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Exhibit 2.3
STOCK PURCHASE AGREEMENT
BY AND AMONG
BANTA CORPORATION,
CHEMED CORPORATION
AND
OCR HOLDING COMPANY
DATED SEPTEMBER 24, 1997
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES............................................1
2. PURCHASE PRICE - PAYMENT...............................................2
2.1. Purchase Price.................................................2
2.2. Payment of Purchase Price......................................4
2.3. Determination of Net Asset Value...............................4
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS...........................................................7
3.1. Corporate......................................................8
3.2. Shareholders...................................................9
3.3. No Violation...................................................9
3.4. Financial Statements..........................................10
3.5. Tax Matters...................................................10
3.6. Accounts Receivable...........................................12
3.7. Inventory.....................................................12
3.8. Absence of Certain Changes....................................12
3.9. Absence of Undisclosed Liabilities............................14
3.10. No Litigation.................................................14
3.11. Compliance With Laws and Orders...............................15
3.12. Title to Properties...........................................16
3.13. Insurance.....................................................18
3.14. Contracts and Commitments.....................................19
3.15. Labor Matters.................................................21
3.16. Employee Benefit Plans........................................21
3.17. Employment Compensation.......................................25
3.18. Trade Rights..................................................25
3.19. Major Customers and Suppliers.................................26
3.20. Product Warranty and Product Liability........................27
3.21. Bank Accounts.................................................27
3.22. Affiliates' Relationships.....................................27
3.23. Assets Necessary to Business..................................28
3.24. No Brokers or Finders.........................................28
3.25. Disclosure....................................................28
4. REPRESENTATIONS AND WARRANTIES OF BUYER...............................28
4.1. Corporate.....................................................28
4.2. Authority.....................................................29
4.3. No Brokers or Finders.........................................29
4.4. Disclosure....................................................29
4.5. Investment Intent.............................................29
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5. COVENANTS...............................................................29
5.1. Title Insurance.................................................29
5.2. Surveys.........................................................29
5.3. Environmental and OSHA Audits...................................30
5.4. Lease for Detroit Facility; Guaranty for Troy Facility..........30
5.5. Employment Agreements; Transitional Services....................30
5.6. Noncompetition; Confidentiality.................................31
5.7. General Releases and Indemnification............................32
5.8. HSR Act Filings.................................................33
5.9. Indemnity Relating to Detroit Facility and Pomona Facility......33
5.10. Tax Matters.....................................................34
5.11. Assumption of and Indemnity Relating to Workers'
Compensation Claims...........................................37
5.12. Employee Benefits and Severance.................................37
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.............................38
6.1. Representations and Warranties True of the Closing Date.........38
6.2. Compliance With Agreement.......................................38
6.3. Absence of Litigation...........................................38
6.4. Consents and Approvals..........................................38
6.5. Title Insurance.................................................38
6.6. Estoppel Certificates...........................................38
6.7. Hart-Scott-Rodino Waiting Period................................39
6.8. Section 1445 Affidavit..........................................39
6.9. Environmental and OSHA Audits...................................39
6.10. Noncompetition and Consulting Agreements........................39
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS...................39
7.1. Representations and Warranties True on the Closing Date.........39
7.2. Compliance With Agreement.......................................39
7.3. Absence of Litigation...........................................39
7.4. Hart-Scott-Rodino Waiting Period................................39
8. INDEMNIFICATION.........................................................40
8.1. By Shareholders.................................................40
8.2. By Buyer........................................................40
8.3. Indemnification of Third-Party Claims...........................40
8.4. Payment.........................................................41
8.5. Limitations on Indemnification..................................41
8.6. No Waiver.......................................................43
9. CLOSING.................................................................43
9.1. Documents to be Delivered by the Shareholders...................43
9.2. Documents to be Delivered by Buyer..............................44
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10. MISCELLANEOUS...........................................................45
10.1. Disclosure Schedule.............................................45
10.2. Further Assurance...............................................45
10.3. Disclosures and Announcements...................................45
10.4. Assignment; Parties in Interest.................................45
10.5. Law Governing Agreement.........................................46
10.6. Amendment and Modification......................................46
10.7. Notice..........................................................46
10.8. Expenses........................................................47
10.9. Entire Agreement................................................48
10.10. Counterparts....................................................48
10.11. Headings........................................................49
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DISCLOSURE SCHEDULE
Schedule 3.1.(c)- Foreign Corporation Qualification
Schedule 3.1.(e)-Directors and Officers
Schedule 3.1.(f)-Shareholder List
Schedule 3.3- Violation, Conflict, Default
Schedule 3.4- Financial Statements
Schedule 3.5.(b)- Tax Returns (Exceptions to Representations)
Schedule 3.5.(c)- Tax Audits
Schedule 3.5.(d)- Consolidated Tax Returns
Schedule 3.5.(e)- Tax, Other
Schedule 3.5.(f)-Tax Basis
Schedule 3.6- Accounts Receivable (Aged Schedule)
Schedule 3.7- Inventory
Schedule 3.8- Certain Changes
Schedule 3.9- Off-Balance Sheet Liabilities
Schedule 3.10- Litigation Matters
Schedule 3.11.(a)- Non-Compliance with Laws
Schedule 3.11.(b)- Licenses and Permits
Schedule 3.11.(c)- Environmental Matters (Exceptions to Representations)
Schedule 3.12.(b)- Owned Real Property
Schedule 3.13- Insurance
Schedule 3.14.(b)- Personal Property Leases
Schedule 3.14.(d)- Sales Commitments
Schedule 3.14.(e)- Contracts With Affiliates
Schedule 3.14.(g)- Collective Bargaining Agreements
Schedule 3.14.(h)- Loan Agreements, etc.
Schedule 3.14.(i)- Guarantees
Schedule 3.14.(k)- Burdensome or Restrictive Agreements
Schedule 3.14.(l)- Material Contracts
Schedule 3.15- Labor Matters
Schedule 3.16.(a)- Employee Plans/Agreements
Schedule 3.16.(e)- Controlled Group
Schedule 3.16.(g)- Post-Retirement Benefits
Schedule 3.17- Employment Compensation
Schedule 3.18- Trade Rights
Schedule 3.19.(a)- Major Customers
Schedule 3.19.(b)- Major Suppliers
Schedule 3.19.(c)- Dealers and Distributors
Schedule 3.20-Product Warranty, Warranty Expense and Liability Claims
Schedule 3.21-Bank Accounts
Schedule 3.22.(a)-Contracts with Affiliates
Schedule 3.22.(c)-Obligations of and to Affiliates
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated September 24,
1997, by and among Banta Corporation, a Wisconsin corporation ("Buyer"), Chemed
Corporation, a Delaware corporation ("Chemed"), and OCR Holding Company, a
Nevada corporation ("OCR").
RECITALS
WHEREAS, OCR is a wholly-owned subsidiary of Chemed; and
WHEREAS, OCR owns beneficially and of record all of the issued and
outstanding shares of capital stock of Omnia I, Inc., a Delaware corporation
("Omnia I"), The Omnia Corporation, a Delaware corporation ("Omnia
Corporation"), Tidi Products, Inc., a Delaware corporation ("Tidi Products"),
Unidisco, Inc., a Delaware corporation ("Unidisco), and Unidisco Acquisition,
Inc., a Delaware corporation ("Unidisco Acquisition"); and
WHEREAS, Omnia I, Omnia Corporation, Tidi Products, Unidisco and
Unidisco Acquisition are collectively referred to herein as the "Acquired
Companies" and are sometimes individually referred to herein as an "Acquired
Company"; and
WHEREAS, Buyer desires to purchase all of the issued and outstanding
shares of capital stock of the Acquired Companies, and Chemed and OCR desire to
sell such shares to Buyer upon the terms and conditions herein set forth; and
WHEREAS, the shares of capital stock of the Acquired Companies to be
acquired by Buyer hereunder (constituting all of the issued and outstanding
shares of capital stock of the Acquired Companies) are hereinafter referred to
as the "Shares" and Chemed and OCR are collectively hereinafter referred to as
the "Shareholders".
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) the Shareholders shall sell to Buyer and Buyer
shall purchase from the Shareholders all the Shares.
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2. PURCHASE PRICE - PAYMENT
2.1. PURCHASE PRICE.
2.1.(a) PURCHASE PRICE. Subject to post-closing adjustments
and payments provided for hereunder, the purchase price (the "Purchase
Price") payable for the Shares shall be Fifty Million Dollars
($50,000,000), plus $666,237, reflecting the amount of the reserves as
of August 31, 1997 established for workers' compensation claims on the
books of the Acquired Companies net of applicable taxes.
2.1.(b) CONTINGENT PURCHASE PRICE. Provided Buyer continues to
receive federal and state income Tax (as hereinafter defined)
deductions for the goodwill and other intangibles identified in
Section 3.5.(g) for each of the following years, Buyer shall pay an
additional amount (the "Contingent Purchase Price") to Shareholders as
follows:
Contingent
Calendar Year Purchase Price Payment Date
------------- -------------- ------------
2000 $350,000 September 30, 2000
2001 350,000 September 30, 2001
2002 350,000 September 30, 2002
2003 350,000 September 30, 2003
2004 350,000 September 30, 2004
2005 350,000 September 30, 2005
The Contingent Purchase Price payment for each year shall be made on
September 30 of such year provided Buyer is eligible to take deductions
for the goodwill and other intangibles on its federal and state Tax (as
hereinafter defined) returns for the then current year and
notwithstanding whether Buyer is actually able to take such deductions
on its Tax returns for the then current year due solely to losses
reported on such returns. The Contingent Purchase Price payments
required under this Section 2.1.(b) shall cease (or, to the extent
deductions for the goodwill and other intangibles are not eliminated in
whole, the Contingent Purchase Price payments shall be reduced by an
amount equivalent to the deductions lost in each period), and the
Shareholders shall immediately reimburse Buyer for Contingent Purchase
Price payments previously received by Shareholders (but only to the
extent that deductions for prior periods are denied or lost), if (i)
changes in federal or state Tax law eliminate or limit the
deductibility of the amortization for goodwill or other intangibles or
(ii) prior deductions relating to such goodwill and other intangibles
are eliminated in whole or in part upon an audit of Buyer's and/or the
Acquired Companies' Tax returns. Notwithstanding the foregoing, in the
event that the Acquired Companies, including any successors thereto,
are no longer members of Buyer's affiliated group of corporations that
file a consolidated return and if Buyer was eligible immediately prior
to the time the Acquired Companies were no longer members of its
affiliated group to take deductions for the goodwill and other
intangibles on its federal and state Tax returns for Buyer's then
current year, Buyer shall remain obligated to make the Contingent
Purchase
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Price payments required under this Section 2.1.(b); PROVIDED, HOWEVER,
the obligation to continue to make such Contingent Purchase Price
payments shall cease (or, to the extent that deductions for the
goodwill and other intangibles are not eliminated in whole, the
Contingent Purchase Price payments shall be reduced by an amount
equivalent to the deductions lost) and Shareholders shall immediately
reimburse Buyer for payments previously received by Shareholders (but
only to the extent that deductions for prior periods are denied or
lost) if prior deductions relating to such goodwill or other
intangibles are eliminated in whole or in part upon subsequent audit.
The Shareholders' obligation to reimburse Buyer for Contingent
Purchase Price payments previously received by Shareholders is not
subject to the limitations set forth in Article 8 hereof.
2.1. (c) INVENTORY ADJUSTMENT AND REIMBURSEMENT; CASH
TRANSACTION RECONCILIATION. Shareholders acknowledge that the Acquired
Companies hold certain inventories identified below that may be in
excess of quantities useable and saleable in the ordinary course of
business or obsoleted by actions of the customers of the Acquired
Companies. Such inventory items are generally identified as the
Criterion Isolation Gown Line, Foster Domestic and Import Non-Woven
Products and Surge Dispenser Products and the equipment and
receivables related thereto (the "Excess Inventory"). The Excess
Inventory assets as of August 31, 1997 and the reserve related thereto
was as follows:
(1) Criterion Isolation Gown Line $795,816
(2) Foster Domestic and Import
Non-Woven Products 68,796
(3) Surge Dispenser Inventory 12,804
(4) Surge Dispenser Receivable 159,982
Equipment Receivable
(5) Reserve (400,000)
--------
(6) Total Net of Reserve $637,398
========
In connection with the Final Closing Balance Sheet (as hereinafter
defined), the value of the Excess Inventory at cost net of reserve will
be calculated. The Shareholders covenant and agree to pay to Buyer an
amount equal to fifty percent (50%) of such value net of reserve. The
Shareholders shall make the payment to Buyer required under this
Section 2.1.(c) within five (5) business days of determination of the
Final Closing Balance Sheet pursuant to Section 2.3.(b). Thereafter,
Buyer covenants that it will use commercially reasonable efforts to
sell the Excess Inventory on hand as of the Closing Date (as
hereinafter defined) during the period from the Closing Date to April
30, 1998. Buyer shall pay the Shareholders an amount equal to fifty
percent (50%) of the difference between (i) the consideration received
by Buyer upon disposition of such Excess Inventory prior to April 30,
1998 and (ii) the reserve related to such Excess Inventory disposed of
during the period. Buyer will provide Shareholders with a
reconciliation of the consideration received by Buyer upon sale of the
Excess Inventory and the reserve related
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thereto within thirty (30) days following April 30, 1998 and the
Shareholders shall have thirty (30) days to review and verify such
reconciliation. The Buyer shall make the payment to the Shareholders
required, if any, under this Section 2.1.(c) within five (5) business
days of the end of the Shareholders' review period.
