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EXHIBIT 99.12
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January
15, 2001 (the "Agreement Date"), is by and among AMERICAN ECOLOGY ENVIRONMENTAL
SERVICES CORPORATION, a Texas corporation ("Purchaser"), whose main offices are
located at 805 West Idaho, Suite 200, Boise, Idaho 83702, AMERICAN ECOLOGY
CORPORATION, a Delaware corporation, and Purchaser's ultimate corporate parent
("AEC"), ENVIROSOURCE TECHNOLOGIES, INC., a Delaware corporation ("Seller"),
whose main offices are located at 1155 Business Center Drive, Horsham,
Pennsylvania 19044, and ENVIROSOURCE, INC., a Delaware corporation, and Seller's
ultimate corporate parent ("Enso").
BACKGROUND
ENVIROSAFE SERVICES OF IDAHO, INC., a Delaware corporation ("ESII" or
the "Company"), has issued and outstanding 1,000 shares of common stock, par
value $1.00 per share, all of which are owned by Seller (the "Shares"). Seller
desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the
Shares on the terms and subject to the conditions set forth in this Agreement.
AEC is a party to this Agreement for the purpose of making certain
representations, warranties and covenants and joining its subsidiary's
indemnification obligations contained herein. Enso is a party to this Agreement
for the purpose of making certain representations and joining its subsidiary's
indemnification obligations contained herein.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and the representations and warranties, conditions, covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. In this Agreement, the term:
"AEC" means American Ecology Corporation, a Delaware corporation.
"Agreement" means this Agreement, as the same may be modified, amended,
supplemented and/or restated from time to time.
"Agreement Date" means the date of this Agreement, as set forth in the
preamble of this Agreement.
"Announcement" means any announcement to the public or to the trade,
the employees or any customer or supplier of the Company with respect to this
Agreement or any of the transactions contemplated hereby.
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"Bank" means First Security Bank, N.A., which has an outstanding line
of credit facility with AEC.
"BLM" has the meaning set forth in Section 4.23.
"BLM Land Transaction" has the meaning set forth in Section 4.23.
"Blue Sky Laws" means the securities or blue sky laws of any state of
the United States.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in New York, New York, Boise, Idaho or
Philadelphia, Pennsylvania are authorized or required by Law to close.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act, as the same may have been amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Claim" means a written demand received by the insured seeking a remedy
and alleging liability on the part of the insured that is a loss covered by an
insurance policy pursuant to its terms and conditions.
"Closing" means the closing and consummation of the Purchase and Sale
and the other transactions contemplated by this Agreement.
"Closing Date" means such date mutually agreed upon by Purchaser and
Seller that is within five Business Days after the first date upon which all of
the conditions set forth in Article VII shall have been satisfied or waived.
"Closing Date Balance Sheet" has the meaning set forth in Section 3.06.
"Closure Trust Fund" has the meaning set forth in Section 3.01(a).
"Code" means the Internal Revenue Code of 1986, as the same may have
been amended.
"Company" means ESII.
"Company Material Adverse Effect" means a condition or event which
results in or has (a) a material adverse change in, or a material adverse effect
on, the business, liabilities, condition (financial or otherwise), properties,
assets or results of operations of the Company, taken as a whole, or (b) a
material adverse effect on the ability of the Seller and Enso to perform their
obligations under this Agreement and the other Seller Documents to which they
are respectively a party or to consummate the transactions contemplated hereby
and thereby.
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"Competing Transaction" has the meaning set forth in Section 6.11.
"Consent" means any governmental, judicial or private party consent,
approval, permission, authorization, waiver or exemption.
"Contract" means any written contract, agreement, instrument,
undertaking, commitment or arrangement, of any kind or description whatsoever to
which ESII is a party or by which any property, assets, capital stock or
partnership interest (as the case may be) of ESII is subject or bound.
"CSI" has the meaning set forth in Section 3.01.
"Disclosure Schedule" means the Disclosure Schedule, comprising the
Schedules referred to in Section 4.01 hereof, delivered by Seller to Purchaser
contemporaneously with this Agreement, as the same may be updated as provided in
Section 7.01(a).
"Employees" has the meaning set forth in Section 4.11.
"Enso" means Envirosource, Inc., a Delaware corporation.
"Environmental, Health and Safety Liabilities" means any Liabilities
arising from or under Environmental Law or Occupational Safety and Health Law
and consisting of or relating to:
(a) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of Hazardous Substances);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands, and
remedial action, response, investigation or inspection costs and
expenses arising under Environmental Law or Occupational Safety and
Health Law; or
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remedial action required by applicable Environmental Law or
Occupational Safety and Health Law.
"Environmental Law" means any Law of, any Permit from, or any consent
decree or agreement with, any federal, state, regional, special district or
local governmental authority regulating, relating to or imposing liability or
enforceable standards of conduct relating to environmental matters or the
protection of the environment, including, without limitation (as the same may
have been or may be amended from time to time), the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act,
CERCLA, any
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so-called "Superfund" or "Superlien" Law, the federal Toxic Substances Control
Act and any similar state or local Law.
"ERISA" means the federal Employee Retirement Income Security Act of
1974, as the same may have been amended.
"ESII" means Envirosafe Services of Idaho, Inc., a Delaware
corporation.
"ESOI" has the meaning set forth in Section 3.07.
"ESOI/Nucor Yamato Letter Agreement" has the meaning set forth in
Section 3.07.
"Exchange Act" means the federal Securities Exchange Act of 1934, as
the same may have been amended, together with the rules and regulations
promulgated thereunder.
"Facility" means the Company's solid waste disposal facility located
near the City of Grandview in Owyhee County, Idaho, identified internally by
EnsoI as "Site B."
"Financial Statements" means the financial statements of the Company
included in Schedule 4.04(a).
"FTC" means the U.S. Federal Trade Commission.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"Governmental Body" means any state, county, city, district or other
jurisdiction of any nature; federal, state, local, municipal or other
government; governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or entity); or
body exercising, or entitled to exercise, any administrative, executive,
legislative, police, regulatory or taxing authority or power of any nature.
"Guaranty" has the meaning set forth in Section 6.16.
"Hazardous Substance" means any hazardous, toxic or polluting
contaminant, substance or waste, including, without limitation, any solid waste,
toxic substance, hazardous substance, hazardous material, hazardous chemical,
pollutant or hazardous or acutely hazardous waste defined or qualifying as such
in (or for the purposes of) any Environmental Law, and shall also include (but
not be limited to) petroleum (including, without limitation, crude oil and any
fraction thereof), any radioactive material (including, without limitation, any
source and special nuclear by-product material as defined at 42 U.S.C. Section
2011 et seq., as amended or hereafter amended), polychlorinated biphenyls (PCBs)
and asbestos in any form or condition.
"IDEQ" has the meaning set forth in Section 7.01(m).
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"Income Taxes" means all U.S. federal income taxes and all income and
franchise taxes imposed by states, territories and possessions of the United
States and political subdivisions thereof which are based on or measured by net
income or net profits together with all interest, penalties and additions
imposed with respect to such taxes.
"Indemnified Person" has the meaning set forth in Section 9.04 hereof.
"Indemnifying Person" has the meaning set forth in Section 9.04 hereof.
"Intellectual Property Rights" means all patents, patent applications,
trademarks, trademark registrations, applications for trademark registrations,
trade names, Internet domain names, brand names, service marks, trade dress
rights, logos and registered copyrights.
"IRBs" has the meaning set forth in Section 6.16.
"IRS" means the U.S. Internal Revenue Service.
"Justice" means the U.S. Department of Justice.
"Laws" means all federal, state, regional, special district and local
laws, statutes, ordinances, codes, directives, rules and regulations of any
Governmental Body.
"Liabilities" means any direct or indirect indebtedness, liability,
claim, deficiency, obligation or responsibility, whether known or unknown, fixed
or unfixed, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise.
"License Agreement" has the meaning set forth in Section 3.04.
"Liens" means all liens, security interests, mortgages, pledges,
covenants, easements and similar encumbrances and defects in title.
"Losses" has the meaning set forth in Section 9.03 hereof.
"Material Contracts" has the meaning set forth in Section 4.13.
"Material Exceptions" has the meaning set forth in Section 6.15(b).
"Material Jurisdictions" has the meaning set forth in Section 4.01.
"Most Recent Balance Sheet" has the meaning set forth in Section
4.04(b).
"Most Recent Balance Sheet Date" has the meaning set forth in Section
4.04(b).
"New Exception" has the meaning set forth in Section 6.15(b).
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"NOLs" has the meaning set forth in Section 4.24(b).
"Non-Competition Agreement" has the meaning set forth in Section 3.02.
"Notice" means any notice, announcement, communication or other advice.
"Occupational Safety and Health Law" means any Law designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards.
"Ordinary Course of Business" means any action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person or is taken in the ordinary course of the normal operations of
such Person; or
(b) such action is similar in nature and magnitude to actions
customarily taken in the ordinary course of the normal operations of
other Persons that are in the same line of business as such Person.
"Permits" means all governmental license, permits, rights, privileges,
registrations, required reports, franchises, authorizations and other consents
which are required under any applicable Law to own and/or operate the business
of the Company.
"Permitted Exceptions" means: (i) Liens for taxes not yet due and
payable; (ii) Liens imposed by Law, such as banker's, warehousemen's, mechanic's
and materialmen's liens, and other similar statutory or common law liens arising
in the Ordinary Course of Business; (iii) Liens arising out of pledges, bonds or
deposits under worker's compensation laws, unemployment insurance, old age
pension or other social security or retirement benefits or similar legislation
and deposits securing obligations for self-insurance arrangements in connection
with any of the foregoing; (iv) easements, rights of way, building restrictions,
minor defects or irregularities in title and such other encumbrances or charges
against property (real, personal or mixed) existing as of the date hereof which
do not in a materially adverse way affect the marketability of the same or
materially interfere with the use thereof in the ordinary course of business,
including, without limitation, those matters set forth on the attached Annex A;
(v) statutory Liens of landlords arising under leases as to which the Company is
lessee; (vi) leases or subleases granted to others in the Ordinary Course of
Business; and (vii) exceptions not objected to by Purchaser pursuant to Section
6.15(b).
"Person" means any natural person, corporation (including any
non-profit corporation), general or limited partnership, joint venture, limited
liability company, bank, trust or unincorporated organization, joint-stock
company or other similar organization, Governmental Body, estate, trust,
organization, labor union or any other legal entity, whether acting in an
individual, fiduciary or other capacity.
"Policy" has the meaning set forth in Section 4.20.
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"Preliminary Title Report" has the meaning set forth in Section
6.15(a).
"Purchase and Sale" means the transaction provided for in Section 2.01.
"Purchase Price" has the meaning set forth in Section 2.02.
"Purchaser" means American Ecology Environmental Services Corporation,
a Texas corporation, and its successors and permitted assigns.
"Purchaser Consents" has the meaning set forth in Section 5.01.
"Purchaser Documents" means this Agreement and the other agreements,
instruments, certificates or other documents executed and delivered by
Purchaser, AEC and/or any affiliate thereof in connection with this Agreement
and/or the Closing.
"Purchaser Material Adverse Effect" means a condition or event which
results in or has (a) a material adverse change in, or a material adverse effect
on, the business, liabilities, condition (financial or otherwise), properties,
assets or results of operations of the Purchaser, taken as a whole, or (b) a
material adverse effect on the ability of the Purchaser or AEC to perform their
obligations under this Agreement and the other Purchaser Documents to which they
are respectively a party or to consummate the transactions contemplated hereby
and thereby.
"Purchaser's Indemnified Persons" means Purchaser and AEC, and their
respective directors, officers, shareholders, controlling persons, employees and
agents, and the Company and its directors, officer, employees and agents serving
as such after the Closing at the request of Purchaser.
"Real Property" has the meaning set forth in Section 4.05(a).
"Required Consents" has the meaning set forth in Section 7.01(c).
"SEC" has the meaning set forth in Section 5.04.
"Securities Act" means the Securities Act of 1933, as the same may have
been amended, together with the rules and regulations promulgated thereunder.
"Seller" means Envirosource Technologies, Inc., a Delaware corporation,
and its successors and permitted assigns.
"Seller Consents" has the meaning set forth in Section 4.02(b).
"Seller Documents" means this Agreement, the Non-Competition Agreement,
the License Agreement, the Transition Services Agreement, the Trademark License
and the
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ESOI/NUCOR Letter Agreement executed and delivered by Seller, Enso, the Company
and/or any affiliate thereof in connection with this Agreement and/or the
Closing.
"Seller Income Tax Periods" has the meaning set forth in Section
6.08(a).
"Seller's Indemnified Persons" means Seller and Enso and their
respective directors, officers, shareholders, controlling persons, employees and
agents, and the directors, officers, employees and agents of Enso who served as
such for any period while Seller owned ESII.
"Shares" has the meaning set forth in the Background paragraph of this
Agreement.
"Sterling Assets" has the meaning set forth in Section 3.01(a).
"Sterling Closing Certificate" has the meaning set forth in Section
3.01(b).
"Sterling Contract" has the meaning set forth in Section 3.01(a).
"Straddle Period Returns" means all Tax Returns of the Company for
taxable periods beginning before and ending after the Closing Date.
"Survey" has the meaning set forth in Section 6.15(a).
"Tangible Personal Property" has the meaning set forth in Section
4.05(a).
"Tax Returns" means all returns (including information returns) and
reports with respect to Taxes, including all schedules and other information and
materials filed submitted or required to be filed or submitted therewith.
"Tax" or "Taxes" means all taxes, charges, levies or other like
assessments, including without limitation all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, capital,
payroll, employment, excise, stamp, property or other taxes, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority.
"Termination Date" has the meaning set forth in Section 8.02(d).
"Threshold Amount" has the meaning set forth in Section 9.01(b)(3).
"Title Company" has the meaning set forth in Section 6.15(a).
"Title Policy" has the meaning set forth in Section 6.15(c).
"Trademark License" has the meaning set forth in Section 3.05.
"Transition Services Agreement" has the meaning set forth in Section
3.03.
