EXHIBIT 10.1
EXECUTED COPY
SHARE PURCHASE AGREEMENT
among
HANDY & HARMAN
and
ALL OF THE SHAREHOLDERS
of
SUMCO INC.
September 9, 1994
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . .
1.1 DEFINITIONS . . . . . . . . . . . . . .
ARTICLE II PURCHASE AND SALE OF THE
SHARES;
THE CLOSING . . . . . . . . . . . . . .
2.1 PURCHASE AND SALE . . . . . . . . . . .
2.2 CONSIDERATION . . . . . . . . . . . . .
2.3 ADDITIONAL CONTINGENT PAYMENT . . . . .
2.4 APPOINTMENT OF THE MANAGEMENT
REPRESENTATIVE . . . . . . . . . . . . .
2.5 THE CLOSING . . . . . . . . . . . . . .
2.6 DELIVERIES BY THE SELLERS . . . . . . .
2.7 DELIVERIES BY THE BUYER . . . . . . . .
2.8 RELATED MATTERS . . . . . . . . . . . .
2.9 ACTIONS TAKEN IMMEDIATELY PRIOR
TO THE CLOSING . . . . . . . . . . . . .
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF EACH SELLER . . . . . . . . . . . . .
3.1 ORGANIZATION AND STANDING OF PNCC . . .
3.2 AUTHORIZATION; BINDING
OBLIGATION . . . . . . . . . . . . . . .
3.3 TITLE TO THE SHARES . . . . . . . . . .
3.4 CONSENTS AND APPROVALS; NO
VIOLATION . . . . . . . . . . . . . . .
3.5 BROKERS . . . . . . . . . . . . . . . .
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE SELLERS . . . . . . . . . . . . .
4.1 ORGANIZATION AND STANDING OF
SUMCO . . . . . . . . . . . . . . . . .
4.2 ORGANIZATIONAL DOCUMENTS AND
CORPORATE RECORDS . . . . . . . . . . .
4.3 EQUITY INVESTMENTS . . . . . . . . . . .
4.4 AUTHORIZATION . . . . . . . . . . . . .
4.5 SUMCO CAPITALIZATION . . . . . . . . . .
4.6 CONSENTS AND APPROVALS; NO
VIOLATION . . . . . . . . . . . . . . .
4.7 FINANCIAL STATEMENTS . . . . . . . . . .
4.8 ABSENCE OF UNDISCLOSED
LIABILITIES . . . . . . . . . . . . . .
4.9 ACCOUNTS RECEIVABLE . . . . . . . . . .
4.10 INVENTORY . . . . . . . . . . . . . . .
4.11 ABSENCE OF CERTAIN CHANGES OR
EVENTS . . . . . . . . . . . . . . . . .
4.12 PROPERTIES AND ASSETS . . . . . . . . .
4.13 CERTAIN CONTRACTS . . . . . . . . . . .
4.14 COMPLIANCE WITH LAWS AND
PERMITS . . . . . . . . . . . . . . . .
4.15 LITIGATION AND ARBITRATION . . . . . . .
4.16 EMPLOYEE MATTERS . . . . . . . . . . . .
4.17 LABOR RELATIONS . . . . . . . . . . . .
4.18 TAXES . . . . . . . . . . . . . . . . .
4.19 INTELLECTUAL PROPERTY . . . . . . . . .
4.20 ENVIRONMENTAL MATTERS . . . . . . . . .
4.21 INSURANCE . . . . . . . . . . . . . . .
4.22 BANK ACCOUNTS . . . . . . . . . . . . .
4.23 CUSTOMERS AND SUPPLIERS . . . . . . . .
4.24 WARRANTIES; RETURNS AND
CANCELLATIONS . . . . . . . . . . . . .
4.25 AFFILIATE TRANSACTIONS . . . . . . . . .
4.26 BROKERS . . . . . . . . . . . . . . . .
4.27 DISCLOSURE . . . . . . . . . . . . . . .
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE BUYER . . . . . . . . . . . . . .
5.1 ORGANIZATION AND STANDING . . . . . . .
5.2 AUTHORIZATION; BINDING
OBLIGATION . . . . . . . . . . . . . . .
5.3 CONSENTS AND APPROVALS; NO
VIOLATION . . . . . . . . . . . . . . .
5.4 INVESTMENT PURPOSE . . . . . . . . . . .
5.5 BROKERS . . . . . . . . . . . . . . . .
ARTICLE VI ADDITIONAL COVENANTS . . . . . . . . . .
6.1 TRANSFER AND SIMILAR TAXES . . . . . . .
6.2 TAX RETURNS, REFUNDS AND
CREDITS . . . . . . . . . . . . . . . .
6.3 FURTHER ASSURANCES;
COOPERATION . . . . . . . . . . . . . .
6.4 NOTIFICATION OF CERTAIN
MATTERS . . . . . . . . . . . . . . . .
6.5 CONFIDENTIALITY/NO-INVESTMENT . . . . .
6.6 PUBLICITY . . . . . . . . . . . . . . .
6.7 EXPENSES . . . . . . . . . . . . . . . .
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION . . . . . .
7.1 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . . . . .
7.2 STATEMENTS AS REPRESENTATIONS . . . . .
7.3 INDEMNIFICATION BY THE SELLERS . . . . .
7.4 INDEMNIFICATION BY THE BUYER . . . . . .
7.5 LIMITATIONS ON INDEMNIFICATION . . . . .
7.6 INDEMNIFICATION PROCEDURES . . . . . . .
7.7 REMEDIES . . . . . . . . . . . . . . . .
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . .
8.1 CONSENT TO SERVICE . . . . . . . . . . .
8.2 PARTIES IN INTEREST; NO THIRD
PARTY BENEFICIARIES . . . . . . . . . .
8.3 EXHIBITS AND DISCLOSURE
SCHEDULE . . . . . . . . . . . . . . . .
8.4 ENTIRE AGREEMENT . . . . . . . . . . . .
8.5 WAIVER OF COMPLIANCE . . . . . . . . . .
8.6 VALIDITY . . . . . . . . . . . . . . . .
8.7 COUNTERPARTS . . . . . . . . . . . . .
8.8 HEADINGS . . . . . . . . . . . . . . .
8.9 GOVERNING LAW . . . . . . . . . . . .
8.10 NOTICES . . . . . . . . . . . . . . .
SHARE PURCHASE AGREEMENT
Share Purchase Agreement (the "Agreement"),
dated September 9, 1994, among Handy & Harman, a New York
corporation (the "Buyer"), and all of the shareholders of
SUMCO INC., an Indiana corporation ("Sumco"), whose
names, addresses and holdings in Sumco are set forth on
Exhibit A hereto (individually a "Seller," and
collectively, the "Sellers").
WHEREAS, Sumco is engaged in the business of
electroplating metal products produced by third parties
for application in the automotive, electric, electronic,
telecommunications, computer, consumer products,
aircraft, aerospace and power industries; and
WHEREAS, the Sellers are the beneficial and
record owners of all of the issued and outstanding Common
Shares, without par value, of Sumco; and
WHEREAS, the Buyer desires to purchase, and the
Sellers desire to sell, all of such Common Shares, upon
the terms and conditions set forth herein; and
WHEREAS, immediately prior to the Closing (as
defined herein), the Buyer, on behalf of and at the
direction of Sumco, repaid and discharged certain senior
and subordinated indebtedness of Sumco in the aggregate
amount of $3,921,459.69 Sumco executed and delivered to
the Buyer a Promissory Note in favor of the Buyer in the
principal amount of such indebtedness and Sumco caused
the collateral securing such indebtedness to be released;
NOW, THEREFORE, in consideration of the mutual
agreements, covenants, representations and warranties set
forth herein, and intending to be legally bound hereby,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this
Agreement, the following terms shall have the meanings
set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms
defined):
"Accounting Books and Records" shall have the
meaning set forth in Section 4.2(b) hereof.
"Accounts Receivable" shall mean all of the
accounts receivable and notes receivable of Sumco.
"Affiliate Transactions" shall have the meaning
set forth in Section 4.25 hereof.
"Audited Balance Sheets" shall have the meaning
set forth in Section 4.7 hereof.
"Audited Financial Statements" shall have the
meaning set forth in Section 4.7 hereof.
"Buyer" shall mean Handy & Harman, a New York
corporation.
"Buyer's Cap Amount" shall have the meaning set
forth in Section 7.5(b) hereof.
"Buyer Indemnified Party" shall have the
meaning set forth in Section 7.3(a) hereof.
"Buyer's Threshold Amount" shall have the
meaning set forth in Section 7.5(b) hereof.
"Closing" shall have the meaning set forth in
Section 2.1 hereof.
"Closing Date" shall have the meaning set forth
in Section 2.5 hereof.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Common Shares" shall mean the Common Shares,
without par value, of Sumco.
"Consigned Inventory" shall mean and include
all Inventory which Sumco holds on consignment.
"Contracts" shall mean and include all leases,
contracts, agreements, licenses, License Agreements,
purchase orders, invoices, sales orders, instruments
evidencing indebtedness for borrowed money, mortgages or
other documents securing any indebtedness for borrowed
money, commitments and understandings, written or oral,
and all amendments or modifications thereto, to which
Sumco is a party or by which Sumco is bound.
"Designated Subsidiary" shall mean one or more
existing or to be formed wholly owned subsidiaries of the
Buyer designated to carry out all or part of the
transactions contemplated by this Agreement and the Other
Documents.
"Disclosure Schedule" shall mean the disclosure
schedule delivered in connection herewith and attached
hereto.
"Duffy" shall mean Patrick C. Duffy, a director
of Sumco.
"Earnout Amount" shall have the meaning set
forth in Section 2.3 hereof.
"Earnout Escrow Agreement" shall have the
meaning set forth in Section 2.8(b) hereof.
"Earnout Period" shall have the meaning set
forth in Section 2.3(c) hereof.
"Encumbrance" shall mean any lien, encumbrance,
proxy, voting trust arrangement, pledge, security
interest, collateral security agreement, financing
statement (and similar notices) filed with any
Governmental Authority, claim (including any claim as
defined in the Code), charge, equities, mortgage, pledge,
objection, title defect, option, restrictive covenant or
restriction on transfer of any nature whatsoever, and the
interest of the lessor in any property subject to a
capital lease.
"Environmental Laws" shall have the meaning set
forth in Section 4.20(a) hereof.
"Environmental Permits" shall have the meaning
set forth in Section 4.20(b) hereof.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning set
forth in Section 4.16(b) hereof.
"ERISA Plans" shall have the meaning set forth
in Section 4.17(b) hereof.
"Escrow Agent" shall have the meaning set forth
in Section 2.2(a)(ii) hereof.
"Escrow Agreement" shall have the meaning set
forth in Section 2.8(a) hereof.
"Escrow Amount" shall have the meaning set
forth in Section 2.2(a)(ii) hereof.
"Family Relationship" shall mean any
relationship by blood, marriage, or adoption, not more
than first cousin, between (i) a salaried employee of
Sumco and any other employee of Sumco and (ii) to the
knowledge of Sumco and the Management Sellers, one or
more hourly employees of Sumco.
"GAAP" shall mean generally accepted accounting
principles as in effect on the date hereof.
"Governmental Authority" shall mean any
government or political subdivision thereof, whether
federal, state, local or foreign, or any agency,
department, commission, board, bureau, court, tribunal,
body, administrative or regulatory authority or
instrumentality of any such government or political
subdivision.
"Hazardous Material" shall mean any substance
that is defined as a "hazardous waste," "hazardous
substance," "pollutant" or "contaminant" under any
Environmental Law or the presence of which requires an
investigation or remediation under any Environmental Law,
including, without limitation, gasoline, diesel fuel and
other petroleum hydrocarbons.
"HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder.
"Income Taxes" shall mean all Taxes based upon
or measured by income.
"Indemnitor" shall have the meaning set forth
in Section 7.6(a) hereof.
"Intellectual Property" shall mean all U.S. and
foreign patents and patent applications, registered and
unregistered copyrights and copyright applications
(including copyrights in proprietary computer software
and databases), trademarks, service marks, trade dress,
logos, tradenames and similar business identifiers,
including, in each case, all registrations and
applications therefor, and the goodwill of the business
symbolized by any of the foregoing, and trade secrets,
knowhow, formulae, processes, inventions (whether
patentable or unpatentable) and other technical
information.
"Inventory" shall mean and include all
inventory owned or held by Sumco and used in the conduct
of its business and operations, including manufacturing
supplies, raw materials, components, repair parts, work-
in-progress, finished goods and other similar items,
whether new or used.
"Law" shall mean any law (including common
law), rule, regulation, restriction (including zoning),
code, statute, ordinance, order, writ, injunction,
judgment, decree or other requirement of a Governmental
Authority.
"License Agreements" shall have the meaning set
forth in Section 4.19(a) hereof.
