(a) of the Code.
(d) Each such Employee Benefit Plan which is
intended to meet the requirements of Section 125 of the Code
meets such requirements and each program of benefits for which
employee contributions are provided pursuant to elections under
any such Employee Benefit Plan meets the requirements of the Code
applicable thereto.
(e) As of the last day of the most recent prior
plan year, the market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other
than any Multiemployer Plan) equaled or exceeded the present
value of liabilities thereunder (determined in accordance with
PBGC methods, factors and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for determination).
(f) No "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any such Employee Benefit Plan which is
an Employee Pension Benefit Plan (or its related trust) which
could subject the Company or the Subsidiary, or any officer,
director or employee thereof, to any Tax or penalty imposed under
Section 4975 of the Code or liability under Section 406 of ERISA.
(g) The Company and the Subsidiary have delivered
to Purchaser correct and complete copies of the plan documents
and summary plan descriptions, the most recent determination
letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts and
other funding arrangements which implement each such Employee
Benefit Plan.
4.17.2 With respect to each Employee Benefit
Plan that the Company and the Subsidiary maintain or to which they
contribute:
(a) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or partially
terminated or has been the subject of a "reportable event" (as
defined in Section 4043 of ERISA) as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC to
terminate any such Employee Pension Benefit Plan has been
instituted.
(b) Neither the Company nor the Subsidiary has
incurred any liability to the PBGC (except for required premium
payments, if any), or otherwise under Title IV of ERISA
(including any withdrawal liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(c) No action, suit, proceeding, hearing or
investigation with respect to the administration or the
investment of assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge
of the Company Stockholders, threatened.
4.17.3 Except as set forth on Schedule 4.17,
neither the Company nor the Subsidiary contributes to, has ever
contributed to or ever has been required to contribute to any
Multiemployer Plan or has any liability (including withdrawal
liability) under any Multiemployer Plan.
4.17.4 Except as set forth on Schedule 4.17,
neither the Company nor the Subsidiary has any obligation to provide
health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the
Code. With respect to all of its past and present employees, the
Company and the Subsidiary have complied in all material respects with
the notice and continuation requirements of Part 6 of Subtitle B of
Title I of ERISA and of Section 4980B of the Code.
4.18 Absence of Changes. Except as otherwise set forth on
Schedule 4.18 hereto, since the date of the Bid Balance Sheet (a) the
business of the Company and the Subsidiary have been operated only in
the ordinary course, (b) there has been no material adverse change in
the business, assets, properties, results of operations or financial
condition of the Company and the Subsidiary, taken as a whole, (c)
none of the actions prohibited under Section 6.2 of this Agreement has
occurred or (d) except for dividends on the Preferred Stock of the
Company in accordance with the terms thereof, any declaration or
payment or setting aside the payment of any dividend or any
distribution in respect of the capital stock of the Company or any
direct or indirect redemption, purchase or other acquisition of any
such stock by the Company.
4.19 Tax Matters.
4.19.1 All Tax Returns required to be filed
with respect to the business and assets of the Company and the
Subsidiary have been duly and timely (within any applicable extension
periods) filed with the appropriate governmental agencies in all
jurisdictions in which such Returns are required to be filed and all
Taxes (including estimated Taxes) shown to be due and payable on such
Returns have been paid.
4.19.2 The aggregate liability of the Company
and the Subsidiary for Taxes (whether or not assessed) as of the date
of the Bid Balance Sheet did not exceed the reserve for Tax liability
(other than any reserve for deferred Taxes established to reflect
timing differences between book and tax income) disclosed on the face
of the Bid Balance Sheet. The aggregate liability of the Company and
the Subsidiary for Taxes (whether or not assessed) as of the Closing
Date will not exceed such reserve for Tax liability (other than any
reserve for deferred Taxes established to reflect timing differences
between book and tax income), as such reserve for Tax liability may be
adjusted for the passage of time through the Closing Date in
accordance with the past customs of the Company or the Subsidiary.
4.19.3 Except as set forth on Schedule 4.19
hereto, there is no claim or assessment pending or, to the Knowledge
of the Company Stockholders, threatened against either the Company or
the Subsidiary for any alleged deficiency in Taxes.
4.19.4 Except as set forth on Schedule 4.19,
neither the Company nor the Subsidiary has (a) filed any consent to
the application of Section 341(f) of the Code, (b) executed a waiver
or consent extending any statute of limitations for the assessment or
collection of any Taxes which remains outstanding, (c) applied for a
ruling relating to Taxes, (d) entered into a closing agreement with
any Tax Authority, or (e) filed an election under Section 338(g) or
338(h)(10) of the Code or caused a deemed election under Section
338(e) of the Code.
4.19.5 Except as set forth on Schedule 4.19, no
Income Tax Return of the Company or the Subsidiary has been audited by
any Tax Authority at any time since the Company Acquisition Date.
4.19.6 Neither the Company nor the Subsidiary
is a party to any written agreement providing for the allocation or
sharing of Taxes.
4.19.7 There are no Tax Liens upon any property
or assets of the Company or the Subsidiary except for Liens for
current Taxes not yet due and payable.
4.20 Environmental Protection.
4.20.1 As used in this Agreement:
(a) "Environmental Claim" shall mean any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, Liens, investigations,
proceedings or notices of noncompliance or violation (written or,
to the Knowledge of the Company Stockholders, oral) by any Person
alleging potential liability (including, without limitation,
potential liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial
costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting
from: (i) the presence, or release into the environment, of any
Environmental Hazardous Materials at any location, whether or not
owned by the Company or the Subsidiary; or (ii) circumstances
forming the basis of any violation or alleged violation, of any
Environmental Law; or (iii) any and all claims by any Person
seeking damages, contribution, indemnification, cost, recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Environmental Hazardous Materials.
(b) "Environmental Laws" shall mean all federal,
state, local or foreign statute, law, rule, ordinance, code and
regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to
Environmental Releases or threatened Environmental Releases of
Environmental Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Environmental Hazardous
Materials.
(c) "Environmental Hazardous Materials" shall
mean: (i) any petroleum or petroleum products, radon gas,
radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation,
polychlorinated biphenyls (PCBs) and transformers or other
equipment that contain dielectric fluid containing levels of
PCBs; and (ii) any chemicals, materials or substances which are
now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar
import, under any Environmental Law.
(d) "Environmental Release" shall mean any
release, spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the atmosphere,
soil, surface water, groundwater or property.
4.20.2 Except as set forth in Schedule 4.20,
each of the Company and the Subsidiary: (a) is in compliance with all
applicable Environmental Laws; and (b) has not received any
communication (written or, to the Knowledge of the Company
Stockholders, oral), from a governmental authority, that alleges that
either the Company or the Subsidiary is not in compliance with
applicable Environmental Laws.
4.20.3 Except as set forth in Schedule 4.20,
each of the Company and the Subsidiary has obtained all environmental,
health and safety Permits and governmental authorizations
(collectively, the "Environmental Permits") necessary for its
operations, and all such Permits are in good standing and each of the
Company and the Subsidiary is in compliance with all terms and
conditions of the Environmental Permits in all material respects.
4.20.4 Except as set forth in Schedule 4.20,
there is no Environmental Claim pending or, to the Knowledge of the
Company Stockholders, threatened against either the Company or the
Subsidiary or against any Person whose liability for any Environmental
Claim either the Company or the Subsidiary has or may have retained or
assumed either contractually or by operation of Law, or against any
real or personal property or operations which either the Company or
the Subsidiary owns, leases or operates.
4.20.5 Except as set forth in Schedule 4.20,
there have been no Environmental Releases of any Environmental
Hazardous Material by either the Company or the Subsidiary on real
property owned, used, leased or operated by either the Company or the
Subsidiary.
4.20.6 Except as set forth on Schedule 4.20, no
real property owned, operated, used or controlled by either the
Company or the Subsidiary since the Company Acquisition Date is
currently listed on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System,
both promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or on
any comparable state list, and neither the Company nor the Subsidiary
has received any written notice from any Person under or relating to
CERCLA or any comparable state or local Law.
4.20.7 Except as set forth on Schedule 4.20, no
off-site location at which either the Company or the Subsidiary has
disposed or arranged for the disposal of any waste is listed on the
National Priorities List or on any comparable state list and neither
the Company nor the Subsidiary has received any written notice from
any Person with respect to any off-site location, of potential or
actual liability or a written request for information from any Person
under or relating to CERCLA or any comparable state or local Law.