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ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE. On the Closing Date, Seller shall sell,
transfer, assign, grant, convey and set over to Purchaser, and its successors
and assigns forever, and Purchaser shall purchase and receive from Seller, free
and clear of any and all Liens, all of Seller's right, title and interest in, to
and under the Shares.
2.02 CONSIDERATION. In consideration of Seller's sale of the Shares to
Purchaser as aforesaid, Purchaser shall pay One Thousand and 00/100 Dollars
($1,000.00) to Seller (the "Purchase Price").
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
3.01 STERLING ASSETS.
(a) Transfer of Sterling Assets. On or before the Closing Date,
Seller covenants and agrees to cause to be contributed to the Company certain
assets and liabilities (including, without limitation, that certain Contract,
effective as of January 1, 1999, between Conversion Systems, Inc., Seller's
affiliate ("CSI"), and Northwestern Steel and Wire Company (the "Sterling
Contract")), relating to the on-site waste processing facility constructed by
CSI at Northwestern Steel and Wire's Sterling, Illinois steel plant (the
"Sterling Assets"). Set forth on Schedule 3.01(a) is a list of the Sterling
Assets, all of which shall be transferred to and shall be the sole and exclusive
property of ESII on the Closing Date. The parties acknowledge and agree that
Purchaser is assuming no liabilities associated with the Sterling Assets arising
prior to the Closing Date other than those specifically set forth on Schedule
3.01(a).
(b) Closure Trust Fund. The parties further acknowledge and agree
that the Sterling Assets shall include Seller's and its affiliates' rights with
respect to the trust fund established under the Sterling Contract to ensure
performance of CSI's "Clean Closure" obligations, as defined in and required by
the Sterling Contract, and the related trust agreement (the "Closure Trust
Fund"); provided, however, that in the event Purchaser has not incurred any
"Clean Closure" obligation under the Sterling Contract during the 12 months
following the Closing Date, Purchaser shall, within five Business Days following
the one-year anniversary of the Closing Date, pay to Seller an amount equal to
the amount by which the Closure Trust Fund on the Closing Date exceeds the
closure liability associated with the CSI facility, as recorded on the Closing
Date Balance Sheet prepared in accordance with Section 3.06.
(c) Representations and Warranties Concerning Sterling Assets. On
the Closing Date, Seller shall deliver to Purchaser a certificate (the "Sterling
Closing Certificate") based on the deemed inclusion of the Sterling Assets
within the properties and assets of ESII and certifying that, as to the Sterling
Assets deemed to be included therein, those representations and
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warranties of Seller set forth on Schedule 3.01(c) are true and correct in all
material respects as of the Closing Date. Seller shall deliver a draft of the
Sterling Closing Certificate to Purchaser at least five (5) Business Days prior
to the Closing Date.
3.02 NON-COMPETITION AGREEMENT. At Closing, the parties shall sign and
deliver a Non-Competition and Non-Solicitation Agreement, substantially in the
form of Exhibit A hereto (the "Non-Competition Agreement").
3.03 TRANSITION SERVICES AGREEMENT. At Closing, the parties shall sign
and deliver a Transition Services Agreement, substantially in the form of
Exhibit B hereto (the "Transition Services Agreement").
3.04 LICENSE AGREEMENT. At Closing, Seller shall cause Envirosafe
Services of Ohio, Inc. to enter into a Patent and Technical Information License
Agreement with ESII, substantially in the form of Exhibit C hereto (the "License
Agreement").
3.05 TRADEMARK LICENSE. At Closing, the parties shall sign and deliver
a Trademark License Agreement substantially in the form of Exhibit D hereto (the
"Trademark License"), pursuant to which ESII will be granted a limited right to
use the "Envirosafe" trademark for a period not to exceed six months following
the Closing.
3.06 CLOSING DATE BALANCE SHEET. At Closing, Seller shall deliver to
Purchaser a balance sheet of ESII dated as of the last day of the calendar month
ending no less than fifteen (15) days prior to the Closing Date (the "Closing
Date Balance Sheet"). The Closing Date Balance Sheet shall be prepared in a
manner that is consistent with the balance sheets included in the Financial
Statements described in Section 4.04(a) hereof; provided, however, that the
parties acknowledge and agree that the Closing Date Balance Sheet shall reflect
on a pro forma basis the inclusion of the Sterling Assets which are to be
transferred to ESII in accordance with the provisions of Section 3.01.
3.07 ESOI/NUCOR YAMATO LETTER AGREEMENT. At Closing, Seller shall cause
its affiliate, Envirosafe Services of Ohio, Inc. ("ESOI") to enter into a letter
agreement with ESII relating to the relationship of ESOI and ESII to the Nucor
Yamato Steel Co. Division of NUCOR Corporation with respect to its operations in
Armorel, Arkansas, substantially in the form of Exhibit E hereto (the
"ESOI/Nucor Yamato Letter Agreement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
4.01 ORGANIZATION AND GOOD STANDING. ESII is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and, except as set forth in Schedule 4.01, is duly qualified or
licensed to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted by it, or
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the character or location of the properties and assets owned or leased by it,
requires such license or qualification, except where the failure to be so
licensed or qualified would not reasonably be expected to, individually or in
the aggregate, result in a Company Material Adverse Effect (the "Material
Jurisdictions"). A complete and accurate list of the Material Jurisdictions is
set forth in Schedule 4.01. ESII has the full corporate power and authority to
own, lease and operate its properties and assets, to carry on its businesses as
presently conducted, and to perform its obligations under all applicable
Contracts, except where the failure to have such power and authority would not
reasonably be expected to, individually or in the aggregate, result in a Company
Material Adverse Effect.
4.02 CONSENTS, AUTHORIZATIONS AND CONFLICTS.
(a) Neither the execution and delivery by Seller and Enso of this
Agreement or of any of the other Seller Documents, nor the performance by Seller
and Enso of their respective obligations hereunder and thereunder, requires any
Consent or the giving of any Notice applicable to Seller, Enso or the Company
(as opposed to Purchaser), except for such Consents and Notices that:
(1) are required elsewhere in this Agreement,
(2) are required under the terms and conditions of those
Contracts listed in Schedule 4.13 and Permits listed in Schedule 4.08,
including, for this purpose, those Contracts and Permits which are to
be transferred to the Company on or before the Closing Date as part of
or in connection with the Sterling Assets; and
(3) (A) have been or will be obtained or given on or before,
and remain in full force and effect as of the Closing Date, or (B) if
not so obtained or given, would not reasonably be expected to,
individually or in the aggregate, result in a Company Material Adverse
Effect.
(b) Schedule 4.02 contains a complete and accurate list of all
material Consents of, or filings with or Notices to, any Person or Governmental
Body, required in connection with the Seller's and Enso's valid execution,
delivery and performance of this Agreement and the Seller Documents and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, any Consents or Notices required in connection with the
Contracts listed in Schedule 4.13 and Permits listed in Schedule 4.08
(collectively, the "Seller Consents"), including, for this purpose, those
Contracts and Permits which are to be transferred to the Company on or before
the Closing Date as part of or in connection with the Sterling Assets.
(c) This Agreement has been duly authorized, executed and
delivered by Seller and Enso and constitutes the legal, valid and binding
obligation of Seller and Enso enforceable against Seller and Enso in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance or similar laws
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of general application relating to or affecting the enforcement of creditors'
rights (the "Equitable Exceptions"). At the Closing, each other Seller Document
shall be duly authorized, executed and delivered by the Seller, the Company or
Enso, as applicable, and shall constitute the legal, valid and binding
obligation of the Seller, the Company or Enso, as applicable, enforceable
against each such respective party in accordance with its terms, except as such
enforceability may be limited by the Equitable Exceptions.
(d) The execution and delivery by the Company, Seller or Enso of
the Seller Documents to which they are respectively a party, and the performance
by such parties of their respective obligations thereunder, does not and will
not contravene, conflict or be inconsistent with, result in a breach of,
constitute a violation of or default under, or require or result in any right of
acceleration or create or impose any Lien under (all or any of the foregoing a
"breach"): (i) the Company's, Seller's or Enso's respective articles or
certificate of incorporation or by-laws (or other organizational documents);
(ii) any Law applicable or relating to any of the Company, Seller or Enso or any
of the businesses, assets or properties of the Company, including, for this
purpose, any assets and properties which are to be transferred to the Company on
or before the Closing Date as part of or in connection with the Sterling Assets;
or (iii) any Contract or Permit, including, for this purpose, any Contract or
Permit which is to be transferred to the Company on or before the Closing Date
as part of or in connection with the Sterling Assets, except, with respect to
clauses (ii) and (iii), for such breaches, violations, defaults, accelerations
or Liens as would not, alone or in the aggregate, be reasonably expected to have
a Company Material Adverse Effect.
4.03 MINUTE AND STOCK TRANSFER BOOKS. Seller has made available to
Purchaser the original or true copies of the minute books and stock transfer
records of the Company. To the best knowledge of Seller, the minute books of the
Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of Directors and
committees of the Board of Directors of the Company, and no meeting of any such
stockholders, Board of Directors or committee has been held for which minutes
have not been prepared and are not contained in such minute books. The stock
transfer records are current, and all documentary and stock transfer tax stamps
required in connection with the issuance and transfer of the capital stock of
the Company have been duly affixed and canceled. At the Closing, all of the
foregoing books and records will be in the possession of the Company.
4.04 FINANCIAL STATEMENTS.
(a) The ESII financial statements, which are included in the
Disclosure Schedule as Schedule 4.04(a), consist of an unaudited income
statement for each of the three years ended December 31, 1997, December 31, 1998
and December 31, 1999 (the "Most Recent Fiscal Year End"), and for the eleven
months ended November 30, 2000, as well as unaudited balance sheets as of
December 31, 1997, 1998 and 1999 and as of November 30, 2000 (the "Financial
Statements"). Such Financial Statements present fairly, in all material
respects, the financial condition and the results of operations of the Company
as at the respective dates of and for the periods referred to in such Financial
Statements, each in a manner that is consistent with the Company's historical
financial accounting and reporting practices and that, while not
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inconsistent with GAAP, is not necessarily in conformity with GAAP because,
among other things: (i) certain non-material disclosures required by GAAP are
not included; and (ii) Seller's corporate staff supplies centralized banking and
cash management services to the Company, and provides tax, general accounting,
auditing, human resources, legal and other services to the Company, which are
charged to the Company in the form of allocated management fees and are not
included in the Financial Statements.
(b) At November 30, 2000 (the "Most Recent Balance Sheet Date"),
ESII had no indebtedness or liabilities required by GAAP to be included on a
balance sheet which are not included in its balance sheet at November 30, 2000
in the Financial Statements (the "Most Recent Balance Sheet"). The "Total
Liabilities" of ESII set forth on the Most Recent Balance Sheet (as that term is
used therein) do not exceed $21 million. Since the Most Recent Balance Sheet
Date, ESII has incurred no indebtedness or liabilities required by GAAP to be
included on a balance sheet except for such indebtedness or liabilities incurred
by ESII in the Ordinary Course of Business.
4.05 TITLE, CONDITION AND NATURE OF TANGIBLE ASSETS.
(a) Schedule 4.05(a) contains a list of all real property ("Real
Property") and material tangible personal property and fixtures ("Tangible
Personal Property") owned or leased by the Company as of the Agreement Date
having, as applicable, a purchase cost of $25,000 or more or a fair market value
(at lease inception) of $25,000 or more. The Company has good and marketable
title to, or a leasehold interest in, the Tangible Personal Property free and
clear of all Liens other than Permitted Exceptions. The Company has insurable
title to, or a leasehold interest in, the Real Property free and clear of all
Liens other than Permitted Exceptions. Set forth on Schedule 4.05(a) is a list
of all real property leases or subleases affecting any of the Real Property, and
all equipment or other personal property leases or subleases affecting any of
the Tangible Personal Property.
(b) Except as set forth on Schedule 4.05(b), to the best knowledge
of Seller, the buildings, structures, improvements, fixtures and appurtenances
owned, leased or operated by the Company on any Real Property, and the Tangible
Personal Property owned, leased or operated by the Company, are adequate to
operate its business as currently operated. No other assets are used or are
necessary to conduct the business of the Company, in all material respects, as
it is currently conducted.
(c) The Company has received no notice of any pending or overtly
threatened condemnation or eminent domain proceeding in respect of any Real
Property or Tangible Personal Property which would reasonably be expected to,
individually or in the aggregate, result in a Company Material Adverse Effect,
and the business of the Company is not conducted under any restriction imposed
upon the Company (but not imposed upon other persons or entities conducting
similar businesses or operating similar assets for similar purposes in the same
localities by any zoning, environmental, health and safety or other Law).
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4.06 INTELLECTUAL PROPERTY RIGHTS. Schedule 4.06 sets forth a complete
list of (i) all material Intellectual Property Rights owned, licensed or used by
the Company, and (ii) all license and other agreements with respect to any of
the foregoing. The Company owns or has the right to use pursuant to license,
sublicense, agreement or permission all such Intellectual Property Rights
necessary for the operation of the business of the Company as presently
conducted, except where the failure to own or possess rights in such
Intellectual Property Rights would not reasonably be expected to, individually
or in the aggregate, result in a Company Material Adverse Effect. With respect
to the material Intellectual Property Rights owned by the Company, the Company
owns such Intellectual Property Rights, free and clear of all Liens other than
Permitted Exceptions. With respect to the material Intellectual Property Rights
licensed by the Company, all such licenses are in full force and effect in
accordance with the terms thereof; and there are no outstanding defaults by the
Company, or to the best knowledge of Seller, any other party under such
licenses. To the best knowledge of Seller, the Company has not infringed upon or
otherwise violated any Intellectual Property Rights of third parties; there are
no existing or, to the best knowledge of Seller, overtly threatened claims (x)
against the Company or Seller by any Person claiming any adverse right of
ownership or use of any of the Intellectual Property Rights, or (y) that the
Company or Seller are infringing any rights in or to the Intellectual Property
Rights of any other Person. To the best knowledge of Seller, no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property Rights of the Company.
