AGREEMENT OF MERGER
AGREEMENT OF MERGER ("Agreement"), dated July 9, 1995, among VALMONT
INDUSTRIES, INC., a Delaware corporation ("Valmont"), VALMONT OREGON, INC.,
an Oregon corporation ("Sub"), MICROFLECT COMPANY, INC., an Oregon
corporation (the "Company"), and GEORGE F. KREITZBERG, JAMES S. KREITZBERG
and RICHARD A. KREITZBERG (hereinafter referred to individually as a
"Shareholder" and, collectively, as the "Shareholders").
RECITALS:
(a) Valmont owns all of the issued and outstanding shares of capital
stock of Sub and the Shareholders own all of the issued and
outstanding capital stock of the Company.
(b) The parties hereto desire to effect a merger whereby Sub will merge
with and into the Company pursuant to the terms of this Agreement
which provides, among other things, for the conversion and exchange
of all shares of the Company's common stock outstanding immediately
prior to the time the merger becomes effective into shares of
common stock of Valmont having a par value of One Dollar ($1.00)
per share ("Valmont Common Stock").
(c) The Merger is intended to constitute and shall be construed as a
nontaxable reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations promulgated pursuant thereto.
(d) The parties intend that the transactions contemplated herein
qualify for treatment as a pooling of interests pursuant to APB 16.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals which are
incorporated with and are made a contractual part of this Agreement, and in
further consideration of the mutual covenants and agreements herein
contained, the parties hereto agree, subject to the terms and conditions
hereinafter set forth, as follows:
1. Plan of Merger.
1.1 Basic Plan of Merger. At Closing (as hereinafter defined), Sub
will be merged by statutory merger (the "Merger") with and into the
Company pursuant to the Plan of Merger attached hereto as Exhibit
1.1(a) (the "Plan of Merger"), with the Company being the surviving
corporation (the "Surviving Corporation'). As a result of the
Merger, the shares of common stock of the Company ("Company Common
Stock") outstanding immediately prior to the "Effective Time" (as
defined below) will be converted into and exchanged for One Million
Nine Hundred Fifty Thousand (1,950,000) shares of Valmont Common
Stock. Such shares of Valmont Common Stock shall be issued to the
Shareholders proportionately based upon the number of shares of
Company Common Stock owned by each Shareholder as set forth on
Exhibit 1.1(b) hereto. The shares of Company Common Stock held in
treasury immediately prior to the Effective Time will be cancelled
and the shares of capital stock of Sub held by Valmont immediately
prior to the Effective Time will be converted into and exchanged
for shares of Company Common Stock which will then constitute all
of the issued and outstanding capital stock of the Company. None
of the shares of capital stock of Valmont will be converted as a
result of the Merger and all of such shares, including such shares
held in treasury, shall remain issued shares of capital stock of
Valmont.
At Closing, Valmont, Sub, the Company and the Shareholders shall
cause the Articles of Merger in the form attached hereto as Exhibit
1.1(c) ("Articles of Merger") to be executed and filed in
accordance with the applicable provisions of the Oregon Business
Corporation Act.
1.2 Effective Time, Surviving Corporation. The Effective Time of the
Merger shall be 5:00 p.m., Pacific Daylight Time, on the Closing
Date (the "Effective Time"). The officers and directors of Sub
immediately prior to the Merger shall become the officers and
directors of the Surviving Corporation following the Closing. The
By-Laws of Sub immediately prior to the Merger shall become the By-
Laws of the Surviving Corporation following the Merger. The
Articles of Incorporation of Sub immediately prior to the Merger
shall become the Articles of Incorporation of the Surviving
Corporation after the Closing.
2. Shareholders' Undertaking with Respect to Unregistered Securities;
Valmont Covenants.
2.1 Undertaking of Shareholders and Stock Certificate Legends.
2.1.1 Undertaking of Company's Shareholders - SEC Rule 144.
Each of the Shareholders hereby severally represents and
undertakes that:
(i) The Shareholder is familiar with Securities and Exchange
Commission ("SEC") Rule 144. The shares of Valmont
Common Stock that are being acquired by such Shareholder
in exchange for his shares of Company Common Stock are
being and will be acquired for himself and not for other
persons and are not being and will not be acquired with
a view to the transfer or distribution thereof, except to
the extent permitted by the Securities Act of 1933, as
amended, (the "1933 Act") and the rules and regulations
thereunder.
(ii) None of the shares of Valmont Common Stock will be
transferred by or through such Shareholder in violation
of the 1933 Act or any state securities laws. In
addition, the Shareholder shall not transfer or otherwise
reduce the Shareholder's risk relative to, the shares of
Valmont Common Stock that will be transferred to the
Shareholder until such time that Valmont has published
consolidated financial results that cover at least thirty
(30) days of combined post-merger operations of Valmont
and the Surviving Company.
(iii) The Shareholder will indemnify Valmont against any
loss, liability or expense (including reasonable
attorneys' fees and out-of-pocket expenses)
incurred by Valmont by reason of any breach by the
Shareholder of clauses (i) and (ii) of this
Section 2.1.1.
(iv) The Shareholder understands that the Valmont Common Stock
has not been registered under the 1933 Act and,
therefore, cannot be resold or otherwise transferred
unless such shares are registered under the 1933 Act or
unless an exemption from registration is available.
(v) The certificates representing the shares of Valmont
Common Stock to be delivered to the Shareholder pursuant
to this Agreement may, and will, bear a restrictive
legend in substantially the following form and an
appropriate stop transfer order may, and will, be placed
against the transfer of the share certificates with the
transfer agent of such shares:
"The securities represented by this
certificate have been issued or transferred to
the registered holder as a result of a
transaction to which the exemption provided by
Section 4(2) under the Securities Act of 1933,
as amended (the "1933 Act") applied. The
securities represented by this certificate
have not been issued to such holders pursuant
to an effective registration under the 1933
Act and may not be sold, transferred or
assigned, and the issuer is not required to
give effect to any attempted sale, transfer or
assignment, except (i) pursuant to a current
or then effective registration statement under
the 1933 Act; (ii) in a transaction permitted
by Rule 144 under the 1933 Act and as to which
the issuer has received reasonably
satisfactory evidence of compliance with the
provisions of Rule 144; or (iii) upon receipt
of a legal opinion reasonably acceptable to
the issuer to the effect that the transaction
does not require registration under the 1933
Act, or other evidence reasonably satisfactory
to the issuer, that such registration is not
required. Furthermore, the securities
represented by this certificate may not be
sold, transferred or assigned, prior to the
publication by the issuer of consolidated
financial results covering at least thirty
(30) days of post-merger combined operations,
and the issuer is not required to give effect
to any sale, transfer or assignment attempted
prior to such date."
(vi) The Shareholder also understands that (a) an exemption
for any public sale of his Valmont Common Stock under SEC
Rule 144 will not be available for at least two (2) years
from the date the said shares are fully paid for, which
will be the Closing Date; (b) thereafter limited amounts
of the said shares can be sold publicly in unsolicited
brokers' transactions under Rule 144 if all the
conditions of the Rule are satisfied and if the Rule is
then applicable; (c) Rule 144 is available only if all
its conditions are satisfied and, in particular, if
Valmont is making current public disclosures about itself
and there is a trading market for the said shares; (d) as
of this date, not all of the above conditions have been
satisfied; and (e) if Rule 144 is not available, then any
public sales of the said shares cannot be made unless
they are registered under the 1933 Act or in compliance
with Regulation A issued by the SEC pursuant to the 1933
Act or some other exemption to the registration
requirements of the 1933 Act.
2.1.2 Representations of the Shareholders. Each of the
Shareholders hereby severally represents and warrants
that:
(i) The Shareholder is familiar with Section 4(2) of the 1933
Act and with Regulation D issued by the SEC pursuant to
the 1933 Act.
(ii) The Shareholder has been furnished before the execution
of this Agreement with the information required by SEC
Rule 502(b)(2)(ii), has made such further investigation
of Valmont as was deemed appropriate and has been given
the opportunity to ask questions of and receive answers
from Valmont or any person acting on its behalf
concerning the terms and conditions of the transactions
contemplated herein and has obtained such additional
information deemed necessary to verify the accuracy of
the information that was obtained by the Shareholder
pursuant to SEC Rule 502(b)(2)(ii).
(iii) The Shareholder has access to, and has reviewed and
understood, all material information, including
financial statements, concerning the Company which
the Shareholder deems necessary or advisable in
order to evaluate the risks and merits of entering
into this transaction and acquiring the Valmont
Common Stock to be issued to the Shareholder under
this Agreement. The Shareholder has had access to,
and has reviewed and understood, all material
information, including financial statements,
concerning Valmont which the Shareholder deems
necessary or advisable in order to evaluate the
risks and merits of acquiring the Valmont Common
Stock to be issued to the Shareholder under this
Agreement.
(iv) The Shareholder has such knowledge and experience in
financial and business matters that the Shareholder is
capable of evaluating the merits and risks in acquiring
the Valmont Common Stock.
(v) The Shareholder understands that the Shareholder must
bear the economic risk of investment in the Valmont
Common Stock for an indefinite period of time because
such shares have not been registered with the SEC under
the 1933 Act and, therefore, cannot be sold unless they
are subsequently registered under the 1933 Act or an
exemption from registration is available.
2.2 Covenants of Valmont to Provide Information Pursuant to Regulation
D. The parties acknowledge that Valmont has furnished each of the
Shareholders with a Private Placement Memorandum, dated July 6,
1995 which includes (i) Valmont's annual report to its stockholders
for fiscal year ended December 31, 1994; (ii) the definitive proxy
statement filed in connection with such annual report; (iii)
Valmont's Form 10-K for fiscal year ended December 31, 1994; (iv)
Valmont's quarterly report on Form 10-Q for the quarter ended April
1, 1995; and (v) a description of the shares of Valmont Common
Stock being offered. (Items (i), (ii), (iii) and (iv) are
collectively the "SEC Filings"). Valmont has furnished each
Shareholder with such information as is needed to update the
foregoing, and has also made available to each Shareholder the
opportunity to ask questions and receive answers concerning the
terms and conditions of the transactions contemplated in this
Agreement and to obtain additional information which Valmont
possesses or could acquire without unreasonable effort or expense
that is necessary to verify the accuracy of information furnished
under this Section.
2.3 Registration of Valmont Common Stock. In connection with the
shares of Valmont Common Stock issuable in connection with the
Merger, the parties agree as follows:
2.3.1 Once per year during the three (3) year period following
Closing, upon at least ninety (90) days prior written
notice delivered by the Shareholders to Valmont
requesting a registration with respect to at least thirty
three and one-third percent (33-1/3%) of the shares of
Valmont Common Stock issued in connection with the
Merger, Valmont will file and use its best efforts to
cause a registration statement on Form S-3 (or its
equivalent) to become effective under the 1933 Act in a
specific underwritten public offering of such Valmont
Common Stock. Valmont shall use its best efforts to
cause such registration statement to become effective and
to be approved by such other governmental agencies or
authorities as may be necessary to enable the holders
thereof to consummate the disposition of the Valmont
Common Stock; provided, however, Valmont shall not be
required to qualify such shares for disposition under the
Blue Sky Laws of any state if Valmont shall be required
in connection therewith to qualify to do business in such
state where it is not then so qualified or take any
action which would subject it to general service of
process in any state where it is not then so subject.
2.3.2 In addition to the rights provided in Section 2.3.1
above, if during the three (3) year period following the
Closing, Valmont proposes to file a registration
statement on Form S-3 (or its equivalent) under the 1933
Act involving a specific underwritten secondary offering
of Valmont Common Stock, Valmont shall include Valmont
Common Stock issued in the Merger in such registration
statement (unless the underwriter involved reasonably
determines that including such shares of Valmont Common
Stock would be detrimental to such secondary offering),
provided the Shareholders request that at least thirty
three and one-third percent (33-1/3%) of the aggregate
Valmont Common Stock issued in the Merger be included in
such registration for sale in a specific underwritten
offering.
2.3.3 An underwriter selected by Valmont shall be utilized in
connection with any registration under this Section 2.3.
2.3.4 Valmont shall bear all expenses of any registration
except that the Shareholders shall bear the underwriter's
commissions and expenses and brokerage fees, if any, with
respect to Valmont Common Stock sold by the Shareholders.
2.3.5 The Shareholders and any other holder of shares through
the Shareholders of Valmont Common Stock included in the
registration (herein "Other Holders") shall furnish
Valmont as promptly as possible such information as may
be reasonably requested from them by Valmont in
connection with any registration statement filed pursuant
hereto and shall cooperate with Valmont to the extent
that it may be reasonably required in order to cause any
such registration statement to become effective.
2.3.6 In connection with any registration statement filed
pursuant to this Section 2.3, each Shareholder and each
Other Holder shall and hereby agrees to severally
indemnify and hold harmless Valmont, its officers and
directors and the other Shareholders and each Other
Holder from and against any and all losses, liabilities,
claims, damages and expenses (including reasonable costs
of investigation and counsel fees) arising out of or
based upon any untrue statement of a material fact in any
writing furnished by such Shareholder or such Other
Holder for use in any such registration statement or by
such Shareholder's or such Other Holder's failure to
furnish a material fact pertaining to such Shareholder or
such Other Holder and required to be stated therein or
necessary to make the statements therein not misleading.
