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PURCHASE AND MERGER AGREEMENT
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TABLE OF CONTENTS
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Merger and Effect of Merger . . . . . . . . . . . . . . . . . . . . . . .
1.01 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.02 Excluded Assets Transfer . . . . . . . . . . . . . . . . . . .
Consideration and Covenants . . . . . . . . . . . . . . . . . . . . . . .
2.01 Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.02 Adjustment to Purchase Price . . . . . . . . . . . . . . . . .
2.03 Excluded and Retained Liabilities . . . . . . . . . . . . . . .
2.04 Sale and Transfer Taxes . . . . . . . . . . . . . . . . . . . .
2.05 Operation of ASC Business Prior to Closing . . . . . . . . . .
2.06 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . .
2.07 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . .
2.08 Proprietary Information . . . . . . . . . . . . . . . . . . . .
2.09 Damages for Breach . . . . . . . . . . . . . . . . . . . . . .
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.01 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . .
3.02 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . .
Representations and Warranties of Sellers . . . . . . . . . . . . . . . .
4.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . .
4.02 Authorization . . . . . . . . . . . . . . . . . . . . . . . . .
4.03 No Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . .
4.04 Financial Statements . . . . . . . . . . . . . . . . . . . . .
4.05 Absence of Certain Facts or Events . . . . . . . . . . . . . .
4.06 Property, Leases and Liens . . . . . . . . . . . . . . . . . .
4.07 Transfer of Good Title . . . . . . . . . . . . . . . . . . . .
4.08 Contracts and Commitments . . . . . . . . . . . . . . . . . . .
4.09 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . .
4.10 Permits and Authorizations . . . . . . . . . . . . . . . . . .
4.11 No Violations . . . . . . . . . . . . . . . . . . . . . . . . .
4.12 No Finders or Brokers . . . . . . . . . . . . . . . . . . . . .
4.13 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.15 No Other Sale . . . . . . . . . . . . . . . . . . . . . . . . .
4.16 Proprietary Information and Rights . . . . . . . . . . . . . .
4.17 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . .
4.18 Employment Laws . . . . . . . . . . . . . . . . . . . . . . . .
4.19 Environmental Laws . . . . . . . . . . . . . . . . . . . . . .
4.20 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.21 No Unlawful Contributions . . . . . . . . . . . . . . . . . . .
4.22 No Insider Transactions . . . . . . . . . . . . . . . . . . . .
4.23 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . .
4.24 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
4.25 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . .
4.26 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . .
4.27 No Misstatement . . . . . . . . . . . . . . . . . . . . . . . .
4.28 Copying and Inspection . . . . . . . . . . . . . . . . . . . .
4.29 Accuracy Records . . . . . . . . . . . . . . . . . . . . . . .
Representations and Warranties of Newco and Parent . . . . . . . . . . .
5.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . .
5.02 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . .
5.03 Authorization . . . . . . . . . . . . . . . . . . . . . . . . .
5.04 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . .
Limitations on Representations, Warranties and Agreements . . . . . . . .
6.01 Certain Limitations on Representations and Warranties . . . . .
6.02 Reliance on and Survival of Representations, Warranties
Covenants and Agreements; Limits on Suits Relating to the
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
6.03 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.01 By Seller . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.02 By Newco . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.03 Procedure for Indemnification . . . . . . . . . . . . . . . . .
7.04 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.05 Specific Environmental Indemnity . . . . . . . . . . . . . . .
7.06 Special Procedures for Environmental Indemnity . . . . . . . .
Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . .
8.01 Conditions to Obligations of Newco and Parent . . . . . . . . .
8.02 Conditions to Obligations of Seller and ASC . . . . . . . . . .
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . .
9.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
10.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . .
10.02 Entire Agreement . . . . . . . . . . . . . . . . . . . . .
10.03 Successors Bound . . . . . . . . . . . . . . . . . . . . .
10.04 Governing Law . . . . . . . . . . . . . . . . . . . . . .
10.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . .
10.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . .
10.07 Severability . . . . . . . . . . . . . . . . . . . . . . .
10.08 Certain Interpretative Matters . . . . . . . . . . . . . .
EXHIBITS
A Agreement of Merger
B Machinery and Equipment (Section 1.01(a) (i))
C Leasehold Interests (Section 1.01(a) (ii))
D Facilities Where Inventory Located (Section 1.01(a) (iii))
E Contracts (Section 1.01(a) (v))
F Excluded Assets (Section 1.02)
G Terms of Preferred Stock (Section 2.01(b))
H Taxes Newco Will Assume (Section 2.03(a)
I Litigation for which Sellers Remain Responsible (Section 2.03(a))
J Exceptions to Representations and Warranties (Section 4) (includes
attached Schedules)
K Principal Terms of Opinion of Kindel & Anderson (Section 8.01(c))
L Employment Agreement (Sections 8.01(h) and 8.02(f))
M Confidential and Proprietary Information Agreement (Section 8.01(i))
N Form of Subscription Agreement (Section 8.01(j))
O Projections (Section 8.01(k))
P Principal Terms of Opinion of Jones, Day, Reavis & Pogue (Section
8.02(c))
PURCHASE AND MERGER AGREEMENT
This Purchase and Merger Agreement (this "Agreement") is made and
entered into as of the 14th day of February, 1994 by and among Aerosol
Services Company, Inc., a California corporation ("ASC"), Walter K. Lim and
Howard C. Lim (hereinafter collectively referred to as "Sellers" and
individually as a Seller"); Aerosol Services Holding Corporation, a
Delaware corporation ("Parent"); and ASC Merger Corp., a California
corporation ("Newco")
W I T N E S S E T H
WHEREAS, Sellers desire to transfer to Newco, substantially all the
business and assets of ASC, subject to the liabilities of ASC except for
certain liabilities the Sellers will retain; and
WHEREAS, Newco desires to acquire substantially all the business and
assets of ASC, subject to liabilities of ASC.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties
hereto agree as follows:
Merger and Effect of Merger
1.01 Merger. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined in Section 3.01):
(a) Pursuant to the Agreement of Merger attached as Exhibit A,
ASC shall merge with and into Newco, with Newco being the surviving
corporation, and Newco shall change its name to "Aerosol Services Company,
Inc."
(b) As a result of the merger described in subparagraph (a)
above, Newco shall acquire all of the right, title and interest of ASC
after giving effect to the Excluded Assets Transfer described in Section
3.01 below, in and to all of the assets, interests and properties of ASC
(the "ASC Assets"), as the same shall exist on the Closing Date (as defined
in Section 3.01 hereof), including the following:
(i) All machinery, equipment (including computer, office,
manufacturing and laboratory equipment), furniture, fixtures, leasehold
improvements, tools, vehicles and other tangible assets or property used or
held for use primarily in connection with the business of ASC, the
principal items of which are listed in Exhibit B hereto;
(ii) The leasehold interests in the real property described
in Exhibit C hereto, together with ASC's interest, if any in the
improvements thereon;
(iii) All of ASC's inventories of supplies, raw
materials, work-in-process and finished goods, wherever located, including
all such inventories located at the facilities identified in Exhibit D
hereto;
(iv) All of ASC's cash and all its accounts, claims and
notes receivable including claims under insurance policies;
(v) Each lease, license, joint venture agreement, contract
or commitment, whether written or oral, pertaining to the conduct of the
business of ASC, including without limitation those which are set forth in
Exhibit E hereto (the "Contracts");
(vi) All patents, trademarks, service marks and trade names
(and all applications thereof), know-how, processes, trade secrets, product
formulae, computer programs and software, and all manufacturing, research
and similar technical information used in the business of ASC;
(vii) ASC's prepaid expenses for its business and
miscellaneous other assets;
(viii) All books of account, records, files, invoices,
supplier lists, customer lists and other data associated with, necessary to
or used or employed in connection with the business of ASC; and
(ix) All ASC's permits, Authorizations (as defined in
Section 4.10) and government licenses, to the extent transferable.
The ASC Assets shall be free and clear of all liens, liabilities,
obligations, claims, security interests and rights of third parties which
are Excluded Liabilities, as defined in Section 2.03 below.
1.02 Excluded Assets Transfer. The parties to this Agreement
recognize that Parent and Newco do not intend to acquire any interest in
the portion of ASC's business sometimes referred to as its "Heartland
Division" or in ASC's note receivable from Image Laboratories, Inc., or in
certain other assets (collectively, the "Excluded Assets") described on
Exhibit F to this Agreement. Sellers shall cause ASC to transfer ownership
of the Excluded Assets prior to Closing and shall deliver evidence this has
been done at the Closing. To the extent that Sellers have not caused ASC
to deliver custody (as opposed to title) of the Excluded Assets prior to
the Closing, Newco and Parent agree to cause or permit such transfers and
deliveries after the Closing.