4.07 LITIGATION. Except as set forth on Schedule 4.07, there are no
Governmental Body or private party actions, suits, claims, proceedings or, to
the best knowledge of Seller, investigations pending or, to the best knowledge
of Seller, overtly threatened against, the Company, Seller or any subsidiary or
affiliate thereof which has or would reasonably be expected to, individually or
in the aggregate, result in a Company Material Adverse Effect: (x) relating to
the Company, the ownership or business of the Company, any of the Shares or any
properties or assets currently owned, leased or operated by the Company, or (y)
which questions or challenges Seller's right, title or interest in or to any of
the Shares. Except as set forth on Schedule 4.07, to the best knowledge of
Seller, neither the Company, the ownership or business of the Company, any of
the Shares, nor any of the properties or assets now or previously owned, leased
or operated by the Company is the subject of any judgment, order or decree of
any governmental authority, court or arbitrator which has had or is reasonably
expected to, individually or in the aggregate, result in a Company Material
Adverse Effect. Schedule 4.07 sets forth a list of all written notices of
violations related to Environmental Laws received by the Company from January 1,
1999 through and including the Agreement Date.
4.08 COMPLIANCE. The Company has obtained all Permits necessary to
operate its business as currently conducted, except those the absence of which
would not reasonably be expected to, individually or in the aggregate, result in
a Company Material Adverse Effect. Schedule 4.08 contains a complete list of all
material Permits held by or issued in favor of the Company as of the Agreement
Date, and a list of all material Permits, including, for this purpose, any
Permits relating to the use and operation of the Sterling Assets which are to be
transferred to the Company on or before the Closing Date. All such material
Permits are valid and in full force and effect. To the best knowledge of Seller,
except as set forth on Schedule 4.08, there exists no
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default or violation by the Company under any such Permit which default or
violation would reasonably be expected to, individually or in the aggregate,
result in a Company Material Adverse Effect and, to the best knowledge of
Seller, no event, act or omission has occurred which has resulted, or (with or
without notice, the passage of time or the occurrence of any other event) would
result, in the revocation or non-renewal of any such Permit.
4.09 TAXES.
(a) The Company has filed or caused to be filed all Tax Returns
that it was required to file on or prior to the date hereof. The Company has
paid or provided for all Income Taxes shown on its Income Tax Returns, except
such Taxes as are listed in Schedule 4.09 and which are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Most Recent Balance Sheet, except where the failure to
file Income Tax Returns or to pay Income Taxes would not reasonably be expected
to result in a Company Material Adverse Effect.
(b) Except as disclosed in the Most Recent Balance Sheet or in
Schedule 4.09, there exists no material written, or to the best of Seller's
knowledge oral, proposed Tax assessment against the Company.
(c) The Company has heretofore made available to the Purchaser
copies of all of the Company's federal and state income Tax Returns filed since
December 31, 1997, together with all examination reports, and statements of
deficiencies assessed against or agreed to by the Company since December 31,
1997. Since December 31, 1997, the Company has not waived any statute of
limitations in respect of Income Taxes for any period since December 31, 1997,
or agreed to any extension of time with respect to an Income Tax assessment or
deficiency for any period since December 31, 1997. Federal and state Tax Returns
filed with respect to the Company for taxable periods ended on or after December
31, 1997 have not been audited nor are they currently the subject of audit.
(d) The Company has not filed a consent under Section 341 of the
Code concerning collapsible corporations. There is no Tax sharing agreement that
will require any payment by the Company after the Agreement Date.
(e) To the best knowledge of Seller, the Company has withheld and
timely deposited or paid or accrued all Taxes required to have been withheld in
connection with amounts paid or owing to any employee, independent contractor,
stockholder or other third party.
(f) The Company has not made any payments and, to the best
knowledge of Seller, is not obligated to make any payments, and is not a party
to any agreement that under certain circumstances would obligate it to make any
payments that would be characterized as "excess parachute payments" under
Section 280G of the Code. None of the assets of the Company (i) is property
which is required to be treated as being owned by any other Person pursuant to
the so-called "safe harbor lease" provisions of former Section 168(f)(8) of the
Code; (ii) directly or indirectly secures any debt the interest on which is tax
exempt under Section
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103(a) of the Code; or (iii) is "tax-exempt use property" within the meaning of
Section 168(h) of the Code. The Company does not have any liability for Taxes of
any Person under Treas. Reg. Sec. 1.1502-6 or any similar provision of state,
local or foreign law, as a member of a consolidated group, transferee or
successor, by contract, or otherwise. The Company is a United States person
within the meaning of the Code and the transactions contemplated by this
Agreement are not subject to the withholding provisions of Section 3406 of the
Code or subchapter A or Chapter 3 of the Code.
(g) Set forth on Schedule 4.09 is a complete description of all
NOLs affecting the Company through December 31, 1999.
4.10 EMPLOYEE BENEFIT MATTERS.
(a) As used in this Section 4.10, the following terms have the
meanings set forth below:
"Other Benefit Obligation of the Company" means any Other
Benefit Obligation owed, adopted or followed by the Company or by an
ERISA Affiliate of the Company.
"Company Plan" means all Plans of which the Company is a Plan
Sponsor, or to which the Company otherwise contributes or in which the
Company otherwise participates.
"ERISA Affiliate" means, with respect to the Company, any
other Person that, together with the Company, would be treated as a
single employer under Section 414 of the Code.
"Multiemployer Plan" has the meaning given in Section 3(37)(A)
of ERISA.
"Other Benefit Obligation" means all legally binding
obligations, arrangements or customary practices to provide benefits,
other than salary, as compensation for services rendered, to present or
former directors or employees other than obligations, arrangements, and
practices that are Plans.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in Section 3(2)(A) of
ERISA. "Plan" has the meaning given in Section 3(3) of ERISA.
"Plan Sponsor" has the meaning given in Section 3(16)(B) of
ERISA.
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"Qualified Plan" means any Plan that meets or purports to meet
the requirements of Section 401(a) of the Code.
"Title IV Plans" means all Pension Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multiemployer Plans.
"Welfare Plan" has the meaning given in Section 3(1) of ERISA.
(b) Schedule 4.10(b) contains a complete and accurate list of all
Company Plans and Other Benefit Obligations of the Company.
(c) The Company has heretofore delivered, or made available to
Purchaser, the following:
(i) (A) the plan document, summary plan description, most
recent IRS determination letter and most recent Form 5500 relating to
each of the Company Plans; and
(ii) all personnel, payroll and employment manuals and
policies of the Company.
(d) Except as provided in Schedule 4.10(d), to the best knowledge
of Seller:
(i) The Company, with respect to all Company Plans and Other
Benefit Obligations of the Company are, and each Company Plan and Other
Benefit Obligation of the Company is, in full compliance with ERISA,
the Code and other applicable requirements of Law, except where the
failure to comply would not reasonably be expected to, individually or
in the aggregate, result in a Company Material Adverse Effect.
(ii) No Title IV or other Plan maintained by the Company or
any ERISA Affiliate of the Company has (A) incurred an "accumulated
funding deficiency," within the meaning of Section 301 of ERISA and
Section 412 of the Code, whether or not waived; (B) been a plan with
respect to which a "reportable event," within the meaning of Section
4043 of ERISA (to the extent that the reporting of such event to the
PBGC has not been waived), has occurred and is continuing; or (C) to
the best knowledge of Seller, has been a plan with respect to which any
liability to the PBGC has been or is expected to be incurred.
(iii) Neither the Company nor any ERISA Affiliate of the
Company has incurred any unsatisfied withdrawal liability, within the
meaning of Section 4201 of ERISA, with respect to any Multiemployer
Plan.
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(iv) Neither the Company nor any ERISA Affiliate of the
Company has been notified by the sponsor of any Multiemployer Plan that
such Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA.
(v) Neither the Company nor any ERISA Affiliate of the Company
has any liability with respect to any Pension Plans under Sections
4062, 4063 or 4064 of ERISA.
(vi) To the best knowledge of Seller, the Company has no
liability with respect to any Company Plan for any lien, penalty or
excise tax under ERISA or the Code.
(vii) Other than claims for benefits submitted by participants
or beneficiaries, no claim against or Proceeding involving any Company
Plan or Other Benefit Obligation of the Company is pending or, to the
best knowledge of Seller, threatened.
(viii) Except to the extent required under Section 601 et seq.
of ERISA and Section 4980B of the Code, the Company provides no
benefits described in Section 3(1) of ERISA to any retired or former
employee or is obligated to provide such benefits to any active
employee following such employee's retirement or other termination of
service.
(ix) No proceeding has been instituted on behalf of any
Multiemployer Plan against the Company to enforce Section 515 of ERISA,
which proceeding has not been dismissed within thirty (30) days.
(x) To the best knowledge of Seller, operations have not
ceased at any plant or facility of the Company which would subject the
Company to the provisions of Section 4062(e) of ERISA.
(xi) To the best knowledge of Seller, no transaction with any
Company Plan proscribed by Section 406 of ERISA has occurred, for which
an exemption is not available.
4.11 EMPLOYEES AND LABOR RELATIONS. Schedule 4.11 contains a complete
list of all of (i) the officers and directors of the Company, and (ii) all
active employees of the Company (collectively, "Employees"). With respect to the
Employees, Schedule 4.11 sets forth the name, job title, social security number,
applicable EEOC code, date of hire, date of birth, annual compensation, wage or
hourly rate and annual vacation days entitlement. The Company has provided or
made available to Purchaser copies of all written employment contracts,
consulting agreements and similar written arrangements to which the Company is a
party. Except as disclosed in Schedule 4.11, the Company does not have any
contract with any of its Employees which cannot be terminated without penalty
payable to such Employee on thirty (30) days' notice. No Employee or former
employee of the Company will become entitled to any bonus,
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retirement, severance, job security or Other Benefit Obligation of the Company
solely as a result of the transactions contemplated by this Agreement. Except as
disclosed in Schedule 4.11, no Employee of the Company is covered by any
collective bargaining agreement or a party to any Contract with the Company.
Except where the failure to comply would not reasonably be expected,
individually or in the aggregate, to result in a Company Material Adverse
Effect, the Company is in compliance with all Laws relating to the employment of
labor, including, without limitation, those relating to wages, hours, unfair
labor practices, discrimination and payment of social security and similar
Taxes. Set forth on Schedule 4.11 are all complaints against the Company pending
or, to the best knowledge of Seller, threatened before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any similar
state or local labor or employment discrimination agency by or on behalf of any
Employee.
4.12 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.12:
(a) To the best knowledge of Seller, the Company is, and at all
times has been, in compliance with, and has not been and is not in violation of
or liable under, any Environmental Law, except for such noncompliance, violation
or liability which would not reasonably be expected to result in a Company
Material Adverse Effect.
(b) To the best knowledge of Seller, the use and operation of the
Sterling Assets which are to be transferred to the Company on or before the
Closing Date, is, and at all times has been, in compliance with, and has not
been and is not in violation of and has not created any liability of CSI under,
any Environmental Law, except for such noncompliance, violation or liability
which would not reasonably be expected to result in a Company Material Adverse
Effect.
(c) The Company has not received any written notice that the
Facility or any other Real Property has been identified on any current or
proposed (i) National Priorities List under 40 C.F.R. Section 300, (ii) CERCLIS
list or (iii) any list arising from a state or local law similar to CERCLA.
(d) The Company has not received any written notice of any claims
or Liens resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
the Facility, any other Real Property or any other properties and assets
(whether real, personal or mixed) in which the Company has or had an interest,
or affecting the use and operation of the Sterling Assets which are to be
transferred to the Company on or before the Closing Date.
(e) To the best knowledge of Seller, the Company has not received
any written citation, directive, inquiry, notice, order, summons, warning, or
other communication in writing during the last three (3) years that relates to
any alleged, actual, or potential violation or failure of the Company to comply
with any Environmental Law, or of any alleged, actual, or potential obligation
of the Company to undertake or bear the cost of any Environmental, Health and
Safety Liabilities with respect to the Facility, any other Real Property or any
other properties
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or assets (whether real, personal or mixed) in which the Company has or had an
interest, or with respect to the use and operation of the Sterling Assets at the
CSI facility.
(f) To the best knowledge of Seller, the Company has heretofore
made available to the Purchaser true and complete copies of all material
documents and files possessed by the Company pertaining to compliance by the
Company, or by Seller's affiliate in connection with the use and operation of
the Sterling Assets which are to be transferred to the Company on or before the
Closing Date, with Environmental Laws or in connection with any Environmental,
Health and Safety Liabilities.
4.13 CONTRACTS. Schedule 4.13 sets forth a complete list of all
Contracts, including, solely for this purpose, the Sterling Contract, except
for: (a) routine purchase orders; (b) employment and other contracts terminable
at will or on 30 days' (or less) notice without penalty; (c) any Contract listed
on any other Disclosure Schedule; and (d) any other Contract involving
liabilities or obligations for future payments by the Company of not more than
$25,000 (collectively, the "Material Contracts"). Seller has heretofore
delivered to Purchaser true and complete copies of all such Material Contracts.
Except as may be indicated on Schedule 4.13 all such Material Contracts are in
full force and effect in accordance with the terms thereof (except to the extent
that any courses of dealing have effected deviations therefrom, none of which
are materially adverse to the Company), and there are no outstanding defaults by
the Company or, to the best knowledge of Seller, any other party under any such
Material Contracts which would reasonably be expected to, individually or in the
aggregate, result in a Company Material Adverse Effect.