Similarly, Valmont shall indemnify and hold harmless the
Shareholders or such Other Holder from and against any
and all such losses, liabilities, claims, damages and
expenses (including reasonable costs of investigation and
counsel fees) arising out of or based upon any untrue
statement of a material fact in any such registration
statement or by its failure to include in any such
registration statement a material fact required to be
stated therein or necessary to make the statements
therein not misleading, except insofar as such liability
arises out of or is based on any such untrue statement or
omission in any writing furnished to Valmont by the
Shareholder, or the Other Holders for use therein.
The indemnification obligations of Valmont set forth in this
Section 2.3.6 shall survive any investigation by the party
entitled to indemnification thereunder.
2.3.7 For purposes of this Section 2, Valmont Common Stock
means and includes the Valmont Common Stock issued at the
Effective Time, any securities issued or issuable with
respect to the Valmont Common Stock by way of stock
dividend or stock split or in connection with a
combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
2.4 Permitted Transfers. Subject to the restrictions contained in this
Agreement and the 1933 Act, Valmont agrees that each Shareholder
may (a) transfer the Valmont Common Stock to other Shareholders; to
spouses or family members; to trusts created by the Shareholder for
the Shareholder's benefit or for the benefit of family members of
the Shareholder; or to a corporation, partnership or limited
liability company, all of the capital stock or interests of which
is owned by the Shareholder, family members or their spouses; or
(b) pledge the Valmont Common Stock as security. For purposes of
this Agreement, "family members" shall mean lineal descendants of
the Shareholder's parents.
3. Ancillary Agreements. In connection with the Merger, the following
documents shall be executed and delivered:
3.1 Termination of the Stockholders' Agreement to be delivered at
Closing ("Termination Agreement") which shall terminate the
Stockholders' Agreement dated December 10, 1987 among the
Shareholders and the Company ("Stockholders' Agreement");
3.2 Escrow Agreement among the Company, the Shareholders, the Escrow
Agent, Valmont and Sub ("Escrow Agreement");
3.3 Amendment to Stockholders' Agreement dated as of this date among
the Stockholders and the Company ("Amendment");
(collectively, the "Termination Agreement", "Escrow Agreement" and
"Amendment" are referred to as the "Ancillary Agreements").
4. Closing. Subject to the terms and conditions contained in this
Agreement, the consummation of the transactions contemplated herein (the
"Closing") will take place at the offices of Schwabe, Williamson & Wyatt,
P.C., Portland, Oregon as soon as reasonably possible after all conditions
are met (estimated to be September 1, 1995,) or at such other place or time
or on such other date as the parties hereto may mutually agree (the "Closing
Date"). The Closing and the Merger shall be deemed to be effective as of the
Effective Time.
4.1 Valmont's and Sub's Obligations at Closing. At Closing, Valmont
and Sub shall, as the case may be:
4.1.1 Shares. Deliver to the Shareholders duly issued and
executed certificates in the respective names of the
Shareholders representing the shares of Valmont Common
Stock to be issued to the Shareholders pursuant to
Section 1.
4.1.2 Resolutions. Deliver a copy of the resolutions of
Valmont's Board of Directors authorizing the transactions
contemplated by this Agreement, certified by the
Secretary or Assistant Secretary of Valmont.
4.1.3 Legal Opinion. Deliver the legal opinion of McGrath,
North, Mullin & Kratz, P.C., counsel for Valmont, in the
form attached hereto as Exhibit 4.1.3.
4.1.4 Articles of Merger. Execute, deliver and cause to be
filed with the Oregon Secretary of State the Articles of
Merger.
4.1.5 Ancillary Agreements. Execute and deliver the Ancillary
Agreements.
4.2 The Company's and/or the Shareholders' Obligations at Closing. At
Closing, the Company and/or the Shareholders shall:
4.2.1 Stock Certificates. Deliver, or cause to be delivered,
to Valmont certificates representing all of the Company's
Common Stock duly endorsed in blank, with all necessary
transfer tax and other revenue stamps acquired at the
Shareholder's expense.
4.2.2 Legal Opinion. Deliver to Valmont the legal opinion of
Schwabe, Williamson & Wyatt, P.C., counsel for the
Company and the Shareholders, in the form attached hereto
as Exhibit 4.2.2.
4.2.3 Articles of Merger. Execute, deliver and cause to be
filed with the Oregon Secretary of State the Articles of
Merger.
4.2.4 Ancillary Agreements. Execute and deliver the Ancillary
Agreements.
4.2.5 Resignations. Deliver to Valmont written resignations of
the officers and directors of the Company.
5. Representations and Warranties of the Shareholders and the Company.
The Shareholders and the Company hereby jointly and severally represent and
warrant to and with Valmont as follows:
5.1 Organization, Good Standing and Corporate Power. The Company is a
corporation duly organized and validly existing under the laws of
the State of Oregon. The Company has the corporate power and
authority to carry on its business as currently being conducted.
The Company is qualified to do business as a foreign corporation in
those jurisdictions set forth in Section 5.1 of the Disclosure
Schedule ("Disclosure Schedule"), dated the date hereof and
delivered to Valmont as a separate document, the contents of which
are incorporated herein by reference. Such jurisdictions
constitute all jurisdictions in which such qualification or
authorization is required, except for jurisdictions in which
failure to be so qualified or authorized would not have a material
adverse effect on the business or operations of the Company.
5.2 Articles and By-Laws. The Shareholders have previously furnished
to Valmont complete and correct copies of (a) the Articles of
Incorporation of the Company as amended to the date furnished,
certified by the Oregon Secretary of State; and (b) the By-Laws of
the Company as in effect on the date furnished, certified by any
officer of the Company. Such Articles of Incorporation and By-Laws
have not been further amended and are in full force and effect,
and, except as set forth in Section 5.2 of the Disclosure Schedule,
the Company is not in violation of any provisions thereof. The
Shareholders have also furnished to Valmont a complete copy of the
Company's corporate minute book.
5.3 Authorized Capital. The authorized and issued capital stock of the
Company as of the date of this Agreement is set forth in
Section 5.3 of the Disclosure Schedule and consists of common stock
("Common Shares" or "Shares") as more fully set forth therein. All
persons and entities who own or hold Common Shares are listed in
Section 5.3 of the Disclosure Schedule. Each Shareholder is the
sole owner of the number of Shares shown in Section 5.3 of the
Disclosure Schedule, in each case free and clear of any and all
liens, charges or encumbrances. Except as set forth in Section 5.3
of the Disclosure Schedule, all of such shares are duly authorized,
validly issued, fully paid and nonassessable with no statutory or
other liability attaching to the ownership thereof (other than
those imposed by applicable securities laws).
5.4 No Options, Warrants, Rights. Except as set forth in Section 5.4
of the Disclosure Schedule, the Company has no outstanding or
authorized options, warrants, calls, rights, commitments or any
other agreements of any character obligating it to issue any shares
of its capital stock or any securities convertible into or
evidencing the right to purchase any shares of its capital stock.
Except as set forth in Section 5.4 of the Disclosure Schedule,
there are no agreements, arrangements or understandings among the
Shareholders with respect to the voting of the stock on any matter
or the transfer or assignment of the capital stock of the Company.
5.5 Corporate Authorization; Binding Agreement. The execution,
delivery and performance of this Agreement and the Plan of Merger
by the Company has been duly and validly authorized by all
necessary corporate, director and shareholder action on the part of
the Company and has been unanimously approved by the Company's
directors and shareholders. This Agreement constitutes the valid
and legally binding agreement of the Company and the Shareholders,
enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights, general principles of equity and matters of public policy.
5.6 Title to Shares. The Shareholders are the lawful and equitable
owners of all of the Shares, free and clear of all liens, claims,
options, charges and encumbrances. The Shares constitute all of
the issued and outstanding shares of capital stock of the Company.
5.7 Subsidiaries. Except as set forth in Section 5.7 of the Disclosure
Schedule, the Company does not directly or indirectly control or
own any equity interest in any corporation, partnership, joint
venture or other business association or entity (whether as direct
subsidiaries or through intervening subsidiaries).
5.8 Effect of Agreement. Except as set forth in Section 5.8 of the
Disclosure Schedule, the execution, delivery and performance of
this Agreement by the Company and the Shareholders and the
consummation by the Company and the Shareholders of the
transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time or both, (a) to the best of
the Shareholders' and the Company's knowledge, violate, in any
material respects, any provision of law, statute, rule or
regulation to which the Shareholders or the Company is subject; (b)
violate any judgment, order, writ or decree of any court to which
the Shareholders or the Company are subject; (c) have any material
adverse effect on any of the permits, licenses, orders or approvals
held or utilized by the Company; or (d) to the best of the
Shareholders' and the Company's knowledge, result in the material
breach of or conflict with any material term, covenant, condition
or provision of, result in the modification or termination of,
constitute a material default under, or result in the creation or
imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to any
corporate charter, by-law, commitment, contract, note, bond, lease
or other agreement or instrument to which the Company or any
Shareholder is a party or by which the Company or any Shareholder
or any of their respective assets or property are or may be bound
or affected or from which the Company or any Shareholder derives
substantial benefits.
5.9 No Authorization Required. Except for compliance with the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), 1933 Act, the NASDAQ-National Market System rules, the
applicable state Blue Sky Laws, the filing of the Articles of
Merger with the Secretary of State of Oregon, and except as set
forth in Section 5.9 of the Disclosure Schedule, no consent,
authorization or approval of, or exemption by, or filings with, any
governmental, public or self-regulatory body or authority or third
party is required in connection with the execution, delivery and
performance by the Company or the Shareholders of the transactions
contemplated by this Agreement or the taking of any action
contemplated hereby.
5.10 Financial Statements. Section 5.10 of the Disclosure Schedule
contains copies of (i) the Company's audited balance sheets as of
December 31, 1994, and related audited statements of income,
shareholders' equity, and cash flows for the year then ended, along
with the unqualified opinion of Boldt, Carlisle & Smith, certified
public accountant (the "Audited Financial Statements"), and, (ii)
the Company's unaudited balance sheet as of May 31, 1995 and
related statements of income, shareholders' equity and cash flows
for the period then ended (the "Unaudited Financial Statements").
The Audited Financial Statements and the Unaudited Financial
Statements are sometimes herein collectively referred to as the
"Financial Statements". The Financial Statements present fairly in
all material respects the consolidated financial position of the
Company as of the periods set forth above and the results of
operations and changes in financial position for the periods then
ended, on a basis consistent with prior periods provided that, in
all instances herein, the Unaudited Financial Statements are
subject to normal year-end adjustments (and other year-end
adjustments in categories shown on Section 5.10 of the Disclosure
Schedule), lack footnotes and are subject to other presentation
items as described in Section 5.10 of the Disclosure Schedule. The
Audited Financial Statements were prepared in conformity with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereof).
Except as set forth in Section 5.10 of the Disclosure Schedule, the
Company has not used any improper accounting practice for the
purpose of incorrectly reflecting or not reflecting in the
Financial Statements or books and records of the Company any
properties, assets, liabilities, revenues or expenses and all books
and records of the Company have been maintained and prepared in
conformity with generally accepted accounting principles,
consistently applied. The Financial Statements do not contain any
material items of special or nonrecurring income or other income
not earned in the ordinary course of business. Section 5.10 of the
Disclosure Schedule sets forth all dividends and other
distributions with respect to the Shares which have been paid or
declared by the Company since December 31, 1991.
5.11 Absence of Undisclosed Liabilities. The Company has no material
(individually or in the aggregate) obligation, liability or
commitment of a nature required to be disclosed by generally
accepted accounting principles (either in the body of a balance
sheet or footnotes thereto), whether secured or unsecured and
whether absolute, accrued, contingent or otherwise, and whether due
or to become due, except as disclosed in Section 5.11 of the
Disclosure Schedule, for liabilities accrued or reserved against in
the Financial Statements, for liabilities disclosed in this
Agreement or the Disclosure Schedule hereto and for liabilities
incurred in the ordinary course of business since May 31, 1995.
5.12 Conduct of Business Since December 31, 1994. Except as disclosed
in Section 5.12 of the Disclosure Schedule, since December 31,
1994:
5.12.1 The business and affairs of the Company have been
conducted and carried on only in the ordinary course
consistent with past practices.
5.12.2 Except for personal property purchased, sold or leased in
the ordinary course of business consistent with past
practices, the Company has not purchased, sold, leased,
mortgaged, pledged or otherwise acquired or disposed of
any properties or assets.
5.12.3 The Company has not declared or paid any dividend on, or
made any other distribution or payment (whether cash or
in kind) in respect of, any shares of stock or other
securities of the Company.
5.12.4 There has been no material increase or other change made
in the rate or nature of the compensation, including
wages, salaries, bonuses and benefits under employee
benefit plans, which has been paid, or will be paid or
payable, by the Company to any of its directors, officers
or employees.
5.12.5 The Company has not sustained or incurred any material
(individually or in the aggregate) loss, damage or
destruction (whether or not insured against) on account
of fire, flood, earthquake, accident or other calamity.
