Exhibit 2.1
STOCK PURCHASE AGREEMENT
by and among
CLIMAX TECHNOLOGIES, INC.
(Buyer),
TEAM INVESTMENT, INC.
(Seller),
TEAM, INC.
(Seller's Parent)
and
CLIMAX PORTABLE MACHINE TOOLS, INC.
(Company)
Dated November 30, 2005
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
----
1. PURCHASE AND SALE OF SHARES..............................................................................1
1.1. Shares and Assets...............................................................................1
2. PURCHASE PRICE - PAYMENT.................................................................................2
2.1. Purchase Price..................................................................................2
2.2. Payment of Purchase Price. 2
2.3. Determination of Net Asset Value................................................................3
3. REPRESENTATIONS AND WARRANTIES OF TEAM...................................................................7
3.1. Corporate.......................................................................................7
3.2. Team............................................................................................8
3.3. No Violation....................................................................................8
3.4. Financial Statements............................................................................9
3.5. Tax Matters.....................................................................................9
3.6. Accounts Receivable............................................................................10
3.7. Inventory......................................................................................10
3.8. Absence of Certain Changes. 11
3.9. Absence of Undisclosed Liabilities.............................................................12
3.10. No Litigation..................................................................................12
3.11. Compliance With Laws and Orders................................................................12
3.12. Title to and Condition of Properties...........................................................14
3.13. Insurance......................................................................................16
3.14. Contracts and Commitments. 16
3.15. Labor Matters..................................................................................18
3.16. Employee Benefit Plans.........................................................................18
3.17. Employment Compensation. 20
3.18. Trade Rights...................................................................................21
3.19. Major Customers and Suppliers..................................................................21
3.20. Product Warranty and Product Liability.........................................................22
3.21. Bank Accounts..................................................................................22
3.22. Affiliates.....................................................................................22
3.23. No Brokers or Finders..........................................................................23
3.24. Disclosure.....................................................................................23
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................23
4.1. Corporate......................................................................................23
4.2. Authority......................................................................................23
4.3. No Brokers or Finders..........................................................................24
4.4. Disclosure.....................................................................................24
4.5. Investment Intent..............................................................................24
4.6. Financial Capability...........................................................................24
5. COVENANTS...............................................................................................24
5.1. Title Insurance................................................................................24
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5.2. Surveys........................................................................................25
5.3. Environmental Audits...........................................................................25
5.4. Noncompetition; Confidentiality................................................................25
5.5. General Releases...............................................................................27
5.6. Access to Information and Records..............................................................27
5.7. Section 338(h)(10) Election; Tax Matters.......................................................27
5.8. Provisions Regarding Accounts Receivable.......................................................30
5.9. Product Liability; Insurance.30
5.10. Product Warranty...............................................................................30
6. INDEMNIFICATION.........................................................................................31
6.1. By Team........................................................................................31
6.2. By Buyer.......................................................................................31
6.3. Indemnification of Third-Party Claims..........................................................31
6.4. Payment........................................................................................32
6.5. Special Indemnification........................................................................33
6.6. Limitations on Indemnification.................................................................33
6.7. No Waiver......................................................................................34
6.8. Exceptions and Limitations to Indemnities......................................................34
6.9. Exclusive Remedy...............................................................................34
7. CLOSING.................................................................................................35
7.1. Documents to be Delivered by Team Investment, Company and Team.................................35
7.2. Documents to be Delivered by Buyer.............................................................36
8. RESOLUTION OF DISPUTES..................................................................................36
8.1. Arbitration....................................................................................36
8.2. Arbitrators....................................................................................37
8.3. Procedures; No Appeal..........................................................................37
8.4. Authority......................................................................................37
8.5. Entry of Judgment..............................................................................37
8.6. Confidentiality................................................................................37
8.7. Continued Performance..........................................................................38
8.8. Tolling........................................................................................38
9. MISCELLANEOUS...........................................................................................38
9.1. Disclosure Schedule............................................................................38
9.2. Further Assurance..............................................................................38
9.3. Disclosures and Announcements..................................................................38
9.4. Assignment; Parties in Interest................................................................38
9.5. Law Governing Agreement. 39
9.6. Amendment and Modification.....................................................................39
9.7. Notice.........................................................................................39
9.8. Expenses.......................................................................................40
9.9. Entire Agreement...............................................................................41
9.10. Counterparts...................................................................................41
9.11. Headings.......................................................................................42
9.12. Definitions....................................................................................42
ii
Disclosure Schedule
-------------------
Schedule 1.1.(a) - Owned Real Property
Schedule 1.1.(b) - Leased Real Property
Schedule 1.1.(e) - Personal Property Lease
Schedule 1.1.(h) - Computer Software
Schedule 2.3(c)(v)(B) - Obsolete, Slow-moving, etc., Inventory
Schedule 3.1.(c) - Foreign Corporation Qualification
Schedule 3.1.(d) Subsidiaries
Schedule 3.1.(e) - Officers and Directors
Schedule 3.3. - Violation, Conflict, Default
Schedule 3.4. - Financial Statements
Schedule 3.5.(a) - Tax Liabilities
Schedule 3.5.(b) - Tax Returns (Exceptions to Representations)
Schedule 3.5.(c) - Tax Audits
Schedule 3.5.(d) - Consolidated Tax Returns
Schedule 3.5.(e) - Tax, Other
Schedule 3.6. - Accounts Receivable (Aged Schedule)
Schedule 3.7. - Inventory Off Premises
Schedule 3.8. - Certain Changes
Schedule 3.9. - Off-Balance Sheet Liabilities
Schedule 3.10. - Litigation Matters
Schedule 3.11.(a) - Non-Compliance with Laws
Schedule 3.11.(b) - Licenses and Permits
Schedule 3.11.(c) - Environmental Matters (Exceptions to Representations)
Schedule 3.13. - Insurance
Schedule 3.14.(a) - Real Property Leases
Schedule 3.14.(b) - Personal Property Leases
Schedule 3.14.(d) - Sales Commitments
Schedule 3.14.(e) - Contracts with Affiliates
Schedule 3.14.(h) - Loan Agreements, etc.
Schedule 3.14.(i) - Guarantees
Schedule 3.14.(l) - Material Contracts
Schedule 3.16.(a) - Employee Plans/Agreements
Schedule 3.17. - Employment Compensation
Schedule 3.18. - Trade Rights
Schedule 3.19.(a) - Major Customers
Schedule 3.19.(b) - Major Suppliers
Schedule 3.19.(c) - Dealers and Distributors
Schedule 3.20. - Product Warranty, Warranty Expense and Liability Claims
Schedule 3.21. - Bank Accounts
Schedule 3.22.(a) - Contracts with Affiliates
Schedule 3.22.(b) - Adverse Interest
Schedule 3.22.(c) - Obligations of and to Affiliates
Schedule 3.22.(d) - GmbH Standby Letter of Credit
Schedule 3.22.(e) - Representations Regarding Climax GmbH
iii
Exhibits
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Exhibit 2.3 Sample Final Closing Balance Sheet
Exhibit 5.7 Purchase Price Allocation
iv
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated November 30, 2005,
by and among Climax Technologies, Inc., a Delaware corporation ("Buyer"), Climax
Portable Machine Tools, Inc., an Oregon corporation ("Company"), Team
Investment, Inc., a Delaware corporation ("Team Investment") and Team, Inc., a
Texas corporation ("Team").
RECITALS
A. Company is engaged in the portable machine tool business (the
"Business"). Team owns all of the issued and outstanding shares of capital stock
of Team Investment. Team Investment owns all of the issued and outstanding
shares (the "Shares") of capital stock of Company.
B. Company's facilities consist of a facility on approximately 3.02
acres at 2712 East Second Street, Newberg, Oregon (the "Facilities").
C. Buyer desires to purchase the Shares from Team Investment and
Team Investment desires to sell the Shares to Buyer, upon the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES
1.1. Shares and Assets.
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) Team Investment shall sell to Buyer, and Buyer
shall purchase from Team Investment, all the Shares.
On the Closing Date (as hereinafter defined) Company's assets shall
include without limitation the Company's right, title and interest in and to the
following:
1.1.(a) Owned Real Property. The real property, including fixtures,
buildings, improvements, and all appurtenant rights owned by Company,
including the real property described on Schedule 1.1(a) (the "Owned Real
Property").
1.1.(b) Leased Real Property. The leases of real property (the "Real
Property Leases") described on Schedule 1.1(b) with respect to the real
property described thereon (the "Leased Real Property").
1.1.(c) Personal Property. Machinery, equipment, vehicles, tools,
supplies, spare parts, furniture and all other personal property (other
than personal property leased pursuant to Personal Property Leases as
hereinafter defined) owned by Company on the Closing Date.
1.1.(d) Inventory. Inventories of raw materials, work-in-process and
finished goods (including all such in transit), and service and repair
parts, supplies and components held for resale by Company on the Closing
Date, together with related packaging materials (collectively the
"Inventory").
1.1.(e) Personal Property Leases. Leases of machinery, equipment,
vehicles, furniture and other personal property leased by Company,
including all such leases (the "Personal Property Leases") described in
Schedule 1.1(e).
1.1.(f) Trade Rights. Trade Rights, as defined in Section 3.18.
1.1.(g) Contracts. All the Company's rights in, to and under all
contracts, purchase orders and sales orders (hereinafter "Contracts") of
Company.
1.1.(h) Computer Software. Computer source codes, programs and other
software of Company, including all machine readable code, printed listings
of code, documentation and related property and information of Company
described on Schedule 1.1(h).
1.1.(i) Literature. Sales literature, promotional literature, catalogs
and similar materials of Company.
1.1.(j) Records and Files. Records and files of Company of every kind
including, without limitation, invoices, customer and vendor lists,
blueprints, specifications, designs, drawings, and operating and marketing
plans, and all other documents, tapes, discs, programs or other embodiments
of information of Company.
1.1.(k) Notes and Accounts Receivable. Subject to Section
2.3(c)(v)(H), notes and accounts receivable of Company.
1.1.(l) Climax GmbH. The Company's interest in Climax GmbH.
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price.
The purchase price (the "Purchase Price") payable for the Shares shall
be Fourteen Million Five Hundred Thousand Dollars ($14,500,000), as finally
adjusted pursuant to Section 2.2(b) (the "Purchase Price Adjustment").
2.2. Payment of Purchase Price.
The Purchase Price shall be paid by Buyer as follows:
2.2.(a) Cash. At the Closing, Buyer shall deliver to Team Investment
Fourteen Million Five Hundred Thousand Dollars ($14,500,000), as adjusted
pursuant to Section 2.3(b).
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2.2.(b) Adjustment of Final Cash Purchase Price. On or before the
fifth business day following the final determination of the Final Closing
Balance Sheet (as hereinafter defined) (such date being hereinafter
referred to as the "Settlement Date"), either (i) Team Investment shall pay
to Buyer the amount, if any, by which the Estimated Net Asset Value exceeds
the Net Asset Value as reflected on the Final Closing Balance Sheet,
together with interest on the amount being paid from the Closing Date to
the date of the payment at a rate per annum equal to 6%; or (ii) Buyer
shall pay to Team Investment the amount, if any, by which the Net Asset
Value, as reflected on the Final Closing Balance Sheet exceeds the
Estimated Net Asset Value, together with interest on the amount being paid
from the Closing Date to the date of payment at a rate per annum equal to
6%.
2.2.(c) Method of Payment. All payments under this Section 2.2 shall
be made by wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the time for
payment specified herein.
2.3. Determination of Net Asset Value.
2.3.(a) Definition of Net Asset Value. The term "Net Asset Value"
shall mean the dollar amount by which the net book value of all the assets
of Company exceeds the net book value of all the liabilities of Company,
both as reflected in the Final Closing Balance Sheet or Estimated Closing
Balance Sheet, as applicable.
2.3.(b) Estimated Closing Balance Sheet. For purposes of determining
the Net Asset Value and the Purchase Price payable by the Buyer at the
Closing, not less than five (5) business days prior to the Closing Date,
Company shall, in consultation with the Buyer, prepare and deliver to Buyer
a projected balance sheet of Company as of 11:59 p.m. on the Closing Date
(hereinafter the "Effective Time") which shall represent Company's
reasonable estimate of the Final Closing Balance Sheet; such balance sheet
to be in form and detail identical to, and with accounting principles,
policies and assumptions consistent in every respect with, the Recent
Balance Sheet as defined in Section 3.4 hereof and accompanied by schedules
setting forth in reasonable detail all assets and liabilities included
therein, but shall not take into account any of the transactions
contemplated by this Agreement. Such balance sheet or the accompanying
schedules shall contain sufficient detail of the assets and liabilities of
Company for the determination of Net Asset Value.