In addition to the foregoing, and in connection with the
preparation of the Final Closing Balance Sheet, a determination shall
be made of the net cash receipts or net cash disbursements of the
Acquired Companies which were received or funded by the Shareholders,
as the case may be, between the Effective Time and the close of
business on the Closing Date. In the event of net cash receipts, the
Shareholders shall be obligated to pay such net amount to Buyer and in
the event of net cash disbursements, Buyer shall be obligated to pay
such net amount to the Shareholders. Any payment required by this cash
transaction reconciliation shall be made within five (5) business days
of determination of the Final Closing Balance Sheet pursuant to
Section 2.3.(b).
2.2. PAYMENT OF PURCHASE PRICE.
2.2.(a) PURCHASE PRICE. The Purchase Price specified in
Section 2.1 shall be paid by Buyer to OCR on the Closing Date. The
Contingent Purchase Price specified in Section 2.1.(b) shall be paid
to the extent set forth in Section 2.1.(b). The payments specified in
Section 2.1.(c) shall be made as set forth in Section 2.1.(c).
2.2.(b) ADJUSTMENT OF FINAL CASH PURCHASE PRICE. On or before
the fifth business day following the final determination of the Final
Closing Balance Sheet, the Shareholders shall pay to Buyer the amount,
if any, by which the Net Asset Value of the Acquired Companies as of
the Effective Time (as hereinafter defined), as reflected on the Final
Closing Balance Sheet, is less than the sum of (i) Sixty-Seven Million
Dollars ($67,000,000) and (ii) $666,237, reflecting the amount of the
reserves as of August 31, 1997 established for workers' compensation
claims on the books of the Acquired Companies net of applicable taxes.
2.2.(c) METHOD OF PAYMENT. All payments under this Section 2.2
shall be made in the form of a certified or bank cashier's check
payable to the order of the recipient or, at the recipient's option,
by wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the time
for payment specified herein.
2.3. DETERMINATION OF NET ASSET VALUE.
2.3.(a) DEFINITION OF NET ASSET VALUE. The term "Net Asset
Value" shall mean the dollar amount by which the net book value of the
assets of the Acquired Companies exceeds the net book value of all the
liabilities of the Acquired Companies, as reflected on the Final
Closing Balance Sheet.
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2.3.(b) FINAL CLOSING BALANCE SHEET. The final balance sheet
of the Acquired Companies prepared as of the close of business on
September 20, 1997 (hereinafter the "Effective Time") shall be
prepared as follows:
(i) Within 60 days after the Closing Date, Buyer shall
deliver to the Shareholders a balance sheet of the Acquired
Companies as of the Effective Time, prepared in accordance
with generally accepted accounting principles from the books
and records of the Acquired Companies, on a basis consistent
with the generally accepted accounting principles theretofore
followed by the Acquired Companies in the preparation of the
Recent Balance Sheet (as hereinafter defined) and in
accordance with this Section 2.3, and fairly presenting the
financial position on a basis consistent with generally
accepted accounting principles as theretofore followed by the
Acquired Companies as of the Effective Time. The balance sheet
shall be accompanied by detailed schedules of the assets and
liabilities of the Acquired Companies at the Effective Time
and by a report (1) setting forth the amount of Net Asset
Value (as defined above) reflected in the balance sheet, (2)
stating that the balance sheet has been prepared in accordance
with generally accepted accounting principles, on a basis
consistent with the accounting principles and presentation
theretofore followed by the Acquired Companies, except as
otherwise provided in this Section 2.3, and (3) setting forth
the amount of any adjustment to the Purchase Price to be paid
to Buyer by the Shareholders pursuant to Section 2.2.(b)
hereof.
(ii) Within 30 days following the delivery of the
balance sheet referred to in (i) above, the Shareholders or a
firm of independent accountants engaged by the Shareholders
("Shareholders' Accountants") may object to any of the
information contained in said balance sheet or accompanying
schedules which could affect the necessity or amount of any
payment by the Shareholders pursuant to Section 2.2.(b)
hereof. Any such objection shall be made in writing and shall
state the Shareholders' determination of the amount of the Net
Asset Value.
(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and the
Shareholders are unable to resolve, either party may elect to
have all such disputes or disagreements resolved by an
accounting firm (other than the Shareholders' Accountants or
the independent accountants for Buyer) of nationally
recognized standing (the "Third Accounting Firm") to be
mutually selected by the Shareholders and Buyer. The Third
Accounting Firm shall make a resolution of the balance sheet
of the Acquired Companies as of the Effective Time and the
calculation of Net Asset Value, which shall be final and
binding for purposes of this Article 2. The Third Accounting
Firm shall be instructed to use every reasonable effort to
perform its services within 15 days of submission of the
balance sheet to it and, in any case, as soon as practicable
after such submission. The fees and
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expenses for the services of the Third Accounting Firm shall
be paid one-half by Buyer and one-half by the Shareholders.
As used in this Agreement, the term "Final Closing
Balance Sheet" shall mean the balance sheet of the Acquired
Companies as of the Effective Time as finally determined for
purposes of this Article 2, whether by acquiescence of the
Shareholders in the figures supplied by Buyer in accordance
with Section 2.3.(b)(i), by negotiation and agreement of the
parties or by the Third Accounting Firm in accordance with
Section 2.3.(b)(iii).
(iv) Buyer agrees to permit the Shareholders, the
Shareholders' Accountants, and their respective
representatives, during normal business hours, to have
reasonable access to, and to examine and make copies of, all
books and records of the Acquired Companies, including but not
limited to the books, records, schedules and work papers of
Buyer, which documents and access are necessary to review the
balance sheet delivered by Buyer in accordance with Section
2.3.(b)(i). In addition, the parties hereto and their
representatives shall have the opportunity to observe the
taking of the inventory in connection with the preparation of
such balance sheet.
(v) Notwithstanding any provision contained herein
requiring that the Final Closing Balance Sheet be prepared in
accordance with generally accepted accounting principles
consistent with the past practices of the Acquired Companies,
the Final Closing Balance Sheet shall be prepared as follows:
(A) Prepaid expenses valued for purposes of
the Final Closing Balance Sheet must be of a nature
and valued in a manner consistent with past practices
of the Acquired Companies.
(B) Inventory shall be valued in accordance
with generally accepted accounting principles on the
basis of the lower of cost or market (net of
appropriate reserves) and consistent with past
practices of the Acquired Companies, provided,
however, that inventory identified in Section 2.1.(c)
shall be valued at cost net of applicable reserves.
Only inventory of a commercially useable quality and
good and usable in the ordinary course of business
shall be valued.
(C) All accrued liabilities shall be
sufficient for the payment in full of the liabilities
to which they relate and accrued expenses shall
reflect all accruals of a character that would be
reflected in a manner consistent with a year-end
balance sheet, including, without limitation, wages,
bonuses, vacation, holiday
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and sick pay (and employee payroll taxes applicable
thereto) attributable to all periods or partial
periods prior to the Effective Time.
(D) Accounts receivable and notes receivable
shall be stated net of an appropriate reserve for
doubtful accounts and anticipated collection expenses.
(E) There shall be established a reasonable
and sufficient reserve for all anticipated costs and
expenses (whether or not covered under product
warranties of the Acquired Companies) for the repair,
replacement or recall of products manufactured on or
prior to the Closing Date which are defective in
design, materials or workmanship.
(F) No insurance claim relating to damage to
or full or partial loss of any property occurring
after the date of the Recent Balance Sheet shall be
valued in excess of the book value (net of accumulated
depreciation) of such property as reflected in the
Recent Balance Sheet.
(G) No reserve or liability for workers'
compensation claims shall be reflected on the Final
Closing Balance Sheet.
(H) The capitalized assets relating to the
proposed Somerset, Kentucky facility set forth on the
Recent Balance Sheet shall be reflected as capitalized
assets on the Final Closing Balance Sheet.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS
In order to induce Buyer to enter into this Agreement, and
acknowledging that Buyer has relied upon the representations and warranties
contained herein, the Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall be unaffected by any investigation heretofore or
hereafter made by Buyer, or any knowledge of Buyer other than as specifically
disclosed in the Disclosure Schedule delivered to Buyer at the time of the
execution of this Agreement, and shall survive the Closing of the transactions
provided for herein.
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3.1. CORPORATE.
3.1.(a) ORGANIZATION. Each of the Acquired Companies is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
3.1.(b) CORPORATE POWER. Each of the Acquired Companies has
all requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as and where such is now
being conducted.
3.1.(c) QUALIFICATION. Each of the Acquired Companies is duly
licensed or qualified to do business as a foreign corporation, and is
in good standing, in each jurisdiction wherein the character of the
properties owned or leased by it, or the nature of its business, makes
such licensing or qualification necessary. The states in which the
Acquired Companies are licensed or qualified to do business are listed
in Schedule 3.1.(c).
3.1.(d) SUBSIDIARIES. The Acquired Companies do not own any
interest in any corporation, partnership or other entity.
3.1.(e) CORPORATE DOCUMENTS, ETC. The copies of the charter
and by-laws of each of the Acquired Companies, including any
amendments thereto, which have been delivered by the Shareholders to
Buyer are true, correct and complete copies of such instruments as
presently in effect. The corporate minute book and stock records of
each of the Acquired Companies which have been furnished to Buyer for
inspection are true, correct and complete and accurately reflect all
material corporate action taken by each of the Acquired Companies. The
directors and officers of each of the Acquired Companies are listed in
Schedule 3.1.(e).
3.1.(f) CAPITALIZATION OF THE ACQUIRED COMPANIES. The
authorized capital stock of each of the Acquired Companies is set
forth in Schedule 3.1(f). No shares of such capital stock are issued
or outstanding except for the shares which are owned of record and
beneficially by the Shareholders (directly in the case of OCR and
indirectly by Chemed) in the respective numbers set forth in Schedule
3.1.(f). All such shares of capital stock of each of the Acquired
Companies are validly issued, fully paid and nonassessable. There are
no (a) securities convertible into or exchangeable for any capital
stock or other securities of the Acquired Companies, (b) options,
warrants or other rights to purchase or subscribe to capital stock or
other securities of any of the Acquired Companies or securities which
are convertible into or exchangeable for capital stock or other
securities of any of the Acquired Companies, or (c) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or
other equity securities of any of the Acquired Companies, any such
convertible or exchangeable securities or any such options, warrants
or other rights.
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3.2. SHAREHOLDERS.
3.2.(a) ORGANIZATION AND OWNERSHIP. Each of the Shareholders
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. OCR is a
wholly-owned subsidiary of Chemed.
3.2.(b) POWER. Each Shareholder has full corporate power,
legal right and authority to enter into, execute and deliver this
Agreement and the other agreements, instruments and documents
contemplated hereby (such other documents sometimes referred to herein
as "Ancillary Instruments"), and to carry out the transactions
contemplated hereby.
3.2.(c) AUTHORIZATION. The execution and delivery of this
Agreement and the Ancillary Instruments, and full performance
thereunder, have been duly authorized by the respective boards of
directors and, if required, the shareholders of each Shareholder, and
no other or further corporate act on the part of any such Shareholder
is necessary therefor.
3.2.(d) VALIDITY. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed
and delivered each Ancillary Instrument will be, the legal, valid and
binding obligation of such Shareholder, enforceable in accordance with
its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally,
and by general equitable principles.
3.2.(e) TITLE. Each Shareholder (directly in the case of OCR
and indirectly in the case of Chemed) has, and at Closing Buyer will
receive, good and marketable title to the Shares to be sold by such
Shareholders hereunder, free and clear of all Liens (as defined in
Section 3.12) including, without limitation, voting trusts or
agreements and proxies.
3.3. NO VIOLATION. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by the Shareholders of the transactions contemplated hereby and
thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or
decree (collectively, "Orders") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), will require any
authorization, consent, approval, exemption or other action by or notice to
any Government Entity (including, without limitation, under any
"plant-closing" or similar law), or (c) subject to obtaining the consents
referred to in Schedule 3.3, will violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets of any of the Acquired Companies (or the Shares)
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under, any term or provision of the charter or by-laws of the Acquired
Companies or the Shareholders or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which any of
the Acquired Companies or any Shareholder is a party or by which any of the
Acquired Companies or any Shareholder or any of its or their assets or
properties may be bound or affected.
3.4. FINANCIAL STATEMENTS. Included as Schedule 3.4 are true and
complete copies of the financial statements of each of the Acquired Companies
consisting of (i) balance sheets of each such Acquired Company as of December
31, 1994, 1995 and 1996, and the related statements of income for the years
then ended, and (ii) a combined balance sheet of the Acquired Companies as of
June 30, 1997 (the "Recent Balance Sheet"), and the related combined statement
of income for the six months then ended and for the corresponding period of
the prior year. All of such financial statements are true, complete and
accurate, have been prepared in accordance with generally accepted accounting
principles (except for the absence of footnote disclosure) applied on a
consistent basis, have been prepared in accordance with the books and records
of the Acquired Companies, and fairly present, in accordance with generally
accepted accounting principles, the assets, the liabilities and financial
position, and the results of operations of the Acquired Companies as of the
dates and for the years and periods indicated. The net intercompany receivable
of the Acquired Companies from Chemed (aggregating $10,512,000 at April 30,
1997) was distributed to Chemed prior to the Effective Time. In addition,
prior to the Effective Time, any advances to the officers of the Acquired
Companies have either been collected or written off. The Final Closing Balance
Sheet shall be in accordance with the specifications set forth in Article 2;
the Final Closing Balance Sheet shall be true, complete and accurate.