"Losses" shall mean and include all demands,
claims, actions, causes of action, assessments, damages,
losses, liabilities, judgments, settlements, fines,
penalties, sanctions, costs and expenses (including,
without limitation, interest, penalties, reasonable
attorneys' fees and expenses as incurred, and all other
reasonable costs of investigating and defending third
party claims as incurred).
"Management Representative" shall have the
meaning set forth in Section 2.4 hereof.
"Management Sellers" shall mean and include R.
Robert Brouillard, Guy R. Brouillard, Thomas R.
Brouillard, Mark R. Brouillard, Lawrence H. Schone,
G. Winfield Yarnell, Jr., Pierre J. Plante, Gary F. Cooke
and Gary M. Lents.
"Material Contract" shall mean any Contract
that (i) is with any of the Sellers' Affiliates, (ii)
involves an obligation or commitment on the part of Sumco
of more than $25,000 or (iii) which otherwise is material
to Sumco's financial condition, results of operations,
assets, liabilities, business or, to the knowledge of
Sumco and the Management Sellers, Sumco's prospects.
"NBD" shall mean NBD Bank, N.A., a national
banking association, and the successor-in-interest to INB
National Bank.
"Operating Income" shall have the meaning set
forth in Section 2.3(c) hereof.
"Operating Income Amount" shall have the
meaning set forth in Section 2.3(c) hereof.
"Order" shall mean any order, judgment,
injunction, award, decree, writ, rule or similar action
of any Governmental Authority.
"Other Documents" shall have the meaning set
forth in Section 2.5 hereof.
"Owned Inventory" shall mean and include all
Inventory other than Consigned Inventory.
"PBGC" shall have the meaning set forth in
Section 4.16(d) hereof.
"Permits" shall mean any franchise, license,
certificate, approval, identification number,
registration, permit, authorization, order or approval
of, and any required registration with, any Governmental
Authority.
"Per Share Consideration" shall mean $30,788.17
unless and until the full Earnout Amount is paid to the
Sellers by the Escrow Agent, in which case "Per Share
Consideration" shall mean $32,019.70.
"Person" shall mean any individual,
partnership, firm, trust, association, corporation, joint
venture, joint stock company, unincorporated
organization, Governmental Authority or other entity.
"Plans" shall have the meaning set forth in
Section 4.16(b) hereof.
"PNCC" shall mean PNC Capital Corp., a Delaware
corporation.
"Pre-Closing Period" shall mean that portion of
any Straddle Period which ends on the Closing Date.
"Pro Rata Proceeds" shall mean, with respect to
any Seller, an amount equal to the product of the Per
Share Consideration and such Seller's number of Shares as
set forth on Exhibit A hereto.
"Real Property" shall have the meaning set
forth in Section 4.12(a) hereof.
"Securities Act" shall mean the Securities Act
of 1933, as amended, and the rules and regulations
promulgated thereunder.
"Sellers" shall have the meaning set forth in
the preamble.
"Sellers' Affiliates" shall have the meaning
set forth in Section 4.25 hereof.
"Sellers' Cap Amount" shall have the meaning
set forth in Section 7.5(a) hereof.
"Seller Indemnified Party" shall have the
meaning set forth in Section 7.4 hereof.
"Sellers' Threshold Amount" shall have the
meaning set forth in Section 7.5(a) hereof.
"Shareholders' Agreement" shall mean the
Shareholders' Agreement, dated July 19, 1990, among R.
Robert Brouillard, Guy R. Brouillard, Thomas R.
Brouillard, Lawrence H. Schone, G. Winfield Yarnell, Jr.,
Pierre J. Plante, Gary F. Cooke, and PNC Capital Corp.,
as amended.
"Shares" shall mean the 812 Common Shares
issued and outstanding as of the Closing.
"Short Period" shall have the meaning set forth
in Section 6.2(a) hereof.
"Short Period Return" shall have the meaning
set forth in Section 6.2(a) hereof.
"Straddle Period" shall mean any taxable period
that begins before and ends after the Closing Date.
"Straddle Period Returns" shall have the
meaning set forth in Section 6.2(b) hereof.
"Sumco" shall mean SUMCO INC., an Indiana
corporation.
"Sumco's Transaction Expenses" shall mean
$23,363.36, which amount reflects certain actual costs
and expenses incurred by Sumco in connection with the
transactions contemplated by this Agreement.
"Tax Notices" shall have the meaning set forth
on Schedule 4.7(a) of the Disclosure Schedule.
"Tax Return" shall mean any return, report,
information return or other document (including any
related or supporting information) with respect to Taxes.
"Taxes" shall mean all taxes, charges, fees,
duties, levies, penalties or other assessments imposed by
any federal, state, local or foreign Governmental
Authority, including, but not limited to, income, gross
receipts, excise, property, sales, gain, use, license,
capital stock, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest,
penalties or additions attributable thereto.
"Third Party Claim" shall have the meaning set
forth in Section 7.6(b) hereof.
"Title Company" shall mean the First American
Title Insurance Company.
"Title Policy" shall mean the title insurance
policy with extended coverage issued by the Title Company
pursuant to Commitment No. GC4206.
"Transfer Taxes" shall have the meaning set
forth in Section 6.1 hereof.
"Warn Act" shall mean the Worker Adjustment and
Retraining Notification Act of 1988.
"1994 Balance Sheet" shall have the meaning set
forth in Section 4.7 hereof.
"1994 Financial Statements" shall have the
meaning set forth in Section 4.7 hereof.
ARTICLE II
PURCHASE AND SALE OF THE SHARES; THE CLOSING
2.1 Purchase and Sale. Upon the terms and
subject to the conditions hereof, at the closing referred
to in Section 2.5 hereof and taking place simultaneously
herewith (the "Closing"), the Sellers are selling,
assigning, transferring and delivering to the Buyer, and
the Buyer is accepting and purchasing from the Sellers,
free and clear of all Encumbrances, the Shares. The
number of and percentage of outstanding Shares being sold
by each of the Sellers is set forth opposite such
Seller's name on Exhibit A hereto.
2.2 Consideration.
(a) Upon the terms and subject to the
conditions hereof, in reliance on the representations,
warranties, covenants and agreements of the Sellers
contained herein, and in consideration of the
aforementioned sale, assignment, transfer and delivery of
the Shares, the Buyer is delivering at the Closing by
interbank or wire transfer of immediately available
funds, the following:
(i) $24,200,000, less Sumco's
Transaction Expenses, to an account designated
by the Sellers; and
(ii) $800,000 (the "Escrow
Amount") to NBD, as escrow agent (the "Escrow
Agent"), to be held and disposed of by the
Escrow Agent pursuant to the Escrow Agreement
referred to in Section 2.8(a) hereof.
(b) The foregoing payments and the
amount, if any, to be paid by the Buyer to the Sellers
pursuant to Section 2.3 hereof shall constitute the full
purchase price for the Shares. Any portion of the Escrow
Amount paid to the Buyer shall be deemed a reduction in
the purchase price paid by the Buyer for the Shares.
(c) Each of the Sellers shall be entitled
to receive such percentage of the payment made pursuant
to subsection (a)(i) of this Section 2, and shall have
such percentage interest in the payment to the Escrow
Agent made pursuant to subsection (a)(ii) of this Section
2, as is set forth opposite such Seller's name on Exhibit
A hereto.
2.3 Additional Contingent Payment. (a)
Subject to the provisions of this Section 2.3, in
reliance on the representations, warranties, covenants
and agreements of the Sellers contained herein, in the
event that the Operating Income Amount once finalized and
binding in accordance with Section 2.3(d) hereof is equal
to or greater than $5 million, then at the time specified
in Section 2.3(d) hereof, the Buyer shall deliver (or
cause the Escrow Agent to deliver) to the Sellers $1
million (the "Earnout Amount") as additional
consideration for the aforementioned sale, assignment,
transfer and delivery of the Shares. Each of the Sellers
shall be entitled to receive such percentage of any
payment made pursuant to the preceding sentence, as is
set forth opposite such Seller's name on Exhibit A
hereto.
(b) To secure the Buyer's obligations
under this Section 2.3, the Buyer is delivering at the
Closing the Earnout Amount to the Escrow Agent, to be
held and disposed of by the Escrow Agent pursuant to the
Earnout Escrow Agreement referred to in Section 2.8(b)
hereof. The Sellers shall not be deemed to have received
the Earnout Amount, constructively or otherwise, unless
and until the Escrow Agent shall make payment thereof to
the Sellers.
(c) "Operating Income Amount" shall mean
the operating income of Sumco for the twelve-month period
ending June 30, 1995 (the "Earnout Period"), determined
in accordance with GAAP applied on a basis consistent
with the 1994 Financial Statements ("Operating Income");
provided that for the sole purpose of determining the
Operating Income Amount, Operating Income shall not
include:
(i) any deduction for any
management fee or allocation of overhead of the
Buyer (or its affiliates) assessed Sumco during
the Earnout Period, provided that any third
party fees or expenses incurred by the Buyer on
behalf of Sumco shall be deducted;
(ii) any adjustments made to
the historical accounting basis of Sumco's
assets resulting from the application of
Accounting Principles Board Opinion No. 16
(Accounting for Business Combinations)
(including subsequent amendments and
interpretations thereof);
(iii) any change to the method
of determining accruals and/or reserves from
those employed by Sumco for the fiscal year
ending June 30, 1994; and
(iv) any change in the benefit
costs of Sumco from those incurred for the
fiscal year ending June 30, 1994 as a result of
coverage under any benefit plans, programs,
arrangements or agreements sponsored by the
Buyer.
(d) Within sixty days after the
expiration of the Earnout Period, the Buyer shall cause
Sumco to prepare and deliver to the Sellers, at the
Buyer's sole cost and expense, the computation of the
Operating Income Amount for the Earnout Period. If such
computation results in no payment to the Sellers pursuant
to Section 2.3(a) hereof, upon reasonable advance notice,
the Buyer shall afford PNCC and the Management
Representative reasonable access to the books and records
of Sumco and the Buyer in order to evaluate Sumco's
computation of the Operating Income Amount. Such
computation shall be conclusive and binding on the
parties hereto, unless within 30 days after the receipt
of such computation, the Sellers notify the Buyer in
writing that they (or their independent certified public
accountants (which if engaged, shall be at the Sellers'
sole cost and expense)) disagree with the Buyer as to
such computation, the parties shall use all reasonable
efforts to resolve such disagreement. If the parties
agree upon the resolution of their disagreement, such
resolution shall be conclusive and binding upon the
parties. If the parties are unable to resolve their
disagreement within 90 days after the Sellers have given
such written notice, then the Buyer and the Sellers will
select and retain an accounting firm mutually agreeable
to the Buyer and the Sellers to resolve such disagreement
(the "Third Accounting Firm"). The Buyer's computation
of the Operating Income Amount as adjusted to reflect the
resolution of such disagreement in accordance with this
Section 2.3(d), shall become the "Operating Income
Amount." The fees, costs and expenses for the services
of the Third Accounting Firm shall be divided equally
between the Buyer and the Sellers. The Third Accounting
Firm shall be instructed to use every reasonable effort
to perform its services within 30 days of the submission
to it of any disagreements, and, in any case, as soon as
practicable after such submission. The Third Accounting
Firm shall perform such procedures and examine such books
and records of Sumco and the Buyer as it deems relevant.
Such determination of the Operating Income Amount shall
be conclusive and binding on the parties hereto, and may
be enforced by appropriate judicial proceedings. The
Management Representative, PNCC and the Buyer shall
jointly notify the Escrow Agent of such conslusive and
binding determination and shall instruct the Escrow Agent
as to the disposition of the Earnout Amount in accordance
with this Section 2.3.
2.4 Appointment of the Management
Representative. Each Management Seller and Duffy hereby
irrevocably appoints R. Robert Brouillard (the
"Management Representative") as such Seller's attorney-
in-fact and representative, to do any and all things and
to execute any and all documents in such Seller's name,
place and stead in connection with this Agreement and the
transactions contemplated hereby, including, without
limitation, to accept on such Seller's behalf any amount
payable to such Seller under this Agreement, to give or
receive, on such Seller's behalf, any notice or
instruction under this Agreement, or to amend, terminate
or extend, or waive the terms of, this Agreement. The
Buyer and PNCC shall be entitled to rely, as being
binding upon such Seller, upon any document or other
writing executed by the Management Representative, and
neither the Buyer nor PNCC shall be liable to any
Management Seller or Duffy for any action 36
taken or omitted to be taken by the Buyer or PNCC in
reliance thereon.
2.5 The Closing. The Closing of the
transactions contemplated hereby is taking place at the
offices of Ice Miller Donadio & Ryan, One American
Square, Indianapolis, Indiana on September 9, 1994 (the
"Closing Date"), simultaneously with the execution of
this Agreement and the other agreements, documents,
instruments and writings executed and delivered pursuant
hereto or in connection herewith (collectively, the
"Other Documents"). At the Closing, the actions
described in Sections 2.6, 2.7 and 2.8 hereof are being
taken. All such actions shall be deemed to have occurred
simultaneously.