5.12.6 The Company has not entered into any significant
(individually or in the aggregate) transaction, contract
or commitment which, by reason of its size, nature or
otherwise, is not in the ordinary course of business.
5.12.7 There has been no material adverse change in or with
respect to the financial condition, operations, results
of operations, assets, management, liabilities or
business of the Company or with relations of the Company
with its employees, creditors, customers, suppliers or
others having business relationships with it and, to the
knowledge of the Shareholders, no state of facts exists
which may reasonably be expected to give rise to any such
material adverse change.
5.12.8 There has been no change by the Company in any method of
accounting or accounting practice, whether tax or
otherwise.
5.13 Tax Matters.
5.13.1 Tax Representations. Except as disclosed in Section
5.13.1 of the Disclosure Schedule and except as reflected
in the current tax accrual included in the Financial
Statements, the Company is not, and will not be, liable
for any material amounts of taxes with respect to the
Company, any existing or previously existing subsidiaries
or affiliates (any such existing or previously existing
subsidiaries or other corporation shall be referred to in
this Section 5.13 as the "Tax Subsidiaries"), or
predecessors, or any joint venture, partnership, trust or
other entity in which any of them have been or are
members or owners (such Tax Subsidiaries, joint ventures,
partnerships, trusts and other entities are herein
collectively called "Tax Affiliates"), relating to
actions, omissions, transactions, business, operations,
or matters that occurred or relate to any period ending
on or before the day prior to the Closing Date or with
respect to any period of such entities ending prior to
the Closing Date (including, without limitation, any
transactions contemplated herein to occur before the
Closing Date). The term "taxes" shall include, without
limitation, estimates, installments in respect of taxes,
charges in lieu of taxes, additions to tax, penalties and
interest which are lawfully due as of the day prior to
the Closing Date.
As set forth in Section 5.13.1 of the Disclosure Schedule, the
Company and its Tax Affiliates have duly prepared and properly
filed with the indicated tax authorities, the tax returns for
the periods indicated, such tax returns were correct and
complete in all material respects and have paid all taxes
shown on such returns to be due, or which have become due,
pursuant to any judgment, settlement, assessment, deficiency,
notice, 30-day letter or similar notice received by any of
them.
The Internal Revenue Service has audited the federal income
tax return, or to the knowledge of the Shareholders, the
applicable statute of limitations has expired with respect to,
the periods ending on or before December 31, 1992 for the
Company and the Tax Affiliates.
The Company is a small business corporation and has duly and
properly elected (with all necessary consents) to be treated
as an S Corporation under Subchapter S, Chapter 1, Subtitle A
of the Internal Revenue Code, effective January 1, 1987. In
addition, the Company has duly and properly elected (with all
necessary consents) to be treated as an S Corporation for all
states in which the Company is otherwise subject to state
taxation except as disclosed in Section 5.13.1 of the
Disclosure Schedule. The S Corporation election for federal
tax purposes has not been terminated or revoked and has
remained in effect for all relevant taxable periods since
January 1, 1987, and shall remain valid through and including
the day before the Closing Date. The S Corporation elections
for state tax purposes have not been terminated or revoked and
have remained in effect for the periods shown on Section
5.13.1 of the Disclosure Schedule. Neither the Company nor
its past or current Shareholders have taken any action or
omitted to take any action which would result in the
termination or revocation of the Company's treatment as a
valid S Corporation (other than upon consummation of this
Merger).
All monies required to be withheld by the Company or any Tax
Affiliate from employees have been collected or withheld, and
either paid to the respective tax authorities or set aside for
such purpose, or accrued or reserved as a current liability.
No Company nor any Tax Affiliate has consented to the
provisions of Code Section 341(f).
5.13.2 Taxes Incurred in the Ordinary Course of Business. With
respect to any period of time through the day prior to
the Closing Date for which tax returns have not yet been
filed, or for which taxes are not yet due or owing, the
Company and its Tax Affiliates have only incurred and
shall only incur normally recurring liabilities for taxes
in the ordinary and regular course of their business.
Any income tax liability relating to the Company's income
attributable to the Shareholders under the Federal S
Corporation statutes and similar state tax laws for tax
periods ending prior to the Closing Date shall be the
responsibility of the Shareholders and in the case of
states not allowing Subchapter S tax treatment, the tax
liability shall be the responsibility of the Company for
tax periods ending prior to the Closing Date, and any
income tax liability relating to the Company for the tax
periods ending on or after the Closing shall be the
responsibility of the Company.
5.13.3 Waivers of Periods of Limitations and Pending Audits. No
presently effective agreement extending the period for
assessment or collection of any taxes has been executed
or filed with any applicable taxing authority.
5.13.4 Pending or Threatened Tax Proceedings. Except as
disclosed in Section 5.13.4 of the Disclosure Schedule,
no Company or Tax Affiliate is a party or parties to any
pending claim, action, proceeding or examination, nor to
the knowledge of the Shareholder is any claim, action,
proceeding, examination, review, audit or investigation
being threatened or asserted by any governmental
authority for assessment or collection of taxes.
5.13.5 Disposition of Valmont Common Stock. There is no current
plan or intention on the part of the Shareholders to sell
or otherwise dispose of Valmont Common Stock to be
received by them pursuant to the terms of this Agreement
in a manner that would adversely affect the treatment of
the Merger contemplated herein as a tax-free
reorganization to the Shareholders and Valmont pursuant
to Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
In addition, the Shareholders have not taken and shall
not take any action or omit to take any action that would
adversely affect the treatment of the Merger contemplated
herein as a reorganization under such Code sections.
5.13.6 Preparation of Certain Tax Returns and Use of Tax
Methods. At the Company's expense, Shareholders or their
respective authorized representatives shall prepare,
execute (if lawful) and file the Company's and the Tax
Affiliates' applicable U.S. federal, foreign (if any),
state, municipal, city, county, parish and local tax
returns for all required taxable periods ending before
the Closing Date. Such returns shall be prepared on a
lawful basis consistent with the past practices of the
Company and the terms of this Agreement. Valmont shall
have the right to review such returns before filing.
5.13.7 Tax Proceedings. The Shareholders and Valmont agree to
cooperate with each other in connection with any official
tax inquiry, tax examination or tax-related legal
proceeding affecting a tax liability of the Company or
any Tax Affiliate or any Shareholder with respect to
matters occurring or relating to any period on or prior
to the Closing Date or in connection with a determination
of any taxes or treatment of any item on a return of any
of them, and to make available to the other party a
reasonable amount of time, at no cost to such party, or
relevant personnel or individuals, together with
documents, correspondence, reports and other materials
bearing on such tax inquiry, examination or proceeding,
provided that each party shall be reimbursed for any out-
of-pocket expenses that it or they incur in assisting
another party hereunder (except that Valmont shall not be
obligated to reimburse Shareholders for expenses relating
to any matter that is indemnified hereunder). Any
information obtained by another party will be kept
confidential except as otherwise required by applicable
law or in connection with such tax inquiry, examination
or proceeding.
5.13.8 Timing Differences. To the extent that, for taxable
periods beginning on or prior to the Closing Date, there
is an adjustment of items known as "timing differences"
by reason of an Internal Revenue Service audit, the
Shareholders or Valmont will compensate the other, as the
case may be, for the benefit derived from such timing
adjustment. Such compensation to be made if and when the
benefit of such timing differences is finally realized
for federal income tax purposes. A timing difference is
an adjustment that affects the timing of a deduction or
the benefit where the adjustment increases the tax
liability of one party and produces a corresponding
deduction for the other party.
5.14 Title to Properties; Absence of Liens; Condition of Assets. Except
as set forth in Section 5.14 of the Disclosure Schedule, the
Company has good title to or a leasehold interest in, all of its
assets and properties reflected in its books and records as being
owned, including the assets and properties reflected as being owned
in the Financial Statements, free and clear of all pledges, leases,
licenses, equities, security interests, claims, liens, or
encumbrances, (except for properties and assets disposed of in the
ordinary course since the date of the Financial Statement, other
than inventory). Section 5.14 of the Disclosure Schedule contains
a list of all properties and assets (other than inventory) disposed
of since the date of the Financial Statements in an amount
exceeding $25,000. The fixed assets of the Company are all located
on real property owned by or leased by the Company. To the
knowledge of the Shareholders, all such assets and properties are
free of material defects and have been maintained in accordance
with normal business practices. Except as set forth in Section
5.14 of the Disclosure Schedule, there are no existing conditions
with respect to the Company's assets that will require capital
expenditures in the aggregate in excess of One Hundred Thousand
Dollars ($100,000) in order for all of such assets to operate
and/or to continue to operate in good repair, order and condition
(subject to normal wear and tear).
5.15 Real Property. Section 5.15 of the Disclosure Schedule contains a
true, complete and correct list of all real estate currently or
previously owned as well as currently or previously leased by the
Company. Except as set forth in Section 5.15 of the Disclosure
Schedule, to the best of the Shareholders' and the Company's
knowledge, the buildings and improvements owned by the Company do
not encroach on any property not owned by the Company and, to the
Shareholders' and the Company's knowledge, no buildings or
improvements not owned by the Company encroach on real property
owned by the Company. The Company has made available to Valmont
true and correct copies of all leases referred to in Section 5.15
of the Disclosure Schedule. Except as set forth in Section 5.15 of
the Disclosure Schedule, the Company is not in material default
under any such lease. To the Shareholders' knowledge, all
buildings, structures and other improvements owned by the Company,
are structurally sound with no material defects (except normal wear
and tear). Except as set forth in Section 5.15 of the Disclosure
Schedule, neither the Company nor the Shareholders have received
any notification that there is any material violation of any
building, zoning or other law, ordinance or regulation in respect
of such buildings, structures and other improvements and no such
violation exists. Each item of real property leased by the Company
is in such condition that upon return of such property to its owner
in its present condition, subject to ordinary wear and tear, at the
end of the relevant lease term or as otherwise contemplated by the
respective agreement, the Company's obligations to such owner or
lessor will be discharged.
5.16 Leased Tangible Personal Property. Section 5.16 of the Disclosure
Schedule lists all material (individually or in the aggregate)
tangible personal property leases to which the Company is a party.
The Company is not in material default under such leases, and each
such leased item has been maintained by the Company substantially
in accordance with the maintenance and repair obligations under
each relevant lease.
5.17 List of Contracts and Other Data.
5.17.1 Section 5.17.1 of the Disclosure Schedule sets forth a
list of all policies of liability, theft, fidelity, life,
fire and other forms of insurance presently or within the
last three (3) years held by or for the benefit of the
Company specifying the insurer, amount of coverage, type
of insurance and policy number, material pending claims
thereunder of which the Company or the Shareholders have
notice together. Copies of such policies have been
furnished to Valmont. Except as set forth in Section
5.17.1 of the Disclosure Schedule, the Company has not
presently, nor has in the past, (i) participated in, or
owned, a captive insurance company, or (ii) participated
in a self-insured program or large deductible or
retrospective premium policy. There are no pending
product liability claims and to the Shareholders' and the
Company's knowledge, any threatened product liability
claims. The Company has not during the past three (3)
years been denied or had revoked or rescinded by a
carrier any policy of insurance. Since December 31,
1989, to the Company's and Shareholders' knowledge, the
Company has not failed to give any notice or present any
claim under any insurance policy in due and timely
fashion. Since December 31, 1989, to the Company's and
the Shareholders' knowledge, there are no outstanding
requirements or recommendations by any insurance company
that issued any such policy with respect to any of the
properties and assets of the Company or by any Board of
Fire Underwriters or similar body exercising similar
functions or by any governmental authority which requires
or recommends changes in the conduct of the business or
requiring any repairs or other work to be done or with
respect to any of the properties, assets or operations of
the Company or requiring any equipment or facilities to
be installed on or in connection with any of the
properties or assets of the Company.
5.17.2 Section 5.17.2 of the Disclosure Schedule sets forth a
list of all existing contracts and commitments, in excess
of $25,000 and either noncancellable within six months or
with a remaining term in excess of six months whether
written or oral, to which the Company is a party, or to
which it or any of its assets or properties are subject
("Material Contracts"), including, without limitation,
any of the following:
(i) Broker, representative and distributor agreements:
(ii) Powers-of-attorney or agency agreements;
(iii) Partnership, joint venture and similar agreements;
(iv) Commodity and commodity-related contracts (including
description of commodity and futures trading and hedging
programs);
(v) Take or pay or similar contracts;
(vi) Trademark, patent or technology licenses;
(vii) Noncompete agreements;
(viii) Nondisclosure or secrecy agreements;
(ix) Real property and personal property leases;
(x) Agreements for the purchase or sale of raw materials,
commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services;
(xi) Agreements under which the Company has created, incurred,
assumed or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under
which the Company has imposed a security interest or
other encumbrance on any of its assets, tangible or
intangible;
(xii) Agreements for the employment of any individual on
a full-time, part-time, consulting or other basis;
(xiii) Agreements under which the Company has advanced or
loaned any amount to any of its directors, officers
and employees; and
(xiv) Agreements under which the consequences of a
default or termination could have an adverse effect
on the business, financial condition, operations or
results of operations of the Company taken as a
whole.
