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U.S. 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) March 30, 1998
MORTON INDUSTRIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Georgia 0-13198 38-0811650
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State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization File Number) Identification No.)
1021 West Birchwood, Morton, Illinois 61550
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code 309-266-7176
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
CARROLL GEORGE, INC., ACQUISITION
On March 30, 1998, the Company acquired all of the issued and
outstanding capital stock of Carroll George, Inc. ("Carroll George"), an Iowa
corporation, from its 30 shareholders. The Company paid a total purchase price
of $8,104,000, including payment of all of Carroll George's revolving credit
and term loan debt. The Company used a draw on its line of credit with Harris
Trust and Savings Bank to fund the purchase price and debt payoff. The purchase
price that the Company paid to the Carroll George shareholders was the result
of arm's length bargaining between the Company and representatives of the
shareholders.
Carroll George manufactures components from polyurethane foam plastic
and similar materials for sale to the agricultural equipment, trucking, and off
road vehicle manufacturers. Carroll George's largest selling products are fully
featured headliners and other interior assemblies for vehicle cabs. These
headliners and interior assemblies contain dome lights, HVAC ducts and hookups,
sound system wiring, and other components. Carroll George's largest customers
are Caterpillar, Deere & Company, and J. I. Case.
Carroll George is located in Northwood, Iowa, where it employs
approximately 350 persons. Among the assets that the Company indirectly acquired
as a result of its purchase of the stock of Carroll George are ten acres of land
containing a 118,000 square foot manufacturing, warehouse, and office facility;
plastic line bending equipment; hot melt laminating machinery; robotic routers;
multiple cavity and rotary thremoforming machinery, robotic water jet cutting
equipment; vinyl and plastic perforating equipment; digital sheeting equipment;
die cutting and flame laminating machinery; and computer assisted design
equipment.
The Company currently intends to maintain Carroll George as a
subsidiary and to operate its assets in substantially the same manner in which
Carroll George employed them before the acquisition.
In connection with the acquisition, the Company entered into an
employment agreement with Gary L. George with a one year term that is renewable
from year to year. Mr. George also entered into a noncompetition agreement with
the Company that continues for five years after the termination of his
employment by Carroll George. Prior to the closing of the acquisition, there was
no material relationship between Mr. George or any of the other selling
shareholders and the Company or any of its officers, directors, or affiliates or
any associate of any director or officer of the Company.
B & W METAL FABRICATORS, INC., ACQUISITION
On April 8, 1998, the Company purchased all of the issued and
outstanding capital stock of B & W Metal Fabricators, Inc., a North Carolina
corporation ("B&W") from its two shareholders, Joseph T. Buie, Jr., and Ernest
J. Butler. The Company paid $7,700,000 to the selling shareholders, $4,050,000
in cash and the balance in the form of the Company's unsecured subordinated
notes (the "Notes"). The Notes bear interest at 7% per annum and are payable in
40 equal quarterly installments of principal and interest of $127,648, beginning
July 8, 1998, and continuing on each October 8, January 8, April 8, and July 8
thereafter. The Company may prepay the Notes in full or in part at any time
without payment of any premium or penalty. At the time of the acquisition, the
Company also paid off $862,908 of B&W's indebtedness.
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The Company used a draw on its line of credit with Harris Trust and Savings Bank
to fund the purchase price and debt payoff. Following the closing, B&W remained
obligated to make installment payments totaling $875,247 on two laser cutting
tools. The purchase price paid to the selling shareholders was the result of
arm's length bargaining between the Company and Mr. Buie and Mr. Butler.
B&W is a manufacturer of metal components and subassemblies for
equipment manufacturers in the Southeast. Its production capabilities include
metal shearing, bending, punching, welding, preparation, and painting, and its
two largest customers are Caterpillar and Ingersoll-Rand.
B&W is located in Welcome, North Carolina, where it employs
approximately 150 people. Through its acquisition of the B&W stock, the Company
indirectly acquired 30 acres of land containing B&W's 187,500 square foot
manufacturing, warehouse, and office facility; laser cutting equipment; metal
punching, bending, shearing, and welding equipment; painting equipment; and
other equipment used in the metal fabrication business.
The Company intends to maintain B&W as a subsidiary and to operate its
assets in substantially the same manner in which B&W employed them before the
acquisition.
In connection with the acquisition, Mr. Butler entered into a one year
employment agreement with B&W, and he and Mr. Buie entered into noncompetition
agreements with the Company having terms ending five years after the April 8,
1998, closing of the acquisition. Prior to the closing of the acquisition, there
was no material relationship between Mr. Butler or Mr. Buie and the Company or
any of its officers, directors, or affiliates or any associate of any director
or officer of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Audited financial statements of Carroll George and B&W and pro forma
financial statements giving effect to the two acquisitions will be filed by
amendment to this Form 8-K within 60 days after April 14, 1998, in the case of
Carroll George, and April 23, 1998, in the case of B&W.
The following documents are filed as Exhibits to this Form 10-K:
Exhibit No. Document
10.1 Stock Purchase Agreement among the Company and
Gary L. George and Gloria J. George dated March
2, 1998
10.2 Stock Purchase Agreement among the Company,
Joseph T. Buie, Jr., and Ernest J. Butler dated
April 8, 1998
10.3 Non-Negotiable Promissory Note (Subordinated) of
the Company to Joseph T. Buie, Jr., dated April
8, 1998
10.4 Non-Negotiable Promissory Note (Subordinated) of
the Company to Ernest J. Butler dated April 8,
1998
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99.1 Press release dated April 8, 1998
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SIGNATURES
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.
MORTON INDUSTRIAL GROUP, INC.
(Registrant)
Date: April 14, 1998 By:/s/ Daryl R. Lindemann
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Daryl R. Lindemann
Vice President Finance,
Secretary, and Treasurer
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EXHIBIT INDEX
Exhibit No. Document
10.1 Stock Purchase Agreement among the Company and
Gary L. George and Gloria J. George dated March
2, 1998
10.2 Stock Purchase Agreement among the Company,
Joseph T. Buie, Jr., and Ernest J. Butler dated
April 8, 1998
10.3 Non-Negotiable Promissory Note (Subordinated) of
the Company to Joseph T. Buie, Jr., dated April
8, 1998
10.4 Non-Negotiable Promissory Note (Subordinated) of
the Company to Ernest J. Butler dated April 8,
1998
99.1 Press release dated April 8, 1998
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of March 2,
1998, by and between MORTON INDUSTRIAL GROUP, INC., a Georgia corporation
("Buyer"); GARY L. GEORGE, an individual resident of Northwood, Iowa ("Gary");
and GLORIA J. GEORGE, an individual resident of Northwood, Iowa ("Gloria").
RECITALS
Gary and Gloria (individually a "Seller", and collectively, the
"Sellers") own the number of shares (the "Shares") of the common stock, no par
value, of CARROLL GEORGE, INC., an Iowa corporation (the "Company"), set forth
in Exhibit A attached. Sellers desire to sell, and Buyer desires to purchase,
the Shares for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING
1.1 SHARES. Subject to the terms and conditions of this Agreement, at
the Closing, Sellers will sell and transfer to Buyer, and Buyer will purchase
from Sellers, the Shares.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for each
Share will be $750.00 reduced by any negative Adjustment Amount.
1.3 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 101 S.W. Adams
Street, Suite 800, Peoria, Illinois, at 10:00 a.m. (local time) on March 25,
1998, or at such other time and place as the parties may mutually agree. Subject
to the provisions of Section 8, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 1.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(ii) Releases in the Form of Exhibit 1.4(a)(ii) executed by
Sellers (collectively, "Sellers' Releases");
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(iii) Employment agreement in the form of Exhibit 1.4(a)(iii),
executed by Gary ("Employment Agreement");
(iv) Noncompetition agreement in the form of Exhibit
1.4(a)(iv), executed by Gary (the "Noncompetition Agreement"); and
(v) A certificate executed by Sellers representing and
warranting to Buyer that each of Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the Schedules attached hereto that
were delivered by Sellers to Buyer prior to the Closing Date in accordance with
Section 4.5).
(b) Buyer will deliver to Sellers:
(i) An aggregate of the funds shown on Exhibit A payable in
the following amounts shown next to each Seller's name by bank cashier's or
certified check or by wire transfer to accounts specified by Sellers.
(ii) A certificate executed by Buyer to the effect that,
except as otherwise stated in such certificate, each of Buyer's representations
and warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the Closing Date as if made
on the Closing Date;
(iii) The Employment Agreement, executed by the Company; and
(iv) The Noncompetition Agreement, executed by Buyer.
(c) Without additional compensation, the Company shall assign to Gloria
all its right, title and interest (including without limitation, the cash
surrender value) in and to the life insurance policy or policies owned by the
Company insuring the life of Gary.
(d) The Company shall enter into a 5 year net lease with Suppliers,
Inc. for the Company's south manufacturing plant premises at a rent of $1,000
per month in the form of the lease attached as Exhibit 1.4(d).
(e) As soon as practicable after Closing, Buyer shall cause Norwest
Bank Minnesota South, National Association, to release Gary from his personal
guarantee of the Company's debt to said Bank.
1.5 ADJUSTMENT AMOUNT. The Adjustment Amount will be (a) the
consolidated stockholders' equity of the Acquired Companies as of the Closing
Date determined in accordance with GAAP, minus (b) $4,700,000; and by dividing
the result by (c) the number of Shares sold hereunder. The Adjustment Amount
will be relevant to this Agreement only if it is a negative number.
1.6 ADJUSTMENT PROCEDURE.
(a) Sellers shall prepare and cause Bertram Cooper & Co. LLP, the
Company's certified public accountants, at the Company's expense, to audit,
within ninety (90) days following the Closing Date, consolidated financial
statements ("Closing Financial Statements") of the Company as of the Closing
Date and for the period from the date of the Balance Sheet through the Closing
Date, including a computation of consolidated stockholders' equity as of the
Closing Date. If within thirty (30) days following delivery of the Closing
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Financial Statements, Buyer has not given Sellers notice of its objection to the
Closing Financial Statements (such notice must contain a statement of the basis
of Buyer's objection), then the consolidated stockholders' equity reflected in
the Closing Financial Statements will be used in computing the Adjustment
Amount. If Buyer gives such notice of objection, then the issues in dispute will
be submitted to McGladrey & Pullen, certified public accountants (the
"Accountants"), for resolution. If issues in dispute are submitted to the
Accountants for resolution, (i) each party will furnish to the Accountants such
workpapers and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party or its
Subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants, (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties, and
(iii) Buyer and Sellers will each bear 50% of the fees of the Accountants for
such determination.
(b) On the tenth (10th) business day following the final determination
of the Adjustment Amount, if the Purchase Price is less than the aggregate of
the payments made pursuant to Section 1.4(b)(i), Sellers will pay the difference
to Buyer. All payments will be made together with interest at 12% beginning on
the Closing Date and ending on the date of payment. Payments must be made in
immediately available funds. Payments to Buyer must be made by wire transfer to
such bank account as Buyer will specify.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING.
(a) Schedule 2.1 contains a complete and accurate list of each Acquired
Company of its name, its jurisdiction of incorporation, and other jurisdictions
in which it is authorized to do business. Each Acquired Company is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. Each Acquired Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect, or allowed Buyer's
representatives to examine the same.
2.2 AUTHORITY; NO CONFLICT.
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(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of the Employment Agreement, the Sellers'
Releases, and the Noncompetition Agreement (collectively, the "Sellers' Closing
Documents"), the Sellers' Closing Documents will constitute the legal, valid,
and binding obligations of Sellers, enforceable against Sellers in accordance
with their respective terms. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Sellers' Closing Documents and to perform their obligations under this agreement
and the Sellers' Closing Documents.