Consideration and Covenants
2.01 Price. Upon the terms and subject to the conditions of this
Agreement, in consideration of the merger Sellers shall receive the
consideration described below (collectively the "Purchase Price") and at
the Closing Newco shall:
(a) Deliver to Sellers the sum of $32,000,000, as adjusted
pursuant to Section 2.03(a) (the "Cash at Closing");
(b) Deliver to Sellers $3 million in face amount of the 10%
Cumulative Redeemable Preferred Stock of Parent, having the terms set forth
on Exhibit G attached hereto (the "Preferred Stock");
(c) Pay the reasonable legal fees and expenses of Kindel &
Anderson and Latham & Watkins incurred by Sellers in connection with this
Agreement and the fees and expenses of Coopers & Lybrand incurred by ASC or
Sellers in connection with this Agreement, provided that any legal fees of
Latham & Watkins which would be amounts recoverable by Newco or Parent
pursuant to Section 7.05 shall not be paid by Parent or Newco, and
(d) Assume, pay, perform and discharge all of ASC's obligations
and liabilities which are not retained by Sellers pursuant to Section
2.03(a) hereof.
2.02 Adjustment to Purchase Price.
(a) The Cash at Closing shall be adjusted by deducting from
$32,000,000 the amount required to pay or discharge the following
indebtedness:
(i) all amounts due under ASC's shareholder note
($1,505,833)
(ii) all amounts due Union Bank by ASC under Obligation Nos.
0003-00-0-001 and 0005-00-0-001 ($2,737,284).
The Cash at Closing shall be further reduced by the amount of any expenses
relating to this Agreement which are the responsibility of Sellers but
which ASC has paid prior to the Closing and by the amount (if any) by which
bonus and profit-sharing amounts awarded by ASC for 1993 are less than
$250,000, in the aggregate.
(b) Prior to Closing, ASC and Newco will agree upon the
allocation of the Purchase Price and record such allocation on a
certificate delivered at the Closing.
2.03 Excluded and Retained Liabilities. As a result of the merger,
Newco shall assume the debts, obligations and liabilities of ASC as they
exist on the Closing Date. Notwithstanding this, as among the parties,
except as specifically listed on Exhibit H, Newco shall not assume or pay
any debt, obligation or liability of ASC or Sellers for federal, state or
local taxes, including excise taxes, owed by ASC or Sellers attributable to
periods on or prior to the Closing Date or attributable to prohibited
transactions (within the meaning of Section 4975 of the Code and Section
406 of ERISA) that occurred on or before the Closing Date or, except as
described in Section 2.04, arising from this purchase. Sellers shall
retain liability for and defend, at their own expense, all such claims
regardless of when they are asserted and shall be responsible for all
obligations of any kind or nature, including but not limited to attorneys'
fees, interest expenses, fines, damages, settlements, judgments, debts,
obligations or any similar liabilities resulting therefrom. In addition,
Sellers shall be and continue to be, from and after the Closing Date,
responsible for all debts, obligations, interest liabilities, attorneys'
fees, costs, expenses, fines, damages, settlements, judgments or similar
liabilities resulting from the claims and lawsuits described in Exhibit I
hereto and for all liabilities associated with the Excluded Assets. Newco
shall cooperate with Sellers in defending such claims and lawsuits and
shall make available to Sellers such personnel and records as Sellers may
reasonably request in connection therewith, provided that Sellers shall pay
all out-of-pocket expenses incurred by Newco. Such liabilities for taxes,
claims and lawsuits are the "Excluded Liabilities."
2.04 Sale and Transfer Taxes. Notwithstanding anything herein to the
contrary, all state or local transfer, stamp, vehicle, sales or use taxes
imposed or incurred in connection with the consummation of the transactions
contemplated by this Agreement shall be borne by Newco.
2.05 Operation of ASC Business Prior to Closing. Prior to the Closing
Date, Sellers shall cause ASC to operate its business only in the ordinary
course and consistent with past practice, and shall not cause or permit ASC
to (i) pay any dividend or distribution except for transfer of the Excluded
Assets, (ii) redeem or otherwise acquire any shares of its stock, (iii)
terminate any employee whose 1992 compensation exceeded $35,000 or (iv)
cause any representation or warranty contained herein to become incorrect
as of the Closing Date, except in each case as Newco shall have consented
in writing.
2.06 Inspection. ASC shall prior to Closing make the plants,
properties, books and records of ASC available for examination and
inspection by Newco and its lenders and its and their advisors and give
Newco and its advisors access to employees of ASC. Such inspections shall
be at reasonable times deigned not to interfere unreasonably with ASC's
operations, and Newco shall indemnify ASC and hold it harmless for any loss
or damage to ASC's property or premises, including consequential damages
and liabilities for discharge or release of Hazardous Materials (as
hereafter defined) arising from such inspections. Sellers and Newco shall,
on request, on or after the Closing Date, cooperate with one another by
furnishing any additional documents and/or instruments and doing any and
all such other things as may be reasonably required by the parties or their
counsel to consummate or otherwise implement the transactions contemplated
by this Agreement.
2.07 Non Competition. Sellers hereby severally agree that neither
Seller will, directly or indirectly, whether as an employee, consultant,
director, shareholder, investor or otherwise, engage in, or have any
interest in or provide any services to any services to any corporation,
partnership, proprietorship, firm, association or business which engages in
any activities competitive with the business of ASC as presently conducted,
except that (a) either Seller may own less than 3% of the shares of any
corporation whose shares are listed on a national securities exchange or
the National Association of Securities Dealers Automated Quotation System;
(b) Sellers may retain an interest in Omni Leasing Co. (provided Omni
Leasing Co. does not accept new customers without Newco's consent) and in
any entity formed to operate or hold the Excluded Assets and (c) Walter K.
Lim may continue to have an ownership interest in, and devote time to,
Walbert, Inc. and Head First, Inc. This covenant shall continue until the
fifth anniversary of the date such Seller's employment by Newco terminates
except that if a Seller's employment by Newco is terminated after the
Closing without cause (as defined in each Seller's employment agreement)
such covenant shall continue only until the third anniversary of the
termination of employment. This covenant shall apply in the State of
California to San Diego County, Los Angeles County, Ventura County,
Riverside County, San Bernardino County and Orange County, and to all other
counties in the State of California listed on Schedule 2.07, and shall also
apply to all other portions of the United States of America, the United
States of Mexico and the Dominion of Canada. Sellers expressly acknowledge
that ASC's business is not restricted by geography, and that ASC ships
products throughout the United States and to other countries. Sellers and
Newco agree that if any court should hold the terms of this Section 2.07 to
be broader than necessary, this Section shall be given the broadest
possible application, to the end that Sellers shall be precluded from
competing with Newco in any area in which ASC-produced products cave been
sold.
2.08 Proprietary Information. ASC and each of the Sellers further
jointly and severally agree not to divulge, use to the detriment of Newco
or use for the benefit of any other person or persons, or misuse in any
way, any confidential information or trade secrets of or relating to the
Purchased Assets or the business of ASC, including personnel information,
inventions, trade secrets, designs, computer programs, formulas, secret
processes know-how, list of customers or other business data. The sellers
acknowledge and agree that any information or data they have acquired on
any of these matters or items was revealed in confidence and as a fiduciary
of ASC.
2.09 Damages for Breach. Each of the Sellers hereby agrees that the
remedy at law for any breach of Sections 2.07 and 2.08 may be inadequate
and in addition to any other relief to which Newco may be entitled, Newco
shall be entitled to injunctive relief for any breach or threatened breach
hereof and further agree that any breach of Section 2.07 or 2.08 shall be
presumed (but subject to rebuttal) to be the cause of any decrease in
revenues or failure to achieve the operating results projected in the
incentive plan established pursuant to the employment agreements described
in Section 8.02 following such breach.
Closing
3.01 Closing Date. The term "Closing" as used herein shall refer to
delivery of the Agreement of Merger for filing in the offices of the
Secretary of State of the State of California and the delivery of the
documents described in Sections 3.02 and 3.03, which shall take place at
the offices of Jones, Day, Reavis & Pogue, 555 West Fifth Street, Los
Angeles, California 90013 on February 14, 1994 or at such other date, time
or place as may be mutually agreed upon in writing by ASC and Newco. The
date of the Closing shall be the actual date the Agreement of Merger is
filed, and is sometimes referred to herein as the "Closing Date.
3.02 Deliveries at Closing.
(a) At the Closing, Sellers and ASC shall deliver to Newco the
following:
(i) the Agreement of Merger, duly executed, and such
assignments, stock certificates, consents and other documents and
instruments of sale, assignment, conveyance and transfer as are appropriate
or necessary to transfer the ASC Assets to Newco in accordance with the
terms of this Agreement;
(ii) Amendments to the leases described on Schedule 4.06,
and related documents, satisfactory in form and substance to ASC and its
counsel and ASC's lenders;
(iii) the documents required of ASC or Sellers Pursuant
to Section 8.01 hereof; and
(iv) such other documents as Newco or its counsel may
reasonably request to carry out the purposes of this Agreement
(b) At the Closing, Newco and Parent shall deliver to ASC and
Sellers the following:
(i) The Cash at Closing and the Preferred Stock, together
with a statement showing the calculation of the Cash at Closing;
(ii) The Agreement of Merger, duly executed, and the escrow
instructions contemplated by Section 2.02;
(iii) The documents required of Newco pursuant to
Section 8.02 hereof; and
(iv) Such other documents as ASC or its counsel my
reasonably request to carry out the purposes of this Agreement.