4.21 Intellectual Property. Schedule 4.21 hereto sets forth
a complete and correct list of all patents, trademarks, trade names,
service marks and copyrights (or pending registrations and
applications therefor) owned or used under license by the Company or
the Subsidiary and of each invention, formula, method and process used
under license by either the Company or the Subsidiary (the
"Intellectual Property"), and no royalties, honorariums or fees are
payable by the Company or the Subsidiary to any Person by reason of
the ownership or use of the Intellectual Property. Schedule 4.21 sets
forth a complete and correct list of each item of Intellectual
Property which the Company or the Subsidiary licenses or sublicenses
to others. Except as set forth on Schedule 4.21, (a) no claims have
been asserted by any Person in connection with the use by the Company
or the Subsidiary of any Intellectual Property, (b) to the Knowledge
of the Company Stockholders, no Person is infringing upon any of the
rights of the Company or the Subsidiary with respect to the
Intellectual Property, and (c) to the Knowledge of the Company
Stockholders, the use by the Company and the Subsidiary of the
Intellectual Property does not infringe on the rights of any Person.
4.22 Material Contracts. Schedule 4.22 hereto
sets forth a complete and correct list of all Material Contracts to
which the Company and the Subsidiary are parties. Such Material
Contracts are valid and binding and in full force and effect and there
are no defaults thereunder or events which with notice or the passage
of time would constitute a default by the Company or the Subsidiary
or, to the Knowledge of the Company Stockholders, by any other party
thereto, except for such defaults and events as to which requisite
waivers or consents have been obtained.
4.23 Transactions With Affiliates. Except as set forth on
Schedule 4.23 hereto, (a) since the date of the Bid Balance Sheet,
neither the Company nor the Subsidiary has entered into any Material
Contract or engaged in any other transaction with any Company
Stockholder or any Affiliate of a Company Stockholder, (b) no
Affiliate of any Company Stockholder has any interest in any property,
real or personal, tangible or intangible, used in or pertaining to the
business of either the Company or the Subsidiary, (c) none of the
Company Stockholders nor any of their Affiliates is indebted to the
Company or the Subsidiary, and (d) neither the Company nor the
Subsidiary is indebted to any Company Stockholder or any of their
Affiliates.
4.24 Powers of Attorney. Except as set forth on Schedule
4.24 hereto, neither the Company nor the Subsidiary has granted any
power of attorney to any Person for any purpose whatsoever, which
power of attorney is currently in force.
4.25 Inventory. Except as set forth on Schedule 4.25, the
inventories of raw materials, work in process, spare parts, supplies,
and finished goods owned by the Company or the Subsidiary are, as a
whole, merchantable and useable or saleable in the ordinary course of
business, subject to the reserve for inventory writedown disclosed on
the books of the Company and the Subsidiary as adjusted for the
passage of time through the Closing Date.
4.26 No Pending Acquisitions. Except for this Agreement,
neither the Company nor the Subsidiary is a party to or is bound by
any agreement, undertaking or commitment with respect to an
Acquisition.
4.27 Accounts. Except as set forth on Schedule 4.7, all
accounts receivable owned by the Company or the Subsidiary have arisen
from bona fide transactions in the ordinary course of business and, to
the extent not previously collected, are fully collectible, subject to
reserves as set forth in the Interim Financial Statements, and none of
such Accounts is or will be at the Closing Date subject to any
counterclaim or set off.
4.28 Plant and Equipment. Except as set forth on
Schedule 4.28, all plant structures and equipment of the Company and
the Subsidiary are in all material respects in good operating
condition and repair, subject to normal wear and tear, and are free
from structural or mechanical defects.
4.29 Borrowed Money Debt; Preferred Stock; Warrants. Except
as set forth on Schedule 4.29, (a) the Borrowed Money Debt is
prepayable without premium or penalty and without the consent of the
lenders thereunder, (b) the Preferred Stock of the Company may be
redeemed by the Company at an aggregate purchase price of $5,000,000,
plus accrued and unpaid dividends and without the consent of the
holders thereof and (c) the Warrants may be redeemed by the Company at
the Warrant Price without the consent of the holders thereof.
4.30 Customers. Except as set forth on Schedule 4.30, since
January 1, 1994, there has been no termination, cancellation or
material curtailment of the business relationship of the Company and
the Subsidiary with any customer or group of affiliated customers
whose purchases individually or in the aggregate constituted more than
five percent (5%) of the consolidated sales of the Company and the
Subsidiary for the fiscal year ended December 31, 1993, nor, to the
Knowledge of the Company Stockholders, any notice of intent to so
materially curtail.
4.31 Transaction. Neither the Company nor the Subsidiary
has incurred any brokers, attorneys, accountants, investment bankers
or other fees or other out-of-pocket expenses in connection with the
transactions described in this Agreement.
4.32 Disclosure. No statement of fact by the Company
Stockholders contained in this Agreement or in the Schedules to this
Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein contained, in the light of
the circumstances under which they were made, not misleading as of the
date to which it speaks.
4.33 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 4 and in
Article 5 hereof, none of the Company Stockholders, the Company, nor
the Subsidiary nor any other Person makes any other express or implied
representation or warranty on behalf of the Company Stockholders, the
Company or the Subsidiary, and the Company Stockholders, the Company
and the Subsidiary hereby disclaim any such representation or
warranty, whether by any Company Stockholder, the Company or the
Subsidiary or any of their respective officers, directors, employees,
agents or Representatives or any other Person, with respect to the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, notwithstanding the delivery or
disclosure to Purchaser or any of its officers, directors, employees,
agents or Representatives or any other Person of any documentation or
other information by the Company Stockholders, the Company or the
Subsidiary or any of their respective officers, directors, employees,
agents or Representatives or any other Person with respect to any one
or more of the foregoing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY STOCKHOLDERS
REGARDING SHARES AND OTHER MATTERS
In order to induce Purchaser to enter into this Agreement,
and to consummate the transactions contemplated hereby, each of the
Company Stockholders severally represents and warrants to Purchaser as
follows:
5.1 Organization and Standing of the Company Stockholders.
Those Company Stockholders which are not individuals are duly
organized, validly existing and in good standing under the Laws of
their respective states of formation. Each of the Company Stockholders
has all requisite right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
5.2 Stock Ownership. Each of the Company Stockholders
owns, beneficially and of record, the shares of Common Stock of the
Company set forth opposite each Company Stockholder's name in the
applicable portion of Schedule 2.1. Except as set forth on Schedule
5.2 hereto, each of the Company Stockholders has the right to transfer
to Purchaser all of the Shares, free and clear of any Liens. The
Company Stockholders will transfer and convey, and Purchaser will
acquire, good, valid and marketable title to the Purchased Shares,
free and clear of all Liens.
5.3 Authorization of Agreement. The execution, delivery
and performance by each Company Stockholder of this Agreement and the
consummation by each Company Stockholder of the transactions
contemplated hereby have been duly and validly authorized by all
requisite action and this Agreement constitutes the legal, valid and
binding obligations of each Company Stockholder, enforceable against
each Company Stockholder in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium, fraudulent
conveyance and other similar Laws affecting creditors' rights
generally and by general principles of equity.
5.4 No Violation or Conflict. Except for the requisite
notice and filing by the Company or the Company Stockholders under the
HSR Act, the execution and delivery of this Agreement and the
consummation by the Company Stockholders of the transactions
contemplated hereby, and compliance by the Company Stockholders with
the provisions hereof, (a) does not and will not violate or conflict
with any provision of Law or any writ, order of decree of any court or
Authority, or any term or provision of any Articles or Certificates of
Incorporation, bylaws or partnership agreement of any Company
Stockholder which is not an individual, and (b) does not and will not,
with or without the passage of time or the giving of notice or both,
result in the breach of, or constitute a default or require any
consent under, or result in the creation of any Lien upon any property
or assets of any Company Stockholder pursuant to, any instrument or
agreement to which any Company Stockholder is a party or by which any
Company Stockholder or its/his properties may be bound or affected.
5.5 Consent or Approval of Authorities. Except for the
requisite notice and filing by the Company or the Company Stockholders
under the HSR Act, no consent, approval or authorization of, or
registration, qualification, designation, declaration or filing with,
any Authority is required in connection with the execution, delivery
of performance by the Company Stockholders of this Agreement, or any
other agreement, instrument or document contemplated hereby or the
consummation by the Company Stockholders of the transactions
contemplated hereby or thereby.
5.6 Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Company Stockholders,
threatened against or involving any Company Stockholder or any of such
Company Stockholder's assets or properties, before any court or
arbitration tribunal or by or before any Authority that question the
validity of this Agreement or seek to prohibit, enjoin or otherwise
challenge the consummation of the transactions contemplated hereby.
There are no outstanding orders, judgments, injunctions, stipulations,
awards or decrees of any Authority, court or arbitration tribunal
against any Company Stockholder or any of such Company Stockholder's
assets or properties which prohibit or enjoin the consummation of the
transactions contemplated hereby.