(b) Except as set forth in Schedule 2.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) Contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Acquired Companies, or (B)
any resolution adopted by the board of directors or the stockholders of any
Acquired Company;
(ii) Contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company or either
Seller, or any of the assets owned or used by any Acquired Company, may be
subject;
(iii) Contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise relates to
the business of, or any of the assets owned or used by, any Acquired Company;
(iv) Cause Buyer or any Acquired Company to become subject to,
or to become liable for the payment of, any Tax;
(v) Cause any of the assets owned by any Acquired Company to
be reassessed or revalued by any taxing authority or other Governmental Body;
(vi) Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vii) Result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired Company.
Except as set forth in Schedule 2.2, no Seller or Acquired Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
2.3 CAPITALIZATION. The authorized equity securities of the Company
consists of 25,000 shares of common stock, no par value. Sellers are and will
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be on the Closing Date the record and beneficial owners and holders of the
Shares, free and clear of all Encumbrances. Schedule 2.3 lists the outstanding
shares of the Company and the owners thereof. No legend or other reference to
any purported Encumbrance appears upon any certificate representing equity
securities of any Acquired Company. All of the outstanding equity securities of
each Acquired Company have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities of any Acquired
Company. None of the outstanding equity securities or other securities of any
Acquired Company was issued in violation of the Securities Act or any other
Legal Requirement. No Acquired Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person (other than Acquired
Companies) or any direct or indirect equity or ownership interest in any other
business.
2.4 FINANCIAL STATEMENTS. Sellers have delivered to Buyer: (a) audited
balance sheets of the Acquired Companies as at September 30 in each of the years
1994 through 1996, and the related audited statements of income and retained
earnings, and cash flow for each of the fiscal years then ended, together with
the report thereon of Bertram, Cooper & Co., independent certified public
accountants, (b) an audited balance sheet of the Acquired Companies as at
September 30, 1997 (including the notes thereto, the "Balance Sheet"), and the
related audited statements of income and retained earnings, and cash flow for
the fiscal year then ended, together with the report thereon of Bertram, Cooper
& Co., independent certified public accountants, and (c) an unaudited balance
sheet of the Acquired Companies as at December 26, 1997 (the "Interim Balance
Sheet") and the related income statement for the three (3) months then ended.
Such financial statements and notes fairly present the financial condition and
the results of operations, changes in stockholders' equity, and cash flow of the
Acquired Companies as at the respective dates of and for the periods referred to
in such financial statements, all in accordance with GAAP, subject, in the case
of interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that if presented would not differ materially
from those included in the Balance Sheet); the financial statements referred to
in this Section 2.4 reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
Person other than the Acquired Companies are required by GAAP to be included in
the consolidated financial statements of the Company.
2.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books, and other records of the Acquired Companies, all of which have been made
available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of
whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Board of
Directors, and committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
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2.6 TITLE TO PROPERTIES; ENCUMBRANCES. Schedule 2.6 contains a complete
and accurate list of all real property, leaseholds, or other interests therein
owned by any Acquired Company. Sellers have delivered or made available to Buyer
copies of the deeds and other instruments (as recorded) by which the Acquired
Companies acquired such real property an interests, and copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of
Sellers or the Acquired Companies and relating to such property or interests.
The Acquired Companies own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in the facilities owned or
operated by the Acquired Companies or reflected as owned in the books and
records of the Acquired Companies, including all of the properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in
Schedule 2.6 and personal property sold since the date of the Balance Sheet and
the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Acquired Companies since the date of the Balance Sheet (except for
personal property acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than inventory
and short-term investments) are listed in Schedule 2.6. All material properties
and assets reflected in the Balance Sheet and the Interim Balance Sheet are free
and clear of all Encumbrances and are not, in the case of real property, subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due, and (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of any
Acquired Company, and (ii) easements, rights of way, zoning laws and other land
use restrictions that do not impair the present or anticipated use of the
property subject thereto. All buildings, plants, and structures owned by the
Acquired Companies lie wholly within the boundaries of the real property owned
by the Acquired Companies and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.
2.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment of the Acquired Companies are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The
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building, plants, structures, and equipment of the Acquired Companies are
sufficient for the continued conduct of the Acquired Companies' businesses after
the Closing in substantially the same manner as conducted prior to the Closing.
2.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Acquired
Companies that are reflected on the Balance Sheet or the Interim Balance Sheet
or on the accounting records of the Acquired Companies as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Acquired Companies as
of the Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
than the reserve reflected in the Interim Balance Sheet represented of the
Account Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety (90) days after
the day on which it first becomes due and payable. There is no contest, claim,
or right of set-off, other than returns in the Ordinary Course of Business,
under any Contract with any debtor of an Accounts Receivable relating to the
amount or validity of such Accounts Receivable. Schedule 2.8 contains a complete
and accurate list of all Accounts Receivable as of the date of the Interim
Balance Sheet, which list sets forth the aging of such Accounts Receivable.
2.9 INVENTORY. All inventory of the Acquired Companies, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance Sheet or
the Interim Balance Sheet or on the accounting records of the Acquired Companies
as of the Closing Date, as the case may be. All inventories not written off have
been priced at the lower of cost or market on a first in, first out basis. The
quantities of each item of inventory (whether raw materials, work-in-process, or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Acquired Companies.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 2.10,
the Acquired Companies have no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise) except
for liabilities or obligations reflected or reserved against in the Balance
Sheet or the Interim Balance Sheet and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
2.11 TAXES.
(a) The Acquired Companies have filed or caused to be filed (on a
timely basis since 1990) all Tax Returns that are or were required to be filed
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by or with respect to any of them, either separately or as a member of a group
of corporations, pursuant to applicable Legal Requirements. The Acquired
Companies have paid, or made provision for the payment of, all Taxes that have
or may have become due pursuant to those Tax Returns or otherwise, or pursuant
to any assessment received by Sellers or any Acquired Company, except such
Taxes, if any, as are listed in Schedule 2.11 and are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Balance Sheet and the Interim Balance Sheet.
(b) The United States federal and state income Tax Returns of each
Acquired Company subject to such Taxes have been audited by the IRS or relevant
state tax authorities or are closed by the applicable statute of limitations for
all taxable years through September 30, 1994. Schedule 2.11 contains a complete
and accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Schedule 2.11, are being contested in good faith by
appropriate proceedings. Schedule 2.11 describes all adjustments to the United
States federal income Tax Returns filed by any Acquired Company or any group of
corporations including any Acquired Company for all taxable years since 1990,
and the resulting deficiencies proposed by the IRS. Except as described in
Schedule 2.11, no Seller or Acquired Company has given or been requested to give
waivers or extensions (or is or would be subject to a waiver or extension given
by any other Person) or any statute of limitations relating to the payment of
Taxes of any Acquired Company or for which any Acquired Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of each Acquired Company are adequate (determined in accordance
with GAAP) and are at least equal to that Acquired Company's liability for
Taxes. There exists no proposed tax assessment against any Acquired Company
except as disclosed in the Balance Sheet or in Schedule 2.11. No consent to the
application of Section 341(f)(2) of the Code has been filed with respect to any
property or assets held, acquired, or to be acquired by any Acquired Company.
All Taxes that any Acquired Company is or was required by Legal Requirements to
withhold or collect have been fully withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated basis)
any Acquired Company are true, correct, and complete. There is no tax sharing
agreement that will require any payment by any Acquired Company after the date
of this Agreement.
2.12 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance Sheet,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of any Acquired Company, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
2.13 EMPLOYEE BENEFITS.
(a) As used in this Section 2.13, the following terms have the meanings
set forth below.
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"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by an Acquired Company or an ERISA Affiliate of an
Acquired Company.
"Company Plan" means all Plans of which an Acquired Company or an ERISA
Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate of an Acquired Company.
"ERISA Affiliate" means, with respect to an Acquired Company, any other
person that, together with the Company, would be treated as a single employer
under Code Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of Code Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements or Code Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under Code
Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Schedule 2.13(i) contains a complete and accurate list of all
Company Plans, Company Other Benefit Obligations, and Company VEBAs, and
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identifies as such all Company Plans that are (A) defined benefit Pension Plans,
(B) Qualified Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Schedule 2.13(ii) contains a complete and accurate list
of (A) all ERISA Affiliates of each Acquired Company, and (B) all Plans of which
any such ERISA Affiliate is or was a Plan Sponsor, in which any such ERISA
Affiliate participates or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(iii) Schedule 2.13(iii) sets forth, for each Multi-Employer
Plan, as of its last valuation date, the amount of potential withdrawal
liability of the Acquired Companies and the Acquired Companies' other ERISA
Affiliates, calculated according to information made available pursuant to ERISA
Section 4221(e).
(iv) Schedule 2.13(iv) sets forth a calculation of the
liability of the Acquired Companies for post-retirement benefits other than
pensions, made in accordance with Financial Accounting Statement 106 of the
Financial Accounting Standards Board, regardless of whether any Acquired Company
is required by this Statement to disclose such information.
(v) Schedule 2.13(v) sets forth the financial cost of all
obligations owed under any Company Plan or Company Other Benefit Obligation that
is not subject to the disclosure and reporting requirements of ERISA.
(c) Sellers have delivered or made available to Buyer:
(i) All documents that set forth the terms of each Company
Plan, Company Other Benefit Obligation, or Company VEBA and of any related
trust, including (A) all plan descriptions and summary plan descriptions of
Company Plans for which Sellers or the Acquired Companies are required to
prepare, file, and distribute plan descriptions and summary plan descriptions,
and (B) all summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, Company Other Benefit Obligations, and
Company VEBAs for which a plan description or summary plan description is not
required;
(ii) All personnel, payroll, and employment manuals and
policies;
(iii) All collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare benefits) by the Acquired Companies and the ERISA Affiliates of the
Acquired Companies, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) A written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) All registration statements filed with respect to any
Company Plan;
(vi) All insurance policies purchased by or to provide
benefits under any Company Plan;
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(vii) All contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) All reports submitted within the four (4) years
preceding the date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors with respect
to any Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) All notifications to employees of their rights under
ERISA Section 601 et seq. and Code Section 4980B;
(x) The Form 5500 filed in each of the most recent three (3)
plan years, including all schedules thereto and the opinions of independent
accountants;
(xi) All notices that were given by an Acquired Company or any
ERISA Affiliate of an Acquired Company or any Company Plan to the IRS, the PBGC,
or any participant or beneficiary, pursuant to statute, within the four (4)
years preceding the date of this Agreement, including notices that are expressly
mentioned elsewhere in this Section 2.13;
(xii) All notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate of an Acquired
Company, or any Company Plan within the four (4) years preceding the date of
this Agreement;
(xiii) With respect to Qualified Plans and VEBAs, the most
recent determination letter for each Plan of the Acquired Companies that is a
Qualified plan; and
(xiv) With respect to Title IV Plans, the Form PBGC-1 filed
for each of the three (3) most recent plan years.
(d) Except as set forth in Schedule 2.13(vi):
(i) The Acquired Companies have performed all of their
respective obligations under all Company Plans, Company Other Benefit
Obligations, and Company VEBAs. The Acquired Companies have made appropriate
entries in their financial records and statements for all obligations and
liabilities under such Plans, VEBAs, an Other Benefit Obligations that have
accrued but are not due.
(ii) No statement, either written or oral, has been made by
any Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit Obligation
and that could have an adverse economic consequence to any Acquired Company or
to Buyer.
(iii) The Acquired Companies, with respect to all Company
Plans, Company Other Benefits Obligations, and Company VEBAs, are, and each
Company Plan, Company Other Benefit Obligation, and Company VEBA is, in full
compliance with ERISA, the Code, and other applicable Laws including the
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<PAGE> 12
provisions of such Laws expressly mentioned in this Section 2.13, and with any
applicable collective bargaining agreement.
(A) No transaction prohibited by ERISA Section 406
and no "prohibited transaction" under Code Section 4975(c) have occurred with
respect to any Company Plan.
(B) No Seller or acquired Company has any liability
to the IRS with respect to any Plan, including any liability imposed by Chapter
43 of the Code.