In the event Buyer shall object to any of the information set forth on
the balance sheet or accompanying schedules as presented by Company, the
parties shall negotiate in good faith and agree on appropriate adjustments
to the end that such balance sheet and accompanying schedules reflect a
reasonable estimate of the Final Closing Balance Sheet and Net Asset Value.
The estimated balance sheet as determined by the parties pursuant to
this subsection is herein referred to as the "Estimated Closing Balance
Sheet" and the estimated Net Asset Value as determined by the parties
pursuant to this subsection is herein referred to as the "Estimated Net
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Asset Value." In connection with the determination and the Estimated Net
Asset Value, Company shall provide to Buyer such information and detail as
Buyer shall reasonably request.
At Closing either (i) the Purchase Price shall be reduced by the
amount, if any, by which the amount of Twelve Million Five Hundred and
Ninety-one Dollars ($12,000,591) exceeds the Estimated Net Asset Value, as
reflected on the Estimated Closing Balance Sheet, or (ii) the Purchase
Price shall be increased by the amount, if any, by which the Estimated Net
Asset Value, as reflected in the Estimated Closing Balance Sheet, exceeds
the amount of Twelve Million Five Hundred and Ninety-one Dollars
($12,000,591).
2.3.(c) Final Closing Balance Sheet. The final balance sheet of
Company prepared as of the Effective Time shall be prepared as follows:
(i) Within 45 days after the Closing Date, Buyer shall
deliver to Team a balance sheet of Company as of the Effective Time,
such balance sheet to be prepared the same way the Recent Balance
Sheet was prepared, including in form, detail, accounting principles,
policies and assumptions (except as required in accordance with this
Section 2.3). Subject to the preceding sentence, the balance sheet
shall be prepared in the same manner as a normal year end closing
balance sheet of the Company accompanied by detailed schedules of the
assets and liabilities of Company at the Effective Time (including all
supporting calculations) and by a report (1) setting forth the amount
of Net Asset Value (as defined above) reflected in the balance sheet,
(2) stating that the balance sheet is in form and detail identical to,
and with accounting principles, policies and assumptions consistent in
every respect with, the Recent Balance Sheet (except as required in
accordance with this Section 2.3), and (3) setting forth the Purchase
Price Adjustment to be paid and by whom pursuant to Section 2.2
hereof.
(ii) Within 30 days following the delivery of the balance
sheet referred to in (i) above, Team may object to any of the
information contained in said balance sheet or accompanying schedules
which could affect the necessity or amount of any payment by Buyer or
Team pursuant to Section 2.2(b) hereof. Any such objection shall be
made in writing and shall state Team's determination of the amount of
the Net Asset Value.
(iii) In the event of a dispute or disagreement relating to
the balance sheet or schedules which Buyer and Team are unable to
resolve, either party may elect to have all such disputes or
disagreements resolved by an office of Pricewaterhouse Coopers, LLC
(the "Accounting Firm") chosen by mutual agreement of Buyer and Team.
The Accounting Firm shall make a resolution of the balance sheet of
Company as of the Effective Time and the calculation of Net Asset
Value, which shall be final and binding for purposes of this Article
2. The Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 15 days of submission of the
balance sheet and objections to it and, in any case, as soon as
practicable after such submission. The fees and expenses for the
services of the Accounting Firm shall be shared by Buyer and Team as
follows:
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Team shall pay a percentage of such fees and expenses equal
to A/(A+B) and Buyer shall pay a percentage of such fees and expenses
equal to B/(A+B), where A is equal to the absolute value of the
difference (in dollars) between Net Asset Value as finally determined
by the Accounting Firm and Net Asset Value as reflected in the
objection prepared and delivered by Team in accordance with Section
2.3(c)(ii) and B is equal to the absolute value of the difference (in
dollars) between Net Asset Value as finally determined by the
Accounting Firm and Net Asset Value as reflected in the report
prepared and delivered by Buyer in accordance with Section 2.3(c)(i).
As used in this Agreement, the term "Final Closing Balance Sheet"
shall mean the balance sheet of Company as of the Effective Time as
finally determined for purposes of this Article 2, whether by
acquiescence of Team in the figures supplied by Buyer in accordance
with Section 2.3(c)(i), by negotiation and agreement of the parties or
by the Accounting Firm in accordance with Section 2.3(c)(iii).
(iv) Buyer agrees to permit Team, Team's accountants, and
their respective representatives, during normal business hours, to
have reasonable access to the Company's personnel, and to have
reasonable access to, and to examine and make copies of, all books,
records, schedules and documents, necessary to review the balance
sheet delivered by Buyer in accordance with Section 2.3(c)(i).
(v) Notwithstanding any provision contained herein
requiring that the Estimated and Final Closing Balance Sheets be in
form and detail identical to, and in their accounting principles,
policies and assumptions consistent in every respect with, the Recent
Balance Sheet, the Final Closing Balance Sheets shall be prepared
using the following criteria:
(A) Prepaid expenses shall be included only to the
extent the Company can benefit from such prepaid assets.
(B) Inventory shall be valued in accordance with the
following standards:
A physical inventory, to be used to "true up" Company's
inventory, shall be taken prior to the Closing by Buyer of
the "A" items as of the Effective Time. Team shall have the
right to participate in and observe such inventory. If the
"true up" reflects that the count is off on particular
item(s) and such item(s) are also on Schedule 2.3.(c)(v)(B),
indicating that the parties have already taken such item(s)
into account by the reserve mentioned below, such
discrepancy shall not affect the "true up" of the inventory
owned.
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A reserve of $205,000 shall be established to account for
inventory that is discontinued, obsolete and/or slow moving.
Except to the extent otherwise provided for herein,
inventory shall be valued in accordance with GAAP on the
basis of the lower of weighted average cost or market.
(C) Accrued liabilities and accrued expenses shall
reflect all accruals of a character that would be reflected
in a manner consistent with the Company's year-end balance
sheet, including, without limitation, wages, bonuses,
vacation, holiday and sick pay (and employee payroll taxes
applicable thereto) attributable to all periods or partial
periods prior to the Effective Time.
(D) There shall be no reserve for costs and expenses
related to warranty work.
(E) No insurance claim relating to damage to or full
or partial loss of any property occurring after the date of
the Recent Balance Sheet shall be valued in excess of the
book value (net of accumulated depreciation) of such
property as reflected in the Recent Balance Sheet.
(F) Intangible assets and goodwill shall be valued at
Two Million Nine Hundred and Fifty Two Thousand Nine Hundred
and Seventy-five Dollars ($2,952,975).
(G) Negative cash equivalents (shown as negative
$408,954 on the Recent Balance Sheet) shall be valued at
zero. Team hereby assumes liability for any negative cash
and cash equivalents. Buyer and Company agree to pay to Team
an amount equal to any positive cash or cash equivalents in
Company's bank accounts at the Closing.
(H) Prior to the closing, Team shall cause the Company
to distribute to Team the installment note in the original
amount of $631,875 due to Company from Airpak Properties LLC
(the "2004 Note") and any current amounts associated
therewith. (On the Recent Balance Sheet the amount due on
the 2004 Note for the long term portion and current portion
was $568,688 and $31,593 respectively.) Accordingly, such
note shall be valued at zero.
(I) The "due to (from) Team" liability, reflected in
the amount of $332,438 on the Recent Balance Sheet, shall be
set at zero. Team agrees that at or prior to Closing, it
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shall have eliminated this liability to the Company, without
any adverse tax liability to Company.
(J) All reserves for bad debt shall be set at zero.
3. REPRESENTATIONS AND WARRANTIES OF TEAM
Team makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof, shall remain true and correct
to and including the Closing Date, shall be unaffected by any investigation
heretofore or hereafter made by Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedule delivered to Buyer at the time
of the execution of this Agreement, and shall survive the Closing of the
transactions provided for herein.
3.1. Corporate.
3.1.(a) Organization. Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon.
3.1.(b) Corporate Power. Company has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its
business as and where such is now being conducted.
3.1.(c) Qualification. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by it,
or the nature of its business, makes such licensing or qualification
necessary. The jurisdictions in which Company is licensed or qualified to
do business are listed in Schedule 3.1(c).
3.1.(d) Subsidiaries, etc. Except as set forth on Schedule 3.1(d),
Company does not own any interest in any corporation, partnership or other
entity.
3.1.(e) Corporate Documents, etc. The copies of the Articles of
Incorporation and By-Laws of the Company, including any amendments thereto,
which have been delivered by Team to Buyer are true, correct and complete
copies of such instruments as presently in effect. The corporate minute
book and stock records of the Company which have been furnished to Buyer
for inspection are true, correct and complete and accurately reflect all
material corporate action taken by the Company. The directors and officers
of the Company are listed in Schedule 3.1.(e).
3.1.(f) Capitalization of the Company. The authorized capital stock of
the Company consists entirely of 50,000 shares of common stock, no par
value. No shares of such capital stock are issued or outstanding except for
24,235 shares of common stock of the Company which are owned of record and
beneficially by Team Investment. All such shares of capital stock of the
Company are validly issued, fully paid and nonassessable. There are no (a)
securities convertible into or exchangeable for any of the Company's
capital stock or other securities, (b) options, warrants or other rights to
purchase or subscribe to capital stock or other securities of the Company
or securities which are convertible into or exchangeable for capital stock
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or other securities of the Company, or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity securities
of the Company, any such convertible or exchangeable securities or any such
options, warrants or other rights.
3.2. Team.
3.2.(a) Power. Team has full power, legal right and authority to enter
into, execute and deliver this Agreement, General Releases, Rental Site
Agreement and the other agreements, instruments and documents specifically
referred to in this Agreement and executed and delivered by Team at Closing
(such other documents sometimes referred to herein as "Ancillary
Instruments"), and to carry out the transactions contemplated hereby.
3.2.(b) Authorization. The execution and delivery of this Agreement
and the Ancillary Instruments, and full performance thereunder, have been
duly authorized by the boards of directors of Company, Team Investment and
Team, and no other or further corporate act on the part of Company, Team
Investment or Team is necessary therefor.
3.2.(c) Validity. This Agreement has been duly and validly executed
and delivered by Team and is, and when executed and delivered each
Ancillary Instrument will be, the legal, valid and binding obligation of
Team, enforceable in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
3.2.(d) Title. Team Investment has, and at Closing Buyer will receive,
good and marketable title to the Shares to be sold by Team Investment
hereunder, free and clear of all Liens (as defined in Section 3.12)
including, without limitation, voting trusts or agreements, proxies,
marital or community property interests other than restrictions under
federal and state securities laws.
3.2.(e) Control of Team Investment. All outstanding capital stock of
Team Investment, and any and all rights to acquire capital stock, are owned
by Team. Team has the authority, alone and in all events, to elect the
entire board of directors of Team Investment. Team hereby unconditionally
guarantees the prompt performance of all obligations of Team Investment
under this Agreement, including, without limitation, Team Investment's
obligation to deliver the Shares at Closing, free and clear of all Liens,
and the obligation, if required under the terms of Section 2.2.(b) of this
Agreement, to pay Buyer a purchase price adjustment.
3.3. No Violation.
Except as set forth on Schedule 3.3, neither the execution and
delivery of this Agreement or the Ancillary Instruments nor the consummation by
Company, Team Investment and Team of the transactions contemplated hereby and
thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or decree
(collectively, "Orders") of any court, arbitrator, department, commission,
8
board, bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), or (c) subject to
obtaining the consents referred to in Schedule 3.3, will violate or conflict
with, or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien upon any of the assets of Company (or the Shares) under, any term or
provision of the Articles of Incorporation or By-Laws of Company or of any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which Company, Team Investment or Team is a party or by
which Company, Team Investment or Team or any of its or their assets or
properties may be bound or affected.