Complete copies of the Material Contracts have been delivered to
Valmont.
5.17.3 The Shareholders and the Company have previously provided
Valmont with the current rate and nature of all
compensation (including wages, salaries, bonuses, and
benefits under pension, profit sharing, deferred
compensation and similar plans or programs) payable by
the Company to any of its employees, officers, partners
or directors. The Company is not, nor will it become, by
virtue of the transactions contemplated herein, obligated
to make any severance payments or similar payments to any
director, officer, partner or employee of the Company.
5.17.4 The Shareholders and the Company have previously provided
Valmont with the name of each bank in which the Company
has an account or safety deposit box, together with the
account numbers and the persons authorized to draw
thereon or procure credit therefrom.
5.17.5 Section 5.17.5 of the Disclosure Schedule sets forth a
list of current officers and directors of the Company.
5.18 Licenses, Permits and Orders. Section 5.18 of the Disclosure
Schedule lists the material qualifications, registrations, filings,
privileges, franchises, immunities, approvals, authorizations,
consents, licenses, orders and other permits of any governmental
agency held by the Company and necessary to conduct its business as
presently conducted, and to the knowledge of the Shareholders and
the Company, is not presently in material violation of any thereof.
All such material permits, licenses, orders and approvals are in
full force and effect and no suspension or cancellation of any of
such items is pending or to the knowledge of the Shareholders and
the Company, threatened, and, to the knowledge of the Shareholders
and the Company, no basis for suspension or cancellation exists.
5.19 Accounts, Notes and Other Receivables. All accounts, notes and
other receivables of the Company reflected in the Financial
Statements or arising thereafter in the ordinary course arose only
out of bona fide transactions in the ordinary course and in a
manner consistent with past credit practices and the reserves shown
on the Audited Financial Statements have been established in
accordance with generally accepted accounting principles,
consistently applied, and are considered by the Shareholders and
the Company to be adequate. There are no rights of offset (except
to the extent reserved for) or similar rights with respect to such
receivables and 99% of such receivables are fully collectible.
5.20 Inventories. The inventory of the Company consists of items of a
quality and quantity usable and saleable in accordance with the
normal pricing and marketing practices of the Company, except for
slow moving and obsolete inventory currently maintained on the
books which slow moving and obsolete inventory is less than 4% of
the Company's inventory. Such inventories have been manufactured,
processed, packaged and labeled, in all material respects, in
accordance with all applicable federal, state and local laws and
regulations.
5.21 Related Party Transactions. Except as disclosed in Section 5.21 of
the Disclosure Schedule, no director, officer or shareholder, or
any relative thereof, and to the knowledge of the Shareholders',
any key employee, directly or indirectly, (i) owns any shares of
stock or other securities of, or has any other direct or indirect
interest in, any person, firm, corporation or entity which has a
material business relationship (as creditor, lessor, lessee,
supplier, dealer, distributor, franchisee, customer or otherwise)
with the Company, (ii) owns, or has any other direct or indirect
interest in, any invention, process, know-how, formula, trade
secret, patent, trademark, trade name, service mark, service name,
copyright or other right, property or asset which is used in the
ownership or operation by the Company of its properties and assets,
or to otherwise carry on and conduct its businesses and affairs, or
(iii) has any other material business relationship, contract,
agreement or arrangement with the Company, other than his capacity
as an officer, director or shareholder of the Company.
5.22 Relationship with Suppliers and Customers. To the Company's and
the Shareholders' knowledge, the relationship of the Company with
its suppliers and customers is satisfactory and neither the Company
nor any Shareholder has received notice of any intention to
terminate or adversely modify in any material respect such
relationships.
5.23 Purchase and Sale Obligations. Substantially all unfilled purchase
and sales orders and all other commitments for purchases and sales
made by the Company have been made in the usual and ordinary course
of business in accordance with, and subject to, normal practices.
To the Company's and the Shareholders' knowledge, there are no
outstanding contracts, commitments, bids or sales proposals that,
individually or in the aggregate, will result in any material loss
to the Company upon completion or performance thereof.
5.24 Litigation. Section 5.24 of the Disclosure Schedule contains a
true, complete and correct list and caption of each pending
lawsuit, administrative proceeding, arbitration, labor dispute or
governmental inspection or investigation pending before any court,
arbitrator or administrative or governmental body or agency to
which the Company is a party or which involve or affect the
operations or assets of the Company. The Shareholders and the
Company have given Valmont copies of all material pleadings
relating to such litigation. With respect to each such proceeding,
Section 5.24 of the Disclosure Schedule discloses the name of the
counsel for each party, the location of the proceeding, and its
current status. To the knowledge of the Shareholders and the
Company, there are no material (individually or in the aggregate)
legal actions or governmental investigations (except for
inspections in the ordinary course of business) threatened against
the Company. Neither the Company nor any of its officers,
directors or employees have been permanently or temporarily
enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or self-regulatory body from engaging
in or continuing any conduct or practice in connection with the
businesses engaged in by the Company. There is no continuing
order, judgment or decree of any federal, state or local court,
arbitrator or other tribunal or any governmental or administrative
agency or self-regulatory body enjoining the Company from taking or
requiring it to take any action of any kind or to which the Company
or its properties or assets are the subject or by which it is
bound. The Company is not in default with respect to any order,
writ, injunction or decree of any federal, state or local court or
self-regulatory body to which it is subject. Except as otherwise
set forth in this Agreement and the Disclosure Schedule, to the
knowledge of the Shareholders and the Company, there is no existing
state of facts, circumstances or contemplated event that is likely
to give rise to a material action, proceeding or investigation
against the Company.
5.25 Labor Relations. The Company is not a party to any collective
bargaining agreement. There are no material controversies pending,
or to the knowledge of the Shareholders and the Company, threatened
between the Company and any of its employees. The Company is in
material compliance with all applicable federal, state and local
laws, rules and regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours,
and has withheld all amounts required by law or agreement to be
withheld from the wages or salaries of its employees and is not
liable for any arrears of wages or any taxes, interest or penalties
for failure to comply with any of the foregoing. To the knowledge
of the Shareholders and the Company, the Company has not been or is
engaged in any unfair labor practice nor has the Company
discriminated in any respect on the basis of age, sex, religion or
national origin in its employment conditions or practices. There
are no charges, investigations, administrative proceedings or
formal complaints of unfair labor practices or age, sex, religion
or national origin discrimination pending or to the knowledge of
the Shareholders and the Company,threatened against the Company
before any federal, state or local board, department, commission or
agency, nor to the knowledge of the Shareholders and the Company,
does any basis exist therefor. There are no existing or, to the
knowledge of the Shareholders and the Company, threatened labor
strikes, disputes, grievances, controversies or other material
labor troubles affecting the Company, nor to the knowledge of the
Shareholders and the Company, does any basis therefor exist. There
are no pending, or to the knowledge of the Shareholders and the
Company, threatened representation questions respecting the
employees of the Company; and there are no arbitration proceedings
arising out of or under any union contract pending or, to the
knowledge of the Shareholders and the Company, threatened, and, to
the knowledge of the Shareholders and the Company, no basis
therefore exists.
5.26 Employee Plans. For purposes of this Section 5.26, the term
"Employee Plan" includes all pension, retirement, disability,
medical, dental or other health insurance plans, life insurance or
other death benefit plans, profit sharing, deferred compensation,
stock option, bonus or other incentive plans, vacation benefit
plans, severance plans or other employee benefit plans or
arrangements, including, without limitation, any "pension plan"
("Pension Plan"), as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
any "welfare plan", as defined in Section 3(1) of ERISA, whether or
not any of the foregoing is funded, (a) to which the Company is a
party or by which it is bound; or (b) with respect to which the
Company has made any payments or contributions during the preceding
six years or may otherwise have any unsatisfied liability.
"Employee Plan" shall not include any government-sponsored employee
benefit arrangements.
5.26.1 There are no Employee Plans which the Company has
maintained, contributed to or otherwise participated in
within the preceding six years other than those listed in
Section 5.26 of the Disclosure Schedule.
5.26.2 To the knowledge of the Shareholders and the Company,
each Employee Plan, the administrator and fiduciaries of
each Employee Plan and the Company have at all times
complied, in all material respects, with all applicable
requirements of ERISA, the Code, and of any other
applicable law (including regulations and rulings
thereunder) governing each Employee Plan, and each
Employee Plan has at all times been administered in all
material respects in accordance with its terms and the
terms of any applicable collective bargaining agreement
to the extent consistent with all such requirements of
laws. No lawsuits or complaints to, or by, any person or
government entity have been filed, are pending, or to the
knowledge of the Shareholders and the Company, are
anticipated by the Company, with respect to any Employee
Plan.
5.26.3 Except as set forth in Section 5.26 of the Disclosure
Schedule, the Company is not bound by, nor contributes to
or has any obligation with respect to any Pension Plan.
5.26.4 To the knowledge of the Shareholders and the Company,
neither any Employee Plan, any administrator or fiduciary
of any Employee Plan, the Company, nor any other person
has any liability to any plan participant, beneficiary or
other person under any provision of ERISA or any other
applicable law by reason of any payment of benefits or
other amounts or failure to pay benefits or any other
amounts, or by reason of any credit or failure to give
credit for any benefits or rights (such as, but not
limited to, vesting rights) with respect to benefits
under or in connection with any Employee Plan except as
disclosed on the Financial Statements and except for
liabilities incurred in the ordinary course of
administration of such plans during the period from
December 31, 1994 through the Closing Date. The Company
is not in arrears with respect to any contributions under
any Employee Plan, except for contributions for the
current tax year.
5.26.5 The Company is not now, and has not been, a participating
employer in a multi-employer plan (as defined in Section
3(37) of ERISA).
5.26.6 Except as set forth in Section 5.26 of the Disclosure
Schedule, none of the Employee Plans are defined benefit
plans (as defined in Section 3(35) of ERISA).
5.26.7 To the knowledge of the Shareholders and the Company,
neither any of the Pension Plans, any trust created
thereunder, nor any trustee or administrator thereof, has
engaged in any transaction in violation of Section 406(a)
or (b) of ERISA (for which no exemption exists under
Section 408 of ERISA) or any prohibited transaction (as
defined in Section 4975(c)(1) of the Code) for which no
exemption exists under Section 4975(c)(2) or (d) of the
Code which could subject such persons or entities to any
tax, penalty or other cost or liability.
5.26.8 True and correct copies of each Employee Plan, related
trust agreements or annuity contracts (or any other
funding instruments); the most recent determination
letter issued by the Internal Revenue Service with
respect to each Pension Plan, and Annual Reports (5500's)
required to be filed for each Employee Plan for the 1993
plan year have heretofore been delivered by the
Shareholders to Valmont.
5.26.9 Except as set forth in Section 5.26.9 of the Disclosure
Schedule, all accrued obligations of the Company, whether
arising by operation of law, by contract or by past
custom or practice, for payments by it to trust or other
funds or to any governmental or administrative agency,
with respect to pension benefits, unemployment
compensation benefits, social security benefits or any
other benefits for employees of the Company as of the
date hereof have been paid as of such date or adequate
accruals therefor have been made in the Financial
Statements, and as of Closing, such payments and accruals
will be made on the books and records of the Company and
none of the foregoing has been rendered not due by reason
of any extension, whether at the request of the Company
or otherwise.
5.26.10 Except as set forth in Section 5.26.10 of the Disclosure
Schedule, all obligations of the Company, whether arising
by operation of law, by contract, by past custom or
practice or otherwise, for salaries, vacation and holiday
pay, bonuses and other forms of compensation which were
or are payable to its respective officers, directors or
other employees either have been paid or have been
accrued as a liability in the Financial Statements and as
of Closing, such payments and accruals will be made on
the books and records of the Company.
5.27 Patents, Trademarks and Similar Rights. Section 5.27 of the
Disclosure Schedule attached hereto contains a true, complete and
correct list of: (i) all patent registrations and all pending
applications for patent registrations which the Company owns or is
using or the use of which is necessary for the conduct of their
business ("Patents"), (ii) all trademarks, service marks, and trade
names, and all registrations and pending applications relating
thereto, which the Company owns or is using or the use of which is
necessary for the conduct of their business ("Trademarks"), and
(iii) all copyrights and all copyright registrations and
applications relating thereto which the Company owns or is using or
the use of which is necessary for the conduct of their business
("Copyrights").
Except as disclosed in Section 5.27 of the Disclosure Schedule, to
the Shareholders' and the Company's knowledge, (i) the Company owns
all right, title and interest in and to their respective
Trademarks, Patents and Copyrights; (ii) all of the Trademarks,
Patents and Copyrights are in good standing, valid and subsisting
and in full force and effect in accordance with their terms; (iii)
no impediment exists to the Company's exclusive ownership, use and
validity of any of the Trademarks, Patents and Copyrights; (iv) no
other person, corporation, partnership, joint venture,
organization, association or entity owns any interest in or uses in
any way any of the Trademarks, Patents and Copyrights; (v) none of
the Trademarks, Patents or Copyrights are involved in, or are the
subject of, any pending or threatened infringement, interference,
opposition, or similar action, suit or proceeding or has otherwise
been challenged in any way; and (vi) the Company has not received
notice that the ownership or operation by the Company of its
properties or its business, or the production, manufacture,
marketing, sale or distribution by the Company of its products, or
the marketing, sale or performance by the Company of its service,
or the use of any product of the Company for the purposes for which
sold, infringes upon or conflicts with any patent, trademark, trade
name, service mark, copyright, privilege, franchise, immunity or
right of any other person, firm, corporation or entity.