5.7 Brokers. The Company Stockholders have not employed
any broker or finder other than Bowles Hollowell Conner & Co. and have
not incurred and will not incur any broker's, finder's or similar
fees, commissions or expenses payable by the Company Stockholders or
the Company in connection with the transactions contemplated by this
Agreement except for fees, if any, payable to Bowles Hollowell Conner
& Co. Any fee payable to Bowles Hollowell Conner & Co. shall be paid
by the Company Stockholders.
ARTRICLE 6. PRE-CLOSING COVENANTS
6.1 Conduct of Business. During the period from the date
hereof to the Closing Date, the Company Stockholders shall, unless
Purchaser shall otherwise consent in writing (which consent shall not
be unreasonably withheld or delayed), cause the Company and the
Subsidiary to continue to conduct their respective business affairs in
the usual and ordinary course of business and in substantially the
same manner as previously conducted (except as required by applicable
Law) and to maintain, or cause to be maintained in full force and
effect, all of the Company's and the Subsidiary's Permits.
6.2 Pre-Closing Activities. Except as otherwise permitted
or required by this Agreement or as set forth on Schedule 6.2 hereto,
prior to the Closing Date, the Company Stockholders shall not, unless
Purchaser shall otherwise consent in writing (which consent shall not
be unreasonably withheld or delayed), take any action to cause the
Company or the Subsidiary, and shall not permit the Company or the
Subsidiary, to:
6.2.1 create, incur or assume any indebtedness
for borrowed money, except for trade credit incurred in the ordinary
course of business, or incur, assume or become subject, whether
directly or indirectly, by way of guaranty or otherwise, to any
obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) other than obligations or
liabilities incurred in the ordinary course of business; or
6.2.2 fail to discharge or satisfy any Lien or
pay or satisfy any obligation or liability (whether absolute, accrued,
contingent or otherwise) arising from its operations when the same
shall become due and payable; or
6.2.3 sell, lease, assign, transfer or
otherwise dispose of any fixed property or fixed asset, except for
sales of fixed assets having a gross book value not in excess of
$50,000 individually or $200,000 in the aggregate; or
6.2.4 permit or allow any property or asset to
be subjected to any Lien except Permitted Personal Property Liens and
Permitted Real Estate Liens, or enter into any conditional sale or
other title retention agreement with respect to any property or asset;
or
6.2.5 except for dividends on the Preferred
Stock of the Company in accordance with the terms thereof and except
for the prorated dividend on the Preferred Stock of the Company from
the last payment date to the Closing Date, declare or pay any dividend
or other distribution on or with respect to any shares of its capital
stock or make any direct or indirect redemption, retirement, purchase
or other acquisition of any shares of its capital stock; or
6.2.6 make any change in its accounting
methods or practices, except as contemplated by this Agreement;
6.2.7 amend its Articles or Certificate of
Incorporation or bylaws or merge with or into or consolidate with any
other Person, subdivide or in any way reclassify any shares of its
capital stock or change in any manner the rights of its outstanding
capital stock; or
6.2.8 create, authorize, issue, sell or
deliver any of its capital stock, bonds or other of its securities
(whether authorized and unissued or held in treasury), or any
instrument convertible into any of them, or grant or otherwise issue
any options, warrants or other rights with respect thereto, or split
up, combine or reclassify any of its outstanding stock; or
6.2.9 merge or consolidate with, or acquire
substantially all of the assets of, any other Person; or
6.2.10 make any loan or advance (whether in
cash or other property), or make any investment in or capital
contribution to, or extend any credit to, any Person, except (a)
short-term investments pursuant to customary cash management policies,
and (b) advances made in the ordinary course of business to employees
consistent with past practices; or
6.2.11 make any payment to any Company
Stockholder or any Affiliate of any Company Stockholder (other than
(a) payments pursuant to the Management Agreement and reimbursements
for expenditures made on behalf of the Company by the Company
Stockholders or their Affiliates in the ordinary course of business
consistent with past practices and (b) compensation to any Company
Stockholder employed by the Company and/or the Subsidiary) or forgive
any indebtedness due or owing from any Company Stockholder or any
Affiliate of any Company Stockholder to the Company; or
6.2.12 enter into any agreement with any labor
union or association representing any employee, or make any wage or
salary increase or bonus, or increase in any other direct or indirect
compensation, for or to any of its officers, directors or employees;
or
6.2.13 enter into, amend, terminate or fail to renew
any Material Contract except in the ordinary course of business; or
6.2.14 in addition to required capital
expenditures associated with reimbursable tooling costs for the
Company's GE Monogram product, make any other capital expenditures,
capital additions or capital improvements which exceeds $100,000 per
expenditure or is in excess of $1,000,000 in the aggregate; or
6.2.15 institute or amend any Employee Benefits
or enter into or modify any written employment arrangement with any
Person; or
6.2.16 enter into any agreement or commitment
to do any of the foregoing.
6.3 Best Efforts. The parties shall use their respective
best efforts to cause the consummation of the transactions
contemplated by this Agreement, including, but not limited to,
obtaining General Electric Company's consent to the assignment or
continuation of the General Electric Agreements in their current form
as soon as possible following the execution of this Agreement.
6.4 Confidentiality.
6.4.1 Unless and until the transactions
contemplated hereby have been consummated, Purchaser shall, and shall
ensure that its Representatives shall, hold in strict confidence and
not use in any way except in connection with the consummation of the
transactions contemplated hereby, all Confidential Information
obtained in connection with the transactions contemplated hereby from
the Company Stockholders, the Company or the Subsidiary or from any of
their respective Representatives, except any such Confidential
Information which is required to be disclosed by Purchaser or its
Representatives (a) in connection with any court action or any
proceeding before any Authority, (b) in connection with the
enforcement of any of the rights of Purchaser hereunder, or (c) in
connection with securing any consent or approval hereunder; provided,
however, that in the case of a disclosure contemplated by clause (a)
or (c) above, no disclosure shall be made until Purchaser shall have
given notice to the Company Stockholders of the intention so to
disclose such Confidential Information and shall have given the
Company Stockholders a reasonable opportunity to contest the need for
such disclosure, and Purchaser shall cooperate with the Company
Stockholders in connection with any such proceeding. Purchaser shall
cause its Representatives to agree, for the benefit of the Company
Stockholders, to keep such Confidential Information confidential, and
to hold or dispose of such Confidential Information in the manner and
to the extent provided herein. Purchaser shall not use any
Confidential Information in competition with the Company and/or the
Subsidiary.
6.4.2 In the event this Agreement is
terminated, Purchaser and its Representatives shall promptly destroy
or, upon the request of the Company Stockholders, return to the
Company Stockholders all Confidential Information furnished by the
Company Stockholders, the Company or the Subsidiary or any of their
respective Representatives, and any copies or extracts thereof.
6.5 HSR Act; Consents and Approvals.
6.5.1 Purchaser and the Company Stockholders
shall each (a) file within two business days after the execution of
this Agreement with the Antitrust Division of the United States
Department of Justice and the Federal Trade Commission the pre-merger
notifications required by the HSR Act from such party, requesting
early termination of the waiting period thereunder, (b) respond
promptly to inquiries to such party from such Authorities in
connection with such filings, and (c) cooperate fully with one another
in the preparation of such filings and responses.
6.5.2 Purchaser and the Company Stockholders
shall each (and the Company Stockholders shall cause the Company and
the Subsidiary to) give any notices to, make any filings with, and use
their respective reasonable efforts to obtain any other
authorizations, consents and approvals of any Authorities required to
be obtained by any of them to consummate the transactions contemplated
hereby.
6.5.3 The Company Stockholders shall cause the
Company and the Subsidiary to give any notices to third parties, and
shall cause the Company and the Subsidiary to use their reasonable
efforts to obtain, any third party consents that Purchaser may
reasonably request in connection with the consummation of the
transactions contemplated hereby. Nothing in this Agreement shall be
construed as an attempt or an agreement by the Company or the
Subsidiary to assign or cause the assignment of any contract or
agreement which is by Law nonassignable without the consent of the
other party or parties thereto, unless such consent shall have been
given.
6.6 Termination of Management Agreement. The Company and
Trivest Analysts, Inc. shall, effective for all periods beginning on
or after the Closing Date, terminate the Management Agreement and any
related policies between or among the Company Stockholders, Affiliates
of the Company Stockholders, the Company and the Subsidiary. Except
for any amounts receivable from or payable to Trivest Analysts, Inc.
under the Management Agreement as of the Closing Date, no further
payments shall be due thereunder. Any amounts payable under the
Management Agreement pursuant to the preceding sentence shall be paid
on or before the Closing Date.