2.6 Deliveries by the Sellers. At the
Closing, the Sellers are delivering to the Buyer (unless
delivered previously) the following:
(a) stock certificates representing the
Shares accompanied by stock powers duly endorsed in blank
or accompanied by duly executed instruments of transfer,
with all necessary transfer tax and other revenue stamps
affixed thereto;
(b) a receipt for the payment provided
for by Section 2.2(a)(i) hereof;
(c) a Certificate of Existence from the
Indiana Secretary of State for Sumco;
(d) the resignations of the officers and
directors of Sumco as requested by the Buyer prior to the
Closing;
(e) the stock books, stock ledgers and
minute books of Sumco (all other records of Sumco being
located on the premises of Sumco);
(f) a duly executed Certificate of Non-
Foreign Status executed by each of the Sellers which is
attached hereto as Exhibit B;
(g) a Title Policy which is attached
hereto as Exhibit C;
(h) a Survey certified to the Buyer, the
Title Company and Sumco, which is attached hereto as
Exhibit D; and
(i) certified resolutions of the Board of
Directors of Sumco approving, among other things, this
Agreement and the transactions contemplated hereby.
2.7 Deliveries by the Buyer. At the Closing,
the Buyer is delivering (unless delivered previously) the
following:
(a) To the Sellers, the payment provided
for in Section 2.2(a)(i) hereof;
(b) To the Escrow Agent, the payments
provided for in Sections 2.2(a)(ii) and 2.3 hereof;
(c) To the Sellers, a certificate
evidencing the good standing of the Buyer under the laws
of the state of New York; and
(d) To the Sellers, certified resolutions
of the Board of Directors of the Buyer approving, among
other things, this Agreement and the transactions
contemplated hereby.
2.8 Related Matters.
(a) Escrow Agreement. At the Closing,
the Sellers, the Buyer and the Escrow Agent are entering
into the escrow agreement attached hereto as Exhibit E
(the "Escrow Agreement"), pursuant to which the Escrow
Amount will be held in escrow in order to satisfy claims
of the Buyer and secure obligations of the Sellers
pursuant to Article VII hereof.
(b) Earnout Escrow Agreement. At the
Closing, the Sellers, the Buyer and the Escrow Agent are
entering into the escrow agreement attached hereto as
Exhibit F (the "Earnout Escrow Agreement"), pursuant to
which the Earnout Amount will be held in escrow in order
to secure obligations of the Buyer pursuant to Section
2.3 hereof.
(c) Employment Agreements. At the
Closing, R. Robert Brouillard, Guy R. Brouillard, Thomas
R. Brouillard, Gary F. Cooke, Gary M. Lents and Mark R.
Brouillard are entering into the Employment Agreements
with the Buyer which are attached hereto as Exhibits G(1-
6).
(d) Non-Competition Agreement. At the
Closing, R. Robert Brouillard, Guy R. Brouillard, Thomas
R. Brouillard, Gary F. Cooke, Gary M. Lents and Mark R.
Brouillard are entering into the Non-Competition
Agreements with the Buyer which are attached hereto as
Exhibits H(1-6).
2.9 Actions Taken Immediately Prior to the
Closing. Immediately prior to the Closing, the following
actions were taken (which occurred in the order set forth
below):
(i) Sumco and NBD entered into
the Termination of Bank Agreements which is
attached hereto as Exhibit I;
(ii) Sumco and PNCC entered
into the Termination of Investment Agreements
which is attached hereto as Exhibit J;
(iii) the Buyer, on behalf of
and at the direction of Sumco, repaid in full
and discharged certain indebtedness of Sumco in
the aggregate amount of $3,921,459.69;
(iv) Sumco executed and
delivered to the Buyer the Promissory Note a
copy of which is attached hereto as Exhibit K;
(v) the UCC termination
statements in respect of the UCC financing
statements set forth on Schedule 2.9(v) of the
Disclosure Schedule were filed with the
appropriate Governmental Authority;
(vi) the mortgages on the Real
Property were released and satisfied;
(vii) 8 Common Shares were
issued to Gary M. Lents and 4 Common Shares
were issued to Duffy;
(viii) the parties to the
Shareholders' Agreement entered into the
Termination of Shareholders' Agreement which is
attached hereto as Exhibit L;
(ix) Sumco declared and paid to
each Seller a dividend in the amount of $628.07
per Common Share; and
(x) Sumco, the Buyer and Olin
entered into the agreement which is attached
hereto as Exhibit M.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller (including, without limitation,
PNCC and Duffy) severally represents and warrants to the
Buyer with respect to such Seller and the Common Shares
owned by such Seller as follows:
3.1 Organization and Standing of PNCC. PNCC
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry
on its business and operations as they are now being
conducted.
3.2 Authorization; Binding Obligation. PNCC
has all requisite corporate power and authority, and such
other Seller has the legal capacity and all requisite
power and authority, to execute and deliver this
Agreement and the Other Documents and to consummate the
transactions contemplated hereby and thereby and to
perform such Seller's obligations hereunder and
thereunder. The execution and delivery of this Agreement
and the Other Documents by such Seller and the
consummation of the transactions contemplated hereby and
thereby by such Seller has been duly and validly
authorized by all necessary action on the part of such
Seller, and in the case of PNCC also has been duly and
validly authorized by the Board of Directors of PNCC, and
no other corporate proceedings on the part of PNCC are
necessary to authorize this Agreement or the Other
Documents or for PNCC to consummate the transactions
contemplated hereby and thereby. This Agreement and the
Other Documents have been duly and validly executed and
delivered by such Seller and, assuming the due
authorization, execution and delivery by the Buyer,
constitutes a legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance
with its terms. Except as set forth in Section 2.4
hereof, no power of attorney has been granted and is
currently in force by such Seller with respect to any
matter relating to Sumco or the Shares, or Sumco's
business, operations or assets.
3.3 Title to the Shares. Immediately prior to
the Closing, such Seller was the record and beneficial
owner of, and had good and marketable title to, the
number of Common Shares set forth next to such Seller's
name on Exhibit A hereto, free and clear of all
Encumbrances other than those set forth on Schedule 3.3
of the Disclosure Schedule. Except as and to the extent
set forth on Schedule 3.3 of the Disclosure Schedule such
Common Shares are not subject to any restrictions on
transferability other than those imposed by the
Securities Act and applicable state securities laws.
Except as and to the extent set forth on Schedule 3.3 of
the Disclosure Schedule, there are no options, warrants,
calls, commitments or rights of any character to purchase
or otherwise acquire Common Shares from such Seller,
under which such Seller may be obligated to sell or
transfer any of such Common Shares other than this
Agreement. At the Closing, the Buyer is acquiring good
and marketable title to such Common Shares, free and
clear of all Encumbrances.
3.4 Consents and Approvals; No Violation.
Except as and to the extent set forth on Schedule 3.4 of
the Disclosure Schedule, neither the execution and
delivery of this Agreement and the Other Documents, nor
the consummation of the transactions contemplated hereby
or thereby, nor compliance with any of the provisions
hereof, will (a) in the case of PNCC, conflict with any
provision of the Certificate of Incorporation or Bylaws
(or other similar organizational documents) of PNCC, (b)
require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, or any
other action by, any Governmental Authority by such
Seller, except for filings pursuant to the applicable
requirements of the HSR Act, (c) violate any Law of any
Governmental Authority applicable to such Seller, or by
which any of such Seller's businesses, properties or
assets (including, without limitation, such Common
Shares) may be bound or affected or (d) violate, breach,
or conflict with, or constitute (with or without due
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration
or any obligation to pay or result in the imposition of
any Encumbrance upon any of the property (including,
without limitation, such Common Shares)) under, any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, Encumbrance, Contract, Permit,
Order, or other instrument or obligation to which such
Seller is a party or by which any of such Seller's
businesses, properties or assets (including, without
limitation, such Common Shares) may be bound or affected.
3.5 Brokers. Neither the Buyer nor Sumco will
have any obligation to pay any broker's, finder's,
investment banker's, financial advisor's or similar fee
in connection with this Agreement or the Other Documents,
or the transactions contemplated hereby or thereby, by
reason of any action taken by or on behalf of such
Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Management Sellers jointly and severally
represent and warrant to the Buyer as follows:
4.1 Organization and Standing of Sumco. Sumco
is a corporation duly organized and validly existing
under the laws of the State of Indiana. Sumco has all
requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its
business and operations as now being and as heretofore
been conducted. Sumco is not qualified or licensed to do
business in any jurisdiction other than the State of
Indiana, and, to the knowledge of Sumco and the
Management Sellers, the location of the property owned,
leased or operated by Sumco and the conduct of Sumco's
business and operations as now being and as heretofore
been conducted does not make such qualification in any
such other jurisdiction necessary.
4.2 Organizational Documents and Corporate
Records. (a) The Sellers have heretofore delivered to
the Buyer complete and correct copies of the Certificate
of Incorporation, Articles of Incorporation and Bylaws of
Sumco, as currently in effect, copies of which are
attached hereto as Exhibits N, O and P, respectively.
The minute books of Sumco have been made available to the
Buyer for its inspection, and, except as set forth on
Schedule 4.2 of the Disclosure Schedule, such minute
books contain complete and correct records in all
material respects of all meetings, and consents in lieu
of a meeting, of Sumco's Board of Directors (and any
committees thereof) and its shareholders since Sumco's
incorporation, and accurately reflect in all material
respects all transactions referred to therein. The stock
books and ledgers of Sumco have been made available to
the Buyer for its inspection, and such books and ledgers
are complete and correct in all material respects.
(b) The Sellers have made available to
the Buyer all of the accounting, corporate and financial
books and records (the "Accounting Books and Records")
relating to the business of Sumco in existence. Such
books and records are true, accurate and complete in all
material respects, have been maintained on a basis
consistent with past practice, and fairly reflect the
basis for Sumco's financial condition and results of
operations as set forth in the Audited Financial
Statements.
4.3 Equity Investments. Sumco does not
directly or indirectly own or control any capital stock
of or other interests or investments in any other Person
nor does Sumco have any obligation or right to acquire
any such interest or investment.
4.4 Authorization. All Corporate proceedings
on the part of Sumco which are necessary to consummate
the transactions contemplated by this Agreement and the
Other Documents have been duly authorized and taken,
including, without limitation, the authorization of the
dividend referred to in Section 2.9(ix). Except as set
forth on Schedule 4.4 of the Disclosure Schedule, no
power of attorney has been granted and is currently in
force by Sumco with respect to any matter relating to
Sumco or Sumco's business, operations or assets.
4.5 Sumco Capitalization. The capitalization
of Sumco consists of (i) 1,000 Common Shares, without par
value, 812 of which are issued and outstanding and owned
by the Sellers as set forth on Exhibit A hereto and (ii)
1,000 Non-Voting Common Shares, without par value, none
of which are issued and outstanding. Sumco has no other
class of capital stock authorized or outstanding. None
of Sumco's shares of capital stock have been reserved for
any purpose. All of the Shares are duly authorized and
validly issued, fully paid, nonassessable and were not
issued in violation of any preemptive rights. Except as
set forth on Schedule 4.5 of the Disclosure Schedule,
there are no (i) options, warrants, calls, commitments or
rights of any character to purchase or otherwise acquire
from Sumco shares of capital stock of any class,
(ii) outstanding securities of Sumco that are convertible
into or exchangeable or exercisable for shares of any
class of capital stock of Sumco, (iii) options, warrants
or other rights to purchase from Sumco any such
convertible or exchangeable securities, or (iv)
contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any
capital stock of Sumco, any such options, warrants or
rights, pursuant to which, in any of the foregoing cases,
Sumco is subject or bound.
4.6 Consents and Approvals; No Violation.
Except as and to the extent set forth on Schedule 4.6 of
the Disclosure Schedule, neither the execution and
delivery of this Agreement and the Other Documents, nor
the consummation of the transactions contemplated hereby
or thereby, nor compliance with any of the provisions
hereof, will (a) conflict with any provision of the
Articles of Incorporation or Bylaws (or other similar
organizational documents) of Sumco, (b) require any
consent, waiver, approval, authorization or permit of, or
filing with or notification to, or any other action by,
any Governmental Authority by Sumco except for filings
pursuant to the applicable requirements of the HSR Act,
(c) violate any Law of any Governmental Authority
applicable to Sumco, or by which any of Sumco's business,
properties or assets may be bound or affected or (d)
violate, breach, or conflict with, or constitute (with or
without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation
or acceleration or any obligation to pay or result in the
imposition of any Encumbrance upon any of the property)
under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, Encumbrance, Contract,
Permit, Order, or other instrument or obligation to which
Sumco is a party or by which any of Sumco's business,
properties or assets may be bound or affected.
