<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 20, 1995
---------------------
BUFFTON CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
-------------------------------
(State or other jurisdiction of incorporation)
1-9822 75-1732794
- - - ----------------------- ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107
-----------------------------------------------------
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code (817) 332-4761
--------------
<PAGE>
BUFFTON CORPORATION
INDEX
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<TABLE>
<CAPTION>
Page No.
--------
<C> <S> <C>
Item 2. Acquisition or Disposition of Assets.................. 3
Item 5. Other Events.......................................... 4
Item 7. Financial Statements and Exhibits..................... 5
Signature ...................................................... 6
</TABLE>
2
<PAGE>
BUFFTON CORPORATION
-------------------
Item 2. - Acquisition or Disposition of Assets
Effective December 31, 1994, Flo Control, Inc., a Delaware corporation
("Seller"), a subsidiary of Buffton Corporation (the "Company"), sold
substantially all of the operating assets and certain operating liabilities to
F. C. Acquisition, Inc., a California corporation ("Buyer"). The purchase price
for the assets was $3,100,000 in cash, plus the assumption of certain
liabilities. In connection with the sale Seller, sold its undivided ninety-five
percent (95%) joint venture interest in Florida Realty Joint Venture, a Florida
general partnership, to F.L.C. Property Acquisition, Inc., an affiliate of the
Buyer. The Joint Venture interests consisted of real estate and improvements
situated in Broward County, Pompano Beach, Florida. The purchase price was
$150,000 and assumption of Sellers obligations under the Joint Venture Agreement
of Florida Realty Joint Venture, consisting primarily of a real estate mortgage.
The operating assets sold consisted of trade accounts receivable, inventory,
machinery, equipment, furniture and fixtures, and all intellectual property and
proprietary information. Liabilities assumed by the Buyer consisted of trade
accounts payable and other accrued liabilities in the ordinary course of
business. The assets and liabilities related to the manufacture of polyvinyl
chloride pipe (PVC) fittings.
In a separate transaction, effective December 31, 1994, Seller sold its
Secondary Containment Assets to Patrick Hopkins and Flo-Safe Systems, Inc., a
Wisconsin Corporation. The Seller received a $500,000 note in payment for the
assets transferred. The note bears interest at eight percent (8%) per annum and
is secured by the assets transferred and a personal guarantee from a third party
individual. Principal payments of $50,000 plus accrued interest will be paid
semi-annually beginning June 30, 1995 and extending through December 31, 1999.
The sole stockholder of the Buyer is a Director of the Company. Prior to the
sale, there were no other material relationships between the Buyer and the
Company, its affiliates or any other director of the Company, or any associate
of any such officer or directors.
3
<PAGE>
BUFFTON CORPORATION
-------------------
Item 5. - Other Events
In conjunction with the disposition of the assets of Flo Control, Inc. , the
Company paid approximately $2,400,000 of the proceeds to Congress Financial
Corporation, its lender, to reduce its debt. The financing agreement with
Congress Financial Corporation was amended to reduce the commitment to
$2,000,000. The loan provides for interest to be paid monthly at a floating rate
of 2-1/2% over the established prime rate (11% at December 31, 1994). Access to
the revolving line of credit is based upon various formulas relating to accounts
receivable and inventories. The credit commitment is secured by all of the
assets of Current Technology, Inc., the $500,000 note from Patrick Hopkins and
the guaranty of the Company.
4
<PAGE>
BUFFTON CORPORATION
-------------------
Item 7. - Financial Statements and Exhibits
<TABLE>
<CAPTION>
(a) Financial Statements Page
----
<C> <S> <C>
Pro forma Statement of Operations
for the year ended September 30, 1994 F - 1
Pro forma Balance Sheet at September 30, 1994 F - 2
Notes to Pro forma Financial Statements F - 3
</TABLE>
(b) Exhibits
10 Agreement for Sale of Assets from Flo Control, Inc. dated as of
January 20, 1995, by and among Buffton Corporation, a Delaware
corporation, Flo Control, Inc., a Delaware corporation,
("Seller") and F.C. Acquisition, Inc., a California corporation
("Buyer").
10-1 Agreement for Sale of Florida Realty Joint Venture interests
from Flo Control, Inc., dated January 20, 1995 by and among
Buffton Corporation, a Delaware corporation, Flo Control, Inc.,
a Delaware corporation, ("Seller") and F.L.C. Property
Acquisition, Inc., a California corporation ("Buyer").
10-2 Agreement for Sale of Secondary Containment Assets from Flo
Control, Inc., dated January 20, 1995, by and among Buffton
Corporation, a Delaware corporation, Flo Control, Inc., a
Delaware corporation ("Seller") and Patrick Hopkins and Flo-Safe
Systems, Inc. a Wisconsin corporation ("Buyer").
10-3 Second Amendment to Accounts Financing Agreement date January
20, 1995 by and among Congress Financial Corporation, Current
Technology, Inc., Electro-Mech, Inc., and Flo Control, Inc.
10-4 Second Amended and Restated Revolving Credit Note
99 Press Release dated January 23, 1995 announcing the completion
by the Company of its disposition of Flo Control's operations.
5
<PAGE>
BUFFTON CORPORATION
-------------------
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BUFFTON CORPORATION
-------------------
(Registrant)
BY: /s/ Robert Korman
--------------------
Robert Korman
Vice President and
Chief Financial Officer
Date: _________________
6
<PAGE>
BUFFTON CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1)
<TABLE>
<CAPTION>
Historical Historical Adjustments
Buffton Flo (Note 2) Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $ 41,419 $(10,987) $ 20 (a) $30,452
Gain on sale of certain operating assets 1,050 - - 1,050
---------- -------- ------ -------
42,469 (10,987) 20 31,502
---------- -------- ------ -------
Costs and expenses:
Cost of goods sold (exclusive of 23,219 (6,164) - 17,055
depreciation)
Selling, general & administrative 14,170 (3,521) - 10,649
Depreciation & amortization 2,086 (884) - 1,202
Interest expense 902 - (561) (a) 341
---------- -------- ------ -------
Total costs and expenses 40,377 (10,569) (561) 29,247
---------- -------- ------ -------
Income from continuing operations
before income taxes 2,092 (418) 581 2,255
Income taxes 184 (146) 203 (b) 241
---------- -------- ------ -------
Income from continuing operations $ 1,908 $ (272) $ 378 $ 2,014
========== ======== ====== =======
Income from continuing operations
per average common share $ 0.37 $ 0.39
========== =======
Weighted average common
shares outstanding 5,120 5,120
========== =======
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-1
<PAGE>
BUFFTON CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1994
(NOTE 1)
ASSETS
------
<TABLE>
<CAPTION>
Historical Historical Adjustments
Buffton Flo (Note 2) Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Current Assets:
Cash & cash equivalents $ 3,196 $ - $ 607 (a) $ 3,803
Accounts receivable 3,541 (1,659) 500 (b) 2,382
Inventories 4,044 (2,989) - 1,055
Prepaid assets 344 (89) - 255
---------- -------- ------- --------
Total current assets 11,125 (4,737) 1,107 7,495
Property, plant & equipment, net 8,082 (5,008) - 3,074
Patents, net 1,818 - - 1,818
Goodwill, net 3,811 - - 3,811
Other assets, net 234 (156) - 78
---------- -------- ------- --------
$ 25,070 $ (9,901) $ 1,107 $ 16,276
========== ======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C> <C>
Current Liabilities:
Current portion of long-term
debt $ 518 $ (28) $ (333) (a) $ 157
Accounts payable 1,610 (659) (180) (c) 771
Accrued liabilities 1,594 (113) 47 (d) 1,528
Income taxes 254 - - (a) 254
---------- -------- ------- --------
Total current liabilities 3,976 (800) (466) 2,710
Long-term debt 5,507 (2,274) (2,096) (a) 1,137
Deferred income taxes 330 - - 330
Shareholders' equity:
Common stock 264 - - 264
Additional paid-in capital 12,020 - - 12,020
Retained earnings 2,973 (6,827) 3,669 (a) (185)
---------- -------- ------- --------
Net shareholders' equity 15,257 (6,827) 3,669 12,099
---------- -------- ------- --------
$ 25,070 $ (9,901) $ 1,107 $ 16,276
========== ========= ======= ========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
- - - ------------------------------------------------------------------------
statements.
- - - -----------
F - 2
<PAGE>
BUFFTON CORPORATION
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- - - -------------------------------
The Company's historical consolidated statement of income and Flo Control,
Inc.'s (Flo) historical statement of operation for the year ended September 30,
1994 serve as the basis for the preparation of the unaudited pro forma
statements of operations. The sale of Flo's operations was accounted for as a
discontinued operation. The pro forma statement of operations is adjusted to
reflect the sale of Flo operations from the beginning of the period. As a result
of the sale, the Company recorded a loss from discontinued operation of
approximately $3,068,000 which is not included in the pro forma results.
The pro forma balance sheet was prepared from the Company's historical
consolidated balance sheet at September 30, 1994 and Flo's assets sold and
related liabilities assumed by the Buyer.
Note 2 - Pro Forma Adjustments
- - - ------------------------------
The pro forma adjustments necessary to reflect the unaudited pro forma
statements of operations and balance sheet of the Company are discussed below.
Statements of Operations:
- - - ------------------------
(a) Adjustment to record the reduction in interest expense as a result of
applying the proceeds from the sale as a reduction of long-term debt
and to reflect an increase in interest income from the $500,000 note.
(b) Adjustment to provide income taxes on the pro forma impact of reducing
interest expense and increasing interest income as if Flo had been
sold at the beginning of the period.
Balance Sheet:
- - - -------------
(a) Adjustment to record proceeds from the sale of Flo simultaneously
applied as a reduction of long-term debt.
(b) Adjustment to record the note receivable from the sale of Flo's
Secondary Containment Assets.
(c) Adjustment to reflect additional payments from the sale proceeds to
reduce accounts payable.
(d) Adjustment to reflect accrual of expenses related to the disposal of
assets.
F - 3
<PAGE>
BUFFTON CORPORATION
-------------------
EXHIBIT INDEX
EXHIBITS PAGE
-------- ----
10 Agreement for Sale of Assets from Flo Control, Inc. dated as of
January 20, 1995, by and among Buffton Corporation, a Delaware
corporation, Flo Control, Inc., a Delaware corporation, ("Seller")
and F.C. Acquisition, Inc., a California corporation ("Buyer").
10-1 Agreement for Sale of Florida Realty Joint Venture interests from
Flo Control, Inc., dated January 20, 1995 by and among Buffton
Corporation, a Delaware corporation, Flo Control, Inc., a Delaware
corporation, ("Seller") and F.L.C. Property Acquisition, Inc., a
California corporation ("Buyer").
10-2 Agreement for Sale of Secondary Containment Assets from Flo
Control, Inc., dated January 20, 1995, by and among Buffton
Corporation, a Delaware corporation, Flo Control, Inc., a Delaware
corporation ("Seller") and Patrick Hopkins and Flo-Safe Systems,
Inc. a Wisconsin corporation ("Buyer").
10-3 Second Amendment to Accounts Financing Agreement date January 20,
1995 by and among Congress Financial Corporation, Current
Technology, Inc., Electro-Mech, Inc., and Flo Control, Inc.
10-4 Second Amended and Restated Revolving Credit Note
99 Press Release dated January 23, 1995 announcing the completion by
the Company of its disposition of Flo Control's operations.
<PAGE>
EXHIBIT 10
AGREEMENT OF PURCHASE AND SALE
------------------------------
by and among
BUFFTON CORPORATION,
FLO CONTROL, INC.,
RUSSELL J. SARNO
and
F. C. ACQUISITION, INC.
<PAGE>
AGREEMENT OF PURCHASE AND SALE
------------------------------
THIS AGREEMENT (this "Agreement") dated the ______ day of January, 1995 by
and among BUFFTON CORPORATION, a Delaware corporation ("Buffton"), FLO CONTROL,
INC., a Delaware corporation ("Seller") and F. C. ACQUISITION, INC., a
California corporation ("Buyer"). RUSSELL J. SARNO ("Sarno") is joining herein
for the limited purposes described in Section 3.10 hereof.
W I T N E S S E T H:
-------------------
WHEREAS, Seller is a wholly-owned subsidiary of Buffton; and
WHEREAS, the Seller is engaged in the business of designing, developing,
manufacturing, and marketing at and from the Seller's Premises (as hereinafter
defined) injection molded fittings and valves (the "Products") for the pool and
spa, commercial and municipal markets (the "Seller's Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from the Seller, the Transferred Assets (as hereinafter defined), upon the terms
and subject to the conditions of this Agreement; and
WHEREAS, Seller wishes to delegate to Buyer, and Buyer is willing to
assume, specified Assumed Liabilities (as hereinafter defined), on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, Sarno is the sole shareholder of Buyer.
-1-
<PAGE>
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
pursuant to the terms and subject to the conditions set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
-----------------
Section 1.1 Transfer of Assets by the Seller. On the terms and subject to
--------------------------------
the conditions hereof and subject to Section 1.5, at the Closing (as defined in
Section 1.7 hereof), Seller shall sell, convey, transfer, assign and deliver
("Transfer") to Buyer, and Buyer shall purchase and acquire all right, title and
interest of Seller in and to all rights, properties and assets of Seller,
wherever located, used or useful in the Seller's Business, including without
limitation all of each of the Seller's right, title and interest in and to the
rights, properties and assets described in this Section 1.1, (all such assets to
be transferred by Seller are referred to herein collectively as, the
"Transferred Assets"):
A. Any and all fixtures, leasehold improvements, furnishings, office
furniture, office equipment, computer hardware and software, machinery,
equipment, molds, tooling, materials, supplies, in-plant vehicles and trucks and
other tangible personal property of every kind, nature and description owned by
Seller and utilized or usable in connection with the Seller's Business,
-2-
<PAGE>
including but not limited to all items more particularly described on Exhibit
1.1(A) attached hereto and made a part hereof, and any additions to or
replacements of such fixtures, leasehold improvements, furnishings, office
furniture, office equipment, computer hardware and software, machinery,
equipment, molds, tooling, materials, supplies, in-plant vehicles and trucks,
and other tangible personal property of every kind, nature and description
acquired prior to the Closing by Seller and utilized or usable in connection
with the Seller's Business ("Equipment");
B. All raw materials, components, work-in-process, finished products,
packaging materials, stores and supplies, spare parts and samples (collectively,
"Inventories") owned by Seller that on the Closing Date (as defined in Section
1.7) wherever located and all other Inventory wherever located on the Closing
Date that is utilized or usable in the Seller's Business;
C. All accounts receivable of Seller which arise from the operation of the
Seller's Business in existence on the Closing Date including but not limited to
those accounts receivable more particularly described on Exhibit 1.1(C) attached
hereto and made a part hereof ("Accounts Receivable");
D. All prepaid expenses and other assets of Seller (and all rights
appertaining thereto) relating to the operation of the Seller's Business in
existence on the Closing Date including without limitation those listed on
Exhibit 1.1(D) attached hereto and made a part hereof ("Prepaid Assets");
-3-
<PAGE>
E. All know-how, formulae, manufacturing procedures and analytical work,
technological information, processes, trade secrets, invention records, designs,
drawings, specifications, part lists and descriptions, related instructions,
operation sheets, plans, costs, studies, competitive studies, manuals and data
owned by Seller and used or usable by Seller in Seller's Business
("Technology");
F. All sales records, market studies, advertising and promotional
literature, customer lists, customer history and procedures, including all
information regarding past customers, business records, accounting and financial
records, logs, files and books, supplier lists, sales representation lists,
mailing lists, computer and electronic data processing material, personnel
records, correspondence and other business records of Seller which relate to the
Seller's Business ("Records");
G. Subject to the terms and conditions of Section 4.12, all rights and
incidents of interest of Seller in all oral or written contracts, permits,
licenses, consents, franchises, commitments and other agreements in existence on
the Effective Date, entered into by Seller, including without limitation those
listed on Exhibit 1.1(G) attached hereto and made a part hereof ("Contracts")
excluding the "Retained Contracts" as hereinafter defined;
H. All leases pursuant to which Seller leases real property, as set forth
in Exhibit 1.1(H) attached hereto and made a part hereof ("Leases") and all of
the Seller's rights as of the
-4-
<PAGE>
Effective Date in all of the structures, fixtures and improvements located
thereon;
I. All equipment leases or licenses pursuant to which the Seller leases or
licenses personal property or equipment used or usable in the Seller's Business
identified on Exhibit 1.1(I) attached hereto and made a part hereof ("Equipment
Leases");
J. The right to use all of the current telephone numbers of Seller, all
yellow page advertisements and listings, all trade journal advertisements and
listings and all advertisements and slogans relating to Seller's Business;
K. All letters patent, patent applications, inventions upon which patent
applications have not yet been filed, copyrights, copyright registrations,
trademarks, trademark registrations and applications therefor, trade names,
service marks, or other marks, of Seller relating to the Seller's Business
("Proprietary Rights");
L. All goodwill associated with the foregoing assets;
M. Seller's name and all other names owned by Seller;
N. All other tangible and intangible assets of every kind or character,
real or personal, wherever located, owned by Seller and used or usable in
connection with the Seller's Business.
Section 1.2 Purchase Price. In consideration of the Transfer of the
--------------
Transferred Assets and the assumption of the Assumed Liabilities, Buyer shall
pay to Seller in cash at the Closing, and Seller shall accept from Buyer, Three
Million One Hundred Thousand and No/100 Dollars ($3,100,000.00) subject to
-5-
<PAGE>
adjustment pursuant to Section 1.3.A. (the price as so determined, the "Purchase
Price").
Section 1.3 Cash Adjustments.
----------------
A. If during the period from October 1, 1994 through December 31, 1994,
the cash expenditures of Seller exceed Seller's cash receipts, then the amount
of such deficit cash shall be added to the purchase price and be paid by Buyer
in cash at the Closing.
B. During the period between the Effective Date (as hereinafter defined)
and the Closing Date (the "Interim Period"), Seller will operate Seller's
Business for the benefit of Buyer. During the Interim Period, Seller's cash
receipts will be collected for the benefit of Buyer and Seller's cash
disbursements in the ordinary course of business will be chargeable against
Buyer. To the extent Seller's cash receipts during the Interim Period exceed
Seller's cash disbursements (the "Excess Cash"), Seller shall pay the amount of
the Excess Cash to Buyer in cash at the Closing. To the extent Seller's cash
disbursements in the ordinary course of business during the Interim Period
exceed Seller's cash receipts ("Cash Deficit"), then Buyer shall pay the amount
of the Cash Deficit to Seller in cash at the Closing.
Section 1.4 Allocation. Seller and Buyer agree upon the allocation of the
----------
total purchase price for the Transferred Assets (including the Purchase Price
and the Assumed Liabilities) as set forth on Exhibit 1.4 attached hereto and
made a part hereof (the "Allocation"). Buffton and Buyer each agree to timely
file, or cause to be filed, Form 8594 with the Internal Revenue Service
-6-
<PAGE>
for the taxable year that includes the date of purchase of the Transferred
Assets hereunder in accordance with the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder; and to report and allocate the Purchase Price on Form 8594 and on
any tax returns (as hereinafter defined) consistent with the Allocation.
Section 1.5 Assets Not Transferred. Nothing contained in this Agreement,
----------------------
except as otherwise specifically provided for herein, shall operate as a
Transfer to Buyer of any of the assets and rights listed or described on Exhibit
1.5 attached hereto and made a part hereof ("Excluded Assets"):
Section 1.6 Buyer's Assumption of Certain Liabilities and Obligations.