4.14 ABSENCE OF CERTAIN CHANGES. Since June 30, 2000, except as
otherwise expressly contemplated by this Agreement or as set forth in Schedule
4.14, the Company has conducted its business and operations in the Ordinary
Course of Business and, except as consistent with recent past practice, has not:
(a) issued or sold any shares of its capital stock or debt
securities or partnership interests, or granted any rights calling for
the issuance or sale of any of the foregoing (including, without
limitation, options, warrants, convertible or exchangeable securities
or similar rights);
(b) amended its certificate or articles of incorporation or
by-laws;
(c) granted any right to severance or termination payment to
any of its officers, directors or employees;
(d) created or otherwise become liable with respect to any
indebtedness for borrowed money (except for indebtedness owed to
Seller, Enso or any subsidiary of Enso, which will be capitalized at
Closing as provided under Section 6.05);
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(e) to the best knowledge of Seller, incurred any damage to or
destruction or loss of any property or assets, whether or not covered
by insurance, which would reasonably be expected to, individually or in
the aggregate, result in a Company Material Adverse Effect;
(f) entered into, terminated or received notice of termination
of any Material Contract that is or was of a nature required to be
disclosed in Schedule 4.13;
(g) made any material change in the accounting methods used by
the Company;
(h) entered into, amended, or terminated any employment
agreement with any employee, except in the Ordinary Course of Business;
entered into, amended, or terminated any agreement with a labor union
or association representing any employee; adopted, entered into, or
amended any Company Plan or Other Benefit Obligation of the Company
which materially affects the business of the Company; or other than in
the Ordinary Course of Business, made any wage or salary increase,
bonus, or increased any other direct or indirect compensation, for or
to any of its employees, or any accrual for or commitment or agreement
to make or pay the same;
(i) other than in the Ordinary Course of Business, entered
into any lease (as lessor or lessee), sold, abandoned, or made any
other disposition of any of its assets or properties except for
inventories and other assets sold in the Ordinary Course of Business;
other than in the Ordinary Course of Business granted any Lien on any
of its assets or properties; incurred or assumed any debt, obligation,
or liability (whether absolute or contingent or whether or not
currently due and payable) except for liabilities incurred in the
Ordinary Course of Business; or paid, directly or indirectly, any of
its material liabilities otherwise than in the Ordinary Course of
Business;
(j) except for inventory, equipment and other fixed assets and
supplies acquired in the Ordinary Course of Business, made any
acquisition of all or any part of the assets, properties, capital
stock, or business of any other Person;
(k) transferred, granted or licensed any rights under, or
permitted to lapse, any Intellectual Property Rights other than in the
Ordinary Course of Business;
(l) guaranteed, indemnified or otherwise become liable for the
obligations or liabilities of another Person except in the Ordinary
Course of Business; or
(m) agreed or committed in writing to do any of the foregoing.
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4.15 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims and, to the best knowledge of
Seller, are current and collectible in accordance with their terms at their
recorded amounts, subject to the reserve for bad debts set forth on the face of
the Most Recent Balance Sheet, as adjusted for the passage of time through the
Closing Date in accordance with GAAP.
4.16 DEALERS, SUPPLIERS, CUSTOMERS AND KEY EMPLOYEES. Except as set
forth in Schedule 4.16, to the best knowledge of Seller, there has not been
since June 30, 2000, any change in the business relationship of the Company with
any dealer, supplier or customer to or of the Company which would reasonably be
expected to, individually or in the aggregate, result in a Company Material
Adverse Effect, and since June 30, 2000, no key employee or other management
employees have ceased to be employed by the Company. To the knowledge of Seller,
except as set forth in Schedule 4.16, no key or management employee, or any
material dealer, supplier or customer has notified the Company that it is
terminating its relationship with the Company.
4.17 EQUITY INTERESTS. ESII has no equity interest in any other entity.
4.18 CAPITALIZATION AND TITLE TO SHARES. The authorized capital stock
of ESII consists of 1,000 shares of Common Stock, par value $1.00 per share, of
which 1,000 shares are issued and outstanding and held by Seller. All of such
shares have been duly authorized and are validly issued, fully paid and
nonassessable, and no personal liability attaches to the ownership thereof.
Seller is the lawful record and beneficial owner of the Shares, all of which are
free and clear of all Liens (other than restrictions on transfer imposed by the
federal and state securities laws). Seller has all requisite right, title, power
and authority to sell, assign, transfer and deliver the Shares to Purchaser.
There are no:
(a) proxies, voting trusts or other agreements or
understandings with respect to the voting of any of the shares of
capital stock or other equity interests of the Company (except as
provided in Contracts listed in Schedule 4.13);
(b) securities convertible into or exchangeable for any shares
of capital stock of ESII;
(c) options, warrants or other rights to purchase or subscribe
for any shares of capital stock of ESII or for securities convertible
into or exchangeable for any shares of capital stock of ESII;
(d) plans, agreements or commitments of any kind or
description relating to the issuance or purchase of any shares of
capital stock of ESII, any such convertible or exchangeable securities
or any such options, warrants or other rights; or
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(e) agreements or commitments of any kind or description which
would obligate ESII to issue or purchase or otherwise acquire any of
its securities.
4.19 BANK ACCOUNTS. Schedule 4.19 sets forth a complete list of the
names and locations of all banks, brokers, depositories and other financial
institutions in which the Company has an account or safe deposit box, including
all relevant account titles, account numbers and the identity of persons
authorized to withdraw funds (or other items) therefrom.
4.20 INSURANCE.
(a) Schedule 4.20 sets forth the following information with
respect to each material insurance policy for any policy period commencing on or
after May 30, 2000, with respect to which the Company is a party, a named
insured or otherwise the beneficiary of coverage (each, a "Policy"):
(i) the name of the insurer and the name of the policyholder;
(ii) the name, address and telephone number of the agent;
(iii) the policy number and period of coverage;
(iv) policy type (i.e., whether coverage is on a claims made
or occurrence basis) and amount of coverage and deductibles;
(v) a description of each claim to which the Company is a
party currently pending under any Policy; and
(vi) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
(b) With respect to each such Policy: (i) the Policy is legal,
valid, binding, enforceable and in full force and effect; (ii) neither the
Company nor any other party to the Policy is in breach or default (including
with respect to the payment of premiums), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification or acceleration under the Policy; and (iii) no
party to the Policy has repudiated any provision thereof. The Company has been
covered during the past 10 years by insurance which it deemed to be reasonable
for the business in which it has been engaged during the foregoing period.
(c) To the best knowledge of Seller, except as set forth on
Schedule 4.20, there is no event, occurrence or written notice as of the date
hereof with respect to ESII that would reasonably be expected to form the basis
for a Claim under the Policies listed on Schedule 4.20.
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4.21 GUARANTIES. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
4.22 BLM LAND TRANSACTION. As of the Agreement Date, the Company is
pursuing a land transaction with the U.S. Bureau of Land Management, Lower Snake
River District ("BLM"),to provide a conservation easement or other property
right to certain BLM public lands adjacent to the Facility, to allow for an
environmental "buffer zone" (the "BLM Land Transaction").
4.23 FULL DISCLOSURE. The representations and warranties contained in
this Article IV do not contain any untrue statement of a material fact.
4.24 NO OTHER REPRESENTATIONS AND WARRANTIES BY SELLER. Seller shall
not be deemed to have made to Purchaser (or any other person or entity) any
representation or warranty other than as expressly made by Seller in Article IV
(as such representations and warranties are modified by the Disclosure Schedules
relating thereto). Without limiting the generality of the foregoing, and
notwithstanding any other express representations and warranties made by Seller
in Article IV hereof (or elsewhere in this Agreement or in any certificate or
document delivered pursuant hereto), Seller makes no representation or warranty
to Purchaser (or any other Person) with respect to:
(a) any projections, estimates or budgets heretofore delivered
to or made available of future revenues, expenses or expenditures,
future results of operations (or any component thereof), future cash
flows or future financial condition (or any component thereof) of the
Company or the future business and operations of the Company;
(b) the availability or value to the Company after the Closing
of any net operating losses ("NOLs") that may now be available to it;
(c) any other information or documents made available with
respect to the Company or the business and operations of the Company,
except as expressly covered by a representation and warranty contained
in Article IV; or
(d) the collectibility of the notes and accounts receivable
referenced in Section 4.15 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AEC AND PURCHASER.
AEC and Purchaser jointly and severally represent and warrant to Seller
as follows:
5.01 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and is duly qualified or licensed to transact business and is in good
standing as a foreign corporation in each jurisdiction
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in which the nature of the business conducted by it, or the character or
location of the properties and assets owned or leased by it, requires such
license or qualification, except where the failure to be so licensed or
qualified would not reasonably be expected to, individually or in the aggregate,
result in a Purchaser Material Adverse Effect. Purchaser has the full corporate
power and authority to own, lease and operate its properties and assets, to
carry on its businesses as presently conducted, and to perform its obligations
under all applicable contracts, except where the failure to have such power and
authority would not reasonably be expected to, individually or in the aggregate,
result in a Purchaser Material Adverse Effect.
5.02 CONSENTS, AUTHORIZATIONS AND CONFLICTS.
(a) Neither the execution and delivery by Purchaser and AEC of
this Agreement or any of the other Purchaser Documents to which they are
respectively a party, nor the performance by Purchaser and AEC of their
respective obligations thereunder, require any Consent or the giving of any
Notice applicable to Purchaser or AEC (as opposed to Seller) (including, without
limitation, Consents and Notices necessary or required under or with respect to
any contract or license of Purchaser, AEC or any subsidiary thereof) except for
(i) the Consent of the Bank, (ii) the Consent of the State of Idaho and other
applicable regulatory authorities, and (iii) the Consents and Notices set forth
on Schedule 5.02 (the "Purchaser Consents").
(b) This Agreement has been duly authorized, executed and
delivered by Purchaser and AEC and constitutes the legal, valid and binding
obligation of Purchaser and AEC enforceable against Purchaser and AEC in
accordance with its terms, except as such enforceability may be limited by the
Equitable Exceptions. At the Closing, each other Purchaser Document shall be
duly authorized, executed and delivered by Purchaser and AEC, as applicable, and
shall constitute the legal, valid and binding obligation of Purchaser and AEC as
applicable, enforceable against Purchaser and/or AEC in accordance with its
terms, except as such enforceability may be limited by the Equitable Exceptions.
(c) The execution and delivery by Purchaser and AEC of the
Purchaser Documents, and the performance by Purchaser and AEC of their
respective obligations thereunder, does not and will not contravene, conflict or
be inconsistent with, result in a breach of, or constitute a violation of or
default under: (i) Purchaser's or AEC's articles or certificate of incorporation
or by-laws, (ii) any Law applicable or relating to Purchaser or (iii) any
contract or permit of Purchaser, AEC or any subsidiary thereof, except with
respect to the Purchaser Consents and except, with respect to clauses (ii) and
(iii), for such breaches, violations, or defaults as would not, alone or in the
aggregate, be reasonably expected to have a Purchaser Material Adverse Effect.
5.03 LITIGATION. Except as set forth in Schedule 5.03, there are no
Governmental Body or private party actions, suits, claims, proceedings, or
investigations pending or, to the best knowledge of Purchaser or AEC, overtly
threatened against Purchaser or AEC or any subsidiary or affiliate thereof which
has or would reasonably be expected to, individually or in the aggregate, result
in a Purchaser Material Adverse Effect or materially impair or delay the ability
of Purchaser and AEC to effect the Closing.
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5.04 FINANCIAL STATEMENTS. The (i) audited financial statements of AEC
included in AEC's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 and (ii) the unaudited financial statements of AEC included in AEC's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000,
have been prepared from, and are in accordance with, the books and records of
AEC and its subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Securities and Exchange Commission (the "SEC") with respect thereto, have been
prepared in accordance with GAAP, and fairly present, in all material respects,
the consolidated financial position and the consolidated results of operations
and cash flows of AEC and its subsidiaries at the dates and for the periods
covered thereby.
5.05 DUE DILIGENCE. Purchaser and AEC have received and reviewed such
information as they each consider necessary or appropriate concerning the
Company and/or the transactions contemplated by this Agreement. Purchaser and
AEC have had an opportunity to ask questions and receive answers from the
Company and Seller and their management regarding the terms and conditions of
the Purchase and Sale and regarding the business, financial affairs, and other
aspects of the Company and have further had the opportunity to obtain all
information (to the extent Seller or the Company possess or can acquire such
information without unreasonable effort or expense) which Purchaser and AEC deem
necessary or appropriate to evaluate the Purchase and Sale and the other
transactions contemplated by this Agreement and to verify the accuracy of
information otherwise provided to Purchaser and AEC. Notwithstanding the
foregoing, Seller acknowledges and agrees that, except as provided in Section
9.01(b)(4), no due diligence investigation undertaken by Purchaser and AEC or
their representatives shall be deemed to reduce or eliminate Purchaser's and
AEC's reliance upon Seller's representations and warranties made herein.
5.06 NO VIOLATION OF LAW. Neither Purchaser nor AEC is in violation of,
and has not been given notice or been charged with any violation of, any Law,
except for such violations, notices or charges that would not reasonably be
expected to, individually or in the aggregate, result in a Purchaser Material
Adverse Effect. Except as set forth in Schedule 5.06, and except as would not
reasonably be expected to, individually or in the aggregate, result in a
Purchaser Material Adverse Effect, no investigation or review by any
Governmental Body with respect to or affecting AEC or Purchaser is pending or,
to the best knowledge of Purchaser, threatened.
5.07 INSURANCE APPROVAL. AEC knows of no reason why ECS Underwriting,
Inc., AEC's insurance underwriter, will not approve adding ESII to AEC's
existing insurance policy covering hazardous waste sites.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; AFTER CLOSING
6.01 ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY. Seller shall give
Purchaser and Purchaser's counsel, accountants, lenders and their respective
employees, agents and representatives such access (during normal business hours)
to, and opportunity to examine, the
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books, records, files, documents, properties and assets of, the Company, and
cause the officers, directors, employees, agents, representatives, legal
counsel, accountants, auditors and actuaries of the Company to furnish such
financial and operating data and other information with respect to the Company,
as Purchaser shall from time to time reasonably request. Any investigation
pursuant to this Section 6.01 shall be conducted in such manner as not to
interfere unreasonably with the Ordinary Course of Business and operations of
the Company or with the confidentiality respecting the transactions contemplated
by this Agreement.