4.7 Financial Statements. The Sellers have
previously furnished to the Buyer the audited balance
sheets of Sumco as at June 30 in each of the years 1991
through 1994 (collectively, the "Audited Balance
Sheets"), and the related statements of (i) income and
retained earnings and (ii) cash flows, for the fiscal
years then ended (together with the notes thereto),
certified by Crowe, Chizek and Company, Sumco's
independent public accountants, and accompanied by their
reports thereon (collectively, with the Audited Balance
Sheets, the "Audited Financial Statements"). The Audited
Balance Sheet of Sumco as of June 30, 1994 is hereinafter
referred to as the "1994 Balance Sheet," and the related
statements of income and retained earnings and cash flows
for the period then ended (together with the notes
thereto), certified by Crowe, Chizek and Company and
accompanied by their reports thereon are hereinafter
referred to, collectively with the 1994 Balance Sheet, as
the "1994 Financial Statements." The Audited Balance
Sheets (including the related notes thereto) (i) have
been prepared from and in accordance with the books and
records of Sumco in accordance with GAAP, and, except as
noted therein, consistently applied and maintained
throughout the periods indicated and (ii) except as set
forth on Schedule 4.7(a) of the Disclosure Schedule,
fairly present, in all respects, the assets, liabilities
and financial condition of Sumco, as at the date thereof.
The other related audited year-end statements included in
the Audited Financial Statements (including the related
notes thereto), (i) have been prepared from and in
accordance with the books and records of Sumco in
accordance with GAAP, and, except as noted therein,
consistently applied and maintained throughout the
periods indicated and (ii) fairly present, in all
respects, the results of operations and cash flows of
Sumco, for the fiscal years then ended. Except as and to
the extent set forth on Schedule 4.7(b) of the Disclosure
Schedule, the statements of income and retained earnings
and cash flows included in the Audited Financial
Statements do not contain any material items of special
or nonrecurring income not earned in the ordinary course
of business and consistent with applicable industry
standards and practice.
4.8 Absence of Undisclosed Liabilities.
Except as and to the extent set forth on Schedule 4.8(a)
of the Disclosure Schedule, to the knowledge of Sumco and
the Management Sellers, Sumco has no liabilities or
obligations arising from or relating to its business and
operations of any nature (whether absolute, accrued,
fixed, contingent, liquidated, unliquidated or otherwise
and whether due or to become due) which were not
reflected or reserved against in the 1994 Balance Sheet,
except for liabilities or obligations incurred since June
30, 1994 in the ordinary course of business and
consistent with past practice. All reserves established
by Sumco and set forth on the 1994 Balance Sheet were
determined in accordance with GAAP. Schedule 4.8(b) of
the Disclosure Schedule sets forth a true, complete and
accurate list of all liabilities or obligations of Sumco
at the Closing with respect to borrowed money, letters of
credit, and any notes, bonds or similar instruments or
under any capitalized lease of Sumco. The transfer of
the Shares will not cause the acceleration of or
otherwise adversely affect the terms or conditions of
such liabilities or obligations.
4.9 Accounts Receivable. Schedule 4.9 of the
Disclosure Schedule sets forth a true, complete and
accurate list of all Accounts Receivable together with
corresponding customer name, contact number, invoice date
and dollar amount as of September 8, 1994. All Accounts
Receivable reflected in the 1994 Balance Sheet and all
Accounts Receivable acquired or generated since June 30,
1994 by Sumco (i) arose from bona fide transactions in
the ordinary course of business consistent with past
practice, (ii) are valid and genuine, (iii) to the
knowledge of Sumco and the Management Sellers, are not
subject to any counterclaim or setoff and (iv) are not
subject to any Encumbrance. Except as and to the extent
set forth on Schedule 4.9 of the Disclosure Schedule, as
of September 8, 1994 (i) no Account Receivable has been
outstanding for more than 90 days, (ii) no Account
Receivable debtor has refused or threatened to refuse to
pay its obligations for any reason and (iii) to the
knowledge of Sumco and the Management Sellers, no Account
Receivable debtor is insolvent or is the subject of a
bankruptcy petition.
4.10 Inventory. All Owned Inventory is owned
by Sumco free and clear of any Encumbrance. All Owned
Inventory which is reflected in the 1994 Balance Sheet is
valued at the lower of cost (on a first-in, first-out
basis) or market in accordance with GAAP consistently
applied and maintained throughout the periods. Except as
and to the extent set forth on Schedule 4.10(a) of the
Disclosure Schedule, all Owned Inventory as of
September 8, 1994 consists of a quality and quantity
usable and salable as first quality goods in the ordinary
course of Sumco's business. All Inventory disposed of by
Sumco since June 30, 1994 has been disposed of only in
the ordinary course of Sumco's business and all Owned
Inventory has been disposed of at prices and under terms
that are consistent with past practice. The quantities
of all Owned Inventory are not excessive but are
reasonable and warranted under the current circumstances
of Sumco's business and operations. All work in process
and finished goods Inventory is free from any defect or
other deficiency except such defects or deficiencies
which can be corrected (i) in the ordinary course of
business consistent with past practice or (ii) without
incurring a material cost or effort to Sumco. Except as
and to the extent set forth on Schedule 4.10(b) of the
Disclosure Schedule, Sumco's assets do not include any
materials in the possession of others. The operations
records of Sumco accurately reflect the amounts and
status of all Consigned Inventory, which amounts are
consistent with the respective Contract with the
consignor of such Consigned Inventory. The Accounting
Books and Records are consistent with the operations
records of Sumco as to the Consigned Inventory. The
Consigned Inventory has not been encumbered, sold or
transferred in violation of any Contract with a consignor
of such Consigned Inventory.
4.11 Absence of Certain Changes or Events.
Except as and to the extent set forth on Schedule 4.11 of
the Disclosure Schedule, since June 30, 1994:
(i) Sumco has operated its
business in the ordinary course consistent with
past practice;
(ii) there has not been any
material adverse change in the business,
results of operations, assets, liabilities,
financial condition or, to the knowledge of
Sumco and the Management Sellers, and except
for matters which apply to United States'
businesses generally, any material adverse
change in the prospects of Sumco;
(iii) Sumco has not incurred
any material damage, destruction or loss
(whether or not covered by insurance) to its
owned or leased property or assets;
(iv) Sumco has not transferred,
licensed, sublicensed, disposed of, abandoned
or permitted to lapse or otherwise failed to
preserve any material rights to use any
Intellectual Property or disclosed to any
Person, other than authorized representatives
of the Buyer, any Intellectual Property not in
the public domain relating to Sumco's business
or operations;
(v) Sumco has not transferred,
disposed of, abandoned or permitted to lapse or
otherwise failed to preserve any Permit or
other form of authorization issued by a
Governmental Authority;
(vi) Sumco has not sold,
assigned, leased, transferred, incurred any
Encumbrance on or license with respect to, or
disposed of, abandoned, or conveyed any of its
properties or assets (whether real, personal or
mixed, tangible or intangible), except in the
ordinary course of business consistent with
past practice;
(vii) Sumco has not canceled
any debts or claims, or waived any rights of
substantial value;
(viii) Sumco has not made, or
committed to make, any capital expenditures
except capital expenditures made in the
ordinary course of business consistent with
past practice, which capital expenditures in
the aggregate do not exceed $100,000.
(ix) Sumco has not incurred any
liabilities or obligations (whether absolute,
accrued or contingent, for borrowed money or
otherwise, and whether due or to become due)
except liabilities or obligations incurred in
the ordinary course of business consistent with
past practice, which liabilities and
obligations in the aggregate do not exceed
$150,000;
(x) Sumco has not paid,
discharged or satisfied any Encumbrance or
liability (whether absolute, accrued,
contingent or otherwise and whether due or to
become due), other than Encumbrances or
liabilities which are reflected or reserved
against in the 1994 Balance Sheet or incurred
thereafter in the ordinary course of business
consistent with past practice and which were
paid, discharged or satisfied in the ordinary
course of business consistent with past
practice;
(xi) Sumco has not (a) entered
into any employment, deferred compensation,
retention, consulting or similar agreement, (b)
granted or promised any bonus or severance
payment to any director, officer, employee,
distributor, independent contractor or agent of
Sumco, (c) created any additional Plan or
modified or amended any existing Plan (whether
or not such Plan would increase the benefit
obligation to any director, officer, employee,
distributor, independent contractor or agent of
Sumco), or (d) granted or promised any increase
in the rates or terms of compensation,
conditionally or otherwise, including, without
limitation, any commission, bonus, pension,
severance or vacation pay, employee welfare or
benefit payment or other direct or indirect
remuneration, in each case to any director,
officer, employee, distributor, independent
contractor or agent of Sumco;
(xii) Sumco has not declared,
paid or made or set aside for payment or
making, any dividend or other payment or
distribution of any kind in respect of its
capital stock or other securities, or to its
securityholders (other than salary and
benefits), or directly or indirectly retired,
redeemed, purchased or otherwise acquired any
of its Common Shares or other securities;
(xiii) Sumco has not issued,
authorized or proposed the issuance of,
reclassified, or sold any shares of capital
stock of Sumco, of securities convertible into
or exchangeable or exercisable for, or rights,
warrants or options to acquire, any such shares
or other convertible securities or acquired any
capital stock or other securities or interests
of any Person, or otherwise made a loan or
advance to or investment in any Person;
(xiv) Sumco has not made any
change in any accounting methods, principles or
practices (including, without limitation,
changes in depreciation or amortization
policies or rates or relating to the
establishment of accrual of reserves) or any
material election with respect to Taxes;
(xv) Sumco has not paid, loaned
or advanced any amount to or in respect of, or
sold, transferred or leased any properties or
assets (whether real, personal or mixed,
tangible or intangible) to, or entered into any
agreement, arrangement or transaction with, any
of the Sellers or any of the Sellers'
Affiliates, other than salary, bonus and
benefits paid to the Management Sellers in the
ordinary course of business consistent with
past practice;
(xvi) Sumco has not entered
into any lease, as lessor or lessee, of real or
personal property involving the expenditure of
more than $5,000, individually, or $20,000, in
the aggregate, on a monthly basis;
(xvii) Sumco has not (a)
entered into any Material Contract, (b)
terminated or amended, breached, or failed to
perform in all material respects all of its
obligations under, any Contract, and to the
knowledge of Sumco and the Management Sellers,
no other party thereto has terminated or
amended, breached, or failed to perform in all
material respects all of its obligations under,
any Contract;
(xviii) Sumco has not issued
any warranties, express, implied or otherwise,
with respect to any products or services
created, sold or licensed by Sumco, except in
the ordinary and usual course of business
consistent with past practice (including those
imposed by applicable Law);
(xix) Sumco has not experienced
any actual or, to the knowledge of Sumco and
the Management Sellers, threatened employee
strikes, disputes, work stoppages, slow-downs
or lock-outs, or had any material change in its
relationship with its employees, salesmen,
distributors, or independent contractors;
(xx) Sumco has not failed to
replenish its inventories and supplies in a
normal and customary manner consistent with
past practice and Sumco has not made any
purchase commitment, except in the ordinary
course of business consistent with past
practice;
(xxi) Sumco has not changed any
of its significant business policies;
(xxii) Sumco has not
instituted, settled or agreed to settle any
litigation, action or proceeding before any
Governmental Authority; or
(xxiii) Sumco has not agreed,
whether in writing or otherwise, to take any
action described in this Section 4.11.
4.12 Properties and Assets.
(a) Sumco has good, valid, marketable and
fee simple title to all of the real property owned by
Sumco as more particularly described on Schedule 4.12(a)
of the Disclosure Schedule (the "Real Property"). Except
as set forth on Schedule 4.12(b) of the Disclosure
Schedule, the Real Property is subject to no Encumbrance,
encroachment, building or use restriction (except for
statutes, codes and ordinances of general applicability,
including building codes and zoning ordinances), zoning
violation, exception, reservation or limitation.
(b) Sumco has not received any written
notice or communication advising it of any general or
special assessment relating to the Real Property which is
not fully paid or which is not specifically disclosed in
the Title Policy or otherwise set forth on Schedule
4.12(c) of the Disclosure Schedule. To the knowledge of
Sumco and the Management Sellers, there are no plans by
any Governmental Authority which may result in the
imposition of any special assessment relating to the Real
Property. There are no condemnation or eminent domain
proceedings pending for which notice has been provided to
Sumco or, to the knowledge of Sumco and the Management
Sellers, threatened against the Real Property by any
Governmental Authority. There are no variances, special
exceptions, conditions or agreements pertaining to the
Real Property imposed or granted by or entered into by
Sumco, with or enforceable by any Governmental Authority,
except as and to the extent set forth in Schedule 4.12(d)
of the Disclosure Schedule. No written notice from any
Governmental Authority has been provided to Sumco or the
Management Sellers requiring or calling attention to the
need for any work, repair, construction, alteration or
installation on, or in connection with, the Real
Property. The Real Property is connected to sanitary
sewer, storm sewer, water, electricity, gas, telephone
and all other utilities necessary for the operations of
Sumco as currently conducted and neither Sumco nor the
Management Sellers have knowledge of any existing
circumstances or conditions which would result in
termination of such access or connections for any
significant period of time.