Representations and Warranties
of
Sellers
Except as otherwise set forth in Exhibit J (Schedules) hereto, ASC and
each Seller hereby represents and warrants to Newco and Parent as follows:
4.01 Organization. ASC is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and
has full corporate power and authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
ASC is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which (i) such qualification is
necessary under the applicable law as a result of its conduct of its
business, and (ii) where the failure to be so qualified would have a
material adverse effect on the business or financial condition of ASC.
4.02 Authorization. ASC has all necessary corporate authority to
enter into this Agreement and the Agreement of Merger. At Closing, ASC and
the Sellers will have taken all necessary corporate action to consummate
the transactions contemplated by this Agreement and the Agreement of Merger
and to perform its and their obligations hereunder. This Agreement and the
Agreement of Merger have been approved by the directors and the
stockholders of ASC and no other action or approval is needed for the
execution, delivery or performance of this Agreement or the Agreement of
Merger by ASC. This Agreement has been duly executed and delivered by ASC
and Sellers and is a valid and binding obligation of ASC and each Seller
enforceable against each of them in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in
effect, relating to or limiting creditors' rights generally and (ii)
general principles of equity (whether considered in an action in equity or
at law).
4.03 No Subsidiaries. For all purposes of this Agreement, the term
"subsidiary" shall mean any corporation, partnership, joint venture or
other entity any of whose outstanding voting securities or other ownership
interests are directly or indirectly owned by ASC. ASC has no
subsidiaries.
4.04 Financial Statements.
(a) ASC has delivered to Newco its audited financial statements
as of December 31, 1992, accompanied by the unqualified opinion of Coopers
& Lybrand, and the September 30, 1993 and December 31, 1993 balance sheet
of ASC and the related statements of operations and statements of cash
flows for the 9-month period ended September 30, 1993 and the 12-month
period ended December 31, 1993 (collectively the "Financial Statements").
The Financial Statements (i) are prepared in accordance with generally
accepted accounting principles consistently applied as at the dates and for
the periods covered thereby (except that the September 30, 1993 and
December 31, 1993 statements are subject to year-end adjustments and are
not accompanied by footnote disclosures), and, except as otherwise noted
therein, (ii) fairly present the financial condition and results of
operations of ASC as of the dates and for the periods then ended, (iii) are
in agreement with the books and records of ASC, (iv) contain and reflect
adequate provisions for all liabilities and all taxes, federal, state,
local or foreign, with respect to the periods then ended and in all prior
periods and, (v) with respect to contracts and commitments, contain and
reflect adequate reserves for all reasonably anticipated losses and costs
and expenses.
(b) Except as set forth in Schedule 4.04 hereto, ASC has no
liabilities or obligations, either accrued, contingent or otherwise, which,
individually or in the aggregate, are material to ASC or which individually
or in the aggregate could cause any material adverse change in the
financial condition or results of operations of ASC, and which have not
been reflected in the Financial Statements. ASC is not in default in
respect of any material term or condition of any indebtedness or liability.
Except as set forth in the Financial Statements or Schedule 4.04 hereto,
there are no claims against or liabilities or obligations of, or any facts
in existence known to ASC or to any Seller or any other reasonable legal
basis known to ASC or any Seller for any claims against or liabilities or
obligations of ASC or any of its subsidiaries, including but not limited to
any pension liabilities of any type.
4.05 Absence of Certain Facts or Events. Except as listed on Schedule
4.05, since December 31, 1992, there has not been:
(a) any material adverse change in (i) the financial condition
of ASC from that shown on the December 31, 1992 balance sheet or in (ii)
the results of operations of ASC from that shown in the statement of income
and retained earnings of ASC for the period ended December 31, 1992;
(b) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the purchased Assets
or the business of ASC;
(c) any increase in the compensation payable or to become
payable by ASC to any employee, officer or director whose 1992 annual
remuneration exceeded $35,000, or in the coverage or benefits under any
bonus, insurance, pension or other benefit plan made for or with any of
such officers or employees;
(d) any redemption or repurchase of outstanding shares, any
declaration, setting aside or payment of any dividend or distribution
thereon, or any agreement to take any such actions;
(e) any sale, assignment or transfer of any of the assets of ASC
or any of ASC's contractual rights on other claims, other than in the
ordinary course of business;
(f) any mortgage, pledge, or other lien, encumbrance or charge
of or on any ASC Asset;
(g) the occurrence of any obligation or liability of ASC as a
result of borrowed money or any commitment to borrow money entered into by
ASC, or any increase in any loans made or agreed to be made by ASC or any
capital expenditure in excess of $20,000;
(h) any failure to repay any obligation of ASC as, when and to
the extent due;
(i) any waiver of any rights of substantial value to ASC or any
amendment or termination of any interest or agreement to which ASC is a
party;
(j) any transaction not in the ordinary course of business or
any failure to operate the business of ASC consistent with past practice;
(k) Any material addition to or modification of the employee
benefit plans, arrangements or practices affecting Personnel of ASC other
than (i) contributions made for fiscal year 1992 in accordance with ASC's
normal practices or (ii) the extension of coverage to other personnel who
became eligible after December 31, 1992 in accordance with the terms of
such employee benefit plan, which contributions and payments are listed in
Schedule 4.05(1); or
(l) Any notification (formal or informal) from any significant
customer of ASC identified on Schedule 4.23 that such customer expects its
annual purchases from ASC to decrease significantly; or
(m) To the knowledge of ASC or a Seller, any other event,
condition or state of facts of any character, whether in the ordinary
course of business or otherwise, which materially and adversely affects, or
threatens to materially and adversely affect, the ASC Assets or the results
of operations or business or financial condition or prospects of ASC,
except for events, conditions or states of fact generally applicable to
businesses In Southern California or general economic conditions in the
United States of America.
4.06 Property. Leases and Liens.
(a) Schedule 4.06 hereto accurately sets forth as of December
31, 1993 all ASC's owned or leased real properties and all items of
personal property or equipment which are significant in the conduct of
ASC's business (which, together with the equipment, buildings and
appurtenances necessary to the operation of such properties are termed
herein the "Properties") and contains with respect to each of the
Properties a list of (i) all leases, franchises and similar agreements
creating, modifying or altering rights to such Property, including zoning
or use restrictions, and (ii) all indebtedness secured by a mortgage, lien,
pledge, restriction, charge or encumbrance on any such Property, specifying
the nature thereof, including, where appropriate, the original principal
amount thereof, the person to whom owed and the unpaid balance and rate of
interest (if any). ASC owns all leasehold estates, charter rights and other
rights purported to be granted by the agreements, contracts and commitments
listed in Schedule 4.06, each of which is in full force and effect without
any material default, waiver or indulgence thereunder by ASC or to Sellers'
knowledge by any other party thereto. Except as noted on Schedule 4.06,
ASC has good and marketable title to all the Properties, in each case free
and clear of all mortgages, liens, pledges, restrictions, charges or
encumbrances of any nature whatsoever.
(b) All Properties of ASC are in a good state of repair (subject
to ordinary wear and tear), are in operable condition, have been maintained
in accordance with ASC's historical practice and are suitable for the uses
for which they are intended in the business of ASC.
(c) Except as disclosed on Schedule 4.06, the Properties
comprise all assets presently used in or needed for conduct of the business
of ASC in accordance with past practice.
4.07 Transfer of Good Title. Except as disclosed on Schedule 4.07,
consummation of the merger will convey and transfer to Newco, good,
complete and marketable title to all of ASC Assets, free and clear of
restrictions or conditions to transfer or assignment and free and clear of
all defects of mortgages, liens, encumbrances, pledges, leases, equities,
claim charges, easements, rights of way, covenants, conditions, conditional
sale of contracts, security interest and restrictions.
4.08 Contracts and Commitments.
(a) Except as set forth in Schedule 4.08, ASC has no (i)
collective bargaining agreements, or any agreements that contain any
severance pay liabilities or obligations; (ii) bonus, deferred
compensation, pension, profit-sharing, stock option, employee stock
purchase or retirement plans, or other employee benefit or incentive plans
or arrangements; (iii) employment, consulting or similar agreement,
contract or commitment not terminable on notice of thirty (30) days or less
or containing an obligation to pay and/or accrue more than $10,000 per
year; (iv) lease of real or personal property having a term in excess of
one year or remaining payments of $10,000 or more (as lessor or lessee);
(v) note or other evidence of indebtedness for borrowed money or the
deferred purchase price of property or services which involves a liability
of more than $25,000; (vi) agreement of guarantee or indemnification (other
than rights of indemnification to which officers, directors, employees and
agents may be entitled by reason of the laws of any state, or by the By-
laws or the Articles of Incorporation of ASC); (vii) agreement, contract or
commitment which is presently expected to have a material adverse impact on
the financial condition or results of operations of ASC; (viii) agreement,
contract or commitment containing any covenant limiting the freedom of ASC
to engage in any line of business or compete with any person; (ix)
agreement, contract or commitment relating to expenditures which, together
with future payments under any such agreement, contract or commitment,
exceed $10,000; (x) agreement, contract or commitment relating to the
acquisition of assets of, or any interest in, any business enterprise; or
(xi) other agreement, contract or commitment (with customers or other third
parties) which involves $10,000 or more and is not cancellable without
penalty within sixty (60) days.