6.02 OPERATION OF THE COMPANY.
(a) From the date hereof to the Closing Date, except to the extent
that Purchaser shall consent in writing, the Company shall operate its business
in such a manner as would be the Ordinary Course of Business. Without limiting
the generality of the foregoing, the Company shall:
(i) not merge or consolidate with any other entity, acquire
any other business or entity, or agree to do any of the foregoing;
(ii) notify Purchaser of any significant loss of, damage to or
destruction of any of its material properties or assets;
(iii) maintain in full force and effect all present insurance
coverages and apply the proceeds received under any such coverages as a
result of any loss of, damage to or destruction of any of its
properties or assets to the repair, restoration or replacement thereof;
and
(iv) use its commercially reasonable efforts to preserve the
present managerial employees, reputation and business relationships of
the Company with Persons having business dealings with it.
(b) Notwithstanding Section 6.02(a), the Company and Seller shall
be free to dividend or otherwise remove cash from the Company (other than the
$2.5 million currently held by the Bank of New York in trust relating to the
Company's financial performance bond) and to effect the transactions
contemplated by Sections 3.01, 6.05 and 6.15.
6.03 CONSENTS AND NOTICES. Promptly after the date hereof, the parties
hereto shall use their respective best efforts to obtain all Consents and give
all Notices which may be necessary in order to consummate the Purchase and Sale
and/or any of the other transactions contemplated hereby in accordance with the
terms hereof. The parties hereto shall otherwise cooperate with each other in
discharging their respective obligations under this Section 6.03, and shall
promptly advise the other parties hereto of any difficulties encountered in
obtaining any such Consents or giving any such Notices.
6.04 EFFORTS TO SATISFY CONDITIONS. Except as otherwise provided in
this Agreement each party shall use its commercially reasonable efforts to cause
the conditions to the Closing set
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forth in Article VII hereof to be satisfied, to the extent that the satisfaction
of such conditions is in the control of such party, as soon as practicable after
the date hereof; provided, however, the foregoing shall not constitute a
limitation upon the covenants and obligations of any party otherwise expressly
set forth in this Agreement.
6.05 INTRACOMPANY INDEBTEDNESS. On or before the Closing Date, any
indebtedness owed by the Company to Seller or any subsidiary or affiliate of
Seller, or owed to the Company by Seller or any subsidiary or affiliate of
Seller, shall be forgiven.
6.06 TRANSFER RESTRICTIONS. From and after the date hereof and until
the Closing, Seller shall not sell, assign, pledge, donate, transfer, encumber
or otherwise dispose of any of the Shares.
6.07 CONFIDENTIAL INFORMATION.
(a) In the event the Closing shall not occur, Purchaser and
Purchaser's counsel, accountants, lenders and their respective employees, agents
and representatives shall treat in confidence all confidential documents and
materials and other confidential information which they shall have obtained
regarding the Company or Seller or any affiliate thereof during the course of
the negotiations leading to the transactions contemplated hereby, the
investigation of the Company and the preparation of this Agreement, and shall
return or destroy all copies (including computer files) of nonpublic
confidential documents and materials which have been furnished in connection
therewith or which contain or incorporate any of the foregoing. However, nothing
contained herein shall prohibit Purchaser or any such other person or entity
from (subject to the provisions of Section 6.03 and Section 10.14) supplying or
filing such documents, materials or other information with such federal, state,
regional, special district or local government, agency or authority which
Purchaser deems necessary or appropriate in connection with the Purchase and
Sale and the other transactions contemplated hereby.
(b) In the event the Closing shall occur, Seller and Seller's
counsel, accountants, lenders and their respective employees, agents and
representatives shall treat in confidence all confidential documents and
materials and other confidential information which they shall have obtained
regarding the Company, Purchaser or any affiliate thereof, if obtained at any
time insofar as the same relates to the Company, or (as the same relates to
Purchaser or any affiliate), if obtained during the course of the negotiations
leading to the transactions contemplated hereby, the investigation of the
Company and the preparation of this Agreement, and shall return or destroy all
copies (including computer files) of nonpublic confidential documents and
materials which have been furnished in connection therewith or which contain or
incorporate any of the foregoing. However, nothing contained herein shall
prohibit Seller or any such other person or entity from (subject to the
provisions of Section 6.03 and Section 10.14) supplying or filing such
documents, materials or other information with such federal, state, regional,
special district or local government, agency or authority which Seller deems
necessary or appropriate in connection with the Purchase and Sale and the other
transactions contemplated hereby.
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6.08 TAX RETURNS AND PAYMENTS.
(a) The Income Tax Returns, reports and filings of Seller shall
include all items of income, gain, loss, deduction or credit of the Company
attributable to all Income Tax periods (or portions thereof) ending prior to the
Closing Date (herein referred to as the "Seller Income Tax Periods"); and,
Seller shall be responsible for and shall pay all Income Taxes payable as a
consequence of the inclusion or omission of such items in the consolidated
Income Tax Returns, reports and filings of Seller for Seller Income Tax Periods
and shall timely file such Income Tax Returns and reports.
(b) With respect to the Seller Income Tax Period between the end
of the most recent taxable period of the Company and the date immediately
preceding the Closing Date, Purchaser shall provide to Seller (to the extent not
already provided), within 15 days after it shall have been requested by Seller,
information required to compute separate taxable income and other relevant
measures of income of the Company.
(c) Except as otherwise provided in Section 6.08(a) and (b), ESII
or the Purchaser shall timely pay or accrue all Taxes for the periods to which
the Straddle Period Returns relate. Any such liabilities for Taxes based on
payroll shall include both Taxes withheld and Taxes accrued (and remaining
unpaid) attributable to any period prior to the Closing Date, and any and all
liabilities with respect to such Taxes shall be the sole responsibility of the
Company. Any liabilities for sales and use Taxes (remaining unpaid) shall be
accrued for all sales or purchases attributable to any period prior to the
Closing Date, and shall be the sole responsibility of the Company. Taxes on Real
Property or personal property for taxable periods beginning before and ending
after the Closing Date shall be the sole responsibility of the Company.
6.09 COOPERATION. After the Closing Date, Purchaser and Seller shall
(1) make available to each other, as reasonably requested, and to any taxing
authority or any accountant or other authorized employee representative, all
information, records or documents (i) relating to Tax liabilities or potential
Tax liabilities of the Company for all periods prior to or including the Closing
Date, and (ii) reasonably necessary in order to prepare consolidated GAAP
financial statements for any period prior to or including the Closing Date, and
(2) preserve all such information, records and documents until the expiration of
any applicable statute of limitations (including extensions thereof). After the
Closing Date, except as required by Law, neither ESII nor Purchaser shall take
any action with respect to Taxes or Tax Returns which would result in any
liability, payment or obligation to Seller in respect of any Taxes owing by the
Company with respect to any pre-Closing periods under this Agreement or
otherwise, without the prior written consent of Seller. After the Closing, ESII
and Purchaser shall promptly notify Seller in writing of any notice, inquiry,
audit, examination or other state of fact which would result in any liability,
payment or obligation to Seller in respect of any Taxes owing by the Company
under this Agreement or otherwise. Seller shall be responsible for any
assessment of Tax for periods up to the Closing Date, shall control any audit or
assessment process, and shall bear its own costs. Notwithstanding any other
provisions hereof, each party shall bear its own expenses in complying with the
foregoing provisions.
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6.10 COMPANY PLANS. Seller shall take any and all actions necessary or
appropriate to cause ESII to cease to be a participating employer or
participating sponsor of those Company Plans that are also maintained by Seller,
effective as of the Closing Date. Benefits accrued by and payable to employees
of ESII under such Company Plans through the Closing Date shall be paid to such
employees or otherwise distributed in accordance with the applicable terms of
the Company Plans.
6.11 NO NEGOTIATION.
(a) Seller and the Company agree that unless this Agreement shall
have been earlier terminated pursuant to Section 8.02 hereof, Seller and the
Company (i) shall, and Seller and the Company shall cause their respective
representatives to, immediately terminate all existing discussions with any
Person (other than Purchaser, AEC and their respective representatives)
concerning any merger, purchase or sale of material assets or shares of capital
stock, consolidation, reorganization, recapitalization, business combination or
similar transaction involving the Company (each, a "Competing Transaction"); and
(ii) shall not, nor shall either of them direct or authorize any of their
representatives to, directly or indirectly, solicit, initiate or participate in
discussions or negotiations with, or provide any information to, any Person
(other than Purchaser, AEC and their respective representatives) concerning any
Competing Transaction involving the Company which would prevent the Purchaser's
acquisition of the Shares or consummation of the other transactions contemplated
hereby substantially in accordance with the terms set forth herein. Seller and
the Company represent that neither they nor any of their affiliates is party to
or bound by any agreement with respect to any such Competing Transaction other
than the Purchase and Sale contemplated by this Agreement.
(b) Purchaser and AEC agree that unless this Agreement shall have
been earlier terminated pursuant to Section 8.02 hereof, Purchaser and AEC (i)
shall, and Purchaser and AEC shall cause their respective representatives to,
immediately terminate all existing discussions with any Person (other than
Seller, Enso and their respective representatives) concerning any merger,
purchase or sale of material assets or shares of capital stock, consolidation,
reorganization, recapitalization, business combination or similar transaction
which would conflict with or significantly impair AEC's and Purchaser's ability
to consummate the transactions contemplated by this Agreement (each, a
"Purchaser Competing Transaction"); and (ii) shall not, nor shall either of them
direct or authorize any of their representatives to, directly or indirectly,
solicit, initiate or participate in discussions or negotiations with, or provide
any information to, any Person (other than Seller, Enso and their respective
representatives) concerning any Purchaser Competing Transaction. Purchaser and
AEC represent that neither they nor any of their affiliates is party to or bound
by any agreement with respect to any such Purchaser Competing Transaction.
6.12 "TO THE BEST KNOWLEDGE, ETC." For all purposes of this Agreement,
any use of the phrases "to the best knowledge", "to the knowledge", or "to the
awareness" of ESII and/or Seller, and words of similar import, when modifying
any particular representation or warranty set forth herein or in any other
Seller Document, shall mean that the officers and managerial
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employees of such party or both such parties (as the context might indicate),
provided that for Seller, Enso and the Company, it shall be limited to the
following employees of Seller, Enso or their affiliates: John Heenan, Leon
Heller, Rich Santello, Doug Roberts, John Juzwiak, Mike Spomer, Rick Fitz, John
Nienius and Lamar Walters, have no knowledge that such representation and
warranty is not complete and correct; and that nothing has come to the attention
of such persons which would cause any of them to believe that such
representation and warranty is not complete and correct.
6.13 INSURANCE.
(a) With respect to each Policy set forth on Schedule 4.20 that is
a claims made policy and the corresponding successor insurance policy of
Purchaser, (i) for Claims made prior to the Closing Date and their respective
deductibles, insurance coverage shall be provided by Seller subject to the terms
and conditions of the appropriate claims made Policies of Seller identified on
Schedule 4.20, and (ii) Purchaser shall be responsible for obtaining insurance
coverage for Claims made on or after the Closing Date and their respective
deductibles.
(b) With respect to each Policy set forth on Schedule 4.20 that is
an occurrence based policy and the corresponding successor insurance policy of
Purchaser, (i) for Claims made prior to the Closing Date for events which
occurred prior to the Closing Date and their respective deductibles, insurance
coverage shall be provided by Seller subject to the terms and conditions of the
appropriate occurrence based Policies of Seller identified on Schedule 4.20,
(ii) Purchaser shall be responsible for obtaining insurance coverage for Claims
made on or after the Closing Date for events which occur on or after the Closing
Date and their respective deductibles, and (iii) for Claims made on or after the
Closing Date for events which occurred prior to the Closing Date and their
respective deductibles, insurance coverage shall be provided by Seller subject
to the terms and conditions of the appropriate occurrence based Policies of
Seller identified on Schedule 4.20.
(c) Seller shall have no obligation to maintain its Policies for
Claims made after the Closing Date with respect to Claims made Policies, or for
events which occur after the Closing Date with respect to occurrence based
Policies. From and after the Closing Date, Purchaser shall obtain such insurance
coverage with respect to ESII as it deems appropriate. Audits and adjustments to
Seller's rating plans, including retrospective rating plans, shall be the
responsibility of Seller.
(d) After the Closing, Purchaser shall promptly notify Seller in
writing of any Claims made for events which occurred prior to the Closing Date
and any other event or occurrence which Purchaser reasonably believes would be
expected to form the basis for a Claim under Seller's Policies.
6.14 EMPLOYEE TRANSFERS. At least ten (10) days prior to Closing,
Seller shall use commercially reasonable efforts to cause the following
employees of Seller or its affiliates to be transferred to ESII: (i) Chuck
Overman, Transportation Manager; (ii) Tim Curtin, Sales Representative, (iii)
Steve Welling, Sales Representative, and (iv) those employees actively
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employed in connection with the use and operation of the Sterling Assets at the
CSI facility, all of which are identified on Schedule 6.14. The employment of
such persons by ESII shall be on substantially similar terms and conditions,
including compensation and benefits, as each of such person's employment with
Seller or its affiliates prior to the Closing Date.
6.15 TITLE INSURANCE.
(a) Preliminary Title Report and Survey. Purchaser previously has
ordered, at Purchaser's sole cost and expense, (i) a title commitment or
preliminary title report applicable to each parcel of Real Property identified
on Schedule 4.05(a) (the "Preliminary Title Report") issued by a reputable
national title insurance company chosen by Purchaser ("Title Company"), and
(ii), if required by the Title Company in order to issue the Title Policy as
provided in Section 6.15(c), a new or updated survey ("Survey") of each parcel
of Real Property, prepared by a licensed Idaho surveyor selected by Purchaser
complying with Minimum Standard Detail Requirements for Idaho Land Title
Surveys, including such optional requirements as Purchaser may desire. Each
Survey shall reflect whether any Real Property is located in a designated flood
zone area and shall be certified to Purchaser, ESII and the Title Company. If
not previously provided, at Purchaser's request, legible copies of all recorded
instruments affecting any of the Real Property or recited as exceptions in the
Preliminary Title Report in the possession of Seller or its affiliates shall be
delivered or made available to Purchaser.