---------------------------------------------------------
A. From and after the Effective Date Buyer shall assume (i) all oral and
written contracts, obligations and commitments of Seller entered into by Seller
and in existence on the Effective Date, including without limitation the
Contracts listed on Exhibit 1.6 hereof (the "Contract Liabilities"), excluding
only the Retained Contracts, as hereinafter defined; and (ii) all trade payables
and accrued liabilities of Seller in existence on the Effective Date, including
without limitation the trade payables and accrued liabilities listed on Exhibit
1.6 (the "Trade Liabilities"). The Contract Liabilities and Trade Liabilities
are hereinafter referred to collectively as the "Assumed Liabilities."
B. In the event the Trade Liabilities specifically listed on Exhibit 1.6
hereof aggregate less than $800,000.00, then
-7-
<PAGE>
Buyer agrees to pay to Seller at the Closing in cash, an amount equal to the
difference between $800,000.00 and the actual aggregate amount of the Trade
Liabilities specifically listed on Exhibit 1.6 hereof. In the event the Trade
Liabilities specifically listed on Exhibit 1.6 hereof exceed $800,000.00, Seller
shall pay to Buyer at the Closing in cash an amount equal to the difference
between the aggregate amount of the Trade Liabilities specifically listed on
Exhibit 1.6 hereof and $800,000.00. Seller shall have no liability to Buyer
with respect to any Trade Liabilities assumed by Buyer not specifically listed
on Exhibit 1.6 hereof and Buyer shall pay and be responsible for same.
C. With respect to the Trade Liabilities being assumed by Buyer, Buyer
shall pay the Trade Liabilities when due in accordance with their respective
terms. A schedule of all Trade Liabilities and the payment due date for each is
attached hereto as Exhibit 1.6. Buyer agrees to keep separate reports with
respect to the payment and remaining balance of the Trade Liabilities listed on
Exhibit 1.6 and to deliver to Buffton and Seller copies of Buyer's reports,
until all Trade Liabilities have been paid. Should Buyer fail to pay any of
the Trade Liabilities, the Buffton Companies shall be fully indemnified against
any losses resulting therefrom, under Section 3.8(ii) hereof; and Buyer hereby
agrees to pay and be responsible for all losses, costs and expenses (including
attorneys' fees) incurred by any creditor owning a Trade Liability in connection
with collection efforts with respect to a
-8-
<PAGE>
Trade Liability. Moreover, in the event any Trade Liability listed on Exhibit
1.6 has not been paid by Buyer in full or in part for any reason whatsoever
(including without limitation by reason of negotiated discount or reduction,
issuance of credit memo or lack of diligence on the part of the creditor)
within 120 days from the Effective Date, then Buyer shall assign such unpaid
liability to Seller and pay to Seller the full face amount of such unpaid
liability immediately upon the expiration of such 120 day period.
D. Buyer is not assuming the obligations of Seller under the contracts,
instruments and agreements listed on Exhibit 1.6(D) attached hereto and made a
part hereof (collectively the "Retained Contracts"). Buyer is not assuming any
liability for federal and state income taxes of Seller either prior to or after
the Closing. Buyer is not assuming any liabilities of Seller under either
Buffton's 401(k) Plan or under Buffton's Employee Stock Purchase Plan.
Section 1.7 Closing Date and Effective Date. The purchase and sale of the
-------------------------------
Transferred Assets under this Agreement shall take place on January 13, 1995
(the "Closing Date") at 10:00 a.m. at the offices of McLean & Sanders, 100 Main
Street, Fort Worth, Texas 76102, and shall be deemed effective as of 11:59 p.m.
on December 31, 1994 (the "Effective Date"). The actual closing shall be
referred to as the "Closing."
-9-
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties of Buffton and Seller. Each of
----------------------------------------------------
Buffton and Seller (referred to collectively as the "Buffton Companies"),
jointly and severally represent and warrant to Buyer as follows:
A. Due Organization and Good Standing. Each of the Buffton Companies are
----------------------------------
(a) corporations duly organized, validly existing, and in good standing under
the laws of their respective states of incorporation, (b) are qualified to do
business as a foreign corporation and in good standing in each jurisdiction in
which the nature and extent of its business and property makes such
qualification necessary, and (c) have the requisite corporate power and
authority to carry on their businesses as presently conducted and to own,
operate and lease the properties and assets now owned and operated by each of
them.
B. Authority. The execution of this Agreement by each of the Buffton
---------
Companies and the delivery hereof to Buyer, and the performance by each of the
Buffton Companies of their respective obligations hereunder, including without
limitation the transfers, conveyances, assignments, deliveries and other
agreements to be executed pursuant hereto or in connection herewith or
contemplated hereby are within each of the Buffton Companies' powers, have been
duly authorized by all necessary corporate action of each such entity (including
authorization of the Board of Directors and where necessary the shareholder(s)),
have received all necessary
-10-
<PAGE>
governmental approvals and do not and will not contravene or conflict with any
provision of law or of the charter or bylaws of any of the Buffton Companies,
and each of the Buffton Companies have full right, power, and authority to
execute this Agreement and to consummate the transactions contemplated herein.
No other corporate proceedings and no further corporate action are necessary
on the part of any of the Buffton Companies to make this Agreement or any
other agreement or instrument to be executed pursuant hereto or in connection
herewith authorized, legal, valid and binding upon each of the Buffton
Companies in accordance with its terms.
C. Validity and Binding Nature. This Agreement is, and the documents and
---------------------------
agreements executed and delivered by each of the Buffton Companies pursuant to
the terms hereof, when duly executed and delivered by all parties whose
execution and delivery thereof is required, will be legal, valid, and binding
obligations of each of the Buffton Companies enforceable against each of the
Buffton Companies in accordance with and to the extent of their respective
terms, except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
general application affecting the rights of creditors generally or by general
principles of equity.
D. Title. Seller has, and following the Closing, Buyer will have, good
-----
and marketable title to the Transferred Assets, free and clear of any title
defects or objections, mortgages, pledges, liens, claims, or encumbrances of any
nature whatsoever.
-11-
<PAGE>
E. No Default. (a) Except as set forth in Exhibit 2.1(E)(a) hereof, each
----------
of the Buffton Companies (i) is not in default under, or in violation of any
provision of, its charter or bylaws, or (ii) has not received any notice that it
is in violation of any law, ordinance, rule, regulation or directive of any
federal, state, county, city or other government, governmental department,
bureau, agency or other body, pertaining or relating to its business, Seller's
Business or the Transferred Assets or the operation thereof.
(b) Except as set forth in Exhibit 2.1(E)(b), neither the execution and
delivery of this Agreement or any other agreement or instrument to be executed
and delivered pursuant hereto or in connection herewith by any of the Buffton
Companies nor the fulfillment of nor the compliance with the terms and
provisions hereof or thereof, nor the consummation of the transactions
contemplated hereby or thereby, will (i) result in a breach of any terms,
conditions or provisions of, constitute a default or an event which, with notice
or lapse of time or both, would constitute a default under, or result in a
violation or termination of, or conflict with or give any third party the right
to accelerate the performance provided by the terms of (1) any contract,
agreement, indenture, mortgage, lease, license or other agreement or instrument
to which any of the Buffton Companies is a party or by which any of them or any
of their assets or properties are bound, (2) any provision of any law, rule,
regulation, order, judgment or decree to which any of the Buffton Companies are
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subject or by which any of them or their respective assets or properties are
bound or (3) the charters or bylaws of any of the Buffton Companies or (ii)
result in the creation or imposition of any lien, charge, restriction, security
interest or encumbrance of any nature whatsoever upon, or give to others any
interest or rights, including rights of termination or cancellation, in, or with
respect to, any of the Transferred Assets.
F. Third-Party and Governmental Consents. Except as specifically
-------------------------------------
described in Exhibit 2.1(F) hereto no consent, authorization, approval or order,
license, certificate or permit from or registration, declaration or filing with,
any governmental authority or any court or other tribunal or any other person,
firm or entity, is required to be obtained or made by or with respect to any of
the Buffton Companies in connection with the execution, delivery and performance
of this Agreement or of any other agreement to be executed and delivered by any
of the Buffton Companies pursuant hereto or in connection herewith or the
consummation of the transactions contemplated hereby or thereby, including any
federal, state or local environmental permits or licenses nor is any such
consent, authorization, approval, order, license, certificate or permit required
under any contract, indenture, mortgage, lease, license, or other agreement or
instrument to which any of the Buffton Companies is a party or by which any of
the Buffton Companies or any of their assets or properties are subject or bound.
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<PAGE>
G. Litigation. Except as set forth in Exhibit 2.1(G) hereto, there are no
----------
claims, actions, suits, proceedings or governmental investigations pending or,
threatened against or affecting Seller's Business or the Transferred Assets, at
law or in equity, before or by any federal, state, municipal or other court,
governmental department, commission, board, agency or instrumentality, and none
of the Buffton Companies after due inquiry, know of any factors or circumstances
which might give rise to any of the foregoing. Except as set forth in Exhibit
2.1(G) hereto, there is no order, writ, injunction or decree of any court or any
federal, state, municipal or local agency or instrumentality affecting the
Seller's Business or the Transferred Assets, and none of the Buffton Companies
are in default with respect to any order of any federal, state, municipal or
other court, department, commission, board, agency or instrumentality.
H. Equipment. The particular items of the Equipment have been owned by
---------
Seller and in operation for varying lengths of time and constitute used
equipment. Accordingly, the Equipment is being sold, AS IS, WHERE IS.
I. Contracts. Seller has supplied Buyer with a true and correct copy of
---------
each Contract material to the conduct of the Seller's Business or the operation
or use of the Transferred Assets, together with any amendments, waivers or other
charges thereto made prior to the date hereof. Other than as disclosed in
Exhibit 2.1(I) attached hereto, there are no material written or oral contracts,
agreements, commitments or understandings relating
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to the Seller's Business or to which Seller is a party, by which Seller is
directly or indirectly bound, or to which any of the Transferred Assets are or
may be subject, except for agreements relating to Excluded Assets and/or the
Retained Contracts.
J. Sales Representatives. To the knowledge of the Buffton Companies after
---------------------
due inquiry, attached hereto as Exhibit 2.1(P) and made a part hereof is a true
and complete list (including names and addresses) of each written sales or
manufacturer's representative or distributor who represents Seller in connection
with the sale of Products.
K. No Broker. None of the Buffton Companies has dealt or negotiated with
---------
any broker in connection with this transaction
L. Proprietary Rights. To the best of Seller's knowledge and belief, set
------------------
forth in Exhibit 2.1(L) annexed hereto is a list of all Proprietary Rights of
Seller.
M. Taxes. All tax reports and return required to be filed or are under
-----
valid extension with respect to Seller's business and operations (except for
returns not yet due) have been filed. All taxes and other charges required to
be paid with respect to Seller's business and operations to any federal, state,
local or foreign taxing authority (including, without limitation, those due in
respect of properties, income, franchises, licenses, sales or payrolls) for all
periods to and including December 31, 1994, have been or will be duly paid by
Seller except for those taxes being assumed by Buyer pursuant to Section 1.6
hereof; and
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there are no tax liens upon any property or assets of Seller except liens for
current taxes net yet due.
N. Employee Benefit Plans. Except as set forth in Exhibit 2.1(N), Seller
----------------------
does not have any bonus, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, or any other employee benefit plan,
arrangement or practice, whether written or unwritten, including, without
limitation, any "employee pension benefit plan" or "employee welfare benefit
plan" within the meaning of the Employment Retirement Income Security Act of
1974, as amended ("ERISA") and the regulations thereunder ("Benefit Plans").
All contributions required to be made to each Benefit Plan under the terms of
such Benefit Plan, ERISA, or other applicable law have been timely made. Each
Benefit Plan is in material compliance, and has been in material compliance in
the past, in form and operation, with the applicable provisions of ERISA, the
Internal Revenue Code of 1986, as amended, and other applicable law. If any
Benefit Plan were to be terminated on the day prior to the date of the Closing
Date, no liability under ERISA would be incurred by Buyer and all benefits
accrued to such day prior to the Closing Date (whether or not vested) would be
fully funded in accordance with the regulations governing the Benefit Plan. No
Benefit Plan has any liability of any nature, accrued or contingent, including
without limitation liabilities for federal, state or local taxes, other than for
routine payments to be made in due course to participants and beneficiaries.
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O. Representations and Warranties True; No Misleading Statements. All of
-------------------------------------------------------------
the representations and warranties set forth in this Section 2.1 shall be true
and correct as of the Closing Date. The representations and warranties made
herein in connection with the sale of the Transferred Assets do not contain any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. Provided, however, Buyer
acknowledges and agrees that it shall not constitute a breach of any warranty or
inaccuracy of any representation of the Buffton Companies hereunder if (i) any
action taken or not taken by Russell J. Sarno as President of Seller or by any
other employee of Seller prior to the Closing Date renders or causes any
representation or warranty to be or to become inaccurate; and/or (ii) to the
extent Buyer or any of its officers, directors, shareholders or employees have
knowledge or should have knowledge of facts or circumstances which render or
cause any representation or warranty to be or to become inaccurate.
Section 2.2 Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to the Buffton Companies as follows:
A. Organization and Standing. Buyer is a corporation duly organized,
-------------------------
validly existing, and in good standing under the laws of the state of
California, and is qualified to do business as a foreign corporation in each
jurisdiction in which a failure to qualify would have a material adverse effect
on Seller.
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<PAGE>
B. Authority. The execution of this Agreement by Buyer and the delivery
---------
hereof to the Buffton Companies, and the consummation by Buyer of the
transactions contemplated herein, are within Buyer's powers, have been duly
authorized by all necessary corporate action of Buyer (including authorization
of the Boards of Directors), have received all necessary governmental approvals
and do not and will not contravene or conflict with any provision of law or of
the charter or bylaws of Buyer, and Buyer has full right, power, and authority
to execute this Agreement and to consummate the transactions contemplated
hereby.
C. Validity and Binding Nature. This Agreement is, and the documents and
---------------------------
agreements executed and delivered by Buyer pursuant to the terms hereof, when
duly executed and delivered by all parties whose execution and delivery thereof
is required, will be legal, valid, and binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms, except to the extent
that enforceability may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or by general principles of equity.
D. No Restrictions Against Purchase of the Transferred Assets. Neither
----------------------------------------------------------
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in a breach of any of the terms or
provisions of, constitute a default or an event which, with notice or lapse of
time or both, would constitute a default under, the charter or bylaws of Buyer
or
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under any agreement or instrument to which Buyer is a party, or by which
Buyer may be bound. Except as listed or described on Exhibit 2.2(D), no
consent, approval, order or authorization of, or registration, declaration or
filing with any Governmental Entity is required to be obtained or made by or
with respect to Buyer in connection with the execution and delivery of this
Agreement by Buyer or the consummation by Buyer of the transactions contemplated
hereby.
E. No Broker. Buyer has not dealt or negotiated with any broker in
---------
connection with this transaction.
F. No Reliance. Since April 1, 1984, certain of Buyer's shareholders,
-----------
officers and directors have served as the principal executive officers of
Seller, and in such capacities had total control over the operations of Seller.
Accordingly, Buyer acknowledges and agrees that it is relying upon its own
knowledge and investigation with respect to any and all aspects of the
operations, assets, liabilities and obligations of Seller; and further
acknowledges that no representations or warranties are being made by Seller
except for those specifically set forth in Section 2.1 hereof.
G. Representations and Warranties True; No Misleading Statements. All the
-------------------------------------------------------------
representations and warranties set forth in Section 2.2 are true and correct as
of the Closing Date. The representations and warranties made herein do not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements herein or therein,
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in light of the circumstances under which they were made, not misleading.
Section 2.3 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the parties set forth in this Agreement shall
be true as of the Closing Date and any cause of action, whenever accruing,
arising therefrom shall survive the Closing Date and the dissolution or
liquidation of the Buffton Companies or of the Buyer, and shall terminate upon
the expiration of a period of two years from the Closing Date; provided,
however, that all covenants, representations, warranties and agreements made by
the parties hereto with respect to tax liability, employee claims or benefit
plans or litigation shall remain effective until the expiration of the
applicable statute of limitation periods with respect to any such claims.
ARTICLE III
COVENANTS AND OTHER AGREEMENTS
------------------------------
Section 3.1 Access and Information. Seller has given to Buyer and to
----------------------
Buyer's counsel, accountants and representatives full and free access during
normal business hours throughout the period prior to the Closing, to all of the
employees, facilities, Transferred Assets and the books, contracts, commitments
and records relating to Seller so as to afford Buyer full opportunity to make
such review, examination and investigation of the Seller's Business as Buyer may
desire to make, including without limitation an environmental evaluation of the
Seller's Business and the Seller's Premises, and has furnished to Buyer during
such period
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<PAGE>
all information concerning Seller as Buyer has reasonably requested.
Buyer has been permitted to make extracts from or to make copies of such books
and records as they deemed reasonably necessary in connection therewith. Seller
promptly furnished or caused to be furnished to Buyer such financial and
operating data and other information as Buyer reasonably requested.
Section 3.2 Taxes and Fees. (a) All applicable sales, transfer,
--------------
documentary, use, filing, and other taxes and fees including all recording or
filing fees, notarized fees and similar costs that may be due and payable as a
result of the conveyance, assignment, transfer, or delivery of the Transferred
Assets shall be borne by Buyer.
Section 3.3 Post Closing Assistance and Agreements.
--------------------------------------
A. All of Seller's books and records pertaining to the Seller's Business
and the Transferred Assets shall be delivered to Buyer on the Closing Date.
Following the Closing, Buyer agrees, upon reasonable notice to Buyer, to grant
to Seller and its representatives access to the financial, accounting personnel
and production books and records of Seller relating to operations prior to the
Closing, during normal hours for reasonable periods of time, to enable the
Buffton Companies to prepare defenses, discovery, responses, reports, documents
and/or returns required of the Buffton Companies by any federal, state or local
taxing authority or any other governmental agency, including without limitation,
the Internal Revenue Service or the Securities and Exchange Commission or in
connection with any administrative, legal or judicial
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<PAGE>
proceeding. Further, Buyer agrees to assist Seller in the preparation of any
such items upon the request of Seller.
B. Except as otherwise provided herein, Buyer agrees to maintain and
preserve the books and records described in Section 3.3.A. following the Closing
for a period of five (5) years from the Closing Date. Should Buyer, during or
after such five (5) year period, desire to dispose of any such records, Buyer
agrees to first notify Buffton of its intention to dispose of the same and
Buffton shall have the opportunity to take possession of such books and records
within a reasonable period of time as stated in Buyer's notice.
Section 3.4 Employment Arrangements.
-----------------------
A. With respect to employees that are not subject to an employment
contract, Buyer shall offer employment to each of the employees of Seller in
substantially the same capacity, at the same annual salary or compensation
arrangement and on terms and conditions of employment that are substantially
comparable in the aggregate to those in which an employee of Buyer would be
entitled or, at the sole discretion of Buyer, to which an employee of Seller
would be entitled on the date hereof; provided however, that nothing in this
paragraph (a) shall (i) prohibit Buyer from terminating any such employee after
the Closing or (ii) change the status of any "at-will" employment relationship.
With respect to employees that are subject to an employment contract, Buyer
shall be bound by the terms of the employment contract, if assigned and
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<PAGE>
assumed herein, and upon expiration of said employment contract, employee is
subject to the provisions contained herein.
B. Seller and Buyer agree that, pursuant to the "Alternative Procedure"
provided in Section 5 of Revenue Procedure 84-77, 1984-2 Cumulative Bulletin
753, with respect to filing and furnishing the Internal Revenue Service Forms W-
2, W-3, and 941, (i) Seller and Buyer shall report, on a "predecessor-successor"
basis as set forth therein, (ii) Seller shall be relieved from furnishing Forms
W-2 to the Transferred Employees and (iii) Buyer shall assume the obligations
of Seller to furnish such forms to such employees for the full 1994 and 1995
calendar years.