(b) Except as set forth in Schedule 4.08: (i) ASC has not
breached, nor has ASC received in writing any claim that it has breached,
any of the terms or conditions of any agreement, contract or commitment set
forth in any of the Schedules to this Agreement (collectively the
"Contracts") in such manner as would permit any other party to cancel or
terminate the same or impose a fee or charge as a result of such breach, if
any such breach or breaches singly or in the aggregate could materially and
adversely affect the ASC Assets or the financial condition or results of
operations of ASC. (ii) To Sellers' knowledge each Contract is except as
otherwise noted on such Schedule, in full force and effect in the form
provided to Newco and there is no breach or default by any party thereto,
nor will there be a breach or default thereunder due to the assignment and
sale of any such Contract to Newco as contemplated by this Agreement.
(iii) To the knowledge of Sellers and ASC there are no facts or conditions
which have occurred or are anticipated to occur which, through the passage
of time or the giving of notice, or both, would constitute a default under
any Contract or would cause the acceleration of any obligation of any party
thereto or the creation of a lien or encumbrance upon any of the ASC
Assets.
4.09 No Conflict. Neither the execution and delivery of this
Agreement by ASC or any Seller nor the consummation of the transactions
contemplated hereunder nor the fulfillment by ASC or any seller of any of
its terms will, except as described on schedule 4.09:
(a) conflict with or result in a breach by ASC or any Seller of, or
constitute default by it under, or create an event that, with the giving of
notice or the elapse of time, or both, would be a default or breach of or
under any of the terms, conditions or provisions of (i) any indenture,
mortgage, lease, deed of trust, pledge, loan or credit agreement, employee
benefit plan or any other Contract to which ASC is a party or to which any
ASC Asset is subject, (ii) the Articles of Incorporation or By-Laws of ASC,
or (iii) any judgment, order, writ, injunction, decree or demand of any
court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which affects ASC or
its business or the ASC Assets;
(b) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the ASC Assets; or
(c) cause a loss or adverse modification of any permit, license, or
other authorization granted to or otherwise held by ASC which is necessary
or useful to ASC's business.
4.10 Permits and Authorizations.
(a) Except as set forth on Schedule 4.10, ASC is the holder of each
federal, state, local or foreign governmental consent, license, permit,
grant or other authorization pursuant to which ASC conducts all or a
material part of its business or holds any of its properties (herein
collectively called "Authorizations") which Authorizations are in full
force and effect and constitute all Authorizations required-to permit Newco
to operate the ASC Assets and conduct ASC's business following the Closing
Date as such ASC Assets and business are presently operated and conducted.
Schedule 4.10 also discloses all Proposed or pending applications for
Authorizations, and all applications for variances from compliance, or
postponement of the dates for compliance with any laws or regulations
affecting ASC or its business.
(b) Schedule 4.10 lists all Authorizations which may materially
restrict the present output of ASC or are required for the presently
contemplated expansion of business of ASC to add two new filling lines
including any limitations on the term of possession or operation of any
assets or the business of ASC, or which pertain to environmental discharge.
(c) ASC and Sellers have no reasonable ground to believe that any of
the Authorizations will not in the ordinary course be renewed (except as
described in Schedule 4.10) upon its expiration. The foregoing statement
shall not be deemed inaccurate by reason of the ordinary expiration of
routine. Authorizations, the renewal of which is expected to be obtained
in the ordinary course without interruption of existing operations.
(d) Except as noted on Schedule 4.10, to the best knowledge of
Sellers and ASC all Authorizations are transferable to Newco upon
effectiveness of the Merger.
(e) ASC has not breached, nor received in writing any claim or
assertion that it has breached, any of the terms or conditions of any
Authorizations in such manner (x) as would permit any other party to
cancel, terminate or materially amend any Authorization or (y) that any
such breach or breaches singly or in the aggregate could materially and
adversely affect the ASC Assets or the financial condition or results of
operations of ASC.
4.11 No Violations.
(a) Except as described on Schedule 4.11 hereto, ASC is not in
violation of any applicable law, statute, order, rule or regulation
promulgated or judgment entered (or, with respect to rules and regulations
of administrative agencies, known by Sellers to be proposed) by any
federal, state, local or foreign court or governmental authority which
violations might have an adverse effect, individually or in the aggregate,
on the financial condition or results of operations of ASC or its
operations or on the ASC Assets.
(b) Except for those filings listed on Schedule 4.11 hereto, no
consent, approval or authorization of, or declaration, filing or
registration with, any federal or state governmental or regulatory
authority is required to be made or obtained by any Sellers in connection
with the execution, delivery and performance by Sellers of this Agreement
and the consummation by ASC of the transactions contemplated hereby.
4.12 No Finders or Brokers. Neither any Seller nor any affiliate of
Sellers has entered into or will enter into any agreement, arrangement or
understanding with any person or firm which will result in the obligation
of Newco or ASC, or any affiliate of Newco or ASC, to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby, except for the arrangement with respect to this
transaction between ASC and Greif & Co., with respect to which all amounts
due to Greif & Co. will be paid by Sellers.
4.13 Proceedings. Schedule 4.13 accurately lists all suits, actions
and legal, administrative, arbitration or other proceedings and
governmental investigations and all other controversies, pending or as to
which ASC has received in writing any claim or assertion. To the best
knowledge of ASC and Sellers, there are no facts which could lead to any
additional investigation being conducted or to any other suit, action or
legal proceeding.
4.14 Insurance. Schedule 4.14 lists all insurance policies under
which ASC is an insured or a beneficiary or for which it is liable to pay
premiums and further sets forth the name of the insurer, policy limits and
deductibles, if any, and the annual premium for each such policy. ASC has
furnished Newco copies of all such policies and a history of all losses
since ___________. Except as noted on Schedule 4.14, the policies listed
on schedule 4.14 will be outstanding, transferred to Newco, and in full
force and effect on and after the Closing Date.
4.15 No Other Sale. Except for this Agreement, neither any seller nor
ASC has any legal obligation, absolute or contingent, to any other person
or firm to sell the business of ASC, to sell substantially all of the
assets of ASC or any of its Shares or to effect any merger, consolidation
or other reorganization of ASC or to enter into any agreement with respect
thereto.
4.16 Proprietary Information and Rights. Schedule 4.16 hereto
accurately lists all patents, patent applications, patent and know-how
licenses, proprietary formulae, trademarks, service marks, trademark
registrations and applications, trade names, or fictitious business names,
computer software and other intellectual property rights (hereinafter
collectively termed "Business Rights") used or proposed to be used by ASC.
Unless otherwise indicated in Schedule 4.16, ASC owns the entire right,
title and interest in and to the Business Rights. Schedule 4.16 also
accurately sets forth all Business Rights which relate to the business of
ASC and which are owned or controlled by any director, officer or employee
of ASC, or by the estate of any such director, officer or employee or any
beneficiary of such estate. Sellers will cause any such Business Rights to
be Contributed to ASC or otherwise included among the ASC Assets. No
Business Rights conflict with, infringe on or otherwise violate any rights
of others, nor require payments to be made to any person, or are subject to
any pending or threatened litigation or other adverse claims or
infringement by others except as set forth in Schedule 4.13. There has
been no infringement by ASC of any domestic or foreign letters patent, or
engaged trademarks of another, or any claim or assertion that ASC has in
any such infringement.
4.17 Employee Benefits. Schedule 4.17 sets forth a list of all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA")) and all
other profit-sharing, deferred compensation, bonus, stock option, stock
purchase, vacation pay, holiday pay, pension, retirement plans, medical and
compensation arrangements ("Benefit Plans") maintained or contributed to or
required to be contributed to by ASC for the benefit of its employees (or
former employees) and/or their beneficiaries; including a complete listing
or description of all pension, retirement, profit sharing, savings, thrift,
stock bonus, stock option, stock purchase, restricted stock purchase, stock
ownership, stock appreciation right, phantom stock, deferred compensation,
supplemental retirement, deferred bonus, severance, change of control,
parachute, medical, health, dental, fitness, vision, dependent care,
educational assistance, group legal services, life insurance, disability,
accidental death, accidental dismemberment, disability income, group
insurance, supplemental employment income, training, apprenticeship,
scholarship, tuition reimbursement, employee discount, subsidized
cafeteria, fringe benefit, employer sponsored recreational facility, or
other employee pension benefit or welfare plan, policy, contract, or
arrangement, or other similar fringe or employee benefit plan, program,
policy, contract, or arrangement, written or oral, qualified or
nonqualified, funded or unfunded, foreign or domestic, for the benefit of,
or relating to, any current or former director, officer, shareholder,
consultant, employee or independent contractor of ASC, or to which ASC
contributes or has an obligation to contribute, including any such plan,
program or arrangement that has been frozen or terminated in the past six
years and any trust, escrow, or similar agreement related thereto, whether
or not funded, in respect of any of the present or former directors,
officers, shareholders, consultants, independent contractors, or employees
of ASC or with respect to which ASC has made within six years prior to
Closing or is required to make payments, transfers or contributions (the
above hereinafter individually or collectively referred to as "Benefit
Plan" or "Benefit Plans," respectively).