(C) No Seller or Acquired Company has any liability
to the PBGC with respect to any Plan or has any liability under ERISA Section
502 or Section 4071.
(D) All filings required by ERISA and the Code as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the Code have been timely provided.
(E) All contributions and payments made or accrued
with respect to all Company Plans, Company Other Benefit Obligations, and
Company VEBAs are deductible under Code Section 162 or Section 404. No amount,
or any asset of any Company Plan or Company VEBA, is subject to tax as
unrelated business taxable income.
(iv) Each Company Plan can be terminated within thirty (30)
days, without payment of any additional contribution or amount and without the
vesting or acceleration of any benefits promised by such Plan.
(v) Since January 1, 1997, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could
result in a material increase in premium costs of Company Plans and Company
Other Benefit Obligations that are insured, or a material increase in benefit
costs of such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
Sellers' Knowledge, is threatened.
(viii) No Company Plan is a stock bonus, pension, or
profit-sharing plan within the meaning of Code Section 401(a).
(ix) Each Qualified Plan of each Acquired Company is qualified
in form and operation under Code Section 401(a); each trust for each such Plan
is exempt from federal income tax under Code Section 501(a). Each Company
VEBA is exempt from federal income tax. No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of tax-exempt
status of any such Plan or trust.
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(x) Each Acquired Company and each ERISA Affiliate of an
Acquired Company has met the minimum funding standard, and has made all
contributions required, under ERISA Section 302 and Code Section 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Acquired Companies have paid all amounts due to PBGC
pursuant to ERISA Section 4007.
(xiii) No Acquired Company or any ERISA Affiliate of an
Acquired Company has ceased operations of any facility or has withdrawn from any
Title IV Plan in a manner that would subject to any entity or Sellers to
liability under ERISA Section 4062(e), Section 4063, or Section 4064.
(xiv) No Acquired Company or any ERISA Affiliate of an
Acquired Company has filed a notice of intent to terminate any Plan or has
adopted any amendment to treat a Plan as terminated. The PBGC has not instituted
proceedings to treat any Company Plan as terminated. No event has occurred or
circumstance exists that may constitute grounds under ERISA Section 4042 for the
termination of, or the appointment of a trustee to administer, any Company Plan.
(xv) No amendment has been made, or is reasonably expected to
be made, to any Plan that has required or could require the provision of
security under ERISA Section 307 or Code Section 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not
waived, exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as of
the last day of the current plan year of any such Plan.
(xvii) The actuarial report for each Pension Plan of each
Acquired Company and each ERISA Affiliate of each Acquired Company fairly
presents the financial condition and the results of operations of each such Plan
in accordance with GAAP.
(xviii) Since the last valuation date for each Pension Plan of
each Acquired Company and each ERISA Affiliate of an Acquired Company, no event
has occurred or circumstance exists that would increase the amount of benefits
under any such Plan or that would cause the excess of Plan assets over benefit
liabilities (as defined in ERISA Section 4001) to decrease, or the amount by
which benefit liabilities exceed assets to increase.
(xix) No reportable event (as defined in ERISA Section 4043)
and in regulations issued thereunder) has occurred.
(xx) No Seller or Acquired Company has Knowledge of any facts
or circumstances that may give rise to any liability of any Seller, any Acquired
Company, or Buyer to the PBGC under Title IV of ERISA.
(xxi) No Acquired Company or any ERISA Affiliate of an
Acquired Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, any Multi-Employer Plan.
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(xxii) No Acquired Company or any ERISA Affiliate of an
Acquired Company has withdrawn from any Multi-Employer Plan with respect to
which there is any outstanding liability as of the date of this Agreement. No
event has occurred or circumstance exists that presents a risk of the occurrence
of any withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multi-Employer Plan that could result in any liability of
either any acquired Company or Buyer to a Multi-Employer Plan.
(xxiii) No Acquired Company or any ERISA Affiliate of an
Acquired Company has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, or that
such Plan intends to terminate or has terminated.
(xxiv) No Multi-Employer Plan to which any Acquired Company or
any ERISA Affiliate of any Acquired Company contributes or has contributed is a
party to any pending merger or asset or liability transfer or is subject to any
proceeding brought by the PBGC.
(xxv) Except to the extent required under ERISA Section 601
et seq. and Code Section 4980B, no Acquired Company provides health or welfare
benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(xxvi) Each Acquired Company has the right to modify and
terminate benefits to retirees (other than pensions) with respect to both
retired and active employees.
(xxvii) Sellers and all Acquired Companies have complied with
the provisions of ERISA Section 601 et seq. and Code Section 4980B.
(xxviii) No payment that is owed or may become due to any
director, officer, employee, or agent of any Acquired Company will be
non-deductible to the Acquired Companies or subject to tax under Code Section
280G or Section 4999; nor will any Acquired Company be required to "gross up"
or otherwise compensate any such person because of the imposition of any excise
tax on a payment to such person.
(xxix) The consummation of the Contemplated Transactions will
not result in the payment, vesting, or acceleration of any benefit.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Schedule 2.14:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) No event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
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by an Acquired Company of, or a failure on the part of any Acquired Company to
comply with, any Legal Requirement, or (B) may give rise to any obligation on
the part of any Acquired Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature; and
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of any Acquired Company to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature.
(b) Schedule 2.14 contains a complete and accurate list of each
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
any Acquired Company. Each Governmental Authorization listed or required to be
listed in Schedule 2.14 is valid and in full force and effect. Except as set
forth in Schedule 2.14:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with all of the terms and requirements of
each Governmental Authorization identified or required to be identified in
Schedule 2.14;
(ii) No event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed in Schedule
2.14, or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in Schedule 2.14;
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Schedule 2.14 have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 2.14 collectively constitute
all of the Governmental Authorizations necessary to permit the Acquired
Companies to lawfully conduct and operate their businesses in the manner they
currently conduct and operate such businesses and to permit the
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Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.
2.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 2.15, there is no pending
Proceeding:
(i) That has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or
(ii) That challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Sellers and the Acquired Companies, (1) no such Proceeding
has been threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Schedule 2.15.
The Proceedings listed in Schedule 2.15 will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
any Acquired Company.
(b) Except as set forth in Schedule 2.15:
(i) There is no Order to which any of the Acquired Companies,
or any of the assets owned or used by any Acquired Company, is subject;
(ii) None of Sellers is subject to any Order that relates to
the business of, or any of the assets owned or used by, any Acquired Company;
and
(iii) To the Knowledge of Sellers and the Acquired Companies,
no officer, director, agent, or employee of any Acquired Company is subject to
any Order that prohibits such officer, director, agent, or employee from
engaging in or continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
(c) Except as set forth in Schedule 2.15:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
subject; and
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<PAGE> 17
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any of the assets
owned or used by an Acquired Company, is or has been subject.
2.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 2.16, since the date of the Balance Sheet, the Acquired Companies have
conducted their businesses only in the Ordinary Course of Business and there has
not been any:
(a) Change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) Amendment to the Organizational Documents of any Acquired Company;
(c) Payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) Adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(e) Damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(f) Entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Contract or transaction involving a
total remaining commitment by any Acquired Company of at least $50,000;
(g) Sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
(h) Cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $50,000;
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(i) Material change in the accounting methods used by any Acquired
Company; or
(j) Agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
2.17 CONTRACTS; NO DEFAULTS.
(a) Schedule 2.17(a) contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies, of:
(i) Each Applicable Contract that involves performance of
services or delivery of goods or materials by any Acquired Company of an amount
or value in excess of $50,000;
(ii) Each Applicable Contract that involves performance of
services or delivery of goods or materials to any Acquired Company of an amount
or value in excess of $50,000;
(iii) Each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
any Acquired Company in excess of $50,000;
(iv) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $10,000 and with terms of less than one (1)
year);
(v) Each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) Each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees relating to wages, hours, and other conditions of employment;
(vii) Each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person;
(viii) Each Applicable Contract containing covenants that in
any way purport to restrict any Acquired Company's business activity or limit
the freedom of any Acquired Company to engage in any line of business or to
compete with any Person;
(ix) Each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;
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(x) Each power of attorney that is currently effective and
outstanding;
(xi) Each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by any Acquired Company to be responsible for consequential damages;
(xii) Each Applicable Contract for capital expenditures in
excess of $10,000;
(xiii) Each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business; and
(xiv) Each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Schedule 2.17(b):
(i) None of the Sellers has or may acquire any rights under,
and none of the Sellers has or may become subject to any obligation or liability
under, any Contract that relates to the business of, or any of the assets owned
or used by, any Acquired Company; and
(ii) To the Knowledge of Sellers and the Acquired Companies,
no officer, director, agent, employee, consultant, or contractor of any Acquired
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.
(c) Except as set forth in Schedule 2.17(c):
(i) Each Contract identified or required to be identified in
Schedule 2.17(a) is in full force and effect and is valid and enforceable in
accordance with its terms; and
(ii) No Contract identified or required to be identified in
Schedule 2.17(a) contains any term or requirement that is unreasonable,
extraordinary, or not customary in the industries in which the Acquired
Companies operate.
(d) Except as set forth in Schedule 2.17(d):
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with all applicable terms and
requirements of each Contract under which such Acquired Company has or had any
obligation or liability or by which such Acquired Company or any of the assets
owned or sued by such Acquired Company is or was bound;
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(ii) Each other Person that has or had any obligation or
liability under any Contract under which an Acquired Company has or had any
rights is, and at all times since December 31, 1992, has been, in full
compliance with all applicable terms and requirements of such Contract;
(iii) No event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict with, or result in
a violation or breach of, or give any Acquired Company or other Person the right
to declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable Contract;
and
(iv) No Acquired Company has given to or received from any
other Person, at any time since December 31, 1992, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under current or completed Contracts with any Person having the
contractual or statutory right to demand or require such renegotiation and no
such Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been entered
into in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
2.18 INSURANCE.
(a) Sellers have delivered to Buyer:
(i) True and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired Company, or
any director of any Acquired Company is covered; and
(ii) True and complete copies of all pending applications for
policies of insurance; and
(iii) Any statement by the auditor of any Acquired Company's
financial statements with regard to the adequacy of such entity's coverage or of
the reserves for claims.
(b) Schedule 2.18(b) describes:
(i) Any self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder;
(ii) Any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired Company; and
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(iii) All obligations of the Acquired Companies to provide
coverage to third parties (for example, under leases or service agreements) and
identifies the policy under which such coverage is provided.
(c) Schedule 2.18(c) sets forth, by year, for the current policy
year;
(i) A summary of the loss experience under each policy;
(ii) A statement describing each claim under an insurance
policy for an amount in excess of $10,000, which sets forth:
(A) The name of the claimant;
(B) A description of the policy by insurer, type of
insurance, and period of coverage; and
(C) The amount and a brief description of the claim; and
(iii) A statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Schedule 2.18(d):
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company or director thereof:
(A) Are valid, outstanding, and enforceable;
(B) Are issued by an insurer that is financially sound
and reputable;
(C) Taken together, provide adequate insurance coverage
for the assets and the operations of the Acquired Companies for all risks to
which the Acquired Companies are normally exposed;
(D) Are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a party or by which
any of them is bound; and
(E) Will continue in full force and effect following the
consummation of the Contemplated Transactions.
(ii) No Seller or Acquired Company has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or that the
issuer of any policy is not willing or able to perform its obligations
thereunder.
(iii) The Acquired Companies have paid all premiums due, and
have otherwise performed all of their respective obligations, under each policy
to which any Acquired Company is a party or that provides coverage to any
Acquired Company or director thereof.
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(iv) The Acquired Companies have given notice to the insurer
of all claims that may be insured thereby.
2.19 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.19:
(a) Each Acquired Company is, and at all times prior to the date
hereof has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. No Seller or Acquired
Company has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any actual or
threatened order, notice, or other communication from (i) any Governmental Body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has had an interest, or with respect to any property or Facility at or
to which Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the
Acquired Companies, threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has or had an
interest.