C. The term "Transferred Employees" shall mean the employees who accept
Buyer's offer of employment as described in paragraph (A) above.
Section 3.5 Product Warranty and Product Liability Claims. Buyer shall
---------------------------------------------
assume responsibility for remedying Product Warranty Claims and for defending
and paying all Product Liability Claims arising, accruing, or asserted prior to
and following the Closing Date with respect to products produced or sold by
Seller prior to and after the Closing Date, regardless of the availability to
Buyer of insurance coverage with respect to any such claim and regardless of
whether such claims are known or unknown at this time. Buyer agrees to maintain
general and product liability insurance in effect for at least three years
following the Closing of at least $1,000,000.00 primary coverage, with an
umbrella of $9,000,000.00, and to always name Buffton and Seller as additional
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insureds under such insurance policies. Initially, the insurance coverage shall
be that described on Exhibit 3.5 hereof. Buffton agrees to pay the sum of
$30,000.00 to Buyer to enable Buyer to purchase the retroactive coverage to
October 1, 1990 under the general liability policy described on Exhibit 3.5.
Section 3.6 Bulk Sales Laws.
---------------
A. Buyer hereby waives compliance with any and all bulk sales laws
applicable to the sale of the Transferred Assets.
B. The Buffton Companies agree to and do hereby indemnify, save and hold
harmless Buyer from and against any losses, damages or liabilities (including
court costs and reasonable attorneys' fees) asserted against or incurred by
Buyer as a result of the Buffton Companies' failure to pay any creditor of
Seller whose obligation is not an Assumed Liability.
Section 3.7 The Buffton Companies' Indemnity. The Buffton Companies,
--------------------------------
jointly and severally, hereby agree to pay on behalf of, indemnify fully, hold
harmless and defend Buyer, its officers, directors, shareholders, successors and
assigns (collectively the "indemnified parties"), from and against all demands,
claims, actions or causes of action, assessments, losses, damages, costs and
other liabilities (including without limitation reasonable attorneys' and
accountants' fees and expenses, court costs and all other out-of-pocket
expenses) (collectively "Losses") asserted against or incurred by the
indemnified parties, directly or indirectly, arising out of or in connection
with any of the following:
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(i) except to the extent such warranty or representation has expired
or such claim is barred by limitations pursuant to Section 2.3, or negated by
Section 2.1(O), the breach of any warranty or the inaccuracy of any
representation of the Buffton Companies contained in Section 2.1 hereof;
(ii) any breach or failure by the Buffton Companies to perform any of
the covenants, agreements or obligations under this Agreement or any other
agreement or instrument executed and delivered by or on behalf of the Buffton
Companies in connection herewith;
(iii) the assertion by any third party against Buyer of a claim
relating to a Retained Contract;
(iv) any federal or state income tax for the periods through December
31, 1994; and
(v) any claim of any employee of Seller or any other person, arising
out of or relating to the Benefit Plans described in items 1 and 2 in
Exhibit 2.1(N) or the operation or termination of such Benefit Plans.
Provided, however, the Buffton Companies' liability under Section 3.7 (i)
shall be limited to only those Losses incurred by the indemnified parties, which
are over and above Losses which in the aggregate equal Ten Thousand and No/100
Dollars ($10,000.00). In addition, the Buffton Companies will indemnify and
hold harmless the indemnified parties from, for and against any costs and
expenses (including attorneys' fees) which it may suffer or sustain seeking to
enforce the indemnified obligation of the Buffton Companies hereunder).
Buyer agrees to promptly (no more than 30 days after receipt of such claim)
notify the Buffton Companies of all facts and circumstances with respect to any
third party claim which may give rise to a claim for indemnification hereunder.
Such notice will describe such claim in reasonable detail. The Buffton
Companies shall be provided an opportunity to deal directly with
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<PAGE>
such third party and, at its option, to settle or control the defense of the
litigation of such claim, including but not limited to the appointment of
counsel reasonably acceptable to Buyer, provided that the Buffton Companies
proceed in good faith, expeditiously and diligently. Buyer agrees to cooperate
with the Buffton Companies and, upon the request of the Buffton Companies,
assist the Buffton Companies, at the Buffton Companies' expense, in the conduct
of such defense.
Section 3.8 Buyer's Indemnity. Buyer hereby agrees to pay on behalf of,
-----------------
indemnify fully, hold harmless and defend the Buffton Companies, their officers,
directors, shareholders, successors and assigns (collectively the "indemnified
parties"), from and against all demands, claims, actions or causes of action,
assessments, and Losses (including without limitation reasonable attorneys' and
accountants' fees and expenses, court costs and all other out-of-pocket
expenses) asserted against or incurred by the indemnified parties, directly or
indirectly, arising out of or in connection with any of the following:
(i) except to the extent such warranty or representation has expired
or such claim is barred by limitations pursuant to Section 2.3, or otherwise,
the breach of any warranty or the inaccuracy of any representation of Buyer
contained in or made pursuant to Section 2.2 hereof;
(ii) any breach or failure by Buyer to perform any of the covenants,
agreements or obligations contained in this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Buyer in connection
herewith, including without limitation the payment and/or performance by Buyer
of the Assumed Liabilities; and
(iii) the assertion by any third party against the Buffton Companies of
any claim, liability or obligation relating to or
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<PAGE>
arising out of the operation by Buyer of the Seller's Business or the
Transferred Assets accrued after the Closing Date.
Provided, however, Buyer's liability under Section 3.8(i) shall be limited
to only those Losses incurred by the indemnified parties, which are over and
above Losses which in the aggregate exceed the sum of Ten Thousand and No/100
Dollars ($10,000.00). In addition, Buyer will indemnify and hold harmless the
indemnified parties from, for and against any costs and expenses (including
attorneys' fees), which it may suffer or sustain in seeking to enforce the
indemnified obligations of Buyer hereunder.
The Buffton Companies agree to promptly (no more than 30 days after receipt
of such claims) notify Buyer of all facts and circumstances with respect to any
third party claim which may give rise to a claim for indemnification hereunder.
Such notice will describe such claim in reasonable detail. Buyer shall be
provided an opportunity to deal directly with such third party and, at their
option, to settle or control the defense of the litigation of such claim,
including but not limited to the appointment of counsel, reasonably acceptable
to the Buffton Companies, provided, that Buyer proceed in good faith,
expeditiously and diligently. The Buffton Companies agree to cooperate with
Buyer and, upon the request of Buyer, assist Buyer, at Buyer's expense, in the
conduct of such defense.
Section 3.9 Environmental Matters.
---------------------
A. Definitions. For purposes of this section, the terms set forth below
-----------
shall have the following meanings:
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"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order or directive (conditional or
otherwise), judgment, lien or other assessment by any governmental authority or
any person for personal injury (including sickness, disease or death), tangible
or intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties, or restrictions, resulting from or based upon (i) the existence, or
the continuation of the existence, of a Release (including, without limitation,
sudden or non-sudden, accidental or non-accidental leaks or spills), of, or
exposure to, or Release of any Hazardous Material, odor or audible noise in,
into or onto the environment, including, without limitation, the air,
groundwater, surface water or any surface or subsurface strata, at, in, by,
from, or related to the Seller's Premises, (ii) the transportation, storage,
treatment or disposal of any Hazardous Material in connection with the
operation of the Seller's Premises or (iii) the violation, or alleged violation,
of any applicable Environmental Laws or any Permits.
"Environmental Laws" shall mean all applicable federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment relating
to the regulation and protection of human health,
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safety, the environment and natural resources (including, without limitation,
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation). As used herein
Environmental Laws shall include, but not be limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. (S) 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation
-- ---
Act, as amended (49 U.S.C. (S) 1801 et seq.); the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act, as amended (7 U.S.C. (S) 136 et seq.); the
-- ---
Resource Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.)
-- ---
("RCRA"); the Toxic Substances Control Act, as amended (15 U.S.C. (S) 2601
et seq.); the Clean Air Act, as amended (42 U.S.C. (S) 740 et seq.); the
- - - -- --- -- ---
Federal Water Pollution Control Act, as amended (33 U.S.C. (S) 1251 et seq.);
-- ---
and the Safe Drinking Water Act, as amended (42 U.S.C. 300f et seq.), and any
-- ---
and all regulations promulgated thereunder, but excluding the Occupational
Safety and Health Act, as amended (29 U.S.C. (S) 651 et seq.) ("OSHA"); and all
-- ---
applicable analogous state and local counterparts, equivalents, or similar
statutes or ordinances, rules or regulations, including, without limitation,
the California Health & Safety Code (S) 1 et seq, as amended, and any transfer
-- ---
of ownership notification or approval statutes.
"Environmental Permit" shall mean any permit, approval, authorization,
license, variance, or permission required by a governmental authority under any
applicable Environmental Laws.
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"Hazardous Material" shall mean, collectively, any (a) petroleum or
petroleum products, or derivative or fraction thereof, flammable material,
explosives, radioactive materials (including radon gas, other than that which
is naturally occurring), asbestos in any form that is or could become friable,
urea formaldehyde foam insulation ("UFI"), and polychlorinated biphenyls
("PCBs"), and (b) any chemical, material or substance, (i) which is now or
hereafter becomes defined as or included in the definition of "hazardous
substances," hazardous wasters," "hazardous materials," "toxic substances,"
"restricted hazardous wastes," "contaminants," "pollutants" or words of similar
import under any applicable Environmental Laws of (ii) the emission, discharge,
release, storage, transport, disposal, management, handling or use of which is
required under or subject to any applicable Environmental Laws.
"Release" shall mean any release, spill, emission, abandonment of any
container or receptacle containing any Hazardous Material, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the environment, or into or out of any property owned, leased or used by Seller,
including the movement or migration, gradual or otherwise, of any Hazardous
Material through or in the air, soil, surface water, groundwater, or land
surface or subsurface strata or formation.
"Remedial Action" shall mean all actions required under Environmental Laws
and all reasonable voluntary efforts to (1) clean up, remove, treat, monitor or
in any other way address the Release of any Hazardous Material in the
environment; (2) prevent
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the further Release or threat of further Release, or minimize the further
Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health or welfare of the environment; or (3) perform
pre-remedial studies and investigations and post-remedial monitoring and care
with respect to any Release or any threatened Release.
"Seller's Premises" shall mean the facility located at 3210 Winona Avenue,
Burbank, California and the Leased Premises covered by the Lease (as defined in
Section 3.10 hereof) at 1251 N.E. 48th Street, Pompano Beach, Florida.
B. Indemnification of Seller. Buyer hereby agrees to pay on behalf of,
-------------------------
indemnify fully, hold harmless and defend (with counsel acceptable to Buyer)
Seller, its officers, directors, shareholders, affiliates, successors and
assigns (collectively "Seller's Indemnified Parties"), from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
costs and other liabilities (including without limitation reasonable attorneys'
and experts' fees and expenses, court costs and all other out-of-pocket
expenses) asserted against or incurred by Seller's Indemnified Parties, directly
or indirectly, arising out of or related to any Environmental Claim or Remedial
Action which is attributable to the operations on Seller's Premises at any time
prior to and/or subsequent to the Closing Date.
Section 3.10 Payment of Lease Obligations. Although Seller is not
----------------------------
assigning to Buyer that certain Lease Agreement dated February 26, 1987, but
effective December 29, 1986 (the
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<PAGE>
"Lease") covering the property located at 1251 N.E. 48th Street, Pompano Beach
Florida, Buyer and Sarno, jointly and severally, agree to pay on behalf of
Seller all of Seller's and Buffton's obligations under the Lease, and Buyer
and Sarno, jointly and severally, hereby agree to indemnify fully, hold harmless
and defend (with counsel acceptable to Buyer) Seller and Buffton, their
officers, directors, shareholders, affiliates, successors and assigns
(collectively "Seller's Indemnified Parties"), from and against all demands,
claims, actions or causes of action, assessments, losses, damages, costs and
other liabilities (including without limitation reasonable attorneys' fees and
experts' fees and expenses, court costs and all other out-of-pocket expenses)
asserted against or incurred by Seller's Indemnified Parties, directly or
indirectly, arising out of or related to the Lease. In this regard, Buyer and
Sarno, jointly and severally, agree to pay to Seller on a monthly basis an
amount equal to Seller's obligation as tenant under the Lease. Currently, such
obligation amounts to $35,320.00 per month. Accordingly, Buyer and Sarno,
jointly and severally, agree to pay to Seller twenty-three (23) monthly
payments of Thirty-Five Thousand Three Hundred Twenty and No/100 Dollars
($35,320.00) each (subject to adjustment as hereinafter set forth), payable on
the 1st day of each month, beginning February 1, 1995 and ending on December 1,
1996. Seller and Buffton agree to use such payments to pay the obligations of
Tenant under the Lease with such obligations to include, without limitation,
rent, taxes and insurance. Seller and Buffton further
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agree to remit to Buyer on a monthly basis any sub-tenant rental income
received by Seller for so long as Buyer and Sarno are making the monthly
payments described above. Seller, Buffton, Buyer and Sarno agree that if for
any reason Seller's monthly obligation under the Lease changes (for example,
by virtue of an increase or decrease in taxes), Buyer's and Sarno's monthly
payment shall be adjusted as appropriate. Further, if Seller's and Buffton's
obligations and/or liabilities under the Lease terminate prior to December 29,
1996, then Buyer's and Sarno's obligations to make the monthly payments
hereunder shall likewise terminate (except for any past due payment).
Section 3.11 Attorneys' Opinions.
-------------------
A. At the Closing, the Buffton Companies shall receive the opinion of
Friedman & Phillips, counsel for Buyer, dated as of the Closing Date, which
opinion of counsel shall be in the form of Exhibit 3.11 (A).
B. At the Closing, Buyer shall receive the opinion of McLean & Sanders,
counsel for the Buffton Companies, dated as of the closing Date, which opinion
of counsel shall be in the form of Exhibit 3.11 (B).
Section 3.12 Further Assurance. Each party will execute and deliver, or
-----------------
cause to be executed and delivered, from and after the date hereof, such
additional or further transfers, assignments, endorsements, and other
instruments as any other party reasonably may request for the purpose of
carrying out this Agreement.
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<PAGE>
Section 3.13 Closing Procedure. At the Closing, Buffton, Seller and
-----------------
Buyer, as the case may be, shall execute and deliver to the appropriate party
the instruments and/or take the action described below:
A. Buffton shall:
a. Execute and deliver the Agreement of Purchase and Sale (the
"Agreement");
b. Deliver Certificates of Corporate Resolutions of the Board
of Directors of Buffton authorizing the transaction contemplated
by the Agreement ; and
c. Deliver the Consents described in Exhibit 3.13(A)(c) to the
Agreement.
B. Seller shall:
a. Execute and deliver the Agreement;
b. Execute and deliver a Bill of Sale transferring to Buyer the
Transferred Assets owned by the Seller, which Bill of Sale shall
be in a form and content satisfactory to Seller and Buyer and will
deliver any other transfer documents necessary to transfer title
to the Transferred Assets to Buyer, including, but not limited
to assignment of patents, copyrights and trademarks;
c. Execute and deliver an Assignment and Assumption Agreement
covering the Assumed Liabilities, which Assignment and Assumption
Agreement shall be in form and content satisfactory to Seller and
Buyer; and
d. Deliver certified Corporate Resolutions of its Board of Directors,
and Shareholder, authorizing the transaction contemplated by the
Agreement;
e. Deliver the Consents described in Exhibit 3.13(B)(e) of the
Agreement;
f. Upon payment and receipt of the purchase price, deliver or cause
Congress Financial Corporation and any other secured party to
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deliver Releases and/or Termination Statements releasing all
security interests of Congress Financial Corporation or any
other secured party in the Transferred Assets (excluding
Lessors under Equipment Leases);
g. Deliver a Certificate of Good Standing from its state of
incorporation, dated within thirty days of the Closing Date;
h. Copies of Amendment to Certificate of Incorporation of Seller
changing the name of Seller from Flo Control, Inc.; and
i. Any and all other documents and instruments reasonably requested
by Buyer.
C. Buyer shall:
a. Execute and deliver the Agreement;
b. Execute and deliver the Assignment and Assumption Agreement
covering the Assumed Liabilities, which Assignment and Assumption
Agreement shall be in form and content satisfactory to Buyer and
Seller;
c. Deliver the Purchase Price to Seller in cash or by wire transfer;
d. Deliver certified Corporate Resolutions of the Board of Directors
of Buyer authorizing the transaction contemplated by the
Agreement; and
e. Deliver a Certificate of Good Standing from its state of
incorporation, dated within thirty days of the Closing Date.
D. At the Closing, the Buffton Companies shall cause McLean & Sanders to
deliver the opinion described in Exhibit 3.11(B) hereof.
E. At the Closing, Buyer shall cause Friedman & Phillips to deliver the
opinion described in Exhibit 3.11(A) hereof.
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<PAGE>
F. At the Closing, Sarno shall execute and deliver to Seller the
Agreement.
Section 3.15 Tax Refunds. Seller is retaining all rights to any and
-----------
all tax refunds attributable to periods prior to the Effective Date. Buyer
agrees to deliver to Seller any such tax refunds it might receive.
Section 3.16 Non-Competition Agreement. In order that Buyer shall
-------------------------
enjoy the benefits of the goodwill which the Seller enjoys, and recognizing that
the covenants hereinafter set forth are not severable from such goodwill, the
Buffton Companies agree that:
A. For a period of three (3) years after the Closing Date, the
Buffton Companies shall not directly or indirectly own, become interested in, or
become involved in any manner whatsoever in any business which is similar to or
competitive with any aspect of the business of the Seller conducted prior to the
closing and which conducts business in any county in which the Seller conducted
business prior to the Closing Date.
B. For a period of three (3) years after the Closing, the Buffton
Companies shall not solicit the employment of, either directly or indirectly,
any employee employed by the Seller prior to the Closing.
C. The Buffton Companies agree that they shall not disclose any
trade secrets, customer lists or other confidential information regarding the
business of the Seller to any third parties, unless required to do so by law or
court order.
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<PAGE>
D. The Buffton Companies acknowledge and agree that the remedy at
law for any breach or threatened breach of any of the provisions of this Section
3.16 will be inadequate and, accordingly, the Buffton Companies covenant and
agree that Buyer shall, in addition to any other rights or remedies which Buyer
may have, be entitled to such equitable and injunctive relief as may be
available from any court of competent jurisdiction to the Buyer from any
violation of such provisions.
E. In the event that any of the provisions of this Section 3.16
shall be determined by a court of competent jurisdiction to be in violation of
applicable law for any reason whatsoever, then any such provision or provisions
shall not be deemed to be void, but shall be deemed to be automatically amended
so as to comply with applicable law. In the event any of such provisions of
this Section 3.16 shall be determined by a court of competent jurisdiction to be
wholly or partially invalid, such determination shall not affect the binding
effect of the other provisions of this Section 3.16 or any of the other
provisions of this Agreement.
F. Buyer acknowledges and agrees that it shall not be a breach of
this provision for the Buffton Companies to hold a security interest in Seller's
Secondary Containment Assets (which are being sold contemporaneously herewith)
or to repossess and thereafter take such action as is necessary to operate such
assets.
Section 3.17 Change of Name. Immediately following the Closing,
--------------
Seller shall change its name to any name not containing
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<PAGE>
either the word "Flo" or "Control" or other words similar to or susceptible of
confusion with the words "Flo" or "Control," or any combination or abbreviation
thereof, by appropriate amendment to its certificate of incorporation. As soon
as practicable following the change of Seller's name, Buyer shall change its
name to "Flo Control, Inc." by appropriate amendment to its certificate of
incorporation.