(c) Except as and to the extent set forth
on Schedule 4.12(e) of the Disclosure Schedule, Sumco has
good, valid and marketable title to all items of personal
property, buildings, improvements, equipment and all
other assets and properties (whether personal or mixed,
tangible or intangible (and whether or not fully
depreciated or expensed)) used in its business and
operations, and such items are subject to no Encumbrance
other than those set forth on Schedule 4.12(f) of the
Disclosure Schedule. Except as and to the extent set
forth on Schedule 4.12(g) of the Disclosure Schedule, all
buildings, improvements, equipment or other material
assets currently used in connection with the business and
operations of Sumco are structurally sound with no known
material defects. Except as and to the extent set forth
on Schedule 4.12(h) of the Disclosure Schedule, none of
such improvements, equipment or other assets are subject
to any commitment or other arrangement for their sale or
use by any third party.
4.13 Certain Contracts. Schedule 4.13(a) of
the Disclosure Schedule sets forth a complete and correct
list of all Material Contracts as of the Closing.
Complete and correct copies of all written Contracts
including any and all amendments and other modifications
thereto have been delivered to or have been made
available for inspection by the Buyer. All written
Contracts and all oral Material Contracts (x) are valid
and binding obligations of Sumco and, to the knowledge of
Sumco and the Management Sellers, the other parties
thereto, (y) are in full force and effect and are
enforceable as to Sumco and, to the knowledge of Sumco
and the Management Sellers, the other parties thereto, in
accordance with their respective terms, and (z) have not
been amended or terminated except in the ordinary course
of business consistent with past practice. Sumco is not
in default under nor has it breached in any respect any
Contract. The aggregate obligations of Sumco with
respect to oral Contracts which do not constitute
Material Contracts do not exceed $50,000. No other party
to any Contract (i) has, to the knowledge of Sumco and
the Management Sellers, breached or is in default
thereunder, (ii) has given notice that it intends to
terminate such Contract or (iii) has altered, in any way
adverse to Sumco, its performance under such Contract.
No event or condition has occurred (or is alleged by any
other party to a Contract to have occurred) which, with
or without due notice or lapse of time or both, would
constitute a breach or event of default on the part of
Sumco, would provide a basis for a valid claim or
acceleration under any Contract as against Sumco or would
prevent Sumco from exercising and obtaining the full
benefits of any rights or options contained therein. Any
Contract which by its terms requires the consent,
approval or action of a Governmental Authority or any
other Person before becoming effective is, as of the date
hereof, effective.
4.14 Compliance with Laws and Permits. (a)
Except as and to the extent set forth on Schedule 4.14(a)
of the Disclosure Schedule, the business and operations
of Sumco have been conducted and are now being conducted
in all material respects in compliance with all Laws and
Orders of all Governmental Authorities having
jurisdiction over Sumco and all Permits relating to any
of its properties or applicable to its business.
(b) Except as and to the extent set forth
on Schedule 4.14(b) of the Disclosure Schedule, Sumco
possesses all Permits necessary to own and operate its
property and assets and to conduct its business as it is
currently conducted. Such Permits are valid, subsisting
in full force and effect, and Sumco has fulfilled its
obligations under each of the Permits, and no event has
occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both,
would constitute a default or violation under any of the
Permits or would permit revocation or termination of any
of the Permits. In respect of any such Permits, no
proceeding is pending for which notice has been provided
to Sumco or, to the knowledge of Sumco and the Management
Sellers, threatened looking toward revocation or
termination of any such Permits.
4.15 Litigation and Arbitration. (a) Except
as and to the extent set forth on Schedule 4.15(a) of the
Disclosure Schedule, no claim, action, cause of action,
suit, proceeding, inquiry, investigation or Order has
been initiated, brought or commenced, or was pending (for
which notice has been provided to Sumco), since the date
of Sumco's incorporation against Sumco or affecting its
business, operations or assets. Except as set forth on
Schedule 4.15(b) of the Disclosure Schedule, there are no
legal, administrative, arbitration or other claims,
actions, causes of action, suits, proceedings, inquiries,
investigations or Orders pending (for which notice has
been provided to Sumco), or, to the knowledge of Sumco
and the Management Sellers, threatened before any
Governmental Authority, arbitration or mediation panel or
similar body against Sumco or affecting its business,
operations or assets, nor is there any Order of any
Governmental Authority, arbitrator or mediator
outstanding against Sumco, its business, operations or
assets. Neither Sumco nor any of the Management Sellers
has knowledge of any fact or circumstance which could
reasonably be expected to result in any other claim,
action, cause of action, suit, proceeding, inquiry,
investigation or Order against Sumco or affecting its
business, operations or assets.
(b) No claim, action, suit, proceeding,
inquiry or investigation has been instituted (for which
Sumco has received notice) or, to the knowledge of Sumco
and the Management Sellers, threatened to restrain or
prohibit or otherwise challenge the legality or validity
of the transactions contemplated by this Agreement or the
Other Documents.
4.16 Employee Matters. (a) Schedule 4.16(a)
of the Disclosure Schedule sets forth a complete and
accurate list of the names, titles and annual
compensation (including any bonuses paid in respect of
the fiscal year ending June 30, 1994) of all directors,
officers and employees of Sumco, and all Family
Relationships among such persons, as of the Closing.
(b) Schedule 4.16(b) of the Disclosure
Schedule sets forth a complete and correct list of each
employment bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life
or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit
plan within the meaning of Section 3(3) of ERISA,
sponsored, maintained or contributed to or required to be
contributed to by Sumco or, to the knowledge of Sumco and
the Management Sellers, by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), that together
with Sumco would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any
employee or terminated employee of Sumco or any ERISA
Affiliate, whether formal or informal and whether legally
binding or not (the "Plans"). Schedule 4.16(c) of the
Disclosure Schedule identifies each of the Plans that is
an "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). Neither
Sumco nor any ERISA Affiliate has any formal plan or
commitment, whether legally binding or not, to create any
additional Plan or modify or change any existing Plan
that would affect any employee or terminated employee of
Sumco or any ERISA Affiliate.
(c) Except as set forth on Schedule
4.16(d), with respect to each Plan, Sumco has heretofore
delivered to Buyer complete and correct copies of each of
the following documents:
(i) a copy of the Plan
(including all amendments thereto);
(ii) a copy of the annual
report, if required under ERISA, with respect
thereto for the last two years;
(iii) a copy of the actuarial
report, if required under ERISA, with respect
thereto for the last two years;
(iv) a copy of the most recent
report prepared with respect thereto in
accordance with Statement of Financial
Accounting Standards No. 87, Employer's
Accounting for Pensions;
(v) a copy of the most recent
Summary Plan Description, together with each
Summary of Material Modifications, required
under ERISA with respect thereto and all
material written communications to employees or
former employees with respect thereto;
(vi) if the Plan is funded
through a trust or any third party funding
vehicle, a copy of the trust or other funding
agreement (including all amendments thereto)
and the latest financial statements thereof; and
(vii) the most recent
determination letter received from the Internal
Revenue Service with respect to each Plan that
is intended to be qualified under Section 401
of the Code.
(d) No "reportable event" (as defined in
accordance with ERISA Section 4043) has occurred with
respect to any ERISA Plan. No liability under Title IV
of ERISA has been incurred by Sumco or any ERISA
Affiliate since the incorporation of Sumco that has not
been satisfied in full, and no condition exists that
presents a material risk to Sumco or any ERISA Affiliate
of incurring a liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty
Corporation ("PBGC") which premiums have been paid when
due. To the extent this representation applies to
Sections 4064, 4069 or 4204 of Title IV of ERISA, it is
made not only with respect to each ERISA Plan but also
with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to
which Sumco or any ERISA Affiliate made, or was required
to make, contributions during the past five years.
(e) The PBGC has not instituted
proceedings to terminate any ERISA Plan, for which notice
has been provided to Sumco, and, to the knowledge of
Sumco and the Management Sellers, no condition exists
that presents a material risk that such proceedings will
be instituted.
(f) With respect to each ERISA Plan which
is subject to Title IV of ERISA, the projected benefit
obligation (as calculated by the Plan's actuaries in
accordance with Financial Accounting Standard No. 87) as
of June 30, 1994, does not exceed the fair value of Plan
assets (as calculated by the Plan's actuaries in
accordance with Financial Accounting Standard No. 87) as
of June 30, 1994, by more than $456,058, and since July
1, 1994, there has not been a material change in the
Plan's unfunded projected benefit obligation.
(g) Neither Sumco, nor to the knowledge
of Sumco and the Management Sellers, any ERISA Affiliate,
nor any ERISA Plan, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a
transaction in connection with which Sumco or any ERISA
Affiliate, any ERISA Plan, any such trust, or any trustee
or administrator thereof, or any party dealing with any
ERISA Plan or any such trust could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975 or
4976 of the Code.
(h) Full payment has been made in
accordance with Section 404(a)(6) of the Code, of all
amounts which Sumco or any ERISA Affiliate is required to
pay under the terms of each ERISA Plan as of the last day
of the most recent plan year thereof ended prior to the
date hereof; and no ERISA Plan or any trust established
thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each ERISA
Plan ended prior to the date hereof; and all
contributions required to be made with respect thereto
(whether pursuant to the terms of any ERISA Plan or
otherwise) on or prior to the Closing have been timely
made.
(i) No ERISA Plan is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA,
nor is any ERISA Plan a plan described in Section 4063(a)
of ERISA.
(j) Except as and to the extent set forth
on Schedule 4.16(f) of the Disclosure Schedule, each Plan
has been operated and administered in all material
respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code and the
rules and regulations promulgated thereunder.
(k) Each ERISA Plan which is intended to
be "qualified" within the meaning of Section 401(a) of
the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a)
of the Code.
(l) No amounts payable under the Plans
will fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code.
(m) No "leased employee," as that term is
defined in Section 414(n) of the Code, performs services
for Sumco or any ERISA Affiliate.
(n) Except as and to the extent set forth
on Schedule 4.16(f) of the Disclosure Schedule, no Plan
provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect
to current or former employees of Sumco or any ERISA
Affiliate beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in
Section 3(2) of ERISA, (iii) deferred compensation
benefits accrued as liabilities on the books of Sumco or
the ERISA Affiliates or (iv) benefits the full cost of
which is borne by the current or former employee (or his
beneficiary).
(o) The consummation of the transactions
contemplated by this Agreement will not (i) entitle any
current or former employee or officer of Sumco or any
ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly
provided herein, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any
such employee or officer 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.
(p) With respect to each Plan that is
funded wholly or partially through an insurance policy,
to the knowledge of Sumco and the Management Sellers,
there will be no liability of Sumco or any ERISA
Affiliate, as of the Closing, under any such insurance
policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of
events occurring prior to the Closing.
(q) There are no pending (for which
notice has been provided), to the knowledge of SUMCO and
the Management Sellers, threatened or anticipated claims
by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for
benefits).
(r) No ERISA Plan, whether or not
terminated, holds, or has discharged any of its
liabilities through the acquisition of, any annuity
contract.
4.17 Labor Relations. (a) Except as and to
the extent set forth on Schedule 4.17(a) of the
Disclosure Schedule, (i) there is no labor strike,
dispute, slowdown, stoppage or lockout actually pending
(for which notice has been provided), or to the knowledge
of Sumco and the Management Sellers, threatened against
or affecting the business and operations of Sumco, and
since Sumco's incorporation there has not been any such
action; (ii) Sumco is not a party to or bound by any
collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with
any labor organization or employee association applicable
to employees of Sumco; (iii) to the knowledge of Sumco
and the Management Sellers, no employee of Sumco is
represented by any labor organization and no current
union organizing activities among the employees of Sumco
exists, and no question exists concerning the
representation of such employees; (iv) there are no
material written personnel policies, rules or procedures
applicable to employees of Sumco, other than those set
forth on Schedule 4.17(a) of the Disclosure Schedule,
complete and accurate copies of which have heretofore
been delivered to the Buyer; (v) Sumco has at all times
been in material compliance with all applicable Laws in
respect of employment and employment practices, terms and
conditions of employment, wages, hours of work and
occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor
Relations Act; (vi) there is no unfair labor practice
charge or complaint against Sumco pending (for which
notice has been provided) or, to the knowledge of Sumco
and the Management Sellers, threatened before the
National Labor Relations Board or any similar state or
foreign agency; (vii) since Sumco's incorporation there
have been no arbitration proceedings or material
grievance proceedings arising out of any collective
bargaining agreement; (viii) to the knowledge of Sumco
and the Management Sellers, no charges with respect to or
relating to Sumco are pending before the Equal Employment
Opportunity Commission or any other agency responsible
for the prevention of unlawful employment practices; (ix)
to the knowledge of Sumco and the Management Sellers,
Sumco has not received notice of the intent of any
Governmental Authority responsible for the enforcement of
labor or employment Laws to conduct an investigation with
respect to or relating to Sumco and no such investigation
is in progress; and (x) to the knowledge of Sumco and the
Management Sellers, there are no complaints, lawsuits or
other proceedings pending or threatened in any forum by
or on behalf of any present or former employee of Sumco,
any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract of
employment, any Law governing employment or the
termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment
relationship.