ARTICLE 7. CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Purchaser. All of the
obligations of Purchaser to consummate the transactions contemplated
by this Agreement are subject to the satisfaction at or prior to the
Closing of each and every one of the following express conditions
precedent, any one or more of which may be waived by Purchaser:
7.1.1 Each of the representations and
warranties of the Company Stockholders contained in: (a) Section 4.1,
4.5, 4.6, 5.2, 5.3 and 5.5 of this Agreement shall be true and correct
in all respects as of the Closing Date with the same force and effect
as though made on and as of such date; and (b) all other Sections of
this Agreement shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as through
made on and as of such date.
7.1.2 The Company Stockholders shall have
performed and complied: (a) in all respects with all of the
agreements, covenants and obligations required under Sections 2.3.1,
2.7, 2.8, 6.5 and 6.6 of this Agreement to be performed or complied
with by the Company Stockholders prior to or at the Closing; and (b)
in all material respects with all of the other agreements, covenants
and obligations required under this Agreement to be performed or
complied with by the Company Stockholders prior to or at the Closing.
7.1.3 The Company Stockholders shall have
delivered to Purchaser a certificate, certifying in such detail as
Purchaser may reasonably request, that the conditions specified in
Sections 7.1.1 and 7.1.2 have been fulfilled.
7.1.4 All filings that are required to have
been made by the Company Stockholders, the Company or the Subsidiary
with any Authority in order to carry out the transactions contemplated
by this Agreement shall have been made, and all authorizations,
consents and approvals from all Authorities required to carry out the
transactions contemplated by this Agreement shall have been received.
7.1.5 There shall be in force no claim,
proceeding, action, order or decree by or before any court or
Authority of competent jurisdiction restraining, enjoining,
prohibiting, invalidating or otherwise preventing (or seeking to
prevent) the consummation of the transactions contemplated hereby.
7.1.6 No proceeding in which any Company
Stockholder, the Company or the Subsidiary shall be a debtor,
defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against
such Person under any United States or state bankruptcy or insolvency
Law.
7.1.7 Purchaser shall have received
certificates issued by the Secretaries of State of the States of
Delaware and Tennessee, as of a date reasonably acceptable to
Purchaser, as to the good standing of the Company and the Subsidiary,
respectively, in each such state. In addition with respect to those
Company Stockholders which are not individuals, Purchaser shall have
received (a) a certificate of the applicable officer or partner of
each such Company Stockholder as to the incumbency and signatures of
the Person executing this Agreement on behalf of such Company
Stockholder, and (b) a certificate issued by the Secretary of State of
the state in which each such Company Stockholder is organized, as of a
date reasonably acceptable to Purchaser, as to the good standing of
such Company Stockholder in such state.
7.1.8 The Company Stockholders shall have
delivered to Purchaser such resignations of the officers and directors
of the Company and the Subsidiary as Purchaser may request.
7.1.9 Purchaser shall have received the
Opinion of Counsel to the Company Stockholders.
7.1.10 Since the date of the Bid Balance Sheet
there shall have been no material adverse change in (or event or
circumstance occurring that, with the passage of time, is reasonably
likely to result in a material adverse change in) the business,
assets, properties, results of operations or financial condition of
the Company and the Subsidiary, taken as a whole.
7.1.11 Funding pursuant to the financing
commitments referred to in Section 3.10 hereof shall have occurred.
7.1.12 At or prior to the Closing, the Company
Stockholders shall have delivered to Purchaser:
(a) a copy of the Articles or Certificate of
Incorporation of each of the Company and the Subsidiary, as
amended to date, certified as of the recent date by the Secretary
of State of the state of incorporation of that corporation; and
(b) all corporate minute books, stock transfer
books, blank stock certificates and corporate seals of the
Company and the Subsidiary.
7.1.13 The Escrow Agreement shall have been
executed and delivered by the Escrow Agent and the Company
Stockholders.
7.1.14 All proceedings, corporate or other, to
be taken in connection with the transactions contemplated by this
Agreement by the Company Stockholders, the Company and the Subsidiary,
and all documents incident thereto, shall be reasonably satisfactory
in form and substance to Purchaser, and the Company Stockholders shall
have made available to Purchaser for examination the originals or true
and correct copies of all documents Purchaser may reasonably request
in connection with the transactions contemplated by this Agreement.
7.2 Conditions to Company Stockholders' Obligations. All
of the obligations of the Company Stockholders to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of each and every one of the
following express conditions precedent, any one or more of which may
be waived by the Company Stockholders:
7.2.1 Each of the representations and
warranties of Purchaser contained in: (a) Sections 3.1 and 3.2 of
this Agreement shall be true and correct in all respects as of the
Closing Date with the same force and effect as though made on and as
of such date; and (b) all other Sections of this Agreement shall be
true and correct in all material respects on and as of the Closing
Date with the same force and effect as though made on and as of such
date.
7.2.2 Purchaser shall have performed and
complied: (a) in all respects with all of the agreements, covenants
and obligations required under Sections 2.2, 2.3.5, 2.7, 2.8, 6.4 and
6.5 of this Agreement to be performed or complied with by the
Purchaser prior to or at the Closing; and (b) in all material respects
with all of the other agreements, covenants and obligations required
under this Agreement to be performed or complied with by it prior to
or at the Closing.
7.2.3 Purchaser shall have delivered to the
Company Stockholders a certificate, executed by a duly authorized
officer of Purchaser in his capacity as such, certifying in such
detail as the Company Stockholders may reasonably request that the
conditions specified in Sections 7.2.1 and 7.2.2 have been fulfilled.
7.2.4 The Company Stockholders, the Company
and the Subsidiary shall have obtained all authorizations, consents,
waivers and approvals from parties to contracts or other agreements to
which the Company or the Subsidiary is a party, or by which either of
them is bound, as may be required to be obtained in connection with
the consummation of the transactions contemplated hereby.
7.2.5 All filings that are required to have
been made by Purchaser with any Authority in order to carry out the
transactions contemplated by this Agreement shall have been made, and
all authorizations, consents and approvals from all Authorities
required to carry out the transactions contemplated by this Agreement
shall have been received.
7.2.6 There shall be in force no claim,
proceeding, action, order or decree by or before any court or
Authority of competent jurisdiction restraining, enjoining,
prohibiting, invalidating or otherwise preventing (or seeking to
prevent) the consummation of the transactions contemplated hereby.
7.2.7 No proceeding in which Purchaser shall
be a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against
such Person under any United States or state bankruptcy or insolvency
Law.
7.2.8 The Company Stockholders shall have
received (a) a certificate of the Secretary or an Assistant Secretary
of Purchaser as to the incumbency and signatures of the officers of
Purchaser executing this Agreement, and (b) a certificate issued by
the Secretary of State of Wisconsin, as of a date reasonably
acceptable to the Company Stockholders, as to the good standing of
Purchaser in such state.
7.2.9 The Company Stockholders shall have
received the Opinion of Counsel to Purchaser.
7.2.10 The Escrow Agreement shall have been
executed and delivered by Purchaser and the Escrow Agent and Purchaser
shall have delivered the Escrow Deposit to the Escrow Agent.
7.2.10 All proceedings, corporate or other, to
be taken in connection with the transactions contemplated by this
Agreement by Purchaser, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Company
Stockholders, and Purchaser shall have made available to the Company
Stockholders for examination the originals or true and correct copies
of all documents which the Company Stockholders may reasonably request
in connection with the transactions contemplated by this Agreement.
ARTICLE 8. ADDITIONAL AGREEMENTS
8.1 Further Assurances. The parties hereto shall deliver
any and all other instruments or documents required to be delivered
pursuant to, or necessary or proper in order to give effect to, all of
the terms and provisions of this Agreement including, without
limitation, all necessary stock, powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the
Shares.
8.2 Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby
shall be made without advance approval thereof by Purchaser and the
Company Stockholders. The parties hereto agree to cooperate in
issuing any press release or other public announcement concerning this
Agreement or the transactions contemplated hereby. Whenever
practicable, each party shall furnish to the other party drafts of all
such press releases or announcements prior to their release. Nothing
contained herein shall prevent any party from at any time furnishing
any information to any Authority or from making any disclosures
required under the Securities Act of 1933 or the Securities and
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, or under the rules and regulations of any
national securities exchange on which such party's shares of capital
stock are listed.
8.3 Certain Tax Matters.
8.3.1 The Company Stockholders shall have no
liability with respect to any Taxes resulting by reason of any
election made or deemed to be made by Purchaser or the Company
subsequent to the Closing, whether express or implied, under Section
338 of the Code.