3.4. Financial Statements.
Included as Schedule 3.4. are true and complete copies of the
financial statements of Company consisting of (i) unaudited balance sheets of
Company as of May 31, 2003, 2004 and 2005, and the related statements of income
and cash flows for the fiscal years then ended (including the notes contained
therein or annexed thereto), and (ii) an unaudited balance sheet of Company as
of July 31, 2005 (the "Recent Balance Sheet"), and the related unaudited
statements of income and cash flows for the seven months then ended and for the
corresponding period of the prior year (including the notes and schedules
contained therein or annexed thereto). All of such financial statements
(including all notes and schedules contained therein or annexed thereto) have
been prepared in accordance with GAAP (except as set forth on Schedule 3.4)
applied on a consistent basis, have been prepared in accordance with the books
and records of Company, and fairly present, in accordance with GAAP in all
material respects, the assets, liabilities and financial position, the results
of operations and cash flows of Company as of the dates and for the years and
periods indicated.
3.5. Tax Matters.
3.5.(a) Provision For Taxes. Except as set forth on Schedule 3.5.(a),
the provision made for taxes on the Recent Balance Sheet is sufficient for
the payment of all federal, state, foreign, county, local and other income,
ad valorem, excise, profits, franchise, occupation, property, payroll,
sales, use, gross receipts and other taxes (and any interest and penalties)
and assessments, whether or not disputed, as of the date thereof, and for
all years and periods prior thereto. Since the date of the Recent Balance
Sheet, Company has not incurred any taxes other than taxes incurred in the
ordinary course of business consistent in type and amount with past
practices of Company.
3.5.(b) Tax Returns Filed. Except as set forth on Schedule 3.5(b), all
federal, state, foreign, county, local and other tax returns required to be
filed by or on behalf of Company have been timely filed and when filed were
true and correct in all material respects, and the taxes shown as due
thereon were paid or adequately accrued. True and complete copies of all
tax returns or reports filed by Company for each of its three most recent
fiscal years have been made available to Buyer. Company has duly withheld
9
and paid all taxes which it is required to withhold and pay relating to
salaries and other compensation heretofore paid to the employees of
Company.
3.5.(c) Tax Audits. The federal and state income tax returns of
Company have not been audited by the Internal Revenue Service and
appropriate state taxing authorities (other than as part of a consolidated
group). Except as set forth on Schedule 3.5(c), Company has not received
from the Internal Revenue Service or from the tax authorities of any state,
county, local or other jurisdiction any written (or to Team's knowledge,
oral) notice of underpayment of taxes or other deficiency which has not
been paid nor any objection to any return or report filed by Company. There
are outstanding no agreements or waivers extending the statutory period of
limitations applicable to any tax return or report.
3.5.(d) Consolidated Group. Schedule 3.5(d) lists every year Company
was a member of an affiliated group of corporations that filed a
consolidated tax return on which the statute of limitations does not bar a
federal tax assessment, and each corporation that has been part of such
group. No affiliated group of corporations of which Company has been a
member has discontinued filing consolidated returns during the past five
years.
3.5.(e) Other. Except as set forth in Schedule 3.5(e), since January
1, 2001 Company has not (i) filed any consent or agreement under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii)
applied for any tax ruling, (iii) entered into a closing agreement with any
taxing authority, (iv) filed an election under Section 338(g) or Section
338(h)(10) of the Code (nor has a deemed election under Section 338(e) of
the Code occurred), (v) made any payments, or been a party to an agreement
(including this Agreement) that under any circumstances could obligate it
to make payments that will not be deductible because of Section 280G of the
Code, or (vi) been a party to any tax allocation or tax sharing agreement.
The Company is not a "United States real property holding company" within
the meaning of Section 897 of the Code.
3.6. Accounts Receivable.
All accounts receivable of Company reflected on the Recent Balance
Sheet, and as incurred in the normal course of business since the date thereof,
represent arm's length sales actually made in the ordinary course of business
and are not in dispute. Schedule 3.6 contains an aged schedule of accounts
receivable included in the Recent Balance Sheet. All accounts receivable of
Company reflected on the Final Closing Balance Sheet will represent arm's length
sales actually made in the ordinary course of business.
3.7. Inventory.
Except as set forth in Schedule 3.7, all inventory of Company is
located on premises owned or leased by Company as reflected in this Agreement.
All work-in-process contained in inventory constitutes items in process of
production pursuant to contracts or open orders taken in the ordinary course of
business.
10
3.8. Absence of Certain Changes.
Except as and to the extent set forth in Schedule 3.8, since the date
of the Recent Balance Sheet there has not been:
3.8.(a) No Material Adverse Change. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or operations
of Company other than a change resulting from an Excluded Matter;
3.8.(b) No Damage. Any loss, damage or destruction, whether covered by
insurance or not, affecting Company's business or properties;
3.8.(c) No Increase in Compensation. Any increase in the compensation,
salaries or wages payable or to become payable to any employee or agent of
Company (including, without limitation, any increase or change pursuant to
any bonus, pension, profit sharing, retirement or other plan or
commitment), or any bonus or other employee benefit granted, made or
accrued;
3.8.(d) No Labor Disputes. Any labor dispute or disturbance, other
than routine individual grievances which are not material to the business,
financial condition or results of operations of Company.
3.8.(e) No Commitments. Any commitment or transaction by Company
(including, without limitation, any borrowing or capital expenditure)
involving an amount in excess of Twenty-Five Thousand Dollars ($25,000)
other than in the ordinary course of business consistent with past
practice;
3.8.(f) No Dividends. Any declaration, setting aside, or payment of
any dividend or any other distribution in respect of Company's capital
stock; any redemption, purchase or other acquisition by Company of any
capital stock of Company, or any security relating thereto; or any other
payment to any shareholder of Company as such a shareholder;
3.8.(g) No Disposition of Property. Any sale, lease or other transfer
or disposition of any properties or assets of Company, except for the sale
of inventory items in the ordinary course of business;
3.8.(h) No Indebtedness. Any indebtedness for borrowed money incurred,
assumed or guaranteed by Company;
3.8.(i) No Liens. Any mortgage, pledge, lien or encumbrance made on
any of the properties or assets of Company;
3.8.(j) No Amendment of Contracts. Any entering into, amendment or
termination by Company of any contract, or any waiver of material rights
thereunder, other than in the ordinary course of business;
11
3.8.(k) Loans and Advances. Any loan or advance (other than advances
to employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person including,
but not limited to, any Affiliate (for purposes of this Agreement, the term
"Affiliate" shall mean and include all shareholders, directors and officers
of Company; the spouse of any such person; any person who would be the heir
or descendant of any such person if he or she were not living; and any
entity in which any of the foregoing has a direct or indirect interest,
except through ownership of less than 5% of the outstanding shares of any
entity whose securities are listed on a national securities exchange or
traded in the national over-the-counter market);
3.8.(l) Credit. Any grant of credit to any customer or distributor on
terms or in amounts more favorable than those which have been extended to
such customer or distributor in the past, any other change in the terms of
any credit heretofore extended, or any other change of Company's policies
or practices with respect to the granting of credit; or
3.8.(m) No Unusual Events. Any other event or condition not in the
ordinary course of business of Company.
3.9. Absence of Undisclosed Liabilities.
Except as and to the extent specifically disclosed in the Recent
Balance Sheet, or in Schedule 3.9, Company does not have any liabilities,
commitments or obligations of a type required to be disclosed in a balance sheet
(and the notes thereto) prepared in accordance with the way the Recent Balance
Sheet was prepared, including the accounting principles, policies and
assumptions used in connection with the Recent Balance Sheet, other than
commercial liabilities and obligations incurred since the date of the Recent
Balance Sheet in the ordinary course of business and consistent with past
practice.
3.10. No Litigation.
Except as set forth in Schedule 3.10 there is no action, suit,
arbitration, proceeding, investigation or inquiry, whether civil, criminal or
administrative ("Litigation") pending or, to the knowledge of Team, threatened
against Company, its directors (in such capacity), its business or any of its
assets, nor does Team know of any basis for any Litigation. Schedule 3.10 also
identifies all Litigation to which Company or any of its directors (in such
capacity) have been parties since January 1, 2001. Except as set forth in
Schedule 3.10, neither Company nor its business or assets is subject to any
Order of any Government Entity.
3.11. Compliance With Laws and Orders.
3.11.(a) Compliance. Except as set forth in Schedule 3.11.(a), Company
(including each and all of its operations, practices, properties and
assets) is in compliance with all applicable Laws and Orders, including,
without limitation, those applicable to discrimination in employment,
occupational safety and health, trade practices, competition and pricing,
product warranties, zoning, building and sanitation, employment, retirement
and labor relations, product advertising, the Environmental Laws as
hereinafter defined and the Foreign Corrupt Practices Act and the
12
regulations promulgated thereunder. Except as set forth in Schedule
3.11.(a), Company has not received written (or, to Team's knowledge, oral)
notice of any violation or alleged violation of, and is subject to no
liability for past or continuing violation of, any Laws or Orders. All
reports and returns required to be filed by Company with any Government
Entity have been filed, and were accurate and complete in all material
respects when filed. Without limiting the generality of the foregoing:
(i) The operation of Company's business as it is now conducted
does not, nor does any condition existing at any of the Facilities, in
any manner constitute a nuisance or other tortious interference with
the rights of any person or persons in such a manner as to give rise
to or constitute the grounds for a suit, action, claim or demand by
any such person or persons seeking compensation or damages or seeking
to restrain, enjoin or otherwise prohibit any aspect of the conduct of
such business or the manner in which it is now conducted.
(ii) Company has made all required payments to its unemployment
compensation reserve accounts with the appropriate governmental
departments of the states where it is required to maintain such
accounts, and each of such accounts has a positive balance.
(iii) Company has delivered to Buyer copies of all reports of
Company for the past five (5) years required under the federal
Occupational Safety and Health Act of 1970, as amended, and under all
other applicable health and safety laws and regulations. The
deficiencies, if any, noted on such reports have been corrected.
3.11.(b) Licenses and Permits. Company has all material licenses,
permits, approvals, authorizations and consents of all Government Entities
and all certification organizations required for the conduct of the
business (as presently conducted and as proposed to be conducted) and
operation of the Facilities. All such material licenses, permits,
approvals, authorizations and consents are described in Schedule 3.11.(b),
are in full force and effect and will not be affected or made subject to
loss, limitation or any obligation to reapply as a result of the
transactions contemplated hereby. Except as set forth in Schedule 3.11.(b),
Company (including its operations, properties and assets) is and has been
in compliance with all such permits and licenses, approvals, authorizations
and consents.
3.11.(c) Environmental Matters. The applicable Laws in effect on the
Closing Date relating to pollution or protection of the environment,
including Laws relating to emissions, discharges, generation, storage,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic, hazardous or petroleum or petroleum-based substances or
wastes ("Waste") into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air Act, the
13
Resource Conservation and Recovery Act, the Toxic Substances Control Act
and the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are herein
collectively referred to as the "Environmental Laws". Without limiting the
generality of the foregoing provisions of this Section 3.11, Company is in
full compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in the Environmental Laws or contained in any regulations, code, plan,
order, decree, judgment, injunction, notice, permit or demand letter
issued, entered, promulgated or approved thereunder. There is no Litigation
nor any written (or, to Team's knowledge, oral) demand, claim, hearing or
notice of violation pending or, to the knowledge of Team, threatened
against Company relating in any way to the Environmental Laws or any Order
issued, entered, promulgated or approved thereunder. Except for the
conditions that would require abatement or corrective action only in the
event of future construction, modifications or changes in use of the Owned
Real Property, there are (i) no conditions existing as of the Closing Date
on the Owned Real Property that are known to Company and give rise, as of
the Closing Date, to any current obligation on the part of Company for
investigation, remediation or cleanup under Environmental Laws, and (ii) no
conditions existing as of the Closing Date, but unknown to Company as of
the Closing Date, that would give rise at the time of discovery to any
obligation on the part of Company for investigation, remediation or cleanup
under such Environmental Laws as are in effect as of the Closing Date.
Except as set forth on Schedule 3.11(c), no portion of any of the Real
Property has been or is being used as a landfill or for storage of Waste.