(b) Since Sumco's incorporation, Sumco
has not effectuated (i) a "plant closing" (as defined in
the Warn Act) affecting any site of employment or one or
more facilities or operating units within any site of
employment or facility of Sumco; or (ii) a "mass layoff"
(as defined in the Warn Act) affecting any site of
employment or facility of Sumco; nor has Sumco been
affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger
application of any similar state or local Law. Except as
and to the extent set forth on Schedule 4.17(b) of the
Disclosure Schedule, none of Sumco's employees has
suffered an "employment loss" (as defined in the Warn
Act) since February 1, 1994.
4.18 Taxes. (a) Sumco has duly and timely
filed all Tax Returns required to be filed by it on or
before the Closing Date, as well as the Income Tax
Returns of Sumco for the fiscal year ended June 30, 1994,
and all such Tax Returns are complete and correct in all
material respects.
(b) Except as and to the extent set forth
on Schedule 4.18 of the Disclosure Schedule, Sumco has
timely paid all Taxes due or claimed to be due from it by
any taxing authority.
(c) Except as and to the extent set forth
on Schedule 4.18 of the Disclosure Schedule, Sumco has
complied in all respects with all applicable Laws
relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar
provisions under any foreign laws) and has, within the
time and within the manner prescribed by Law, withheld
from employee wages and paid over to the proper
Governmental Authorities all amounts required to be
withheld and paid over under all applicable Laws.
(d) There are no Encumbrances for Taxes
upon Sumco's assets except for statutory liens for
current Taxes not yet due.
(e) Sumco has not requested any extension
of time within which to file any Tax Return in respect of
any fiscal year which has not since been filed. Except
as and to the extent set forth on Schedule 4.18 of the
Disclosure Schedule, there are no outstanding waivers or
comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax
Returns that has been given by Sumco.
(f) Except as and to the extent set forth
on Schedule 4.18 of the Disclosure Schedule, no federal,
state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending
(for which notice has been provided to Sumco) with regard
to any Taxes or Tax Returns of Sumco.
(g) Sumco is not required to include in
income any adjustment pursuant to Section 481(a) of the
Code, by reason of a voluntary change in accounting
method (nor has any taxing authority proposed in writing
to Sumco any such adjustment or change of accounting
method).
(h) Sumco is not a party to, is not bound
by, nor has any obligation under, any Tax sharing
agreement or similar contract or arrangement.
(i) Except as and to the extent set forth
on Schedule 4.18 of the Disclosure Schedule, no power of
attorney has been granted by Sumco with respect to any
matter relating to Taxes which is currently in force.
(j) Sumco has not filed a consent
pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by Sumco.
(k) Except as and to the extent set forth
on Schedule 4.18 of the Disclosure Schedule, Sumco is not
a party to any agreement, contract, or arrangement that
will result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(l) None of the income recognized for
federal, state, local or foreign Income Tax purposes by
Sumco during the period beginning from July 1, 1994 to
the date hereof will be derived other than in the
ordinary course of business.
4.19 Intellectual Property. (a) Schedule
4.19(a) of the Disclosure Schedule contains a complete
and correct list of all: (i) patents and patent
applications, (ii) registered copyrights, copyright
applications and material unregistered copyrights
(including any such copyrights in proprietary computer
software and databases), and (iii) trademarks, service
marks, tradenames, logos and material trade dress,
including, in each case, all registrations thereof and
applications therefor, owned by Sumco. Schedule 4.19(b)
of the Disclosure Schedule sets forth each agreement
pertaining to the use of Intellectual Property in Sumco's
business and operations listing, in each case, whether
Sumco is the licensor or licensee thereunder, the subject
matter of the license, and whether the rights granted are
exclusive or non-exclusive (the "License Agreements").
(b) Sumco owns or, to the knowledge of
Sumco and the Management Sellers, has the right to use
all Intellectual Property used in or necessary to conduct
its business as currently conducted, in each case without
the payment of any royalties except under the agreements
set forth on Schedule 4.19(b) of the Disclosure Schedule.
Sumco is the sole and exclusive owner of the Intellectual
Property set forth on Schedule 4.19(a) of the Disclosure
Schedule, free and clear of all Encumbrances except as
set forth on Schedule 4.19(c) of the Disclosure Schedule.
All applications and registrations for the Intellectual
Property set forth on Schedule 4.19(a) of the Disclosure
Schedule stand in the name of Sumco. The Intellectual
Property set forth on Schedule 4.19(a) of the Disclosure
Schedule has not lapsed, expired or been abandoned and,
to the knowledge of Sumco and the Management Sellers, is
valid and enforceable. No application or registration
therefor is the subject of any opposition or cancellation
proceeding before any registration authority in any
jurisdiction for which notice has been provided to Sumco
or, to the knowledge of Sumco and the Management Sellers,
is any such proceeding threatened.
(c) To the knowledge of Sumco and the
Management Sellers, the activities and products of Sumco
do not infringe upon the Intellectual Property rights of
any other Person. There are no claims or suits pending
for which notice has been provided or, to the knowledge
of Sumco and the Management Sellers, threatened (i)
alleging that Sumco's activities or products infringe
upon or constitute the unauthorized use of a third
party's Intellectual Property rights or (ii) challenging
Sumco's ownership of, right to use, or the validity or
enforceability of any Intellectual Property owned or used
by Sumco. To the knowledge of Sumco and the Management
Sellers, there are no infringements by third parties of
any Intellectual Property owned by Sumco. Sumco has not
entered into any consent, indemnification, forbearance to
sue, or settlement agreement with any third party
relating to Intellectual Property.
(d) The License Agreements constitute
binding obligations of Sumco, and Sumco is not in breach
of or default under the License Agreements nor has an
event or condition occurred (or is alleged by any other
party to have occurred) which, with or without due notice
or lapse of time or both, would constitute a breach or
event of default on the part of Sumco or would provide a
basis for a valid claim, acceleration or termination by
any other party under the License Agreements. To the
knowledge of Sumco and the Management Sellers, no other
party is in breach of or default under the License
Agreements nor has any event or condition occurred (or is
alleged by any other party to have occurred) which, with
or without due notice or lapse of time or both, would
constitute a breach or event of default on the part of
such other party under the License Agreements. The
consummation of the transactions contemplated by this
Agreement and the Other Documents will not result in the
loss or impairment of any of Sumco's rights in the
Intellectual Property used in or necessary to conduct its
business as currently conducted or in the License
Agreements.
4.20 Environmental Matters. Except as and to
the extent set forth on Schedule 4.20(a) of the
Disclosure Schedule:
(a) Sumco is and has been in compliance
with, and there are no outstanding allegations (for which
Sumco has been provided notice) by any Person that Sumco
is not or has not been in compliance with, all applicable
Laws relating to pollution, the preservation of the
environment and the discharge or release of Hazardous
Materials into the environment or workplace
("Environmental Laws").
(b) All Permits held by Sumco under
Environmental Laws ("Environmental Permits") are set
forth on Schedule 4.20(b) of the Disclosure Schedule.
Sumco has not been notified by any Governmental Authority
that, and Sumco and the Management Sellers have no
knowledge that, any Environmental Permit may be modified,
suspended or revoked, or that any Environmental Permit
has not been timely reapplied for by Sumco, or to the
knowledge of Sumco and the Management Sellers, cannot be
renewed, transferred or otherwise obtained by the Buyer
in the ordinary course of business.
(c) There are no Orders, claims or
demands or investigations pending (for which Sumco has
been provided notice) or, to the knowledge of Sumco and
the Management Sellers, threatened against Sumco relating
to any alleged violation of Environmental Laws, or to any
potential liability relating to the alleged discharge,
release or threatened release of materials into the
environment or workplace, and to the knowledge of Sumco
and the Management Sellers, there are no acts, conditions
or circumstances (including, without limitation,
contractual provisions and the existence of corporate
predecessors) that could reasonably be expected to give
rise to such Orders, claims, demands or investigations in
the future.
(d) With respect to the Real Property:
(i) to the knowledge of Sumco and the Management Sellers,
no friable asbestos contained in or forming part of any
building, building component, structure of office space;
(ii) to the knowledge of Sumco and the Management
Sellers, no polychlorinated biphenyls or urea
formaldehyde foam insulation is present; and (iii) no
underground storage tanks are present.
(e) Schedule 4.20(c) of the Disclosure
Schedule sets forth a complete and correct list of all
Contracts pursuant to which Sumco has indemnified or has
agreed to indemnify any other Person for any liability
under, or violation of, Environmental Laws.
4.21 Insurance. Schedule 4.21(a) of the
Disclosure Schedule sets forth a complete and correct
list as of the Closing of all primary, excess and
umbrella policies, bonds and other forms of insurance,
and renewals thereof, owned or held by or on behalf of or
providing insurance coverage to or for the benefit of
Sumco, copies of which have previously been provided to
the Buyer. All of such insurance policies are in full
force and effect, all premiums currently payable or
previously due have been paid, no notice of cancellation
or termination has been received with respect to any such
policy and no assignment of proceeds or Encumbrance
exists with respect to the proceeds of any such policy.
Except as and to the extent set forth on Schedule 4.21(b)
of the Disclosure Schedule, there are no pending claims
against such policies. To the knowledge of Sumco and the
Management Sellers, all such policies will remain in full
force and effect upon execution and delivery of this
Agreement and the Other Documents and the consummation of
the transactions contemplated hereby and thereby.
4.22 Bank Accounts. Schedule 4.22 of the
Disclosure Schedule sets forth a complete and correct
list of (i) the names and locations of all financial
institutions at which Sumco maintains a checking account,
deposit account, securities account, safety deposit box
or other deposit or safekeeping arrangement, (ii) the
number or other identification of all such accounts and
arrangements and (iii) the names of all persons
authorized to draw thereon or have access thereto.
4.23 Customers and Suppliers. Schedule 4.23(a)
of the Disclosure Schedule sets forth a complete and
correct list of (i) the names of the ten largest
customers (by revenues generated) of Sumco and the amount
of revenues generated by each such customer in Sumco's
fiscal year ended June 30, 1994 and (ii) the names of
suppliers to whom Sumco paid more than $50,000 in Sumco's
fiscal year ended June 30, 1994 and the approximate total
purchases by Sumco from each such supplier during such
year. Except as and to the extent set forth on Schedule
4.23(b) of the Disclosure Schedule, there have been no
adverse changes in the relationships between Sumco and
its customers and suppliers since January 1, 1994. Sumco
has not been provided with any notice that any supplier,
manufacturer or customer intends to cease doing business
with Sumco. To the knowledge of Sumco and the Management
Sellers, there are no facts or circumstances (including,
without limitation, the transactions contemplated by this
Agreement and the Other Documents) that could reasonably
be expected to have an adverse affect on Sumco's
relationships with its customers, suppliers and
manufacturers.
4.24 Warranties; Returns and Cancellations.
(a) Schedule 4.24(a) of the Disclosure Schedule sets
forth a complete and correct list of all express
warranties with respect to any products or services
created, sold, distributed or licensed by Sumco. Except
as and to the extent set forth on Schedule 4.24(a) of the
Disclosure Schedule, there are no express or implied
warranties outstanding with respect to any products or
services created, sold, distributed or licensed by Sumco
(other than those imposed by applicable Law).
(b) There are no claims to returns or
trial use arrangements or price allowances or similar
disputes for products shipped by Sumco on or prior to the
Closing Date which will result in $140,000, in the
aggregate, of costs and expenses (on a net basis) to
Sumco by reason of alleged overshipments, defective or
unsatisfactory products or equipment, the expiration of
trial use arrangements or otherwise. There is no product
or equipment of Sumco in the hands of customers under an
understanding that such product or equipment would be
returnable other than pursuant to the standard return
policy set forth in Sumco's forms of invoice and
quotation form. To the knowledge of Sumco and the
Management Sellers, the execution and delivery of this
Agreement and the Other Documents, and the consummation
of the transactions contemplated hereby or thereby will
not result in any cancellations or withdrawals of any
accepted and unfilled orders for the sale, license, lease
or other transfer of products or equipment.