3.5. TAX MATTERS.
3.5.(a) PROVISION FOR TAXES. The provision or reserve made for
taxes on the face of the Recent Balance Sheet (excluding any such
provision or reserve set forth in the notes thereto) is sufficient for
the payment of all federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Internal Revenue Code of 1986, as amended
(the "Code")), customs, duties, capital stock, franchise, profits,
withholding, social security (or similar tax), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated,
or other tax or assessment of any kind whatsoever, including any
interest, penalty, or addition thereto, whether or not disputed ("Tax"
or "Taxes") at the date of the Recent Balance Sheet and for all years
and periods prior thereto. Since the date of the Recent Balance Sheet,
the Acquired Companies have not incurred any Taxes other than Taxes
incurred in the ordinary course of business consistent in type and
amount with past practices of the Acquired Companies.
3.5.(b) TAX RETURNS FILED. Except as set forth on Schedule
3.5.(b), all Tax returns required to be filed (including without
limitation all returns for periods ending on or before December 31,
1996) by or on behalf of each of the Acquired Companies have been
timely filed and when filed were true and correct in all respects, and
all Taxes have
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been paid or adequately accrued. True and complete copies of all Tax
returns or reports (and any examination reports and/or statements of
deficiency related thereto) filed by each of the Acquired Companies
for each of the five most recent fiscal years have been delivered to
Buyer. Each of the Acquired Companies has duly withheld and paid all
Taxes which it is required to withhold and pay relating to amounts
paid to the employees, independent contractors, creditors,
stockholders, or other third parties of such Acquired Company.
3.5.(c) TAX AUDITS. The Tax returns of the Acquired Companies
have been audited by the Internal Revenue Service or the appropriate
Tax authorities for the periods and to the extent set forth in
Schedule 3.5.(c), and the Acquired Companies have not received from
the Internal Revenue Service or from such Tax authorities any notice
of underpayment of Taxes or other deficiency which has not been paid
nor any objection to any return or report filed by the Acquired
Companies. There are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any Tax return or
report.
3.5.(d) CONSOLIDATED GROUP. Schedule 3.5.(d) lists for each of
the Acquired Companies every year such Acquired Company was a member
of an affiliated group of corporations that filed a consolidated Tax
return on which the statute of limitations does not bar a federal or
state Tax assessment, and each corporation that has been part of such
group. No affiliated group of corporations of which any of the
Acquired Companies has been a member has discontinued filing
consolidated returns during the past five years. None of the Acquired
Companies have any liability for the Taxes of any person other than
the Acquired Companies (i) under Reg. ss. 1.1502-6 as promulgated
pursuant to the Code (or any similar provision of state, local, or
foreign law), (ii) as a transferee or successor, (iii) by contract, or
(iv) otherwise.
3.5.(e) OTHER. Except as set forth in Schedule 3.5.(e), each
of the Acquired Companies has not (i) filed any consent or agreement
under Section 341(f) of Code, (ii) applied for any tax ruling, (iii)
entered into a closing agreement with any taxing authority, (iv) filed
an election under Section 338(g) or Section 338(h)(10) of the Code
(nor has a deemed election under Section 338(e) of the Code occurred),
(v) made any payments, or been a party to an agreement (including this
Agreement) that under any circumstances could obligate it to make
payments that will not be deductible because of Section 280G or 162(m)
of the Code, or (vi) been a party to any Tax allocation or Tax sharing
agreement. Each of the Acquired Companies is not a "United States real
property holding company" within the meaning of Section 897 of the
Code.
3.5.(f) TAX BASIS. Schedule 3.5(f) sets forth the following
information with respect to each of the Acquired Companies as of the
most recent practicable date: (A) the original and adjusted tax basis
of its assets; (B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to the Acquired Companies; and (C)
the amount of any
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deferred gain or loss allocable to the Acquired Companies arising out
of any deferred intercompany transaction.
3.5.(g) DEDUCTIBILITY OF CERTAIN ASSETS. The goodwill and
other intangible assets reflected on the Recent Balance Sheet have
been and currently are tax deductible over a 15-year period (which
commenced as of the date such goodwill or intangible assets were
acquired) by the Acquired Companies for federal income tax purposes
pursuant to Section 197 of the Code (and for state, local, and foreign
income or franchise tax purposes under any corresponding state, local
or foreign tax law) and neither the Shareholders nor the Acquired
Companies have taken action or omitted to take action that could cause
or result in such deductibility being modified or denied or have
knowledge of any attempt or proposed action by the Internal Revenue
Service or other Tax authority to deny or modify such deductibility.
At June 30, 1997, such goodwill and other intangibles aggregated
$22,543,000 and $4,741,000, respectively.
3.6. ACCOUNTS RECEIVABLE. All accounts receivable of the Acquired
Companies reflected on the Recent Balance Sheet, and as incurred in the normal
course of business since the date thereof, represent arm's length sales
actually made in the ordinary course of business; are collectible (net of the
reserve shown on the Recent Balance Sheet for doubtful accounts) within 210
days of the date of such receivables without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in dispute.
Schedule 3.6 contains an aged schedule of accounts receivable as of June 28,
1997. All accounts receivable of the Acquired Companies reflected on the Final
Closing Balance Sheet will represent arm's length sales actually made in the
ordinary course of business and will be collected (net of the reserve shown on
the Final Closing Balance Sheet for doubtful accounts) within 210 days of the
date of such receivables without the necessity of commencing legal proceedings
and will be subject to no counterclaim or set-off. If the Shareholders are
required to reimburse or indemnify Buyer for any uncollectible accounts
receivable, the Shareholders shall obtain the right to pursue collection of
such accounts receivable for their own benefit to the extent of such
indemnification.
3.7. INVENTORY. Except as set forth in Schedule 3.7 and except for the
inventory specifically identified in Section 2.1.(c), all inventory of the
Acquired Companies reflected on the Recent Balance Sheet had a commercial
value at least equal to the value shown on such balance sheet and is valued in
accordance with generally accepted accounting principles at the lower of cost
(on a FIFO basis) or market. All inventory purchased since the date of such
balance sheet consists of a quality and quantity useable and saleable in the
ordinary course of business. Except as set forth in Schedule 3.7, all
inventory of the Acquired Companies is located on premises owned or leased by
the Acquired Companies as reflected in this Agreement.
3.8. ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 3.8, since December 31, 1996 there has not been:
3.8.(a) NO ADVERSE CHANGE. Any adverse change in the financial
condition, assets, liabilities, business, prospects or operations of
the Acquired Companies;
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3.8.(b) NO DAMAGE. Any loss, damage or destruction, whether
covered by insurance or not, affecting the business or properties of
the Acquired Companies;
3.8.(c) NO INCREASE IN COMPENSATION. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of any Acquired Company (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement or other plan or commitment), or any bonus
or other employee benefit granted, made or accrued, except, in the
case of employees only, for increases in base compensation made in the
ordinary course of business and not representing increases in excess
of 7% per annum in each case, and except for up to thirty (30)
employees with annual base salaries of less than $50,000 who may have
received increases in excess of 7%;
3.8.(d) NO LABOR DISPUTES. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
business, financial condition or results of operations of any Acquired
Company;
3.8.(e) NO COMMITMENTS. Any commitment or transaction by any
Acquired Company (including, without limitation, any borrowing or
capital expenditure) other than in the ordinary course of business
consistent with past practice;
3.8.(f) NO DIVIDENDS. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of the
capital stock of any Acquired Company; any redemption, purchase or
other acquisition by any Acquired Company of any of its respective
capital stock, or any security relating thereto; or any other payment
to any shareholder of any Acquired Company as such a shareholder;
3.8.(g) NO DISPOSITION OF PROPERTY. Any sale, lease or other
transfer or disposition of any properties or assets of any Acquired
Company exceeding $150,000 in the aggregate, except for the sale of
inventory items in the ordinary course of business and except for the
disposition of the Detroit Facility and the Pomona Facility (as such
terms are hereinafter defined);
3.8.(h) NO INDEBTEDNESS. Any indebtedness for borrowed money
incurred, assumed or guaranteed by any Acquired Company;
3.8.(i) NO LIENS. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of any Acquired Company;
3.8.(j) NO AMENDMENT OF CONTRACTS. Any entering into,
amendment or termination by any Acquired Company of any contract, or
any waiver of material rights thereunder, other than in the ordinary
course of business;
3.8.(k) LOANS AND ADVANCES. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance
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with past practice) to any person including, but not limited to, any
Affiliate (for purposes of this Agreement, the term "Affiliate" shall
mean and include the Shareholders and the directors and officers of
either Shareholder or any Acquired Company; the spouse of any such
natural person; any natural person who would be the heir or descendant
of any such person if he or she were not living; and any entity in
which any of the foregoing has a direct or indirect interest, except
through ownership of less than 5% of the outstanding shares of any
entity whose securities are listed on an internationally recognized
securities exchange);
3.8.(l) CREDIT. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which
have been extended to such customer or distributor in the past, any
other change in the terms of any credit heretofore extended, or any
other change of the policies or practices of any Acquired Company with
respect to the granting of credit; or
3.8.(m) NO UNUSUAL EVENTS. Any other event or condition not in
the ordinary course of business of the Acquired Companies.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the Recent Balance Sheet, or in Schedule 3.9, the
Acquired Companies do not have any liabilities, commitments or obligations
(secured or unsecured, and whether accrued, absolute, contingent, direct,
indirect or otherwise), other than commercial liabilities and obligations
incurred since the date of the Recent Balance Sheet in the ordinary course of
business and consistent with past practice and none of which has or will have
a material adverse effect on the business, financial condition or results of
operations of the Acquired Companies taken as a whole. Except as and to the
extent described in the Recent Balance Sheet or in Schedule 3.9, neither the
Acquired Companies nor any Shareholder has knowledge of any basis for the
assertion against the Acquired Companies of any liability and there are no
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to liabilities, except commercial liabilities
and obligations incurred in the ordinary course of the business of the
Acquired Companies and consistent with past practice.
3.10. NO LITIGATION. Except as set forth in Schedule 3.10, there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation"), pending or threatened
against the Acquired Companies, their directors or officers (in such
capacity), their business or any of their assets, nor do the Acquired
Companies or any Shareholder know, or have grounds to know, of any basis for
any Litigation. Except for routine collection matters brought by one or more
of the Acquired Companies which have been resolved and closed and except for
such collection matters which are currently pending but in each case involve
claims for less than $20,000, Schedule 3.10 also identifies all Litigation to
which the Acquired Companies or any of their directors or officers (in such
capacity) have been parties since January 1, 1993. Except as set forth in
Schedule 3.10, neither the Acquired Companies nor their respective businesses
or assets are subject to any Order of any Government Entity.
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3.11. COMPLIANCE WITH LAWS AND ORDERS.
3.11.(a) COMPLIANCE. Except as set forth in Schedule 3.11.(a),
each Acquired Company (including each and all of its operations,
practices, properties and assets) is in compliance with all applicable
Laws and Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations,
product advertising and the Environmental Laws (as hereinafter
defined). Except as set forth in Schedule 3.11.(a), the Acquired
Companies have not received notice of any violation or alleged
violation of, and are subject to no liability or other obligation for
past or continuing violation of, any Laws or Orders. All reports and
returns required to be filed by each Acquired Company with any
Government Entity have been filed, and were accurate and complete when
filed. Without limiting the generality of the foregoing:
(i) The operation of the business of the Acquired
Companies as it is now conducted does not, nor does any
condition existing at any of its facilities, in any manner
constitute a nuisance or other tortious interference with the
rights of any person or persons in such a manner as to give
rise to or constitute the grounds for a suit, action, claim or
demand by any such person or persons seeking compensation or
damages or seeking to restrain, enjoin or otherwise prohibit
any aspect of the conduct of such business or the manner in
which it is now conducted.
(ii) Each Acquired Company has made all required
payments to its unemployment compensation reserve accounts
with the appropriate governmental departments of the states
where it is required to maintain such accounts, and each of
such accounts has a positive balance.
(iii) Each Acquired Company has delivered to Buyer
copies of all reports of such Acquired Company for the past
five (5) years required under the federal Occupational Safety
and Health Act of 1970, as amended, and under all other
applicable health and safety laws and regulations. The
deficiencies, if any, noted on such reports have been
corrected.
(iv) Each Acquired Company is in compliance or has
fully complied with any and all reporting, notification,
recall and remedial action requirements of Laws applicable to
such company or the current or past sale of their Products (as
defined in Section 3.20).
3.11.(b) LICENSES, PERMITS AND APPROVALS. Each Acquired
Company has (and for discontinued Products had) all licenses, permits,
approvals, authorizations and consents of all Government Entities and
all certification organizations required for the conduct of its
business (as presently conducted and as proposed to be conducted) and
operation of its facilities. All such licenses, permits, approvals,
authorizations and
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consents are described in Schedule 3.11.(b), are in full force and
effect and will not be affected or made subject to loss, limitation or
any obligation to reapply as a result of the transactions contemplated
hereby. Except as set forth in Schedule 3.11.(b), each Acquired
Company (including its operations, properties and assets) is and has
been in compliance with all such permits and licenses, approvals,
authorizations and consents.
3.11.(c) ENVIRONMENTAL MATTERS. The applicable Laws relating
to pollution or protection of the environment, including Laws relating
to emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local
counterparts are herein collectively referred to as the "Environmental
Laws". Without limiting the generality of the foregoing provisions of
this Section 3.11, each of the Acquired Companies is in full
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulations,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder. Except as
set forth in Schedule 3.11.(c), there is no Litigation nor any demand,
claim, hearing or notice of violation pending or threatened against
any Acquired Company relating in any way to the Environmental Laws or
any Order issued, entered, promulgated or approved thereunder. Except
as set forth in Schedule 3.11.(c), there are no past or present or, to
the best knowledge of the Acquired Companies and the Shareholders,
future events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans which may interfere with or
prevent compliance or continued compliance with the Environmental Laws
or with any Order issued, entered, promulgated or approved thereunder,
or which may give rise to any liability, including, without
limitation, liability under CERCLA or similar state or local Laws, or
otherwise form the basis in whole or in part of any Litigation,
hearing, notice of violation, study or investigation, based on or
related in any way to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission,
discharge, migration, release or threatened release of or into the
environment, or exposure to, any Waste.