(c) No Seller or Acquired Company has any basis to expect, nor has
any of them or any other Person for whose conduct they are or may be held
responsible, received, any Order, notice, communications, inquiry, warning,
citation, summons, directive, or any other indication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company had an interest, or with respect to any property or facility to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or, to the Knowledge of
Sellers and the Acquired Companies, with respect to any other properties and
assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company (or any predecessor), has or had an interest, or at any property
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geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. No
Seller, Acquired Company, any other Person for whose conduct they are or may be
held responsible, or to the Knowledge of Sellers and the Acquired Companies, any
other Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company has
or had an interest except in full compliance with all applicable Environmental
Laws.
(f) There has been no Release or, to the Knowledge of Sellers and the
Acquired Companies, threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has or had an interest, or to the Knowledge of Sellers and the Acquired
Companies any geologically or hydrologically adjoining property, whether by
Sellers, any Acquired Company, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Sellers or any Acquired Company pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.
2.20 EMPLOYEES.
(a) Schedule 2.20 contains a complete and accurate list of the
following information for each employee or director of the Acquired Companies,
including each employee on leave of absence or layoff status: name; employee
number; beginning date; department; and current compensation paid or payable.
(b) No former or current employee or current or former director of any
Acquired Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement, between such employee or director and any other entity or
person ("Proprietary Rights Agreement") that in any way adversely affected,
affects, or will affect (i) the performance of his duties as an employee or
director of the Acquired Companies, or (ii) the ability of any Acquired Company
to conduct its business, including any Proprietary Rights Agreement with Sellers
or the Acquired Companies by any such employee or director. To Sellers'
Knowledge, no director, officer, or other key employee of any Acquired Company
intends to terminate his employment with such Acquired Company.
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(c) No retired employee or director of the Acquired Companies, or their
dependents, are receiving benefits or scheduled to receive benefits in the
future.
2.21 LABOR DISPUTES; COMPLIANCE. Since December 31, 1992, no Acquired
Company has been or is a party to any collective bargaining or other labor
Contract. Since December 31, 1992, there has not been, there is not presently
pending or existing, and there is not threatened any strike, slowdown,
picketing, work stoppage, labor arbitration or proceeding in respect of the
grievance of any employee, application or complaint filed by an employee or
union with the National Labor Relations Board or any comparable Governmental
Body, organizational activity, or other labor dispute against or affecting any
of the Acquired Companies or their premises, and no application for
certification of a collective bargaining agent is pending or is threatened. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. This is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any Acquired Company.
Each Acquired Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. No Acquired Company is liable for the payment of any taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
2.22 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets -- The term "Intellectual
Property Assets" includes:
(i) The name Carroll George, Inc., all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) All patents and patent applications (collectively,
"Patents");
(iii) All copyrights in both published works and unpublished
works that are material to the Acquired Companies' businesses (collectively,
"Copyrights");
(iv) All rights in mask works (collectively, "Rights in Mask
Works"); and
(v) All know-how, trade secrets, confidential information,
software, technical information, process technology, plans, drawings, and
blueprints (collectively, "Trade Secrets"); owned, used, or licensed by any
Acquired Company as licensee or licensor.
(b) Agreements -- Schedule 2.22(b) contains a complete and
accurate list and summary description, including any royalties paid or received
by the Acquired Companies, of all agreements relating to the Intellectual
Property Assets to which any Acquired
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Company is a party or by which any Acquired Company is bound, except for any
license implied by the sale of a product and common software programs with a
value of less than $1,000. There are no outstanding and, to Sellers' Knowledge,
no threatened disputes or disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business -- Except as otherwise
described in Schedule 2.22(c):
(i) The Intellectual Property Assets are all those necessary
for the operation of the Acquired Companies' businesses as they are currently
conducted. One or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Intellectual Property Assets, free and
clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims, and has the right to use without payment to a third party
all of the Intellectual Property Assets.
(ii) All employees of each Acquired Company have executed
written agreements with one or more of the Acquired Companies that assign to one
or more of the Acquired Companies all rights to any inventions, improvements,
discoveries, or information relating to the business of any Acquired Company. No
employee of any Acquired Company has entered into any agreement that restricts
or limits in any way the scope or type of work in which the employee may be
engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than one or more of the Acquired Companies.
(d) Patents
(i) Schedule 2.22(d) contains a complete and accurate list and
summary description of all Patents. One or more of the Acquired Companies is the
owner of all right, title, and interest in and to each of the Patents, free and
clear of all liens, security interests, charges, encumbrances, entities, and
other adverse claims.
(ii) All of the Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposing proceeding. To Sellers'
Knowledge, there is no potentially interfering patent or patent application of
any third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has
been challenged or threatened in any way. None of the products manufactured and
sold, nor any process or know-how used, by any Acquired Company infringes or is
alleged to infringe any patent or other proprietary right of any other Person.
(e) Trademarks
(i) Schedule 2.22(e) contains a complete and accurate list and
summary description of all Marks. One or more of the Acquired Companies is
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the owner of all right, title, and interest in and to each of the Marks, free
and clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims.
(ii) Except as otherwise set forth in Schedule 2.22(e) all
Marks have been registered with the United States Patent and Trademark Office
and are currently in compliance with all formal legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such action is
threatened with respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) No Mark is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the Marks used by any Acquired
Company infringes or is alleged to infringe any trade name, trademark, or
service mark of any third party.
(f) Copyrights
(i) Schedule 2.22(f) contains a complete and accurate list and
summary description of all Copyrights. One or more of the Acquired Companies is
the owner of all right, title, and interest in and to each of the Copyrights,
free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) Except as otherwise set forth in Schedule 2.22(f), all
Copyrights have been registered and are currently in compliance with formal
legal requirements, are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the date of Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has
been challenged or threatened in any way. None of the subject matter of any of
the Copyrights infringes or is alleged to infringe any copyright of any third
party.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the special knowledge or memory of others.
(ii) Sellers and the Acquired Companies have taken all
reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
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(iii) One or more of the Acquired Companies has good title and
an absolute (but not necessarily exclusive) right to use the Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature, and, to
Sellers' Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Acquired Companies) or to
the detriment of the Acquired Companies. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
2.23 CERTAIN PAYMENTS. Since December 31, 1992, no Acquired Company
or director, officer, agent, or employee of any Acquired Company, or to Sellers'
Knowledge any other Person associated with or acting for or on behalf of any
Acquired Company, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of any Acquired
Company or any affiliate of an Acquired Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Companies.
2.24 DISCLOSURE.
(a) No representation or warranty of Sellers in this Agreement and
no statement in the underlined schedules omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 4.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact known to any Seller that has specific
application to any Seller or any Acquired Company (other than general economic
or industry conditions) and that materially adversely affects the assets,
business, prospects, financial condition, or results of operations of the
Acquired Companies (on a consolidated basis) that has not been set forth in this
Agreement or the underlined schedules.
2.25 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
Schedule 2.25, no Seller or any Related Person of Sellers or of any Acquired
Company has, or since December 31, 1995 has had, any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to the Acquired Companies' businesses. No Seller or any Related
Person of Sellers or of any Acquired Company owns, or since December 31, 1995
has owned, of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (i) had business dealings or
a material financial interest in any transaction with any Acquired Company, or
(ii) engaged in competition with any Acquired Company with respect to any line
of the products or services of such Acquired Company (a "Competing Business") in
any market presently served by such Acquired Company. Except as set forth in
Schedule 2.25, no Seller or any Related Person of Sellers or of
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any Acquired Company is a party to any Contract with, or has any claim or right
against, any Acquired Company.
2.26 BROKERS OR FINDERS. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Employment Agreement and the
Noncompetition Agreement (collectively, the "Buyer's Closing Documents"), the
Buyer's Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents.
(b) Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) Any provision of Buyer's Organizational Documents;
(ii) Any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) Any Legal Requirement or Order to which Buyer may be
subject; or
(iv) Any Contract to which Buyer is a party or by which Buyer
may be bound.
Except as set forth in Schedule 3.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
3.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
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preventing, delaying, making illegal, or otherwise interfering with,, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
3.5 BROKERS OR FINDERS. Buyer and its officers an agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Sellers harmless from any such
payment alleged to be due by and through Buyer as a result of the action of
Buyer or its officers or agents.
4. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, Sellers will, and will cause each Acquired Company and its
Representatives to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to each Acquired Company's personnel, properties (including
subsurface testing), contracts, books and records, and other documents and data,
(b) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
4.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES. Between
the date of this Agreement and the Closing Date, Sellers will, and will cause
each Acquired Company to:
(a) Conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) Use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services of the
current officers, employees and agents of such Acquired Company, and maintain
the relations and goodwill with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with such Acquired
Company;
(c) Confer with Buyer concerning operational matters of a material
nature; and
(d) Otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of such Acquired Company.
4.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date, Sellers
will not, and will cause each Acquired Company not to, without the prior consent
of Buyer, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 2.16 is likely to occur.
4.4 REQUIRED APPROVALS. As promptly as practicable after the date
of this Agreement, Sellers will, and will cause each Acquired Company to, make
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all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions [(including all filings under the HSR
Act)]. Between the date of this Agreement and the Closing Date, Sellers will,
and will cause each Acquired Company to, (a) cooperate with Buyer with respect
to all filings that Buyer elects to make or is required by Legal Requirements to
make in connection with the Contemplated Transactions, and (b) cooperate with
Buyer in obtaining all consents identified in Schedule 3.2.
4.5 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Seller will promptly notify Buyer in writing if such Seller
or any Acquired Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Sellers' representations and warranties as of the
date of this Agreement, or if such Seller or any Acquired Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
underlined schedules if the schedules were dated the date of the occurrence or
discovery of any such fact or condition, Sellers will promptly deliver to Buyer
a supplement to the underlined schedules specifying such change. During the same
period, each Seller will promptly notify Buyer of the occurrence of any Breach
of any covenant of Sellers in this Section 4 or of the occurrence of any event
that may make the satisfaction of the conditions in Section 6 impossible or
unlikely.
4.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as
expressly provided in this Agreement, Sellers will cause all indebtedness of any
Related Person to any Acquired Company to be paid in full prior to Closing.
4.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 8, Sellers will not, and will cause each Acquired
Company and each of their Representatives not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets (other
than in the Ordinary Course of Business) of any Acquired Company, or any of the
capital stock of any Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
4.8 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Sellers will use their Best Efforts to cause the conditions in
Sections 6 and 7 to be satisfied.
5. COVENANTS OF BUYER
5.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable
after the date of this Agreement, Buyer will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions [(including all filings under the
HSR Act)]. Between the date of this Agreement and the Closing Date, Buyer will,
and will cause each Related Person to, cooperate with Sellers with
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respect to all filings that Sellers are required by Legal Requirements to make
in connection with the Contemplated Transactions, and (ii) cooperate with
Sellers in obtaining all consents identified in Schedule 2.2; provided that this
Agreement will not require Buyer to dispose of or make any change in any portion
of its business or to incur any other burden to obtain a Governmental
Authorization.
5.2 BEST EFFORTS. Except as set forth in the proviso to Section
5.1, between the date of this Agreement and the Closing Date, Buyer will use its
Best Efforts to cause the conditions in Sections 6 and 7 to be satisfied.
5.3 CERTAIN KEY EMPLOYEES. Buyer represents to Sellers that it
intends to cause the Company to maintain for a period of at least two (2) years
following Closing, at a minimum of their current compensation schedules (with
performance-warranted raises), the following employees which have been
identified by Sellers as key employees of the Company:
Steve Bendickson
Laurie Sather, Engineering Manager
Teresa George, Purchasing Manager
Daniel George, Quality Control
This Section 5.3 with respect to continuity of employees shall be based upon
performance only, and in the event Buyer, in its absolute discretion, determines
performance to be unsatisfactory, this Section 5.3 shall not be construed to be
an employment contract for the benefit of such employee or employees.