4.25 Affiliate Transactions. Schedule 4.25 of
the Disclosure Schedule sets forth a correct and complete
list of all arrangements or transactions (other than
salary, bonus and benefits generally available to the
employees of Sumco) between Sumco and the Sellers or any
affiliate or associate of the Sellers, or any business or
entity in which the Sellers or any affiliate or associate
of any of the Sellers, has any direct or indirect
interest (the "Sellers' Affiliates"), that involves an
obligation or commitment on the part of or for the
benefit of Sumco or such Sellers' Affiliate of more than
$1,000 in any calendar year (the "Affiliate
Transactions").
4.26 Brokers. Neither the Buyer nor Sumco has
or will have any obligation to pay any broker's,
finder's, investment banker's, financial advisor's or
similar fee in connection with this Agreement or the
Other Documents, or the transactions contemplated hereby
or thereby, by reason of any action taken by or on behalf
of the Sellers or Sumco.
4.27 Disclosure. The Sellers have not
knowingly failed to disclose to the Buyer any facts
material to Sumco's business, results of operations,
assets, liabilities, financial condition and prospects.
No representation or warranty by the Sellers in this
Agreement and no statement by the Sellers in any Other
Document (including the Schedules of the Disclosure
Schedule), contains any untrue statement of a material
fact or omits to state any material fact necessary, in
order to make the statements made herein or therein, in
light of the circumstances under which they were made,
not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the
Sellers as follows:
5.1 Organization and Standing. The Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New York. The
Buyer has all requisite corporate power and authority to
own, lease and operate its properties and assets and to
carry on its business and operations as it is now being
conducted.
5.2 Authorization; Binding Obligation. The
Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and the Other
Documents and to consummate the transactions contemplated
hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of
this Agreement and the Other Documents by the Buyer and
the consummation of the transactions contemplated hereby
and thereby by the Buyer have been duly and validly
authorized by the Board of Directors of the Buyer and no
other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement or the Other
Documents or to consummate the transactions contemplated
hereby or thereby. This Agreement and the Other
Documents have been validly executed and delivered by the
Buyer and, assuming the due authorization, execution and
delivery by the Sellers, constitutes legal, valid and
binding obligations of the Buyer, enforceable against the
Buyer in accordance with their terms.
5.3 Consents and Approvals; No Violation.
Except as and to the extent set forth on Schedule 5.3(a)
of the Disclosure Schedule, neither the execution and
delivery of this Agreement and the Other Documents by the
Buyer, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance with any
of the provisions hereof, will (a) conflict with any
provision of the Certificate of Incorporation or Bylaws
of the Buyer, (b) require any consent, waiver, approval,
authorization or permit of, or filing with or
notification to, or any other action by, any Governmental
Authority by the Buyer, except for filings pursuant to
the applicable requirements of the HSR Act, (c) violate
any Law of any Governmental Authority applicable to the
Buyer, or by which any of its businesses, property or
assets may be bound or affected or (d) violate, breach,
or conflict with, or constitute (with or without due
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration
or any obligation to pay or result in the imposition of
any Encumbrance upon any of the property) under, any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, Encumbrance, Contract, Permit,
Order, or other instrument or obligation to which the
Buyer is a party or by which any of its businesses,
property or assets may be bound or affected.
5.4 Investment Purpose. The Buyer is
acquiring the Shares for its own account without a view
to any distribution thereof in violation of the
securities laws of the United States of America or any
state thereof.
5.5 Brokers. The Sellers do not have, nor
will the Sellers have, any obligation to pay any
broker's, finder's, investment banker's, financial
advisor's or similar fee in connection with this
Agreement or the Other Documents, or the transactions
contemplated hereby or thereby, by any action taken by or
on behalf of the Buyer.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Transfer and Similar Taxes. (a)
Notwithstanding any other provision of this Agreement to
the contrary, the Sellers shall assume and promptly pay
all sales, use, privilege, transfer, documentary, gains,
stamp, duties, recording and similar Taxes and fees
(including any penalties, interest or additions) imposed
upon any party incurred in connection with the sale of
the Shares by the Sellers to the Buyer (collectively, the
"Transfer Taxes"), and the Sellers shall, at their own
expense, procure any stock transfer stamps required by,
and accurately file all necessary Tax Returns and other
documentation with respect to, any Transfer Tax.
6.2 Tax Returns, Refunds and Credits. (a)
The Sellers shall prepare all Tax Returns of Sumco for or
in respect of Income Taxes due with respect to the period
beginning on July 1, 1994 and ending on the Closing Date
(the "Short Period") in a manner consistent with the past
practices of Sumco for separate taxable periods (the
"Short Period Returns") in each case at the Sellers' sole
cost and expense. The Buyer shall cause Sumco to sign
and file the Short Period Returns and to pay all Income
Taxes shown on the Short Period Returns.
(b) The Buyer shall prepare and file, or
cause to be prepared and filed, on a timely basis (in
each case, at its sole cost and expense) all Tax Returns
with respect to Sumco for the Straddle Period (the
"Straddle Period Returns") and shall include the results
of Sumco's operations after the Closing Date in such
returns. The Buyer shall pay, or cause to be paid, all
Taxes due with respect to the Straddle Period. The Buyer
covenants that it will not take or cause Sumco to take
any actions with respect to Taxes of Sumco on the Closing
Date except in the ordinary course of business consistent
with the past practices of Sumco.
(c) The Sellers and the Buyer shall
cooperate, and shall cause their respective, officers,
employees, agents, auditors and representatives to
cooperate, (i) in preparing and filing the Short Period
Returns and all Straddle Period Returns (including
amended returns and claims for refund) and (ii) with
respect to any audit or other administrative or court
proceedings with respect to Taxes and Tax Returns of
Sumco for periods ending on or before the Closing Date,
in each case including maintaining and making available
to each other all records necessary in connection with
Taxes payable with respect to such Tax Returns and in
resolving all disputes and audits and refunds with
respect to such Tax Returns and Taxes and any earlier Tax
Returns and Taxes of Sumco. No election may be made by
the Buyer or Sumco with respect to the Taxes of Sumco
without the Sellers' written consent if such election
will adversely affect the Sellers (including without
limitation an election under Section 338 of the Code.
(d) For a period of seven years from the
Closing Date, the Buyer shall not, and shall cause Sumco
not to, dispose of or destroy any of the business records
and files of Sumco relating to the Taxes of Sumco in
existence on the Closing Date without first offering to
turn over possession thereof to the Sellers by written
notice to the Sellers at least thirty days prior to the
proposed date of such disposition or destruction.
(e) Any refunds of or credits for Income
Taxes of Sumco with respect to (i) any taxable period
ending on or before the Closing Date (including the Short
Period) shall be for the account of the Sellers, and if
received or utilized by the Buyer or Sumco, shall be paid
to the Sellers within five (5) business days after the
Buyer or Sumco receives such refund or utilizes such
credit, provided, however that refunds or credits
attributable to the carryback of losses or other tax
items realized after the Closing Date shall be for the
account of the Buyer, and (ii) any taxable period
beginning after the Closing Date shall be for the account
of the Buyer, and if received or utilized by the Sellers,
shall be paid by the Sellers to the Buyer within five
business days after the Sellers receive such refund or
utilize such credit.
(f) Any refunds of or credit for Taxes
(other than Income Taxes) shall be for the account of the
Buyer, and if received or utilized by the Sellers shall
be paid to the Buyer within five (5) business days after
the Sellers receive such refund or utilize such credit.
6.3 Further Assurances; Cooperation. (a) The
parties shall from time to time after the Closing, upon
the request of any other party and without further
consideration, execute, acknowledge and deliver in proper
form any further instruments, and take such further
actions as such other party may reasonably require, to
carry out effectively the intent of this Agreement and
the Other Documents.
(b) The Sellers shall cooperate with
Sumco and the Buyer in connection with any claim, action,
suit, proceeding, inquiry or investigation with any other
Person which relates to the execution and delivery of
this Agreement or the Other Documents, or the
consummation of the transactions contemplated hereunder
and thereunder.
6.4 Notification of Certain Matters. Each of
the parties hereto shall promptly notify the other
parties, in the manner provided in Section 8.10 hereof,
of (i) any claim, action, suit, proceeding, inquiry or
investigation pending or, to such party's knowledge,
threatened which relates to the execution and delivery of
this Agreement or the Other Documents, or the
consummation of the transactions contemplated hereunder
or thereunder, (ii) any circumstance or development which
could adversely impair or affect its ability to perform
its obligations under this Agreement and the Other
Documents, (iii) any notice or other communication from
any third party alleging that the consent of such third
party is or may be required in connection with the
transactions contemplated by this Agreement and the Other
Documents or (iv) any notice or other communication from
any Governmental Authority in connection with the
transactions contemplated by this Agreement and the Other
Documents.
6.5 Confidentiality/No-Investment. (a) PNCC
and Duffy agree that they will not (and in the case of
PNCC, PNCC will cause its officers not to) at any time
after the Closing, without the prior written consent of
the Buyer, disclose or use any such confidential
information except:
(i) as may be necessary in
connection with their tax filing and reporting
obligations,
(ii) to the extent required by
Law or,
(iii) as may be necessary to
comply with GAAP and generally accepted
auditing standards.
(b) PNCC agrees that for a period of two
years after the Closing Date, PNCC shall not make any
investment in any of the entities set forth on Schedule
6.5 of the Disclosure Schedule. Except as set forth in
the preceding sentence, PNCC shall be free to invest in,
or make loans to, or otherwise provide financial
accommodations to, any Person in the same business or
industry as Sumco.
(c) It is understood and agreed that
money damages would not be a sufficient remedy for any
breach of this Section 6.5 by PNCC (or its officers) or
Duffy and that the Buyer shall be entitled to specific
performance as a remedy for any such breach. Such remedy
shall not be deemed to be the exclusive remedy for any
breach of this Section 6.5 but shall be in addition to
all other remedies available at law or equity to the
Buyer.
6.6 Publicity. The Sellers shall not issue
any press release or make any public statement regarding
the transactions contemplated hereby, without the prior
approval of the Buyer, which approval shall not be
unreasonably withheld, except (i) as may be required, by
applicable Law and (ii) PNCC may disclose the completion
of the transactions contemplated by this Agreement in
connection with its general marketing and business
development activities. The Buyer hereby agrees to issue
a press release, in a form reasonably acceptable to all
of the parties, promptly after the Closing.
6.7 Expenses. (a) Except as otherwise
specifically provided for herein, each party hereto shall
be solely responsible for all expenses incurred by it or
on its behalf in connection with the preparation and
execution of this Agreement and the Other Documents and
the consummation of the transactions contemplated hereby
and thereby, including, without limitation, the fees and
expenses of its counsel, accountants, brokers, finders,
financial advisors and other representatives.
(b) The Sellers and the Buyer agree that
in the event any dispute between them, either occurring
under, relating to or in connection with any of the
provisions of this Agreement or the Other Documents, is
submitted to a Governmental Authority or other
appropriate entity, then all costs and expenses of the
parties (including reasonable legal fees) shall be paid
by the party against whom a determination by such
Governmental Authority or entity is made or, in the
absence of a determination wholly against one party, as
such Governmental Authority or entity shall direct.
(c) All costs and expenses of the Title
Company and all costs and expenses for the Survey
delivered pursuant to Section 2.6 hereof shall be paid by
the Buyer.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and
Warranties. All representations and warranties of the
Sellers and the Buyer contained herein or made pursuant
hereto shall survive the Closing and any investigation at
any time made by or on behalf of any party hereto until
March 31, 1996, except that the representations and
warranties contained in Section 4.18 (Taxes) shall
survive until 90 days following the expiration of the
applicable statute of limitations. Provided that a claim
with respect to a breach of representation or warranty is
made within the applicable period in accordance with the
provisions of Section 7.6 hereof, it may continue to be
asserted beyond such period with respect to the
representation or warranty to which such claim relates.
7.2 Statements as Representations. All
statements contained herein or in any Schedule contained
in the Disclosure Schedule or in any Exhibit hereto shall
be deemed representations and warranties within the
meaning of Sections 7.1, 7.3(a), 7.3(b)(i) and 7.4(i)
hereof.
7.3 Indemnification by the Sellers.
(a) Subject to the provisions of this
Article VII, each Seller shall severally indemnify,
defend and hold harmless the Buyer, any parent,
subsidiary or affiliate of the Buyer, and any director,
officer, employee, agent or advisor of any of them, or
any of their respective successors or assigns (a "Buyer
Indemnified Party"), from and against any and all Losses
asserted against, resulting to, imposed upon or incurred
by any Buyer Indemnified Party, directly or indirectly,
by reason of or resulting from the breach of or any
inaccuracy in any of the representations and warranties
of such Seller contained in or made pursuant to Article
III hereof, or any facts or circumstances constituting
such breach or inaccuracy.