(a) ASC has delivered to Newco true and complete
(i) Each Benefit Plan and any related funding agreements
(e.g., insurance contracts or trusts), including all amendments (and
Schedule 4.17 includes a description of any such item that is not in
writing), all of which are legally valid and binding and in full force and
effect (except for terminated Benefit Plans), and there are no defaults
thereunder;
(ii) The current draft of the Summary Plan Description
pertaining to each Benefit Plan for which a Summary Plan Description is
required;
(iii) The three most recent annual reports for each
Benefit Plan (including all relevant schedules) for which such annual
reports are required;
(iv) The most recently filed PBGC Form l (if applicable);
and
(v) The Internal Revenue Service determination letter (if
applicable) for each Benefit Plan and each amendment thereto.
(b) Each Benefit Plan has been maintained and administered in
all material respects in accordance with its terms and any related
agreements, and with all applicable laws, and, if intended to qualify under
Code Section 401(a), is so qualified and with respect to each Benefit Plan
that is subject to Title IV of ERISA:
(i) Neither ASC nor any affiliate of ABC has ever
contributed or been obligated to contribute to any "multi-employer plan"
(as defined in Section 3(37) of ERISA) on account of any withdrawal from
such plan;
(ii) No such plan has been terminated at a time when the
plan was not sufficiently funded;
(iii) Except as otherwise provided on Schedule 4.17, the
value, determined on a termination basis, of all accrued benefits (whether
or not vested) under each such plan did not exceed, as of the most recent
valuation date, and will not exceed as of the time of filing, the then
current fair market value of the assets of the plan.
(c) All contributions and other payments to be made to each
Benefit Plan under the terms of that Benefit Plan, ERISA, the Internal
Revenue Code ("Code") or any other applicable law have been timely made and
all contributions made have been fully deductible under the Code. The
books of ABC properly reflect all amounts required to be accrued as
liabilities to date under each Benefit Plan.
(d) In the case of each Benefit Plan, there is no accumulated
funding deficiency (within the meaning of Section 4971 of the Code),
whether or not such deficiency has been waived, or any other unfunded
liability.
(e) Each Benefit Plan complies currently, and has complied in
the past, in all material respects, in form and operation, with all
applicable law including ERISA, the Code, and the continuation coverage
rules of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), Code section 4980B or part 6 of Title I of ERISA.
(f) No "prohibited transactions" (as defined in Section 4975(c)
(l) of the Code) or breaches of fiduciary duty involving ASC, a Seller, a
director or officer of ASC or, to ASC's knowledge, any third party, have
occurred with respect to any of the Benefit Plans.
(g) All trusts maintained in connection with a Benefit Plan,
including trusts, including trusts that are intended to comply with the
provisions of Code section 501(c) (9) or section 501(c) (17), are exempt
from federal income taxation under Code section 501(a) and there has been
no noncompliance or failure to properly maintain, operate or administer any
Benefit Plan (or a related trust) which has rendered or will render such
Benefit Plan or trust, or ASC, subject to or liable for any taxes,
penalties or liabilities to any person.
(h) There is no contract, agreement, or benefit arrangement
covering any employee of ASC which, individually or collectively, could
give rise to the payment of any amount which would constitute an "excess
parachute payment" (within the meaning of Section 280G of the Code).
(i) Neither ASC nor any ASC affiliate maintains any Benefit Plan
that provides severance pay or medical benefits to one or more former
employees (including retirees), or provides for post-retirement benefits to
present or former employees, other than benefits that are required to be
provided pursuant to COBRA or state law conversion rights.
(j) To the best knowledge of ASC and the Sellers, there are no
investigations, proceedings, or lawsuits, either currently in progress or
expected to be instituted in the future, against any Benefit Plan, by any
administrative agency, whether local, state, or federal.
(k) There are no lawsuits or other claims, pending or threatened
(other than routine claims for benefits under the plan) against (i) any
Benefit Plan, or (ii) any Fiduciary of such plan (within the meaning of
Section 3(21) (A) of ERISA) brought on behalf of any participant,
beneficiary, or Fiduciary thereunder, nor is there any reasonable basis for
any such claim.
4.18 Employment Laws. Except as shown on Schedule 4.18:
(a) ASC is in compliance with all Federal, state or other
applicable laws, domestic or foreign, respecting employment and employment
practices, terms and conditions of employment, wages and hours, affirmative
action and occupational safety (except for minor violations or failures to
comply which would not result in any significant liability), and has not
and is not engaged in any unfair labor practice.
(b) No unfair labor practice complaint against ASC is pending
before the National Labor Relations Board.
(c) There is not any labor strike, dispute, slowdown or stoppage
actually pending or threatened against or involving
(d) There is no currently pending claim by any labor union or
similar organization concerning representation of the of ASC.
(e) Except to the extent expressly provided herein, there are no
claims, grievances or arbitration proceedings, workers' compensation
proceedings, labor disputes (including charges of violations of any
federal, state, or local laws or regulations relating to current and/or
former employees (including retirees), and/or current and/or former
applicants for employment) litigation, governmental investigations, or
administrative proceedings of any kind pending or, to the best knowledge of
ASC or Sellers, threatened against or relating to ASC, its employees,
employment practices, or operations as they pertain to conditions of
employment; nor has there come to Sellers' attention any such matter
pending or threatened against any other person, firm, or corporation which
might adversely affect ASC, its employees, assets, properties or
operations; nor are Sellers subject to any known order, judgment, decree,
award, or administrative ruling arising from any such matter.
(f) No collective bargaining agreement is currently in existence
or is being negotiated by ASC and as of the date of this Agreement no labor
organization has been certified or recognized as the representative of any
employees of ASC.
(g) ASC has not experienced any material labor difficulty during
the last three years. There has not been, and to the best knowledge,
information and belief of ASC, there will not be, any change in relations
with employees of ASC as a result of any announcement or completion of the
transactions contemplated by this Agreement.
(h) ASC's contracts with Interim Personnel Pool and )1 Arlin
Personnel Services represent bona-fide, arms-length agreements and the
personnel provided by such companies are not ASC's employees for purposes
of any federal or California laws, including laws pertaining to tax
withholding, provision of benefits or union representation.
4.19 Environmental Laws. (a) Except as disclosed on Schedule 4.19,
(i) the ASC Assets and the business of ASC have been operated in compliance
with all applicable Environmental Laws (except for violations that
individually or in the aggregate would not have a material adverse effect
on ASC or its operations), (ii) there has been no production, storage,
Release, or disposal of any Hazardous Materials at, in, on under, about or
from any of the Properties (as defined in Section 4.06) by or on behalf of
ASC, or to the best knowledge of ASC or Sellers, by any previous owner or
tenant of the Properties in violation of any applicable Environmental Law,
(iii) there has been no production, storage, Release or disposal of any
Hazardous Materials by or on behalf of ASC at any other site in violation
of any applicable Environmental Law, and (iv) there are no underground
storage tanks, asbestos-containing materials or electrical equipment
containing PCB's on the Properties, and (v) no federal, state or local
governmental entity, or any other person or group, has issued or commenced
any notice of violation, notice to comply, compliance schedule,
administrative or judicial complaint, enforcement action or lien with
respect to alleged violations of Environmental Laws or, to the best
knowledge of ASC or Sellers, any proceeding or inquiry with respect to any
actual or alleged violation of any Environmental Law or any release or
alleged release of a Hazardous Material by or on behalf of ASC or relating
to the Properties.
(b) "Environmental Law" shall mean all laws, federal, state or
local, including statutes, regulations, rules, ordinances and orders which
purport to regulate the Release of Hazardous Materials to the environment,
or impose requirements relating to environmental protection or public or
employee health and safety, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. section 6901 et seq., the
Emergency Planning and Community Right-to-Know Act, as amended, 42 U.S.C.
Section 11001 et seq., the Clean Air Act, as amended, 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act, as amended,
15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, as amended, 42
U.S.C. Section 300f et seq., the Federal insecticide, Fungicide &
Rodentcide Act, as amended, 7 U.S.C. Section 136 et seq., the Federal Food,
Drug and Cosmetic Act, as amended, 21 U.S.C. Section 301 et seq., and the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651 et
seq. Environmental Law shall also mean any law, regulation or requirement
of any foreign country in which ASC's products are distributed which
governs the distribution, import or export of any Hazardous Material.
(c) "Hazardous Material(s)" shall mean any substance which is
(i) defined as a hazardous substance, hazardous material, hazardous waste,
pollutant, contaminant or words of similar import under any Environmental
Law, (ii) a petroleum hydrocarbon, including crude oil or any fraction
thereof, (iii) hazardous, toxic, corrosive, flammable, explosive,
infectious, radioactive, carcinogenic or a reproductive toxicant, or (iv)
regulated pursuant to any Environmental Law.