3.12. Title to and Condition of Properties.
3.12.(a) Marketable Title - Personal Property. Company has good and
marketable title to all of Company's personal property, including, without
limitation, all such properties (tangible and intangible) reflected in the
Recent Balance Sheet, except for inventory disposed of in the ordinary
course of business since the date of such Recent Balance Sheet, free and
clear of all liens, (statutory or otherwise) security interests, claims,
pledges, licenses, equities, options, conditional sales contracts,
assessments, levies, limitations, charges or encumbrances of any nature
whatsoever (collectively, "Liens") except for Permitted Encumbrances. For
purposes of this Agreement, "Permitted Encumbrances" means (i) the Existing
Title Exceptions, (ii) zoning ordinances and regulations which do not
materially adversely affect the use of the Owned Real Property or Leased
Real Property for its current uses after Closing, (iii) liens for taxes or
assessments not yet due and payable, (iv) any of the following that have
been recorded: easements, encumbrances not securing a financial obligation,
covenants, conditions, reservations, restrictions and other matters, (v)
mechanics', materialmen's, carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary and usual course of
business relating to obligations reflected on the Recent Balance Sheet or
the Final Closing Balance Sheet and as to which there is no material
default, and (vi) other matters, other than liens, which do not materially
adversely affect the use or value of the Company's assets. For purposes of
this Agreement, "Existing Title Exceptions" means all of the exceptions set
forth in Schedule B of the title commitment or policy applicable to a
parcel of Owned Real Property and any matters shown on the survey for such
parcel of Owned Real Property that indicate the existence of Liens not
14
listed in the title commitment or policy. To the knowledge of Team, there
are no encumbrances referenced in sub-sections (ii), (iv) and (vi) above.
None of Company's machinery or inventory is subject to any restrictions
with respect to the transferability thereof; and the Company's title
thereto will not be affected in any way by the transactions contemplated
hereby.
3.12.(b) Owned Real Property. Company has good and marketable title to
the Owned Real Estate Property, free and clear of all mortgages, liens,
encumbrances, easements, covenants, reservations, restrictions,
rights-of-way except for Permitted Encumbrances. There are now in full
force and effect duly issued certificates of occupancy permitting the Owned
Real Property and improvements located thereon to be legally used and
occupied as the same are now constituted. To the knowledge of Team, there
is no pending or threatened restriction or denial, governmental or
otherwise which would prohibit or adversely affect the ordinary rights of
access to and from the Owned Real Property from and to the existing
highways and roads. To the knowledge of Team, there is not (i) any claim of
adverse possession or prescriptive rights involving any of the Owned Real
Property, (ii) any structure located on any Real Property which encroaches
on or over the boundaries of neighboring or adjacent properties or (iii)
except as disclosed on the surveys provided to Buyer pursuant to Section
5.2, any structure of any other party which encroaches on or over the
boundaries of any of such Real Property. To the knowledge of Team, none of
the Real Property is located in a flood plain, flood hazard area, wetland
or lakeshore erosion area within the meaning of any Law, regulation or
ordinance. To the knowledge of Team, no public improvements have been
commenced and to Company's and Team's knowledge none are planned which in
either case may result in special assessments against or otherwise
materially adversely affect any Real Property. Neither Company nor Team has
received written (or to Team's knowledge, oral) notice of any (i) planned
or proposed increase in assessed valuations of any Real Property, (ii)
Order requiring repair, alteration, or correction of any existing condition
affecting any Real Property or the systems or improvements thereat, (iii)
condition or defect which could give rise to an order of the sort referred
to in "(ii)" in this sentence, or (iv) work that has been done or labor or
materials that has or have been furnished to any Real Property during the
period of six (6) months immediately preceding the date of this Agreement
for which liens could be filed against any of the Real Property.
3.12.(c) Condition. All material equipment and machinery and the Owned
Real Property (including plumbing, electrical, sewerage, heating,
ventilating and air conditioning systems) are, to Team's knowledge, in good
operating condition and repair, taking into account age and normal wear and
tear.
3.12.(d) No Condemnation or Expropriation. Neither the whole nor any
portion of the property or any other assets of Company is subject to any
Order to be sold or is being condemned, expropriated or otherwise taken by
any Government Entity with or without payment of compensation therefor, nor
to the best of Team's knowledge has any such condemnation, expropriation or
taking been proposed.
15
3.13. Insurance.
Set forth in Schedule 3.13 is a complete and accurate list and
description of all policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in effect with
respect to the business and properties of Company, whether issued to Team or
Company, true and correct copies of which have heretofore been made available to
Buyer. Schedule 3.13 includes, without limitation, the carrier, the description
of coverage, the limits of coverage, retention or deductible amounts, date of
expiration and any pending claims to the extent they relate to the business and
properties of the Company. No notice of cancellation or termination has been
received with respect to any such policy, and Team has no knowledge of any act
or omission of Company which would reasonably be expected to result in
cancellation of any such policy prior to its scheduled expiration date. Neither
Team nor Company has been refused any insurance with respect to any aspect of
the operations of the Company's business nor has its coverage related to the
Company been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last three years. To
Team's knowledge, Company has duly and timely made all claims it has been
entitled to make under each policy of insurance. Since January 1, 2001, all
products liability and general liability policies maintained by or for the
benefit of Company have been "occurrence" policies and not "claims made"
policies. There is no claim by Team or Company related to the business or
properties of the Company pending under any such policies as to which coverage
has been questioned, denied or disputed by the underwriters of such policies,
and Team knows of no basis for denial of any claim under any such policy. Team
or Company has not received any written notice from or on behalf of any
insurance carrier issuing any such policy that insurance rates therefor will
hereafter be substantially increased (except to the extent that insurance rates
may be increased for all similarly situated risks) or that there will hereafter
be a cancellation or an increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) or nonrenewal of any such policy. Such
policies are sufficient in all material respects for compliance by Company with
all requirements of law and with the requirements of all material contracts to
which Company is a party.
3.14. Contracts and Commitments.
3.14.(a) Real Property Leases. Except as set forth in Schedule
3.12.(c), Company has no leases of real property.
3.14.(b) Personal Property Leases. Except as set forth in Schedule
3.14.(b), Company has no leases of personal property involving
consideration or other expenditure in excess of $25,000 or involving
performance over a period of more than 12 months.
3.14.(c) Purchase Commitments. Company has no purchase commitments for
inventory items or supplies that, together with amounts on hand, constitute
in excess of 12 months normal usage, or which are at an excessive price.
3.14.(d) Sales Commitments. Except as set forth in Schedule 3.14(d),
Company has no sales orders or commitments to customers or distributors
which aggregate in excess of $25,000 to any one customer or distributor (or
group of affiliated customers or distributors). Company has no sales
contracts or commitments except those made in the ordinary course of
16
business, at arm's length, and no such contracts or commitments are for a
sales price which would result in a loss to the Company.
3.14.(e) Contracts With Affiliates and Certain Others. Except as set
forth in Schedule 3.14(e), Company has no agreement, understanding,
contract or commitment (written or oral) with any Affiliate or any
employee, agent, consultant, distributor, dealer or franchisee that is not
cancelable by Company on notice of not longer than 30 days without
liability, penalty or premium of any nature or kind whatsoever.
3.14.(f) Powers of Attorney. The Company has not given a power of
attorney, which is currently in effect, to any person, firm or corporation
for any purpose whatsoever (except for freight forwarding).
3.14.(g) Collective Bargaining Agreements. Company is not a party to
any collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups.
3.14.(h) Loan Agreements. Except as set forth in Schedule 3.14.(h),
Company is not obligated under any loan agreement, promissory note, letter
of credit, or other evidence of indebtedness as a signatory, guarantor or
otherwise.
3.14.(i) Guarantees. Except as disclosed on Schedule 3.14.(i), Company
has not guaranteed the payment or performance of any person, firm or
corporation, agreed to indemnify any person or act as a surety, or
otherwise agreed to be contingently or secondarily liable for the
obligations of any person.
3.14.(j) Contracts Subject to Renegotiation. Company is not a party to
any contract with any governmental body which is subject to renegotiation.
3.14.(k) Restrictive Agreements. Company is not a party to nor is it
bound by any agreement requiring Company to assign any interest in any
trade secret or proprietary information, or prohibiting or restricting
Company from competing in any business or geographical area or soliciting
customers or otherwise restricting it from carrying on its business
anywhere in the world.
3.14.(l) Other Material Contracts. Company has no lease, contract or
commitment of any nature involving consideration or other expenditure in
excess of $25,000, or involving performance over a period of more than 12
months, or which is otherwise individually material to the operations of
Company, except as explicitly described in Schedule 3.14.(l) or in any
other Schedule.
3.14.(m) No Default. Company is not in default under any material
lease, contract or commitment, nor, to the knowledge of Team, has any event
or omission occurred which through the passage of time or the giving of
notice, or both, would constitute a default thereunder or cause the
acceleration of any of Company's obligations or result in the creation of
any Lien on any of the assets owned, used or occupied by Company. To the
17
knowledge of Team, no third party is in material default under any lease,
contract or commitment to which Company is a party, nor has any event or
omission occurred which, through the passage of time or the giving of
notice, or both, would constitute a material default thereunder or give
rise to an automatic termination, or the right of discretionary
termination, thereof.
3.15. Labor Matters.
Within the last five years Company has not experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements in connection with its business. Except to the extent set forth in
Schedule 3.11(a), (a) Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
(b) there is no unfair labor practice charge or complaint against Company
pending or, to the knowledge of Team, threatened; (c) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or,
to the knowledge of Team, threatened against Company nor any secondary boycott
with respect to products of Company; (d) no grievance which might have a
material adverse effect on Company, nor any arbitration proceeding arising out
of or under collective bargaining agreements, is pending and, to the knowledge
of Team, no such claim therefor exists; and (e) there are no administrative
charges or court complaints against Company concerning alleged employment
discrimination or other employment related matters pending or, to the knowledge
of Team, threatened before the U.S. Equal Employment Opportunity Commission or
any Government Entity.
3.16. Employee Benefit Plans.
3.16.(a) Disclosure. Schedule 3.16.(a) sets forth all stock purchase,
stock option, stock appreciation, stock bonus, executive or deferred
compensation, other similar fringe or employee benefit plans, programs and
arrangements, and any employment or consulting contracts, "golden
parachutes," collective bargaining agreements, severance agreements or
plans, vacation and sick leave plans, all "employee benefit plans" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), all employee manuals, and all written or
binding oral statements of policies, practices or understandings relating
to employment, which are provided to, for the benefit of, or relate to, any
persons employed by Company ("Company Employees"). The items described in
the foregoing sentence are hereinafter sometimes referred to collectively
as "Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore been
made available to Buyer.
3.16.(b) ERISA Title IV Plans. No Employee Plan/Agreement is or has
ever been within the last six years, subject to the provisions of Title IV
of ERISA with respect to which the Company or any of its assets may,
directly or indirectly, be subject to any liability.
3.16.(c) Prohibited Transactions, etc. There have been no "prohibited
transactions" within the meaning of Section 406 or 407 of ERISA or Section
4975 of the Code for which a statutory or administrative exemption does not
exist with respect to any Employee Plan/Agreement. To the knowledge of
18
Team, no event or omission has occurred in connection with any Employee
Plan/Agreement, directly or indirectly, which could subject the Company or
any Employee Benefit Plan/Agreement to any liability under ERISA, the Code
or any other Law or Order applicable to any Employee Plan/Agreement, or
under any agreement, instrument, Law or Order pursuant to or under which
Company has agreed to indemnify or is required to indemnify any person
against liability incurred under any such Law or Order.
3.16.(d) Controlled Group; Affiliated Service Group; Leased Employees.
Company is not and never has been a member of a controlled group of
corporations as defined in Section 414(b) of the Code or in common control
with any unincorporated trade or business as determined under Section
414(c) of the Code. Company is not and never has been a member of an
"affiliated service group" within the meaning of Section 414(m) of the
Code. There are not and never have been any leased employees within the
meaning of Section 414(n) of the Code who perform services for Company, and
no individuals are expected to become leased employees with the passage of
time.