8.3.2 Notwithstanding any provision of this
Agreement which may be to the contrary, Purchaser shall preserve, and
shall cause the Company and the Subsidiary to preserve, all Returns,
books and records in their control relating to any liabilities for
Taxes due with respect to any Pre-Closing Tax Period until the
expiration of the Indemnification Period.
8.4 Further Assurances After Closing. In case at any time
after the Closing any further action is necessary to carry out the
purposes of this Agreement, each of the parties hereto will take such
further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request,
all at the sole cost and expense of the requesting party (except to
the extent the requesting party is entitled to indemnification
therefor under this Agreement).
8.5 Access.
8.5.1 Until the date which is five years after
the Closing Date, Purchaser will give, and will cause the Company and
the Subsidiary to give, to the Company Stockholders reasonable access
to (and the right to make copies at the expense of the Company
Stockholders of) the books, files, records and Tax Returns of the
Company and the Subsidiary to the extent that such relate to the
business and operations of the Company and the Subsidiary on or prior
to the Closing Date and are in Purchaser's, the Company's or the
Subsidiary's possession on the Closing Date or subsequently come into
Purchaser's, the Company's or the Subsidiary's possession. Any access
pursuant to this Section 8.5.1 will be conducted by the Company
Stockholders in good faith, with a reasonable purpose and in such
manner as not to interfere unreasonably with the operations of
Purchaser, the Company or the Subsidiary following the Closing.
Neither Purchaser, the Company nor the Subsidiary will destroy or
dispose of any such books, files, records or Tax Returns prior to the
expiration of such five year period.
8.5.2 Until the date which is five years after
the Closing Date, the Company Stockholders will give to Purchaser, the
Company and the Subsidiary reasonable access to (and the right to make
copies at the expense of Purchaser, the Company or the Subsidiary of)
the books, files, records and Tax Returns of the Company Stockholders
to the extent that such relate to the business and operations of the
Company and the Subsidiary prior to the Closing Date and are in the
possession of any Company Stockholder on the Closing Date or
subsequently come into a Company Stockholder's possession. Any access
pursuant to this Section 8.5.2 will be conducted by Purchaser in good
faith, with a reasonable purpose and in such manner as not to
interfere unreasonably with the operations of such Company Stockholder
following the Closing. The Company Stockholders will not destroy or
dispose of any such books, files, records or Tax Returns prior to the
expiration of such five year period.
8.6 Dispute Resolution Mechanisms
8.6.1 As used in this Agreement, "Dispute" shall:
(a) mean any dispute or disagreement between the
Company Stockholders and Purchaser concerning the interpretation
of this Agreement, the validity of this Agreement, any breach or
alleged breach by any party under this Agreement or any other
matter relating in any way to this Agreement; and
(b) exclude any dispute or disagreement between
the Company Stockholders and Purchaser concerning (i) the
calculations of Gross Profit and the Earnout, or the calculations
of the Final Gross Profit or the Final Earnout, which shall be
resolved pursuant to the provisions of Section 2.4 of this
Agreement and (ii) the Closing Date Balance Sheet or the
calculation of the Post Closing Adjustment, or the calculations
of the Final Closing Date Balance Sheet or the Final Post Closing
Adjustment, which shall be resolved pursuant to the provisions of
Section 2.5 of this Agreement.
8.6.2 If a Dispute arises, the parties shall
follow the procedures specified in Sections 8.6.3, 8.6.4 and 8.6.5 of
this Agreement.
8.6.3 The parties shall promptly attempt to
resolve any Dispute by negotiations between the Company Stockholders'
Agent and Purchaser. Either the Company Stockholders' Agent or
Purchaser may give the other party written notice of any Dispute not
resolved in the normal course of business. The Company Stockholders'
Agent and Purchaser shall meet at a mutually acceptable time and place
within ten (10) calendar days after delivery of such notice, and
thereafter as often as they reasonably deem necessary, to exchange
relevant information and to attempt to resolve the Dispute. If the
Dispute has not been resolved by these Persons within thirty (30)
calendar days of the disputing party's notice, or if the parties fail
to meet within such fifteen (15) calendar days, either the Company
Stockholders' Agent or Purchaser may initiate mediation as provided in
Section 8.6.4 of this Agreement. If a negotiator intends to be
accompanied at a meeting by legal counsel, the other negotiator shall
be given at least three (3) business days' notice of such intention
and may also be accompanied by legal counsel.
8.6.4 If the Dispute is not resolved by
negotiations pursuant to Section 8.6.3 of this Agreement, the Company
Stockholders' Agent and Purchaser shall attempt in good faith to
resolve any such Dispute by nonbinding mediation. Either the Company
Stockholders' Agent or Purchaser may initiate a nonbinding mediation
proceeding by a request in writing to the other party (the "Request"),
and both parties will then be obligated to engage in a mediation. The
proceeding will be conducted in accordance with the then current
Center for Public Resources ("CPR") Model Procedure for Mediation of
Business Disputes, with the following exceptions:
(a) if the parties have not agreed within thirty
(30) calendar days of the Request on the selection of a mediator
willing to serve, CPR, upon the request of either the Company
Stockholders' Agent or Purchaser, shall appoint a member of the
CPR Panels of Neutrals as the mediator; and
(b) efforts to reach a settlement will continue
until the conclusion of the proceedings, which shall be deemed to
occur upon the earliest of the date that: (i) a written
settlement is reached; or (ii) the mediator concludes and informs
the parties in writing that further efforts would not be useful;
or (iii) the Company Stockholders' Agent and Purchaser agree in
writing that an impasse has been reached; or (iv) a period of
sixty (60) calendar days has passed since the Request and none of
the events specified in Sections 8.6.4(b)(i), (ii) or (iii) have
occurred. No party may withdraw before the conclusion of the
proceeding.
8.6.5 If a Dispute is not resolved by
negotiation pursuant to Section 8.6.3 of this Agreement or by
mediation pursuant to Section 8.6.4 of this Agreement within one
hundred (100) calendar days after initiation of the negotiation
process pursuant to Section 8.6.3 of this Agreement, such Dispute and
any other claims arising out of or relating to this Agreement may be
heard, adjudicated and determined in an action or proceeding filed in
any state or federal court which has jurisdiction over the parties.
8.6.6 (a) Provisional Remedies. At any time
during the procedures specified in Sections 8.6.3 and 8.6.4 of
this Agreement, a party may seek a preliminary injunction or
other provisional judicial relief if in its judgment such action
is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action, the parties will continue to
participate in good faith in the procedures specified in Section
8.6.3 and 8.6.4 of this Agreement.
(b) Tolling Statue of Limitations. All
applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while the procedures specified in
Sections 8.6.3 and 8.6.4 of this Agreement are pending. The
parties will take such action, if any, as is required to
effectuate such tolling.
(c) Performance to Continue. Each party is
required to continue to perform its obligations under this
Agreement pending final resolution of any Dispute.
(d) Extension of Deadlines. All deadlines
specified in this Section 8.6 of this Agreement may be extended
by mutual agreement between the Company Stockholders' Agent and
Purchaser.
(e) Enforcement. The parties regard the
obligations in this Section 8.6 of this Agreement to constitute
an essential provision of this Agreement and one that is legally
binding on them. In case of a violation of the obligations in
this Section 8.6 of this Agreement by either the Company
Stockholders or Purchaser, a party may bring an action to seek
enforcement of such obligations in any state or federal court
having jurisdiction over the parties.
(f) Costs. The parties shall pay: (i) their own
costs, fees, and expenses incurred in connection with the appli-
cation of the provisions of Sections 8.6.3 and 8.6.4 of this
Agreement; and (ii) fifty percent (50%) of the fees and expenses
of CPR and the mediator in connection with the application of the
provisions of Section 8.6.4 of this Agreement.
(g) Replacement. If CPR is no longer in business
or is unable or refuses or declines to act or to continue to act
under Section 8.6.4 of this Agreement for any reason, then the
functions specified in Section 8.6.4 of this Agreement to be
performed by CPR shall be performed by another Person engaged in
a business equivalent to that conducted by CPR as is agreed to by
the Company Stockholders' Agent and Purchaser (the
"Replacement"). If the Company Stockholders' Agent and Purchaser
cannot agree on the identity of the Replacement within ten (10)
calendar days after a Request, the Replacement shall be selected
by the Chief Judge of the United States District Court for the
Eastern District of Wisconsin upon application. If a Replacement
is selected by either means, Section 8.6.4 shall be deemed
appropriately amended to refer to such Replacement.