5.4 MANUFACTURER'S REPRESENTATIVES. Buyer shall use its Best
Efforts to cause the Company to enter into manufacturer's representative
agreements with Jay Berwanger Inc. of Downers Grove, Illinois and Robert Birch
of Algonquin, Illinois to assure continuity of representation; such agreements
to be for a period of three (3) years with mutually agreeable options to extend.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part).
6.1 ACCURACY OF REPRESENTATION.
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the underlined schedules.
(b) Each of Sellers' representations and warranties in Sections
2.3, 2.4, 2.12, and 2.24 must have been accurate in all respects as of the date
of this Agreement, and must be accurate in all respects as of the Closing Date
as
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if made on the Closing Date, without giving effect to any supplement to the
underlined schedules.
6.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each Seller must have delivered each of the documents required
to be delivered by such Seller pursuant to Section 1.4, and each of the other
covenants and obligations in Sections 4.4 and 4.8 must have been performed and
complied with in all respects.
6.3 CONSENTS. Each of the Consents identified in Schedule 2.2 must
have been obtained and must be in full force and effect.
6.4 ADDITIONAL DOCUMENTS. Sellers must have caused the
following documents to be delivered to Buyer:
(a) An opinion of John H. Greve, dated the Closing Date, in the
form of Exhibit 6.4(a);
(b) Such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of, or the
compliance by either Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iv) evidencing the satisfaction of
any condition referred to in this Section 6, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
6.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, an Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Acquired Companies, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
6.7 NO PROHIBITION. Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated
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with Buyer to suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
6.8 OTHER SHARES. Buyer shall have entered into binding agreements
with the shareholders of the Company other than Sellers to acquire not less than
3,000 of the remaining 3,120 outstanding shares of the Company at a price of not
more than $750 per share.
7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
7.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 1.4 and must have made the cash payments
required to be made by Buyer pursuant to Sections 1.4(b)(i) and 1.4(b)(ii).
7.3 CONSENTS. Each of the Consents identified in Schedule 2.2
must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS. Buyer must have caused the
following documents to be delivered to Sellers:
(a) An opinion of Husch & Eppenberger, dated the Closing Date, in
the Form of Exhibit 7.4; and
(b) Such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to in
Section 6.4(a), (ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (iv) evidencing
the satisfaction of any condition referred to in this Section 7, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
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7.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the sale of the
Shares by Sellers to Buyer, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) By either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) By Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or
(ii) By Sellers, if any of the conditions in Section 8 has not
been satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to comply with
their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date;
(c) By mutual consent of Buyer and Sellers; or
(d) By either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before March
31, 1998, or such later date as the parties may agree upon.
8.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 8.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 8.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 10.1 and 10.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the schedules, the supplements to the schedules,
and any other certificate or document delivered pursuant to this Agreement will
survive the Closing; the right to indemnification, reimbursement, or other
remedy based on such representations, warranties,
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covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) about
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement, or other remedy based on such representations,
warranties, covenants, and obligations.
9.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS - GENERALLY.
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Acquired Companies, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons"),
and will reimburse the Indemnified Persons, for any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively, "Damages"), arising from or in connection with:
(a) Any Breach of any representation or warranty made by Sellers
in this Agreement (without giving effect to any supplement to the schedules),
the schedules, the supplements to the schedules, the certificate delivered
pursuant to Section 1.4(a)(v) (for this purpose, that certificate will be deemed
to have stated that Sellers' representations and warranties in this agreement
are accurate as of the Closing Date as if made on the Closing Date without
giving effect to any supplement to the schedules, unless the certificate
expressly stated that the matters disclosed in a supplement have caused the
condition specified in Section 6.1 not to be satisfied), or any other
certificate or document delivered by Sellers pursuant to this Agreement;
(b) Any breach by any Seller of any covenant or obligation of such
Seller in this Agreement;
(c) Any product shipped or manufactured by, or any services
provided by, any Acquired Company prior to the Closing Date; or
(d) Any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
9.3 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS -- ENVIRONMENTAL
MATTERS. In addition to the provisions of Section 9.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyer, the Acquired Companies, and
the other Indemnified Persons, and will reimburse Buyer, the Acquired Companies,
and the other Indemnified Persons, and will reimburse Buyer, the Acquired
Companies, and any other Indemnified Person, for any Damages (including costs of
cleanup, containment, or other remediation) arising from or in connection with:
(a) Any Environmental, Health, and Safety Liabilities arising out
of or relating to: (i)(A) the ownership, operation, or condition at any time on
or prior to the Closing Date of the Facilities or any other properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
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in which Sellers or any Acquired Company has or had an interest, or (B) any
Hazardous Materials or other contaminants that were present on the Facilities or
such other properties and assets at any time on or prior to the Closing Date; or
(ii)(A) any Hazardous Materials or other contaminants, wherever located, that
were, or were allegedly, generated, transported, stored, treated, Released, or
otherwise handled by Sellers or any Acquired Company or by any other Person for
whose conduct they are or may be held responsible at any time on or prior to the
Closing Date, or (B) any Hazardous Activities that were, or were allegedly,
conducted by Sellers or any Acquired Company or by any other Person for whose
conduct they are or may be held responsible; or
(b) Any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property), or
other damage of or to any Person, including any employee or former employee of
Sellers or any Acquired Company or any other Person for whose conduct they are
or may be held responsible, in any way arising from or allegedly arising from
any Hazardous Activity conducted or allegedly conducted with respect to the
Facilities or the operation of the Acquired Companies prior to the Closing Date,
or from Hazardous Material that was (i) present or suspected to be present on or
before the Closing Date on or at the Facilities (or present or suspected to be
present on any other property, if such Hazardous Material emanated or allegedly
emanated from any of the Facilities and was present or suspected to be present
on any of the Facilities on or prior to the Closing Date) or (ii) Released or
allegedly Released by Sellers or any Acquired Company or any other Person for
whose conduct they are or may be held responsible, at any time on or prior to
the Closing Date.
Buyer will be entitled to control any Cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 9.3. The procedure described
in Section 9.9 will apply to any claim solely for monetary damages relating to a
matter covered by this Section 9.3.
9.4 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer will
indemnify and hold harmless Sellers, and will reimburse Sellers, for any Damages
arising from or in connection with (a) any Breach of any representation or
warranty made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this agreement, (b) any Breach by Buyer of any covenant or
obligation of Buyer in this Agreement, (c) any liability of the Company
disclosed in this Agreement which has been personally guaranteed by a Seller or
the Sellers, or (d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
9.5 TIME LIMITATIONS. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 2.3,
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2.11, and 2.13, unless on or before three (3) years after Closing Sellers are
given notice of claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer; a claim with respect to Section 2.3,
2.11, or 2.13, or a claim for indemnification or reimbursement not based upon
any representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time. If the Closing
occurs, Buyer will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before three
(3) years after Closing Buyer is given notice of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Sellers.
9.6 LIMITATIONS ON AMOUNT -- SELLERS. Sellers will have no
liability (for indemnification or otherwise) with respect to the matters
described in Sections 9.2 and 9.3 until the total of all Damages with respect to
such matters exceeds $50,000, and then only for fifty (50%) percent of the
amount by which such Damages exceed $50,000 up to a maximum Sellers' liability
of $500,000. However, this Section 9.6 will not apply to any Breach of any of
Sellers' representations and warranties of which any Seller had Knowledge at any
time prior to the date on which such representation and warranty is made or any
intentional Breach by any Seller of any covenant or obligation, and Sellers will
be jointly and severally liable for all Damages with respect to such Breaches.
9.7 LIMITATIONS ON AMOUNT -- BUYER. Buyer will have no liability
(for indemnification or otherwise) with respect to the matters described in
clause (a) or (b) of Section 9.4 until the total of all Damages with respect to
such matters exceeds $50,000, and then only for the amount by which such Damages
exceed $50,000. However, this Section 9.7 will not apply to any Breach of any of
Buyer's representations and warranties of which Buyer had Knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional Breach by Buyer of any covenant or obligation, and Buyer will be
liable for all Damages with respect to such Breaches.
9.8 RIGHT OF SET-OFF. Upon notice to Sellers specifying in
reasonable detail the basis for such set-off, Buyer may set off any amount to
which it may be entitled under this section against amounts otherwise payable
under the Noncompetition Agreement. The exercise of such right of set-off by
Buyer in good faith, whether or not ultimately determined to be justified, will
not constitute an event of default or nonperformance by Buyer under the
Noncompetition Agreement if promptly remedied by Buyer after a final,
nonappealable determination that such set-off was not justified. Neither the
exercise of nor the failure to exercise such right of set-off will constitute an
election of remedies or limit Buyer in any manner in the enforcement of any
other remedies that may be available to it.
9.9 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section
9.2, 9.4, or (to the extent provided in the last sentence of Section 9.3)
Section 9.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party
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demonstrates that the defense of such action is prejudiced by the indemnifying
party's failure to give such notice.
(b) If any Proceeding referred to in Section 9.9(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 9 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnifying party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and indemnifying party does not, within ten (10)
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such claim anywhere in the
world.
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9.10 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10. GENERAL PROVISIONS
10.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. Sellers will cause the
Acquired Companies not to incur any out-of-pocket expenses in connection with
this Agreement. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
10.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer determines.
Unless consented to by Buyer in advance or required by Legal Requirements, prior
to the Closing Sellers shall, and shall cause the Acquired Companies to, keep
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Acquired Companies' employees, customers, and
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
10.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Acquired
Companies to maintain in confidence, and not use to the detriment of another
party or an Acquired Company any written, oral, or other information obtained in
confidence from another party or an Acquired Company in connection with this
Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyer's request cause the Acquired Companies to waive, any cause of
action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential information of the
Acquired Companies except for the intentional competitive misuse by Buyer of
such trade secrets or confidential information.
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10.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by first class mail, postage prepaid, or (c) when
received by the addressee, if sent by a national recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
Sellers: c/o Gary George
208 North Tenth
Northwood, IA 50459
Telecopy No. (515) 324-1231
With a Copy to: John H. Greve
736 Central Avenue
Northwood, IA 50459
Telephone No. (515) 324-1327
Telecopy No. (515) 324-2155
Buyer: Morton Industrial Group, Inc.
1021 West Birchwood
P.O. Box 429
Morton, Illinois 61550
Attention: William D. Morton, President
Telecopy No.: (309) 263-1841
With a Copy to: Gene A. Petersen, Esq.
Husch & Eppenberger
101 S.W. Adams, Suite 800
Peoria, Illinois 61602
Telecopy No.: (309) 637-4928
10.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the States
of Illinois or Iowa, or, if it has or can acquire jurisdiction, in any United
States District Court located in either of those states, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
10.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
10.7 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
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right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instances for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
10.9 SCHEDULES.
(a) The disclosures in the schedules to this Agreement, and those
in any supplement thereto, must relate only to the representations and
warranties in the section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the schedules to this Agreement (other than
an exception set forth as such in the Schedules with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, except that Buyer may assign any of its rights
under this Agreement to any Subsidiary of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this agreement and their
successors and assigns.
10.11 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
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10.12 SECTION HEADINGS; CONSTRUCTION. The headings of sections of this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Sections" refer to the corresponding
sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
10.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.14 GOVERNING LAW. This Agreement will be governed by and construed
under the laws of the State of Illinois without regard to conflicts of laws
principles.
10.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
11. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified or referred to in this Section 11.
"Acquired Companies" -- The Company and its Subsidiaries, if any,
collectively.
"Adjustment Amount" -- As defined in Section 1.5.
"Applicable Contract" -- Any Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by any Acquired Company is
or may become bound.
"Balance Sheet" -- As defined in Section 2.4.
"Best Efforts" -- The efforts that a prudent person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"Breach" -- A "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by a Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Buyer" -- As defined in the first paragraph of this Agreement.