(b) Exceptions to Title. Promptly following Purchaser's receipt of
the Preliminary Title Report and Survey for each parcel of Real Property, or any
supplement thereto containing exceptions not set forth in the original
Preliminary Title Report, Purchaser shall notify Seller in writing of its
objection to any matter(s) indicated as an exception in the Preliminary Title
Report, any supplement thereto, and/or the Survey except for Permitted
Exceptions (each, a "New Exception"). Seller shall use commercially reasonable
efforts to satisfy, cause to be released or cure any New Exceptions which
materially and adversely affect the marketability or the use and operation of
the applicable parcel of Real Property as such parcel of Real Property is
currently used and operated (the "Material Exceptions"), and shall use
commercially reasonable efforts to satisfy, cause to be released or cure any
other New Exceptions. If any of the Material Exceptions have not been satisfied,
released or cured as of the Closing Date, after the commercially reasonable
efforts of Seller, Purchaser may, at its option (i) terminate this Agreement
pursuant to Section 8.02(b) hereof, or (ii) elect to waive its disapproval of
the Material Exceptions and proceed with the Purchase and Sale.
(c) Evidence of Title. At Closing, Purchaser shall receive an
owner's ALTA extended coverage policy of title insurance (1990 revision) ("Title
Policy"), insuring title to the real property owned by the Company as of the
Agreement Date, subject to the (i) Permitted Exceptions, and (ii) in the event
Purchaser has waived its objections and elected to proceed with the Purchase and
Sale as provided in paragraph (b) above, Material Exceptions which have not been
satisfied, released or cured as of the Closing Date. The Title Policy shall have
a liability limit equal to not less than the value of the Real Property carried
on the Most Recent Balance Sheet.
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(d) Endorsements. Seller shall use commercially reasonable
efforts to cooperate with the Title Company to permit the Title Company to issue
the Title Policy with the following endorsements: (i) an endorsement deleting
those standard printed exceptions to the Title Policy set forth and described on
Schedule 6.15 hereto, and (ii) an endorsement insuring that the real property
described in the Title Policy is the same real estate as shown on the Survey, if
applicable, delivered with respect to the Real Property.
6.16 GUARANTY. With respect to the Guaranty Agreement, dated as of June
1, 1994 (the "Guaranty"), issued by Enso in favor of the Industrial Development
Corporation of Owyhee County, Idaho, relating to the issuance of $8.5 million of
Industrial Development Revenue Bonds, Series 1994 ("IRBs"), to pay for the
construction and development of the Facility:
(a) AEC will use commercially reasonable efforts to secure the
approval of the holders of the IRBs to substitute an AEC guaranty for
the Guaranty, and to release Enso from the Guaranty; and
(b) In the event AEC is unsuccessful in securing IRB holder
approval for a substitute guaranty, as described in subparagraph (a)
above, AEC will use commercially reasonable efforts to refinance the
IRBs.
6.17 INSURANCE APPROVAL. AEC shall use commercially reasonable efforts
to cause ESII to be added to AEC's existing insurance policy covering hazardous
waste sites, effective as of the Closing Date. Promptly after the execution and
delivery of this Agreement, AEC shall submit a request to the IDEQ (or other
applicable state agency) for approval of such coverage as a replacement for the
Company's current financial assurance bond with Frontier Insurance Company, and
will use commercially reasonable efforts to obtain the approval of such coverage
from the IDEQ (or other applicable state agency).
ARTICLE II
CONDITIONS OF CLOSING
7.01 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the Purchase and Sale and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
each of which may be waived in writing by Purchaser.
(a) Representations and Warranties; Performance of Obligations.
The representations and warranties of Seller set forth in Article IV hereof
shall be true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date, except insofar as any such representations
and warranties refer to a particular date or period, in which case they shall be
true and correct in all material respects on the Closing Date with respect to
such date or period. Seller shall have performed the agreements and obligations
required to be performed by it under this Agreement prior to the Closing Date in
all material respects. Seller shall have executed and delivered to Purchaser a
certificate or certificates certifying to its compliance with the foregoing.
Notwithstanding the first sentence of this Section 7.01(a):
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(1) from time to time on or prior to the Closing, Seller shall be permitted to
deliver to Purchaser information which changes, modifies or supplements the
representations and warranties set forth in Article IV and/or the Disclosure
Schedule because of the occurrence or nonoccurrence of any event, or any
circumstance arising, after the Agreement Date; (2) upon such delivery, such
representations and warranties (and/or Disclosure Schedule) shall be deemed to
be amended by such information; and (3) if any such event or circumstance
results in a Company Material Adverse Effect, then the condition stated in the
first sentence of this Section 7.01(a) shall be deemed not to have been
satisfied, and Purchaser may terminate this Agreement pursuant to Section
8.02(b)(i). If prior to the Closing Purchaser discovers or otherwise has
knowledge of any breach of any representation and warranty of Seller of which
(Purchaser reasonably believes) Seller is unaware, Purchaser shall notify Seller
of such breach and, if such breach would result in a Company Material Adverse
Effect that is not curable within ten (10) Business Days and is not then cured
within such period, then the condition stated in the first sentence of this
Section 7.01(a) shall be deemed not to have been satisfied, and Purchaser may
terminate this Agreement pursuant to Section 8.02(b)(i). If, notwithstanding (x)
any failure of such condition as provided in the foregoing clause (3) of the
foregoing sentence, or (y) any misrepresentation on the part of Seller as to
which Purchaser has received notice or otherwise has actual knowledge prior to
the Closing, Purchaser proceeds with the Closing, then such failure of condition
and/or such misrepresentation (as the case may be) shall be deemed for all
purposes to be waived.
(b) Total Liabilities. The "Total Liabilities" of the Company set
forth on the Closing Date Balance Sheet (as that term is used therein) to be
delivered by Seller to Purchaser pursuant to Section 3.06 shall not exceed $21
million.
(c) Consents and Notices. All Consents and Notices which are
necessary in order to consummate the Purchase and Sale, or any of the other
transactions contemplated hereby in accordance with the terms hereof (the
"Required Consents") shall have been obtained (in the case of Consents) or given
(in the case of Notices) and shall be unconditional and in full force and
effect. A list of the Required Consents is set forth on Schedule 7.01(c).
(d) Legal Restraints. There shall not have been proposed or
enacted any Law, or any change in any existing Law, which prohibits or delays
the consummation of the Purchase and Sale which would reasonably be expected to
have a Company Material Adverse Effect. No order, decree, judgment or ruling by
any court or governmental authority shall have been rendered or issued, and no
action, suit, claim or proceeding shall have been commenced by any governmental
authority to restrain, enjoin or hinder, or to seek damages from Purchaser, any
affiliate thereof or the Company on account of the consummation of the Purchase
and Sale.
(e) Release of Guarantees and Liens. The Company shall have been
released from all liability under any guarantee of contracts or other
obligations of the Seller and/or any of its subsidiaries (other than the
Company), and any Liens (other than Permitted Exceptions) affecting the property
or assets of the Company shall have been released and discharged on or prior to
the Closing.
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(f) Title Policy. The Title Company shall have issued the Title
Policy, in accordance with the provisions of Section 6.15.
(g) Share Certificates. Seller shall have delivered to Purchaser a
certificate or certificates representing the Shares, duly endorsed in blank or
accompanied by a stock power covering such Shares duly executed in blank by
Seller, and with all required stock transfer tax stamps affixed.
(h) Resignations. Unless otherwise agreed by Purchaser, each
officer and director of ESII holding such positions immediately prior to the
Closing Date shall have executed and delivered to the Purchaser a resignation of
such person's position(s) with ESII, or, in the case of such officers, ESII
shall have terminated them in such capacity although not their employment with
ESII, in either case effective as of the Closing Date.
(i) Opinion of Counsel. Purchaser shall have received an opinion
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., special counsel to Seller, dated
the Closing Date and in the form of Exhibit F hereto.
(j) Minute Books. The minute books and stock transfer records of
the Company, and its corporate seal, shall have been delivered to Purchaser.
(k) Bank Signature Cards. ESII shall have delivered such signature
cards or other required documents for the Company accounts and safe deposit
boxes at banks, brokers, depositories or other financial institutions so as to
enable Purchaser to designate the persons authorized to withdraw funds (or other
items) therefrom from and after the Closing.
(l) Corporate Documents. Seller shall have delivered to Purchaser:
(i) a certified copy of the certificate of incorporation and by-laws of Seller
and ESII; and (ii) a certified copy of resolutions of the board of directors of
Seller authorizing the execution, delivery and performance of this Agreement and
any other documents delivered by Seller hereunder.
(m) Facility Siting License. The Director of the Idaho Department
of Environmental Quality ("IDEQ") shall have issued a hazardous waste facility
siting license for the pending Company application pursuant to Title 39, Chapter
58, of the Idaho Code.
(n) Change of Ownership Approval. The IDEQ and the U.S.
Environmental Protection Agency ("EPA") shall have approved any required "Change
of Ownership" permit modifications for the Company's RCRA and Clean Air Act
Permits, or Purchaser and Seller shall have received satisfactory evidence that
such approvals are unnecessary.
(o) Insurance Approval. AEC's insurance underwriter shall have
approved adding ESII to AEC's existing policy covering hazardous waste sites,
and the IDEQ (or other applicable state agency) shall have approved such
insurance coverage as a replacement for the Company's current financial
assurance bond with Frontier Insurance Company.
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(p) Seller Documents. Seller and/or its affiliates, as applicable,
shall have signed and delivered to Purchaser the Non-Competition Agreement, the
Transition Services Agreement, the License Agreement, the Trademark License and
the ESOI/NUCOR Letter Agreement.
(q) Sterling Closing Certificate. Seller shall have delivered to
Purchaser the Sterling Closing Certificate, attached to which, among other
things, shall be a good standing certificate from the State of Illinois
evidencing ESII's qualification to do business as a foreign corporation in such
state.
7.02 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate the Purchase and Sale and the other transactions contemplated hereby
are subject to the satisfaction of the following conditions, each of which may
be waived in writing by Seller.
(a) Representations and Warranties; Performance of Obligations.
The representations and warranties of Purchaser set forth in Article V hereof or
in any Purchaser Document shall be true and correct in all material respects on
the Closing Date as though made on and as of the Closing Date except insofar as
any such representations and warranties refer to a particular date or period, in
which case they shall be true and correct in all material respects on the
Closing Date with respect to such date or period. Purchaser shall have performed
the agreements and obligations required to be performed by it under this
Agreement prior to the Closing Date in all material respects. Purchaser shall
have executed and delivered to Seller a certificate or certificates certifying
to its compliance with the foregoing, in form and substance reasonably
satisfactory to Seller.
(b) Consents and Notices. All Required Consents shall have been
obtained (in the case of Consents) or given (in the case of Notices) and shall
be unconditional and in full force and effect.
(c) Legal Restraints. There shall not have been proposed or
enacted any Law, or any change in any existing Law, which prohibits or delays
the consummation of the Purchase and Sale or which would reasonably be expected
to have a Purchaser Material Adverse Effect. No order, decree, judgment or
ruling by any court or governmental authority shall have been rendered or
issued, and no action, suit, claim or proceeding shall have been commenced by
any governmental authority to restrain, enjoin or hinder, or to seek damages
from Purchaser, any affiliate thereof or the Company on account of the
consummation of the Purchase and Sale.
(d) Release of Guarantees. Enso, Seller and their subsidiaries
(other than the Company) shall have been released from all liability under any
guarantee of contracts or other obligations of the Company; provided, however,
that with respect to the Guaranty, either Enso shall have been released
therefrom or the IRBs shall have been refinanced, each pursuant to the terms of
Section 6.16 hereof.
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(e) Purchase Price. Seller shall have received the Purchase Price
for the Shares from Purchaser.
(f) Receipt. Purchaser shall have executed and delivered to Seller
a written instrument, in form and substance reasonably satisfactory to Seller,
acknowledging Purchaser's receipt of the certificate or certificate(s)
representing the Shares.
(g) Opinion of Counsel. Seller shall have received an opinion of
Stoel Rives LLP, legal counsel to Purchaser, dated the Closing Date, and
substantially in the form of Exhibit G hereto.
(h) Corporate Documents. Purchaser shall have delivered to Seller:
(i) a certified copy of the certificate of incorporation and by-laws of
Purchaser; and (ii) a certified copy of resolutions of the board of directors of
Purchaser authorizing the execution, delivery and performance of this Agreement
and any other document delivered by Purchaser hereunder.
(i) Purchaser Documents. Purchaser, AEC and/or any of their
affiliates, as applicable, shall have signed and delivered to Seller the
Purchaser Documents.
ARTICLE VIII
CLOSING DATE AND TERMINATION
8.01 CLOSING DATE. The Closing shall take place at the offices of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York
10022, at 10:00 AM, local time, on the Closing Date, unless another place is
agreed to by Purchaser and Seller.
8.02 TERMINATION OF AGREEMENT. This Agreement may, by written notice
given prior to or at the Closing, be terminated:
(a) by either Purchaser or the Seller if a material breach of any
provision of this Agreement has been committed by the other party and such
breach has not been waived or cured within twenty (20) days after written notice
of such breach by the other party;
(b) (i) by Purchaser if satisfaction of any of the conditions in
Section 7.01 is or becomes impossible (other than through the failure of the
Purchaser or AEC to comply with its obligations under this Agreement) and
Purchaser has not waived in writing such condition on or before the Closing
Date; or (ii) by Seller, if satisfaction of any of the conditions in Section
7.02 is or becomes impossible (other than through the failure of the Seller or
Company to comply with its obligations under this Agreement) and the Seller has
not waived in writing such condition on or before the Closing Date;
(c) by mutual written consent of Purchaser and Seller; or
(d) by either Purchaser or Seller, upon notice to the other
parties hereto, if the Closing shall not have occurred on or before January 31,
2001 (the "Termination Date");
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provided, however, that: (i) Purchaser shall not be permitted to terminate this
Agreement under this Section 8.02(d) if the Closing shall not have occurred by
the Termination Date by reason of the non-fulfillment by Purchaser of its
conditions to close under Section 7.02; and (ii) Seller shall not be permitted
to terminate this Agreement under this Section 8.02(d) if the Closing shall not
have occurred by the Termination Date by reason of the non-fulfillment by Seller
of its conditions to close under Section 7.01.