3.12. TITLE TO PROPERTIES.
3.12.(a) MARKETABLE TITLE. Except for the real estate relating
to the facility located at 19000 Fitzpatrick, Detroit, Michigan (the
"Detroit Facility") and the facility located at 1280 East 9th Street,
Pomona, California (the "Pomona Facility"), and except for inventory
disposed of in the ordinary course of business since the date of the
Recent Balance Sheet, each of the Acquired Companies has good and
marketable title to all of its
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assets, business and properties, including, without limitation, all
such properties (tangible and intangible) reflected in the Recent
Balance Sheet, free and clear of all mortgages, liens, (statutory or
otherwise) security interests, claims, pledges, licenses, equities,
options, conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those reflected on the Recent Balance
Sheet and, in the case of real property, Liens for taxes not yet due
or which are being contested in good faith by appropriate proceedings
(and which have been sufficiently accrued or reserved against in the
Recent Balance Sheet), municipal and zoning ordinances and easements
for public utilities, none of which interfere with the use of the
property as currently utilized. None of the assets, business or
properties of the Acquired Companies are subject to any restrictions
with respect to the transferability thereof; and the title thereto
will not be affected in any way by the transactions contemplated
hereby. All buildings, plants and other structures owned or otherwise
utilized by each of the Acquired Companies are in good condition and
repair and have no structural defects or defects affecting the
plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems. Since the date of the Recent Balance Sheet and
prior to the Effective Time, OCR has acquired for no consideration
each of the Detroit Facility and the Pomona Facility and has assumed
all liabilities relating thereto, and (except for the lease for the
Detroit Facility referenced in Section 5.4 hereof) the Acquired
Companies have and in the future will have no liabilities or other
obligations (including, without limitation, liabilities under the
Environmental Laws) with respect to such facilities. All transfer
fees, all Taxes or other liabilities incurred by any Acquired Company
in connection with the transfer of the Detroit Facility and the Pomona
Facility have been paid by OCR. The Pomona Facility has not been used
to conduct the business of the Acquired Companies since June 1991.
3.12.(b) REAL PROPERTY. Schedule 3.12.(b) sets forth all real
property owned, used or occupied by each of the Acquired Companies
(the "Real Property"), including with respect to all owned Real
Property a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which each such
company has notice or knowledge) granted on or appurtenant to or
otherwise affecting such Real Property, the zoning classification
thereof, and all plants, buildings or other structures located
thereon. There are no encumbrances, easements or rights of way, zoning
classifications or other restrictions or limitations that would
materially and adversely affect the use of any leased Real Property by
the Acquired Company which is the tenant with respect to such leased
Real Property. Schedule 3.12.(b) also sets forth, with respect to each
parcel of Real Property which is leased, the material terms of such
lease. There are now in full force and effect required duly issued
certificates of occupancy permitting the Real Property and
improvements located thereon to be legally used and occupied as the
same are now constituted. All of the owned Real Property has permanent
rights of access to dedicated public highways. No fact or condition
exists which would prohibit or adversely affect the ordinary rights of
access to and from the owned Real Property from and to the existing
highways and roads and there is no pending or threatened restriction
or denial, governmental or otherwise, upon such ingress and egress.
There is not (i) any claim of adverse possession or prescriptive
rights involving any of the
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owned Real Property, (ii) any structure located on any owned Real
Property which encroaches on or over the boundaries of neighboring or
adjacent properties, (iii) any structure of any other party which
encroaches on or over the boundaries of any of such owned Real
Property, or (iv) any material adverse other matter affecting the
owned Real Property that would be disclosed by an accurate ALTA survey
of such owned Real Property. Except as set forth in Schedule 3.12.(b),
none of the Real Property is located in a flood plain, flood hazard
area, wetland or lakeshore erosion area within the meaning of any Law,
regulation or ordinance. No public improvements have been commenced
and to the best knowledge of the Acquired Companies and the
Shareholders none are planned which in either case may result in
special assessments against or otherwise materially adversely affect
any Real Property. No portion of any of the Real Property has been
used as a landfill or for storage or landfill of hazardous or toxic
materials. Neither any Acquired Company nor any Shareholder has notice
or knowledge of any (i) planned or proposed increase in assessed
valuations of any Real Property, (ii) Order requiring repair,
alteration, or correction of any existing condition affecting any Real
Property or the systems or improvements thereat, (iii) condition or
defect which could give rise to an order of the sort referred to in
"(ii)" above, (iv) underground storage tanks, or any structural,
mechanical, or other defects of material significance affecting any
Real Property or the systems or improvements thereat (including, but
not limited to, inadequacy for normal use of mechanical systems or
disposal or water systems at or serving the Real Property), or (v)
work that has been done or labor or materials that has or have been
furnished to any Real Property during the period of six (6) months
immediately preceding the date of this Agreement for which Liens could
be filed against any of the Real Property.
3.12.(c) NO CONDEMNATION OR EXPROPRIATION. Neither the whole
nor any portion of the property or any other assets of any Acquired
Company is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor to the best knowledge of
the Acquired Companies or the Shareholders has any such condemnation,
expropriation or taking been proposed.
3.13. INSURANCE. Set forth in Schedule 3.13 is a complete and accurate
list and description of all policies of fire, liability, product liability,
workers compensation, health and other forms of insurance presently in effect
with respect to the business and properties of each of the Acquired Companies,
true and correct copies of which have heretofore been delivered to Buyer.
Schedule 3.13 includes, without limitation, the carrier, the description of
coverage, the limits of coverage, retention or deductible amounts, amount of
annual premiums, date of expiration and the date through which premiums have
been paid with respect to each such policy, and any pending claims in excess
of $50,000. All such policies are valid, outstanding and enforceable policies
and provide insurance coverage for the properties, assets and operations of
each of the Acquired Companies, of the kinds, in the amounts and against the
risks customarily maintained by organizations similarly situated; and no such
policy (nor any previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events arising prior to the date hereof. Schedule 3.13 indicates each policy
as to which (a) the coverage
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limit has been reached or (b) the total incurred losses to date equal 75% or
more of the coverage limit. No notice of cancellation or termination has been
received with respect to any such policy, and neither any Acquired Company nor
any Shareholder has knowledge of any act or omission which could result in
cancellation of any such policy prior to its scheduled expiration date. No
Acquired Company has been refused any insurance with respect to any aspect of
the operations of its business nor has its coverage been limited by any
insurance carrier to which it has applied for insurance or with which it has
carried insurance during the last three years. Each of the Acquired Companies
has duly and timely made all claims it has been entitled to make under each
policy of insurance. Since January 1, 1993, all general liability policies
maintained by or for the benefit of any Acquired Company have been
"occurrence" policies and not "claims made" policies. There is no claim by any
Acquired Company pending under any such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies, and
neither the Acquired Companies nor any Shareholder knows of any basis for
denial of any claim under any such policy. No Acquired Company has received
any written notice from or on behalf of any insurance carrier issuing any such
policy that insurance rates therefor will hereafter be substantially increased
(except to the extent that insurance rates may be increased for all similarly
situated risks) or that there will hereafter be a cancellation or an increase
in a deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy. Such policies are sufficient in
all material respects for compliance by each of the Acquired Companies with
all requirements of law and with the requirements of all material contracts to
which any of them is a party. Schedule 3.13 describes any self-insurance
arrangements affecting any of the Acquired Companies. Except for reserves
established for and relating to workers' compensation claims, the reserves
established by the Acquired Companies are adequate to dispose of any liability
under such self-insurance arrangements.
3.14. CONTRACTS AND COMMITMENTS.
3.14.(a) REAL PROPERTY LEASES. Except as set forth in Schedule
3.12.(b), the Acquired Companies have no leases of real property. The
leases set forth in Schedule 3.12.(b) are valid and in full force and
effect and the amounts required to be paid thereunder by the Acquired
Companies have been paid.
3.14.(b) PERSONAL PROPERTY LEASES. Except as set forth in
Schedule 3.14.(b), the Acquired Companies have no leases of personal
property involving consideration or other expenditure in excess of
$50,000.
3.14.(c) PURCHASE COMMITMENTS. The Acquired Companies have no
purchase commitments for inventory items or supplies that, together
with amounts on hand, constitute in excess of four months normal
usage, or which are at an excessive price.
3.14.(d) SALES COMMITMENTS. Except as set forth in Schedule
3.14.(d), the Acquired Companies have no sales contracts or
commitments to customers or distributors which aggregate in excess of
$100,000 to any one customer or distributor (or group of affiliated
customers or distributors). The Acquired Companies have no sales
contracts or commitments except those made in the ordinary course of
business, at arm's
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length, and no such contracts or commitments are for a sales price
which would result in a loss to any Acquired Company.
3.14.(e) CONTRACTS WITH AFFILIATES AND CERTAIN OTHERS. Except
as set forth in Schedule 3.14.(e), the Acquired Companies have no
agreement, understanding, contract or commitment (written or oral)
with any Affiliate or any employee, agent, consultant, distributor,
dealer or franchisee that is not cancelable by the Acquired Company
which is a party thereto on notice of not longer than 30 days without
liability, penalty or premium of any nature or kind whatsoever.
3.14.(f) POWERS OF ATTORNEY. No Acquired Company has given a
power of attorney, which is currently in effect, to any person, firm
or corporation for any purpose whatsoever.
3.14.(g) COLLECTIVE BARGAINING AGREEMENTS. Except as set forth
in Schedule 3.14.(g), no Acquired Company is a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups. Copies of all such agreements have
heretofore been delivered to Buyer.
3.14.(h) LOAN AGREEMENTS. Except as set forth in Schedule
3.14.(h), no Acquired Company is obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
as a signatory, guarantor or otherwise.
3.14.(i) GUARANTEES. Except as disclosed on Schedule 3.14.(i),
no Acquired Company has guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as
a surety, or otherwise agreed to be contingently or secondarily liable
for the obligations of any person.
3.14.(j) CONTRACTS SUBJECT TO RENEGOTIATION. No Acquired
Company is a party to any contract with any governmental body which is
subject to renegotiation.
3.14.(k) BURDENSOME OR RESTRICTIVE AGREEMENTS. No Acquired
Company is a party to or is it bound by any agreement, deed, lease or
other instrument which is so burdensome as to materially affect or
impair the operation of such Acquired Company, except as provided in
Schedule 3.14.(k). Without limiting the generality of the foregoing,
except as set forth on Schedule 3.14.(k), no Acquired Company is a
party to or is it bound by any agreement requiring it to assign any
interest in any trade secret or proprietary information, or
prohibiting or restricting it from competing in any business or
geographical area or soliciting customers or otherwise restricting it
from carrying on its business anywhere in the world.
3.14.(l) OTHER MATERIAL CONTRACTS. No Acquired Company is
party to any contract or commitment of any nature involving
consideration or other expenditure in excess of $50,000, or involving
performance (other than with respect to leases) over a period of more
than 12 months, or which is otherwise individually material to the
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operations of the Acquired Companies taken as a whole, except as
explicitly described in Schedule 3.14.(l) or in any other Schedule.
3.14.(m) NO DEFAULT. No Acquired Company is in default under
any lease, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or cause the acceleration
of any of its obligations or result in the creation of any Lien on any
of the assets owned, used or occupied by such Acquired Company. No
third party is in default under any lease, contract or commitment to
which any Acquired Company is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or give rise to an
automatic termination, or the right of discretionary termination,
thereof.
3.15. LABOR MATTERS. Except as set forth in Schedule 3.15, within the
last five years no Acquired Company has experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule 3.15,
(a) each of the Acquired Companies is in compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint against
any Acquired Company pending or threatened; (c) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or
threatened against or affecting any Acquired Company nor any secondary boycott
with respect to products of any Acquired Company; (d) no question concerning
representation has been raised or is threatened respecting the employees of
any Acquired Company; (e) no grievance which might have a material adverse
effect on any Acquired Company, nor any arbitration proceeding arising out of
or under collective bargaining agreements, is pending and no such claim
therefor exists; and (f) there are no administrative charges or court
complaints against any Acquired Company concerning alleged employment
discrimination or other employment related matters pending or threatened
before any Government Entity.
3.16. EMPLOYEE BENEFIT PLANS.
3.16.(a) DISCLOSURE. Schedule 3.16.(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all
employee manuals, and all written or binding oral statements of
policies, practices or understandings relating to employment, which
are provided to, for the benefit of, or relate to, any persons
employed by the Acquired Companies. The items described in the
foregoing sentence are hereinafter sometimes
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referred to collectively as "Employee Plans/Agreements," and each
individually as an "Employee Plan/Agreement." True and correct copies
of all the Employee Plans/Agreements, including all amendments
thereto, have heretofore been provided to Buyer. Each of the Employee
Plans/Agreements is identified on Schedule 3.16.(a), to the extent
applicable, as one or more of the following: an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), a "defined
benefit plan" (as defined in Section 414 of the Code), an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and/or as
a plan intended to be qualified under Section 401 of the Code. Except
as set forth in Schedule 3.16.(a), no Employee Plan/Agreement is a
"multiemployer plan" (as defined in Section 4001 of ERISA), and none
of the Acquired Companies has ever contributed nor been obligated to
contribute to any such multiemployer plan.