8.7 Payment of 1995 Bonuses. Notwithstanding any provision
of this Agreement which may be to the contrary, Purchaser acknowledges
that certain of the management employees of the Company are
participants in (a) an Executive Bonus Program and (b) a Management
Selling Bonus Plan, copies of which have previously been given to
Purchaser. Subject to Closing occurring, the Company Stockholders and
Purchaser agree to cause the Company to pay in full all bonuses
required to be paid under such Executive Bonus Program and Management
Selling Bonus Plan in respect of the year ending December 31, 1995 as
follows:
8.7.1 At Closing the following will be paid to
the participants in the Executive Bonus Program and the Management
Selling Bonus Plan: (a) the amount accrued on the Company's financial
statements as of the Closing Date for the Executive Bonus Program,
which accrual shall be a pro rata portion of the total 1995 bonus
expense for such Program, and (b) the Management Selling Bonus amount
due based upon the initial $126,000,000 purchase price less the Escrow
Deposit. For purposes of this Agreement, the amount paid at Closing
to participants in the Management Selling Bonus Plan will be deemed to
be Company Stockholders' Fees and Expenses.
8.7.2 Purchaser agrees to cause the Company to
accrue and pay to the participants in the Executive Bonus Program the
remaining bonus due under such Program for the year ending December
31, 1995 in accordance with the Company's past practices.
8.7.3 After the determination of the Earnout
and Post Closing Adjustment in accordance with the provisions of
Sections 2.4 and 2.5 and payment of amounts due with respect thereto,
the Company Stockholders agree to pay to the participants in the
Management Selling Bonus Plan any additional bonus due under such Plan
based upon the determinations of the Earnout and Post Closing
Adjustment. The Company Stockholders further agree to pay to the
participants in the Management Selling Bonus Plan any additional bonus
due under such Plan as a result of payments received pursuant to the
Escrow Agreement.
8.8 Tax Audits.
8.8.1 From and after the date of this
Agreement through and including September 16, 1999, Purchaser
covenants not to, and to cause the Company and the Subsidiary not to,
request or take any action to initiate an audit of any Tax Return of
Purchaser, the Company or the Subsidiary.
8.8.2 Purchaser shall promptly notify the
Company Stockholders in writing upon receipt by the Company, Purchaser
or their Affiliates of written notice of any pending or threatened Tax
audits of or assessments against the Company or the Subsidiary for any
Pre-Closing Tax Period of the Company or the Subsidiary, which may
affect the determination of Taxes for which indemnification is
provided to Purchaser hereunder; provided, however, that the Company
Stockholders shall not be relieved of their obligations under Section
9.4 by reason of any delay or failure to give such notice except and
to the extent that such party is prevented by the expiration of the
statute or limitations or otherwise from exercising its rights under
Section 8.8.3 solely by reason of such delay or failure.
8.8.3 Subject to the provisions of Section
9.5, the Company Stockholders may, at their own expense, control any
audit or determination by any Authority, initiate any claim for refund
or amended Return, and contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed
adjustment of Taxes of the Company or the Subsidiary for any Pre-
Closing Tax Period; provided, however, that the Company Stockholders
(a) shall consult with Purchaser with respect to the resolution of any
issue that could affect the Company, the Subsidiary, Purchaser or
their Affiliates in that or any other taxable year, (b) shall not
settle any such issue, or file any amended Return relating to such
issue, without the consent of Purchaser and (c) shall promptly pay all
Taxes which are assessed and not contested and all Taxes which are
contested and finally determined to be due upon resolution or
settlement of such contest at the time payment is due, subject,
however, to the provisions and limitations of Article 9 and the Escrow
Agreement. Where consent to a settlement is withheld by Purchaser
pursuant to clause (b) of the preceding sentence, Purchaser may
continue or initiate any further proceedings at its own expense,
provided that the liability of the Company Stockholders, after giving
effect to this Agreement, shall not exceed the liability that would
have resulted from the settlement or amended Return.
8.8.4 Purchaser and the Company Stockholders
shall furnish or cause to be furnished to each other (at reasonable
times) upon request as promptly as practicable such information
(including access to personnel and books and records pertaining solely
to the Company and the Subsidiary) and assistance relating to the
Company and the Subsidiary as is reasonably necessary for the
preparation, review, audit and filing of any Tax Return, the
preparation for any Tax audit or the defense of any assessment or
other similar claim, provided, that access shall be limited to those
items pertaining solely to the Company and the Subsidiary. The party
requesting information shall reimburse the other for the outside
nonemployee costs of providing such information. Pursuant to the
provisions of Section 8.5, Purchaser will provide the Company
Stockholders with access to all books and records of with respect to
consolidated, combined or unitary Tax Returns, including corporations
other than the Company and the Subsidiary, schedules showing the items
on such Tax Returns attributable to the Company and the Subsidiary,
within 30 business days of a request therefor. Information to which
this Section 8.8.4 applies shall not be disposed of by Purchaser until
two months after the expiration of the applicable statute of
limitations (including any extension thereof); provided, however, that
in the event a proceeding has been instituted for which the
information may be required prior to the expiration of the applicable
statute of limitations, the information shall be retained until two
months after there is a final determination with respect to such
proceeding; provided, further, that Purchaser shall offer to the
Company Stockholders the portions of all such Tax Returns pertaining
to the Company and the Subsidiary.
8.9 Specific Performance. The parties agree that the
assets and business of the Company and the Subsidiary as a going
concern constitute unique property. There is no adequate remedy at
law for the damage which any party might sustain for failure of the
other parties to consummate the transactions contemplated by this
Agreement, and accordingly, each party shall be entitled, at its
option, to the remedy of specific performance to enforce the
consummation of the transactions described in this Agreement.
ARTICLE 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
9.1 Company Stockholders' Indemnification. Upon the
condition that the Closing be effected, each of the Company
Stockholders hereby severally indemnifies and holds harmless
Purchaser, the Company and the Subsidiary (collectively, the
"Indemnitees"), and their respective successors and assigns, from,
against and in respect of:
9.1.1 any Adverse Consequences which the
Indemnitees shall suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to or caused
by:
(a) any breach or violation of any of the
representations or warranties of the Company Stockholder
contained in Article 5 of this Agreement; or
(b) the failure by the Company Stockholder to
comply with any of the covenants or agreements of the Company
Stockholder contained in this Agreement; and
9.1.2 the Company Stockholder's Pro Rata Portion of
any Adverse Consequences which the Indemnitees shall suffer through
and after the date of the claim for indemnification resulting from,
arising out of, relating to or caused by any breach or violation of
any of the representations or warranties of the Company Stockholder
contained in Article 4 of this Agreement; provided, however,
notwithstanding (a) the disclosure set forth in item 6 of Schedule 4.8
and (b) the disclosures set forth in item 2.2 of Schedules 4.12 and
4.14, the Company Stockholders shall be responsible for their Pro Rata
Portion of any Adverse Consequences which the Indemnitees shall suffer
resulting from the matters disclosed in item 6 of Schedule 4.8 and
item 2.2 of Schedules 4.12 and 4.14, subject to the Basket, the Cap
and the provisions of Section 9.11.3.
9.1.3 the Company Stockholder's Pro Rata Portion of
any Adverse Consequences which the Indemnitees shall suffer through
and after the date of the claim for indemnification resulting from,
arising out of or relating to any Junker Landfill Indemnification
Claim as provided in Section 9.3 hereof;
9.1.4 the Company Stockholder's Pro Rata Portion of
any Adverse Consequences which the Indemnitees shall suffer through
and after the date of the claim for indemnification resulting from,
arising out of or relating to any Specific Tax Indemnification Claims
as provided in Section 9.4 hereof;
provided, however, that except as otherwise specifically provided in
Sections 9.3 and 9.4 the Company Stockholders shall not have any
obligation to indemnify the Indemnitees from, against or in respect of
any Adverse Consequences resulting from, arising out of, relating to
or caused by the breach or violation of any of the representations or
warranties contained in this Agreement (x) until the Indemnitees have
suffered Adverse Consequences by reason of all such breaches or
violations in excess of $750,000 (the "Basket") (and then only to the
extent that such Adverse Consequences, in the aggregate, exceed the
Basket), or (y) to the extent the Adverse Consequences suffered by the
Indemnitees by reason of all such breaches or violations exceed
$20,000,000 (the "Cap"). For purposes of this Section 9.1, no single
claim for damages by the Indemnitees against the Company Stockholders
hereunder shall be deemed to apply against such $750,000 aggregate
deductible (and the Company Stockholders shall have no liability to
the Indemnitees in connection therewith) unless the amount of such
damages exceeds $10,000; provided, however, that in the event that the
aggregate amount of any such individual claims of $10,000 or less
asserted by the Indemnitees against the Company Stockholders shall
exceed $200,000, then the total amount of such claims shall be deemed
to apply against such $750,000 aggregate deductible. Notwithstanding
anything to the contrary contained in this Agreement, the Company
Stockholders maximum liability for Adverse Consequences relating to
the Junker Landfill Indemnification Claim shall not exceed $500,000
and the Company Stockholders maximum liability for Adverse
Consequences relating to the Specific Tax Indemnification Claims shall
not exceed the amount of the Tax Escrow Deposit at the time the
Specific Tax Indemnification Claims are made by an Indemnitee.