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1 Amendment. This Agreement may not be amended, modified
---------
or altered, except pursuant to an instrument in writing signed by each of the
parties hereto.
Section 4.2 Assignment. No party to this Agreement may assign its
----------
rights or obligations hereunder without first obtaining the written consent of
the other parties hereto; provided, however, that (a) nothing in this Agreement
is intended to limit Buyer's ability to sell or to Transfer any or all of the
Transferred Assets following the Closing Date and (b) Buyer may assign or
delegate any or all of its rights or obligations under this Agreement to any
Affiliate thereof or to any person or entity that acquires all or substantially
all of the assets or voting stock of Buyer. In addition, Buyer may assign all
of its rights hereunder to any lender of Buyer.
Section 4.3 Expenses. The Buffton Companies and Buyer will each
--------
pay their respective expenses, fees and costs incident to the preparation and
execution of this Agreement, and except as
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otherwise expressly provided for herein, each party shall bear its respective
expenses or fees involved in the preparation and delivery of all documents,
reports and opinions required to be delivered by or on behalf of such party
hereunder, whether or not the transactions contemplated hereunder are
consummated, except that Buyer shall bear all filing fees incurred in any
governmental filing required in connection with the transactions contemplated by
this Agreement.
Section 4.4 Entire Agreement. This Agreement contains the entire
----------------
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all previous written or oral agreements,
negotiations, commitments and writings.
Section 4.5 Rights. Nothing in this Agreement shall be construed
------
to give any person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy, or claim under this
Agreement.
Section 4.6 Parties Bound. This Agreement shall be binding upon
-------------
and inure to the benefit of each party hereto, its permitted assigns, and its
successors in interest, and all assigns and successors in interest thereafter.
Section 4.7 Governing Law. This Agreement, including, without
-------------
limitation, the interpretation, construction, validity and enforceability
hereof, shall be governed by the laws (other than the conflict of law rules) of
the State of California.
Section 4.8 Attorneys' Fees. Should any action at law or in equity
---------------
(including any action for declaratory relief) be
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<PAGE>
brought to enforce or interpret the provisions of this Agreement and/or any
other agreement executed or delivered incident hereto, the prevailing party
shall be entitled to recover its attorneys' fees from the other party or
parties, which fees may be set by the Court in the trial of such action or
may be enforced in a separate action brought for that purpose, and which fees
shall be in addition to any other relief which may be awarded.
Section 4.9 Notices. Any notice, consent or other communication
-------
given hereunder shall be in writing including by facsimile and shall be deemed
to have been duly given when delivered either personally or by registered or
certified mail, postage prepaid, or when dispatched by electronic facsimile
transfer (confirmed in writing by mail simultaneously dispatched) or one
business day after having been dispatched by a nationally recognized overnight
courier service to the parties at the following addresses, or such other
addresses as may be specified by notice given in accordance herewith:
THE BUFFTON COMPANIES: Buffton Corporation
226 Bailey Avenue
Suite 101
Fort Worth, Texas 76107
SARNO: Russell J. Sarno
3210 Winona Avenue
Burbank, California 91504
BUYER: F. C. Acquisition, Inc.
3210 Winona Avenue
Burbank, California 91504
Section 4.10 Headings, Exhibits, Exhibits. The heading s of the
----------------------------
various sections of this Agreement are included solely for the convenience of
reference and are not intended to be full or
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<PAGE>
accurate descriptions of the contents hereof. Any reference to Exhibits or
Exhibits shall signify that such Exhibits or Exhibits are incorporated herein
by reference.
Section 4.11 Counterparts. This Agreement may be executed in two or
------------
more original counterparts, each of which may be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 4.12 Agreements Not Assignable.
-------------------------
A. To the extent that any of the Contracts, Leases or Equipment
Leases to be transferred to Buyer pursuant hereto (all of such documents being
referred to as "agreements" for purposes of this Section 4.12 only) are not
assignable without the consent of another party, which consent shall not have
been obtained prior to the Closing Date, this Agreement shall not constitute an
assignment or an attempted assignment of such agreement if such assignment or
attempted assignment would constitute a breach thereof or violation of any law
or regulation.
B. Notwithstanding anything contained in this Agreement to the
contrary, Seller will not be obligated to transfer to Buyer any of its rights
and obligations in and to any of the Contracts referred to in Section 4.12(A)
without first having obtained all consents, approvals and waivers necessary for
such Transfers; provided, however, that Seller shall only be required to obtain
consents, approvals and waivers for those Contracts specified by Buyer prior to
the Closing Date; provided further that Seller will use its best efforts to
obtain such consents, approvals and waivers
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prior to the Closing Date and for a period of three (3) months after the
Closing Date as specified by Buyer.
C. To the extent that the consents, approvals and waivers referred
to in Section 4.12(A) are not obtained by Seller, Seller will use its best
efforts to (i) provide to Buyer the financial and business benefits of any
Contract referred to in Section 4.12(A) and (ii) enforce, at the request of
Buyer, for the account of Buyer, any rights of Seller arising from any such
Contract (including without limitation the right to elect to terminate in
accordance with the terms thereof upon the advice of Buyer).
D. Subject to Section 4.12(A), Buyer will use its best efforts to
perform the Seller's obligations arising under all Contracts referred to in
Section 4.12(A). If Buyer fails to use its best efforts so to perform such
obligations as to any particular Contract, then Seller will have no obligation
to Buyer under Section 4.12(A) with respect to such Contract unless and until
such failure is substantially cured.
Section 4.13 Interpretation. Any pronoun used in this Agreement
--------------
shall be deemed to include singular and plural and masculine, feminine and
neuter gender, as the case may be. Unless the context otherwise requires, (i)
the words "herein," "hereof," and "hereunder" shall be deemed to refer to this
entire Agreement, (ii) all references to Sections, Articles or Exhibits are to
Sections, Articles or Exhibits of or to this Agreement, (iii) each term defined
in this Agreement has the meaning assigned to it, (iv)
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each accounting term not otherwise defined in this Agreement has the meaning
assigned to it in accordance with GAAP, (v) "or" is disjunctive but not
necessarily exclusive, and (vi) the terms "Subsidiary" and "Affiliate" have
the meanings given to those terms in Rule 12b-2 of Regulation 12B under the
Securities Exchange Act of 1934, as amended. All references to "$" or dollar
amounts will be in lawful currency of the United States of America. Currency
exchange rates against the United States Dollar will be the average of the
closing rates as reported in the New York edition of the Wall Street Journal
published on the business day immediately preceding the date hereof and will
apply for all purposes of this Agreement notwithstanding subsequent changes
in such currency exchange rates, except that all computations to be made as
of the Closing Date will be based on such rates as of the close of business on
the Closing Date.
Section 4.14 No Third Party Beneficiaries. Nothing expressed or
----------------------------
implied in this Agreement is intended or will be construed to confer upon or
give any person or entity other than the parties hereto and their respective
affiliates any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as
of the day and year first above written.
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<PAGE>
BUFFTON: BUFFTON CORPORATION
By:_________________________________
Robert H. McLean
Chairman of the Board and/or
President
SELLER: FLO CONTROL, INC.
By:_________________________________
Robert H. McLean
Chairman of the Board
BUYER: F. C. ACQUISITION, INC.
By:_________________________________
SARNO: ____________________________________
Russell J. Sarno
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<PAGE>
EXHIBIT 10.1
AGREEMENT OF PURCHASE AND SALE
------------------------------
by and among
BUFFTON CORPORATION,
FLO CONTROL, INC.
and
F.L.C. PROPERTY ACQUISITION, INC.
<PAGE>
AGREEMENT OF PURCHASE AND SALE
------------------------------
THIS AGREEMENT (this "Agreement") dated the ------ day of January, 1995
by and among BUFFTON CORPORATION, a Delaware corporation ("Buffton"), FLO
CONTROL, INC., a Delaware corporation ("Seller") and F.L.C. PROPERTY ACQUISTION,
INC., a California corporation ("Buyer").
W I T N E S S E T H :
-------------------
WHEREAS, Seller owns an undivided ninety-five percent (95%) joint venture
interest in Florida Realty Joint Venture, a Florida general partnership (the
"Partnership"), and the partnership owns certain real property situated in
Broward County, Pompano Beach, Florida, together with all improvements thereon,
and being more a part hereof (the "Ppropety"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of Seller's right, title and interest in and to the
Partnership.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
pursuant to the terms and subject to the conditions set forth herein, the
parties hereto agree as follows:
-1-
<PAGE>
ARTICLE I
PURCHASE AND SALE
-----------------
Section 1.1 Transfer of Partnership Interest by Seller. On the terms
------------------------------------------
and subject to the conditions hereof, at the Closing (as defined in Section 1.4
hereof), Seller shall sell, convey, transfer, assign and deliver ("Transfer") to
Buyer, and Buyer shall purchase and acquire all right, title and interest of
Seller in and to the Partnership ("Seller's Partnership Interest").
Section 1.2 Purchase Price. In consideration of the Transfer of
--------------
Seller's Partnership Interest and the assumption of all of Seller's obligations
and duties under the Partnership Agreement (as hereinafter defined), Buyer shall
pay to Seller in cash at the Closing One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) in cash.
Section 1.3 Buyer's Assumption of Partnership Agreement. From and
-------------------------------------------
after the Effective Date (as hereinafter defined), Buyer shall assume Seller's
obligations under the Joint Venture Agreement of Florida Realty Joint Venture,
dated November 14, 1986, together with all addenda and amendments thereto (the
"Partnership Agreement") and Seller shall be released from its obligations under
the Partnership Agreement. At the Closing, Seller and Buyer shall execute an
Assignment and Assumption Agreement in form and substance as the Assignment and
Assumption Agreement attached hereto as Exhibit 1.3 and made a part hereof
("Assignment and Assumption Agreement").
-2-
<PAGE>
Section 1.4 Closing Date and Effective Date. The purchase and sale
-------------------------------
of Seller's Partnership Interest under this Agreement shall take place on or
before January 13, 1995 (the "Closing Date") at 9:00 a.m., at the offices of
McLean & Sanders, 100 Main Street, Fort Worth, Texas 76102, and shall be deemed
effective as of 11:59 p.m. on December 31, 1994 (the "Effective Date"). The
actual closing shall be referred to as the "Closing."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties of Seller. Seller
----------------------------------------
represents and warrants to Buyer as follows:
A. Due Organization and Good Standing. Seller is (a) a corporation
----------------------------------
duly organized, validly existing, and in good standing under the laws of its
state of incorporation, (b) is qualified to do business as a foreign corporation
and in good standing in each jurisdiction in which the nature and extent of its
business and property makes such qualification necessary, and (c) has the
requisite corporate power and authority to carry on its business as presently
conducted and to own, operate and lease the properties and assets now owned and
operated by it.
B. Authority. The execution of this Agreement by Seller and the
---------
delivery hereof to Buyer, and the performance by Seller of its respective
obligations hereunder, including without limitation the transfers, conveyances,
assignments, deliveries and other agreements to be executed pursuant hereto or
in connection herewith or contemplated hereby are within Seller's powers, have
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<PAGE>
been duly authorized by all necessary corporate action of such entity (including
authorization of the Board of Directors and where necessary the shareholder(s)),
have received all necessary governmental approvals and do not and will not
contravene or conflict with any provision of law or of the charter or bylaws of
Seller, and Seller has full right, power, and authority to execute this
Agreement and to consummate the transactions contemplated herein. No other
corporate proceedings and no further corporate action are necessary on the part
of Seller to make this Agreement or any other agreement or instrument to be
executed pursuant hereto or in connection herewith authorized, legal, valid and
binding upon Seller in accordance with its terms.
C. Validity and Binding Nature. This Agreement is, and the
---------------------------
documents and agreements executed and delivered by Seller pursuant to the terms
hereof, when duly executed and delivered by all parties whose execution and
delivery thereof is required, will be legal, valid, and binding obligations of
Seller enforceable against Seller in accordance with and to the extent of their
respective terms, except to the extent that enforceability may be limited by
bankruptcy, receivership, moratorium, conservatorship, reorganization or other
laws of general application affecting the rights of creditors generally or by
general principles of equity.
D. Title. Seller has, and following the Closing, Buyer will have,
-----
good and marketable title to Seller's Partnership Interest, free and clear of
any title defects or objections, mortgages, pledges, liens, claims, or
encumbrances of any nature
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<PAGE>
whatsoever. Seller has not granted any option or right of first refusal to any
party to acquire the Partnership Interest.
E. No Default. (a) Except as set forth in Exhibit 2.1(E)(a) hereof,
----------
Seller (i) is not in default under, or in violation of any provision of, its
charter or bylaws, or (ii) has not received any notice that it is in violation
of any law, ordinance, rule, regulation or directive of any federal, state,
county, city or other government, governmental department, bureau, agency or
other body, pertaining or relating to Seller's Partnership Interest or to the
Property.
(b) Except as set forth in Exhibit 2.1(E)(b), neither the execution and
delivery of this Agreement or any other agreement or instrument to be executed
and delivered pursuant hereto or in connection herewith by Seller nor the
fulfillment of nor the compliance with the terms and provisions hereof or
thereof, nor the consummation of the transactions contemplated hereby or
thereby, will (i) result in a breach of any terms, conditions or provisions of,
constitute a default or an event which, with notice or lapse of time or both,
would constitute a default under, or result in a violation or termination of, or
conflict with or give any third party the right to accelerate the performance
provided by the terms of (1) any contract, agreement, indenture, mortgage,
lease, license or other agreement or instrument to which Seller is a party or by
which Seller's Partnership Interest or the Property are bound, (2) any provision
of any law, rule, regulation, order, judgment or decree to which Seller is
subject or by which any of
-5-
<PAGE>
its assets or properties are bound or (3) the charter or bylaws of Seller or
(ii) result in the creation or imposition of any lien, charge, restriction,
security interest or encumbrance of any nature whatsoever upon, or give to
others any interest or rights, including rights of termination or cancellation,
in, or with respect to Seller's Partnership Interest or the Property.
F. Third-Party and Governmental Consents. Except as specifically
-------------------------------------
described in Exhibit 2.1(F) hereto no consent, authorization, approval or order,
license, certificate or permit from or registration, declaration or filing with,
any governmental authority or any court or other tribunal or any other person,
firm or entity, is required to be obtained or made by or with respect to Seller
in connection with the execution, delivery and performance of this Agreement or
of any other agreement to be executed and delivered by Seller pursuant hereto or
in connection herewith or the consummation of the transactions contemplated
hereby or thereby, including any federal, state or local environmental permits
or licenses nor is any such consent, authorization, approval, order, license,
certificate or permit required under any contract, indenture, mortgage, lease,
license, or other agreement or instrument to which Seller is a party or by which
Seller's Partnership Interest or the Property are subject or bound.
G. Litigation. Except as set forth in Exhibit 2.1(G) hereto, there
----------
are no claims, actions, suits, proceedings or governmental investigations
pending or, to the knowledge of Seller after due inquiry, threatened against or
affecting Seller's
-6-
<PAGE>
Partnership Interest or the Property, at law or in equity, before or by any
federal, state, municipal or other court, governmental department, commission,
board, agency or instrumentality, and Seller, after due inquiry, knows of no
factors or circumstances which might give rise to any of the foregoing. Except
as set forth in Exhibit 2.1(G) hereto, there is no order, writ, injunction or
decree of any court or any federal, state, municipal or local agency or
instrumentality affecting the Seller's Partnership Interest or the Property, and
Seller is not in default with respect to any order of any federal, state,
municipal or other court, department, commission, board, agency or
instrumentality.
I. Contracts. Seller has supplied Buyer with a true and correct
---------
copy of each Contract material to Seller's Partnership Interest and the
Property, together with any amendments, waivers or other charges thereto made
prior to the date hereof. Other than as disclosed in Exhibit 2.1(I) attached
hereto, there are no material written or oral contracts, agreements, commitments
or understandings relating to the Seller's Partnership Interest or the Property.
J. No Broker. Seller has not dealt or negotiated with any broker in
---------
connection with this transaction
K. Taxes. Except as set forth in Exhibit 2.1(K) hereof, all
-----
federal, state and local tax reports and returns required to be filed by the
Partnership with respect to the Partnership's operations (except for returns not
yet due), or by the Seller with respect to the Partnership Interest, have been
-7-
<PAGE>
filed. Except as set forth in Exhibit 2.1(K) hereof, all taxes and other
payments required to be made by the Partnership or the Seller with respect to
its Partnership Interest, including any federal, state or local taxes with
respect to the Partnership, the Partnership Interest or the Property (except for
amounts not yet due) have been paid (including, without limitation, those due in
respect of the ownership or operation of the Property, income, and licenses),
and there are no tax liens upon any property or assets of the Partnership,
including the Property, except liens for current taxes net yet due. Seller
expressly agrees to pay and discharge all sales taxes which may be due or
payments received by Seller with respect to the Leased Premises prior to the
Closing.
L. Financial Statements. Included in Exhibit 2.1(L) are copies of
--------------------
the balance sheet of the Partnership dated as of December 31, 1994, together
with related statements of income for the Partnership for the previous twelve
months (collectively, the "Financials"). The Financials are true, accurate and
complete, include all notes necessary to permit a full understanding of all
transactions or contingencies reflected therein, and present fairly the
financial position of the Partnership in conformity with generally accepted
accounting principles consistently applied.
M. Change in Business. Since the date of the Financials, to the
------------------
best knowledge and belief of Seller, there have not been any of the following
changes in the Partnership or the Property:
a. Any material change in the assets or liabilities of the
Partnership;
-8-
<PAGE>
b. Any damage, destruction or loss materially and adversely
affecting the Partnership or the Property;
c. Any material transaction by the Partnership not in the ordinary
course of its business.
N. Licenses, Permits. To the best knowledge and belief of Seller,
-----------------
the partnership has obtained all licenses, permits, variances, approvals,
authorizations, easements and rights of way, required form all governmental
authorities having jurisdiction over the Property or from private parties for
the intended use, operation and occupancy of the Property and to insure
vehicular and pedestrian ingress to and egress from the Property.
O. Condition of the Property. Seller makes no representations or
-------------------------
warranties whatsoever with respect to the condition of the Property or any
improvements or personal property located thereon.
P. Title to Property. The Partnership is the legal titleholder of
-----------------
the Property in fee simple and has full right to convey the same. Without
limiting the generality of the foregoing, the Partnership has not granted any
option or right of first refusal to any party to acquire any interest in the
Property.
Q. Representations and Warranties True; No Misleading Statements.
-------------------------------------------------------------
All of the representations and warranties set forth in this Section 2.1 shall be
true and correct as of the Closing Date. The representations and warranties made
herein in connection with the sale of Seller's Partnership Interest do not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements herein or therein, in
-9-
<PAGE>
light of the circumstances under which they were made, not misleading.
Provided, however, Buyer acknowledges and agrees that it shall not constitute a
breach of any warranty or inaccuracy of any representation of Seller hereunder
if (i) any action taken or not taken by Russell J. Sarno as President of Seller
or by any other employee of Seller prior to the Closing Date renders or causes
any representation or warranty to be or to become inaccurate; and/or (ii) to the
extent Buyer or any of its officers, directors, shareholders or employees have
knowledge or should have knowledge of facts or circumstances which render or
cause any representation or warranty to be or to become inaccurate.
Section 2.2 Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to Seller as follows:
A. Organization and Standing. Buyer is a corporation duly organized,
-------------------------
validly existing, and in good standing under the laws of the state of
California, and is qualified to do business as a foreign corporation in each
jurisdiction in which a failure to qualify would have a material adverse effect
on Seller.