3.16.(b) TERMINATIONS, PROCEEDINGS, PENALTIES, ETC. With
respect to each employee benefit plan (including, without limitation,
the Employee Plans/Agreements) that is subject to the provisions of
Title IV of ERISA and with respect to which the Acquired Companies or
any of their assets may, directly or indirectly, be subject to any
liability, contingent or otherwise, or the imposition of any Lien
(whether by reason of the complete or partial termination of any such
plan, the funded status of any such plan, any "complete withdrawal"
(as defined in Section 4203 of ERISA) or "partial withdrawal" (as
defined in Section 4205 of ERISA) by any person from any such plan, or
otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any assets of any Acquired Company to
any liability, contingent or otherwise, or the imposition of
any lien under Title IV of ERISA;
(ii) no proceeding has been initiated or threatened by
any person (including the Pension Benefit Guaranty Corporation
("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of any Acquired Company to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA, whether to the PBGC or to any
other person or otherwise on account of the termination of any
such plan;
(iv) if any such plan were to be terminated as of the
Closing Date, no assets of any Acquired Company would be
subject, directly or indirectly, to any liability, contingent
or otherwise, or the imposition of any lien under Title IV of
ERISA;
(v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency"
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(as defined in Section 302 of ERISA and Section 412 of the
Code, respectively), whether or not waived; and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
3.16.(c) PROHIBITED TRANSACTIONS, ETC. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection
with which any Acquired Company or any of their assets or any Employee
Plan/Agreement, directly or indirectly, could be subject to any
liability under ERISA, the Code or any other Law or Order applicable
to any Employee Plan/Agreement, or under any agreement, instrument,
Law or Order pursuant to or under which any Acquired Company has
agreed to indemnify or is required to indemnify any person against
liability incurred under any such Law or Order.
3.16.(d) FULL FUNDING. The funds available under each Employee
Plan/Agreement which is intended to be a funded plan exceed the
amounts required to be paid, or which would be required to be paid if
such Employee Plan/Agreement were terminated, on account of rights
vested or accrued as of the Closing Date (using the actuarial methods
and assumptions then used by actuaries of the Acquired Companies in
connection with the funding of such Employee Plan/Agreement).
3.16.(e) CONTROLLED GROUP; AFFILIATED SERVICE GROUP; LEASED
EMPLOYEES. Except as set forth in Schedule 3.16.(e), each of the
Acquired Companies is not and never has been a member of a controlled
group of corporations as defined in Section 414(b) of the Code or in
common control with any unincorporated trade or business as determined
under Section 414(c) of the Code. Except as set forth in Schedule
3.16.(e), each of the Acquired Companies is not and never has been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code. Except as set forth in Schedule 3.16.(e), there
are not and never have been any leased employees within the meaning of
Section 414(n) of the Code who perform services for the Acquired
Companies, and no individuals are expected to become leased employees
with the passage of time. With respect to any entity identified on
Schedule 3.16.(e), the representations and warranties in the last
sentence of Section 3.16.(a) hereof and all of Section 3.16.(b) hereof
would be accurate if all of such entities were included as "Acquired
Companies" for purposes of Sections 3.16.(a) and 3.16.(b) hereof.
3.16.(f) PAYMENTS AND COMPLIANCE. With respect to each
Employee Plan/Agreement, (i) all payments due from any Acquired
Company to date have been made and all amounts properly accrued to
date as liabilities of any Acquired Company which have not been paid
have been properly recorded on the books of such Acquired Company and
are reflected in the Recent Balance Sheet; (ii) each of the Acquired
Companies has complied with, and each such Employee Plan/Agreement
conforms in form and operation
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to, all applicable Laws and regulations, including but not limited to
ERISA and the Code, in all respects and all reports and information
relating to such Employee Plan/Agreement required to be filed with any
Governmental Entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/ Agreement required to
be disclosed or provided to participants or their beneficiaries have
been timely disclosed or provided; (iv) each such Employee
Plan/Agreement which is intended to qualify under Section 401 of the
Code has received a favorable determination letter from the Internal
Revenue Service with respect to such qualification, its related trust
has been determined to be exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption;
(iv) there are no actions, suits or claims pending (other than routine
claims for benefits) or threatened with respect to such Employee Plan/
Agreement or against the assets of such Employee Plan/Agreement; and
(v) no Employee Plan/Agreement is a plan which is established and
maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.
3.16.(g) POST-RETIREMENT BENEFITS. Except as set forth on
Schedule 3.16.(g), no Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether or
not insured) with respect to current or former employees of the
Acquired Companies beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii) death
or retirement benefits under any Employee Plan/Agreement that is an
employee pension benefit plan, (iii) deferred compensation benefits
accrued as liabilities on the books of the Acquired Companies
(including the Recent Balance Sheet), (iv) disability benefits under
any Employee Plan/Agreement that is an employee welfare benefit plan
and which have been fully provided for by insurance or otherwise, (v)
benefits in the nature of severance pay or (vi) as set forth in
Schedule 3.16.(g).
3.16.(h) NO TRIGGERING OF OBLIGATIONS. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of any Acquired Company to severance pay,
unemployment compensation or any other payment, (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due
to any such employee or former employee or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available. Buyer
covenants that any liability for severance payments to employees of
the Acquired Companies (other than for Messrs. Devlin, Naglick and
Williams) arising after the Closing Date and resulting from actions
taken by Buyer after the Closing Date (other than any rights to
severance benefits that arise as a result of the transactions
contemplated by this Agreement) shall be the sole responsibility of
Buyer.
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3.16.(i) DELIVERY OF DOCUMENTS. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for
the last two years;
(ii) a copy of the summary plan description, together
with each summary of material modifications, required under
ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/ Agreement is
embodied entirely in an insurance policy to which any Acquired
Company is a party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through
a trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each
Employee Plan/Agreement that is intended to be a "qualified
plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual
report has been filed and delivered to Buyer pursuant to clause (i) of
this Section 3.16.(i), no material adverse change has occurred with
respect to the matters covered by the latest such annual report since
the date thereof.
3.16.(j) FUTURE COMMITMENTS. No Acquired Company has an
announced plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.17. EMPLOYMENT COMPENSATION. Schedule 3.17 contains a true and
correct list of all employees to whom any Acquired Company is paying
compensation, including bonuses and incentives, at an annual rate in excess of
$50,000 for services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of compensation for
each employee and in the case of hourly or commission employees identifies
certain reasonable ranges of rates and the number of employees falling within
each such range.
3.18. TRADE RIGHTS. Schedule 3.18 lists all Trade Rights (as defined
below) in which each of the Acquired Companies now has any interest,
specifying whether such Trade Rights are owned, controlled, used or held
(under license or otherwise) by such company, and also indicating which of
such Trade Rights are registered. All Trade Rights shown as registered in
Schedule 3.18 have been properly registered, all pending registrations and
applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current.
In order to conduct the business of each of the Acquired Companies, as
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such is currently being conducted or proposed to be conducted, such company
does not require any Trade Rights that it does not already have. The Acquired
Companies are not infringing and have not infringed any Trade Rights of
another in the operation of their businesses, nor is any other person
infringing the Trade Rights of the Acquired Companies. No Acquired Company has
granted any license or made any assignment of any Trade Right listed on
Schedule 3.18, nor does any Acquired Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There is no
Litigation pending or threatened to challenge any Acquired Company's right,
title and interest with respect to its continued use and right to preclude
others from using any of its Trade Rights. All Trade Rights of the Acquired
Companies are valid, enforceable and in good standing, and there are no
equitable defenses to enforcement based on any act or omission of any Acquired
Company. The consummation of the transactions contemplated hereby will not
alter or impair any Trade Rights owned or used by any Acquired Company. As
used herein, the term "Trade Rights" shall mean and include: (i) all trademark
rights, business identifiers, trade dress, service marks, trade names and
brand names, all registrations thereof and applications therefor and all
goodwill associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights associated with
the foregoing and the underlying works of authorship; (iii) all patents and
patent applications, and all international proprietary rights associated
therewith; (iv) all contracts or agreements granting any right, title, license
or privilege under the intellectual property rights of any third party; (v)
all inventions, mask works and mask work registrations, know-how, discoveries,
improvements, designs, trade secrets, shop and royalty rights, employee
covenants and agreements respecting intellectual property and non-competition
and all other types of intellectual property; and (vi) all claims for
infringement or breach of any of the foregoing.
3.19. MAJOR CUSTOMERS AND SUPPLIERS.
3.19.(a) MAJOR CUSTOMERS. Schedule 3.19.(a) contains a list of
the ten largest customers, including distributors, of the Acquired
Companies for each of the two (2) most recent fiscal years (determined
on the basis of the total amount of net sales) showing the total
amount of net sales to each such customer during each such year.
Neither the Acquired Companies nor any Shareholder has any knowledge
or information of any facts indicating, nor any other reason to
believe, that any of the customers listed on Schedule 3.19.(a) will
not continue to be customers of the business of the Acquired Companies
after the Closing at substantially the same level of purchases as
heretofore.
3.19.(b) MAJOR SUPPLIERS. Schedule 3.19.(b) contains a list of
the ten largest suppliers to the Acquired Companies for each of the
two (2) most recent fiscal years (determined on the basis of the total
amount of purchases) showing the total amount of purchases from each
such supplier during each such year. Neither the Acquired Companies
nor any Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the suppliers
listed on Schedule 3.19.(b) will not continue to be suppliers to the
business of the Acquired Companies after the Closing and will not
continue to supply the business with substantially the same quantity
and quality of goods at competitive prices.
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3.19.(c) DEALERS AND DISTRIBUTORS. Section 3.19.(c) contains a
list by product line of all sales representatives, dealers,
distributors and franchisees of the Acquired Companies, together with
representative copies of all sales representative, dealer, distributor
and franchise contracts and policy statements, and a description of
all substantial modifications or exceptions.
3.20. PRODUCT WARRANTY AND PRODUCT LIABILITY. Schedule 3.20 contains a
true, correct and complete copy of the standard warranty or warranties of the
Acquired Companies for sales of Products (as defined below) and, except as
stated therein, there are no warranties, commitments or obligations with
respect to the return, repair or replacement of Products. Schedule 3.20 sets
forth the estimated aggregate annual cost to the Acquired Companies of
performing warranty obligations for customers for each of the two preceding
fiscal years and the current fiscal year to the date of the Recent Balance
Sheet. Schedule 3.20 contains a description of all product liability claims
and similar Litigation relating to products manufactured or sold, or services
rendered, which are presently pending or which to the best knowledge of any
Acquired Company or Shareholder are threatened, or which have been asserted or
commenced against any Acquired Company within the last five years, in which a
party thereto either requests injunctive relief or alleges damages in excess
of $5,000 (whether or not covered by insurance). There are no defects in
design, construction or manufacture of the Products which would adversely
affect performance, create an unusual risk of injury to persons or property or
require notification to end-users, recall or remedial action under applicable
Laws. None of the Products has been the subject of (i) any Medication and
Device Experience Report ("MDR"); or (ii) any remedial action replacement,
field fix, retrofit, modification or recall campaign by any Acquired Company
and, to the best knowledge of any Acquired Company or Shareholder, no facts or
conditions exist which could reasonably be expected to result in such a MDR or
recall campaign. The Products have been designed and manufactured so as to
meet and comply with all governmental standards, specifications and Laws
currently in effect. Such products have received all approvals from
Governmental Entities or certificates necessary to allow their sale and use,
including applicable stock certificates. As used in this Section 3.20, the
term "Products" means any and all products currently or at any time previously
manufactured, distributed or sold by any Acquired Company, or by any
predecessor of any Acquired Company under any brand name or mark under which
products are or have been manufactured, distributed or sold by any Acquired
Company.
3.21. BANK ACCOUNTS. Schedule 3.21 sets forth the names and locations
of all banks, trust companies, savings and loan associations and other
financial institutions at which any Acquired Company maintains a safe deposit
box, lock box or checking, savings, custodial or other account of any nature,
the type and number of each such account and the signatories therefore, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
3.22. AFFILIATES' RELATIONSHIPS.
3.22.(a) CONTRACTS WITH AFFILIATES. All leases, contracts,
agreements or other arrangements between any Acquired Company and any
Affiliate (including any Shareholder) are described on Schedule
3.22.(a).
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3.22.(b) NO ADVERSE INTERESTS. No Affiliate has any direct or
indirect interest in (i) any entity which does business with any
Acquired Company or is competitive with the business of the Acquired
Companies, or (ii) any property, asset or right which is used by the
Acquired Companies in the conduct of their business.
3.22.(c) OBLIGATIONS. All obligations of any Affiliate to any
Acquired Company, and all obligations of any Acquired Company to any
Affiliate, are listed on Schedule 3.22.(c).
3.23. ASSETS NECESSARY TO BUSINESS. The Acquired Companies presently
have and at the Closing (provided that the lease relating to the Detroit
Facility as contemplated by Section 5.4 has been entered into) will have good,
valid and marketable title to all property and assets, tangible and
intangible, and all leases, licenses and other agreements, necessary to permit
Buyer to carry on the business of the Acquired Companies as presently
conducted and as conducted as reflected in the financial statements described
in Section 3.4 hereof.
3.24. NO BROKERS OR FINDERS. Neither the Acquired Companies nor the
Shareholders nor any of their directors, officers, employees, shareholders or
agents have retained, employed or used any broker or finder in connection with
the transactions provided for herein or in connection with the negotiation
thereof.
3.25. DISCLOSURE. No representation or warranty by the Shareholders in
this Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of the Acquired Companies
and/or the Shareholders pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary to
make the statements contained therein not misleading. All statements and
information contained in any certificate, instrument, Disclosure Schedule or
document delivered by or on behalf of the Acquired Companies and/or the
Shareholders shall be deemed representations and warranties by the
Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which is true and correct on the date hereof, shall be
unaffected by any investigation heretofore or hereafter made by the
Shareholders or any notice to the Shareholders, and shall survive the Closing
of the transactions provided for herein.