Section 5.27 of the Disclosure Schedule contains a list of all
material agreements, contracts and commitments to which the Company
is a party (including, without limitation, licenses and other such
agreements), which affect any of the Trademarks, Patents or
Copyrights. Such licenses and agreements are valid, binding and
enforceable in accordance with their respective terms for the
periods stated therein, subject to general equitable principles and
except as the same may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally, and there is no existing material default or event of
default thereunder or any event which with notice and/or lapse of
time would constitute a material default.
5.28 Compliance with Agreements. The Company is not in material default
under any Material Contracts. To the knowledge of the Shareholders
and the Company, no other party is in default under any such
agreements. All Material Contracts, are valid, binding and
enforceable in accordance with their respective terms for the
period stated therein subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights, general principles of
equity and matters of public policy.
5.29 Compliance with Laws. Except as otherwise set forth in this
Agreement or the Disclosure Schedule and specifically as set forth
in Section 5.29 of the Disclosure Schedule, the Company has owned
and operated, and currently owns and operates, its business,
properties and assets in compliance in all material respects with
applicable federal, foreign, state and local laws, ordinances,
rules and regulations. Section 5.29 of the Disclosure Schedule
sets forth for the past three (3) years all investigations,
inspections or citations under any federal, state or local laws or
any rules or regulations under the foregoing and the results
thereof, together with a brief description of all corrective or
other action taken with respect thereto. The Company has not
received any notice of violation that is now pending and unresolved
of any such applicable law, ordinance, regulation, order or
requirement relating to their operations or properties.
5.30 Borrowings and Guarantees. Except as and to the extent reflected
in Section 5.30 of the Disclosure Schedule, there are no notes,
mortgages, indentures or other obligations or agreements or other
instruments for or relating to any lending or borrowing (including
assumed debt) by the Company or to which the Company is a party or
to which its properties or assets are subject. Except as disclosed
in Section 5.30 of the Disclosure Schedule, no indebtedness exists
between the Shareholders and the Company.
5.31 Environmental Matters. For purposes of this Section 5.31,
"Hazardous Substances" shall have the same meaning as the term
"Hazardous Substance" in 42 U.S.C. 9601(14). In addition,
"Hazardous Substances" shall include any substances, materials or
wastes defined or designated as dangerous, toxic, or hazardous in
or governed by any federal, state or local statute, law, regulation
or other requirement relating to any Hazardous Substances or to
human health and safety of the environment. Hazardous Substances
shall include, without being limited to, urea-formaldehyde,
polychlorinated biphenyls, asbestos-containing materials, nuclear
fuel or waste or petroleum products (to the extent regulated by any
of the legal or regulatory sources referenced above).
No person, entity, or governmental agency has notified the Company
of any requests for damages, costs, or expenses, demands, causes of
action, or claims, arising out of or due to the emission, disposal,
discharge or other release or threatened release of any Hazardous
Substances in connection with or related to any of the Company's
past or present facilities, properties or assets, owned, leased or
otherwise (collectively, the "Company's Assets"), or arising out of
or due to any injury to human health or the environment by reason
of the current condition or operation of the Company's Assets, or
past conditions and operations of the Company or activities on the
Company's Assets. The Company is not a party to any pending, or to
the knowledge of the Shareholders and the Company, threatened,
actions for damages, costs, or expenses, demands, causes of action,
claims, lawsuits, administrative proceedings, enforcement actions,
or investigations, or notice of any of these, arising out of or due
to the emission, disposal, discharge or release or threatened
release of any Hazardous Substances in connection with or related
to the Company's Assets. To the Company's or any Shareholder's
knowledge, there is no environmental condition, situation, or
incident on, at or concerning the Company's Assets or operations of
the Company that could give rise to an action or liability brought
in good faith under any law, rule, ordinance, or common laws theory
relating to the safety of the environment and human health and
further, the Company is in material compliance with CERCLA, RCRA,
or TSCA or under any other statute, including state law, similar to
CERCLA, RCRA or TSCA.
There has not been, and is not now occurring, to any Shareholder's
or the Company's knowledge, any release (as that term is defined in
42 U.S.C. 9601(22)), or threatened release, emission, disposal,
discharge at or from the Company's Assets any Hazardous Substances
that would require any corrective action where such corrective
action would require an expenditure of $10,000 or more. The real
property on which the Company's Assets are located to any
Shareholder's or the Company's knowledge has not been used as a
landfill, dump, or other disposal area for Hazardous Substances.
The Company has not caused or permitted the Company's Assets to be
used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer or process Hazardous Substances or other
solid wastes, except in material compliance with all applicable
federal, state, and local laws and regulations or requirements.
Except as set forth in Schedule 5.31 of the Disclosure Schedule, no
underground storage tanks or underground petroleum pipelines
(whether or not currently in use) are located at the Company's
Assets. Except as set forth in Section 5.31 of the Disclosure
Schedule, no Hazardous Substances are present at the Company's
Assets, whether stored, treated, disposed of, or managed (other
than materials to be used in the ordinary course of the Company's
business, all of which are stored in material compliance with
applicable laws and none of which require any remedial action or
are being held for off-site disposal), and to any Shareholder's and
the Company's knowledge (without any investigation or inquiry),
there are no Hazardous Substances at any adjoining location. The
Company or the Shareholders have not been notified of any
investigations, inspections, or inquiries of any kind with respect
to the Company's Assets by any governmental authority which in any
way pertain to Hazardous Substances or the violation or potential
violation of any statutes, laws, regulations or other requirements
relating to the safety of the environment and human health. The
Company has not been notified that it is being charged with any
violation of, and the Company is now operating, and at all times
has operated, its business at or in connection with the Company's
Assets in material compliance with, all applicable foreign,
federal, state, and local statutes, laws or regulations or other
requirements relating to the safety of the environment and human
health including, but not limited to, laws, regulations, or
requirements relating to emissions, disposals, discharges, releases
or threatened releases of Hazardous Substances into ambient air,
surface water, groundwater, land, subsurface soil, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Substances.
No material expenditures are required in order for Valmont to
comply with any existing environmental statute, law, regulation or
other requirement in connection with the Company's Assets after
consummation of the transactions contemplated herein, including,
without limitation, expenditures relating to the clean up, removal,
response actions, corrective actions, or closure actions relating
to any Hazardous Substances which may have been discharged,
emitted, disposed of, or released prior to Closing at the Company's
Assets or from the Company's Assets.
To the Shareholders' and the Company's knowledge, there are no
state or federal liens encumbering the Company's Assets resulting
from any clean up or response actions related to Hazardous
Substances at the Company's Assets or from the Company's Assets by
state or federal authorities.
To the Shareholders' and the Company's knowledge, the Company's
Assets are not identified on the current or proposed National
Priorities List under 40 CFR 300, Appendix B, the Comprehensive
Environmental Response Compensation and Liability Inventory Systems
(CERCLIS), or any list arising under similar state laws.
The Company is in compliance with the provisions of any legal
requirement relating to public or community right-to-know or
notification, including the provisions of Sections 102 and 103 of
CERCLA (42 U.S.C. 9602 and 9603), Section 133 of the Clean Water
Act (33 U.S.C. 1321), and the Emergency Planning and Community
Right-to-Know Act of 1986, except where such noncompliance would
not have a material adverse effect on the Company.
Notwithstanding anything to the contrary contained in this
Agreement, the representations and warranties relating to
environmental matters are exclusively contained in Section 5.18
relating to environmental permits and in this Section 5.31.
5.32 All Assets. There are no material assets owned or used by the
Company in the conduct of its business as presently conducted other
than (i) those assets owned by the Company, or (ii) those assets
leased or licensed to the Company pursuant to the agreements listed
in Sections 5.15 and 5.16 of the Disclosure Schedule.
5.33 Pooling. To the knowledge of the Shareholders and the Company,
neither the Company nor the Shareholders have taken any action or
failed to take any action that they know will prevent the Merger
from qualifying as a pooling of interests transaction under APB 16
and neither the Shareholders nor the Company is aware of any fact
or circumstance unknown to Valmont that is reasonably likely to
prevent the Merger from qualifying as a pooling under APB 16.
5.34 Disclosure and Reliance. The Shareholders and the Company have, to
the best of their knowledge, disclosed to Valmont all facts
relating to the Company and its operations and assets material to
the transactions contemplated by this Agreement. No representation
or warranty made by the shareholders in this Agreement and in any
certificate furnished to Valmont pursuant to this Agreement and in
the Disclosure Schedule relating to the Shareholders and the
Company contains or as of the Closing Date will contain any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading. The representations and warranties made herein are
made by the Shareholders and the Company with the knowledge and
expectation that Valmont is placing reliance thereon.
6. Representations, Warranties and Covenants of Sub and Valmont.
Sub and Valmont hereby jointly and severally represent, warrant and covenant
to and with the Shareholders as follows:
6.1 Organization, Standing and Power. Sub and Valmont are corporations
duly organized, validly existing and in good standing under the
laws of the states of Oregon and Delaware, respectively, and each
has the corporate power to carry on its business as it is now being
conducted and to enter into this Agreement and to carry out the
transactions contemplated hereby.
6.2 Corporate Authorization; Binding Agreement. The execution,
delivery and performance of this Agreement by Sub and Valmont has
been duly and validly authorized by all necessary corporate action
on the part of Sub and Valmont. This Agreement constitutes the
valid and legally binding agreement of Sub and Valmont, enforceable
in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, general
principles of equity and matters of public policy.
6.3 No Authorization Required. Except for compliance with the HSR Act,
the 1933 Act, the NASDAQ-National Market System rules and
applicable state Blue Sky Laws, and the filing of the Articles of
Merger, no consent, authorization or approval of, or exemption by,
or filings with, any governmental, public or self-regulatory body
or authority or third party is required in connection with the
execution, delivery and performance by Sub and Valmont of the
transactions contemplated by this Agreement or the taking of any
action contemplated hereby.
6.4 Effect of Agreement. The execution, delivery and performance of
this Agreement by Valmont and Sub and the consummation by Valmont
and Sub of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time or both, (a) to
the best of Valmont's knowledge, violate in any material respects,
any provision of law, statute, rule or regulation to which Sub or
Valmont is subject; (b) violate any judgment, order, writ or decree
of any court applicable to Sub or Valmont; or (c) to the best of
Valmont's knowledge, result in the material breach of, or conflict
with, any term, covenant, condition or provision of, result in the
modification or termination of, constitute a material default
under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties
or assets of Sub or Valmont pursuant to any corporate charter, by-
law, commitment, contract, note, bond, lease or other agreement or
instrument to which Sub or Valmont is a party or by which Sub or
Valmont or any of their respective assets or property are or may be
bound or affected or from which Sub or Valmont derives substantial
benefits.
6.5 Pooling. To the knowledge of Valmont and Sub, neither Valmont nor
Sub have taken any action or failed to take any action that they
know will prevent the Merger from qualifying as a pooling of
interests transaction under APB 16 and neither Valmont nor Sub is
aware of any fact or circumstance unknown to the Shareholders and
the Company that is reasonably likely to prevent the Merger from
qualifying as a pooling under APB 16.
6.6 Issuance of Valmont Common Stock. When issued, the Valmont Common
Stock shall constitute the duly authorized, validly issued, fully
paid and nonassessable shares of the common stock of Valmont with
no statutory or other liability attaching to the ownership thereof,
free and clear of any and all liens, charges or encumbrances
created by or through Valmont, other than the transfer restrictions
set forth and described in Section 2 hereof.
6.7 Private Placement Memorandum and Periodic Reports. Except as set
forth in Section 6.7 of the Disclosure Schedule, as of their
respective dates, none of the SEC Filings (including all exhibits
and schedules thereto and documents incorporated by reference
therein), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of
the SEC Filings at the time of filing complied in all material
respects with the Exchange Act or the 1933 Act, as the case may be,
and the rules and regulations thereunder.
6.8 Litigation. Except as disclosed in Section 6.8 of the Disclosure
Schedule, there is no claim, action, suit, proceeding or
investigation pending, or, to the best of the knowledge of Valmont,
threatened, that questions the validity or legality of this
Agreement or any action taken or to be taken by Valmont in
connection with this Agreement. Valmont has disclosed in the SEC
Filings, as of the date hereof and at Closing, all claims, actions,
proceedings or investigations pending, or, to the best knowledge of
Valmont, threatened against Valmont or its subsidiaries, or any
properties or rights of Valmont or its subsidiaries, before any
court, administrative, governmental or regulatory authority or body
which have or could have a material adverse effect in or with
respect to the financial condition, operations, results of
operations, assets, management, liabilities or business of Valmont
or upon Valmont's ability to perform its obligations under this
Agreement required to be disclosed in such SEC Filings.