8.03 EFFECT OF TERMINATION. In the event of termination of this
Agreement under Section 8.02, this Agreement, other than Section 6.07, this
Section 8.03, Section 9.06 and Sections 10.02, 10.03, 10.04, 10.05, 10.06,
10.07, 10.09, 10.11 and 10.12 shall automatically and irrevocably be of no
further force and effect and, except as set forth in this Section 8.03 and
Section 10.03, there shall be no liability on the part of any party, or their
respective officers, directors, partners or affiliates. Notwithstanding the
foregoing, the liabilities and obligations arising under Section 6.07 shall
survive any termination of this Agreement. Notwithstanding the foregoing, if
this Agreement is terminated by a party because of the willful breach of this
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's willful failure to comply with its obligations under
this Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE IX
INDEMNIFICATION
9.01 BY SELLER AND ENSO.
(a) Subject to the limitations set forth below in this Section
9.01, from and after the Closing Date, Seller and Enso, jointly and severally,
shall indemnify the Purchaser's Indemnified Persons against, and hold the
Purchaser's Indemnified Persons harmless from, any and all Losses directly or
indirectly suffered or incurred by any of the Purchaser's Indemnified Persons
resulting from, relating to or arising out of:
(i) any breach of any of the representations or warranties of
Seller set forth in Article IV hereof,
(ii) any breach of any covenant or agreement made by Seller
and/or Enso (excluding actions taken by Seller and/or Enso after
Closing) under this Agreement; and
(iii) any liability, payment or obligation in respect of any
Taxes determined to be owing by the Company by any taxing authority in
a "determination" as defined in Code Section 1313, or under similar
circumstances with respect to state or local Taxes, for periods prior
to the Closing Date, whether or not such Tax liability is shown as
owing on the Company's Tax Returns for periods prior to the Closing
Date, including any liability imposed upon the
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Company because of joint and several liability as a member of Seller's
consolidated group.
(b) The right to indemnification under this Section 9.01 is
subject to the following limitations:
(i) The indemnification rights under this Section 9.01 shall
expire at the respective times set forth in Section 9.05, and Seller and Enso
shall have no liability under this Section 9.01 or otherwise in connection with
the transactions contemplated by this Agreement unless a Purchaser's Indemnified
Person gives written notice to Seller and Enso asserting a claim for Losses,
including reasonably detailed specific facts and circumstances pertaining
thereto, before the expiration of the periods of time that the underlying
representations, warranties, covenants and agreements survive under Section 9.05
hereof.
(ii) Seller's and Enso's aggregate liability for all claims
under this Section 9.01 shall not exceed $4,000,000.
(iii) Notwithstanding anything else in this Agreement to the
contrary, (i) Seller's and Enso's indemnification obligation under this Section
9.01 shall not arise until the aggregate Losses of Purchaser Indemnified Persons
owed by Seller and Enso to Purchaser pursuant to Section 9.01(a) exceeds
$500,000 (the "Threshold Amount"), at which time Seller's and Enso's
indemnification obligations will be only for those Losses of Purchaser
Indemnified Persons in excess of the Threshold Amount, subject to the limitation
on the Seller's and Enso's aggregate liability set forth in Section 9.01(b)(2);
provided, however, that the Purchaser Indemnified Persons shall be entitled to
indemnification for (i) all Losses pursuant to a "determination" as that term is
defined in Section 1313 of the Code, or under similar circumstances for state or
local purposes, relating to the Company's Income Tax liability which is the
responsibility of Seller hereunder, (ii) all Losses relating to or arising out
of fraud on the part of Seller, or (iii) Losses arising in connection with
Section 10.03.
(iv) If Purchaser or AEC shall have actual knowledge as of the
Closing Date that any of the representations or warranties of Seller contained
herein are false or inaccurate or that Seller is in breach of any covenant or
obligation under this Agreement, then Seller shall have no liability for any
loss resulting from or arising out of the falsity or inaccuracy of such
representations or warranties, or the breach of such covenant or obligation.
9.02 BY PURCHASER AND AEC.
(a) Subject to the limitations set forth below in this Section
9.02, from and after the Closing Date, Purchaser and AEC, jointly and severally,
shall indemnify the Seller's Indemnified Persons against, and hold the Seller's
Indemnified Persons harmless from, any and all Losses directly or indirectly
suffered or incurred by any of the Seller's Indemnified Persons resulting from,
relating to or arising out of:
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(i) any breach of any of the representations or warranties of
Purchaser set forth in Article V hereof,
(ii) any breach of any covenant or agreement made by Purchaser
under this Agreement,
(iii) any obligation that arises from an event that occurs, or
circumstance that arises, after the Closing Date involving any of the
Purchaser's Indemnified Persons, and
(iv) except as specifically provided otherwise in Sections
6.08 and 6.13 of this Agreement, any Liabilities of ESII from and after
the Closing Date.
(b) The right to indemnification under this Section 9.02 is
subject to the following limitations:
(i) The indemnification rights under this Section 9.02 shall
expire at the respective times set forth in Section 9.05, and Purchaser and AEC
shall have no liability under this Section 9.02 or otherwise in connection with
the transactions contemplated by this Agreement unless a Seller's Indemnified
Person gives written notice to Purchaser and AEC asserting a claim for Losses,
including reasonably detailed specific facts and circumstances pertaining
thereto, before the expiration of the periods of time that the underlying
representations, warranties, covenants and agreements survive under Section 9.05
hereof.
(ii) If Seller shall have actual knowledge as of the Closing
Date that any of the representations or warranties of Purchaser and AEC
contained herein are false or inaccurate or that Purchaser or AEC is in breach
of any covenant or obligation under this Agreement, then Purchaser and AEC shall
have no liability for any loss resulting from or arising out of the falsity or
inaccuracy of such representations or warranties, or the breach of such covenant
or obligation.
9.03 "LOSSES" DEFINED. In this Agreement, the term "Losses" means all
losses, claims, liabilities, damages, judgments, liabilities, payments,
obligations, costs and expenses (including, without limitation, any reasonable
legal fees and reasonable costs and expenses incurred after the Closing Date in
defense of or in connection with any alleged or asserted liability, payment or
obligation as to which indemnification may apply hereunder), regardless of
whether or not any liability, payment, obligation or judgment is ultimately
imposed against the Purchaser's Indemnified Persons or Seller's Indemnified
Persons and whether or not the Purchaser's Indemnified Persons or Seller's
Indemnified Persons are made or become parties to an action, suit or proceeding
in respect thereof, voluntarily or involuntarily.
9.04 NOTICE OF CLAIMS. With respect to any matter as to which any
person or entity (the "Indemnified Person") is entitled to indemnification from
any other person or entity (the "Indemnifying Person") under this Article IX,
the Indemnified Person shall have the right, but
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not the obligation, to contest, defend or litigate, and to retain counsel of its
choice in connection with, any claim, action, suit or proceeding by any third
party alleged or asserted against the Indemnified Person in respect of,
resulting from, relating to or arising out of such matter, and the costs and
expenses thereof shall be subject to the indemnification obligations of the
Indemnifying Person hereunder; provided, however, that if the Indemnifying
Person acknowledges in writing its obligation to indemnify the Indemnified
Person in respect of such matter to the fullest extent provided by this Article
IX, the Indemnified Person shall be entitled, at its option, to assume and
control the defense of such claim, action, suit or proceeding at its expense
through counsel of its choice if it gives prompt notice of its intention to do
so to the Indemnified Person. Neither an Indemnified Person nor an Indemnifying
Person shall be entitled to settle or compromise any such claim, action, suit or
proceeding without the prior written consent of the other party hereto (and for
purposes of this provision the "other party hereto" shall be: (1) Purchaser, for
any Indemnified Person or Indemnifying Person who is a Seller's Indemnified
Person, and (ii) Seller, for any Indemnified Person or Indemnifying Person who
is a Purchaser's Indemnified Person), which consent shall not be unreasonably
withheld.
9.05 SURVIVAL OF PROVISIONS.
(a) All representations and warranties contained herein or made
pursuant to this Agreement shall survive the Closing until (but excluding) the
first anniversary of the Closing Date, except that (i) the representations and
warranties contained in Sections 4.18 (Capitalization and Title to Shares) shall
survive the Closing without limitation, and (ii) the representations and
warranties contained in Section 4.09 (Taxes) and Section 4.12 (Environmental
Matters) shall survive until the end of the applicable statute of limitations
period.
(b) All covenants and agreements of the parties contained in or
made pursuant to this Agreement and required to be performed prior to the
Closing Date shall not survive the Closing and shall be deemed to have been
waived by the party for whose benefit the covenant or agreement exists. All
other covenants and agreements contained in or made pursuant to this Agreement
(including Section 9.01 and 9.02) shall survive the Closing for so long as any
claim may be made in respect of such matters under any applicable statute of
limitations.
9.06 NO PUNITIVE DAMAGES. Notwithstanding anything to the contrary set
forth in this Agreement, no party hereto shall have any liability to any other
party hereto, any of Purchaser's Indemnified Persons or any of Seller's
Indemnified Persons for any punitive, consequential or special damages by virtue
of any breach of any representation, warranty, covenant or agreement in or
pursuant to this Agreement, any Seller Document or Purchaser Document or any
other agreement, document or instrument executed and delivered pursuant hereto
or in connection herewith or the Closing; provided that the foregoing shall not
be deemed to limit the obligation of any party hereunder to indemnify for Losses
constituting punitive, consequential or special damages awarded to any
third-party claimant.
9.07 EXCLUSIVE REMEDY. Each party hereto agrees that the sole liability
of any other party hereto for any claim with respect to the transactions
contemplated under this Agreement
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from and after the Closing Date shall be limited to indemnification under this
Article IX; provided, however, that the foregoing shall not be deemed to
prohibit or restrict the availability of any equitable remedies (including
specific performance) in the event of any violation or threatened violation of
Section 6.07.
ARTICLE X
MISCELLANEOUS
10.01 FURTHER ACTIONS. From time to time after the Closing Date, the
parties hereto shall execute and deliver (or cause to be executed and delivered)
such other and further documents and instruments and shall take (or cause to be
taken) such other and further actions, as any other party hereto may reasonably
request in order to further effect and/or evidence the transactions contemplated
hereby or to otherwise consummate and give effect to the covenants and
agreements set forth herein.
10.02 BROKERS. Seller shall indemnify Purchaser against, and hold
Purchaser harmless from, at all times after the date hereof, any and all Losses
resulting from, relating to or arising out of any agreement, arrangement or
undertaking made or alleged to have been made By Seller or any officer,
director, employee, agent, representative of affiliate of Seller with any third
party for brokerage or finder fees or other commissions in connection with this
Agreement or the transactions contemplated hereby or thereby. Purchaser shall
indemnify Seller against, and hold Seller harmless from, at all times after the
date hereof, any and all Losses resulting from, relating to or arising out of
any agreement, arrangement or undertaking made or alleged to have been made by
Purchaser or any officer, director, employee, agent, representative or affiliate
of Purchaser with any third party for brokerage or finder fees or other
commissions in connection with this Agreement or the transactions contemplated
hereby or thereby.
10.03 EXPENSES. Seller shall bear its and the Company's legal fees,
appraisal fees, investment banking fees and other costs and expenses with
respect to the negotiation, execution and the delivery of this Agreement and the
consummation of the transactions hereunder. Purchaser shall bear its own legal
fees, appraisal fees, investment banking fees and other costs and expenses with
respect to the negotiation, execution and the delivery of this Agreement and the
consummation of the transactions hereunder. Seller shall pay any and all sales,
transfer and documentary stamp taxes and other expenses incident to the transfer
of the Shares.
10.04 ENTIRE AGREEMENT. This Agreement, which includes the Exhibits
hereto and the Disclosure Schedule, and the other Seller Documents and Purchaser
Documents contain the entire agreement among Seller and Purchaser with respect
to the subject matter hereof and thereof, and supersede all prior agreements,
arrangements and understandings with respect thereto.
10.05 DESCRIPTIVE HEADINGS; REFERENCES. The descriptive headings of
this Agreement and other Seller Documents and Purchaser Documents are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof or thereof. Article, Section and Exhibit
references in this Agreement are to the referenced Articles and
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Sections of and Exhibits to, this Agreement, unless the context otherwise
requires. Schedule references in this Agreement are to the referenced Schedules
in the Disclosure Schedule, unless the context otherwise requires.
10.06 NOTICES. Any notice or other communication which is required or
permitted hereunder or under any other Seller Document or Purchaser Document
shall be in writing and shall be deemed to have been delivered and received (x)
on the day of (or, if not a Business Day, the first Business Day after) its
having been personally delivered or telecopied to the following address or
telecopy number, (y) on the first Business Day after its having been sent by
overnight delivery service to the following address, or (z) if sent by regular,
registered or certified mail, when actually received at the following address:
If to Purchaser, AEC or (after the Closing) ESII:
American Ecology Corporation
805 W. Idaho, Suite 200
Boise, Idaho 83702
Attention: Jim Baumgardner
Telecopier No.: (208) 331-7900
Telephone No.: (208) 331-8400
with a copy to:
Stoel Rives LLP
101 S. Capitol Blvd., Suite 1900
Boise, Idaho 83702
Attention: Paul M. Boyd, Esq.
Telecopier No.: (208) 389-9040
Telephone No.: (208) 389-8400
If to Seller or Enso:
Envirosource Technologies, Inc.
1155 Business Center Drive
Horsham, Pennsylvania 19044
Attention: General Counsel
Telecopier No.: (215) 956-5424
Telephone No.: (215) 956-5500
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Steven M. Pesner and Stephen B. Kuhn
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Telecopier No.: (212) 872-1002
Telephone No.: (212) 872-1000
Any party may by notice change the address or telecopier number to which notices
or other communications to it are to be delivered, telecopied or sent.