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"Closing" -- As defined in Section 1.3.
"Closing Date" -- The date and time as of which the Closing actually
takes place.
"Code" -- The Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code of 1986, as amended, or any successor law.
"Company" -- Carroll George, Inc.
"Consent" -- Any approval, consent, ratification, waiver, or other
authorization (including any governmental Authorization).
"Contemplated Transactions" -- All of the transactions contemplated by
this Agreement, including without limitation: (a) the sale of the Shares by
Sellers to Buyer; (b) the execution, delivery, and performance of the Employment
Agreement, the Noncompetition Agreement, and the Sellers' Releases; (c) the
performance by Buyer and Sellers of their respective covenants and obligations
under this Agreement; (d) Buyer's acquisition and ownership of the Shares and
exercise of control over the Acquired Companies; and (e) Buyer's acquisition and
ownership of the remaining 870 shares of the Company from its other
stockholders.
"Contract" -- Any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages" -- As defined in Section 9.2.
"Employment Agreements" -- As defined in Section 1.4(a)(iii).
"Encumbrances" -- Any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting (in the case of any security), transfer, receipt of income, or exercise
of any other attribute of ownership.
"Environment" -- Soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwater, drinking
water supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- Any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and relating to:
(a) Any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) Fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
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remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) Financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law of Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by an
Governmental Body or any other Person) and for any natural resource damages; or
(d) Any other compliance, corrective, or remedial measures required
under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" will include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"Environmental Law" -- Any Legal Requirement in effect on or prior to
Closing designed:
(a) To advise appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations or discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) To prevent or acceptably minimize the release of pollutants or
hazardous substances or materials into the Environment;
(c) To reduce the quantities, prevent the release, and minimize the
hazardous characteristics of wastes that are generated;
(d) To assure that products are designed, formulated, packaged, or used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) To protect resources, species, or ecological amenities;
(f) To acceptably minimize the risks inherent in transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) To clean up pollutants that have been released, prevent the threat
of release, or pay the costs of such clean up or prevention; or
(h) To make responsible parties pay private parties, or groups of them,
for damages done to their health or Environment, or to permit self-appointed
representatives of the public interest to recover for injuries done to public
assets.
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"ERISA" -- The Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities" -- Any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company (or any
predecessor Person) and any buildings, plants, structures, or equipment
currently or formerly owned, leased, or operated by any Acquired Company (or any
predecessor Person).
"GAAP" -- Generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 2.4(b) were prepared.
"Governmental Authorization" -- Any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" -- Any:
(a) Nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) Federal, state, local, municipal, foreign, or other government;
(c) Governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) Multi-national organization or body; or
(e) Body exercising, or entitled or purporting to exercise any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity" -- The distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of hazardous materials in, or under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" -- Includes any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14), (33) of CERCLA
or the regulations designated pursuant to Section 102 of CERCLA and found at 40
C.F.R. Section 302), including any element, compound, mixture, solution, or
substance that is or may be designated pursuant to Section 102 of CERCLA; (ii)
substance that is or may be designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act, as amended (33 U.S.C. Sections 1251,
1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste having the characteristics
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identified under or listed pursuant to Section 3001 of the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, 6921)
("RCRA") or having characteristics that may subsequently be considered
under RCRA to constitute a hazardous waste; (iv) substance containing
petroleum, as that term is defined in Section 9001(8) of RCRA; (v) toxic
pollutant that is or may be listed under Section 307(a) of FWPCA; (vi)
hazardous air pollutant that is or may be listed under Section 112 of the Clean
Air Act, as amended (42 U.S.C. Sections 7401, 7412); (vii) imminently hazardous
chemical substance or mixture with respect to which action has been or may be
taken pursuant to Section 7 of the Toxic Substances Control Act, as amended (15
U.S.C. Sections 2601, 2606); (viii) source, special nuclear, or by-product
material as defined by the Atomic Energy Act of 1954, as amended (42 U.S.C.
Section 2001 et seq.); (ix) asbestos, asbestos-containing material, or urea
formaldehyde or material that contains it; (x) waste oil and other petroleum
products; and (xi) any other toxic materials, contaminants, or hazardous
substances or wastes pursuant to any Environmental Law.
"Indemnified Persons" -- As defined in Section 9.2.
"Intellectual Property Assets" -- As defined in Section 2.22.
"Interim Balance Sheet" -- As defined in Section 2.4.
"IRS" -- The United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- An individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) Such individual is actually aware of such fact or other matter; or
(b) A prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement" -- Any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance, principle
of common law, regulation, statute, or treaty.
"Noncompetition Agreement" -- As defined in Section 1.4(a)(iv).
"Occupational Safety and Health Law" -- Any Legal Requirement in effect
on or prior to Closing designed to provide safe and healthful working conditions
and to reduce occupational safety and health hazards, and any program, whether
governmental or private (such as those promulgated or
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sponsored by industry associations and insurance companies), designed to provide
safe and healthful working conditions.
"Order" -- Any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- An action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
(c) Such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the by-laws of the corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person" -- Any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- As defined in Section 2.13.
"Proceeding" -- Any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person" -- With respect to a particular individual:
(a) Each other member of such individual's Family;
(b) Any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) Any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
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(d) Any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a) Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) Any Person that holds a Material Interest in such specified Person;
(c) Each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) Any Person in which such specified Person holds a Material
Interest; and
(e) Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
"Release" -- Any spilling, leading, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"Representative" -- With respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" -- The Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Sellers" -- As defined in the Recitals of this Agreement.
"Sellers' Releases" -- As defined in Section 1.4.
"Shares" -- As defined in the second paragraph of this Agreement.
"Subsidiary" -- With respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than
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securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of the Company.
"Tax" -- Any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Buyer: Sellers:
MORTON INDUSTRIAL GROUP, INC.
By:_____________________________ By:_________________________________
William D. Morton, President GARY L. GEORGE
ATTEST: By:_________________________________
GLORIA J. GEORGE
By:_____________________________
Daryl R. Lindemann, Secretary
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TABLE OF CONTENTS
PAGE
RECITALS 1
AGREEMENT................................................................... 1
1. Sale and Transfer of Shares; Closing.............................. 1
1.1 Shares................................................... 1
1.2 Purchase Price........................................... 1
1.3 Closing.................................................. 1
1.4 Closing Obligations...................................... 1
1.5 Adjustment Amount........................................ 2
1.6 Adjustment Procedure..................................... 2
2. Representations and Warranties of Sellers......................... 3
2.1 Organization and Good Standing........................... 3
2.2 Authority; No Conflict................................... 3
2.3 Capitalization........................................... 4
2.4 Financial Statements..................................... 4
2.5 Books and Records........................................ 4
2.6 Title to Properties; Encumbrances........................ 5
2.7 Condition and Sufficiency of Assets...................... 5
2.8 Accounts Receivable...................................... 6
2.9 Inventory................................................ 6
2.10 No Undisclosed Liabilities............................... 6
2.11 Taxes.................................................... 6
2.12 No Material Adverse Change............................... 7
2.13 Employee Benefits........................................ 7
2.14 Compliance with Legal Requirements; Governmental
Authorizations........................................... 12
2.15 Legal Proceedings; Orders................................ 13
2.16 Absence of Certain Changes and Events.................... 14
2.17 Contracts; No Defaults................................... 15
2.18 Insurance................................................ 17
2.19 Environmental Matters.................................... 18
2.20 Employees................................................ 19
2.21 Labor Disputes; Compliance............................... 19
2.22 Intellectual Property.................................... 20
2.23 Certain Payments......................................... 22
2.24 Disclosure............................................... 22
2.25 Relationships With Related Persons....................... 22
2.26 Brokers or Finders....................................... 23
3. Representations and Warranties of Buyer........................... 23
3.1 Organization and Good Standing........................... 23
3.2 Authority; No Conflict................................... 23
3.3 Investment Intent........................................ 23
3.4 Certain Proceedings...................................... 23
3.5 Brokers or Finders....................................... 24
4. Covenants of Sellers Prior to Closing Date........................ 24
4.1 Access and Investigation................................. 24
4.2 Operation of the Businesses of the Acquired Companies.... 24
4.3 Negative Covenant........................................ 24
4.4 Required Approvals....................................... 24
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4.5 Notification............................................. 24
4.6 Payment of Indebtedness by Related Persons............... 25
4.7 No Negotiation........................................... 25
4.8 Best Efforts............................................. 25
5. Covenants of Buyer................................................ 25
5.1 Approvals of Governmental Bodies......................... 25
5.2 Best Efforts............................................. 25
5.3 Certain Key Employees.................................... 25
5.4 Manufacturer's Representatives........................... 26
6. Conditions Precedent to Buyer's Obligation to Close............... 26
6.1 Accuracy of Representation............................... 26
6.2 Sellers' Performance..................................... 26
6.3 Consents................................................. 26
6.4 Additional Documents..................................... 26
6.5 No Proceedings........................................... 26
6.6 No Claim Regarding Stock Ownership or Sale Proceeds...... 27
6.7 No Prohibition........................................... 27
6.8 Other Shares............................................. 27
7. Conditions Precedent to Sellers' Obligation to Close.............. 27
7.1 Accuracy of Representations.............................. 27
7.2 Buyer's Performance...................................... 27
7.3 Consents................................................. 27
7.4 Additional Documents..................................... 27
7.5 No Injunction............................................ 28
8. Termination....................................................... 28
8.1 Termination Events....................................... 28
8.2 Effect of Termination.................................... 28
9. Indemnification; Remedies......................................... 28
9.1 Survival................................................. 28
9.2 Indemnification and Reimbursement by Sellers --
Generally................................................ 28
9.3 Indemnification and Reimbursement by Sellers --
Environmental Matters.................................... 29
9.4 Indemnification and Reimbursement by Buyer............... 30
9.5 Time Limitations......................................... 30
9.6 Limitations on Amount -- Sellers......................... 30
9.7 Limitations on Amount -- Buyer........................... 30
9.8 Right of Set-Off......................................... 30
9.9 Procedure for Indemnification -- Third Party Claims...... 31
9.10 Procedure for Indemnification -- Other Claims............ 32
10. General Provisions................................................ 32
10.1 Expenses................................................. 32
10.2 Public Announcements..................................... 32
10.3 Confidentiality.......................................... 32
10.4 Notices.................................................. 32
10.5 Jurisdiction; Service of Process......................... 33
10.6 Further Assurances....................................... 33
10.7 Waiver................................................... 33
10.8 Entire Agreement and Modification........................ 33
10.9 Schedules................................................ 34
10.10 Assignments, Successors, and No Third-Party Rights....... 34
10.11 Severability............................................. 34
10.12 Section Headings; Construction........................... 34
10.13 Time of Essence.......................................... 34
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10.14 Governing Law............................................ 34
10.15 Counterparts............................................. 34
11. Definitions....................................................... 34
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EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of April 8,
1998, by and between MORTON INDUSTRIAL GROUP, INC., a Georgia corporation
("Buyer"); JOSEPH T. BUIE, JR., an individual resident of North Carolina
("Buie"); and ERNEST J. BUTLER, an individual resident of North Carolina
("Butler").
RECITALS
Buie and Butler (individually a "Seller" and collectively the
"Sellers") own the shares reflected on Exhibit A attached (the "Shares") of the
common stock, par value $1.00 per share, of B & W Metal Fabricators, Inc., a
North Carolina corporation (the "Company"), which constitute all of the issued
and outstanding shares of capital stock of Company. Sellers desire to sell, and
Buyer desires to purchase, the Shares for the consideration and on the terms set
forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING
1.1 SHARES. Subject to the terms and conditions of this Agreement, at
the Closing, Sellers will sell and transfer to Buyer, and Buyer will purchase
from Sellers, the Shares.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares will be as set forth in Exhibit A.