(d) "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment including the abandonment or
discarding of barrels, containers, and other receptacles containing any
Hazardous Material)
4.20 Taxes.
(a) Except as set forth in Schedule 4.20 hereto, (i) all federal,
state, foreign and local tax returns and tax reports (including information
returns) required to be filed by ASC have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all such returns and reports are, in
all material respects, complete, accurate and in all respects in accordance
with all legal requirements applicable thereto; (ii) all federal, state,
foreign and material local income, profits, franchise, sales, use,
occupation, property, severance, production, excise, withholding and other
taxes, duties, charges and assessments (including interest and penalties)
due from ASC, without limitation including all amounts due and payable to
the California Department of Benefit Payments and the California State
Board of Equalization, (x) have been fully paid or adequately provided for
on the books and financial statements of ASC in accordance with generally
accepted accounting principles or, (y) are disclosed on Schedule 4.20 and
are being contested in good faith by appropriate proceedings and are not
material to ASC; (iii) no issues have been raised (and are currently
pending) by the Internal Revenue Service or any other taxing authority in
connection with any of the returns and reports referred to in the foregoing
clause (i) which, individually or in the aggregate, might have a material
adverse effect on ASC; (iv) no waivers of statutes of limitation have been
given or requested with respect to ASC, (v) the United States and
California tax returns of ASC have been examined (or are no longer subject
to examination) by the appropriate agency for all periods prior to and
including the dates set forth on Schedule 4.20 for each category of tax
return, (vi) and except as and to the extent shown on such Schedule, all
deficiencies asserted or assessments made as a result of examination by any
taxing authorities have been fully paid or fully reflected on the books of
ASC.
(b) ASC is not subject to any penalty by reason of violation of any
order, rule or regulation of, or a default with respect to any return or
report (other than a tax return or report set forth on Schedule 4.20)
required to be filed with, any federal, state, foreign, local or other
governmental agency, department, commission, board, bureau or
instrumentality to which it is subject, which violations or defaults,
individually or in the aggregate, might have a material adverse effect on
the financial condition or results of operations of ASC.
4.21 No Unlawful Contributions. Neither ASC, nor, to the best of
Sellers' knowledge, information and belief, any director, officer, agent,
employee or other person associated with or acting on behalf of ASC, has
made or used any corporate funds to make any unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity,
made any direct or indirect unlawful payments to officials or employees of
any federal, state, local or foreign governmental agency from corporate
funds; failed to file any reports required with respect to lawful
contributions; established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; made any false or fictitious entries on
the books or records of ASC; or made or received any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment; and there have been
no claims that any such actions have occurred.
4.22 No Insider Transactions.
Except as disclosed in schedule 4.22, no Seller nor any ancestor,
sibling, descendant, spouse or affiliate of any such persons, or any trust,
partnership or corporation in which any of such persons has or had an
interest, has or has had, directly or indirectly, (i) an interest in any
entity which furnished or sold, or furnishes or sells, services or products
which ASC furnishes or sells, or proposes to furnish or sell, or (ii) any
interests in any entity which purchases from or sells or furnishes to ASC
any goods or services; (iii) a beneficial interest in any contract,
commitment, agreement or understanding to which ASC is a party or by which
it may be bound or affected; (iv) any interest or claim against any of the
Purchased Assets or ASC which could result in a claim against Newco or
could adversely affect the Purchased Assets, Newco's title to or its right
to use the Purchased Assets, or Newco's right to conduct ASC's business
following the Closing. Except as disclosed on Schedule 4.22, none of the
purchased Assets include any receivables from any officer, director,
shareholder or employee of ASC.
4.23 Accounts Receivable. The accounts receivable reflected on the
Financial Statements, or thereafter acquired by ASC from September 30, 1993
through the Closing Date were fully earned by performance in the ordinary
course of business, have been collected or to ASC's and Sellers' knowledge
are collectible at the aggregate gross recorded amounts thereof less, in
the case of accounts receivable reflected on the Financial Statements, the
allowance for uncollectible accounts set forth therein, and for accounts
receivable collected from September 30, 1993 through the Closing Date,
consistent with past practices of ASC. Schedule 4.23 discloses, as of
December 31, 1991 and December 31, 1992 the identity of each of ASC's ten
(10) largest customers for the year then ended, and the amounts receivable
from each such customer at the respective dates, and also discloses, as of
September 30, 1993, the year-to-date sales for each customer identified on
Schedule 4.23 and the amount owing from such customer on September 30,
1993. Except as disclosed on Schedule 4.23, ASC does not expect the
purchases of any customer identified on Schedule 4.23 to decrease
materially after the Closing.
4.24 Inventories. The inventories reflected on the Financial
Statements, and thereafter acquired by ASC through the date hereof, taken
as a whole, are in all material respects of a quality and quantity usable
in the normal course of the business of ASC or saleable at values (taken as
a whole) at least equal to values at which such are carried on the books of
ASC statements reflect the normal inventory valuation policy of ASC stating
inventories at the lower of cost or market on a first-in, first-out basis.
Schedule 4.24 lists all inventories of raw materials, finished goods,
packaging supplies or ingredients owned or in the custody of ASC
("Inventory") and, with respect to Inventory owned by or held for the
account of a customer, identifies such customer and Inventory in reasonable
detail, and specifies the location of such Inventory.
4.25 Bank Accounts. Schedule 4.25 lists all bank accounts, safe
deposit boxes, money market funds, certificates of deposit, stocks, bonds,
notes and other securities owned directly or indirectly, beneficially or of
record, by ASC.
4.26 Warranties. Except as set forth on Schedule 4.26, ASC has not
given or made any express warranties to third parties with respect to any
products sold or services performed. Sellers do not have any knowledge of
any fact or of the occurrence of any event forming the basis of any present
or future claim against ASC, whether or not fully covered by insurance, for
liability on account of products liability or on account of any expressed
or implied product warranty, except for warranty obligations and product
returns in the ordinary course of business and as set forth on Schedule
4.26.
4.27 No Misstatement. This Agreement, and the Schedules, Exhibits or
other written material supplied under this Agreement by ASC or Sellers do
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein in
light of the circumstances in which made, not misleading.
4.28 Copying and Inspection. Sellers and ASC have made available for
inspection and copying by Newco true and correct copies of all documents,
and any and all amendments to any such documents, referred to in this
Agreement or in any Schedule delivered to Newco pursuant to this Agreement.
4.29 Accurate Records. ASC has maintained complete and accurate books
and records in accordance with good business practices, including financial
records which fairly present its financial condition and complete and
accurate records of all its corporate proceedings.
Representations and Warranties
of
Newco and Parent
Newco and Parent hereby represent and warrant to ASC as lows:
5.01 Organization. Newco and Parent each is a corporation duly
organized, validly existing and in good standing under the laws of the
State of its incorporation, has full corporate power and authority to
perform this Agreement and in Newco's case to conduct the business of ASC
following the Closing. Parent is qualified and in good standing as a
foreign corporation in the State of California.
5.02 No Conflict. Neither the execution and delivery of this
Agreement by Newco or Parent nor the consummation of the transaction
contemplated hereunder nor the fulfillment by Newco or Parent of any of its
terms will conflict with or result in a breach of, or constitute a default
by it under, any of the terms, conditions or provisions of (i) any
indenture, mortgage, lease, deed of trust, pledge, loan or credit agreement
or any other contract, arrangement or agreement to which Newco is a party,
(ii) Newco's or Parent's Certificate of Incorporation or By-Laws, and (iii)
any judgment, order, writ, injunction, decree or demand against Newco or
its Parent of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality.
5.03 Authorization. The execution and delivery of this Agreement by
Newco and Parent and the performance of all acts contemplated to be
performed by it hereunder have been duly authorized by all necessary
corporate actions. Newco and Parent have duly executed and delivered this
Agreement, and this Agreement constitutes a legal, valid and binding
obligation of Newco and Parent, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, relating to or limiting creditors' rights
generally, and (ii) general principles of equity (whether considered in an
action in equity or at law).
5.04 No Brokers or Finders. Newco and Parent have not retained any
broker, finder, investment banker or financial advisor in connection with
this Agreement or the transaction contemplated herein, except The Gordon &
Morris Group, whose fees and expenses will be paid by Newco and Parent.
Limitations on Representations, Warranties and Agreements
6.01 Certain Limitations on Representations and Warranties.
(a) Each party to this Agreement is a sophisticated person or
legal entity that was advised by knowledgeable counsel and, to the extent
it deemed necessary, other advisors in connection with this Agreement.
Accordingly, each party hereby acknowledges that there are no
representations or warranties by or on behalf of any party hereto or any of
its respective affiliates or representatives other than those expressly set
forth in this Agreement.
(b) The representations and warranties made in this Agreement by
Sellers and ASC will be deemed for all purposes to be qualified by the
disclosure made in the Schedules, whether or not in the case of any
particular representation or warranty such representation or warranty
refers to the Schedule in which the disclosure is made or to any other
Schedule. All references in this Agreement to the knowledge of ASC will be
deemed to be references solely to the actual knowledge of the managers of
ASC listed on Schedule 6.01.
6.02 Reliance on and Survival of Representations, Warranties,
Covenants and Agreements: Limits on Suits Relating to the Agreement.
(a) The representations and warranties made by any party in this
Agreement or in any agreement, certificate, schedule or exhibit delivered
pursuant to this Agreement may be fully and completely relied upon by ASC,
Sellers, Newco and Parent, as the case may be, notwithstanding any
investigation heretofore or hereafter made by such party or on behalf of
any of them.