3.16.(e) Payments and Compliance. With respect to each Employee
Plan/Agreement, (i) all payments due from Company to date have been made
and all amounts properly accrued to date as liabilities of Company which
have not been paid have been properly recorded on the books of Company and
are reflected in the Recent Balance Sheet; (ii) Company has complied with,
and each such Employee Plan/Agreement conforms in form and operation to,
all applicable laws and regulations, including but not limited to ERISA and
the Code, in all respects and all reports and information relating to such
Employee Plan/Agreement required to be filed with any governmental entity
have been timely filed; (iii) each such Employee Plan/Agreement which is
intended to qualify under Section 401 of the Code and which is an
individually designed plan has received a favorable determination letter
from the Internal Revenue Service with respect to such qualification, its
related trust has been determined to be exempt from taxation under Section
501(a) of the Code, and, to Team's knowledge, nothing has occurred since
the date of such letter that has or is likely to adversely affect such
qualification or exemption; (iv) there are no actions, suits or claims
pending (other than routine claims for benefits) or, to Team's knowledge,
threatened with respect to such Employee Plan/Agreement or against the
assets of such Employee Plan/Agreement; and (v) no Employee Plan/Agreement
is a plan which is established and maintained outside the United States
primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
3.16.(f) Post-Retirement Benefits. No Employee Plan/Agreement provides
benefits, including, without limitation, death or medical benefits (whether
or not insured) with respect to current or former Company employees beyond
their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) deferred compensation benefits accrued as
liabilities on the books of Company (including the Recent Balance Sheet),
(iii) disability benefits under any Employee Plan/ Agreement that is an
employee welfare benefit plan and which have been fully provided for by
insurance or otherwise or (iv) benefits in the nature of severance pay.
19
3.16.(g) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or former employee or (iii)
result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available.
3.16.(h) Delivery of Documents. There has been delivered to Buyer,
with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under ERISA, with
respect to each such Employee Plan/Agreement for the last two years;
(ii) a copy of the summary plan description, together with each
summary of material modifications, required under ERISA with respect
to such Employee Plan/Agreement and all material employee
communications relating to such Employee Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through a trust or
any third party funding vehicle (other than an insurance policy), a
copy of the trust or other funding agreement and the latest financial
statements thereof; and
(iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Employee Plan/Agreement
which is an individually designed plan that is intended to be a
"qualified plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual
report has been filed and delivered to Buyer pursuant to clause (i) of this
Section 3.16.(h), no material adverse change has occurred with respect to
the matters covered by the latest such annual report since the date
thereof.
3.16.(i) Future Commitments. Company has no announced plan or legally
binding commitment to create any additional Employee Plans/Agreements or to
amend or modify any existing Employee Plan/Agreement.
3.17. Employment Compensation.
Schedule 3.17 contains a true and correct list of all employees to
whom Company is paying compensation, including bonuses and incentives, at an
annual rate in excess of Fifty Thousand Dollars ($50,000) for services rendered
or otherwise; and in the case of salaried employees such list identifies the
current annual rate of compensation for each employee and in the case of hourly
or commission employees identifies certain reasonable ranges of rates and the
number of employees falling within each such range.
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3.18. Trade Rights.
Schedule 3.18 lists all Trade Rights (as defined below) in which
Company now has any interest, specifying whether such Trade Rights are owned,
controlled, used or held (under license or otherwise) by Company, and also
indicating which of such Trade Rights are registered. All Trade Rights shown as
registered in Schedule 3.18 have been properly registered, all pending
registrations and applications have been properly made and filed and all
annuity, maintenance, renewal and other fees relating to registrations or
applications are current. In order to conduct the business of Company, as such
is currently being conducted, Company does not require any Trade Rights that it
does not already have the right to use (under license or otherwise). Except as
set forth in Schedule 3.18, Company is not infringing and has not infringed any
Trade Rights of another in the operation of the business of Company, nor, to the
knowledge of Team, is any other person infringing the Trade Rights of Company.
Company has not granted any license or made any assignment of any Trade Right
listed on Schedule 3.18, nor does Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There is no
Litigation pending or, to the knowledge of Team, threatened to challenge
Company's right, title and interest with respect to its continued use and right
to preclude others from using any Trade Rights of Company. To the knowledge of
Team, all Trade Rights of Company are valid, enforceable and in good standing,
and, to the knowledge of Team, there are no equitable defenses to enforcement
based on any act or omission of Company. The consummation of the transactions
contemplated hereby will not alter or impair any Trade Rights owned or used by
Company. As used herein, the term "Trade Rights" shall mean and include: (i) all
trademark rights, business identifiers, trade dress, service marks, trade names
and brand names, all registrations thereof and applications therefor and all
goodwill associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights associated with
the foregoing and the underlying works of authorship; (iii) all patents and
patent applications, and all international proprietary rights associated
therewith; (iv) all contracts or agreements granting any right, title, license
or privilege under the intellectual property rights of any third party; (v) all
inventions, mask works and mask work registrations, know-how, discoveries,
improvements, designs, trade secrets, shop and royalty rights, employee
covenants and agreements respecting intellectual property and non-competition
and all other types of intellectual property; and (vi) all claims for
infringement or breach of any of the foregoing.
3.19. Major Customers and Suppliers.
3.19.(a) Major Customers. Schedule 3.19.(a) contains a list of the 20
largest customers, including distributors, of Company for 2004 calendar
year and the 2005 year to date (determined on the basis of the total dollar
amount of net sales) showing the total dollar amount of net sales to each
such customer during each such year. Team has no knowledge of any facts
reasonably indicating that any of the customers listed on Schedule 3.19.(a)
will not continue to be customers of the business of Company after the
Closing at substantially the same level of purchases as heretofore.
3.19.(b) Major Suppliers. Schedule 3.19.(b) contains a list of the 20
largest suppliers to Company the 2004 calendar year and the 2005 year to
date (determined on the basis of the total dollar amount of purchases)
showing the total dollar amount of purchases from each such supplier during
each such year. Team has no knowledge of any facts reasonably indicating
21
that any of the suppliers listed on Schedule 3.19.(b) will not continue to
be suppliers to the business of Company after the Closing and will not
continue to supply the business with substantially the same quantity and
quality of goods at competitive prices.
3.19.(c) Dealers and Distributors. Schedule 3.19.(c) contains a list
by product line of all sales representatives, dealers, distributors and
franchisees of Company, and representative copies of all sales
representative, dealer, distributor and franchise contracts and policy
statements, and a description of all substantial modifications or
exceptions, have been made available to Buyer.
3.20. Product Warranty and Product Liability.
Schedule 3.20 contains a true, correct and complete copy of Company's
standard warranty or warranties for sales of Products (as defined below) and,
except as stated therein, there are no warranties, commitments or obligations
with respect to the return, repair or replacement of Products. Schedule 3.20
sets forth the estimated aggregate annual cost to Company of performing warranty
obligations for customers for each of the five (5) preceding fiscal years and
the current fiscal year to the date of the Recent Balance Sheet. Schedule 3.20
contains a description of all product liability claims and similar Litigation
relating to products manufactured or sold, or services rendered, which are
presently pending or which to Team's knowledge are threatened, or which have
been asserted or commenced against Company within the last five (5) years, in
which a party thereto either requests injunctive relief or alleges damages
(whether or not covered by insurance). None of the Products has been the subject
of any of the following applicable to an SKU in general: replacement, field fix,
retrofit or recall campaign ("Campaign") by Company. To Team's knowledge, no
facts or conditions exist which could reasonably be expected to require a
Campaign regarding an SKU in general. The Products have been designed and
manufactured so as to meet and comply with all governmental standards and
specifications currently in effect. Such products have received all governmental
approvals necessary to allow their sale and use. As used in this Section 3.20,
the term "Products" means any and all products currently or at any time
previously manufactured, distributed or sold by Company, or by any predecessor
of Company under any brand name or mark under which products are or have been
manufactured, distributed or sold by Company.
3.21. Bank Accounts.
Schedule 3.21 sets forth the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company maintains a safe deposit box, lock box or checking, savings,
custodial or other account of any nature, the type and number of each such
account and the signatories therefore, a description of any compensating balance
arrangements, and the names of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.
3.22. Affiliates.
3.22.(a) Contracts With Affiliates. All leases, contracts, agreements
or other arrangements between Company and any Affiliate are described on
Schedule 3.22.(a).
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3.22.(b) No Adverse Interests. Except as set forth in Schedule
3.22(b), no Affiliate has any direct or indirect interest in (i) any entity
which does business with Company or is competitive with Company's business,
or (ii) any property, asset or right which is used by Company in the
conduct of its business.
3.22.(c) Obligations. All obligations of any Affiliate to Company, and
all obligations of Company to any Affiliate, are listed on Schedule
3.22.(c).
3.22.(d) A true and exact copy of a standby letter of credit securing
certain obligations of Climax GmbH is set forth as Schedule 3.22(d).
3.22.(e) The representations and warranties concerning Climax GmbH set
forth on Schedule 3.22(e) are hereby incorporated.
3.23. No Brokers or Finders.
Neither Company nor any of its directors, officers, employees,
shareholders or agents have retained, employed or used any broker or finder in
connection with the transaction provided for herein or in connection with the
negotiation thereof, except for Gulfstar Group, whose fees and expenses Team
agrees to pay.
3.24. Disclosure.
To Team's knowledge, no representation or warranty by Company and/or
Team in this Agreement, contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Team, each
of which is true and correct on the date hereof, shall remain true and correct
to and including the Closing Date, shall be unaffected by any investigation
heretofore or hereafter made by Team or any notice to Team, and shall survive
the Closing of the transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.1.(b) Corporate Power. Buyer has all requisite corporate power to
enter into this Agreement and the other documents and instruments to be
executed and delivered by Buyer and to carry out the transactions
contemplated hereby and thereby.
4.2. Authority.
The execution and delivery of this Agreement and the other documents
and instruments to be executed and delivered by Buyer pursuant hereto and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Buyer. No other act or proceeding on the
23
part of Buyer or its shareholders is necessary to authorize this Agreement or
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
will constitute, valid and binding agreements of Buyer, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally, and by general equitable principles.
4.3. No Brokers or Finders.
Neither Buyer nor any of its shareholders, directors, officers,
employees or agents have retained, employed or used any broker or finder in
connection with the transaction provided for herein or in connection with the
negotiation thereof.
4.4. Disclosure.
No representation or warranty by Buyer in this Agreement contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not misleading.
4.5. Investment Intent.
The Shares are being acquired by Buyer for its own account and for
investment purposes only and not with a view to the resale or other distribution
thereof within the meaning of the federal securities laws. Buyer confirms that
Team has made available to Buyer and its representatives the opportunity to ask
questions of the officers and management employees of Team and Company and to
acquire such additional information about the business and financial condition
of Team and Company as Buyer has requested, and all such information has been
received by Buyer.
4.6. Financial Capability.
Buyer (i) has, and at the Closing will have, sufficient internal funds
available to pay the Purchase Price and any expenses incurred by Purchaser in
connection with the transactions contemplated by this Agreement, (ii) has, and
at the Closing will have, the resources and capabilities (financial or
otherwise) to perform its obligations hereunder, and (iii) has not incurred any
obligation, commitment, restriction or liability of any kind, which would impair
or adversely affect such resources and capabilities.
5. COVENANTS
5.1. Title Insurance.
Prior to the Closing, Team shall provide to Buyer title insurance
commitments, issued by a title insurance company or companies reasonably
satisfactory to Buyer, agreeing to issue to Company standard form owner's
policies of title insurance with respect to all Real Property, with
non-imputation and other endorsements, together with a copy of each document to
24
which reference is made in such commitments. Team will have satisfied all
pre-Closing requirements for issuing such policy. In the case of Owned Real
Property, such policies shall be standard ALTA Form 1990 owner's policies in the
full fair market value thereof, insuring good and marketable title thereto
(expressly including all easements and other appurtenances).
5.2. Surveys.
Prior to the Closing, Team shall provide to Buyer surveys of all Owned
Real Property, prepared in accordance with ALTA/ASCM standards, each dated no
more than ninety (90) days prior to the Closing and each detailing the legal
description, the perimeter boundaries, all improvements located thereon, all
easements and encroachments affecting each such parcel of Real Property and such
other matters as may be reasonably requested by Buyer or the title insurance
companies, each containing a surveyor certificate reasonably acceptable to Buyer
and the title insurance companies, and each prepared by a registered land
surveyor satisfactory to Buyer.
5.3. Environmental Audits.
Team will promptly retain a firm engaged in the regular business of
environmental engineering acceptable to Buyer to conduct a "Phase I"
environmental audit of the Owned Real Property and issue a report prior to the
Closing to Team and Company. 5.4. Noncompetition; Confidentiality.