1.3 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 101 S.W. Adams
Street, Suite 800, Peoria, Illinois 61602, at 10:00 a.m. (local time) on April
8, 1998, or at such other time and place as the parties may mutually agree.
Subject to the provisions of Section 9, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 1.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(ii) Releases in the Form of Exhibit 1.4(a)(ii) executed by
Sellers (collectively, "Sellers' Releases");
(iii) Employment agreement in the form of Exhibit 1.4(a)(iii),
executed by Butler (the "Employment Agreement");
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(iv) Noncompetition agreements in the form of Exhibit
1.4(a)(iv), executed by Sellers (collectively, the "Noncompetition Agreements");
(v) A certificate executed by Sellers representing and
warranting to Buyer that each of Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the Schedules that were delivered by
Sellers to Buyer prior to the Closing Date in accordance with Section 4.5);
(vi) The resignations of Tonya H. Buie and Frankie B. Butler
from their respective positions with the Company; and
(vii) Evidence of the filing of the Company's federal, state
and local (if any) income tax returns for the year ended December 31, 1997.
(b) Buyer will deliver to Sellers:
(i) By bank cashier's or certified check or by wire transfer
to accounts specified by Buie and Butler, respectively, the amounts reflected in
Exhibit A;
(ii) Promissory notes payable to Buie and Butler in the
respective principal amounts reflected in Exhibit A in the form of Exhibit
1.4(b) (the "Promissory Notes");
(iii) A certificate executed by Buyer to the effect that,
except as otherwise stated in such certificate, each of Buyer's representations
and warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the Closing Date as if made
on the Closing Date;
(iv) The Employment Agreement, executed by Buyer; and
(v) Assignments of the keyman and split dollar life insurance
policies owned by the Company on the lives of Sellers and Tonya H. Buie to the
insured parties.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING.
(a) Schedule 2.1 contains a complete and accurate list of each Acquired
Company of its name, its jurisdiction of incorporation, other jurisdictions in
which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). Each
Acquired Company is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
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(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
2.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with its terms.
Upon the execution and delivery by Sellers of the Employment Agreement, the
Sellers' Releases, and the Noncompetition Agreements (collectively, the
"Sellers' Closing Documents"), the Sellers' Closing Documents will constitute
the legal, valid, and binding obligations of Sellers, enforceable against
Sellers in accordance with their respective terms. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the Sellers' Closing Documents and to perform their obligations
under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Schedule 2.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) Contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Acquired Companies, or (B)
any resolution adopted by the board of directors or the stockholders of any
Acquired Company;
(ii) Contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company or either
Seller, or any of the assets owned or used by any Acquired Company, may be
subject;
(iii) Contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise relates to
the business of, or any of the assets owned or used by, any Acquired Company;
(iv) Cause Buyer or any Acquired Company to become subject to,
or to become liable for the payment of, any Tax;
(v) Cause any of the assets owned by any Acquired Company to
be reassessed or revalued by any taxing authority or other Governmental Body;
(vi) Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vii) Result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired Company.
Except as set forth in Schedule 2.2, no Seller or Acquired Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
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(c) Sellers are acquiring the Promissory Notes for their own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act. Each Seller is an "accredited investor" as such
term is defined in Rule 501(a) under the Securities Act.
2.3 CAPITALIZATION. The authorized equity securities of the
Company consists of 100,000 shares of common stock, par value $1.00 per share,
of which 58,501 shares are issued and outstanding and constitute the Shares.
Sellers are and will be on the Closing Date the record and beneficial owners and
holders of the Shares, free and clear of all Encumbrances. Buie owns the Shares
set opposite his name in Exhibit A and Butler owns the Shares set opposite his
name in Exhibit A. With the exception of the Shares (which are owned by
Sellers), all of the outstanding equity securities and other securities of each
Acquired Company are owned of record and beneficially by one or more of the
Acquired Companies, free and clear of all Encumbrances. No legend or other
reference to any purported Encumbrance appears upon any certificate representing
equity securities of any Acquired Company. All of the outstanding equity
securities of each Acquired Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of any
Acquired Company. None of the outstanding equity securities or other securities
of any Acquired Company was issued in violation of the Securities Act or any
other Legal Requirement. No Acquired Company owns, or has any Contract to
acquire, any equity securities or other securities of any Person (other than
Acquired Companies) or any direct or indirect equity or ownership interest in
any other business.
2.4 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of the Acquired Companies, all of which have
been made available to Buyer, are complete and correct and have been maintained
in accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of
whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Board of
Directors, and committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
2.5 TITLE TO PROPERTIES; ENCUMBRANCES. Schedule 2.5 contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned by any Acquired Company. Sellers have delivered or made available
to Buyer copies of the deeds and other instruments (as recorded) by which the
Acquired Companies acquired such real property and interests, and copies of all
title insurance policies, opinions, abstracts, and surveys in the possession of
Sellers or the Acquired Companies and relating to such property or interests.
The Acquired Companies own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in the facilities owned or
operated by the Acquired Companies or reflected as owned in the books and
records of the Acquired Companies. All material properties and assets of the
Company are free and clear of all Encumbrances and are not, in the case of real
property, subject to any rights of way, building use restrictions, exceptions,
variances,
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reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on Schedule
2.5, with respect to which no default (or event that, with notice or lapse of
time or both, would constitute a default) exists, (b) liens for current taxes
not yet due, and (c) with respect to real property, (i) minor imperfections of
title, if any, none of which is substantial in amount, materially detracts from
the value or impairs the use of the property subject thereto, or impairs the
operations of any Acquired Company, and (ii) zoning laws and other land use
restrictions that do not impair the present or anticipated use of the property
subject thereto. All buildings, plants, and structures owned by the Acquired
Companies lie wholly within the boundaries of the real property owned by the
Acquired Companies and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.
2.6 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment of the Acquired Companies are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The building, plants,
structures, and equipment of the Acquired Companies are sufficient for the
continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
2.7 ACCOUNTS RECEIVABLE. All accounts receivable of the Acquired
Companies that are reflected on the accounting records of the Acquired Companies
as of the Closing Date (collectively, the "Accounts Receivable") represent or
will represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the accounting
records of the Acquired Companies as of the Closing Date (which reserves are
adequate and calculated consistent with past practice)). Subject to such
reserves, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within ninety (90) days after the day on which it
first becomes due and payable. There is no contest, claim, or right of set-off,
other than returns in the Ordinary Course of Business, under any Contract with
any debtor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Schedule 2.7 contains a complete and accurate list of all
Accounts Receivable as of the date reflected thereon, which list sets forth the
aging of such Accounts Receivable.
2.8 INVENTORY. All inventory of the Acquired Companies consists of
a quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value on the accounting
records of the Acquired Companies as of the Closing Date, as the case may be.
All inventories not written off have been priced at the lower of cost or market
on a first in, first out basis. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable in the present circumstances of the Acquired Companies.
2.9 TAXES.
(a) The Acquired Companies have filed or caused to be filed (on a
timely basis since 1990) all Tax Returns that are or were required to be filed
by or with respect to any of them, either separately or as a member of a group
of corporations, pursuant to applicable Legal Requirements. Sellers have
delivered
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to Buyer copies of, and Schedule 2.9 contains a complete and accurate list of,
all such Tax Returns relating to income or franchise taxes filed since 1993. The
Acquired Companies have paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Sellers or any Acquired Company, except
such Taxes, if any, as are listed in Schedule 2.9 and are being contested in
good faith.
(b) The United States federal and state income Tax Returns of each
Acquired Company subject to such Taxes have been audited by the IRS or relevant
state tax authorities or are closed by the applicable statute of limitations for
all taxable years through 1993. Schedule 2.9 contains a complete and accurate
list of all audits of all such Tax Returns, including a reasonably detailed
description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or, as
described in Schedule 2.9, are being contested in good faith by appropriate
proceedings. Schedule 2.9 describes all adjustments to the United States federal
income Tax Returns filed by any Acquired Company or any group of corporations
including any Acquired Company for all taxable years since 1990, and the
resulting deficiencies proposed by the IRS. Except as described in Schedule 2.9,
no Seller or Acquired Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) or any statute of limitations relating to the payment of Taxes of
any Acquired Company or for which any Acquired Company may be liable.
(c) Each Acquired Company has paid all its liability for Taxes
accrued through December 31, 1997. There exists no proposed tax assessment
against any Acquired Company except as disclosed in Schedule 2.9. No consent to
the application of Section 341(f)(2) of the Code has been filed with respect to
any property or assets held, acquired, or to be acquired by any Acquired
Company. All Taxes that any Acquired Company is or was required by Legal
Requirements to withhold or collect have been fully withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) any Acquired Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by any Acquired Company after
the date of this Agreement.
2.10 NO MATERIAL ADVERSE CHANGE. Since December 31, 1997, there has
not been any material adverse change in the business, operations, properties,
prospects, assets, or condition of any Acquired Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
2.11 EMPLOYEE BENEFITS.
(a) As used in this Section 2.11, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by an Acquired Company or an ERISA Affiliate of an
Acquired Company.
"Company Plan" means all Plans of which an Acquired Company or an ERISA
Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
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<PAGE> 7
Affiliate of an Acquired Company otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate of an Acquired Company.
"ERISA Affiliate" means, with respect to an Acquired Company, any other
person that, together with the Company, would be treated as a single employer
under Code Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of Code Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements or Code Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under Code
Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Schedule 2.11(i) contains a complete and accurate list of all
Company Plans, Company Other Benefit Obligations, and Company VEBAs, and
identifies as such all Company Plans that are (A) defined benefit Pension Plans,
(B) Qualified Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Schedule 2.11(ii) contains a complete and accurate list of (A)
all ERISA Affiliates of each Acquired Company, and (B) all Plans of which any
such ERISA Affiliate is or was a Plan Sponsor, in which any such ERISA Affiliate
participates or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(iii) Schedule 2.11(iii) sets forth, for each Multi-Employer Plan,
as of its last valuation date, the amount of potential withdrawal liability of
the Acquired Companies and the Acquired Companies' other ERISA Affiliates,
calculated according to information made available pursuant to ERISA Section
4221(e).
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(iv) Schedule 2.11(iv) sets forth a calculation of the liability of
the Acquired Companies for post-retirement benefits other than pensions, made in
accordance with Financial Accounting Statement 106 of the Financial Accounting
Standards Board, regardless of whether any Acquired Company is required by this
Statement to disclose such information.
(v) Schedule 2.11(v) sets forth the financial cost of all
obligations owed under any Company Plan or Company Other Benefit Obligation that
is not subject to the disclosure and reporting requirements of ERISA.
(c) Sellers have delivered or made available to Buyer:
(i) All documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Company
Plans for which Sellers or the Acquired Companies are required to prepare, file,
and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans, Company Other Benefit Obligations, and Company VEBAs for which a
plan description or summary plan description is not required;
(ii) All personnel, payroll, and employment manuals and policies;
(iii) All collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare benefits) by the Acquired Companies and the ERISA Affiliates of the
Acquired Companies, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) A written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) All registration statements filed with respect to any Company
Plan;
(vi) All insurance policies purchased by or to provide benefits
under any Company Plan;
(vii) All contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that relate
to any Company Plan, Company Other Benefit Obligation, or Company VEBA;
(viii) All reports submitted within the four (4) years preceding
the date of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) All notifications to employees of their rights under ERISA
Section 601 et seq. and Code Section 4980B;
(x) The Form 5500 filed in each of the most recent three (3) plan
years with respect to each Company Plan, including all schedules thereto and the
opinions of independent accountants;
(xi) All notices that were given by an Acquired Company or any
ERISA Affiliate of an Acquired Company or any Company Plan to the IRS, the PBGC,
or any participant or beneficiary, pursuant to statute, within the four (4)
years
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<PAGE> 9
preceding the date of this Agreement, including notices that are expressly
mentioned elsewhere in this Section 2.13;
(xii) All notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate of an Acquired
Company, or any Company Plan within the four (4) years preceding the date of
this Agreement;
(xiii) With respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Acquired Companies that is a Qualified
plan; and
(xiv) With respect to Title IV Plans, the Form PBGC-1 filed for
each of the three (3) most recent plan years.