(b) All representations, warranties, covenants and agreements
made by a party to another party in this Agreement or in any agreement,
certificate, schedule or exhibit pursuant to this Agreement shall remain in
full force and effect regardless of any investigation, verification or
approval by any party or its representative and shall survive the Closing
for a period of two years from the Closing Date, except (i) that the
covenants and agreements in Section 2.07 shall survive for the periods set
forth therein; (ii) that the representations and warranties made in
Sections 4.17, 4.18 and 4.20 shall survive the Closing until the expiration
of any applicable statute of limitations; (iii) that any agreement made by
a party to another party in this Agreement or in any agreement,
certificate, schedule or exhibit delivered pursuant to this Agreement and
relating to any liability or obligation in respect of claims, actions,
suits, proceedings or investigations instituted under Environmental Laws or
based upon the presence or release of Hazardous Substances shall survive
the Closing until the expiration of any applicable statute of limitations;
(iv) that the provisions of Section 2.08 shall survive the Closing until
the expiration of any applicable statute of limitations, and (v) that the
provisions of Sections 6.03 and 7.05 shall survive the Closing until the
expiration of any applicable statute of limitations. Upon the expiration
of any such survival period, any suit, claim or action relating to any
representation, warranty, covenant or agreement hereunder shall be forever
barred.
6.03 Confidentiality. Whether or not the Closing occurs, each party
to this agreement will treat in confidence all documents materials and
other information disclosed by any other party that is not its affiliate,
whether during the course of the negotiations leading to the execution of
this Agreement or thereafter, in its investigation of the other and in the
preparation of agreements, schedules and other documents relating to the
consummation of the transactions contemplated hereby. In the event that
this Agreement is terminated, none of the parties hereto will use any
information furnished by any other party hereto in its or any of its
affiliate's businesses. If this Agreement is terminated, each party will
use its reasonable efforts to return to the other all originals and copies
of nonpublic documents and materials of the type provided for in this
Section 6.03 that have been furnished in connection with this agreement.
Indemnification
7.01 By Sellers. Sellers shall jointly and severally indemnify and
hold harmless Newco and Parent against any loss, damage or expense
(including reasonable attorneys' fees) suffered by Newco or Parent
resulting from (i) any breach by ASC or any Seller of this Agreement or any
of its terms or conditions, or (ii) any inaccuracy in or breach of any of
the representations, warranties or covenants made by ASC or any Seller
herein or in any document delivered pursuant hereto, except that no Seller
shall have any liability for a breach by another Seller of Section 2.07,
Section 2.08 or of such other Seller's employment agreement.
7.02 By Newco. Newco shall indemnify and hold harmless sellers
against any loss, damage or expense (including reasonable attorneys' fees)
suffered by Sellers resulting from (i) any breach by Newco or Parent of
this Agreement or any of its terms or conditions or (ii) any inaccuracy in
or breach of any of the representations, warranties or covenants made by
Newco or Parent herein or in any document delivered pursuant hereto.
7.03 Procedure for Indemnification. Upon obtaining knowledge
thereof, the indemnified party shall promptly notify the indemnifying party
of any claim or demand which it has determined has given or could give rise
to a right of indemnification under this Agreement. If such claim or
demand relates to a claim asserted by a third party, the indemnifying party
shall notify the indemnified party within 45 days (or, in the event that a
temporary restraining order is being sought by such third party, within 48
hours) if it intends to contest any such claim or demand and shall have the
right to employ counsel reasonably acceptable to the indemnified party, and
the indemnified party shall cooperate in the defense of any such claim or
demand, provided that the indemnifying party shall pay all out-of-pocket
expenses incurred by the indemnified party. Whether or not the
indemnifying party so elects to defend any such claim or demand, the
indemnified party shall not have any obligation to do so and the
indemnified party shall not waive any rights it may have against the
indemnifying party hereunder with respect to any such claim or demand by
not defending same.
7.04 Payment. Subject to the indemnifying party's right to defend
third party claims as set forth above, the indemnifying party shall
reimburse the indemnified party promptly upon demand for any payment made
or loss suffered by the indemnified party in respect of any liability,
loss, damage or expense to which this Section 7 relates. However, (except
with respect to payments arising under or with respect to Sections 2.03,
4.07, 4.18, 4.19 and 4.20) no payment shall be due except to the extent
that the aggregate amount of all payments due pursuant to Section 7.01 or
7.02, as applicable, exceeds $400,000 and the aggregate amount of all
payments pursuant to Section 7.01 or 7.02, as applicable, shall not exceed
$3,000,000 (excluding in calculating both the $400,000 and $3,000,000
amounts, payments arising under or with respect to Sections 2.03, 4.07,
4.17, 4.18, 4.19 and 4.20)
7.05 Specific Environmental Indemnity. Sellers, jointly and
severally, shall release, indemnify, defend and hold harmless Newco and
Parent and their directors, officers, partners, employees, affiliates,
agents, consultants, representatives, and their respective successors and
assigns (collectively "Environmental Indemnitees" and individually
"Environmental Indemnitee") from and against any and all claims (including,
without limitation, third party claims for personal injury or real or
personal property damage), actions, judicial proceedings, administrative
proceedings (including informal proceedings), judgements, damages, punitive
damages, penalties, fines, liabilities (whether absolute or contingent, and
including sums paid in settlement of claims), interest, taxes, fees
(including attorneys', consultants', and expert witness fees), liens,
claims of lien, expenses or costs sought from, asserted against, imposed
upon or incurred by any Environmental Indemnitee, which arise out of, are
related to or are based upon any of the following:
(a) Any matter disclosed on Schedule 4.19 or any breach of any
representation or warranty under Section 4.19 of this Agreement, provided
that if a matter disclosed on Schedule 4.19 is also subject to specific
indemnification under paragraph (f) or (h), or the proviso following
paragraph (h), of this Section 7.05 the language in such paragraph or
proviso shall control such indemnification;
(b) The presence, Release, treatment, storage or disposal of any
Hazardous Material in, on, under, about or from the Properties, or ASC's
former location at 1440 Chico Street, South El Monte, California, which was
present, occurred or existed on or before the Closing Date;
(c) Any investigation, characterization and/or remediating of
any Hazardous Material that was present in, on, under or about, or Released
from the Properties on or before the closing Date, or in, on, under or
about ASC's former location at 1440 Chico Street, South El Monte,
California which is performed or rehired by any third party, including
without limitation, the U.S. Environmental Protection Agency and/or the
Regional Water Quality Control Board Los Angeles Region;
(d) The Release, treatment, storage, transportation or disposal of
any Hazardous Material at any site other than the Properties by ASC or any
of the Sellers or their respective agents or contractors, which occurred on
or before the Closing Date, whether or not such other site was or has ever
been owned or operated by ASC;
(e) Any failure by ASC or Sellers, or pertaining to the
Properties or ASC's business, to comply with any Environmental Law,
including any failure to have, maintain in effect or operate in compliance
with any permit or approval required by any Environmental Law, which
failure occurred or existed on or before the Closing Date;
(f) Any failure by ASC or Sellers, or pertaining to the
Properties or ASC's business, to comply with any Environmental Law after
the Closing Date, where such failure commenced on or before the Closing
Date and continued thereafter, provided that the right to indemnification
under this subparagraph 7.05(f) for any continuing failure described on
Schedule 7.05(f) or a similar failure shall cease as of the date, if any
(which shall not be earlier than one year following the Closing), which
Sellers establish as the date on which Newco, through the exercise of
reasonable efforts after discovery of such failure, without extraordinary
expense, could have corrected such failure;
(g) The implementation of any measure, program, construction or
other work or action necessary to correct any failure by ASC or the
Sellers, or pertaining to the Properties or ASC's business, to comply with
any Environmental Law, which failure occurred, existed or commenced on or
before the Closing Date; or
(h) The removal of any (i) underground storage tank not in use
as of the Closing Date, or (ii) asbestos-containing materials if removal is
required to comply with laws or reasonable safety policies, or (iii) PCBs,
any of which is present on the Properties as of the Closing Date.
Provided, that up to $115,000 of costs associated with bringing
underground storage tanks into compliance with applicable laws or with
responding to requirements of the California Regional Water Quality Control
Board shall be excluded from the amounts Sellers are required to pay
pursuant to this Section 7.05, and provided further, that-wages and
salaries of ASC employees who write plans, prepare and install labels or
governing signs, administer training and perform similar functions bring
Newco into compliance with Environmental Laws, shall not be reimbursed by
Sellers, but costs incurred by ASC or Newco to have such functions
performed by consultants or other outside personnel shall be costs against
which Sellers shall indemnify.