Subject to the Closing, and as an inducement to Buyer to execute this
Agreement and complete the transactions contemplated hereby, and in order to
preserve the goodwill associated with the business of Company being acquired
pursuant to this Agreement, Team hereby covenants and agrees as follows:
5.4.(a) Covenant Not to Compete. For a period of five years from the
Closing Date, Team will not directly or indirectly:
(i) engage in, continue in or carry on a Competitive
Business, including owning or controlling any financial interest in
any corporation, partnership, firm or other form of business
organization which is so engaged;
(ii) provide assistance to a Competitive Business,
including, but not limited to, loaning money or rendering any other
form of financial assistance to or engaging in any form of business
transaction on other than an arm's length basis with any Competitive
Business; or
(iii) offer employment to an employee of Company, without
the prior written consent of Buyer.
provided, however, that the foregoing shall not prohibit the ownership of
securities of corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount
which shall not exceed 5% of the outstanding shares of any such
25
corporation. The parties agree that the geographic scope of this covenant
not to compete shall extend throughout the world.
For purposes hereof, "Competitive Business" shall mean any portable machine
tool business conducted in the same manner as such business is currently
conducted by Company; provided, however, that such term shall not include
any business currently conducted by Team or its affiliates (other than the
Company), the continuation of which shall not violate this Section 5.4. The
parties agree that in the event Team succeeds to the business or assets of
a third party, or a third party succeeds to the business or assets of Team,
in either case, through a merger, consolidation, stock purchase,
acquisition of assets or otherwise, and such third party is engaged in a
Competitive Business, the continuation of such business by Team or the
third party, as the case may be, after consummation of the transaction
shall not constitute a violation of this Section 5.4 if such business is
not the primary business of the third party. The parties agree that Buyer
may sell, assign or otherwise transfer this covenant not to compete, in
whole, to any person, corporation, firm or entity that purchases all of the
business of the Company. In the event a court of competent jurisdiction
determines that the provisions of this covenant not to compete are
excessively broad as to duration, geographical scope or activity, it is
expressly agreed that this covenant not to compete shall be construed so
that the remaining provisions shall not be affected, but shall remain in
full force and effect, and any such over broad provisions shall be deemed,
without further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same valid
and enforceable in such jurisdiction.
5.4.(b) Covenant of Confidentiality. Team shall not at any time
subsequent to the Closing, except as explicitly requested by Buyer, (i) use
for any purpose, (ii) disclose to any person, or (iii) keep or make copies
of documents, tapes, discs or programs containing, any confidential and
proprietary information of the Company unless and until such information
becomes public knowledge or is otherwise no longer confidential and
proprietary (other than by disclosure in breach of this Section 5.4(b)) or
as required by law, including applicable securities laws and regulations.
For purposes hereof, "confidential information" shall mean and include,
without limitation, all confidential and proprietary Trade Rights in which
Company has an interest, customer lists and customer information, and other
information concerning Company's processes, apparatus, equipment,
packaging, products, marketing and distribution methods, not previously
disclosed to the public directly by Company.
5.4.(c) Equitable Relief for Violations. Team agrees that the
provisions and restrictions contained in this Section 5.4 are necessary to
protect the legitimate continuing interests of Buyer in acquiring the
Shares, and that any violation or breach of these provisions may result in
irreparable injury to Buyer for which a remedy at law may be inadequate and
that, in addition to any relief at law which may be available to Buyer for
such violation or breach and regardless of any other provision contained in
this Agreement, Buyer shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this Section
5.4.
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5.5. General Releases.
At the Closing, Team shall deliver general releases to Buyer, in form
agreed to by the parties, releasing Company and Geoff Gilmore from claims by
Team against Company and Geoff Gilmore as of the Closing Date. At the Closing,
the Company and Geoff Gilmore shall deliver general releases to Team, in form
agreed to by the parties, releasing Team from all claims by the Company and
Geoff Gilmore against Team as of the Closing Date. At the Closing, Geoff Gilmore
shall deliver a general release, in form agreed to by the parties, releasing all
claims against Company, other than for compensation for current periods and
bonuses as agreed among Geoff Gilmore and the parties.
5.6. Access to Information and Records.
During the period prior to the Closing, Team shall cause Company to
give Buyer, its counsel, accountants and other representatives (i) access during
normal business hours to all of the properties, books, records, contracts and
documents of Company for the purpose of such inspection, investigation and
testing as Buyer reasonably requests (and Company shall furnish or cause to be
furnished to Buyer and its representatives all information with respect to the
business and affairs of Company as Buyer may reasonably request); (ii) access to
employees, agents and representatives for the purposes of such meetings and
communications as Buyer reasonably requests; and (iii) access to vendors,
customers, manufacturers of its machinery and equipment, and others having
business dealings with Company as Buyer reasonably requests.
5.7. Section 338(h)(10) Election; Tax Matters.
5.7.(a) The parties shall allocate the Purchase Price as set forth on
Exhibit 5.7, as the same may be adjusted in connection with the Final
Closing Balance Sheet. Exhibit 5.7 was prepared on the basis of the
Estimated Closing Balance Sheet. At the request of Buyer, Team will join
with Buyer in making an election under Section 338(h)(10) of the Code and
Treasury Regulation Section 1.338(h)(10)-1(d) (and, if permissible, any
corresponding elections under any applicable state and local income tax
laws) (collectively, the "Section 338(h)(10) Elections") with respect to
the purchase and sale of the Shares.
5.7.(b) To the extent necessary, Buyer, Team and Company shall execute
on or prior to the closing any and all forms necessary to effectuate the
Section 338(h)(10) Elections (including, without limitation, Internal
Revenue Service Form 8023 and any similar forms under the applicable state
and local income tax laws (the "Section 338 Forms")). In the event,
however, any Section 338 Forms are not executed at the closing, Buyer and
Team shall prepare and complete each such Section 338 Form no later than 15
days prior to the date such Section 338 Form is required to be filed. Buyer
and Team shall each cause the Section 338 Forms to be duly executed by an
authorized person for Buyer and Team in each case, and shall duly and
timely file the Section 338 Forms in accordance with applicable tax laws
and the terms of this agreement.
27
5.7.(c) Preparation and Filing of Tax Returns.
(i) Team shall prepare or cause to be prepared and shall
file or cause to be filed on a timely basis all tax returns with
respect to the Company for any taxable period ending on or before the
Closing Date (a "Pre-Closing Tax Period"). Buyer shall prepare all tax
returns for periods ending after the Closing Date in accordance with
the Company's past tax accounting practices and principles, unless
prohibited by law.
(ii) The Buyer shall promptly notify Team in writing of the
receipt by the Company or the Buyer of a notice of any pending or
threatened tax audits or assessments relating to the income,
properties or operations of the Company or any of its Subsidiaries, in
each case for Pre-Closing Tax Periods only, so long as such
Pre-Closing Tax Periods remain open. Team shall promptly notify the
Buyer in writing of any notice received by Team of any pending or
threatened tax audits or assessments relating to periods prior to the
Pre-Closing Tax Periods.
(iii) The Buyer shall cause the Company and its Subsidiaries
to retain all tax returns, schedules, work papers and all material
records and other documents relating thereto for five (5) years on the
taxable periods to which such tax returns, schedules, work papers and
other material records relate. Any information retained under this
Section shall remain confidential, except as may be necessary to be
disclosed in connection with filing any tax return, amended tax return
or claim for refund, determining any tax liability or right to refund
of taxes or conducting or defending any audit or other proceeding in
respect of taxes.
5.7.(d) Amended Returns.
(i) Team shall not file, or cause to be filed, without the
written consent of the Buyer (which consent shall not be unreasonably
withheld or delayed), any amended tax return or claim for tax refund
with respect to the Company or any of its Subsidiaries for any
Pre-Closing Tax Period.
(ii) The Buyer shall not, without the prior written consent
of Team (which consent shall not be unreasonably withheld), file, or
cause to be filed, any amended tax return or claim for tax refund,
with respect to the Company or any of its Subsidiaries, to the extent
that any such filing may adversely affect taxes of Team or the Company
for any Pre-Closing Tax Period.
5.7.(e) Assistance and Cooperation.
(i) After the Closing Date, the Buyer and Team shall
provide each other, and the Buyer shall cause the Company and its
Subsidiaries to provide Team, with such cooperation and information
relating to the Company and each of its Subsidiaries as either party
may reasonably request in: (a) filing any tax return, amended tax
return or claim for refund; (b) determining any tax liability or a
28
right to refund of taxes; (c) conducting or defending any audit or
other proceeding in respect of taxes; or (d) effectuating the terms of
this Agreement.
(ii) After the Closing Date, each of the Buyer and Team
shall:
(A) timely sign and deliver such certificates and
forms as may be necessary or appropriate to establish an
exemption from (or otherwise reduce), or file tax returns or
other reports with respect to, taxes described therein;
(B) assist the other party in preparing any tax
returns which such other party is responsible for preparing
and filing, including giving access, upon reasonable
request, to information, records and documents necessary to
prepare such tax returns; and
(C) cooperate filly in preparing for any audits of, or
disputes with tax authorities regarding, taxes of the
Company or any of its Subsidiaries.
5.7.(f) Tax Proceedings.
(i) Right to Control Proceedings. Team shall have the right
to control, at Team's expense, the audit (and disposition thereof) of
any tax return for any Pre-Closing Tax Period and to participate in
the disposition of the audit of any tax return relating to the periods
ending after the Closing Date if such audit or disposition thereof
could give rise to a claim for indemnification hereunder (any such
audit or disposition, a "Tax Proceeding").
(ii) Notice; Reports. Team's right to control a Tax
Proceeding shall commence upon the receipt by the Company, the Buyer
or any of its Affiliates of a proposed adjustment to tax for the
period under audit or examination communicated in writing. The Buyer
shall promptly notify Team in writing upon their learning of the
pendency of a Tax Proceeding and shall fully cooperate with Team in
the conduct of such Tax Proceeding. The failure on the part of the
Buyer to promptly notify Team of the pendency of a Tax Proceeding
shall not discharge Team's indenmity obligations hereunder, except
that the Buyer shall be liable for any increase in penalties,
interest, other assessments or fees and expenses which are due to any
delay in promptly notifying Team of the pendency of any Tax Proceeding
and shall be responsible for any indemnity obligations to the extent
that Team is prejudiced as a result of such delay. Without the prior
written consent of Team (which consent shall not be unreasonably
withheld), neither the Buyer nor any of its Affiliates shall settle or
compromise any claim for taxes relating to any Pre-Closing Tax Period
or that might result in Team being required to make an indemnity
payment pursuant to Section 6.1. The Buyer shall, and shall cause
foreign operating locations to, cooperate with Team, including
providing reasonable access to records, returns and supporting
information, in connection with any Tax Proceeding or matter as to
29
which the Buyer may seek indemnity or other relief for Team under this
Article. The Buyer promptly shall pay Team any refunds, rebates or
other recoveries received by Buyer to which Team is entitled pursuant
to this Agreement.
5.8. Provisions Regarding Accounts Receivable.
Buyer shall use its best efforts to collect within 120 days after the
Closing all accounts receivable outstanding on the Closing Date. If all or a
portion of an account is not collected by the time the Final Closing Balance
Sheet has been completed, such account (or portion) shall nevertheless be valued
at face value for purposes of the Final Closing Balance Sheet. If an account has
not been collected within 120 days after the Closing, Buyer at its election
shall either (a) retain such account in which case Team shall have no further
liability, or (b) transfer such account to Team. In the event Buyer elects
option (b) in the preceding sentence, Team shall pay Buyer the face value and
Buyer shall reasonably cooperate with Team in collecting such account. If the
account debtor pays any amount on such account after such account is transferred
to Team, Buyer shall promptly remit such amount to Team.
5.9. Product Liability; Insurance.
Team hereby assumes responsibility for losses and damages that occur
within three years after the Closing Date (regardless of when the claim is
made), including damage to property and personal injury, arising from products
manufactured and shipped by Company before the Closing Date and shall hold the
Buyer and Company harmless from such liability. Company and Buyer hereby assume
responsibility for losses and damages, including damage to property and personal
injury arising from products manufactured or shipped by Company on and after the
Closing Date and shall hold Team harmless from such liability.