4.1. CORPORATE.
4.1.(a) ORGANIZATION. Buyer is a corporation duly organized
and validly existing under the laws of the State of Wisconsin.
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4.1.(b) CORPORATE POWER. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
4.2. AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and instruments
to be executed and delivered by Buyer pursuant hereto or the consummation of
the transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Buyer pursuant hereto will constitute, valid and
binding agreements of Buyer, enforceable in accordance with their respective
terms, except as such may be limited by bankruptcy, insolvency, reorganization
or other Laws affecting creditors' rights generally, and by general equitable
principles.
4.3. NO BROKERS OR FINDERS. Neither Buyer nor any of its directors,
officers, employees or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
4.4. DISCLOSURE. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Buyer pursuant to this
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading.
4.5. INVESTMENT INTENT. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
5. COVENANTS
5.1. TITLE INSURANCE. The Shareholders, at their expense, shall
provide to Buyer prior to Closing title insurance commitments, issued by a
title insurance company or companies reasonably satisfactory to Buyer,
agreeing to issue to the Acquired Companies standard form owner's policies of
title insurance with respect to all owned Real Property, together with a copy
of each document to which reference is made in such commitments. Such policies
shall be standard ALTA Form 1990 owner's policies in the full fair market
value thereof, insuring good and marketable title thereto (expressly including
all easements and other appurtenances). All policies shall insure title in
full accordance with the representations and warranties set forth herein and
shall be subject only to such conditions and exceptions as shall be reasonably
acceptable to Buyer, and shall contain such endorsements as Buyer shall
reasonably request (including, but not limited to, an endorsement over rights
of creditors, if requested by Buyer).
5.2. SURVEYS. The Shareholders, at their expense, shall provide to
Buyer as soon as is reasonably practicable after Closing surveys of all owned
Real Property, prepared in accordance
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with ALTA/ASCM standards, each dated no more than ninety (90) days prior to
the date of delivery to Buyer and each detailing the legal description, the
perimeter boundaries, all improvements located thereon, all easements and
encroachments affecting each such parcel of Real Property and such other
matters as may be reasonably requested by Buyer or the title insurance
companies, each containing a surveyor certificate reasonably acceptable to
Buyer and the title insurance companies, and each prepared by a registered
land surveyor satisfactory to Buyer.
5.3. ENVIRONMENTAL AND OSHA AUDITS. Buyer (at its option) will prior
to Closing have retained a firm engaged in the regular business of
environmental engineering and such firm will have conducted such environmental
audits of the operations of the Acquired Companies and the real estate
occupied or previously owned or occupied by the Acquired Companies as Buyer in
its discretion shall consider necessary or appropriate. In addition, Buyer (at
its option) will prior to Closing have retained a firm engaged in the business
of performing compliance audits relating to Laws governing occupational health
and safety matters and such firm shall have conducted such reviews of the
operations of the Acquired Companies as Buyer in its discretion shall consider
necessary or appropriate.
5.4. LEASE FOR DETROIT FACILITY; GUARANTY FOR TROY FACILITY. At the
Closing, OCR and Omnia Corporation shall execute and deliver a lease for the
Detroit Facility in the form of Exhibit A hereto. At the Closing, Buyer will
enter into a guaranty of the Acquired Companies' obligations with respect to
the lease for the space located at 50 Big Beaver, Suite 350, Troy, Michigan
(the "Troy Guaranty").
5.5. EMPLOYMENT AGREEMENTS; TRANSITIONAL SERVICES. Chemed acknowledges
that it currently has employment agreements, as amended, with each of James H.
Devlin, John Naglick, Jr. and David P. Williams and that, at Closing, Chemed
will continue to employ and assume all liability for (and indemnify, defend
and hold the Acquired Companies and Buyer harmless with respect to) such
employment contracts. Chemed further acknowledges that Buyer may, but is not
obligated to, offer one or both of Messrs. Devlin and Naglick full-time
employment with one or more of the Acquired Companies and Chemed waives any
claims, actions or the like it may have against Buyer or the Acquired
Companies resulting from any such offer or offers of employment or the
transactions contemplated by this Section 5.5. Chemed further consents to and
acknowledges that, as contemplated by Section 9.1.(c), Buyer will enter into
Noncompetition and Consulting Agreements with Messrs. Devlin and Naglick in
connection with the Closing. In addition, Chemed acknowledges that it has an
employment agreement, dated May 16, 1994, with Christopher J. Heaney, which
agreement has been amended by amendment no. 1 thereto, dated May 15, 1995, by
amendment no. 2 thereto, dated May 20, 1996, and by amendment no. 3 thereto,
dated May 19, 1997 (such employment agreement as so amended is hereinafter
referred to as the "Heaney Employment Agreement"). Chemed agrees to continue
to employ Mr. Heaney pursuant to the terms of the Heaney Employment Agreement
and represents and warrants that it has not taken and will not take any action
(including, without limitation, consummation of the transactions contemplated
by this Agreement), and has not omitted and will not omit to take any action
that would constitute a termination of Mr. Heaney "Without Cause" as such term
is defined in the Heaney Employment Agreement. Chemed further agrees that, for
the one year period following the Closing Date, it will use its reasonable
best efforts to cause Mr.
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Heaney to provide such consulting services to the Acquired Companies
(consistent in scope to the services provided by Mr. Heaney prior to the
Closing Date) as the Buyer or the Acquired Companies may from time to time
request. Buyer agrees to reimburse Chemed for seventy percent (70%) of the
costs incurred by Chemed with respect to the employment of Mr. Heaney under
the Heaney Employment Agreement during the one year period following the
Closing Date in accordance with the terms of the Heaney Employment Agreement
as in effect on the date hereof, with any additional costs thereunder being
Chemed's responsibility. In addition, Buyer will pay Mr. Heaney a bonus amount
equal to thirty percent (30%) of his current annual salary under the Heaney
Employment Agreement, payable in monthly installments commencing September 30,
1997. Notwithstanding the foregoing, Chemed following the Closing will use its
reasonable best efforts to encourage Mr. Heaney to accept full-time employment
with Buyer or one or more of its subsidiaries (including for this purpose the
Acquired Companies) on terms to be negotiated by the parties and Chemed waives
any claims, actions or the like it may have against Buyer or its subsidiaries
(including the Acquired Companies) resulting from any such offer of employment
or the transactions contemplated by this Section 5.5. Buyer agrees to provide
their existing office space to Messrs. Williams and Heaney at no cost to such
individuals or the Shareholders for the one year period following the Closing
Date; provided however, that if Buyer relocates that facility, it will provide
equivalent space elsewhere.
5.6. NONCOMPETITION; CONFIDENTIALITY. Subject to the Closing, and as
an inducement to Buyer to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
business of the Acquired Companies being acquired pursuant to this Agreement,
each Shareholder hereby covenants and agrees as follows:
5.6.(a) COVENANT NOT TO COMPETE. For a period of ten years
from the Closing Date, no Shareholder will directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the business of the Acquired Companies or
is substantially similar thereto, including owning or
controlling any financial interest in any corporation,
partnership, firm or other form of business organization which
is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of the Acquired Companies or Buyer in
any aspect with respect to the business of the Acquired
Companies, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with
any such competitor;
(iii) offer employment to an employee (other than
James H. Devlin, John Naglick, Jr., David P. Williams and
Christopher J. Heaney as
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contemplated by Section 5.5 hereof) of any Acquired Company,
without the prior written consent of Buyer; or
(iv) engage in any practice the purpose of which is to
evade the provisions of this covenant not to compete or to
commit any act which adversely affects the business of the
Acquired Companies;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of
any such corporation. The parties agree that the geographic scope of
this covenant not to compete shall extend to the United States and its
territories and Canada. The parties agree that Buyer may sell, assign
or otherwise transfer this covenant not to compete, in whole or in
part, to any person, corporation, firm or entity that purchases all or
part of the business of the Acquired Companies. In the event a court
of competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same
valid and enforceable in such jurisdiction.
5.6.(b) COVENANT OF CONFIDENTIALITY. No Shareholder shall, and
the Shareholders will cause their respective Affiliates, employees,
advisors and agents not to, at any time subsequent to the Closing,
except as explicitly requested by Buyer, (i) use for any purpose, (ii)
disclose to any person, or (iii) keep or make copies of documents,
tapes, discs or programs containing, any confidential information
concerning the Acquired Companies. For purposes hereof, "confidential
information" shall mean and include, without limitation, all Trade
Rights in which the Acquired Companies have an interest, all customer
lists and customer information, and all other information concerning
any processes, apparatus, equipment, packaging, products, marketing
and distribution methods of the Acquired Companies, not previously
disclosed to the public directly by the Acquired Companies.
5.6.(c) EQUITABLE RELIEF FOR VIOLATIONS. Each Shareholder
agrees that the provisions and restrictions contained in this Section
5.6 are necessary to protect the legitimate continuing interests of
Buyer in acquiring the Shares, and that any violation or breach of
these provisions will result in irreparable injury to Buyer for which
a remedy at law would be inadequate and that, in addition to any
relief at law which may be available to Buyer for such violation or
breach and regardless of any other provision contained in this
Agreement, Buyer shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this
Section 5.6.
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5.7. GENERAL RELEASES AND INDEMNIFICATION. At the Closing, each
Shareholder shall deliver general releases to Buyer, in form and substance
satisfactory to Buyer and its counsel, releasing each Acquired Company and the
directors, officers, agents and employees of each such Acquired Company from
all claims to the Closing Date, except as otherwise contemplated by this
Agreement and any agreement, document or instrument delivered hereunder or in
connection herewith. In addition to any other indemnification otherwise
provided for in this Agreement, and notwithstanding any disclosure with
respect thereto in the Disclosure Schedule or otherwise, or any knowledge or
information of or obtained by Buyer or the Acquired Companies, the
Shareholders, jointly and severally, shall indemnify and hold Buyer, its
directors, officers, employees and controlled and controlling persons and the
Acquired Companies harmless from and against any and all loss, cost, expense
or other damage (including, without limitation, reasonable attorneys' fees and
expenses and any fines or penalties) resulting from, arising out of or
incurred with respect to, or alleged to result from, arise out of or have been
incurred with respect to any claim, demand, right, liability, obligation,
action, cause of action or suit, known or unknown, which any of James H.
Devlin, John G. Naglick, Jr., David P. Williams or Christopher J. Heaney or
any person claiming through or under any of them ever had or now has or
hereafter can, shall or may have against the Acquired Companies and their
respective directors, officers, agents and employees, or any of them, for,
upon, or by reason of any matter, cause or thing from the beginning of the
world to the date hereof, including but not limited to matters related to the
employment of any of Messrs. Devlin, Naglick, Williams or Heaney by the
Acquired Companies or any oral or written agreement of any nature whatsoever
between any of them and the Acquired Companies, except there is expressly
excluded from this
indemnification obligation of the Shareholders any right or claim that any of
Messrs. Devlin, Naglick, Williams or Heaney may have arising under this
Agreement and any agreement, document or instrument delivered hereunder or in
connection herewith.
5.8. HSR ACT FILINGS. To the extent such filings have not been
completed prior to the execution of this Agreement, each party shall, in
cooperation with the other parties, file or cause to be filed any reports or
notifications that may be required to be filed by it under the HSR Act, with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the others all such information in its
possession as may be necessary for the completion of the reports or
notifications to be filed by the other. Prior to making any communication,
written or oral, with the Federal Trade Commission, the Antitrust Division of
the federal Department of Justice or any other Governmental Entity or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby, the Shareholders shall, and shall cause the Acquired
Companies to, consult with Buyer.
5.9. INDEMNITY RELATING TO DETROIT FACILITY AND POMONA FACILITY. In
addition to any other indemnification otherwise provided for in this
Agreement, and notwithstanding any disclosure with respect thereto in the
Disclosure Schedule or otherwise, or any knowledge or information of or
obtained by Buyer or the Acquired Companies, the Shareholders, jointly and
severally, shall indemnify and hold Buyer, its directors, officers, employees
and controlled and controlling persons and the Acquired Companies harmless
from and against any and all loss, cost, expense or other damage (including,
without limitation, reasonable attorneys' fees and expenses and any fines or
penalties) resulting from, arising out of or incurred with respect to, or
alleged
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to result from, arise out of or have been incurred with respect to: (i) any
liability or obligation relating to the Detroit Facility (other than
obligations of Omnia Corporation under the lease contemplated by Section 5.4
hereof) and the Pomona Facility, whether accrued, absolute, contingent, known
or unknown, or otherwise; (ii) any violation or alleged violation of any Law
or Order with respect to the Detroit Facility or the Pomona Facility,
including, but not limited to, the Environmental Laws; (iii) any suit,
proceeding, investigation or remedial procedure relating to any of the
foregoing.
5.10. TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between Buyer and the Shareholders for certain
Tax matters following the Closing Date:
5.10.(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Shareholders shall prepare or cause to be prepared and timely file or
cause to be timely filed all Tax returns and shall pay all Taxes due
thereon for the Acquired Companies for all periods beginning before
but ending on or prior to the Closing Date which are filed after the
Closing Date. The Shareholders shall submit draft copies of such Tax
returns and related schedules to Buyer at least fifteen (15) days
prior to the required filing date for each such return. The
Shareholders will allow Buyer an opportunity to review and comment
upon such Tax returns (including any amended returns) to the extent
that they relate to the Acquired Companies. The Shareholders will take
no position on such returns that relate to the Acquired Companies that
would adversely affect the Acquired Companies after the Closing Date.
Buyer shall reimburse the Shareholders for Taxes of the Acquired
Companies with respect to such periods within three (3) days after
payment by the Shareholders of such Taxes up to the amount of the
reserve for such Tax liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax
income) shown on the face of the Final Closing Balance Sheet.