6.9 Investment. Valmont is presently acquiring the Company Common
Stock for investment for its own account, and not with a view to,
or for the offer or sale in connection with, any distribution
thereof. Valmont acknowledges that the Company Common Stock to be
acquired is not registered under the 1933 Act, or any state
securities law and that the Company Common Stock may not be
transferred or sold except pursuant to the registration provisions
of the 1933 Act or pursuant to an applicable exemption therefor and
subject to state securities laws and regulations.
6.10 Absence of Certain Changes. Except as set forth in Section 6.10 of
the Disclosure Schedule, since the SEC Filings, there has been no
material change in or with respect to the financial condition,
operations, results of operations, assets, management, liabilities
or business of Valmont or with relations of Valmont with its
employees, creditors, customers, suppliers or others having
business relationships with it and, to the knowledge of Valmont, no
state of facts exists which may reasonably be expected to give rise
to any such material adverse change.
6.11 Disclosure and Reliance. No representation or warranty made by
Valmont in this Agreement and in any certificate furnished to the
Shareholders pursuant to this Agreement and in the Disclosure
Schedule relating to Valmont contains or as of the Closing Date,
will contain any untrue statement of a material fact or omits to
state a material fact necessary to make the statement contained
herein and therein not misleading. All documents furnished to the
Shareholders pursuant to this Agreement as being documents
described in this Agreement or in any such Schedule are true and
correct copies of the original documents which they purport to
represent.
6.12 Merger Tax Matters. Valmont and the Sub have not knowingly taken
and shall not knowingly take any action or omit to take any action
that would adversely affect the treatment of the Merger
contemplated herein as a reorganization under Sections 368(a)(1)(A)
and 368(a)(2)(E) of the Code.
Valmont and Sub represent and warrant as follows as of this date
and the date of the Merger:
6.12.1 Valmont will own, as of the time of the Merger, all of
the issued and outstanding shares of stock of Sub.
6.12.2 Valmont does not have any present intent to liquidate the
Company.
6.12.3 Valmont will convert all of its stock of Sub solely into
stock of the Company in the Merger.
6.12.4 There has not been any redemption of the stock of Sub
since its formation or any other distributions with
respect to its stock.
6.12.5 The shares of Valmont which are distributed to the
Shareholders will have the same voting rights as the
currently issued and outstanding voting common stock of
Valmont.
6.12.6 The Company will acquire all of the assets of Sub except
for the voting stock of Valmont which is distributed to
the Shareholders of the Company by Sub in the Merger and
there have been no distributions or sales of assets of
Sub other than in the ordinary course of business since
its inception.
6.12.7 Valmont does not have any present intent to dispose of
any of the shares of the Company which it will receive in
the Merger.
6.12.8 Sub will adopt and execute the plan of merger as is
required under Oregon law.
6.12.9 Valmont does not have any present intent to discontinue
or sell the business of the Company.
6.13 Current Public Information. Valmont agrees to use its best efforts
to make available adequate current public information with respect
to itself to enable the Shareholders to use Rule 144, provided
however, nothing in this Section 6.13 shall prohibit or affect the
officers and directors of Valmont from discharging their fiduciary
obligation to Valmont and its shareholders nor shall this Section
6.13 prohibit or affect a vote by a majority of the shareholders of
Valmont.
6.14 Benefit Plans. Valmont will maintain for fiscal year 1995, benefit
plans which are substantially equivalent, in the aggregate, to the
Employee Plans of the Company in effect on the date of this
Agreement; provided, however, that nothing contained therein shall
be construed as requiring Valmont or the Surviving Corporation to
continue any specific plans other than the Profit Sharing Plan,
Middle Management Incentive Compensation Plan, the 1980 Awards Plan
and Sales Bonus Plan for Inside Sales People or to continue the
employment of any specific person. Valmont shall cause the
Surviving Corporation to pay the amounts owing to the employees or
its benefit plans of the Company for 1995 under the Company's
Profit Sharing Plan, Middle Management Incentive Compensation Plan,
Sales Bonus Plan for Inside Sales People and the 1980 Award Plan
consistent with the Company's past practices and the terms of each
of the plans and in time to allow the Shareholders the benefit of
the tax deduction for plan contributions accruing up to the day
before the Closing.
7. Covenants of the Shareholders.
7.1 Conduct of Business. During the period from the date hereof to the
Closing Date, the Shareholders covenant that the Company shall not,
without the prior written consent of Valmont:
7.1.1 Except as required by any written employment agreement
disclosed in the Disclosure Schedule, (a) increase or
change in any manner the compensation of any employee's
pay; (b) agree to pay a pension, severance benefit,
retirement allowance or other employee benefit to any
employees not required by any existing plan, agreement or
arrangement to any such person; (c) commit itself to pay
any additional pension, profit sharing, bonus, incentive,
deferred compensation, stock purchase, stock option,
group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement or
employee agreement with or for the benefit of any persons
employed by the Company; or (d) modify any agreement
providing for employee benefits except as required by
law;
7.1.2 Permit any current insurance policies to be cancelled or
terminated or any of the coverage thereunder to lapse
unless such policies are replaced with comparable
coverage and the Shareholders give Valmont prompt notice
of such cancellation or termination;
7.1.3 Enter into any transaction other than in the ordinary
course of business consistent with past practices, or
execute any agreement the terms of which would be
violated by the consummation of the transactions
contemplated by this Agreement, except for options or
rights of first refusal to purchase land in Salem, Oregon
and an amendment to the Stockholders' Agreement relating
to the Merger;
7.1.4 Agree to become subject to any liability or obligation
(absolute or contingent), except liabilities incurred or
obligations arising under contracts entered into in the
ordinary course of business and except for expenses
relating to this Agreement;
7.1.5 Enter into or terminate any lease of real or personal
property, except for warehouse space in Nevada;
7.1.6 Sell, abandon or otherwise dispose of, or pledge,
mortgage or otherwise encumber any of the assets of the
Company (including, without limitation, machinery,
equipment, parts and supplies) other than in the ordinary
course of business, or make any commitment relating to
any such assets or property other than in the ordinary
course of business, or cancel or waive any claim or right
of substantial value;
7.1.7 Amend any charter documents or by-laws or take any action
with respect to any such amendment;
7.1.8 Enter into any collective bargaining agreement;
7.1.9 Declare or make any payment, dividend or distribution to
any Shareholders, or purchase, redeem or otherwise
acquire, any shares of Company Common Stock or borrow
from or repay funds to any related party, except for
payment on the Commercial Bank loan;
7.1.10 Make any capital expenditures, capital additions, or
capital improvements which involve an amount in excess of
$50,000 or $150,000 in the aggregate;
7.1.11 Merge or consolidate with any other corporation or
acquire or agree to acquire any stock or substantially
all of the assets of any other person, firm, association,
corporation or other business organization;
7.1.12 Change to or use any invalid or materially inconsistent
tax accounting method, practice or election in respect to
any period beginning prior to the Closing Date;
7.1.13 Alter in any way their equity interest in the Company or
in any way reduce or affect their risk in owning their
shares of Company Common Stock; and
7.1.14 Sell any assets acquired in the merger with IFI, Inc.
which would cause the Company to be liable for the tax on
built-in gains under the statutes relating to S
Corporations.
7.2 Advice of Changes. The Shareholders agree that from the date
hereof until the Closing Date they will report generally to Valmont
regarding the operations of the Company and will give prompt notice
to Valmont in writing with respect to (i) any material changes or
supplements required in the Disclosure Schedule in order to make
the statements contained herein true and correct at the Closing
Date; (ii) any notice of, or other communication relating to, a
default or an event of default or an event which with the lapse of
time could become a default under any material instrument or
agreement relating to the Company or to which the Company is a
party or by which it is bound; (iii) any notice or other
communication from any third party alleging that the consent of
such third party is or may be required in connection with the
transactions contemplated by this Agreement; and (iv) any matter or
event which, if it had occurred as of the date hereof, would
constitute a material breach of the representations and warranties
of the Shareholders contained in this Agreement.
7.3 Maintenance of Assets. The Company and the Shareholders agree that
at all times after the date hereof and until the Closing Date they
will:
(i) Maintain the Company's real estate, buildings, equipment and
any and all other assets in good and operational repair, order
and condition (subject to normal wear and tear); and
(ii) Operate the Company only in the usual, regular and ordinary
course and use best efforts to preserve the Company intact and
keep available the services and present relationships with
persons having business dealings with the Company except as
provided in Section 7.1.
7.4 Information and Access. The Shareholders shall give Valmont and
its counsel, accountants and other representatives access during
normal business hours to all properties, books, contracts,
documents and records with respect to the affairs of the Company as
Valmont may reasonably request at such times and in such manner as
will not disrupt or interfere with the conduct of the Company.
8. Conditions Precedent to Obligations of Valmont. The obligation of
Valmont and Sub to consummate the transactions contemplated herein is subject
to the satisfaction, at or prior to the Closing Date, of all of the following
conditions, unless waived by Valmont:
8.1 Accuracy of Representations and Warranties. The representations
and warranties of the Shareholders and the Company contained in
this Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material respects on
and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
8.2 Performance of Agreements. The Company and the Shareholders shall
have performed all obligations and agreements and complied, in all
material respects, with all covenants and conditions contained in
this Agreement to be performed and complied with by them on or
prior to the Closing Date.
8.3 Absence of Material Adverse Changes. There shall have been no
material adverse change in the assets or liabilities of the Company
or results of operations or financial condition of the Company
during the period from the date hereof to and including the Closing
Date.
8.4 Certificate. At the Closing, the Shareholders shall have delivered
to Valmont a certificate, dated the Closing Date, with respect to
the obligations set forth in Sections 8.1, 8.2 and 8.3.
8.5 Absence of Injunction. There shall be pending no temporary or
permanent injunction or order from any court or government body or
authority prohibiting, restraining or making unlawful the
consummation of the transactions contemplated by this Agreement or
materially limiting the ability of the Company to operate its
business or been terminated.
8.6 HSR Act. All applicable waiting periods specified in the HSR Act
shall have expired or been terminated.
8.7 Board Approval. The Valmont Board of Directors shall have approved
the Merger and this Agreement.
8.8 Due Diligence. The completion of a due diligence investigation of
the Company by or on behalf of Valmont and Valmont's reasonable
satisfaction, in all respects, with the results of such due
diligence investigation.
8.9 Pooling. Valmont shall have received assurances satisfactory to it
that the transactions proposed hereunder shall be accounted for as
a "pooling of interests" under APB 16 and applicable securities and
exchange rules and regulations.
8.10 Consents. All consents, authorizations, orders and approvals of,
and filings and registrations with any governmental authority or
any non-governmental third party which are required for or in
connection with the delivery by the Company and the Shareholders of
this Agreement and other documents contemplated hereby shall have
been obtained or made.
8.11 Legal Opinion. Valmont shall have received an opinion dated as of
the Closing Date, in substantially the form attached hereto as
Exhibit 4.2.2 of Schwabe, Williamson & Wyatt, P.C.
9. Conditions Precedent to Obligations of the Company and the
Shareholders. The obligation of the Company and the Shareholders to
consummate the transactions contemplated herein is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, unless waived by the Shareholders:
9.1 Accuracy of Representations and Warranties. The representations
and warranties of Valmont contained in this Agreement shall have
been true in all material respects when made and, in addition,
shall be true in all material respects on and as of the Closing
Date with the same force and effect as though made on and as of the
Closing Date.
9.2 Performance of Agreements. Valmont shall have performed all
obligations and agreements, and shall have complied with all
covenants contained in this Agreement to be performed and complied
with by it at or prior to the Closing Date.
9.3 Certificate. At the Closing, Valmont shall have delivered to the
Shareholders a certificate, dated the Closing Date, stating that
Valmont has fulfilled the obligations set forth in Sections 9.1,
9.2 and 9.6.
9.4 Absence of Injunction. There shall be pending no temporary or
permanent injunction or order from any court or government body or
authority prohibiting, restraining or making unlawful the
transactions contemplated by this Agreement on the Closing Date.
9.5 HSR Act. All applicable waiting periods specified in the HSR Act
shall have expired or been terminated.
9.6 Absence of Material Adverse Changes. There shall have been no
material adverse change in the assets or liabilities of Valmont or
results of operations or financial condition of Valmont during the
period from the date hereof to and including the Closing Date.
9.7 Consents. All consents, authorizations, orders and approvals of,
and filings and registrations with any governmental authority or
any non-governmental third party which are required for or in
connection with the delivery by Valmont or Sub of this Agreement
and other documents contemplated hereby shall have been obtained or
made.
9.8 Legal Opinion. The Shareholders shall have received an opinion
dated as of the Closing Date, in substantially the form attached
hereto as Exhibit 4.1.3, of McGrath, North, Mullin & Kratz, P.C.
9.9 Shareholders' Guaranties. All personal guaranties of the
Shareholders for the Company's obligations shall be cancelled. If
the guaranties are not cancelled, Shareholders may not refuse to
close solely because of the failure of this condition if Valmont
agrees to unconditionally indemnify and hold the Shareholders
harmless from all obligations under the guaranties which accrue
from and after the Closing Date.