9.2 Purchaser Indemnification. Upon the condition that the
Closing be effected, Purchaser hereby indemnifies and holds harmless
the Company Stockholders, their successors and assigns from, against
and in respect of, any Adverse Consequences which the Company
Stockholders shall suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to or caused
by (a) any breach or violation of any of the representations or
warranties of Purchaser contained in this Agreement, or (b) the
failure by Purchaser to comply with any of the covenants or agreements
of Purchaser contained in this Agreement.
9.3 Junker Landfill Indemnification Claim. Upon the
condition that the Closing be effected, each of the Company
Stockholders hereby severally indemnifies and holds harmless the
Indemnitees, and their respective successors and assigns, from,
against and in respect of its or his respective Pro Rata Portions of
any Adverse Consequences arising out of the Junker Sanitary Landfill
located in Hudson, Wisconsin (the "Junker Landfill Indemnification
Claim") in accordance with the provisions of this Section 9.3 and the
terms and provisions of the Escrow Agreement. The parties acknowledge
and agree that (a) the Basket shall not apply to any Junker Landfill
Indemnification Claim and that the Company Stockholders shall be
responsible for all Adverse Consequences relating to any Junker
Landfill Indemnification Claim up to a maximum of $500,000 and (b) any
Adverse Consequences paid by the Company Stockholders for a Junker
Landfill Indemnification Claim shall be deemed to be Adverse
Consequences for purposes of the Cap in Section 9.1. On the Closing
Date, Purchaser and the Company Stockholders have agreed to establish
the Junker Escrow Deposit for the specific purpose of providing funds
for the payment of any Junker Landfill Indemnification Claim.
9.4 Specific Tax Indemnification Claims. Upon the
condition that the Closing be effected and in consideration of
Purchaser's agreement to the provisions of Section 8.8, each of the
Company Stockholders hereby severally indemnifies and holds harmless
the Indemnitees, and their respective successors and assigns, from,
against and in respect of its or his respective Pro Rata Portions of
any Adverse Consequences arising out of the Tax matters defined as
"Specific Tax Indemnification Claims" in the Escrow Agreement in
accordance with the provisions of this Section 9.4 and the terms and
provisions of the Escrow Agreement. The parties acknowledge and agree
that (a) the Basket shall not apply to any Specific Tax
Indemnification Claim and that the Company Stockholders shall be
responsible for all Adverse Consequences relating to any Specific Tax
Indemnification Claim up to a maximum amount equal to the amount of
the Tax Escrow Deposit at the time the Specific Tax Indemnification
Claim is made by an Indemnitee and (b) any Adverse Consequences paid
by the Company Stockholders for a Specific Tax Indemnification Claim
shall be shall be deemed to be Adverse Consequences for purposes of
the Cap in Section 9.1. On the Closing Date, Purchaser and the
Company Stockholders have agreed to establish the Tax Escrow Deposit
for the specific purpose of providing funds for the payment of any
Specific Tax Indemnification Claim.
9.5 Notice of Indemnification Claim. A party (which, if
the Company and/or the Subsidiary is to be indemnified, shall be
deemed to include the Company and/or the Subsidiary) seeking
indemnification pursuant to this Article 9 (the "Indemnified Party")
shall give prompt notice to the party from whom such indemnification
is sought (the "Indemnifying Party") . In the event that any such
claim is based on the fact that a Person not a party to this Agreement
has made any demand or claim, or filed or threatened to file any
lawsuit (a "Third Party Claim"), which Third Party Claim may cause
liability to the Indemnifying Party pursuant to the indemnification
provisions of this Agreement, the Indemnifying Party shall have the
right, exercisable by notice to the Indemnified Party within ten (10)
business days after notice by the Indemnified Party to the
Indemnifying Party of the commencement or assertion of such Third
Party Claim, to retain counsel (which counsel shall be reasonably
acceptable to the Indemnified Party) for the Indemnified Party, at the
cost and expense of the Indemnifying Party, to defend any such Third
Party Claim. The Indemnified Party shall be permitted to participate
in the defense of such Third Party Claim at its own expense. In the
event that the Indemnifying Party shall fail to respond within thirty
(30) days after receipt of notice from the Indemnified Party of the
commencement or assertion of any such Third Party Claim, then the
Indemnified Party shall retain counsel and conduct the defense of such
Third Party Claim as it may in its discretion deem proper, at the cost
and expense of the Indemnifying Party.
9.6 Defense by Indemnified Party. Unless and until the
Indemnifying Party assumes the defense of a Third Party Claim as
provided in Section 9.5, the Indemnified Party may defend against the
Third Party Claim in any manner it may reasonably deem appropriate.
9.7 Consent to Entry of Judgment or Settlement. The
Indemnifying Party, if it shall have assumed the defense of any Third
Party Claim, shall not have the right to consent to the entry of
judgment with respect to, or otherwise settle such Third Party Claim
without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld), unless the judgment or
proposed settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or other
equitable relief upon the Indemnified Party.
9.8 Defense Cooperation. The parties hereto shall
cooperate in the defense of any Third Party Claim and shall furnish
such records, information and testimony, and attend at such
conferences, discovery proceedings, hearings, trials and appeals as
may be reasonably requested in connection therewith.
9.9 Reduction in Adverse Consequences for Tax Benefits. If
the event causing the Adverse Consequences for the purposes of this
Article 9 gives rise to a current deduction against taxable income of
the Indemnified Party, the Adverse Consequences shall be reduced by
the Tax benefit attributable thereto. If such event will give rise to
a future Tax deduction to the Indemnified Party, the Adverse
Consequences shall be reduced by the Tax benefit attributable thereto
discounted at the prime rate of interest reported in the Wall Street
Journal at the time of payment.
9.10 Submission of Claims to Insurance Carriers. Purchaser
shall, in connection with any Adverse Consequences for which it may
seek indemnify under this Agreement, (a) promptly submit all claims in
respect of such Adverse Consequences to its insurance carriers, unless
Purchaser determines in good faith that such claims are not covered by
any such insurance and so notifies the Company Stockholders, and (b)
use its best efforts in good faith to recover all amounts to which it
may be entitled from any applicable insurer in respect of the claims
so submitted.
9.11 Indemnification Period. The right of any Indemnified
Party to receive indemnity as provided in this Article 9 of this
Agreement shall, as to any matter which has not been described in a
notice delivered to an Indemnifying Party pursuant to this Article 9
of this Agreement prior to such time, expire at 11:59 P.M., Central
Time, on:
9.11.1 the seventh anniversary of the Closing
Date for any Junker Landfill Indemnification Claim, and December 31,
1998 for any other matter described in Section 9.1 of this Agreement
insofar as it relates to the representations and warranties of the
Company Stockholders contained in Section 4.20 of this Agreement or to
any products liability claim;
9.11.2 September 16, 1999 for any Specific Tax
Indemnification Claim, and December 31, 1998 for any other matter
described in Section 9.1 of this Agreement insofar as it relates to
the representations and warranties of the Company Stockholders
contained in Section 4.19 of this Agreement; and
9.11.3 April 30, 1997, for all other matters
described in or covered by Article 9 of this Agreement.
9.12 Termination of Indemnification Period. The termination
of the rights of an Indemnified Party to receive indemnity as
described in Section 9.11 of this Agreement shall not affect any
Person's right to prosecute to conclusion any claim made by that
Person prior to the time that the relevant right of indemnity
terminates.
9.13 Exclusive Remedies. The remedies provided in this
Article 9 shall be exclusive and shall preclude assertion by the
Company Stockholders or Purchaser of any other rights or the seeking
of any other remedies against the others.
ARTICLE 10. MODIFICATION, WAIVERS AND TERMINATION
10.1 Modification. Purchaser and the Company Stockholders
may, by mutual consent, amend, modify or supplement this Agreement in
such manner as may be agreed upon by them in writing at any time.
10.2 Waivers. Each of Purchaser and the Company
Stockholders, by an instrument in writing, may extend the time for or
waive the performance of any of the obligations of the other or waive
compliance by the other with any of the covenants or conditions
contained herein.