10.07 GOVERNING LAW AND FORUM. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than the
choice of law principles thereof). Any claim, action, suit or other proceeding
initiated by any of the Seller's Indemnified Persons against Purchaser and/or
AEC, under or in connection with this Agreement or any Purchaser Document shall
exclusively be asserted, brought, prosecuted and maintained in any federal or
state court in the State of Idaho, as the party bringing such action, suit or
proceeding shall elect, having jurisdiction over the subject matter thereof. Any
claim, action, suit or other proceeding initiated by any of the Purchaser's
Indemnified Persons against Seller and/or Enso, under or in connection with this
Agreement or any Seller Document shall exclusively be asserted, brought,
prosecuted and maintained in any federal or state court in the Commonwealth of
Pennsylvania, as the party bringing such action, suit or proceeding shall elect,
having jurisdiction over the subject matter thereof. Seller, Enso, Purchaser and
AEC each hereby irrevocably (i) submit to the jurisdiction of such courts, (ii)
waive any and all rights to object to the laying of venue in any such court,
(iii) waive any and all rights to claim that any such court may be an
inconvenient forum, and (iv) agree that service of process on them in any such
action, suit or proceeding may be effected by the means by which notices may be
given to it under this Agreement.
10.08 ASSIGNMENT. This Agreement, and the respective rights and
obligations of the parties hereunder, may not be assigned or delegated other
than by operation of law (x) by Purchaser, AEC or (after the Closing) ESII
without the prior written consent of Seller; provided, however, that
notwithstanding the foregoing, Purchaser may assign this Agreement and its
rights hereunder to a wholly-owned subsidiary of Purchaser without Seller's
consent (provided, such assignment shall not relieve Purchaser of its
indemnification obligations under this Agreement) or (y) by Seller, Enso or
(prior to the Closing) ESII without the prior written consent of Purchaser, and
any purported assignment or delegation by any party hereto in violation of the
foregoing shall be void ab initio; provided, further, that any or all rights of
any party to receive the performance of the obligations of the other parties
hereunder (but not any obligations of any party hereunder) and rights to assert
claims against the other parties in respect of breaches of representations,
warranties or covenants may be assigned to any entity extending credit to such
party or any of its affiliates, but any assignee of such rights shall take such
rights subject to any defenses, counterclaims and rights of set-off to which the
non-assigning parties might be entitled under this Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
10.09 REMEDIES. Purchaser and Seller acknowledge that any violation or
threatened violation of Section 6.07 hereof will cause irreparable injury to the
other party and that the remedy at law for any such violation or threatened
violation will be inadequate. Purchaser and Seller agree that the other party
shall be entitled to temporary and permanent injunctive relief for
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any such violation or threatened violation without the necessity of proving (i)
that the other party will be irreparably injured thereby, (ii) that the remedy
at law for such violation or threatened violation is inadequate or (iii) actual
damages.
10.10 WAIVERS AND AMENDMENTS. Any waiver of any term or condition of
this Agreement, or any amendment or supplementation of this Agreement, shall be
effective only if in a writing executed by each of the parties hereto. A waiver
of any breach or failure to enforce any of the terms or conditions of this
Agreement shall not in any way affect, limit or waive a party's rights hereunder
at any time to enforce strict compliance thereafter with every term or condition
of this Agreement.
10.11 THIRD PARTY RIGHTS. Notwithstanding any other provision of this
Agreement, and except as expressly provided in Article IX or as permitted
pursuant to Section 10.08 hereof, this Agreement and the other Seller Documents
and Purchaser Documents shall not create benefits on behalf of any employee,
agent or representative of ESII or any other person or entity not party hereto
(including, without limitation, any accountant, broker or finder,
notwithstanding the provisions of Section 10.02), and this Agreement shall be
effective only as between the parties hereto, their successors, and permitted
assigns.
10.12 ILLEGALITIES. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect, and the remaining provisions of this
Agreement, shall not, at the election of the party for whose benefit the
provision exists, be in any way impaired.
10.13 NATURE OF THE TRANSACTION.
(a) Purchaser and Seller agree that the Purchase and Sale
hereunder is a purchase of a business in its entirety as a going concern to be
directed and operated by the Purchaser, and not an investment in securities
although the transaction will be effectuated by a sale of the Shares.
(b) For purposes of the Securities Act, Purchaser hereby
acknowledges its understanding that the Shares are not registered under the
Securities Act, or registered or qualified under any Blue Sky Laws, on the
grounds that the offering, sale, issuance and delivery thereof is exempt from
the registration and/or qualification requirements thereof, and that Seller's
reliance on such exemption is predicated in part on the following covenants,
agreements and acknowledgments of Purchaser. Purchaser hereby represents and
warrants to and covenants and agrees with Seller that Purchaser: (i) is
acquiring the Shares for its own account for investment purposes only, with no
present intention of offering, selling, transferring, distributing or otherwise
disposing of the same, any part thereof or any interest therein (subject,
nevertheless, to any requirement of the law that the disposition of its
securities shall at all times be within its control), and (ii) will not offer,
sell, transfer, distribute or otherwise dispose of the Shares except in
compliance with the Securities Act and all applicable Blue Sky Laws.
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10.14 PUBLIC ANNOUNCEMENTS. No party hereto shall make any Announcement
to which the other parties hereto shall reasonably object, however, Seller and
Purchaser will be required under the Exchange Act to report this Agreement and
the transactions contemplated hereby, and such reporting shall be permitted in
all events. Each party shall afford the other parties hereto a reasonable
opportunity to review and comment upon each Announcement proposed to be made by
it prior to the release thereof.
10.15 GENDER AND PLURAL TERMS. Words of gender or neuter may be read as
masculine, feminine or neuter, as required by the context. Singular and plural
forms of defined and other terms herein may be read as singular or plural, as
required or permitted by the context.
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10.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date first above written.
PURCHASER: SELLER:
American Ecology Environmental Services Envirosource Technologies, Inc.
Corporation
By: By:
----------------------------------- ---------------------------------
Name: Name:
Title: Title:
AEC: ENSO:
American Ecology Corporation Envirosource, Inc.
By: By:
----------------------------------- --------------------------------
Name: Name:
Title: Title:
49
Annex A
Permitted Exceptions
See attached.
50
Exhibit A
Form of Non-Competition Agreement
See attached.
51
Exhibit B
Form of Transition Services Agreement
See attached.
52
Exhibit C
Form of License Agreement
See attached.
53
Exhibit D
Form of Trademark License
See attached.
54
Exhibit E
Form of ESOI/Nucor Yamato Letter Agreement
See attached.
55
Exhibit F
Form of Opinion of Seller's Counsel
See attached.
56
Exhibit G
Form of Opinion of Counsel to Purchaser and AEC
See attached.
57
EXECUTION COPY
================================================================================
STOCK PURCHASE AGREEMENT
by and among
AMERICAN ECOLOGY ENVIRONMENTAL
SERVICES CORPORATION,
AMERICAN ECOLOGY CORPORATION,
ENVIROSOURCE TECHNOLOGIES, INC., and
ENVIROSOURCE, INC.
Dated: January 15, 2001
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TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.................................................1
1.01 CERTAIN DEFINITIONS.........................................1
ARTICLE II PURCHASE AND SALE..................................................9
2.01 PURCHASE AND SALE...........................................9
2.02 CONSIDERATION...............................................9
ARTICLE III ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES................9
3.01 STERLING ASSETS.............................................9
3.02 NON-COMPETITION AGREEMENT..................................10
3.03 TRANSITION SERVICES AGREEMENT..............................10
3.04 LICENSE AGREEMENT..........................................10
3.05 TRADEMARK LICENSE..........................................10
3.06 CLOSING DATE BALANCE SHEET.................................10
3.07 ESOI/NUCOR YAMATO LETTER AGREEMENT.........................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..........................10
4.01 ORGANIZATION AND GOOD STANDING.............................10
4.02 CONSENTS, AUTHORIZATIONS AND CONFLICTS.....................11
4.03 MINUTE AND STOCK TRANSFER BOOKS............................12
4.04 FINANCIAL STATEMENTS.......................................12
4.05 TITLE, CONDITION AND NATURE OF TANGIBLE ASSETS.............13
4.06 INTELLECTUAL PROPERTY RIGHTS...............................14
4.07 LITIGATION.................................................14
4.08 COMPLIANCE.................................................14
4.09 TAXES......................................................15
4.10 EMPLOYEE BENEFIT MATTERS...................................16
4.11 EMPLOYEES AND LABOR RELATIONS..............................18
4.12 ENVIRONMENTAL MATTERS......................................19
4.13 CONTRACTS..................................................20
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4.14 ABSENCE OF CERTAIN CHANGES.................................20
4.15 NOTES AND ACCOUNTS RECEIVABLE..............................22
4.16 DEALERS, SUPPLIERS, CUSTOMERS AND KEY EMPLOYEES............22
4.17 EQUITY INTERESTS...........................................22
4.18 CAPITALIZATION AND TITLE TO SHARES.........................22
4.19 BANK ACCOUNTS..............................................23
4.20 INSURANCE..................................................23
4.21 GUARANTIES.................................................24
4.22 BLM LAND TRANSACTION.......................................24
4.23 FULL DISCLOSURE............................................24
4.24 NO OTHER REPRESENTATIONS AND WARRANTIES BY SELLER..........24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF AEC AND PURCHASER................24
5.01 ORGANIZATION AND GOOD STANDING.............................24
5.02 CONSENTS, AUTHORIZATIONS AND CONFLICTS.....................25
5.03 LITIGATION.................................................25
5.04 FINANCIAL STATEMENTS.......................................23
5.05 DUE DILIGENCE..............................................23
5.06 NO VIOLATION OF LAW........................................23
5.07 INSURANCE APPROVAL.........................................23
ARTICLE VI CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; AFTER CLOSING..........23
6.01 ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY............23
6.02 OPERATION OF THE COMPANY...................................27
6.03 CONSENTS AND NOTICES.......................................27
6.04 EFFORTS TO SATISFY CONDITIONS..............................27
6.05 INTRACOMPANY INDEBTEDNESS..................................28
6.06 TRANSFER RESTRICTIONS......................................28
6.07 CONFIDENTIAL INFORMATION...................................28
6.08 TAX RETURNS AND PAYMENTS...................................29
6.09 COOPERATION................................................29
6.10 COMPANY PLANS..............................................30
6.11 NO NEGOTIATION.............................................30
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6.12 "TO THE BEST KNOWLEDGE, ETC."..............................30
6.13 INSURANCE..................................................31
6.14 EMPLOYEE TRANSFERS.........................................31
6.15 TITLE INSURANCE............................................32
6.16 GUARANTY...................................................33
6.17 INSURANCE APPROVAL.........................................33
ARTICLE VII CONDITIONS OF CLOSING............................................33
7.01 CONDITIONS TO OBLIGATIONS OF PURCHASER.....................33
7.02 CONDITIONS TO OBLIGATIONS OF SELLER........................36
ARTICLE VIII CLOSING DATE AND TERMINATION....................................37
8.01 CLOSING DATE...............................................37
8.02 TERMINATION OF AGREEMENT...................................37
8.03 EFFECT OF TERMINATION......................................38
ARTICLE IX INDEMNIFICATION...................................................38
9.01 BY SELLER AND ENSO.........................................38
9.02 BY PURCHASER AND AEC.......................................39
9.03 "LOSSES" DEFINED...........................................40
9.04 NOTICE OF CLAIMS...........................................40
9.05 SURVIVAL OF PROVISIONS.....................................41
9.06 NO PUNITIVE DAMAGES........................................41
9.07 EXCLUSIVE REMEDY...........................................41
ARTICLE X MISCELLANEOUS......................................................42
10.01 FURTHER ACTIONS............................................42
10.02 BROKERS....................................................42
10.03 EXPENSES...................................................42
10.04 ENTIRE AGREEMENT...........................................42
10.05 DESCRIPTIVE HEADINGS; REFERENCES...........................42
10.06 NOTICES....................................................43
10.07 GOVERNING LAW AND FORUM....................................44
10.08 ASSIGNMENT.................................................44
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10.09 REMEDIES...................................................44
10.10 WAIVERS AND AMENDMENTS.....................................45
10.11 THIRD PARTY RIGHTS.........................................45
10.12 ILLEGALITIES...............................................45
10.13 NATURE OF THE TRANSACTION..................................45
10.14 PUBLIC ANNOUNCEMENTS.......................................46
10.15 GENDER AND PLURAL TERMS....................................46
10.16 COUNTERPARTS...............................................47
Annex A - Permitted Exceptions
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EXHIBITS
Exhibit A - Form of Non-Competition Agreement
Exhibit B - Form of Transition Services Agreement
Exhibit C - Form of License Agreement
Exhibit D - Form of Trademark License
Exhibit E - Form of ESOI/NUCOR Letter Agreement
Exhibit F - Form of Opinion of Seller's Counsel
Exhibit G - Form of Opinion of Counsel to Purchaser and AEC
SCHEDULES
Schedule 3.01(a) - List of Sterling Assets
Schedule 3.01(c) - Representations and Warranties Applicable to Sterling
Assets
Schedule 4.01 - Organization and Good Standing and Material Jurisdictions
Schedule 4.02 - Seller Consents
Schedule 4.04(a) - ESII Financial Statements
Schedule 4.05(a) - Real Property and Tangible Personal Property
Schedule 4.06 - Intellectual Property Rights
Schedule 4.07 - Litigation
Schedule 4.08 - ESII Permits and Compliance
Schedule 4.09 - Taxes
Schedule 4.10(b) - Company Plans and Other Benefit Obligations
Schedule 4.10(d) - ERISA
Schedule 4.11 - Employees and Labor Relations
Schedule 4.12 - Environmental Matters
Schedule 4.13 - Material Contracts of ESII
Schedule 4.14 - Absence of Certain Changes
Schedule 4.16 - Dealers, Suppliers, Customers and Key Employees
Schedule 4.19 - Bank Accounts
Schedule 4.20 - Insurance
Schedule 5.02 - Purchaser Consents
Schedule 5.03 - Litigation (Purchaser)
Schedule 5.06 - No Violation of Law
Schedule 6.14 - CSI Facility Employees
Schedule 6.15 - Standard Printed Exceptions to Title Policy
Schedule 7.01(c) - Required Consents
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