10. Termination. The transactions contemplated by this Agreement may
be terminated on or before the Closing Date as follows:
10.1 Mutual Agreement. By mutual written agreement of the Shareholders
and Valmont.
10.2 Court Order. By Valmont, the Company or the Shareholders if any
court of competent jurisdiction shall have issued an order
restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement.
10.3 Breach of Representation or Warranty. By Valmont, the Company or
the Shareholders if any representation or warranty made herein by
the other was untrue or false in any material respect as of the
date given or made.
10.4 Conditions to Close. By Valmont, the Company or the Shareholders
if any condition precedent to its or their obligation to close has
not occurred as of the Closing Date, unless the party seeking to
terminate has failed to observe any covenant, agreement or
condition precedent to be observed or performed by such party on or
before the Closing Date.
10.5 Failure to Close. After October 1, 1995, by either the Company,
Valmont or the Shareholders if the Closing has not occurred for any
reason other than (i) a breach of this Agreement by the terminating
party or (ii) all applicable waiting periods specified in the HSR
Act having not expired or been terminated.
10.6 Effect of Termination. In the event this Agreement is terminated
pursuant to the provisions of Section 10 hereof, except as set
forth below, this Agreement shall forthwith become wholly void and
of no force and effect and there shall be no liability on the part
of the parties hereto other than as provided in the Non-Disclosure
Agreement. If for any reason on the Closing Date there has been
nonfulfillment of an undertaking by or condition precedent for the
Company, Valmont or a Shareholder not waived in writing by the
party in whose favor such undertaking or condition runs, the party
in whose favor such undertaking or condition runs may refuse to
consummate the transactions contemplated by this Agreement without
any liability or obligation on its part whatsoever. In the event
of any nonfulfillment of an undertaking by Valmont, the Company or
a Shareholder, the refusal by Valmont, the Company or a Shareholder
to consummate the transactions hereby contemplated because of
nonfulfillment by the other party shall not constitute an election
of remedies and either party may pursue whatever legal rights and
remedies they may have at law or in equity by reason of such
nonfulfillment or failure by the other party; provided, however, in
the event Valmont terminates this Agreement due to Valmont's
refusal to accept any changes or supplements made to the Disclosure
Schedule of the Shareholders between the date hereof and the
Closing Date, then such termination shall be deemed an election of
remedies by Valmont and Valmont shall not be entitled to pursue any
legal rights or remedies it may have at law or in equity in
connection therewith. Upon termination, Valmont agrees not to
directly or through any third party solicit any current employee of
the Company for a period of three years from the date of
termination of this Agreement.
11. Indemnification.
11.1 Shareholder Indemnity. Subject to the limits set forth in this
Section 11, the Shareholders shall and hereby agree to jointly and
severally, except as to the covenants, representations and
warranties in Section 2 as to which, Shareholder shall severally,
indemnify and hold Valmont and the Company harmless against and in
respect of:
11.1.1 All debts, liabilities and obligations of the Company of
any nature, whether accrued, absolute, contingent, known
or unknown on the date hereof existing or arising on or
resulting from events which occurred or failed to occur
on or before the Closing Date, other than (i) those, and
to the extent, reserved for as a liability in the
Financial Statements, (ii) those incurred since December
31, 1994 in the ordinary course of business consistent
with past practices, and (iii) those disclosed in the
Disclosure Schedule.
11.1.2 Any claim, action, loss, damage or cost relating to or
arising by reason of (i) the disposal or arranging for
disposal (on-site or off-site), the release or threatened
release prior to the date hereof, of any Hazardous
Substance in, on, to, under, upon or from any of the
Company's Assets, or (ii) any violation of any applicable
law relating to the protection of human health and the
safety of the environment which occurs prior to the date
hereof from activities in, on, under, upon or from any of
the Company's Assets or in, on, to, under, upon or from
any part thereof upon which the Company's Assets have
been located.
11.1.3 Any liability, loss, claim, damage or deficiency
resulting directly or indirectly from any nondisclosure,
misrepresentation, breach of warranty or nonfulfillment
of any agreement on the part of the Shareholders or the
Company under this Agreement or the Disclosure Schedule,
or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be
furnished to Valmont hereunder.
11.1.4 Any tax (as defined in Section 5.13) of the Company or
any Tax Affiliate (not fully accrued for on the balance
sheet of the Company or set forth in the Disclosure
Schedule) relating to transactions, business, operations,
or matters that occurred or failed to occur on or before
the Closing Date or with respect to any period through
the Closing Date.
11.1.5 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident to
the foregoing, including, without limitation, actual
attorneys' fees and other out-of-pocket expenses.
11.2 Indemnification by Valmont. Valmont agrees to indemnify, hold
harmless and defend the Shareholders in respect of any and all
claims, losses, damages, liabilities, demands, assessments,
judgments, costs and expenses (including, without limitation,
settlement costs, and any legal or other expenses for
investigation, bringing or defending any actions) reasonably
incurred by the Shareholders in connection with any
misrepresentation or breach of any warranty, covenant or agreement
made by Valmont under this Agreement, or in any schedule, exhibit,
certificate or other instrument pursuant thereto.
11.3 Waiver and Estoppel. No party shall be entitled to assert after
the Closing any claim based upon a breach of any representation or
warranty under this Agreement, to the extent such representation or
warranty otherwise would survive the Closing if, and only if, it is
shown by the other party that (a) at or prior to the Closing an
officer of Valmont, if Valmont is the party asserting such claim,
or a Shareholder, if the Shareholders are asserting such claim,
possessed knowledge of the facts constituting such breach, (b) the
asserting party knew that such facts constituted a breach of this
Agreement, and (c) the facts were unknown to the party defending
such claim and were not disclosed by the other party. If, and only
if, (a), (b) and (c) occur, the party asserting the claim shall be
deemed to have waived, and shall be estopped to assert at or after
the Closing, any claim or remedy based upon such breach by the
other; provided, however, that notwithstanding the foregoing, a
party may not invoke benefit of this Section 11 if such party could
not have remedied the breach prior to the Closing if the facts
known by the other party had been disclosed.
11.4 Notice of Claims. The party seeking indemnification ("Indemnified
Party") agrees to give the party from whom indemnification is
sought ("Indemnifying Party") timely notice of any and all claims
asserted for which indemnification is or may be sought under this
Section 11. Such notice shall be given within a reasonable time
after receipt of written notice of such claim by the Indemnified
Party. Failure to give such notice shall not abrogate or diminish
the Indemnifying Party's obligation under this Section 11 if the
Indemnifying Party has or receives knowledge of the existence of
any such claim by any other means or if such failure does not
prejudice the Indemnifying Party's ability to defend such claim.
11.5 Defense of Claim. In any litigation, administrative proceeding,
negotiation or arbitration pertaining to any claim for which
indemnification is sought under this Section 11, the Indemnifying
Party shall have the right to select legal counsel to represent the
Indemnified Party and to otherwise control such litigation,
proceedings, negotiations and arbitration. If the Indemnifying
Party elects to control such litigation, proceeding, negotiation or
arbitration, the Indemnified Party shall at all times have the
right to fully participate in the defense at its own expense. If
the Indemnifying Party shall, within a reasonable time after
notice, fail to defend, the Indemnified Party shall have the right,
but not the obligation, to undertake the defense of and to
compromise or settle the claim or other matter on behalf, for the
account, and at the risk of the Indemnifying Party. If the claim
is one that cannot by its nature be defended solely by the
Indemnifying Party then the Indemnified Party shall make available
all information and assistance as the Indemnifying Party may
reasonably request. Notwithstanding the foregoing provisions of
this Section 11, should the subject matter of any litigation,
proceeding, negotiation or arbitration include a claim against
Valmont or the Company seeking permanent injunctive relief, Valmont
shall have the right to take exclusive control of the defense of
the entire proceeding.
11.6 Costs Included. The amounts for which a party may seek
indemnification under this Section 11 shall extend to and include
the actual attorney's fees, accountant's fees, costs of litigation
and other reasonable expenses incurred in the defense of any claim
and any amounts paid in settlement or compromise of any claims
asserted against them to the extent that the claim asserted would
have been subject to the indemnification provisions of this Section
11.
11.7 Time Limits. Valmont or the Company may not seek indemnification
under Section 11.1 in respect to any claims for which written
notice, setting forth in reasonable detail each such claim, has not
been given to the Shareholders prior to March 15, 1996; provided,
however, it is specifically understood and agreed that the damages
sustained for which indemnification is sought need not be incurred
or paid by Valmont or the Company within the foregoing periods but
only that the claim with respect to which indemnification is sought
be asserted within such applicable period and presented to the
Shareholders within such applicable period.
11.8 Basket. Except in connection with the representations and
warranties provided in Sections 5.6, 5.13 and 5.14 above and the
indemnity obligations under Section 11.1 relating thereto, for
which no limitation shall apply, Shareholders shall have no
liability under this Section 11 for any claim for indemnity by
Valmont or the Company which is less than Five Thousand Dollars
($5,000) nor shall the Shareholders have any liability under this
Section 11 until the net aggregate of all claims for indemnity made
by Valmont or the Company exceeds One Hundred Thousand Dollars
($100,000), and then only to the extent such claims exceed One
Hundred Thousand Dollars ($100,000).
11.9 Limitation on Liability. Except with respect to any
representations and warranties provided in Sections 5.6, 5.13 and
5.14 above and the indemnity obligations under Section 11.1
relating thereto, for which no limitation shall apply, in no event
shall the aggregate liability of the Shareholders to Valmont and
the Company for indemnification exceed an amount equal to
$3,000,000.
11.10 Escrow Agreement. Subject to the terms and conditions of an
escrow agreement (the "Escrow Agreement") to be executed by
the Shareholders, Valmont and an escrow agent reasonably
acceptable to Valmont and the Shareholders ("Escrow Agent"),
150,000 shares of the Valmont Common Stock issued to the
Shareholders, 50,000 shares from each Shareholder, in this
transaction shall be deposited with the Escrow Agent pursuant
to the terms of the Escrow Agreement as collateral for the
indemnification of Valmont of possible claims. The
Shareholders shall have all voting rights with respect to the
escrowed shares ("Escrowed Shares") and shall receive all
dividends and distributions on the Escrowed Shares or in
respect thereof. In the event Escrowed Shares are returned to
Valmont for the indemnification of any claims, such Escrowed
Shares shall be valued, per share, at the average of the bid
and asked price at the close of business on the Closing Date;
provided, however, that the Shareholders may satisfy any
Valmont claims by payment of cash in lieu of Escrowed Shares
so long as such cash payment does not have an adverse effect
on the treatment of the Merger as a pooling of interest.
11.11 Determination of Claim. Indemnification under this Section
shall be payable with respect to any claim upon the happening
of the earliest to occur of any of the following
("Determination Date"):
(i) Resolution of such claim by mutual agreement between the
parties; or
(ii) The issuance of a final award by the arbitrators in accordance
with Section 12.17; or
(ii) Final settlement of such claim by a third party pursuant to
mutual authorization.
11.12 Manner of Indemnification.
(a) By the Shareholders. If Valmont or the Surviving Corporation
is entitled to indemnification from any or all of the
Shareholders, the Shareholders shall satisfy their respective
indemnification obligations to Valmont or the Surviving
Corporation first from the Escrowed Shares and thereafter by
delivery of shares of Valmont Common Stock for cancellation.
The Shareholders shall satisfy their indemnification
obligations to Valmont or the Surviving Corporation no later
than ten (10) business days following the Determination Date.
(b) By Valmont. All indemnification by Valmont under this Section
shall be made by payment of Valmont Common Stock in the amount
of the indemnification liability no later than ten (10)
business days following the Determination Date; provided,
however, that Valmont may satisfy any Shareholder claims by
payment of cash in lieu of Valmont Common Stock so long as
such cash payment does not have an adverse effect on the
treatment of the Merger as a pooling of interest. Such
Valmont Common Stock shall be valued, per share, at the
average of the bid and asked price at the close of business on
the Closing Day.
11.13 Measure of Loss. Any loss shall be determined net of any
recovery of proceeds, including proceeds from the Company's
insurance, related thereto. Valmont agrees that to the extent
the Surviving Corporation does not maintain insurance, of the
kinds, in the amounts and with such deductibles and exclusions
as set forth in Section 5.17.1 of the Disclosure Schedule,
then any claim by Valmont for indemnification from the
Shareholders shall be treated as if such insurance was still
in full force and effect as existing on the Closing Date and
the Shareholders shall only be required to indemnify Valmont
to the extent the Shareholders would have indemnified Valmont
if such insurance coverage had been maintained in full force
and effect.
11.14 Remedies Exclusive. Except for claims of fraud or criminal
misconduct, this Section 11 shall provide the sole and
exclusive remedy for all claims of misrepresentation, breaches
of this Agreement, or any other claims arising out of or
related to this Agreement.
11.15 Shareholder Time Limits; Baskets; Limitations of Liabilities.
Except in connection with representations, warranties and
covenants provided in Sections 2, 6.6, 6.12 and 6.13 above and
the indemnity obligations under Section 11.2 relating thereto,
for which no limitation shall apply, the limitations set forth
in Sections 11.7, 11.8 and 11.9 shall apply to claims for
indemnification made by the Shareholders under Section 11.2.