B. Authority. The execution of this Agreement by Buyer and the delivery
---------
hereof to Seller, and the consummation by Buyer of the transactions contemplated
herein, are within Buyer's powers, have been duly authorized by all necessary
corporate action of Buyer (including authorization of the Board of Directors),
have received all necessary governmental approvals and do not and will not
contravene or conflict with any provision of law or of the charter or bylaws of
Buyer, and Buyer has full right, power, and
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authority to execute this Agreement and to consummate the transactions
contemplated hereby.
C. Validity and Binding Nature. This Agreement is, and the documents and
---------------------------
agreements executed and delivered by Buyer pursuant to the terms hereof, when
duly executed and delivered by all parties whose execution and delivery thereof
is required, will be legal, valid, and binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms, except to the extent
that enforceability may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or by general principles of equity.
D. No Restrictions Against Purchase of Seller's Partnership Interest.
-----------------------------------------------------------------
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in a breach of any of the terms or
provisions of, constitute a default or an event which, with notice or lapse of
time or both, would constitute a default under, the charter or bylaws of Buyer
or under any agreement or instrument to which Buyer is a party, or by which
Buyer may be bound. Except as listed or described on Exhibit 2.2(D), no
consent, approval, order or authorization of, or registration, declaration or
filing with any Governmental Entity is required to be obtained or made by or
with respect to Buyer in connection with the execution and delivery of this
Agreement by Buyer or the consummation by Buyer of the transactions contemplated
hereby.
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<PAGE>
E. No Broker. Buyer has not dealt or negotiated with any broker in
---------
connection with this transaction.
F. No Reliance. Since April 1, 1984, certain of Buyer's shareholders,
-----------
officers and directors have served as the principal executive officers of
Seller, and in such capacities had total control over the operations of Seller
on the Property. Accordingly, Buyer acknowledges and agrees that it is relying
upon its own knowledge and investigation with respect to any and all aspects of
the operations of Seller on the Property, and with respect to the condition of
the Property; and further acknowledges that no representations or warranties are
being made by Seller except for those specifically set forth in Section 2.1
hereof.
G. Representations and Warranties True; No Misleading Statements. All the
-------------------------------------------------------------
representations and warranties set forth in Section 2.2 are true and correct as
of the Closing Date. The representations and warranties made herein do not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
Section 2.3 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the parties set forth in this Agreement shall
be true as of the Closing Date and any cause of action, whenever accruing,
arising therefrom shall survive the Closing Date and the dissolution of Seller,
and shall terminate upon the expiration of a period of three years from
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the Closing Date; provided, however, that any representation, warranties and
agreements made by the parties hereto with respect to tax liability of the
Seller or the Partnership shall remain effective until the expiration of any
applicable statute of limitation period with respect to any such claims.
ARTICLE III
COVENANTS AND OTHER AGREEMENTS
------------------------------
Section 3.1 Access and Information. Seller has given to Buyer and to
----------------------
Buyer's counsel, accountants and representatives full and free access during
normal business hours throughout the period prior to the Closing, to all of the
facilities, books, contracts, commitments and records relating to Seller's
Partnership Interest and the Property so as to afford Buyer full opportunity to
make such review, examination and investigation of Seller's Partnership Interest
and the Property as Buyer may desire to make, including without limitation an
environmental evaluation of the Property, and has furnished to Buyer during such
period all information concerning Seller's Partnership Interest and the Property
as Buyer has reasonably requested. Buyer has been permitted to make extracts
from or to make copies of such books and records as it deemed reasonably
necessary in connection therewith.
Section 3.2 Taxes and Fees. All applicable sales, transfer, documentary,
--------------
use, filing, and other taxes and fees including all recording or filing fees,
notarized fees and similar costs that may be due and payable as a result of the
conveyance,
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assignment, transfer, or delivery of Seller's Partnership Interest shall be
borne by Buyer.
Section 3.3 Post Closing Assistance and Agreements.
--------------------------------------
A. All of Seller's books and records pertaining to the Seller's
Partnership Interest and the Property shall be delivered to Buyer on the
Closing Date. Following the Closing, Buyer agrees, upon reasonable notice to
Buyer, to grant to Seller and its representatives access to such books and
records of Seller relating to Seller's Partnership Interest and the Property,
during normal hours for reasonable periods of time, to enable the Seller to
prepare defenses, discovery, responses, reports, document s and/or returns
required of Seller or its affiliates by any federal, state or local taxing
authority or any other governmental agency, including without limitation, the
Internal Revenue Service or the Securities and Exchange Commission or in
connection with any administrative, legal or judicial proceeding. Further,
Buyer agrees to assist Seller in the preparation of any such items upon the
request of Seller.
B. Except as otherwise provided herein, Buyer agrees to maintain and
preserve the books and records described in Section 3.3.A. following the Closing
for a period of five (5) years from the Closing Date. Should Buyer, during or
after such five (5) year period, desire to dispose of any such records, Buyer
agrees to first notify Seller of its intention to dispose of the same and Seller
shall have the opportunity to take possession of such books
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<PAGE>
and records within a reasonable period of time as stated in Buyer's notice.
Section 3.4 Buffton's and Seller's Indemnity. Buffton and Seller, jointly
--------------------------------
and severally, hereby agree to pay on behalf of, indemnify fully, hold harmless
and defend Buyer, its officers, directors, shareholders, successors and assigns
(collectively the "indemnified parties"), from and against all demands, claims,
actions or causes of action, assessments, losses, damages, costs and other
liabilities (including without limitation reasonable attorneys' and accountants'
fees and expenses, court costs and all other out-of-pocket expenses)
(collectively "Losses") asserted against or incurred by the indemnified parties,
directly or indirectly, arising out of or in connection with any of the
following:
(i) except to the extent such warranty or representation has expired or
such claim is barred by limitations pursuant to Section 2.3. or negated by
Section 2.1(O) hereof, the breach of any warranty or the inaccuracy of any
representation of Seller contained in Section 2.1 hereof;
(ii) any breach or failure by Seller to perform any of the covenants,
agreements or obligations under this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Seller in connection
herewith;
(iii) the assertion by 1st Nationwide Bank of any claims against Buyer
arising solely by virtue of Seller transferring the Partnership Interest to
Buyer without the consent of 1st Nationwide Bank; and
(iv) except with respect to environmental matters which are dealt with
exclusively in Section 3.6 hereof, the assertion by any third party against an
indemnified party of any liability, including without limitation any claim,
liability or obligation not specifically assumed or indemnified against by Buyer
under this Agreement or any other agreement or instrument executed and delivered
by or on behalf of Buyer in connection herewith, relating to or arising out of
Seller's ownership of Seller's Partnership
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<PAGE>
Interest, whether known or unknown, accrued, contingent or otherwise as of the
Closing Date, including without limitation, any judgments, orders, decrees,
claims, actions, suits or proceedings relating to Seller's Partnership Interest
or the Property prior to the Closing Date.
Provided, however, Buffton's and Seller's liability under Section 3.4 (i)
shall be limited to only those Losses incurred by the indemnified parties, which
are over and above Losses which in the aggregate equal Ten Thousand and No/100
Dollars ($10,000.00). In addition, Buffton and Seller will indemnify and hold
harmless the indemnified parties from, for and against any costs and expenses
(including attorneys fees) which it may suffer or sustain in seeking to enforce
the indemnification obligation of Buffton and Seller hereunder.
Buyer agrees to promptly (no more than 30 days after receipt of such claim)
notify Buffton and Seller of all facts and circumstances with respect to any
third party claim which may give rise to a claim for indemnification hereunder.
Such notice will describe such claim in reasonable detail. Seller shall be
provided an opportunity to deal directly with such third party and, at its
option, to settle or control the defense of the litigation of such claim,
including but not limited to the appointment of counsel reasonably acceptable to
Buyer, provide d that Buffton and Seller proceed in good faith, expeditiously
and diligently. Buyer agrees to cooperate with Buffton and Seller and, upon the
request of Buffton and Seller, assist Buffton and Seller, at Buffton's and
Seller's expense, in the conduct of such defense.
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<PAGE>
Section 3.5 Buyer's Indemnity. Buyer hereby agrees to pay on behalf of,
-----------------
indemnify fully, hold harmless and defend Seller, its officers, directors,
shareholders, successors and assigns (collectively the "indemnified parties"),
from and against all demands, claims, actions or causes of action, assessments,
and Losses (including without limitation reasonable attorneys' and accountants'
fees and expenses, court costs and all other out-of-pocket expenses) asserted
against or incurred by the indemnified parties, directly or indirectly, arising
out of or in connection with any of the following:
(i) except to the extent such warranty or representation has expired or
such claim is barred by limitations pursuant to Section 2.3, or otherwise, the
breach of any warranty or the inaccuracy of any representation of Buyer
contained in or made pursuant to Section 2.2 hereof;
(ii) any breach or failure by Buyer to perform any of the covenants,
agreements or obligations under this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Buyer in connection
herewith, including without limitation the performance by Buyer of the
Assignment and Assumption Agreement; and
(iii) except with respect to environmental matters which are dealt with
exclusively in Section 3.6 hereof, the assertion by any third party against an
indemnified party of any claim, liability or obligation relating to or arising
out of Buyer's ownership of Seller's Partnership Interest or the Property
arising or accrued after the Closing Date.
Provided, however, Buyer's liability under Section 3.5(i) shall be limited
to only those Losses incurred by the indemnified parties, which are over and
above Losses which in the aggregate exceed the sum of Ten Thousand and No/100
Dollars ($10,000.00). In addition, the Buyer will indemnify and hold harmless
the indemnified parties from, for and against any costs and expenses
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<PAGE>
(including attorneys fees) which it may suffer or sustain to enforce the
indemnification obligations of Buyers hereunder.
Seller agrees to promptly (no more than 30 days after receipt of such
claims) notify Buyer of all facts and circumstances with respect to any third
party claim which may give rise to a claim for indemnification hereunder. Such
notice will describe such claim in reasonable detail. Buyer shall be provided
an opportunity to deal directly with such third party and, at their option, to
settle or control the defense of the litigation of such claim, including but not
limited to the appointment of counsel reasonably acceptable to the Seller,
provided that Buyer proceeds in good faith, expeditiously and diligently.
Seller agrees to cooperate with Buyer and, upon the request of Buyer, assist
Buyer, at Buyer's expense, in the conduct of such defense.
Section 3.6 Environmental Matters.
---------------------
A. Definitions. For purposes of this section, the terms set forth below
-----------
shall have the following meanings:
"Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order or directive (conditional or
otherwise), judgment, lien or other assessment by any governmental authority or
any person for personal injury (including sickness, disease or death), tangible
or intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties, or restrictions, resulting from or based upon (i) the existence, or
the continuation of the
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<PAGE>
existence, of a Release (including, without limitation, sudden or non-sudden,
accidental or non-accidental leaks or spills), of, or exposure to, or Release of
any Hazardous Material, odor or audible noise in, into or onto the environment,
including, without limitation, the air, groundwater, surface water or any
surface or subsurface strata, at, in, by, from, or related to the Property, (ii)
the transportation, storage, treatment or disposal of any Hazardous Material in
connection with the operation of the Property or (iii) the violation, or alleged
violation, of any applicable Environmental Laws or any Permits.
"Environmental Laws" shall mean all applicable federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment relating
to the regulation and protection of human health, safety, the environment and
natural resources (including, without limitation, ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). As used herein Environmental Laws shall include, but
not be limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. (S) 9601 et seq.) ("CERCLA"); the
-- ---
Hazardous Material Transportation Act, as amended (49 U.S.C. (S) 1801 et seq.);
-- ---
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
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<PAGE>
(S) 136 et seq.); the Resource Conservation and Recovery Act, as amended (42
-- ---
U.S.C. (S) 6901 et seq.) ("RCRA"); the Toxic Substances Control Act, as amended
-- ---
(15 U.S.C. (S) 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. (S) 740
-- ---
et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. (S)
- - - -- ---
1251 et seq.); and the Safe Drinking Water Act, as amended (42 U.S.C. (S) 300f
-- ---
et seq.), and any and all regulations promulgated thereunder, but excluding the
- - - -- ---
Occupational Safety and Health Act, as amended (29 U.S.C. (S) 651 et seq.)
-- ---
("OSHA"); and all applicable analogous state and local counterparts,
equivalents, or similar statutes or ordinances, rules or regulations, including,
without limitation, the California Health & Safety Code (S) 1 et seq, as
-- ---
amended, and any transfer of ownership notification or approval statutes.
"Environmental Permit" shall mean any permit, approval, authorization,
license, variance, or permission required by a governmental authority under any
applicable Environmental Laws.
"Hazardous Material" shall mean, collectively, any (a) petroleum or
petroleum products, or derivative or fraction thereof, flammable material,
explosives, radioactive materials (including radon gas, other than that which is
naturally occurring ), asbestos in any form that is or could become friable,
urea formaldehyde foam insulation ("UFI"), and polychlorinated biphenyls
("PCBs"), and (b) any chemical, material or substance, (i) which is now or
hereafter becomes defined as or included in the definition of "hazardous
substances," hazardous wasters," "hazardous materials," "toxic substances,"
"restricted hazardous wastes," "contaminants,"
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<PAGE>
"pollutants" or words of similar import under any applicable Environmental Laws
of (ii) the emission, discharge, release, storage, transport, disposal,
management, handling or use of which is required under or subject to any
applicable Environmental Laws.
"Release" shall mean any release, spill, emission, abandonment of any
container or receptacle containing any Hazardous Material, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the environment, or into or out of the Property, including the movement or
migration, gradual or otherwise, of any Hazardous Material through or in the
air, soil, surface water, groundwater, or land surface or subsurface strata or
formation.
"Remedial Action" shall mean all actions required under Environmental Laws
and all reasonable voluntary efforts to (1) clean up, remove, treat, monitor or
in any other way address the Release of any Hazardous Material in the
environment; (2) prevent the further Release or threat of further Release, or
minimize the further Release of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health or welfare of the environment; or
(3) perform pre-remedial studies and investigations and post-remedial
monitoring and care with respect to any Release or any threatened Release.
"Seller's Premises" shall mean the Leased Premises as defined in the Lease
Agreement between the Partnership and Seller.
B. Representations and Warranties of Seller. Title to the Property has
----------------------------------------
been in the Partnership, but the Partnership
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itself has not conducted any operations on the Property. Accordingly, to the
best of Seller's knowledge, the Partnership has not violated any Environmental
Laws. To Seller's knowledge, the Partnership has not (i) used, manufactured,
generated, treated, stored, disposed of, or Released any Hazardous Material on,
under or about the Property, or (ii) transported any Hazardous Material over the
Property. To Seller's knowledge the Partnership has not installed, used or
removed any storage tank on, from or in connection with the Property except in
full compliance with all Environmental Laws.
C. Indemnification of Buyer. Buffton and Seller, jointly and severally,
------------------------
hereby agree to pay on behalf of, indemnify fully, hold harmless and defend
(with counsel acceptable to Buffton and Seller) Buyer, its officers, directors,
shareholders, affiliates, successors and assigns (collectively "Buyer's
Indemnified Parties") from and against all demands, claims, actions or causes of
action, assessments, losses, damages, costs and other liabilities (including
without limitation reasonable attorneys' fees and experts' fees and expenses,
court costs and all other out-of-pocket expenses) asserted against or incurred
by Buyer's Indemnified Parties, directly or indirectly, arising out of or
related to a breach of Seller's representations and warranties contained in
Section 3.6.B. hereinabove or arising out of or related to any Environmental
Claim or
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<PAGE>
Remedial Action which is attributable to the Property at any time prior to the
Closing Date, except for and specifically excluding any Environmental Claims or
Remedial Action which is attributable to the operations of Seller on Seller's
Premises whether arising or accruing prior to or subsequent to the Closing Date.
D. Indemnification of Seller. Buyer hereby agrees to pay on behalf of,
-------------------------
indemnify fully, hold harmless and defend (with counsel acceptable to Buyer)
Seller, its officers, directors, shareholders, affiliates, successors and
assigns (collectively "Seller's Indemnified Parties"), from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
costs and other liabilities (including without limitation reasonable attorneys'
and experts' fees and expenses, court costs and all other out-of-pocket
expenses) asserted against or incurred by Seller's Indemnified Parties, directly
or indirectly, arising out of or related to any Environmental Claim or Remedial
Action which is attributable to events or operations on the Property occurring
subsequent to the Closing Date, and any Environmental Claims or Remedial Action
which is attributable to the operations of Seller on Seller's Premises at any
time prior to or subsequent to the Closing Date.
Section 3.7 Further Assurance. Each party will execute and deliver, or
-----------------
cause to be executed and delivered, from and after the date hereof, such
additional or further transfers, assignments, endorsements, and other
instruments as any other party reasonably may request for the purpose of
carrying out this Agreement.
Section 3.8 Attorneys' Opinions.
-------------------
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<PAGE>
A. At the Closing, Seller shall receive the opinion of Friedman &
Phillips, counsel for Buyer, dated as of the Closing Date, which opinion of
counsel shall be in the form of Exhibit 3.8(A).
B. At the Closing, Buyer shall receive the opinion of McLean & Sanders,
counsel for the Buffton Companies, dated as of the Closing Date, which opinion
of counsel shall be in the form of Exhibit 3.8(B).
Section 3.9 Closing Procedure. At the Closing, Seller and Buyer, as the
-----------------
case may be, shall execute and deliver to the appropriate party the instruments
and/or take the action described below:
A. Seller shall:
a. Execute and deliver the Agreement;
b. Execute and deliver the Assignment and Assumption
Agreement; and
c. Deliver certified Corporate Resolutions of its Board of Directors,
and Shareholder, authorizing the transaction contemplated by the
Agreement;
d. Deliver the Consents described in Exhibit 2.1(F) of the Agreement,
excluding the consent of 1st Nationwide Bank;
e. Upon payment and receipt of the purchase price, deliver or cause
Congress Financial Corporation and any other secured party to
deliver Releases and/or Termination Statements releasing all
security interests of Congress Financial Corporation or any
other secured party in Seller's Partnership Interest;
f. Deliver a Certificate of Good Standing from its state of
incorporation, dated within thirty days of the Closing Date; and
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<PAGE>
g. Any and all other documents and instruments reasonably requested
by Buyer.
B. Buyer shall:
a. Execute and deliver the Agreement;
b. Execute and deliver the Assignment and Assumption Agreement;
c. Deliver the purchase price to Seller in cash or by wire transfer;
d. Deliver certified Corporate Resolutions of the Board of Directors
of Buyer authorizing the transaction contemplated by the
Agreement; and
e. Deliver a Certificate of Good Standing from its state
incorporation, dated within thirty days of the Closing Date.
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1 Amendment. This Agreement may not be amended, modified
---------
or altered, except pursuant to an instrument in writing signed by each of the
parties hereto.
Section 4.2 Assignment. No party to this Agreement may assign its
----------
rights or obligations hereunder without first obtaining the written consent of
the other parties hereto; provided, however, that (a) nothing in this Agreement
is intended to limit Buyer's ability to sell or to transfer Seller's Partnership
Interest following the Closing Date and (b) Buyer may assign or delegate any or
all of its rights or obligations under this Agreement to any Affiliate thereof
or to any person or entity that acquires all or substantially all of the assets
or voting stock of Buyer. In addition, Buyer may assign all of its rights
hereunder to any lender of Buyer.
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<PAGE>
Section 4.3 Expenses. Seller and Buyer will each pay their
--------
respective expenses, fees and costs incident to the preparation and execution of
this Agreement, and except as otherwise expressly provided for herein, each
party shall bear its respective expenses or fees involved in the preparation and
delivery of all documents, reports and opinions required to be delivered by or
on behalf of such party hereunder, whether or not the transactions contemplated
hereunder are consummated, except that Buyer shall bear all filing fees incurred
in any governmental filing required in connection with the transactions
contemplated by this Agreement.