Team shall for a period of three years after the Closing Date maintain
insurance for product liability on an "occurrence basis" arising from products
manufactured and shipped by Company on or before the Closing Date in an
aggregate amount of not less than $5,000,000, which insurance shall name Buyer
as an additional insured. Team shall provide a certificate of insurance at the
Closing Date that confirms the foregoing and that such insurance cannot be
modified or cancelled unless the insurance company gives both parties at least
30 days prior written notice.
5.10. Product Warranty.
Team shall reimburse Company for all warranty expenses for products
manufactured and shipped by Company before the Closing Date arising from
third-party claims of breach of Company's warranties that are made within one
year after the date such product is delivered. Such warranty expenses shall mean
all direct costs to repair or replace such products or for credits granted to
Company's customers. Warranty work shall be limited to products that are covered
by and breach Company's warranties and shall not include work or credit merely
to generate customer good will. Warranty expense shall be computed in a manner
consistent with past practices of the Company, and shall be comprised of any or
all of the following: (a) the weighted average cost of any material shipped to
30
the customer to replace the defective material, (b) the weighted average cost of
any material used in the repair of the equipment if the item is returned to
company for repair, (c) the freight cost to ship the replacement part or the
repaired item back to the customer (outbound freight), (d) burdened labor cost
(overhead) to repair the defective item if it is returned for repair (and not
replaced by a new unit). The weighted average cost of a part in inventory is the
material and burdened labor cost of all the parts on hand divided by the
quantity on hand. The weighted average cost of a manufactured part includes
material and burdened labor cost (overhead). The weighted average cost of a
purchased part is the purchase price of the part. Burdened labor cost (overhead)
is the actual hours of labor recorded by the employee on that task at the
standard rate of the workcenter. Workcenter rates include labor cost,
depreciation of equipment, manufacturing department cost and an allocated
portion of facilities cost (based on square footage). Workcenter rates for the
fiscal year 2006 shall be based on budgeted cost and hours.
6. INDEMNIFICATION
6.1. By Team.
Subject to the terms, conditions and limitations of this Article 6,
Team hereby agrees to indemnify and hold harmless Buyer and the Company from and
against all Claims resulting to, imposed upon, or incurred by Buyer or the
Company, by reason of, arising out of or resulting from (a) the inaccuracy or
breach of any representation or warranty of Team or Company contained in this
Agreement, or (b) the breach of any covenant of Team, Team Investment or the
Company contained in this Agreement. As used in this Article 6, the term "Claim"
shall include (i) all debts, liabilities and obligations; (ii) all losses,
damages (but excluding consequential, punitive and exemplary damages, except for
consequential, punitive and exemplary damages payable to third persons (other
than a person seeking indemnification pursuant to this Agreement) as a result of
a Claim), judgments, awards, settlements, and reasonable costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and attorneys fees and expenses); and
(iii) all demands, claims, suits, actions, costs of investigation, causes of
action, proceedings and assessments, whether or not ultimately determined to be
valid.
6.2. By Buyer.
Subject to the terms and conditions of this Article 6, Buyer hereby
agrees to indemnify, defend and hold harmless Team and Team Investment from and
against all Claims asserted against, resulting to, imposed upon or incurred by
any such person, directly or indirectly, by reason of or resulting from (a) the
inaccuracy or breach of any representation or warranty of Buyer contained in or
made pursuant to this Agreement, or (b) the breach of any covenant of Buyer
contained in this Agreement.
6.3. Indemnification of Third-Party Claims.
The obligations and liabilities of any party to indemnify any other
party under this Article 6 with respect to Claims relating to third parties
shall be subject to the following terms and conditions:
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6.3.(a) Notice and Defense. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the party from
whom indemnification is sought (the "Indemnifying Party") prompt written
notice of any such Claim, and the Indemnifying Party will have the right to
undertake the defense thereof by representatives chosen by it. Failure to
give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 6, except to the extent the Indemnifying
Party is prejudiced thereby. The Indemnified Party shall make available to
the Indemnifying Party and its representatives all records and other
materials requested by them and in the possession or under the control of
the Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other respects
give reasonable cooperation in such defense.
6.3.(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, elects not to defend such
Claim, the Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Claim or consent to
the entry of a judgment with respect to such Claim, but the Indemnifying
Party will not be bound by any determination of a Claim so defended or any
compromise or settlement of such Claim without its prior written consent.
6.3.(c) Indemnified Party's Rights. Anything in this Section 6.3 to
the contrary notwithstanding, (i) if there is a reasonable probability that
a Claim may materially and adversely affect the Indemnified Party other
than as a result of money damages or other money payments, the Indemnified
Party, by written notice to the Indemnifying Party, may assume the right to
defend, compromise or settle such Claim, but the Indemnifying Party will
not be bound by any determination of a Claim so defended or any compromise
or settlement of such Claim without its prior written consent, and (ii) the
Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the entry
of any judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Claim.
6.4. Payment.
The Indemnifying Party shall promptly pay the Indemnified Party any
amount due under this Article 6. Upon judgment, determination, settlement or
compromise of any third party Claim in accordance with the provisions of this
Article 6, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment an
appeal is made from the judgment. If the Indemnifying Party desires to appeal
from an adverse judgment, then the Indemnifying Party shall post and pay the
cost of the security or bond to stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
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6.5. Special Indemnification.
Without limiting the generality of the foregoing, Team agrees to
indemnify and hold harmless Buyer and Company for, from, and against all Claims
asserted against, imposed on, or incurred by any such person, directly or
indirectly, in connection with any matter listed on Schedule 3.10. (Litigation).
Such indemnification shall not be subject to the provisions of Section 6.6.
After Closing, Team shall have the right to defend and manage the resolution of
the Doreen Cadd claim, as described on Schedule 3.10, including the defense of
the current proceeding related thereto, in its sole discretion, and Buyer and
Company and their respective representatives shall reasonably cooperate with
Team in connection therewith, including making available to Team all records and
other materials requested by Team.
6.6. Limitations on Indemnification.
6.6.(a) Time Limitation. No claim or action shall be brought under
this Article 6 for breach of a representation or warranty after the lapse
of two (2) years following the Closing. Regardless of the foregoing,
however, or any other provision of this Agreement:
(i) The foregoing time limitation shall not apply to claims
or actions brought for breach of any representation or warranty made
by Team or Company in Sections 3.1, 3.2 or 3.23 and Team hereby waives
all applicable statutory limitation periods with respect thereto.
(ii) Any claim or action brought for breach of any
representation or warranty made by Team in Section 3.5 may be brought
at any time until five (5) years after the Closing Date.
(iii) Any claim made by a party hereunder for breach of a
representation or warranty prior to the termination of the survival
period for such claim shall be preserved despite the subsequent
termination of such survival period.
(iv) Any claim or action brought for breach of any
representation or warranty under Sections 3.11(c) may be brought at
any time within five (5) years after the Closing Date.
(v) If Buyer can prove fraud by Team regarding any breach
or misrepresentation, there shall be no time or dollar amount
limitation under Section 6.6(b) regarding such breach or
misrepresentation.
(vi) If any act, omission, disclosure or failure to disclose
shall form the basis for a claim for breach of more than one
representation or warranty, and such claims have different periods of
survival hereunder, the termination of the survival period of one
claim shall not affect a party's right to make a claim based on the
breach of representation or warranty still surviving.
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6.6.(b) Amount Limitation. Except with respect to claims for breaches
of representations or warranties contained in Sections 3.1, 3.2, 3.5(a)-(c)
or 3.23, an Indemnified Party shall not be entitled to indemnification
under this Article 6 for breach of a representation or warranty unless the
aggregate of the Indemnifying Party's indemnification obligations to the
Indemnified Party pursuant to this Article 6 (but for this Section 6.6.(b))
exceeds One Hundred Fifty Thousand Dollars ($150,000); but in such event,
the Indemnified Party shall be entitled to indemnification in full for all
breaches of representations and/or warranties. The maximum liability of any
party under this Article 6 shall be Five Million Dollars ($5,000.000).
6.7. No Waiver.
The closing of the transactions contemplated by this Agreement shall
not constitute a waiver by any party of its rights to indemnification hereunder,
regardless of whether the party seeking indemnification has knowledge of the
breach, violation or failure of condition constituting the basis of the Claim at
or before the Closing.
6.8. Exceptions and Limitations to Indemnities.
Notwithstanding any provision contained herein to the contrary, Team's
indemnity obligations hereunder shall not include any Claim to the extent such
Claim directly or indirectly arises from (a) a breach of any representation or
warranty or covenant of the Buyer under this Agreement or (b) any action taken
by Buyer after the Closing Date. Notwithstanding any provision contained herein
to the contrary, the Buyer's indemnity obligations hereunder shall not include
any Claim to the extent such Claim directly or indirectly arises from (a) a
breach of any representation or warranty or covenant of Team or the Company
under this Agreement or (b) any action taken by Team after the Closing Date.
Each of the parties shall take and shall cause their respective affiliates to
take all reasonable steps to mitigate any Claim upon becoming aware of any event
which would reasonably be expected to, or does, give rise thereto.
6.9. Exclusive Remedy.
The sole and exclusive remedy for any breach or failure to be true and
correct, or alleged breach or failure to be true and correct, of any
representation or warranty or any covenant or agreement in this Agreement, shall
be indemnification in accordance with this Article 6. In furtherance of the
foregoing, each of the parties hereby waive, to the fullest extent permitted by
applicable law, any and all other rights, claims and causes of action (including
rights of contributions, if any) known or unknown, foreseen or unforeseen, which
exist or may arise in the future, that it may have against the other parties
hereto, as the case may be, arising under or based upon any federal, state or
local law (including any such law relating to environmental matters or arising
under or based upon any securities law, common law or otherwise).
Notwithstanding the foregoing, this Section 6.9 shall not operate to limit the
rights of the parties to seek equitable remedies (including specific performance
or injunctive relief) for breaches of Section 5.4.
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7. CLOSING
The closing of this transaction ("the Closing") shall take place at
the offices of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin,
on November 30, 2005, and shall be effective as of 11:59 p.m. on that day. Such
date is referred to in this Agreement as the "Closing Date."
7.1. Documents to be Delivered by Team Investment, Company and Team.
At the Closing, Team Investment, Company and Team shall deliver to
Buyer the following documents, in each case duly executed or otherwise in proper
form:
7.1.(a) Stock Certificate(s). A stock certificate or certificates
representing the Shares, duly endorsed for transfer or with duly executed
stock powers attached.
7.1.(b) Certified Resolutions. Certified copies of the resolutions of
the Boards of Directors of Team and Team Investment authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement. 7.1.(c) Articles; By-Laws. A copy of the
By-Laws of Company certified by the secretary of Company, and a copy of the
Articles of Incorporation of Company certified by the Secretary of State of
Oregon.
7.1.(d) Incumbency Certificate. Incumbency certificates relating to
each person executing (as a corporate officer or otherwise on behalf of
another person) any document executed and delivered to Buyer pursuant to
the terms hereof.
7.1.(e) General Releases. The General Releases referred to in Section
5.5, duly executed by all parties.
7.1.(f) Resignations. The resignations of all directors of Company
except Geoff Gilmore (consisting of Ted W. Owen, Philip J. Hawk and Kenneth
M. Tholan) as directors and officers of the Company, effective as of the
Closing Date and in form satisfactory to Buyer's counsel.
7.1.(g) Affidavit. An affidavit from Company in form and substance
satisfactory to Buyer complying with Section 1445(b)(3) of the Code to the
effect that Company is not a "foreign person," "foreign corporation,"
"foreign partnership," "foreign trust," or "foreign estate" under Section
1445 of the Code.
7.1.(h) Title Insurance. Buyer shall have obtained good and valid
title insurance policies or, in final form, irrevocable title insurance
binders, dated as of the Effective Time.
7.1.(i) Environmental Audit. The Environmental Audit referred to in
Section 5.3.
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7.1.(j) Rental Site Agreement. An agreement providing for the
continuation of the rental site arrangements at the current charge per
month per site for at least five years (unless Team vacates the geographic
area and gives Company six months advance notice), all in form agreed to by
the parties.
7.1.(k) Release(s) of Guarantee(s). Release(s) by the lender(s) of any
and all guarantees of indebtedness of Team guaranteed by Company, in form
acceptable to Buyer.