5.10.(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE
CLOSING DATE. Except for 1997 calendar year state income or franchise
Tax returns set forth in Section 5.10.(c), the Shareholders shall
prepare or cause to be prepared and timely file or cause to be timely
filed any Tax returns and shall pay all Taxes due thereon of the
Acquired Companies for Tax periods which begin before the Closing Date
and end after the Closing Date. The Shareholders shall submit draft
copies of such Tax returns and related schedules to Buyer at least
fifteen (15) days prior to the required filing date for each such
return. The Shareholders will allow Buyer an opportunity to review and
comment upon such Tax returns (including any amended returns) to the
extent that they relate to the Acquired Companies. The Shareholders
will take no position on such returns that relate to the Acquired
Companies that would adversely affect the Acquired Companies after the
Closing Date. The Buyer shall pay to the Shareholders within three (3)
days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to
the portion of such Taxable period ending on the Closing Date to the
extent such Taxes are reflected in the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of
the Final Closing Balance Sheet. Buyer shall pay
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to the Shareholders an amount equal to all Taxes paid by the
Shareholders with respect to periods after the Closing Date.
5.10.(c) STATE TAX RETURNS FOR PERIODS BEGINNING BEFORE AND
ENDING AFTER THE CLOSING DATE. Buyer shall prepare or cause to be
prepared and timely file or caused to be timely filed all 1997
calendar year state income and franchise Tax returns for the Acquired
Companies for all periods ending on or after the Closing Date (other
than income (or franchise) Tax returns with respect to periods for
which a consolidated, unitary or combined income (or franchise) Tax
return of the Shareholders will include the operations of the Acquired
Companies). Buyer shall submit draft copies of such Tax returns and
related schedules to the Shareholders at least fifteen (15) days prior
to the required filing date for each such 1997 calendar year return.
The Shareholders shall reimburse Buyer for Taxes of the Acquired
Companies with respect to such periods within three (3) days after
payment by Buyer or the Acquired Companies of such Taxes in an amount
equal to the portion of such Taxes which relates to the portion of the
Taxable period ending on the Closing Date to the extent such Taxes are
not reflected in the reserve for such Tax liability (rather than the
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Final Closing
Balance Sheet.
5.10.(d) ALLOCATION OF TAXES. For purposes of this Section
5.10, in the case of any Taxes that are imposed on a periodic basis
and are payable for a Tax period that includes (but does not end on)
the Closing Date, the portion of such Tax which relates to the portion
of such Tax period ending on the Closing Date shall (x) in the case of
any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction the numerator of which is the number
of days in the Tax period ending on and including the Closing Date and
the denominator of which is the number of days in the entire Tax
period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if
the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing
Date shall be taken into account as though the relevant Tax period
ended on the Closing Date.
5.10.(e) CONSOLIDATED RETURNS FOR PERIODS THROUGH THE CLOSING
DATE. Chemed will include the income of the Acquired Companies
(including any deferred income triggered into income by Reg.
ss.1.1502-13 and Reg. ss.1.1502-14 and any excESS loss accounts taken
into income under Reg. ss.1.1502-19) on Chemed's consolidated federal
(and state) income (or franchises) Tax returns for all periods through
and including the Closing Date and pay any Taxes attributable to such
income. The Acquired Companies will furnish Tax information to Chemed
for inclusion in Chemed's federal (and state) consolidated (or
combined) income Tax return for the period which includes the Closing
Date in accordance with the Acquired Companies' past custom and
practice. Chemed will allow Buyer an opportunity to review and comment
upon such Tax returns (including any amended returns) to the extent
that they relate to the Acquired Companies. Chemed will take no
position on such returns that relate to the Acquired Companies that
would adversely affect the Acquired Companies after the Closing Date.
The income of the
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Acquired Companies will be apportioned to the period up to and
including the Closing Date and the period after the Closing Date by
closing the books of the Acquired Companies as of the end of the
Closing Date. Buyer shall reimburse Shareholders for Taxes of the
Acquired Companies with respect to such periods within three (3) days
after payment by Shareholders to the extent such Taxes are reflected
in the liability accrual for Tax liabilities shown on the Final
Closing Balance Sheet.
5.10.(f) COOPERATION ON TAX MATTERS.
(i) Buyer and the Shareholders shall cooperate fully,
as and to the extent reasonably requested by the other party,
in connection with the filing of Tax returns pursuant to this
Section 5.10 and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to
any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material
provided hereunder. Buyer and the Shareholders agree (A) to
retain all books and records with respect to Tax matters
pertinent to the Acquired Companies relating to any taxable
period beginning before the Closing Date until the expiration
of the statute of limitations (and, to the extent notified by
Buyer or the Shareholders, any extensions thereof) of the
respective Taxable periods, and to abide by all record
retention agreements entered into with any Taxing authority,
and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, Buyer (on
behalf of the Acquired Companies) or the Shareholders, as the
case may be, shall allow the other party to take possession of
such books and records.
(ii) Chemed will allow the Acquired Companies and their
counsel to participate in any audits of Chemed's consolidated income
(and franchise) Tax returns to the extent that such returns relate to
the Acquired Companies. Chemed will not settle any such audit in a
manner which would adversely affect the Acquired Companies after the
Closing Date without the prior written consent of Buyer.
(iii) Buyer and the Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any Government Entity or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iv) Buyer and the Shareholders further agree, upon
request, to provide the other party with all information that either
party may be required to report pursuant to Section 6043 of the Code
and all regulations of the Treasury Department promulgated thereunder
(if any).
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5.10.(g) TAX SHARING AGREEMENT. All Tax sharing agreements or
similar agreements with respect to or involving the Acquired Companies
shall be terminated as of the Closing Date and, after the Closing
Date, the Acquired Companies shall not be bound thereby or have any
liability thereunder, and such agreements shall have no further effect
for any Tax year (whether the current year, a future year, or a past
year).
5.10.(h) TAXES OF OTHER PERSONS. The Shareholders, jointly and
severally, agree to indemnify the Buyer from and against the entirety
of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any
liability of any of the Acquired Companies for Taxes of any person
other than any of the Acquired Companies (i) under Reg. ss.1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.
"Adverse Consequences" for purposes of this Section 5.10.(h) means all
actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, Taxes, liens, losses, expenses
and fees, including court costs and reasonable attorneys' fees and
expenses.
5.10.(i) CARRYBACKS. Chemed will immediately pay to the Buyer
any Tax refund (or reduction in Tax liability) resulting from a
carryback of a postacquisition Tax attribute of any of the Acquired
Companies into Chemed's consolidated (or combined) Tax return, when
such refund or reduction is realized by the Chemed group. Chemed will
cooperate with Buyer and the Acquired Companies in obtaining such
refunds (or reduction in Tax liability), including through the filing
of amended Tax returns or refund claims. Buyer agrees to indemnify
Chemed for any Taxes resulting from the disallowance of such
postacquisition Tax attribute on audit or otherwise.
5.11. ASSUMPTION OF AND INDEMNITY RELATING TO WORKERS' COMPENSATION
CLAIMS. The Shareholders hereby assume responsibility for all claims,
liabilities or other obligations of the Acquired Companies as of the Closing
Date with respect to workers' compensation claims (the "Assumed Liabilities")
and further agree, notwithstanding any disclosure with respect thereto in the
Disclosure Schedule or otherwise, or any knowledge or information of or
obtained by Buyer or the Acquired Companies, to, jointly and severally,
indemnify and hold Buyer, its directors, officers, employees and controlled
and controlling persons and the Acquired Companies harmless from and against
any and all loss, cost, expense or other damage (including, without
limitation, reasonable attorneys' fees and expenses and any fines or
penalties) resulting from, arising out of or incurred with respect to, or
alleged to result from, arise out of or have been incurred with respect to the
Assumed Liabilities. Shareholders represent and warrant that, as of August 31,
1997, the amount of the reserves established for workers' compensation claims
as reflected on the books and records of the Acquired Companies was
$1,024,980.
5.12. EMPLOYEE BENEFITS AND SEVERANCE. Chemed agrees to continue the
participation of the current and future employees of the Acquired Companies in
its medical plan and "125" plan through December 31, 1997. The Acquired
Companies shall promptly (i) transmit employee contributions to the plans and
(ii) reimburse Chemed for their share of the third-party
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administrative costs for both plans for the period after the Closing Date
through December 31, 1997 and for the costs of medical benefits paid from the
medical plan for expenses incurred during the period after the Closing Date
through December 31, 1997. In addition, Buyer covenants that following the
Closing Date the severance policy for nonunion employees of the Acquired
Companies shall provide for one week of pay for each year of service up to a
maximum of twenty weeks of severance pay. In addition, during the six-month
period following the Closing Date, Buyer will provide an additional week of
severance pay for each year of service up to the maximum of twenty weeks of
severance pay. The Shareholders covenant and agree to reimburse Buyer for the
costs associated with this additional severance pay. After six months
following the Closing Date, Buyer and the Acquired Companies shall be free to
establish whatever severance policy such parties may deem appropriate for the
employees of the Acquired Companies.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of the
following conditions:
6.1. REPRESENTATIONS AND WARRANTIES TRUE OF THE CLOSING DATE. Each of
the representations and warranties made by the Shareholders in this Agreement,
and the statements contained in the Disclosure Schedule or in any instrument,
list, certificate or writing delivered by the Shareholders or the Acquired
Companies pursuant to this Agreement, shall be true and correct when made and
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date.
6.2. COMPLIANCE WITH AGREEMENT. The Shareholders shall have in all
material respects performed and complied with all of their agreements and
obligations under this Agreement which are to be performed or complied with by
them prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 9.1.
6.3. ABSENCE OF LITIGATION. No Litigation shall have been commenced or
threatened, and no investigation by any Government Entity shall have been
commenced, against Buyer, the Acquired Companies, the Shareholders or any of
the Affiliates of any of them, with respect to the transactions contemplated
hereby.
6.4. CONSENTS AND APPROVALS. All approvals, consents and waivers that
are required to effect the transactions contemplated hereby shall have been
received, and executed counterparts thereof shall have been delivered to
Buyer.
6.5. TITLE INSURANCE. Buyer shall have obtained good and valid title
insurance policies or, in final form, irrevocable title insurance binders
conforming to the specifications set forth in Section 5.1 hereof.
6.6. ESTOPPEL CERTIFICATES. The Shareholders shall have caused the
Acquired Companies to deliver to Buyer an estoppel certificate or status
letter from the landlord under each lease of Real Property which estoppel
certificate or status letter will certify (i) the lease is valid
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and in full force and effect; (ii) the amounts payable by the Acquired
Companies under the lease and the date to which the same have been paid; (iii)
whether there are, to the knowledge of said landlord, any defaults thereunder,
and, if so, specifying the nature thereof; and (iv) a statement that the
transactions contemplated by this Agreement will not constitute a default
under the lease; PROVIDED, HOWEVER, to the extent Buyer consents to the
delivery of one or more of such estoppel certificates after the Closing Date,
the Shareholders shall use their reasonable best efforts to obtain such
certificate or certificates at the earliest practicable date.
6.7. HART-SCOTT-RODINO WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
6.8. SECTION 1445 AFFIDAVIT. Each of the Acquired Companies shall have
delivered to Buyer an affidavit, in form satisfactory to Buyer, to the effect
that such company is not a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate" under Section 1445 of the
Code, and containing all such other information as is required to comply with
the requirements of such Section.
6.9. ENVIRONMENTAL AND OSHA AUDITS. The results of the audits
conducted pursuant to Section 5.3 shall be acceptable to Buyer in its sole
discretion.
6.10. NONCOMPETITION AND CONSULTING AGREEMENTS. At the Closing, the
Shareholders shall deliver to Buyer Noncompetition Agreements in substantially
the form attached hereto as Exhibits B and C, duly executed by John H. Devlin
and John Naglick, Jr., respectively.
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS
Each and every obligation of the Shareholders to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing
of the following conditions:
7.1. REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE. Each of
the representations and warranties made by Buyer in this Agreement shall be
true and correct when made and shall be true and correct at and as of the
Closing Date as though such representations and warranties were made or given
on and as of the Closing Date.
7.2. COMPLIANCE WITH AGREEMENT. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and obligations
under this Agreement which are to be performed or complied with by Buyer prior
to or on the Closing Date, including the delivery of the closing documents
specified in Section 9.2.
7.3. ABSENCE OF LITIGATION. No Litigation shall have been commenced or
threatened, and no investigation by any Government Entity shall have been
commenced, against Buyer, the Acquired Companies, the Shareholders or any of
the Affiliates of any of them, with respect to the transactions contemplated
hereby.
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7.4. HART-SCOTT-RODINO WAITING PERIOD. All applicable waiting periods
related to the HSR Act shall have expired.
8. INDEMNIFICATION
8.1. BY SHAREHOLDERS. Subject to the terms and conditions of this
Article 8, each Shareholder, jointly and severally, hereby agrees to
indemnify, defend and hold harmless Buyer, its directors, officers, employees
and controlled and controlling persons (hereinafter "Buyer's Affiliates") and
the Acquired Companies from and against all Claims asserted against, resulting
to, imposed upon, or incurred by Buyer, Buyer's Affiliates or the Acquired
Companies, directly or indirectly, by reason of, arising out of or resulting
from (a) the inaccuracy or breach of any representation or warranty of the
Shareholders contained in or made pursuant to this Agreement, or (b) the
breach of any covenant of the Shareholders contained in this Agreement. As
used in this Article 8, the term "Claim" shall include (i) all debts,
liabilities and obligations; (ii) all losses, damages, judgments, awards,
settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court
costs and attorneys fees and expenses); and (iii) all demands, claims, suits,
actions, costs of investigation, causes of action, proceedings and
assessments, whether or not ultimately determined to be valid.