7.06 Special Procedures for Environmental Indemnity. In additional
and as a supplement to the procedures in Section 7.03 above, (i) Sellers
shall on Newco's request pay directly any count for which Newco or any
other indemnified party would have the right to be reimbursed pursuant to
Section 7.05, (ii) Sellers shall have the right (to be exercised in a
manner which shall minimize disruption to the ongoing business activities
of Newco and Parent) to enter onto the Property and to take reasonable
steps to correct or otherwise deal with any matter or condition giving rise
or potentially giving rise to a right of indemnification under Section
7.05, and (iii) Newco and Parent shall, upon discovery of any matter or
condition giving rise to a right of indemnification under Section 7.05,
take reasonable steps to mitigate the resultant damages therefrom
(provided, however, that such duty to mitigate shall not limit Newco's
rights under subparagraph 7.05 (g) above or require Newco or Parent to
expend amounts in excess of $10,000 with respect to an individual or
related series of matters or conditions if Newco or Parent shall have made
demand upon Sellers to advance or pay such amounts in excess of $10,000 and
Sellers shall have failed to do so, or if Sellers are otherwise in default
with respect to Section 7.05 this Section 7.06).
Conditions to Closing
8.01 Conditions to Obligations of Newco and Parent. The obligations
of Newco and Parent hereunder (including the obligation of Newco to
consummate the transactions contemplated hereby) are subject to the
following conditions precedent:
(a) ASC shall have delivered a certified copy of a resolution or
resolutions duly adopted by its Board of Directors and shareholders
authorizing the transaction contemplated hereby;
(b) On the Closing Date, (i) each of the representations and
warranties of ASC contained herein shall be true in all material respects
on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on the Closing Date; (ii) ASC
shall have performed and complied with all agreements, obligations,
covenants and conditions required to be performed or complied with by it
pursuant hereto on or prior to the Closing Date; and (iii) the business of
ASC shall have been operated in the ordinary course and in accordance with
Section 2.06 hereof between the date of this Agreement and the Closing
Date, and Newco shall have received a certificate from ASC, signed by an
officer of ASC, satisfactory in form and substance to Newco, to such
effect.
(c) ASC shall have provided an opinion of Kindel & Anderson,
counsel for ASC, dated the Closing Date, in form and substance satisfactory
to Newco and its counsel, in substantially the form of Exhibit K attached
hereto;
(d) At the Closing there shall be delivered to Newco, signed by
ASC, the documents required by Sections 1.02, 2.07 and 3.02(a) hereof;
(e) Newco shall have received all necessary consents to the
transfer of ASC's Authorizations, and in the case of authorizations not
transferable shall have received new licenses, permits or other
entitlements as needed to permit Newco to operate ASC's business after the
Closing.
(f) No proceeding or litigation, at law or in equity, shall be
pending or threatened by or before any court, governmental or regulatory
commission or agency or any other body or authority which challenges the
consummation of the transaction contemplated hereby or which claims
substantial damages against Newco as a result of such consummation;
(g) Newco shall have received from one or more lenders
acceptable to Newco, on terms and conditions reasonably acceptable to
Newco, proceeds in an amount sufficient to permit it to pay the Purchase
Price;
(h) Howard C. Lim and Walter K. Lim shall have entered into
employment agreements with Newco in substantially the form of Exhibit L to
this Agreement;
(i) Each ASC employee with access to confidential or proprietary
information shall have executed a confidentiality and proprietary
information agreement with Newco in substantially the form of Exhibit M to
this Agreement;
(j) Newco and Parent shall have received from Howard C. and
Walter K. Lim executed subscription agreements in the form of Exhibit N for
not less than 210,000 shares of the common stock of Parent and payment of
the purchase price for such shares, and shall have received from them and
other persons an aggregate of not less than $6,100,000 in payment for
common stock in Parent;
(k) Newco shall have confirmed to its reasonable Satisfaction
that ASC has performed, through the Closing Date, substantially in
accordance with the projections included in Exhibit O; and
(l) Newco shall have received an appraisal satisfactory to Newco
and its lender(s) showing the value of ASC's fixed assets as in excess of
$6.5 million.
8.02 Conditions to Obligations of Sellers and ASC. The obligations of
ASC and Sellers hereunder (including the obligation to consummate the
transactions contemplated hereby) are subject to the following conditions
precedent:
(a) Newco shall have furnished ASC with a certified copy of
resolutions duly adopted by Newco's and Parent's Board of Directors
authorizing the transactions contemplated hereby;
(b) ASC shall have received a certificate from Newco signed by
an officer of Newco and Parent, satisfactory in and substance to ASC,
certifying that each of the representations and warranties of Newco
and Parent contained Date with the same force and effect as if such
representations and warranties had been made on the Closing Date and
that Newco and Parent has performed and complied with all agreements,
obligations, covenants and conditions required to be performed or
complied with by it pursuant hereto on or prior to the Closing Date;
(c) Newco shall have provided the opinion of Jones, Day, Reavis
& Pogue, counsel for Newco, dated the Closing Date, in form and
substance satisfactory to ASC and its counsel, in substantially the
form of Exhibit P attached hereto;
(d) At the Closing there shall be delivered to sellers the Cash
at Closing, the Certificates representing the preferred Stock and the other
documents required by Section 3.02, and the payments required by Section
2.01(c) shall have occurred;
(e) No proceeding or litigation, at law or in equity, shall be
pending or threatened by or before any court, governmental or regulatory
commission or agency or any other body or authority which challenges the
consummation of the transaction contemplated hereby or which claims
substantial damages against ASC or Sellers as a result of such
consummation;
(f) Walter K. and Howard C. Lim shall have entered into
employment agreements with Newco in substantially the form of Exhibit L to
this Agreement; and
(g) The allocation referred to in Section 2.02(b) shall have
been completed.
Termination
9.01 Termination. This Agreement and the transaction contemplated
hereby may be terminated at any time prior to the closing Date:
(a) by mutual consent of ASC, Sellers, Newco and Parent;
(b) by any party if the conditions to the terminating party's
obligation to consummate the transaction contemplated hereby have not been
satisfied at the time of Closing; or
(c) by any party if the Closing Date shall not have occurred
prior to February 28, 1994 provided that the party seeking so to terminate
shall not then be in default hereunder and shall have used its best efforts
to consummate the transactions contemplated hereby.
9.02 Effect of Termination. If this Agreement is terminated for any
reason set forth in Section 9.01 hereof, it shall become void and have no
effect, and there shall be no liability on the part of any party hereto or
its stockholders, directors or officers in respect thereof, except for the
provisions of Sections 2.06, 2.08 and 6.03.
Miscellaneous
10.01 Expenses. Except as provided in Section 2.01(c), each party
will each pay its own costs and expenses (including attorneys' fees,
accountants' fees, investment bankers' fees and other professional fees and
expenses) in connection with the negotiation, preparation, execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
10.02 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the transaction
contemplated hereby, and supersedes all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the date
hereof. No waiver and no modification or amendment of any provision of
this Agreement shall be effective unless specifically made in writing and
duly signed by the party to be bound thereby.
10.03 Successors Bound. This Agreement shall be binding Upon and
inure to the benefit of the respective successors and assigns of the
parties hereto. Notwithstanding the above, this Agreement, and all rights
and obligations provided for herein shall not be assigned by any party
hereto without the written consent of the other parties hereto, except that
the indemnities in Sections 7.01, 7.02 and 7.05 shall be assignable to and
run to the benefit of the successors and assignees of the parties hereto.
10.04 Governing Law. The validity, interpretation and effect of
this Agreement shall be exclusively governed by, and construed in
accordance with, the laws of the State of California
10.05 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and delivered in
person (including by courier) or by telecopy, or sent by certified mail,
postage prepaid, and properly addressed as follows:
To ASC or Sellers:
Aerosol Services Company, Inc.
425 So. Ninth Avenue
City of Industry, CA 91746
Attn: Walter K. Lim and Howard C. Lim
With a Copy to:
Kindel & Anderson
555 South Flower Street
Los Angeles, California 90071
Attn: Hugh Boss, Esq.
To Parent or Newco:
c/o The Gordon + Morris Group
620 Newport Center Drive
Suite 1400
Newport Beach, California 92660
Attn: John H. Morris
With Copies to:
Jones, Day, Reavis & Pogue
2600 Main Street
Suite 900
Irvine, California 92714-6232
Attn: Peter J. Tennyson
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 10.05 shall, if
delivered personally (including delivery by courier) or by telecopy, be
effective upon delivery and shall, if delivered by mail, be effective four
(4) business days following deposit in the United States Mail, postage
prepaid. Any party may from time to time change its address for the
Purpose of notices to that party by a similar notice specifying a new
address, but no such notice shall be deemed to have been given until it is
actually received by the party sought to be charged with the contents.
10.06 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all
affixed together shall be deemed to be one and the same instrument.
10.07 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and full provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon any binding
determination that is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable and legally enforceable manner, to the end that the transactions
contemplated hereby may be completed to the extent possible.
10.08 Certain Interpretative Matters.
(a) Titles and headings to Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
(b) No provision of this Agreement will be interpreted in favor
of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
(c) All references in this Agreement to Sections or portions of
Sections are to Sections of this Agreement unless otherwise indicated
specifically.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date and year first above written.
ASC MERGER CORPORATION AEROSOL SERVICES COMPANY, INC.
By: /s/ John H. Morris By: /s/ Walter K. Lim
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Title: President Title: President
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By: /s/ Walter K. Lim
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By: /s/ Howard C. Lim
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AEROSOL SERVICES
HOLDING CORPORATION
By: /s/ John H. Morris
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Title: President
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