Section 4.4 Entire Agreement. This Agreement contains the entire
----------------
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all previous written or oral agreements,
negotiations, commitments and writings.
Section 4.5 Rights. Nothing in this Agreement shall be construed
------
to give any person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy, or claim under this
Agreement.
Section 4.6 Parties Bound. This Agreement shall be binding upon
-------------
and inure to the benefit of each party hereto, its permitted assigns, and its
successors in interest, and all assigns and successors in interest thereafter.
Section 4.7 Governing Law. This Agreement, including, without
-------------
limitation, the interpretation, construction, validity and
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enforceability hereof, shall be governed by the laws (other than the conflict of
law rules) of the State of California.
Section 4.8 Attorneys' Fees. Should any action at law or in equity
---------------
(including any action for declaratory relief) be brought to enforce or interpret
the provisions of this Agreement and/or any other agreement executed or
delivered incident hereto, the prevailing party shall be entitled to recover its
attorneys' fees from the other party or parties, which fees may be set by the
Court in the trial of such action or may be enforced in a separate action
brought for that purpose, and which fees shall be in addition to any other
relief which may be awarded.
Section 4.9 Notices. Any notice, consent or other communication
-------
given hereunder shall be in writing including by facsimile and shall be deemed
to have been duly given when delivered either personally or by registered or
certified mail, postage prepaid, or when dispatched by electronic facsimile
transfer (confirmed in writing by mail simultaneously dispatched) or one
business day after having been dispatched by a nationally recognized overnight
courier service to the parties at the following addresses, or such other
addresses as may be specified by notice given in accordance herewith:
BUFFTON: Buffton Corporation
226 Bailey Avenue
Suite 101
Fort Worth, Texas 76107
SELLER: Flo Control, Inc.
226 Bailey Avenue
Suite 101
Fort Worth, Texas 76107
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<PAGE>
BUYER: F.L.C. Property Acquisition, Inc.
3210 Winona Avenue
Burbank, California 91504
Section 4.10 Headings, Exhibits, Exhibits. The heading s of the various
----------------------------
sections of this Agreement are included solely for the convenience of reference
and are not intended to be full or accurate descriptions of the contents hereof.
Any reference to Exhibits shall signify that such Exhibits are incorporated
herein by reference.
Section 4.11 Counterparts. This Agreement may be executed in two or more
------------
original counterparts, each of which may be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 4.12 Interpretation. Any pronoun used in this Agreement shall be
--------------
deemed to include singular and plural and masculine, feminine and neuter gender,
as the case may be. Unless the context otherwise requires, (i) the words
"herein," "hereof," and "hereunder" shall be deemed to refer to this entire
Agreement, (ii) all references to Sections, Articles or Exhibits are to
Sections, Articles or Exhibits of or to this Agreement, (iii) each term defined
in this Agreement has the meaning assigned to it, (iv) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP, (v) "or" is disjunctive but not necessarily exclusive, and (vi) the
terms "Subsidiary" and "Affiliate" have the meanings given to those terms in
Rule 12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as
amended. All references to "$" or dollar amounts will
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<PAGE>
be in lawful currency of the United States of America. Currency exchange rates
against the United States Dollar will be the average of the closing rates as
reported in the New York edition of the Wall Street Journal published on the
business day immediately preceding the date hereof and will apply for all
purposes of this Agreement notwithstanding subsequent changes in such currency
exchange rates, except that all computations to be made as of the Closing Date
will be based on such rates as of the close of business on the Closing Date.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the day and year first above written.
BUFFTON: BUFFTON CORPORATION
By:________________________________
Robert H. McLean
Chairman of the Board
SELLER: FLO CONTROL, INC.
By:________________________________
Robert H. McLean
Chairman of the Board
BUYER: F.L.C. PROPERTY ACQUISITION, INC.
By:________________________________
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<PAGE>
EXHIBIT 10.2
AGREEMENT OF PURCHASE AND SALE
------------------------------
by and between
FLO CONTROL, INC.,
PATRICK HOPKINS
and
FLO-SAFE SYSTEMS, INC.
<PAGE>
AGREEMENT OF PURCHASE AND SALE
------------------------------
THIS AGREEMENT (this "Agreement") dated the _____ day of January, 1995 by
and between FLO CONTROL, INC., a Delaware corporation ("Seller") and PATRICK
HOPKINS ("Hopkins") and FLO-SAFE SYSTEMS, INC., a Wisconsin corporation
("Buyer").
W I T N E S S E T H :
-------------------
WHEREAS, the Seller owns and operates certain assets in connection with the
manufacture and sale of its secondary containment product line (the "Product
Line"); and
WHEREAS, the Seller desires to sell to Buyer, and Buyer desires to purchase
from the Seller, certain assets relating to the Product Line, upon the terms and
subject to the conditions of this Agreement; and
WHEREAS, Seller wishes to delegate to Buyer, and Buyer is willing to
assume, specified Assumed Liabilities (as hereinafter defined), on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
pursuant to the terms and subject to the conditions set forth herein, the
parties hereto agree as follows:
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<PAGE>
ARTICLE I
PURCHASE AND SALE
-----------------
Section 1.1 Transfer of Assets by the Seller. On the terms and subject to
--------------------------------
the conditions hereof, at the Closing (as defined in Section 1.4 hereof), Seller
shall sell, convey, transfer, assign and deliver to 3210 Winona Avenue, Burbank,
California ("Transfer") to Buyer, and Buyer shall purchase and acquire all
right, title and interest of Seller in and to the following assets:
A. The molds and tooling specifically described on Exhibit 1.1(A) hereof
("Tooling");
B. All sales records, market studies, advertising and promotional
literature, customer lists, customer history and procedures, including all
information regarding past customers, business records, accounting and financial
records, logs, files and books, supplier lists, sales representation lists,
mailing lists, computer and electronic data processing material, correspondence
and other business records of Seller which relate to the Product Line
("Records");
C. All rights and incidents of interest of Seller in the contracts,
permits, licenses, consents, franchises, commitment s and other agreements
listed on Exhibit 1.1(C) attached hereto and made a part hereof ("Contracts");
D. All letters patent, patent applications, inventions upon which patent
applications have not yet been
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<PAGE>
filed, copyrights and copyright registrations, of Seller relating to the Product
Line ("Proprietary Rights");
The foregoing assets are hereinafter called the Transferred Assets.
Section 1.2 Purchase Price. In consideration of the transfer of the
--------------
Transferred Assets, Buyer and Hopkins shall pay to Seller at the Closing, the
sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) by the execution
and delivery to Seller of the promissory note attached hereto as Exhibit 1.2(A)
and made a part hereof (the "Note"). Payment of the Note shall be secured by a
first and prior security interest in the Transferred Assets, and at the Closing,
Buyer shall execute and deliver to Seller the Security Agreements attached
hereto as Exhibits 1.2(B)-1 and 1.2(B)-2 and made a part hereof (the "Security
Agreements"). Payment of the Note shall be additionally secured by the personal
guarantee of Brian Bose, which guaranty shall be form and substance as the
Guaranty attached hereto as Exhibit 1.2(C) and made a part hereof (the
"Guaranty"). Buyer shall execute and deliver to Seller at the Closing any
additional documents required to perfect the security interest to be granted by
Buyer to Seller in the Transferred Assets, including without limitation,
financing statements.
Section 1.3 No Assumption of Liabilities. Buyer does not assume or agree
----------------------------
to pay, satisfy, discharge or perform, and will not be deemed by virtue of the
execution and delivery of this Agreement or any document delivered at the
Closing pursuant
-3-
<PAGE>
to this Agreement (a "Closing Document"), or as a result of the consummation of
the transactions contemplated by this Agreement, to have assumed, or to have
agreed to pay, satisfy, discharge or perform, any liability, obligation or
indebtedness of Seller, whether primary or secondary, direct or indirect. The
liabilities not expressly assumed by Buyer hereunder are called "Retained
Liabilities" hereunder.
Section 1.4 Closing Date and Effective Date. The purchase and sale of the
-------------------------------
Transferred Assets under this Agreement shall take place on January 13, 1995
(the "Closing Date") at 9:00 a.m. at the offices of McLean & Sanders, 100 Main
Street, Fort Worth, Texas 76102, and shall be deemed effective as of 11:59 p.m.
on December 31, 1994 (the "Effective Date"). The actual closing shall be
referred to as the "Closing."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Representations and Warranties of Seller. Seller represents
----------------------------------------
and warrants to Buyer as follows:
A. Due Organization and Good Standing. Seller is a corporation duly
----------------------------------
organized, validly existing, and in good standing under the laws of its state of
incorporation and is qualified to do business as a foreign corporation and in
good standing in each jurisdiction in which the nature and extent of its
business and property makes such qualification necessary.
B. Authority. The execution of this Agreement by Seller and the delivery
---------
hereof to Buyer, and the performance by
-4-
<PAGE>
Seller of it obligations hereunder, including without limitation the transfers,
conveyances, assignments, deliveries and other agreements to be executed
pursuant hereto or in connection herewith or contemplated hereby are within
Seller's powers, have been duly authorized by all necessary corporate action of
Seller (including authorization of the Board of Directors), have received all
necessary governmental approvals and do not and will not contravene or conflict
with any provision of law or of the charter or bylaws of Seller and Seller has
full right, power, and authority to execute this Agreement and to consummate the
transactions contemplated herein. No other corporate proceedings and no further
corporate action are necessary on the part of Seller to make this Agreement or
any other agreement or instrument to be executed pursuant hereto or in
connection herewith authorized, legal, valid and binding upon Seller in
accordance with its terms.
C. Validity and Binding Nature. This Agreement is, and the documents and
---------------------------
agreements executed and delivered by Seller pursuant to the terms hereof, when
duly executed and delivered by all parties whose execution and delivery thereof
is required, will be legal, valid, and binding obligations of Seller enforceable
against Seller in accordance with and to the extent of their respective terms,
except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
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<PAGE>
general application affecting the rights of creditors generally or by general
principles of equity.
D. Title. Seller has, and following the Closing, Buyer will have, good
-----
and marketable title to the Transferred Assets, free and clear of any title
defects or objections, mortgages, pledges, liens, claims, or encumbrances of any
nature whatsoever.
E. No Default. (a) Except as set forth in Exhibit 2.1(E)(a) hereof,
----------
Seller (i) is not in default under, or in violation of any provision of, its
charter or bylaws, or (ii) has not received any notice that it is in violation
of any law, ordinance, rule, regulation or directive of any federal, state,
county, city or other government, governmental department, bureau, agency or
other body, pertaining or relating to the Product Line or the Transferred
Assets.
(b) Except as set forth in Exhibit 2.1(E)(b), neither the execution
and delivery of this Agreement or any other agreement or instrument to be
executed and delivered pursuant hereto or in connection herewith by Seller nor
the fulfillment of nor the compliance with the terms and provisions hereof or
thereof, nor the consummation of the transactions contemplated hereby or
thereby, will (i) result in a breach of any terms, conditions or provisions of,
constitute a default or an event which, with notice or lapse of time or both,
would constitute a default under, or result in a violation or termination of, or
conflict with or give any third party the right to accelerate the
-6-
<PAGE>
performance provided by the terms of (1) any contract, agreement, indenture,
mortgage, lease, license or other agreement or instrument to which Seller is a
party or by which its assets or properties are bound, (2) any provision of any
law, rule, regulation, order, judgment or decree to which Seller is subject or
by which its assets or properties are bound or (3) the charter or bylaws of
Seller or (ii) result in the creation or imposition of any lien, charge,
restriction, security interest or encumbrance of any nature whatsoever upon, or
give to others any interest or rights, including rights of termination or
cancellation, in, or with respect to, any of the Transferred Assets.
F. Third-Party and Governmental Consents. Except as specifically
-------------------------------------
described in Exhibit 2.1(F) hereto no consent, authorization, approval or order,
license, certificate or permit from or registration, declaration or filing with,
any governmental authority or any court or other tribunal or any other person,
firm or entity, is required to be obtained or made by or with respect to Seller
in connection with the execution, delivery and performance of this Agreement or
of any other agreement to be executed and delivered by Seller pursuant hereto or
in connection herewith or the consummation of the transactions contemplated
hereby or thereby, including any federal, state or local environmental permits
or licenses nor is any such consent, authorization, approval, order, license,
certificate or permit required under any contract, indenture, mortgage, lease,
license,
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<PAGE>
or other agreement or instrument to which Seller is a party or by which Seller
is subject or bound.
G. Litigation. To the knowledge and belief of Seller, there are no
----------
claims, actions, suits, proceedings or governmental investigations pending or,
to the knowledge of the Seller after due inquiry, threatened against or
affecting the Product Line or the Transferred Assets, at law or in equity,
before or by any federal, state, municipal or other court, governmental
department, commission, board, agency or instrumentality, and Seller, after due
inquiry, knows of no factors or circumstances which might give rise to any of
the foregoing.
H. Tooling. The Tooling has been owned by Seller and in operation for
-------
varying lengths of time and constitute used equipment. Accordingly, the Tooling
is being sold, AS IS, WHERE IS.
I. Contracts. To the best of Seller's knowledge, Seller has supplied
---------
Buyer with a true and correct copy of each Contract material to the Product
Line or use of the Transferred Assets, together with any amendments, waivers or
other charges thereto made prior to the date hereof. It is a condition
precedent to Seller's obligations hereunder that all of the Contracts be
terminated prior to the Closing.
J. No Broker. Seller has not dealt or negotiated with any broker in
---------
connection with this transaction
-8-
<PAGE>
K. Proprietary Rights. To the best of Seller's knowledge and belief, set
------------------
forth in Exhibit 2.1(K) annexed hereto is a list of all Proprietary Rights of
Seller.
L. Representations and Warranties True; No Misleading Statements. All of
-------------------------------------------------------------
the representations and warranties set forth in this Section 2.1 shall be true
and correct as of the Closing Date. The representations and warranties made
herein in connection with the sale of the Transferred Assets do not contain any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
Section 2.2 Representations and Warranties of Hopkins and Buyer. Hopkins
---------------------------------------------------
and Buyer, jointly and severally, represent and warrant to Seller as follows:
A. Organization and Standing. Buyer is a corporation duly organized,
-------------------------
validly existing, and in good standing under the laws of the state of Wisconsin,
and is qualified to do business as foreign corporations and in good standing in
each jurisdiction where the nature and extent of its businesses and properties
makes qualification necessary.
B. Authority. The execution of this Agreement by Buyer and the delivery
---------
hereof to Seller, and the consummation by Buyer of the transactions contemplated
herein, are within Buyer's powers, have been duly authorized by all necessary
corporate action of Buyer (including authorization of the Boards of
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<PAGE>
Directors), have received all necessary governmental approvals and do not and
will not contravene or conflict with any provision of law or of the charter or
bylaws of Buyer, and Buyer has full right, power, and authority to execute this
Agreement and to consummate the transactions contemplated hereby.
C. Validity and Binding Nature. This Agreement is, and the documents and
---------------------------
agreements executed and delivered by Buyer pursuant to the terms hereof, when
duly executed and delivered by all parties whose execution and delivery thereof
is required, will be legal, valid, and binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms, except to the extent
that enforceability may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditor s generally or by general principles of equity.
D. No Restrictions Against Purchase of the Transferred Assets. Neither
----------------------------------------------------------
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in a breach of any of the terms or
provisions of, constitute a default or an event which, with notice or lapse of
time or both, would constitute a default under, the charter or bylaws of Buyer
or under any agreement or instrument to which Buyer is a party, or by which
Buyer may be bound. Except as listed or described on Exhibit 2.2(D), no
consent, approval, order or authorization of, or registration, declaration or
filing
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<PAGE>
with any Governmental Entity is required to be obtained or made by or with
respect to Buyer in connection with the execution and delivery of this Agreement
by Buyer or the consummation by Buyer of the transactions contemplated hereby.
E. No Broker. Buyer has not dealt or negotiated with any broker in
---------
connection with this transaction.
F. No Reliance. Certain of Buyer's shareholders, officers and directors
-----------
(including Hopkins) have been actively involved in the design, development,
manufacture and sale of the Product Line. Accordingly, Buyer and Hopkins
acknowledge and agree that they are relying upon their own knowledge and
investigation with respect to any and all aspects of the Product Line and the
Transferred Assets; and further acknowledge that no representations or
warranties are being made by Seller with respect to the Product Line or
Transferred Assets except for those specifically set forth in Section 2.1
hereof.
G. Representations and Warranties True; No Misleading Statements. All the
-------------------------------------------------------------
representations and warranties set forth in Section 2.2 are true and correct as
of the Closing Date. The representations and warranties made herein do not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
Section 2.3 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the
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<PAGE>
parties set forth in this Agreement shall be true as of the Closing Date and any
cause of action, whenever accruing, arising therefrom shall survive the Closing
Date and shall terminate upon the expiration of a period of two years from the
Closing Date.
ARTICLE III
COVENANTS AND OTHER AGREEMENTS
------------------------------
Section 3.1 Access and Information. Seller has given to Buyer and to
----------------------
Buyer's counsel, accountants and representatives full and free access during
normal business hours throughout the period prior to the Closing, to all of the
Transferred Assets and the books, contracts, commitments and records relating to
the Product Line so as to afford Buyer full opportunity to make such review,
examination and investigation of the Transferred Assets and the Product Line as
Buyer may desire to make, and has furnished to Buyer during such period all
information concerning the Product Line as Buyer has reasonably requested.
Buyer has been permitted to make extracts from or to make copies of such books
and records as it deemed reasonably necessary in connection therewith. Seller
promptly furnished or caused to be furnished to Buyer such financial and
operating data and other information relating to the Product Line as Buyer
reasonably requested.
Section 3.2 Taxes and Fees. All applicable sales, transfer, documentary,
--------------
use, filing, and other taxes and fees including all recording or filing fees,
notarized fees and similar costs that may be due and payable as a result of the
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<PAGE>
conveyance, assignment, transfer, or delivery of the Transferred Assets shall be
borne by Buyer, excluding any income or capital gains taxes of Seller.
Section 3.3 Post Closing Assistance and Agreements.
--------------------------------------
A. All of Seller's books and records pertaining to the Product Line and
the Transferred Assets shall be delivered to Buyer on the Closing Date.
Following the Closing, Buyer agrees, upon reasonable notice to Buyer, to grant
to Seller and its representatives access to the books and records of Seller
relating to operations prior to the Closing, during normal hours for reasonable
periods of time, to enable Seller or its affiliates to prepare defenses,
discovery, responses, reports, documents and/or returns required of Seller or
its affiliates by any federal, state or local taxing authority or any other
governmental agency, including without limitation, the Internal Revenue Service
or the Securities and Exchange Commission or in connection with any
administrative, legal or judicial proceeding. Further, Buyer agrees to assist
Seller in the preparation of any such items upon the request of Seller.
B. Except as otherwise provided herein, Buyer agrees to maintain and
preserve the books and records described in Section 3.3.A. following the Closing
for a period of five (5) years from the Closing Date. Should Buyer, during or
after such five (5) year period, desire to dispose of any such records, Buyer
agrees to first notify Seller of its intention to dispose of the same and Seller
shall have the opportunity to take
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<PAGE>
possession of such books and records within a reasonable period of time as
stated in Buyer's notice.
Section 3.4 Bulk Sales Laws.
---------------
A. Buyer hereby waives compliance with any and all bulk sales laws
applicable to the sale of the Transferred Assets.
B. Seller agrees to and does hereby indemnify, save and hold harmless
Buyer from and against any losses, damages or liabilities (including court costs
and reasonable attorneys' fees) asserted against or incurred by Buyer as a
result of the Seller's failure to pay any creditor of Seller whose obligation is
not an Assumed Liability.