10.3 Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, prior to the Closing as
follows:
10.3.1 by Purchaser and the Company
Stockholders by mutual written consent at any time;
10.3.2 by Purchaser if any of the conditions
set forth in Section 7.1 of this Agreement shall not have been
fulfilled by the Closing Date;
10.3.3 by the Company Stockholders if any of
the conditions set forth in Section 7.2 of this Agreement shall not
have been fulfilled by the Closing Date:
10.3.4 by Purchaser by giving written notice to
the Company Stockholders at any time if the Closing shall not have
occurred on or before December 15, 1995 (unless the failure results
primarily from Purchaser itself breaching any representation,
warranty, covenant or agreement of Purchaser contained in this
Agreement);
10.3.5 by the Company Stockholders by giving
written notice to Purchaser at any time if the Closing shall not have
occurred on or before December 15, 1995 (unless the failure results
primarily from the Company Stockholders themselves breaching any
representation, warranty, covenant or agreement of the Company
Stockholders contained in this Agreement); or
10.3.6 by the Company Stockholders or by
Purchaser at any time prior to the Closing Date if the Closing shall
violate any order, decree or judgment of any court or any Authority
having competent jurisdiction.
10.4 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 10.3, all rights and obligations of the
parties hereunder shall terminate without liability of any party to
any other party (except for any liability of any party then in
breach); provided, however, that (a) the provisions of Sections 6.4,
11.7 and this 10.4 shall remain in full force and effect, and (b)
Purchaser shall not, for a period of two years after the date of such
termination, without the prior written approval of the Company
Stockholders, directly or indirectly solicit, encourage, entice or
induce any employee of the Company or the Subsidiary on the date
hereof or at any time hereafter prior to such termination, to
terminate his or her employment with the Company or the Subsidiary.
ARTICLE 11. MISCELLANEOUS
11.1 Notices. Any notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and, except as otherwise specified in writing, shall be given
by personally delivery, facsimile transmission, Federal Express (or
other similar courier service) or by registered or certified mail,
postage prepaid, return receipt requested (a) if to Purchaser to the
address for notices set forth on the signature page hereto (with
copies, as applicable, as set forth on such signature page), and (b)
if to the Company Stockholders, c/o Trivest, Inc., 2665 South Bayshore
Drive, Eighth Floor, Miami, Florida 33133, telecopier: (305) 285-
0102, Attention: General Counsel or to such other addresses as any
party hereto may from time to time give notice of (complying as to
delivery with the terms of this Section 11.1) to the others. Notice
by registered or certified mail shall be effective three days after
deposit in the United States mail. Notice by any other permitted
means will be effective upon receipt.
11.2 Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto and supersedes all prior
agreements, understandings, negotiations and discussions, both written
and oral, among the parties hereto with respect to the subject matter
hereof, except for the Confidentiality Agreement dated June 2, 1995
executed by Purchaser with Bowles Hollowell Conner & Co.
11.3 Benefits; Binding Effect; Assignment. This Agreement
shall be for the benefit of and binding upon the parties hereto, their
respective successors and, where applicable, assigns. Prior to
Closing, no party may assign this Agreement or any of its rights,
interests or obligations hereunder without the prior approval of the
other parties; provided, however, that Purchaser may (a) assign any or
all of its rights and interests hereunder to one or more of its
Affiliates, and (b) designate one or more of its Affiliates to perform
its obligations hereunder (but in any or all of such cases Purchaser
shall nonetheless remain responsible for the performance of all of its
obligations hereunder).
11.4 Waiver. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly so provided.
11.5 No Third Party Beneficiary. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any Person other than the parties hereto and their
respective successors and assigns any rights or remedies under or by
reason of this Agreement.
11.6 Severability. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained
in this Agreement shall not affect the enforceability of the remaining
portions of the Agreement or any part hereof, all of which are
inserted conditionally on their being valid in Law and,in the event
that any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall be declared
invalid, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses,
section or sections, or subsection or subsections, had not been
inserted.
11.7 Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, all legal, accounting and
other costs and expenses incurred in connection with this Agreement
and any of the transactions contemplated hereby on behalf of Purchaser
shall be borne and paid by Purchaser, and all such costs and expenses
incurred on behalf of the Company, the Subsidiary or the Company
Stockholders shall be borne and paid by the Company Stockholders, and
no party shall be obligated for any cost or expense incurred by any
other party unless this Agreement expressly so provides.
11.8 Section Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of any provisions of this
Agreement.
11.9 Counterparts. This Agreement may be executed in any
number of counterparts and by the several parties hereto in separate
counterparts, each of which shall be deemed to be one and the same
instrument.
11.10 Litigation; Prevailing Party. In the event of any
litigation with regard to this Agreement, the prevailing party or
parties shall be entitled to receive from the non-prevailing party or
parties and the nonprevailing party or parties shall pay all
reasonable fees and expenses of counsel for the prevailing party or
parties.
11.11 Remedies Cumulative. No remedy made available by
any of the provisions of this Agreement is intended to be exclusive of
any other remedy, and each and every remedy shall be cumulative and
shall be in addition to ever other remedy given hereunder or now or
hereafter existing at Law or in equity.
11.12 Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the internal Laws of
the State of Wisconsin.
11.13 Construction. The specification of any dollar
amount in the representations and warranties or otherwise in this
Agreement or in the Schedules hereto or the inclusion of any specific
item in the Schedules hereto is not intended and shall not be deemed
to be an admission or acknowledgement of the materiality of such
amounts or items, nor shall the same be used in any dispute or
controversy between the parties to determine whether any obligation,
item or matter (whether or not described herein or included in any
Schedule) is or is not material for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have each executed
and delivered this Stock Purchase Agreement as of the day and year
first above written.
PURCHASER:
THE MANITOWOC COMPANY, INC.
By: /s/ Fred M. Butler
____________________________________
Fred M. Butler,
President and Chief Executive Officer
Address for Notices to Purchaser:
The Manitowoc Company, Inc.
Attention: Fred M. Butler
700 East Magnolia Avenue, Suite B
Manitowoc, WI 54221
Telecopier No.: (414) 683-8129
Copies of Notices to:
Quarles & Brady
Attention: Patrick M. Ryan
411 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopier No.: (414) 271-3552
COMPANY STOCKHOLDERS:
TRIVEST INSTITUTIONAL FUND, LTD.
By: Trivest 1988 Fund Managers, Ltd.,
its General Partner
By: Trivest Group, Inc.,
its General Partner
By: /s/ Troy D. Templeton
__________________________
Troy D. Templeton,
Vice President
TRIVEST INVESTORS FUND, LTD.
By: Trivest 1988 Fund Managers, Ltd.,
its General Partner
By: Trivest Group, Inc.,
its General Partner
By: /s/ Troy D. Templeton
___________________________
Troy D. Templeton,
Vice President
TRIVEST PRINCIPALS' FUND 1988
By: /s/ Earl W. Powell
________________________________
Earl W. Powell,
Managing General Partner
/s/ Gary L. Hainley
___________________________________
Gary L. Hainley
By its execution hereof, Trivest, Inc. agrees to the provisions of
Section 2.13 of this Agreement.
TRIVEST, INC.
By: /s/ Troy D. Templeton
________________________________
Troy D. Templeton,
Vice President
EXHIBITS AND SCHEDULES
EXHIBIT A - Opinion of Counsel to Purchaser
EXHIBIT B - Opinion of Counsel to the Company Stockholders
EXHIBIT C - Warrant Purchase Agreement
EXHIBIT D - Escrow Agreement
SCHEDULE 2.1 - Common Stock Information
SCHEDULE 2.4 - Accounting Methodology
SCHEDULE 4.2 - Authority to do Business
SCHEDULE 4.4 - Subsidiaries
SCHEDULE 4.6 - Rights; Warrants or Options; Dividends
SCHEDULE 4.7 - Financial Statements
SCHEDULE 4.8 - Undisclosed Liabilities
SCHEDULE 4.9 - Personal Property Liens
SCHEDULE 4.10 - Real Property
SCHEDULE 4.11 - Insurance
SCHEDULE 4.12 - Labor Relations
SCHEDULE 4.13 - Permits; Compliance With Law
SCHEDULE 4.14 - Litigation
SCHEDULE 4.15 - List of Accounts
SCHEDULE 4.16 - List of Personnel
SCHEDULE 4.17 - Employee Benefit Plans; ERISA
SCHEDULE 4.18 - Absence of Changes
SCHEDULE 4.19 - Tax Matters
SCHEDULE 4.20 - Environmental Matters
SCHEDULE 4.21 - Intellectual Property
SCHEDULE 4.22 - Material Contracts
SCHEDULE 4.23 - Transactions With Affiliates
SCHEDULE 4.24 - Powers of Attorney
SCHEDULE 4.25 - Inventory
SCHEDULE 4.28 - Plant and Equipment
SCHEDULE 4.29 - Borrowed Money Debt; Preferred Stock; Warrants
SCHEDULE 4.30 - Customers
SCHEDULE 5.2 - Stock Ownership
SCHEDULE 6.2 - Certain Actions Permitted