7.1.(l) Terminations of Liens and Financing Statements. Instruments in
form acceptable to Buyer releasing or terminating all liens of record on or
against property of Company.
7.1.(m) Other Documents. All other documents, instruments or writings
required to be delivered to Buyer at or prior to the Closing pursuant to
this Agreement and such other certificates of authority and documents as
Buyer may reasonably request.
7.2. Documents to be Delivered by Buyer.
At the Closing, Buyer shall deliver to Team and Team Investment the
following documents, in each case duly executed or otherwise in proper form:
7.2.(a) Cash Purchase Price. To Team Investment, by wire transfer of
immediately available funds.
7.2.(b) Certified Resolutions. A certified copy of the resolutions of
the Board of Directors of Buyer authorizing and approving this Agreement
and the consummation of the transactions contemplated by this Agreement.
7.2.(c) Incumbency Certificate. Incumbency certificates relating to
each person executing any document executed and delivered to Company or
Team by Buyer pursuant to the terms hereof.
7.2.(d) Other Documents. All other documents, instruments or writings
required to be delivered to Company at or prior to the Closing pursuant to
this Agreement and such other certificates of authority and documents as
Company may reasonably request.
8. RESOLUTION OF DISPUTES
8.1. Arbitration.
Any dispute, controversy or claim arising out of or relating to this
Agreement or any contract or agreement entered into pursuant hereto or the
performance by the parties of its or their terms shall be initially submitted to
the chief executive officers of Buyer and Team for resolution. If the chief
executive officers cannot agree upon a resolution to such dispute within thirty
(30) days after submission thereof, then such dispute shall be settled by
binding arbitration held in Portland Oregon in accordance with the Commercial
36
Arbitration Rules of the American Arbitration Association then in effect, except
as specifically otherwise provided in this Article 8. Notwithstanding the
foregoing, Buyer may, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened violation of
the covenants of Team under Section 5 of this Agreement. Without the express
written consent of all parties, this Article 8 shall not apply where the amount
in controversy, excluding attorneys' fees and expenses, exceeds Two Million
Dollars ($2,000,000).
8.2. Arbitrators.
If the matter in controversy (exclusive of attorney fees and expenses)
shall appear, as at the time of the demand for arbitration, to exceed
$1,000,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator. The parties shall mutually
select the arbitrator(s). If the parties cannot agree, the arbitrator(s) shall
be selected in accordance with the procedures of the American Arbitration
Association then in effect.
8.3. Procedures; No Appeal.
The arbitrator(s) shall allow such discovery as the arbitrator(s)
determine appropriate under the circumstances and shall resolve the dispute as
expeditiously as practicable, and if reasonably practicable, within 120 days
after the selection of the arbitrator(s). The arbitrator(s) shall give the
parties written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if any
party so requests within 10 days after the decision. Thereafter, the decision of
the arbitrator(s) shall be final, binding, and nonappealable with respect to all
persons, including (without limitation) persons who have failed or refused to
participate in the arbitration process.
8.4. Authority.
The arbitrator(s) shall have authority to award relief under legal or
equitable principles, including interim or preliminary relief, and to allocate
responsibility for the costs of the arbitration and to award recovery of
attorneys fees and expenses in such manner as is determined to be appropriate by
the arbitrator(s).
8.5. Entry of Judgment.
Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having in personam and subject matter jurisdiction. Buyer and Team
hereby submit to the in personam jurisdiction of the Federal and State courts in
Oregon, for the purpose of confirming any such award and entering judgment
thereon.
8.6. Confidentiality.
All proceedings under this Article 8, and all evidence given or
discovered pursuant hereto, shall be maintained in confidence by all parties.
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8.7. Continued Performance.
The fact that the dispute resolution procedures specified in this
Article 8 shall have been or may be invoked shall not excuse any party from
performing its obligations under this Agreement and during the pendency of any
such procedure all parties shall continue to perform their respective
obligations in good faith.
8.8. Tolling.
All applicable statutes of limitation shall be tolled while the
procedures specified in this Article 8 are pending. The parties will take such
action, if any, required to effectuate such tolling.
9. MISCELLANEOUS
9.1. Disclosure Schedule.
The schedules (the "Disclosure Schedule") have been dated and
delivered to Buyer on the date of this Agreement. Team may, at its option,
include in the Disclosure Schedule items that are not material in order to avoid
any misunderstanding, and such inclusion, or any references to dollar amounts,
shall not be deemed to be an acknowledgement or representation that such items
are material, to establish any standard of materiality or to define further the
meaning of such terms for purposes of this Agreement. Information disclosed in
the Disclosure Schedule shall constitute a disclosure for all purposes under
this Agreement notwithstanding any reference to a specific section, and all such
information shall be deemed to qualify the entire Agreement and not just such
section.
9.2. Further Assurance.
From time to time, at any party's request and without further
consideration, the other parties hereto will execute and deliver to the
requesting party such documents and take such other action as the requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
9.3. Disclosures and Announcements.
Announcements concerning the transactions provided for in this
Agreement by Buyer, Company or Team shall be subject to the approval of the
other parties in all essential respects, except as required by a court of
competent jurisdiction or applicable laws, including applicable securities laws
and regulations.
9.4. Assignment; Parties in Interest.
9.4.(a) Assignment. Except as expressly provided herein, the rights
and obligations of a party hereunder may not be assigned, transferred or
encumbered without the prior written consent of the other parties.
Notwithstanding the foregoing, Buyer may, without consent of any other
party, cause one or more subsidiaries of Buyer to carry out all or part of
the transactions contemplated hereby; provided, however, that Buyer shall,
38
nevertheless, remain liable for all of its obligations, and those of any
such subsidiary, to Team hereunder.
9.4.(b) Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successors
and permitted assigns of the parties hereto. Nothing contained herein shall
be deemed to confer upon any other person any right or remedy under or by
reason of this Agreement.
9.5. Law Governing Agreement.
This Agreement may not be modified or terminated orally, and shall be
construed and interpreted according to the internal laws of the State of
Delaware, excluding any choice of law rules that may direct the application of
the laws of another jurisdiction.
9.6. Amendment and Modification.
Buyer and Team may amend, modify and supplement this Agreement in such
manner as may be agreed upon in writing between Buyer and Team.
9.7. Notice.
All notices, requests, demands and other communications hereunder
shall be given in writing and shall be: (a) personally delivered; (b) sent by
telecopier, facsimile transmission; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
9.7.(a) If to Buyer, to:
Climax Technologies, Inc.
c/o Horizon Partners, Ltd.
3838 Tamiami Trail N., Suite 408
Naples, FL 34103-3590
Attention: Robert M. Feerick
Facsimile: (239) 261-2085
(with a copy to)
Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
or to such other person or address as Buyer shall furnish to Team in writing.
39
9.7.(b) If to Team or Team Investment, to:
c/o Team, Inc.
200 Hermann Drive
Alvin, Texas 77511
Attention: Chief Executive Officer
Facsimile: (281) 388-5583
(with a copy to)
Team, Inc.
200 Hermann Drive
Alvin, Texas 77511
Attention: General Counsel
Facsimile: (281) 388-4411
and
Locke Liddell & Sapp LLP
600 Travis Street
3400 JPMorgan Chase Tower
Houston, Texas 77002
Attention: Michael T. Peters
Facsimile: 713-229-2667
or to such other person or address as Team shall designate as a successor in
accordance with this Agreement.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if transmitted by telecopy or facsimile pursuant to this
paragraph, such communication shall be deemed delivered the next business day
after transmission (and sender shall bear the burden of proof of delivery); if
sent by overnight courier pursuant to this paragraph, such communication shall
be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
9.8. Expenses.
Regardless of whether or not the transactions contemplated hereby are
consummated:
9.8.(a) Brokerage. Team agrees to hold Buyer and the Company harmless
from and against all other claims for brokerage commissions or finder's
fees in connection with the execution of this Agreement or the transactions
provided for herein, including the fees and expenses of Gulfstar Group.
40
9.8.(b) Expenses to be Paid by Team. Team shall pay, and shall
indemnify, defend and hold Buyer and Company harmless from and against,
each of the following:
(i) Transfer Taxes. Any sales, use, excise, transfer or
other similar tax imposed on Team with respect to the transactions
provided for in this Agreement, and any interest or penalties related
thereto.
(ii) Title Insurance Premiums, Surveys. All premiums for the
issuance of the title insurance policies issued pursuant to Section
5.1 hereof, and the cost of surveys performed pursuant to Section 5.2,
provided that Buyer shall reimburse Team for one-half of such costs at
Closing.
(iii) Environmental Audit. The fees and other expenses
relating to the environmental audit performed pursuant to Section 5.3
hereof, provided that Buyer shall reimburse Team for such fees and
expenses at Closing.
(iv) Professional Fees. All fees and expenses of Team's
legal, accounting, investment banking and other professional counsel
in connection with the transactions contemplated hereby (and any such
expenses of Company, incurred prior to Closing, to the extent not
fully accrued on the Final Closing Balance Sheet).
9.8.(c) Other. Except as otherwise provided herein, each of the
parties shall bear its own expenses and the expenses of its counsel and
other agents in connection with the transactions contemplated hereby.
9.8.(d) Costs of Litigation or Arbitration. The parties agree that
(subject to the discretion, in an arbitration proceeding, of the arbitrator
as set forth in Section 8.4.) the prevailing party in any action brought
with respect to or to enforce any right or remedy under this Agreement
shall be entitled to recover from the other party or parties all reasonable
costs and expenses of any nature whatsoever incurred by the prevailing
party in connection with such action, including without limitation
attorneys' fees and prejudgment interest.
9.9. Entire Agreement.
This instrument embodies the entire agreement between the parties
hereto with respect to the transactions contemplated herein, and there have been
and are no agreements, representations or warranties between the parties other
than those set forth or provided for herein.
9.10. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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9.11. Headings.
The headings in this Agreement are inserted for convenience only and
shall not constitute a part hereof.
9.12. Definitions.
"Excluded Matter" means any one or more of the following: (i) the
effect of any change in the United States or foreign economies or securities or
financial markets in general; (ii) the effect of any change that generally
affects any industry in which any of the Company's customers operates; (iii) the
effect of any change arising in connection with earthquakes, hostilities, acts
of war, sabotage or terrorism or military actions or any escalation or material
worsening of any such hostilities, acts of war, sabotage or terrorism or
military actions existing or underway as of the date hereof; (iv) the effect of
any action taken by Buyer or its Affiliates with respect to the transactions
contemplated hereby or with respect to Team or the Company; (v) the effect of
any changes in applicable Laws or accounting rules; or (vi) any effect resulting
from the announcement of this Agreement, compliance with terms of this Agreement
or the consummation of the transactions contemplated by this Agreement.
"GAAP" means generally accepted accounting principles in effect in the
United States on the date hereof.
"Knowledge" - Team shall be deemed to have "knowledge" of or to have
"known" a particular fact or other matter only if Phil Hawk or Greg Sangalis has
actual knowledge of such fact or other matter, after due inquiry. For purposes
of the preceding sentence, "due inquiry" by Mr. Hawk or Mr. Sangalis shall be
satisfied by making an inquiry to the following persons, as appropriate: Geoff
Gilmore, Nancy Polnoff, Lawrence Rentz and Joni George. With respect to matters
related to Climax GmbH, Team shall be deemed to have "knowledge" of or to have
"known" a particular fact or other matter only if Phil Hawk or Greg Sangalis has
actual knowledge of such fact or other matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
[signature page follows]
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CLIMAX TECHNOLOGIES, INC. (Buyer)
By /s/ Raymond Desrocher
----------------------------------------------
Name: Raymond Desrocher
-------------------------------------------
Title: President
------------------------------------------
TEAM INVESTMENT, INC.
(Team Investment)
By /s/ Kenneth M. Tholan
----------------------------------------------
Name: Kenneth M. Tholan
-------------------------------------------
Title: President & COO
------------------------------------------
TEAM, INC. (Team)
By /s/ Philip J. Hawk
----------------------------------------------
Name: Philip J. Hawk
-------------------------------------------
Title: Chairman & CEO
------------------------------------------
CLIMAX PORTABLE MACHINE TOOLS, INC. (Company)
By /s/ Geoff Gilmore
----------------------------------------------
Name: Geoff Gilmore
-------------------------------------------
Title: CEO/President
------------------------------------------
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