Section 3.5 Seller's Indemnity. Seller hereby agrees to pay on behalf of,
------------------
indemnify fully, hold harmless and defend Buyer, its officers, directors,
shareholders, successors and assigns (collectively the "indemnified parties"),
from and against all demands, claims, actions or causes of action, assessments,
losses, damages, costs and other liabilities (including without limitation
reasonable attorneys' and accountants' fees and expenses, court costs and all
other out-of-pocket expenses) (collectively "Losses") asserted against or
incurred by the indemnified parties, directly or indirectly, arising out of or
in connection with any of the following:
(i) except to the extent such warranty or representation has expired or
such claim is barred by limitations pursuant to Section 2.3, the breach of any
warranty or the inaccuracy of any representation of Seller contained in Section
2.1 hereof;
(ii) any breach or failure by Seller to perform any of the covenants,
agreements or obligations under this Agreement or
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<PAGE>
any other agreement or instrument executed and delivered by or on behalf of
Seller in connection herewith; and
(iii) the assertion by any third party against Buyer of any Retained
Liability, including without limitation any claim, liability or obligation not
specifically assumed by Buyer under this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Buyer in connection
herewith, relating to or arising out of events occurring or with respect to the
manner in which the Product Line was conducted prior to the Closing Date.
Buyer agrees to promptly (no more than 30 days after receipt of such claim)
notify Seller of all facts and circumstances with respect to any third party
claim which may give rise to a claim for indemnification hereunder. Such notice
will describe such claim in reasonable detail. Seller shall be provided an
opportunity to deal directly with such third party and, at its option, to settle
or control the defense of the litigation of such claim, including but not
limited to the appointment of counsel reasonably acceptable to Buyer, provided
that Seller proceed in good faith, expeditiously and diligently. Buyer agrees
to cooperate with Seller and, upon the request of Seller, assist Seller, at
Seller's expense, in the conduct of such defense.
Section 3.6 Hopkin's and Buyer's Indemnity. Hopkins and Buyer, jointly
------------------------------
and severally, hereby agree to pay on behalf of, indemnify fully, hold harmless
and defend the Seller, its officers, directors, shareholders, successors and
assigns (collectively the "indemnified parties"), from and against all demands,
claims, actions or causes of action, assessments, and Losses (including without
limitation reasonable attorneys' and
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<PAGE>
accountant s' fees and expenses, court costs and all other out-of-pocket
expenses) asserted against or incurred by the indemnified parties, directly or
indirectly, arising out of or in connection with any of the following:
(i) except to the extent such warranty or representation has expired or
such claim is barred by limitations pursuant to Section 2.3, or otherwise, the
breach of any warranty or the inaccuracy of any representation of Buyer
contained in or made pursuant to Section 2.2 hereof;
(ii) any breach or failure by Buyer to perform any of the covenants,
agreements or obligations under this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Buyer in connection
herewith; and
(iii) the assertion by any third party against an undemnified party of
any claim, liability or obligation relating to or arising out of the operation
by Buyer of the Product Line or the Transferred Assets accrued after the Closing
Date.
Seller agrees to promptly (no more than 30 days after receipt of such
claims) notify Hopkins and Buyer of all facts and circumstances with respect to
any third party claim which may give rise to a claim for indemnification
hereunder. Such notice will describe such claim in reasonable detail. Buyer
shall be provided an opportunity to deal directly with such third party and, at
their option, to settle or control the defense of the litigation of such claim,
including but not limited to the appointment of counsel, reasonably acceptable
to Seller, provided, that Hopkins and Buyer proceed in good faith, expeditiously
and diligently. Seller agrees to cooperate with Buyer and, upon the request of
Buyer, assist Buyer, at Buyer's expense, in the conduct of such defense.
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<PAGE>
Section 3.7 No Tradenames. Buyer acknowledges and agrees that Seller is
-------------
not selling to Buyer any of Seller's trademarks, service marks, trade names or
logos relating to the Product Line.
Section 3.8 Attorneys' Opinions.
-------------------
A. At the Closing, Seller shall receive the opinion of Caldwell, Berner &
Caldwell, counsel for Buyer, dated as of the Closing Date, which opinion of
counsel shall cover the matters represented by Buyer in Sections 2.2.A, 2.2.B
and 2.2.C.
B. At the Closing, Buyer shall receive the opinion of McLean & Sanders,
counsel for the Buffton Companies, dated as of the closing Date, which opinion
of counsel shall cover the matters represented by Seller in Sections 2.1.A,
2.1.B and 2.1.C.
Section 3.9 Further Assurance. Each party will execute and deliver, or
-----------------
cause to be executed and delivered, from and after the date hereof, such
additional or further transfers, assignments, endorsements, and other
instruments as any other party reasonably may request for the purpose of
carrying out this Agreement.
Section 3.12 Closing Procedure. At the Closing, Seller, Hopkins and
-----------------
Buyer, as the case may be, shall execute and deliver to the appropriate party
the instruments and/or take the action described below:
A. Seller shall:
a. Execute and deliver the Agreement;
b. Execute and deliver a Bill of Sale transferring to Buyer the
Transferred Assets
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<PAGE>
owned by the Seller, which Bill of Sale shall be in a form and
content satisfactory to Seller and Buyer and will deliver any
other transfer documents necessary to transfer title to the
Transferred Assets to Buyer, including, but not limited to
assignment of patents;
c. Execute and deliver the Security Agreement;
d. Deliver certified Corporate Resolutions of its Board of
Directors, authorizing the transaction contemplated by the
Agreement;
e. Upon payment and receipt of the purchase price, deliver or cause
Congress Financial Corporation and any other secured party to
deliver Releases and/or Termination Statements releasing all
security interests of Congress Financial Corporation or any
other secured party in the Transferred Assets; and
f. Deliver a Certificate of Good Standing from its state of
incorporation, dated within thirty days of the Closing Date.
B. Buyer and Hopkins shall:
a. Execute and deliver the Agreement;
b. Execute and deliver the Note;
c. Execute and deliver the Security Agreements;
d. Deliver the executed Guaranty;
e. Deliver certified Corporate Resolutions of the Board of
Directors of Buyer authorizing the transaction contemplated
by the Agreement; and
f. Deliver a Certificate of Good Standing from Buyer's state of
incorporation, dated within thirty days of the Closing Date.
D. At the Closing, Seller shall cause McLean & Sanders to deliver the
opinion described in Section 3.8.B hereof.
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<PAGE>
E. At the Closing, Buyer shall cause Caldwell, Berner & Caldwell to
deliver the opinion described in Section 3.8.A hereof.
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1 Amendment. This Agreement may not be amended, modified or
---------
altered, except pursuant to an instrument in writing signed by each of the
parties hereto.
Section 4.2 Assignment. No party to this Agreement may assign its
----------
rights or obligations hereunder without first obtaining the written consent of
the other parties hereto; provide d, however, that (a) nothing in this Agreement
is intended to limit Buyer's ability to sell or to Transfer any or all of the
Transferred Assets following the Closing Date and (b) Buyer may assign or
delegate any or all of its rights or obligations under this Agreement to any
Affiliate thereof or to any person or entity that acquires all or substantially
all of the assets or voting stock of Buyer. In addition, Buyer may assign all
of its rights hereunder to any lender of Buyer.
Section 4.3 Expenses. Seller and Buyer will each pay their respective
--------
expenses, fees and costs incident to the preparation and execution of this
Agreement, and except as otherwise expressly provided for herein, each party
shall bear its respective expenses or fees involved in the preparation and
delivery of all documents, reports and opinions required to be delivered by or
on behalf of such party hereunder, whether or not
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<PAGE>
the transactions contemplated hereunder are consummated, except that Buyer shall
bear all filing fees incurred in any governmental filing required in connection
with the transactions contemplated by this Agreement.
Section 4.4 Entire Agreement. This Agreement contains the entire
----------------
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all previous written or oral agreements,
negotiations, commitments and writings.
Section 4.5 Rights. Nothing in this Agreement shall be construed to
------
give any person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy, or claim under this
Agreement.
Section 4.6 Parties Bound. This Agreement shall be binding upon and
-------------
inure to the benefit of each party hereto, its permitted assigns, and its
successors in interest, and all assigns and successors in interest thereafter.
Section 4.7 Governing Law. This Agreement, including, without
-------------
limitation, the interpretation, construction, validity and enforceability
hereof, shall be governed by the laws (other than the conflict of law rules) of
the State of Texas.
Section 4.8 Attorneys' Fees. Should any action at law or in equity
---------------
(including any action for declaratory relief) be brought to enforce or interpret
the provisions of this Agreement and/or any other agreement executed or
delivered incident hereto, the prevailing party shall be entitled to recover its
attorneys'
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<PAGE>
fees from the other party or parties, which fees may be set by the Court in the
trial of such action or may be enforced in a separate action brought for that
purpose, and which fees shall be in addition to any other relief which may be
awarded.
Section 4.9 Notices. Any notice, consent or other communication
-------
given hereunder shall be in writing including by facsimile and shall be deemed
to have been duly given when delivered either personally or by registered or
certified mail, postage prepaid, or when dispatched by electronic facsimile
transfer (confirmed in writing by mail simultaneously dispatched) or one
business day after having been dispatched by a nationally recognized overnight
courier service to the parties at the following addresses, or such other
addresses as may be specified by notice given in accordance herewith:
SELLER: Flo Control, Inc.
226 Bailey Avenue
Suite 101
Fort Worth, Texas 76107
HOPKINS: Patrick Hopkins
P.O. Box 326
902 East Wisconsin Street
Delavan, Wisconsin 53115
BUYER: FLO-SAFE SYSTEMS, INC.
P.O. Box 326
902 East Wisconsin Street
Delavan, Wisconsin 53115
Section 4.10 Headings, Exhibits, Exhibits. The headings of the various
----------------------------
sections of this Agreement are included solely for the convenience of reference
and are not intended to be full or accurate descriptions of the contents
hereof.
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<PAGE>
Any reference to Exhibits or Exhibits shall signify that such Exhibits or
Exhibits are incorporated herein by reference.
Section 4.11 Counterparts. This Agreement may be executed in two or
------------
more original counterparts, each of which may be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 4.12 Interpretation. Any pronoun used in this Agreement
--------------
shall be deemed to include singular and plural and masculine, feminine and
neuter gender, as the case may be. Unless the context otherwise requires, (i)
the words "herein," "hereof," and "hereunder" shall be deemed to refer to this
entire Agreement, (ii) all references to Sections, Articles or Exhibits are to
Sections, Articles or Exhibits of or to this Agreement, (iii) each term defined
in this Agreement has the meaning assigned to it, (iv) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP, (v) "or" is disjunctive but not necessarily exclusive, and (vi) the
terms "Subsidiary" and "Affiliate" have the meanings given to those terms in
Rule 12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as
amended. All references to "$" or dollar amounts will be in lawful currency of
the United States of America. Currency exchange rates against the United States
Dollar will be the average of the closing rates as reported in the New York
edition of the Wall Street Journal published on the business day immediately
preceding the date hereof and will apply for all purposes of this Agreement
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<PAGE>
notwithstanding subsequent changes in such currency exchange rates, except that
all computations to be made as of the Closing Date will be based on such rates
as of the close of business on the Closing Date.
Section 4.13 No Third Party Beneficiaries. Nothing expressed or
----------------------------
implied in this Agreement is intended or will be construed to confer upon or
give any person or entity other than the parties hereto and their respective
affiliates any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the day and year first above written.
SELLER: FLO CONTROL, INC.
By:________________________________
Robert H. McLean
Chairman of the Board
BUYER: FLO-SAFE SYSTEMS, INC.
By:________________________________
HOPKINS: ___________________________________
Patrick Hopkins
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<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT TO
--------------------
ACCOUNTS FINANCING AGREEMENT [SECURITY AGREEMENT]
-------------------------------------------------
THIS SECOND AMENDMENT TO ACCOUNTS FINANCING AGREEMENT [SECURITY
AGREEMENT] (this "Amendment") is made and entered into as of the ____ day of
---------
January, 1995, but effective for all purposes on the date on which all of the
conditions precedent set forth in Article IV hereof have been either satisfied
----------
or specifically waived (the "Effective Date"), by and among CONGRESS FINANCIAL
--------------
CORPORATION (SOUTHWEST), a Texas corporation ("Lender"), CURRENT TECHNOLOGY,
------
INC., a Delaware corporation ("Current Technology"), ELECTRO-MECH, INC., a
------------------
Nevada corporation ("Electro-Mech"), and FLO CONTROL, INC., a Delaware
------------
corporation ("Flo Control") (Current Technology, Electro-Mech and Flo Control
-----------
are collectively referred to herein as "Borrowers").
---------
RECITALS
WHEREAS, Borrowers, MoldCon, Inc., a Delaware corporation ("MoldCon"),
-------
Tri-Tec Engineering Corporation, a Delaware corporation ("Tri-Tec") (Borrowers,
-------
MoldCon and Tri-Tec are collectively referred to herein as the "Original
--------
Borrowers"), and Lender are parties to that certain Accounts Financing Agreement
- - - ---------
[Security Agreement] dated March 3, 1992 (together with any supplements or
riders thereto, the "Loan Agreement").
--------------
WHEREAS, in connection with the Loan Agreement, Original Borrowers
executed that certain letter regarding inventory loans dated March 3, 1992 (the
"Original Inventory Letter").
-------------------------
WHEREAS, the Loan Agreement and the Original Inventory Letter were
amended by that certain First Amendment to Accounts Financing Agreement
[Security Agreement] dated March 11, 1994 by and among Original Borrowers and
Lender (the "First Amendment"). The Loan Agreement, as amended by the First
---------------
Amendment and as otherwise amended or modified from time to time is hereinafter
referred to as the "Agreement". The Original Inventory Letter, as amended by
---------
the First Amendment, and as otherwise amended or modified from time to time is
hereinafter referred to as the "Inventory Letter".
----------------
WHEREAS, Original Borrowers have executed, as maker, a certain First
Amended and Restated Revolving Credit Note dated as of March 11, 1994 (the
"Revolving Note"), payable to the order of Lender in the stated principal amount
- - - ---------------
of $4,000,000.00.
WHEREAS, Original Borrowers have executed, as maker, a certain First
Amended and Restated Term Note dated as of March 11, 1994 (the "Term Note"),
---------
payable to the order of Lender in the original principal amount of
$1,000,000.00.
WHEREAS, effective as of July 7, 1994, MoldCon and Tri-Tec, together with
various other corporations, have merged with and into National Pipe Company, a
Delaware corporation ("National Pipe"), with National Pipe as the surviving
-------------
corporation (the "Merger").
------
1
<PAGE>
WHEREAS, pursuant to the terms of (i) that certain Agreement of Purchase
and Sale dated the date hereof among Buffton Corporation ("Buffton"), Flo
-------
Control, Russell J. Sarno and F.C. Acquisition, Inc., a California corporation
("F.C.A."), (ii) that certain Agreement of Purchase and Sale dated the date
------
hereof between Buffton, Flo Control and F.L.C. Property Acquisition, Inc., a
California corporation ("F.L.C.") and (iii) that certain Agreement of Purchase
------
and Sale dated the date hereof among Flo Control, Patrick Hopkins and Flo-Safe
Systems, Inc., a Wisconsin corporation ("FSS") (F.C.A., F.L.C. and FSS are
---
collectively referred to as the "Purchaser") (collectively, the "Asset Purchase
--------- --------------
Agreements"), Purchaser has agreed to purchase substantially all of the assets
- - - ----------
of Flo Control in existence on the date hereof (the "Asset Sale").
----------
WHEREAS, upon the consummation of the Asset Sale, Borrowers shall
partially repay amounts owing to Lender under the Revolving Note and shall repay
the Term Note in full.
WHEREAS, Borrowers and Lender desire to amend the Agreement and the
Inventory Letter in the manner provided below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
-----------
the extent not otherwise defined herein, shall have the same meaning as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS
----------
Section 2.01. Amendment to Section 1.9 of the Agreement. Effective as
-----------------------------------------
of the Effective Date, Section 1.9 of the Agreement is hereby amended and
-----------
restated to read in its entirety as follows:
"1.9. 'INDEX RATE' shall mean the prime commercial interest rate from
time to time publicly announced by CoreStates Bank, N.A., whether or not such
announced rate is the best rate available at such bank."
Section 2.02. Amendment to Section 1.10 of the Agreement. Effective as
------------------------------------------
of the Effective Date, Section 1.10 of the Agreement is hereby amended and
------------
restated to read in its entirety as follows:
"1.10. 'MAXIMUM CREDIT' shall mean the amount of $2,000,000."
Section 2.03. Amendment to Section 1.17 of the Agreement. Effective as
------------------------------------------
of the Effective Date, Section 1.17 of the Agreement is hereby deleted in its
------------
entirety.
2
<PAGE>
Section 2.04. Amendment to Section 2.3 of the Agreement. Effective as
-----------------------------------------
of the Effective Date, Section 2.3 of the Agreement is hereby amended and
-----------
restated to read in its entirety as follows:
"2.3. Except in your sole discretion, the outstanding aggregate
principal amount of all loans by you to us hereunder or under any supplement
hereto shall not exceed the Maximum Credit at any time. Without limiting your
right to demand payment of the Obligations, or any portion thereof, in
accordance with any other terms of this Agreement, or any supplement hereto, in
the event that the outstanding aggregate principal amount of loans by you to us
exceeds the Maximum Credit or the formula set forth in Section 2.1 hereof (after
giving effect to any adjustments thereto based on any supplements hereto), we
shall remain liable therefor and the entire amount of such excess(es) shall, at
your option, become immediately due and payable, upon your demand."
Section 2.05. Amendment to Section 3.8 of the Agreement. Effective as
-----------------------------------------
of the Effective Date, Section 3.8 of the Agreement is hereby amended and
-----------
restated to read in its entirety as follows:
"3.8. If the average outstanding daily principal balance of all
loans by you to us under this Agreement or any supplement hereto in any calendar
month shall be less than the Maximum Credit, we shall pay to you on or before
the tenth (10th) day of the next succeeding calendar month an unused line fee
equal to one-half of one percent (.50%) per annum upon the amount by which the
Maximum Credit exceeds the average outstanding daily principal balance of all
such loans in respect of such month."
Section 2.06. Amendment to Section 3.9 of the Agreement. Effective as
-----------------------------------------
of the Effective Date, Section 3.9 of the Agreement is hereby amended by
-----------
deleting therefrom the reference therein to "$3,750.00" and replacing it with
"$1,250.00".
Section 2.07. Amendment to Section 9.2 of the Agreement. Effective as
-----------------------------------------
of the Effective Date, the first sentence of Section 9.2 to the Agreement is
-----------
hereby amended and restated to read in its entirety as follows:
"9.2. If you terminate this Agreement upon the occurrence of an
Event of Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of your lost profits as a result thereof, we
hereby agree that we shall pay to you, upon the effective date of such
termination, an early termination fee in an amount equal to: (a) five percent
(5%) of the Maximum Credit if such termination occurs on or prior to March 3,
1995; (b) two and one half percent (2.5%) if such termination occurs on or prior
to March 3, 1996 but after March 3, 1995; and (c) one percent (1%) of the
Maximum Credit if such termination occurs after March 3, 1996 and on a day other
than an anniversary of the Renewal Date."
3
<PAGE>
Section 2.08. Amendment to Paragraph 3 of the Inventory Letter.
------------------------------------------------
Effective as of the Effective Date, Paragraph 3 of the Inventory Letter is
-----------
hereby amended by deleting therefrom the reference therein to "$1,750,000" and
replacing it with "$500,000."
Section 2.09. Amendment to Rider 1.17 to the Agreement. Effective as of
----------------------------------------
the Effective Date, Rider 1.17 to the Agreement is hereby deleted in its
----------
entirety.