(b) Subject to the provisions of this
Article VII, PNCC and the Management Sellers shall,
jointly and severally, indemnify, defend and hold
harmless each Buyer Indemnified Party from and against
any and all Losses asserted against, resulting to,
imposed upon or incurred by such Buyer Indemnified Party,
directly or indirectly, by reason of or resulting from:
(i) the breach of or any
inaccuracy in any of the representations and
warranties of the Sellers contained in or made
pursuant to any section of this Agreement other
than a section in Article III hereof, or any
facts or circumstances constituting such breach
or inaccuracy;
(ii) the breach or
nonperformance of any covenant or agreement of
the Sellers contained in or made pursuant to
this Agreement or any facts or circumstances
constituting such breach or nonperformance; and
(iii) any failure by Sumco to
comply with the applicable provisions of the
Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, at or prior to the
Closing, including, but not limited to, Losses
in respect of the loss of any tax deductions or
other favorable tax treatment claimed by Sumco
and directly or indirectly attributable to or
resulting from such failure; and
(iv) any failure by Sumco to
have obtained the Permits for the structures
set forth on Schedule 4.14(a)(1)(a)-(p) of the
Disclosure Schedule; and
(v) Income Taxes of Sumco in
respect of all taxable periods ending on or
before the Closing Date (other than the amounts
shown on the Short Period Returns, but
including all such Income Taxes assessed after
the filing of such returns) including, without
limitation, Taxes of Sumco relating to, or
attributable to, the Tax Notices.
7.4 Indemnification by the Buyer. Subject to
the provisions of this Article VII, the Buyer shall
indemnify, defend and hold harmless the Sellers, any
parent, subsidiary or affiliate of the Sellers, and any
director, officer, employee, agent or advisor of any of
them or any of their respective heirs, successors or
assigns (a "Seller Indemnified Party"), from and against
any and all Losses asserted against, resulting to,
imposed upon or incurred by any Seller Indemnified Party,
directly or indirectly, by reason of or resulting from:
(i) the breach of or any
inaccuracy in any of the representations and
warranties of the Buyer contained in or made
pursuant to this Agreement or any facts or
circumstances constituting such breach or
inaccuracy; and
(ii) the breach or non-
performance of any agreement of the Buyer
contained in or made pursuant to this Agreement
or any facts or circumstances constituting such
breach or nonperformance.
7.5 Limitations on Indemnification.
(a) The indemnifications in favor of the
Buyer Indemnified Parties contained in Section 7.3(b)(i)
hereof shall not be effective until the aggregate dollar
amount of all Losses indemnified against under such
Section exceeds $200,000 (the "Sellers' Threshold
Amount"), and then only to the extent such aggregate
amount exceeds the Sellers' Threshold Amount. The
indemnifications in favor of the Buyer Indemnified
Parties contained in Section 7.3(a) hereof shall, as to
any Seller, not exceed such Seller's Pro Rata Proceeds.
In addition, the indemnifications in favor of the Buyer
Indemnified Parties contained in Sections 7.3(a),
7.3(b)(i), 7.3(b)(ii), 7.3(b)(iii), 7.3(b)(iv) and
7.3(b)(v) hereof shall terminate once the dollar amount
of all Losses indemnified under such Sections aggregates
$25,000,000 ($26,000,000 if the full Earnout Amount is
paid to the Sellers by the Escrow Agent) (the "Sellers'
Cap Amount"); provided, however, that under no
circumstances shall PNCC's indemnification obligations in
respect of such Sections exceed its Pro Rata Proceeds.
(b) The indemnifications in favor of the
Seller Indemnified Parties contained in Section 7.4(i)
hereof shall not be effective until the aggregate dollar
amount of all Losses indemnified against under such
Section exceeds $200,000 (the "Buyer's Threshold
Amount"), and then only to the extent such aggregate
amount exceeds the Buyer's Threshold Amount. The
indemnifications in favor of the Seller Indemnified
Persons contained in Sections 7.4(i) and 7.4(ii) hereof
shall terminate once the dollar amount of all Losses
indemnified against under such Section aggregates
$25,000,000 ($26,000,000 if the full Earnout Amount is
paid to the Sellers by the Escrow Agent) (the "Buyer's
Cap Amount").
7.6 Indemnification Procedures.
(a) Notice. If any legal proceeding
shall be threatened or instituted or any claim or demand
shall be asserted by any Buyer Indemnified Party or
Seller Indemnified Party in respect of which
indemnification may be sought under the provisions of
this Agreement, the party seeking indemnification (the
"Claiming Party") shall promptly cause written notice of
the assertion of any such claim, demand or proceeding of
which it has knowledge to be forwarded to the party from
whom it is claiming indemnification (the "Indemnitor").
Such notice shall contain a reference to the provisions
hereof or of such other agreement, instrument or
certificate delivered pursuant hereto, in respect of
which such claim is being made, and shall specify, in
reasonable detail, the amount of such Loss if
determinable at such time. The Claiming Party's failure
to give the Indemnitor prompt notice shall not preclude
the Claiming Party from seeking indemnification from the
Indemnitor unless the Claiming Party's failure has
materially prejudiced the Indemnitor's ability to defend
the claim, demand or proceeding.
(b) Third Party Claims. If the Claiming
Party seeks indemnification from the Indemnitor as a
result of a claim or demand being made by a third party
(a "Third Party Claim"), the Indemnitor shall have the
right to promptly assume the control of the defense of
such Third Party Claim, including, at its own expense,
employment by it of counsel reasonably satisfactory to
the Claiming Party. The Claiming Party may, in its sole
discretion and at its own expense, employ counsel to
represent it in the defense of the Third Party Claim, and
in such event counsel for the Indemnitor shall cooperate
with counsel for the Claiming Party in such defense,
provided that the Indemnitor shall direct and control the
defense of such Third Party Claim or proceeding. The
Indemnitor shall not consent to the entry of any
judgment, except with the written consent of the Claiming
Party, and shall not enter into any settlement of such
Third Party Claim without the written consent of the
Claiming Party which (i) does not include as an
unconditional term thereof the release of the Claiming
Party from all liability in respect of such Third Party
Claim and (ii) results in the imposition on the Claiming
Party of any remedy other than money damages; provided,
however, that the Claiming Party shall not unreasonably
withhold or delay its consent to the entry of any
judgment or any settlement of a Third Party Claim. If
the Indemnitor elects not to exercise its rights to
assume the defense of the Third Party Claim, or if
injunctive relief is sought which would have an adverse
effect on the Claiming Party (or Sumco if the Buyer is
the Claiming Party), the Claiming Party may, but shall
have no obligation to, defend against such Third Party
Claim or legal proceeding in such manner as it may deem
appropriate, and the Claiming Party may compromise or
settle such Third Party Claim and proceeding without the
Indemnitor's consent so long as the Claiming Party acts
in a commercially reasonable manner (without regard to
the Claiming Party's indemnification rights hereunder).
(c) Payment. After any final judgment or
award shall have been rendered by a court, arbitration
board or administrative agency of competent jurisdiction
and the time in which to appeal therefrom shall have
expired, or a settlement shall have been consummated, or
the Claiming Party and the Indemnitor shall arrive at a
mutually binding agreement with respect to each separate
matter alleged to be indemnified by the Indemnitor
hereunder, the Claiming Party shall forward to the
Indemnitor notice of any sums due and owing by it with
respect to such matter (in accordance with Section 8.10
hereof) and the Indemnitor shall pay all of the sums so
owing to the Claiming Party by wire transfer, certified
or bank cashier's check within 10 days after the date of
such notice.
(d) Escrow. To the extent that the
Escrow Amount has not been released pursuant to the
Escrow Agreement, the Buyer Indemnified Party's right to
indemnification and to be held harmless pursuant to
7.3(a), 7.3(b)(i), 7.3(b)(ii), 7.3(b)(iii), 7.3(b)(iv)
and 7.3(b)(v) hereof must first be asserted against the
Escrow Amount.
7.7 Remedies. Except for Losses resulting
from fraud or violations of the securities laws, the sole
and exclusive remedy for any breach of this Agreement
shall be pursuant to this Article VII.
ARTICLE VIII
MISCELLANEOUS
8.1 Consent to Service. Each Management
Seller and Duffy designates and appoints the Management
Representative as its authorized agent upon whom process
may be served in any suit, proceeding or other action
against such Seller instituted by the Buyer and relating
to this Agreement. Such designation and appointment
shall, to the extent permitted by law, be irrevocable,
unless and until a successor authorized agent acceptable
to the Buyer shall have been appointed by Duffy and the
Management Sellers, such successor shall have accepted
such appointment and written notice thereof shall have
been given to the Buyer. Each Management Seller and
Duffy further agrees that service of process upon such
authorized agent or successor shall be deemed in every
respect service of process upon such Seller in any such
suit, proceeding or other action. Each Management Seller
and Duffy further agrees to take any and all action,
including the execution and filing of all such
instruments and documents, as may be necessary to
continue such designation and appointment of such
authorized agent in full force and effect.
8.2 Parties in Interest; No Third Party
Beneficiaries.
(a) This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and
permitted assigns. This Agreement and the rights and
obligations of the Buyer and the Sellers hereunder may
not be assigned by any of the parties hereto without the
prior written consent of the other parties, except that
the Buyer may assign its rights and obligations hereunder
to any Designated Subsidiary, provided, however, that the
Buyer shall remain liable for all of its obligations and
those of any Designated Subsidiary hereunder.
(b) This Agreement is not intended, nor
shall it be construed, to confer upon any Person except
the parties hereto and their heirs, successors and
permitted assigns any rights or remedies under or by
reason of this Agreement.
8.3 Exhibits and Disclosure Schedule. All
Exhibits annexed hereto and the Disclosure Schedule
referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein.
8.4 Entire Agreement. This Agreement,
including the Exhibits hereto and the documents,
schedules, certificates and instruments referred to
herein, embody the entire agreement and understanding of
the parties hereto in respect of the transactions
contemplated by this Agreement. This Agreement
supersedes all prior agreements, arrangements and
understandings of the parties with respect to such
transactions.
8.5 Waiver of Compliance. No amendment,
modification, alteration, supplement or waiver of
compliance with any obligation, covenant, agreement,
provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an
instrument in writing executed by all of the parties or
in the case of a waiver, the party against whom
enforcement of any waiver, is sought. Any waiver or
failure to insist upon strict compliance with such
obligation, covenant, agreement, provision or condition
shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
8.6 Validity. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain
in full force and effect.
8.7 Counterparts. This Agreement may be
executed in any number of counterparts, each of which
shall be deemed an original but all of which together
shall constitute one and the same instrument.
8.8 Headings. The table of contents, article
and section headings contained in this Agreement or any
Exhibit hereto or the Disclosure Schedule are for
convenience only and shall not control or affect in any
way the meaning or interpretation of the provisions of
this Agreement.
8.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of New York without giving effect to the
principles of conflicts of law of such jurisdiction.
8.10 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if
delivered personally, telecopied (which is confirmed) or
sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following
addresses:
(a) If to the Buyer to:
Handy & Harman
250 Park Avenue
New York, New York 10177
Telephone: (212) 661-2400
Telecopy: (212) 309-0682
Attention: Paul E. Dixon, Esq.
Copy to:
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Telecopy: (212) 735-2000
Attention: Milton G. Strom, Esq.
(b) If to a Seller:
to its address as set forth on
Exhibit A hereto.
Copies to:
Ice Miller Donadio & Ryan
One American Square
Indianapolis, Indiana 46282
Telephone: (317) 236-2100
Telecopy: (317) 236-2219
Attention: John R. Thornburgh, Esq.
and
Jones, Day, Reavis & Pogue
31st Floor, 500 Grant Street
Pittsburgh, Pennsylvania 15265
Telephone: (412) 391-3939
Telecopy: (412) 394-7959
Attention: Charles A. Schliebs, Esq.
or to such other address as the person to whom notice is
to be given may have previously furnished to the other in
writing in the manner set forth above, provided that
notice of a change of address shall be deemed given only
upon receipt.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, on the day and year first above
written.
THE SELLERS:
/s/ R. Robert Brouillard
R. Robert Brouillard
/s/ Guy R. Brouillard
Guy R. Brouillard
/s/ Thomas R. Brouillard
Thomas R. Brouillard
/s/ Mark R. Brouillard
Mark R. Brouillard
/s/ Lawrence H. Schone
Lawrence H. Schone
/s/ G. Winfield Yarnall, Jr.
G. Winfield Yarnall, Jr.
/s/ Pierre J. Plante
Pierre J. Plante
/s/ Gary F. Cooke
Gary F. Cooke
/s/ Gary M. Lents
Gary M. Lents
/s/ Patrick C. Duffy
Patrick C. Duffy
PNC Capital Corp.
By: /s/ Paul A. Giusti
Name: Paul A. Giusti
Title: Senior Vice President
and Principal
THE BUYER:
HANDY & HARMAN
By:/s/ Paul E. Dixon
Name: Paul E. Dixon
Title: Vice President
and General Counsel