8.2. BY BUYER. Subject to the terms and conditions of this Article 8,
Buyer hereby agrees to indemnify, defend and hold harmless each Shareholder
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement.
8.3. INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and
liabilities of any party to indemnify any other under this Article 8 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
8.3.(a) NOTICE AND DEFENSE. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") written notice of any such Claim, and the Indemnifying Party
will undertake the defense thereof by representatives chosen by it. In
all matters concerning the Shareholders by virtue of joint and several
liability, Chemed shall give and receive notice and otherwise act in
all respects on its own behalf and on behalf of OCR. Failure to give
such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 8, except to the extent the
Indemnifying Party is materially prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them
and in the possession or under the control of the Indemnified Party,
for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense.
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8.3.(b) FAILURE TO DEFEND. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment therein.
8.3.(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Section
8.3 to the contrary notwithstanding, (i) if there is a reasonable
likelihood that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from
all liability in respect of such Claim.
8.4. PAYMENT. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 8. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party,
and/or to the Indemnified Party in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment,
determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment an
appeal is made from the judgment. If the Indemnifying Party desires to appeal
from an adverse judgment, then the Indemnifying Party shall post and pay the
cost of the security or bond to stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to
the extent not waived in settlement, against the third party who made such
third party Claim.
8.5. LIMITATIONS ON INDEMNIFICATION. Except for any willful or knowing
breach or misrepresentation, as to which Claims may be brought without
limitation as to time or amount:
8.5.(a) TIME LIMITATION. No claim or action shall be brought
under this Article 8 for breach of a representation or warranty after
December 31, 1999. Regardless of the foregoing, however, or any other
provision of this Agreement:
(i) There shall be no time limitation on Claims or
actions brought for breach of any representation or warranty
made by the Shareholders in or pursuant to Sections 3.1.(f),
3.2.(e) and 3.12.(a) and the Shareholders hereby waive all
applicable statutory limitation periods with respect thereto.
(ii) Any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Section
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3.5 may be brought at any time until the underlying Tax
obligation is barred by the applicable period of limitation
under federal and state laws relating thereto (as such period
may be extended by waiver).
(iii) Any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Sections 3.2.(a), (b), (c) or (d), or 3.11 may be
brought at any time on or prior to five (5) years after the
Closing and any Claim or action brought for breach of any
representation or warranty made by the Shareholders in or
pursuant to Section 3.9 may be brought at any time on or prior
to three (3) years after the Closing; PROVIDED, HOWEVER, that
there shall be no time limit with respect to such Claims
relating to offsite disposal or release of Waste, or for
Claims involving the migration of Waste or contaminants
associated with or related to Waste (including but not limited
to breakdown products that have migrated from the disposal or
release location) whether such disposal or release occurred on
property owned or utilized by the Acquired Companies or on
other property.
(iv) Any Claim made by a party hereunder by providing
notice thereof to the Indemnifying Party under this Article 8
or by filing a suit or action in a court of competent
jurisdiction or a court reasonably believed to be of competent
jurisdiction for breach of a representation or warranty prior
to the termination of the survival period for such Claim shall
be preserved despite the subsequent termination of such
survival period.
(v) If any act, omission, disclosure or failure to
disclosure shall form the basis for a Claim for breach of more
than one representation or warranty, and such Claims have
different periods of survival hereunder, the termination of
the survival period of one Claim shall not affect a party's
right to make a Claim based on the breach of representation or
warranty still surviving.
Nothing contained in this Section 8.5.(a) shall be construed
to limit in any way the rights of the parties under Article 2 or
Sections 5.5, 5.6, 5.7, 5.9, 5.10, 5.11, 5.12 and 10.8 of this
Agreement.
8.5.(b) AMOUNT LIMITATION. Except with respect to claims for
breaches of representations or warranties contained in Sections
3.1.(f), 3.2.(e) and 3.12.(a) and adjustments or reimbursements
contained in Article 2 to which the following limitation shall not
apply, an Indemnified Party shall not be entitled to indemnification
under this Article 8 for breach of a representation or warranty unless
the aggregate of the Indemnifying Party's indemnification obligations
to the Indemnified Party pursuant to this Article 8 (but for this
Section 8.5.(b)) exceeds $250,000; but in such event, the Indemnified
Party shall be entitled to indemnification for all claims for breaches
of representations and/or warranties in excess of $100,000; PROVIDED,
HOWEVER, that in the event the aggregate of the Indemnifying Party's
indemnification obligations to the
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Indemnified Party pursuant to this Article 8 (but for this Section
8.5.(b)) exceeds $500,000, the Indemnified Party shall be entitled to
indemnification in full for all breaches of representations and/or
warranties.
Nothing contained in this Section 8.5.(b) shall be construed
to limit in any way the rights of the parties under Article 2 or
Sections 5.5, 5.6, 5.7, 5.9, 5.10, 5.11, 5.12 and 10.8 of this
Agreement.
8.6. NO WAIVER. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing.
9. CLOSING
The closing of this transaction ("the Closing") shall take place at
the offices of Chemed Corporation, 2600 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio, at 11:00 A.M. on September 24, 1997, or at such other time
and place as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "Closing Date".
9.1. DOCUMENTS TO BE DELIVERED BY THE SHAREHOLDERS. At the Closing,
the Shareholders shall deliver to Buyer the following documents, in each case
duly executed or otherwise in proper form:
9.1.(a) STOCK CERTIFICATE(S). Stock Certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached.
9.1.(b) COMPLIANCE CERTIFICATE. A certificate signed by the
chief executive or chief financial officer of each Shareholder that
each of the representations and warranties made by the Shareholders in
this Agreement is true and correct on and as of the Closing Date and
that the Shareholders have performed and complied in all material
respects with all of their obligations under this Agreement which are
to be performed or complied with on or prior to the Closing Date.
9.1.(c) NONCOMPETITION AND CONSULTING AGREEMENTS. The
Noncompetition Agreements duly executed by John H. Devlin and John
Naglick, Jr., respectively, as contemplated by Section 6.10 hereof.
9.1.(d) LEASE FOR DETROIT FACILITY. The Lease for the Detroit
Facility duly executed by OCR in the form of Exhibit A hereto.
9.1.(e) CERTIFIED RESOLUTIONS. Certified copies of the
resolutions of the Board of Directors of the Shareholders authorizing
and approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
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9.1.(f) CHARTER; BY-LAWS. A copy of the By-Laws of each
Acquired Company certified by the secretary of such company, and a
copy of the charter of such company certified by the Secretary of
State (or other applicable Governmental Entity) of the state of
incorporation of the company.
9.1.(g) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
9.1.(h) GENERAL RELEASES. The General Releases referred to in
Section 5.7, duly executed by the Shareholders.
9.1.(i) RESIGNATIONS. The resignations of all of the directors
of the Acquired Companies and the resignations of Kevin J. McNamara
and Mark W. Stephens as officers of the Acquired Companies, effective
as of the Closing Date and in form satisfactory to Buyer's counsel.
9.1.(j) AFFIDAVIT. An affidavit from each of the Acquired
Companies in form and substance satisfactory to Buyer complying with
Section 1445(b)(3) of the Code.
9.1.(k) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority
and documents as Buyer may reasonably request.
9.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to the Shareholders the following documents, in each case duly
executed or otherwise in proper form:
9.2.(a) CASH PURCHASE PRICE. To the Shareholders, certified or
bank cashier's checks (or wire transfer) as required by Section 2.2
hereof.
9.2.(b) COMPLIANCE CERTIFICATE. A certificate signed by the
chief executive or chief financial officer of Buyer that the
representations and warranties made by Buyer in this Agreement are
true and correct on and as of the Closing Date, and that Buyer has
performed and complied in all material respects with all of Buyer's
obligations under this Agreement which are to be performed or complied
with on or prior to the Closing Date.
9.2.(c) CERTIFIED RESOLUTIONS. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
9.2.(d) NONCOMPETITION AND CONSULTING AGREEMENTS. The
Noncompetition and Consulting Agreements duly executed by Buyer in the
form of Exhibits B and C hereto.
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9.2.(e) LEASE FOR DETROIT FACILITY. The Lease for the Detroit
Facility duly executed by Omnia Corporation in the form of Exhibit A
hereto.
9.2.(f) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to the Shareholders by Buyer pursuant to the terms hereof.
9.2.(g) TROY GUARANTY. The Troy Guaranty duly executed by
Buyer.
9.2.(h) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to the Shareholders at or prior to
the Closing pursuant to this Agreement and such other certificates of
authority and documents as the Shareholders may reasonably request.
10. MISCELLANEOUS
10.1. DISCLOSURE SCHEDULE. The Schedules have been compiled in a bound
volume (the "Disclosure Schedule"), executed by the Shareholders and dated and
delivered to Buyer on the date of this Agreement. Information set forth in the
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive and such information shall
not be deemed to have been disclosed with respect to any other article or
section of this Agreement or for any other purpose. The Disclosure Schedule
includes a table of contents and/or index to all of the information and
documents contained therein. The Disclosure Schedule shall not vary, change or
alter the language of the representations and warranties contained in this
Agreement and, to the extent the language in the Disclosure Schedule does not
conform in every respect to the language of such representations and
warranties, such language in the Disclosure Schedule shall be disregarded and
be of no force or effect.
10.2. FURTHER ASSURANCE. From time to time, at Buyer's request and
without further consideration, the Shareholders will execute and deliver to
Buyer such documents and take such other action as Buyer may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
10.3. DISCLOSURES AND ANNOUNCEMENTS. Announcements concerning the
transactions provided for in this Agreement by Buyer or the Shareholders shall
be subject to the approval of the other parties in all essential respects,
except that approval of the other parties shall not be required as to any
statements and other information which any party is required to make or
disclose pursuant to any rule or regulation of the Securities and Exchange
Commission or any applicable securities exchange or market, or pursuant to
other applicable Law.
10.4. ASSIGNMENT; PARTIES IN INTEREST.
10.4.(a) ASSIGNMENT. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may,
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without consent of any other party, cause one or more subsidiaries of
Buyer to carry out all or part of the transactions contemplated
hereby; provided, however, that Buyer shall, nevertheless, remain
liable for all of its obligations, and those of any such subsidiary,
to the Shareholders hereunder.
10.4.(b) PARTIES IN INTEREST. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
10.5. LAW GOVERNING AGREEMENT. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Wisconsin, excluding any choice of law rules
that may direct the application of the laws of another jurisdiction.
10.6. AMENDMENT AND MODIFICATION. Buyer and the Shareholders may
amend, modify and supplement this Agreement in such manner as may be agreed
upon in writing between Buyer and the Shareholders.
10.7. NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return
receipt requested and postage prepaid, or by private overnight mail courier
service. The respective addresses to be used for all such notices, demands or
requests are as follows:
(a) If to Buyer, to:
Banta Corporation
River Place
225 Main Street
Menasha, Wisconsin 54952
Attention: Gerald A. Henseler, Executive Vice
President and Chief Financial Officer
Facsimile: (414) 751-7790
(with a copy to)
Jay O. Rothman
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile: (414) 297-4900
or to such other person or address as Buyer shall furnish to the Shareholders
in writing.
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(b) If to the Shareholders, to:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
Attention: Timothy S. O'Toole
Executive Vice President and Treasurer
Facsimile: (513) 762-6919
(with a copy to)
Clifford A. Roe, Jr.
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Facsimile: (513) 977-8501
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent
by overnight courier pursuant to this paragraph, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or,
if the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
10.8. EXPENSES. Regardless of whether or not the transactions
contemplated hereby are consummated:
10.8.(a) BROKERAGE. The Shareholders and Buyer each represent
and warrant to each other that there is no broker involved or in any
way connected with the transfer provided for herein on their behalf
respectively (and the Shareholders represent and warrant that there is
no broker involved on behalf of the Acquired Companies) and each
agrees to hold the other harmless from and against all other claims
for brokerage commissions or finder's fees in connection with the
execution of this Agreement or the transactions provided for herein.
10.8.(b) EXPENSES TO BE PAID BY THE SHAREHOLDERS. The
Shareholders shall pay, and shall indemnify, defend and hold Buyer and
the Acquired Companies harmless from and against, each of the
following:
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(i) TRANSFER TAXES. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
(ii) TITLE INSURANCE PREMIUMS. All premiums for the
issuance of the title insurance policies issued pursuant to
Section 6.5 hereof, and the cost of surveys performed pursuant
to Section 5.2.
(iii) PROFESSIONAL FEES. All fees and expenses of
their own and the Acquired Companies' legal, accounting,
investment banking and other professional counsel in
connection with the transactions contemplated hereby.
10.8.(c) OTHER. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
10.8.(d) COSTS OF LITIGATION OR ARBITRATION. The parties agree
that the prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled to
recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party in
connection with such action, including without limitation attorneys'
fees and prejudgment interest.
10.9. ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
10.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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10.11. HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
BANTA CORPORATION
("Buyer")
By: Donald D. Belcher
---------------------------------
Donald D. Belcher
Chairman, President and Chief
Executive Officer
Attest: Gerald A. Henseler
----------------------------
Gerald A. Henseler
Executive Vice President and
Chief Financial Officer
CHEMED CORPORATION
("Chemed")
By: Kevin J. McNamara
----------------------------------
Kevin J. McNamara
President
Attest: Naomi C. Dallob
-----------------------------
Naomi C. Dallob
Secretary
OCR HOLDING COMPANY
("OCR")
By: Mark W. Stephens
---------------------------------
Mark W. Stephens
Assistant Treasurer
Attest: Naomi C. Dallob
---------------------------
Naomi C. Dallob
Secretary
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