ARTICLE III
LIMITED RELEASE
---------------
Effective as of the Effective Date, Lender hereby releases National Pipe
from any and all of its obligations arising solely as a "Borrower" under the
Loan Documents (as hereinafter defined) as a result of the Merger; provided,
however, National Pipe shall remain fully liable and obligated to perform its
obligations as a "Guarantor" under the Loan Documents, including, without
limitation, the Guarantee and Waiver dated March 3, 1992 executed by National
Pipe in favor of Lender.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
Section 4.01. Conditions. The effectiveness of this Amendment is
----------
subject to the satisfaction of the following conditions precedent, unless
specifically waived by Lender:
(a) Lender shall have received four (4) copies of this
Amendment duly executed by Borrowers;
(b) Lender shall have received a Second Amended and Restated
Revolving Credit Note, in the form of Exhibit A attached hereto, dated as of the
---------
date of this Amendment and duly executed by Borrowers;
(c) Lender shall have received a Consent and Ratification, in
the form of Exhibit B attached hereto, dated as of the date of this Amendment
---------
and duly executed by each of the signatories thereto ("Guarantors");
----------
(d) Lender shall have received a Secretary's Certificate of
Directors' Resolutions and Incumbency and Shareholders' Consent dated as of the
date of this Amendment, in form and substance satisfactory to Lender, certified
by the Secretary of each Borrower certifying among other things, (i) that such
Borrower's Board of Directors has met and has adopted, approved, consented to
and ratified resolutions which authorize the execution, delivery and performance
by such Borrower of this Amendment and all such other documents to which such
Borrower is or is to be a party and (ii) the names of the officers of such
Borrower authorized to sign this Amendment and each of such other documents to
which such Borrower is or is to be a party hereunder (including the certificates
contemplated herein) together with specimen signatures of such officers;
4
<PAGE>
(e) Lender shall have received a notice regarding the absence
of oral agreements, in the form of Exhibit C attached hereto, dated as of the
---------
date of this Amendment and duly executed by Borrowers and Guarantors;
(f) Lender shall have received payment of the "Prepayment
----------
Amount" as defined in, and in accordance with the terms and conditions of,
- - - ------
Lender's letter to Borrowers in the form of Exhibit D attached hereto;
---------
(g) Lender shall have received the Note as defined in, and in
accordance with the terms and conditions of, Lender's letter to Borrowers in the
form of Exhibit E attached hereto;
---------
(h) The representations and warranties contained herein, in
the Agreement, as amended hereby, and/or in the other documents and agreements
relating hereto or thereto (hereinafter individually referred to as a "Loan
----
Document" and collectively referred to as the "Loan Documents") shall be true
- - - -------- --------------
and correct as of the date hereof as if made on the date hereof;
(i) No default shall have occurred under the Agreement and be
continuing and no default shall exist under the Agreement unless such default
has been specifically waived in writing by Lender;
(j) Lender shall have received a letter from Borrowers
regarding the application of the amount by which the Prepayment Amount exceeds
the aggregate Obligations owing by Flo Control; and
(k) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Lender and its
legal counsel, Hughes & Luce, L.L.P.
ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
---------------------------------------------
Section 5.01. Ratifications. The terms and provisions set forth in this
-------------
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the Inventory Letter and except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement and
the Inventory Letter are ratified and confirmed and shall continue in full force
and effect.
Section 5.02. Representations and Warranties. Each Borrower hereby
------------------------------
represents and warrants to Lender that (i) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of such Borrower and will not violate the
Articles/Certificate of Incorporation or Bylaws of such Borrower, (ii) the
representations and warranties contained in the
5
<PAGE>
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof as though made on and as of the date hereof, (iii)
such Borrower is in full compliance with all covenants and agreements contained
in the Agreement and the other Loan Documents, as amended hereby, and (iv) such
Borrower has not amended its Articles/Certificate of Incorporation or Bylaws
since March 3, 1992, except as disclosed to Lender in writing contemporaneously
with the execution of this Amendment.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in the Agreement or any other document or
documents relating thereto, including, without limitation, any Loan Document
furnished in connection with this Amendment, shall survive the execution and
delivery of this Amendment and the other Loan Documents, and no investigation by
Lender or any closing shall affect the representations and warranties or the
right of Lender to rely upon them.
Section 6.02. Reference to Agreement. Each of the Loan Documents,
----------------------
including the Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement or the Inventory
Letter shall mean a reference to the Agreement and the Inventory Letter, as each
is amended hereby.
Section 6.03. Expenses of Lender. As provided in the Agreement,
------------------
Borrowers agree to pay on demand all costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the costs
and fees of Lender's legal counsel, and all costs and expenses incurred by
Lender in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of Lender's legal counsel.
Section 6.04. Severability. Any provision of this Amendment held by a
------------
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable. Furthermore,
in lieu of each such invalid or unenforceable provision there shall be added
automatically as a part of this Amendment a valid and enforceable provision that
comes closest to expressing the intention of such invalid or unenforceable
provision.
SECTION 6.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN
--------------
DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN DALLAS, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 6.06. Successors and Assigns. This Amendment is binding upon
----------------------
and shall inure to the benefit of Lender and Borrowers and their respective
successors and assigns, except
6
<PAGE>
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of Lender.
Section 6.07. Counterparts. This Amendment may be executed in one or
------------
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
Section 6.08. Effect of Waiver. No consent or waiver, express or
----------------
implied, by Lender to or for any breach of or deviation from any covenant,
condition or duty of the Agreement shall be deemed a consent or waiver to or of
any other breach of the same or any other covenant, condition or duty.
Section 6.09. Headings. The headings, captions and arrangements used in
--------
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed by Borrowers
and Lender as of the date first above written.
CURRENT TECHNOLOGY, INC.
ELECTRO-MECH, INC.
FLO CONTROL, INC.
By:___________________________________________
Name: Robert H. McLean
Title: President and/or
Chairman of the Board
AGREED AND ACCEPTED as of January __, 1995.
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:___________________________________________
Name:_________________________________________
Title:________________________________________
7
<PAGE>
EXHIBIT A
FORM OF FIRST AMENDED AND RESTATED
----------------------------------
REVOLVING CREDIT NOTE
---------------------
[SEE ATTACHMENT]
Exhibit A
<PAGE>
EXHIBIT B
FORM OF CONSENT AND RATIFICATION
--------------------------------
[SEE ATTACHMENT]
Exhibit B
<PAGE>
EXHIBIT C
FORM OF NOTICE REGARDING ABSENCE OF ORAL AGREEMENTS
---------------------------------------------------
[SEE ATTACHMENT]
Exhibit C
<PAGE>
EXHIBIT D
FORM OF PARTIAL PAYDOWN LETTER
------------------------------
[SEE ATTACHMENT]
Exhibit D
<PAGE>
EXHIBIT E
FORM OF LETTER AGREEMENT
------------------------
[SEE ATTACHMENT]
Exhibit E
<PAGE>
EXHIBIT 10.4
SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE
$2,000,000 January ____, 1995
Dallas, Texas
FOR VALUE RECEIVED, the undersigned (collectively, the "Maker"),
jointly and severally, do hereby promise to pay to CONGRESS FINANCIAL
CORPORATION (SOUTHWEST) (the "Payee"), at its offices located at 1201 Main
Street, Suite 1625, P. O. Box 50728, Dallas, Texas 75250 or at such other place
as the Payee or any holder hereof may from time to time designate, the sum of
TWO MILLION AND NO/100 DOLLARS ($2,000,000), or if less, the unpaid principal
balance, on or before March 3, 1996, unless otherwise extended pursuant to the
Financing Agreements (as hereinafter defined). Maker hereby further promises to
pay interest to Payee in like money at said office or place on the unpaid
principal balance hereof computed at the rate of two and one-half percent
(2.50%) per annum plus the prime commercial interest rate from time to time
publicly announced by CoreStates Bank, N.A., whether or not such announced rate
is the best rate available at such bank, which interest rate payable hereunder
shall increase or decrease in an amount equal to each increase or decrease,
respectively, in said prime commercial interest rate as announced by said bank,
effective on the first day of the month after any change in said prime
commercial interest rate based on the prime commercial interest rate in effect
on the last day of the month in which any such change occurs. Interest shall be
payable on the first day of each month, commencing February 1, 1995. Interest
after maturity shall be payable at a rate equal to three percent (3%) per annum
in excess of the rate otherwise payable hereunder. Interest shall be calculated
on the basis of a 360-day year and actual days elapsed. In no event shall the
interest charged hereunder exceed the maximum permitted under the laws of the
State of Texas.
This Note is issued as evidence of indebtedness arising pursuant to
the terms and provisions of the financing agreements, documents and guaranties
granting collateral security or evidencing or creating indebtedness, each
executed and delivered by Maker or related parties in favor of Payee
contemporaneously herewith (the foregoing, together with all present and future
related agreements or instruments with respect thereto, as the same may now
exist or hereafter be amended, modified or supplemented are hereafter
collectively referred to as the "Financing Agreements"). This Note is secured
by, and is entitled to the benefit of, any and all collateral pledged by Maker
or related parties to Payee as more particularly set forth in the Financing
Agreements. At the time any payment is due hereunder, at its option Payee may
charge the amount thereof to any account of the Maker maintained by Payee.
The unpaid principal balance hereof shall at no time exceed the sum of
TWO MILLION AND NO/100 DOLLARS ($2,000,000).
The unpaid principal balance of this Note at any time shall be the
total amounts loaned or advanced hereunder by the holder hereof, less the amount
of payments or prepayments of principal made hereon by or for the account of
Maker. It is contemplated that by reason of prepayments hereon there may be
times when no indebtedness is owing hereunder; but
<PAGE>
notwithstanding such occurrences, this Note shall remain valid and shall be in
full force and effect as to loans or advances made pursuant to and under the
terms of this Note subsequent to each such occurrence. All loans or advances and
all payments or prepayments made hereunder on account of principal or interest
may be evidenced by Payee, or any subsequent holder, maintaining in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Maker resulting from all loans or advances and all payments or prepayments
hereunder from time to time and the amounts of principal and interest payable
and paid from time to time hereunder, in which event, in any legal action or
proceeding in respect of this Note, the entries made in such account or accounts
shall constitute a rebuttable presumption to the existence and amounts of the
obligations of the Maker therein recorded, subject to contrary proof. In the
event that the unpaid principal amount hereof at any time, for any reason,
exceeds the maximum amount as provided in the Financing Agreements, Maker
covenants and agrees to pay the excess principal amount forthwith UPON DEMAND;
such excess principal amount shall in all respects be deemed to be included
among the loans or advances made pursuant to the other terms of this Note and
shall bear interest at the rates hereinabove stated.
Advances hereunder may be made by the holder hereof (i) pursuant to
the terms of any written agreement executed in connection herewith between Maker
and Payee, or (ii) at the oral or written request of Maker or of any officer or
agent of Maker designated by or acting under the authority of resolutions of the
Board of Directors of Maker, a duly certified or executed copy of which shall be
furnished to the holder hereof, until written notice of the revocation of such
authority is received by the holder hereof. Maker covenants and agrees to
furnish to the holder hereof written confirmation of any such oral request
within five (5) days of the resulting loan or advance, but any such loan or
advance shall be deemed to be made under and entitled to the benefits of this
Note irrespective of any failure by Maker to furnish such written confirmation.
Any loan or advance shall be conclusively presumed to have been made under the
terms of this Note to or for the benefit of Maker when made pursuant to the
terms of any written agreement executed in connection herewith between Maker and
Payee, or in accordance with such requests and directions, or when said advances
are deposited to the credit of the account of Maker with Payee regardless of the
fact that persons other than those authorized hereunder may have authority to
draw against such account.
If there shall be a default in the payment when due of principal or
interest hereunder, or if an Event of Default shall occur for any reason under
the Financing Agreements, or if the Financing Agreements shall be terminable or
be terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to and not in limitation of all rights and remedies of the
Payee under the Financing Agreements, applicable law and otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, the Payee may, at its option,
declare all amounts owing under this Note to be due and payable, whereupon the
then unpaid balance hereof together with all interest accrued thereon shall
forthwith become due and payable, together with interest accruing thereafter at
the aforesaid rate payable after maturity until this Note is paid and the costs
and expenses of collection hereof, including reasonable attorneys' fees.
2
<PAGE>
The Maker hereby waives presentment for payment, demand, notice of
nonpayment and dishonor, protest and notice of protest and notice of
acceleration and of intent to accelerate.
Except as provided in the two immediately following sentences, this
Note may not be prepaid, in whole or in part. Provided that Maker gives the
holder hereof five business days' notice of such prepayment and that Maker pays
to Payee in immediately available federal funds all Obligations (as defined in
that certain Accounts Financing Agreement [Security Agreement] between Maker and
Payee dated March 3, 1992, as amended), including, without limitation, all
amounts due under Section 9.2 in such Accounts Financing Agreement [Security
-----------
Agreement], Maker may prepay in whole (but not in part) all of the Obligations
and this Note. Maker shall also have the right to make partial prepayments in
accordance with such Accounts Financing Agreement [Security Agreement]. The
provisions of this Note may not be changed, modified or terminated orally, but
only by an agreement, in writing signed by the party to be charged, nor shall
any waiver be applicable except in the specific instance for which it is given.
In the event of any litigation with respect to any of the Financing
Agreements, or arising on, out of or by reason of this Note, the Maker waives
all rights of set off and rights to interpose counterclaims and cross-claims.
The Maker hereby irrevocably consents to the nonexclusive jurisdiction of the
courts of the State of Texas and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Note. The execution and delivery of this Note has been authorized by the Board
of Directors of Maker. The Maker hereby authorizes the Payee to complete this
Note in any particulars according to the terms of the loan evidenced hereby.
This Note and the Financing Agreements shall be governed by and construed, and
all rights and obligations hereunder determined, in accordance with the laws of
the State of Texas (other than its conflicts of law rules) and shall be binding
upon the successors and assigns of the Maker and inure to the benefit of the
Payee, its successors, endorsees and assigns. If any term or provision of this
Note shall be held invalid, illegal or unenforceable, the validity of all other
terms and provisions shall in no way be affected thereby.
No agreements, conditions, provisions or stipulations contained in
this Note, or the default of Maker, or the exercise by the holder hereof of the
right to accelerate the payment or the maturity of principal and interest, or to
exercise any option whatsoever contained herein, or in any other agreements
between Maker and Payee, or the arising of any contingency whatsoever, shall
entitle the holder of this Note to collect, in any event, interest exceeding the
maximum rate of nonusurious interest allowed from time to time by applicable
state or federal law as now or as may hereinafter be in effect (the "Maximum
Legal Rate") and in no event shall Maker be obligated to pay interest exceeding
such Maximum Legal Rate, and all agreements, conditions or stipulations, if any,
which may in any event or contingency whatsoever operate to bind, obligate or
compel Maker to pay a rate of interest exceeding the Maximum Legal Rate shall be
without binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Legal Rate. In the event any interest is
charged in excess of the Maximum Legal Rate (the "Excess"), Maker acknowledges
and stipulates that any such charge shall be the result of an accidental and
bona fide error, and such Excess shall be first, applied to reduce the principal
then unpaid hereunder; second, applied to reduce any obligation for other
indebtedness of Maker to Payee; and third, returned to Maker, it being the
intention of the parties hereto not to enter at any
3
<PAGE>
time into an usurious or other illegal relationship. Maker recognizes that with
fluctuations in the prime commercial interest rate from time to time announced
by Cove States Bank, N.A. such an unintentional result could inadvertently
occur. By the execution of this Note, Maker covenants that (a) the prompt credit
or return of any Excess shall constitute the acceptance by Maker of such Excess,
and (b) if promptly certified or returned, Maker shall not seek or pursue any
other remedy, legal or equitable, against Payee or any holder hereof based, in
whole or in part, upon the charging or receiving of any interest in excess of
the Maximum Legal Rate. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by Payee or any holder hereof, all
interest at any time contracted for, charged or received by Payee or any holder
hereof, in connection with this Note, shall be amortized, prorated, allocated
and spread in equal parts during the entire term of this Note to the extent
permitted by applicable law.
This Note shall be construed under and governed by the laws of the
State of Texas and applicable federal law; provided, however, that the
provisions of Chapter 15 of the Texas Credit Code (Tex. Rev. Civ. Stat. Ann.
article 5069-15.01 et. seq.), as amended, shall not be applicable to the loan(s)
-- ---
evidenced by this Note. Unless preempted by federal law, the rate of interest
from time to time in effect hereunder shall not exceed the "indicated ceiling
rate" from time to time in effect under Tex. Rev. Civ. Stat. Ann. article 5069-
1.04, as amended.
THIS NOTE RENEWS, EXTENDS, AMENDS AND RESTATES, BUT DOES NOT
EXTINGUISH, THAT CERTAIN REVOLVING CREDIT NOTE, DATED MARCH 3, 1992 IN THE
STATED PRINCIPAL AMOUNT OF $7,000,000, EXECUTED BY MAKER AND PAYABLE TO THE
ORDER OF PAYEE, AS RENEWED, EXTENDED, AMENDED AND RESTATED, BUT NOT
EXTINGUISHED, BY THAT CERTAIN FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE,
DATED MARCH 11, 1994 IN THE STATED PRINCIPAL AMOUNT OF $4,000,000, EXECUTED BY
MAKER AND PAYABLE TO THE ORDER OF PAYEE.
Maker, if two or more in number, shall be jointly and severally bound
hereunder.
CURRENT TECHNOLOGY, INC.
ELECTRO-MECH, INC.
FLO CONTROL, INC.
By: _________________________________________
Name: Robert H. McLean
Title: President and/or Chairman of the Board
4
<PAGE>
EXHIBIT 99
PRESS RELEASE
FOR IMMEDIATE RELEASE:
- - - ----------------------
BUFFTON CORPORATION
ANNOUNCES COMPLETION OF SALE
FORT WORTH, TEXAS, January 23, 1995 -- Robert H. McLean, Chairman of the Board
and President of Buffton Corporation (ASE-"BFX"), announced today the completion
of the previously announced sale by its subsidiary Flo Control, Inc. of its
operations in Burbank, California for $3,100,000 in cash and the assumption of
$800,000 in liabilities. In connection with this sale, Flo Control, Inc. also
disposed of its 95% ownership interest in the Florida Realty Joint Venture for
$150,000 in cash and its secondary containment product line for a $500,000 note.
Mr. McLean stated, "As a result of the above sales, Buffton Corporation will
incur an approximate $3.1 million loss (or $.59 per share) for its first
quarter. Although the loss is significant, it will be available to offset
future taxable income and the sale of Flo Control's operations and its
ownership interest in the Florida Realty Joint Venture strengthen our balance
sheet and improve our cash flow."
The cash proceeds from the sale will be used to reduce and refinance the
Company's outstanding debt with Congress Financial Corporation. Subsequent to
this payment the Company's only outstanding debt will be with its wholly owned
subsidiary, Current Technology, Inc., which will have a $2 million revolving
credit commitment with Congress Financial Corporation, approximately $1 million
of which will be outstanding. The Company's cash position will be at
approximately $3.5 million prior to collection of the $500,000 note. In
addition, as a result of the sale of the interest in the Florida Realty Joint
Venture, the Company will eliminate the $2.3 million debt of the Florida Realty
Joint Venture presently consolidated in the Company's balance sheet.
Mr. McLean concluded, "Our remaining manufacturing subsidiary, Current
Technology, Inc. and our Hospitality Division, continue to perform well."
Buffton Corporation is a diversified group of companies with its shares traded
on the American Stock Exchange.
For More Information, Contact:
Robert Korman, Vice President & Chief Financial Officer
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
817/332-4761
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