11.16 Definition of Material Adverse Effect. For purposes of the
application of the indemnification provisions of this Section
11 only, the terms "material", "materially", "material adverse
effect" and the like, as such phrases appear in the
representations and warranties of the parties in Sections 5
and 6 hereof shall be the incurrence of a loss or other amount
for which indemnification is provided (i) under Section 11.1.2
or as a result of a breach of Section 5.31 in excess of
$10,000 and (ii) under all other sections of Section 11 in
excess of $5,000.
12. Miscellaneous. The following miscellaneous provisions shall apply
to this Agreement:
12.1 Notices. All notices or other communications required or permitted
to be given, pursuant to the terms of this Agreement, shall be in
writing and shall be deemed to be duly given when received if
delivered in person or by telex, telegram or cable and confirmed by
mail, or mailed by registered or certified mail (return receipt
requested) or overnight courier, express mail, postage prepaid, as
follows:
If to the Company and the Mr. Richard A. Kreitzberg
Shareholders: 3332 El Dorado Loop
Salem, OR 97302
- and - Microflect Company, Inc.
3575 25th Street S.E.
Salem, OR 97302-1123
Attn: President
With a Copy to: Schwabe, Williamson & Wyatt,
P.C.
Suites 1600-1800 Pacwest Center
1211 S.W. Fifth Avenue
Portland, OR 97204
Attn: Walter H. Grebe, Esq.
If to Valmont or Sub: Valmont Industries, Inc.
Highway 275 West
Valley, NE 68064
Attn: Thomas P. Egan, Jr., Esq.
With a Copy to: McGrath, North, Mullin & Kratz,
P.C.
One Central Park Plaza
Suite 1400
Omaha, NE 68102
Attn: David G. Anderson, Esq.
or at such other address as the party to whom notice is to be given
furnishes in writing to the other party in the manner set forth
above.
In accordance with the provisions of Section 12 hereof, all
notices, requests, demands or other communications by Valmont shall
be deemed to have been duly given to all the Shareholders if such
notices, requests, demands or communications are duly given in
accordance with this Paragraph 12.1 to Mr. Richard A. Kreitzberg.
12.2 Amendments and Waivers. This Agreement may not be modified or
amended, except by instrument or instruments in writing, signed by
the party against whom enforcement of any such modification or
amendment is sought. Either Valmont or the Shareholders may, by an
instrument in writing, waive compliance by the other party with any
term or provision of this Agreement on the part of such other party
to be performed or complied with. No action taken, pursuant to
this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty or
agreement contained herein. The waiver by any party hereto of a
breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
12.3 Expenses. Except as otherwise provided herein, whether or not the
transactions contemplated by this Agreement shall be consummated,
the Company and Valmont shall each pay the expenses incident to the
preparation, execution and consummation of this Agreement.
12.4 Brokers, Finders Fee and Professional Fees. Neither the
Shareholders, the Company nor Valmont have employed any investment
banker, broker, or finder or has incurred any liability for any
brokerage fees, commissions or finders fees in connection with the
transactions contemplated by this Agreement.
12.5 Survival of Representations, Warranties, Covenants and
Indemnifications. All representations, warranties, covenants and
indemnities made in or pursuant to this Agreement shall survive the
Closing hereunder pursuant to the terms of Sections 11.7 and 11.15;
provided, however, that the Company's responsibility and obligation
for any representations, warranties or covenants shall expire and
terminate at Closing and the Shareholders shall have no right of
contribution from the Company with respect thereto.
12.6 Entire Agreement. This Agreement (including Exhibits and the
Disclosure Schedule), the Plan of Merger, and the Non-Disclosure
Agreement constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral and written, among the parties
hereto with respect to the subject matter hereof, except as the
parties have provided otherwise in writing by specific reference to
this Section 12.6.
12.7 Applicable Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance
with the laws of the State of Oregon applicable to contracts made
and performed in Oregon.
12.8 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any person
other than the parties hereto or their respective heirs, successors
and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
12.9 Assignability. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without
the prior written consent of the other party hereto.
12.10 Effect of Headings. The headings of the various sections and
subsections herein are inserted merely as a matter of
convenience and for reference and shall not be construed as in
any manner defining, limiting, or describing the scope or
intent of the particular sections to which they refer, or as
affecting the meaning or construction of the language in the
body of such sections.
12.11 Exhibits; Disclosure Schedule. All exhibits referred to in
this Agreement and the Disclosure Schedule are attached hereto
and are incorporated herein by reference as if fully set forth
herein.
12.12 Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or other provisions of this Agreement in any other
jurisdiction.
12.13 Construction. The language in all parts of this Agreement
shall in all cases be construed as a whole according to its
fair meaning, strictly neither for nor against any party
hereto, and without implying a presumption that the terms
thereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be
construed more strictly against the person who himself drafted
same. It is hereby agreed that representatives of both
parties have participated in the preparation hereof.
12.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original
and all of which shall constitute one and the same instrument.
12.15 Dissenters' Rights. The Shareholders have consented to the
Merger and hereby waive any and all rights under applicable
law to dissent from the Merger including, but not limited to,
those rights set forth in the Oregon Business Corporation Act.
12.16 Reasonable Best Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the parties shall use
its reasonable best efforts to take, or cause to be taken, and
to assist and cooperate with the other in doing all things
reasonably necessary, proper or advisable under any applicable
law to consummate and made effective in the most expeditious
manner practicable, the Merger.
12.17 Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement shall be settled by arbitration
in accordance with the Arbitration Services of Portland, in
Portland, Oregon. Such arbitration shall be held before a
panel of three (3) arbitrators, one selected by the
Shareholders, one selected by Valmont and the third selected
by mutual agreement of the first two arbitrators. Each
arbitrator shall be independent and impartial. Judgment upon
any award rendered by the arbitrators may be entered into by
any court of competent jurisdiction. The determination of
which party (or combination of them) bears the costs and
expenses, including reasonable attorneys' fees, incurred in
connection with any such arbitration proceeding shall be made
by the arbitrators.
12.18 Tax Effects of Merger. The parties hereto acknowledge that
the Merger is intended to constitute a reorganization under
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. The
parties hereto agree and acknowledge, however, that, except as
specifically set forth herein, no representation, warranty or
guaranty has been made by any party hereto with respect to the
tax effects of the transactions provided for in this Agreement
and that, except for any breach of any representation,
warranty, or covenant contained in this Agreement (and the
indemnifications therefor as provided in this Agreement), no
party hereto shall be liable or responsible to any other party
hereto in the event such transactions do not constitute a non-
taxable reorganization.
12.19 Acceptance of Certificate. A party's acceptance of the
certificates described in Sections 8.4 and 9.3 shall be deemed
to amend such representations and warranties in accordance
with the certificate on and as of the date of this Agreement
as well as at and as of the Closing Date.
12.20 Definition Regarding Knowledge. As used in this Agreement,
the phrases "to the best of the knowledge of", "to the
knowledge of", "knowingly" or derivations thereof means actual
knowledge after due and reasonable inquiry with respect
thereto.
13. Shareholders' Agent.
13.1 Appointment; Acceptance. By executing this Agreement, each of the
Shareholders irrevocably constitutes and appoints Richard A.
Kreitzberg and his successors, acting as hereinafter provided, as
his attorney-in-fact and agent in this name, place and stead in
connection with the transactions and agreements contemplated by
this Agreement (the "Shareholders' Agent"), and acknowledges that
such appointment is coupled with an interest. By executing and
delivering this Agreement, the individual who is appointed as the
Shareholders' Agent (i) accepts his appointment and authorization
to act as the Shareholders' Agent as attorney-in-fact and agent on
behalf of the Shareholders in accordance with the terms of this
Agreement and (ii) agrees to perform his obligations hereunder, and
otherwise comply with this Section.
13.2 Authority. Each Shareholder by this Agreement fully and
completely, without restriction:
a. Authorizes the Shareholders' Agent (i) to prepare,
finalize, approve and authorize all exhibits, schedules and other
attachments to this Agreement and such approval and authorization
may be conclusively evidenced by the Shareholders' Agent; (ii) to
deliver on his behalf to Valmont as provided in this Agreement his
share certificates representing all of his shares and the separate
stock transfer powers, if any, relating to all such shares duly
endorsed by him and otherwise as provided in this Agreement and all
materials to be delivered in connection with such share
certificates; (iii) to execute, deliver and accept on his behalf
this Agreement and the related documents; (iv) to execute and
deliver, and to accept delivery, on his behalf of such amendments
as may be deemed by the Shareholders' Agent in his sole discretion
to be appropriate under the Agreement; and (v) to execute and
deliver and to accept delivery, on his behalf of such agreements,
instruments and other documents as may be deemed by the
Shareholders' Agent in his sole discretion to be appropriate under
the Agreement.
b. Agrees to be bound by all notices received and agreements
and determinations made by and documents executed and delivered by
the Shareholders' Agent under this Agreement.
c. Authorizes the Shareholders' Agent (i) to dispute or to
refrain from disputing any claim made by Valmont or the Company
under the Agreement; (ii) to negotiate and compromise any dispute
which may arise under, and exercise or refrain from exercising
remedies available under the Agreement, to sign any releases or
other documents with respect to such dispute or remedy; (iii) to
waive any condition contained in the Agreement; (iv) to give any
and all consents under the Agreement; and (v) to give such
instructions and do such other things and refrain from doing such
things as the Shareholders' Agent shall deem appropriate to carry
out the provisions of this Agreement; and
d. Authorizes and directs the Shareholders' Agent to receive
any payments made to the Shareholders' Agent under this Agreement,
to invest such funds pending their disbursement in such matter as
the Shareholders Agent in his sole discretion deems appropriate;
and to disburse pro rata any payments due the Shareholder under
this Agreement in accordance with their interest after (i) payment
of any attorneys' and accountants' and other fees and expenses
incurred on behalf of the Shareholders in connection with the
consummation of the transactions contemplated by this Agreement,
and (ii) withholding such amounts to pay costs and expenses
relating to potential disputes arising with respect to
indemnification of other obligations of the Shareholders under this
Agreement. Notwithstanding the foregoing or anything else in this
Agreement, the Shareholders' Agent shall have no authority
involving a breach by a Shareholder of a representation or warranty
in Section 2 of this Agreement, as to which such Shareholder shall
have the sole authority to exercise rights or remedies.
13.3 Actions. Each of the Shareholders expressly acknowledges and
agrees that the Shareholders' Agent is authorized to act on his
behalf, notwithstanding any dispute or disagreement among the
Shareholders and that Valmont and any other person or entity shall
be entitled to rely on any and all actions taken by the
Shareholders' Agent under this Agreement without any liability to,
or obligation to inquire of, any of the Shareholders. All notices,
counter-notices or other instruments or designations delivered by
the Shareholders' Agent shall not be effective unless, but shall be
effective if, signed by the Shareholders' Agent, and if not, such
document shall have no force and effect whatsoever hereunder and
Valmont and any other person or entity may proceed without regard
to any such document. Valmont and any other person or entity are
expressly authorized to rely on the genuineness of the signature of
the Shareholders' Agent, and upon receipt of any writing which
reasonably appears to have been signed by the Shareholders' Agent,
Valmont and any other person or entity may act upon the same
without any further duty of inquiry as to the genuineness of the
writing.
13.4 Effectiveness. The authorizations of the Shareholders' Agent shall
be irrevocable and effective until his rights and obligations under
this Agreement terminate by virtue of the termination of any and
all of the obligations of the Shareholders to Valmont under this
Agreement.
13.5 Indemnification. The Shareholders jointly and severally agree to
indemnify and hold the Shareholders' Agent harmless from any and
all liability, cost, damage or expense, including reasonable
attorneys' fees (at trial and on appeal), except for gross
negligence or willful misconduct.
13.6 SURVIVAL OF AUTHORIZATIONS. EACH SHAREHOLDER INTENDS FOR THE
AUTHORIZATION AND AGREEMENTS IN THIS SECTION TO REMAIN IN FORCE AND
NOT BE AFFECTED IF SUCH SHAREHOLDER SUBSEQUENTLY BECOMES MENTALLY
OR PHYSICALLY DISABLED OR INCOMPETENT, DOES HEREBY AUTHORIZE SUCH
RECORDINGS AND FILINGS HEREOF AS A HOLDER MAY DEEM APPROPRIATE, AND
DOES DIRECT THAT NO FILING OF ACCOUNTS OR INVENTORIES OR POSTING OF
A SURETY BOND SHALL BE REQUIRED.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
MICROFLECT COMPANY, INC., an VALMONT INDUSTRIES, INC., a Delaware
Oregon corporation corporation
By: /s/ Richard A. Kreitzberg By: /s/ Mogens C. Bay
____________________________ ____________________________________
Its: President Its: President and
Chief Executive Officer
/s/ George F. Kreitzberg
____________________________ VALMONT OREGON, INC., an Oregon
GEORGE F. KREITZBERG corporation
/s/ James S. Kreitzberg
____________________________ By: /s/ Mogens C. Bay
JAMES S. KREITZBERG ______________________________
Its: President
/s/ Richard A. Kreitzberg
____________________________
RICHARD A. KREITZBERG