(d) Except as set forth in Schedule 2.11(vi):
(i) The Acquired Companies have performed all of their respective
obligations under all Company Plans, Company Other Benefit Obligations, and
Company VEBAs. The Acquired Companies have made appropriate entries in their
financial records and statements for all obligations and liabilities under such
Plans, VEBAs, and Other Benefit Obligations that have accrued but are not due.
(ii) No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit Obligation
and that could have an adverse economic consequence to any Acquired Company or
to Buyer.
(iii) The Acquired Companies, with respect to all Company Plans,
Company Other Benefits Obligations, and Company VEBAs, are, and each Company
Plan, Company Other Benefit Obligation, and Company VEBA is, in full compliance
with ERISA, the Code, and other applicable Laws including the provisions of such
Laws expressly mentioned in this Section 2.11, and with any applicable
collective bargaining agreement.
(A) No transaction prohibited by ERISA Section 406
and no "prohibited transaction" under Code Section 4975(c) have occurred with
respect to any Company Plan.
(B) No Seller or acquired Company has any liability
to the IRS with respect to any Plan, including any liability imposed by Chapter
43 of the Code.
(C) No Seller or Acquired Company has any liability
to the PBGC with respect to any Plan or has any liability under ERISA Section
502 or Section 4071.
(D) All filings required by ERISA and the Code as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the Code have been timely provided.
(E) All contributions and payments made or accrued
with respect to all Company Plans, Company Other Benefit Obligations, and
Company VEBAs are deductible under Code Section 162 or Section 404. No amount,
or any asset of any Company Plan or Company VEBA, is subject to tax as
unrelated business taxable income.
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<PAGE> 10
(iv) Each Company Plan can be terminated within thirty (30) days,
without payment of any additional contribution or amount and without the vesting
or acceleration of any benefits promised by such Plan.
(v) Since December 31, 1996, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could result
in a material increase in premium costs of Company Plans and Company Other
Benefit Obligations that are insured, or a material increase in benefit costs of
such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
Sellers' Knowledge, is threatened.
(viii) No Company Plan is a stock bonus, pension, or profit-sharing
plan within the meaning of Code Section 401(a).
(ix) Each Qualified Plan of each Acquired Company is qualified in
form and operation under Code Section 401(a); each trust for each such Plan is
exempt from federal income tax under Code Section 501(a). Each Company VEBA is
exempt from federal income tax. No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of tax-exempt
status of any such Plan or trust.
(x) Each Acquired Company and each ERISA Affiliate of an Acquired
Company has met the minimum funding standard, and has made all contributions
required, under ERISA Section 302 and Code Section 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Acquired Companies have paid all amounts due to PBGC
pursuant to ERISA Section 4007.
(xiii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has ceased operations of any facility or has withdrawn from any Title IV
Plan in a manner that would subject to any entity or Sellers to liability under
ERISA Section 4062(e), Section 4063, or Section 4064.
(xiv) No Acquired Company or any ERISA Affiliate of an Acquired
Company has filed a notice of intent to terminate any Plan or has adopted any
amendment to treat a Plan as terminated. The PBGC has not instituted
proceedings to treat any Company Plan as terminated. No event has occurred or
circumstance exists that may constitute grounds under ERISA Section 4042 for
the termination of, or the appointment of a trustee to administer, any Company
Plan.
(xv) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision of security
under ERISA Section 307 or Code Section 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or circumstance
exists that may result in an accumulated funding deficiency as of the last day
of the current plan year of any such Plan.
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(xvii) The actuarial report for each Pension Plan of each Acquired
Company and each ERISA Affiliate of each Acquired Company fairly presents the
financial condition and the results of operations of each such Plan.
(xviii) Since the last valuation date for each Pension Plan of each
Acquired Company and each ERISA Affiliate of an Acquired Company, no event has
occurred or circumstance exists that would increase the amount of benefits
under any such Plan or that would cause the excess of Plan assets over benefit
liabilities (as defined in ERISA Section 4001) to decrease, or the amount by
which benefit liabilities exceed assets to increase.
(xix) No reportable event (as defined in ERISA Section 4043) and in
regulations issued thereunder) has occurred.
(xx) No Seller or Acquired Company has Knowledge of any facts or
circumstances that may give rise to any liability of any Seller, any Acquired
Company, or Buyer to the PBGC under Title IV of ERISA.
(xxi) No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Multi-Employer Plan.
(xxii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has withdrawn from any Multi-Employer Plan with respect to which there
is any outstanding liability as of the date of this Agreement. No event has
occurred or circumstance exists that presents a risk of the occurrence of any
withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multi-Employer Plan that could result in any liability of
either any acquired Company or Buyer to a Multi-Employer Plan.
(xxiii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, or that
such Plan intends to terminate or has terminated.
(xxiv) No Multi-Employer Plan to which any Acquired Company or any
ERISA Affiliate of any Acquired Company contributes or has contributed is a
party to any pending merger or asset or liability transfer or is subject to any
proceeding brought by the PBGC.
(xxv) Except to the extent required under ERISA Section 601 et
seq. and Code Section 4980B, no Acquired Company provides health or welfare
benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(xxvi) Each Acquired Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired and
active employees.
(xxvii) Sellers and all Acquired Companies have complied with the
provisions of ERISA Section 601 et seq. and Code Section 4980B.
(xxviii) No payment that is owed or may become due to any director,
officer, employee, or agent of any Acquired Company will be non-deductible to
the Acquired Companies or subject to tax under Code Section 280G or Section
4999; nor will any
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Acquired Company be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such person.
(xxix) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Schedule 2.12:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a violation by
an Acquired Company of, or a failure on the part of any Acquired Company to
comply with, any Legal Requirement, or (B) may give rise to any obligation on
the part of any Acquired Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature; and
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of any Acquired Company to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature.
(b) Schedule 2.12 contains a complete and accurate list of each
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
any Acquired Company. Each Governmental Authorization listed or required to be
listed in Schedule 2.12 is valid and in full force and effect. Except as set
forth in Schedule 2.12:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with all of the terms and requirements of
each Governmental Authorization identified or required to be identified in
Schedule 2.12;
(ii) No event has occurred or circumstance exists that may (with
or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed in Schedule
2.12, or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in Schedule 2.12;
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
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(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Schedule 2.12 have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 2.12 collectively constitute
all of the Governmental Authorizations necessary to permit the Acquired
Companies to lawfully conduct and operate their businesses in the manner they
currently conduct and operate such businesses and to permit the Acquired
Companies to own and use their assets in the manner in which they currently own
and use such assets.
2.13 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 2.13, there is no pending
Proceeding:
(i) That has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or
(ii) That challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of Sellers and the Acquired Companies, (1) no such Proceeding
has been threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Schedule 2.13.
The Proceedings listed in Schedule 2.13 will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
any Acquired Company.
(b) Except as set forth in Schedule 2.13:
(i) There is no Order to which any of the Acquired Companies,
or any of the assets owned or used by any Acquired Company, is subject;
(ii) None of Sellers is subject to any Order that relates to
the business of, or any of the assets owned or used by, any Acquired Company;
and
(iii) To the Knowledge of Sellers and the Acquired Companies,
no officer, director, agent, or employee of any Acquired Company is subject to
any Order that prohibits such officer, director, agent, or employee from
engaging in or continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
(c) Except as set forth in Schedule 2.13:
(i) Each Acquired Company is, and at all times since December
31, 1992, has been, in full compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has been
subject;
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(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
subject; and
(iii) No Acquired Company has received, at any time since
December 31, 1992, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any of the assets
owned or used by an Acquired Company, is or has been subject.
2.14 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 2.14, since December 31, 1997, the Acquired Companies have conducted
their businesses only in the Ordinary Course of Business and there has not been
any:
(a) Change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) Amendment to the Organizational Documents of any Acquired
Company;
(c) Payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) Adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(e) Damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(f) Entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by any Acquired Company of at least
$50,000;
(g) Sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
(h) Cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $50,000;
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(i) Material change in the accounting methods used by any Acquired
Company; or
(j) Agreement, whether oral or written, by any Acquired Company to
do any of the foregoing.
2.15 CONTRACTS; NO DEFAULTS.
(a) Schedule 2.15(a) contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies, of:
(i) Each Applicable Contract that involves performance of
services or delivery of goods or materials by any Acquired Company of an amount
or value in excess of $50,000;
(ii) Each Applicable Contract that involves performance of
services or delivery of goods or materials to any Acquired Company of an amount
or value in excess of $50,000;
(iii) Each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of any
Acquired Company in excess of $50,000;
(iv) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $10,000 and with terms of less than one (1)
year);
(v) Each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) Each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees relating to wages, hours, and other conditions of employment;
(vii) Each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person;
(viii) Each Applicable Contract containing covenants that in any
way purport to restrict any Acquired Company's business activity or limit the
freedom of any Acquired Company to engage in any line of business or to compete
with any Person;
(ix) Each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;
(x) Each power of attorney that is currently effective and
outstanding;
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(xi) Each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by any Acquired Company to be responsible for consequential damages;
(xii) Each Applicable Contract for capital expenditures in
excess of $10,000;
(xiii) Each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business; and
(xiv) Each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
Schedule 2.15(a) sets forth reasonably complete details concerning such
Contracts, including the parties to the Contracts, the amount of the remaining
commitment of the Acquired Companies under the Contracts, and the Acquired
Companies' office where details relating to the Contracts are located.
(b) Except as set forth in Schedule 2.15(b):
(i) Neither Seller has or may acquire any rights under, and
neither Seller has or may become subject to any obligation or liability under,
any Contract that relates to the business of, or any of the assets owned or used
by, any Acquired Company; and
(ii) To the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, employee, consultant, or contractor of any Acquired
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.
(c) Except as set forth in Schedule 2.15(c):
(i) Each Contract identified or required to be identified in
Schedule 2.15(a) is in full force and effect and is valid and enforceable in
accordance with its terms; and
(ii) No Contract identified or required to be identified in
Schedule 2.15(a) contains any term or requirement that is unreasonable,
extraordinary, or not customary in the industries in which the Acquired
Companies operate.
(d) Except as set forth in Schedule 2.15(d):
(i) Each Acquired Company is, and at all times since December
31, 1992 has been, in full compliance with all applicable terms and requirements
of each Contract under which such Acquired Company has or had any obligation or
liability or by which such Acquired Company or any of the assets owned or used
by such Acquired Company is or was bound;
(ii) Each other Person that has or had any obligation or
liability under any Contract under which an Acquired Company has or had any
rights is, and at all times since December 31, 1992 has been, in full compliance
with all applicable terms and requirements of such Contract;
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<PAGE> 17
(iii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give any Acquired Company or other Person the right
to declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable Contract;
and
(iv) No Acquired Company has given to or received from any other
Person, at any time since December 31, 1992, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under current or completed Contracts with any Person having the
contractual or statutory right to demand or require such renegotiation and, to
the Knowledge of Sellers and the Acquired Companies, no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been entered
into in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
2.16 INSURANCE.
(a) Sellers have delivered to Buyer:
(i) True and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired Company, or
any director of any Acquired Company, is or has been covered at any time within
the five (5) years preceding the date of this Agreement;
(ii) True and complete copies of all pending applications for
policies of insurance; and
(iii) Any statement by the auditor of any Acquired Company's
financial statements with regard to the adequacy of such entity's coverage or of
the reserves for claims.
(b) Schedule 2.16(b) describes:
(i) Any self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder;
(ii) Any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired Company; and
(iii) All obligations of the Acquired Companies to provide
coverage to third parties (for example, under leases or service agreements) and
identifies the policy under which such coverage is provided.
(c) Schedule 2.16(c) sets forth, by year, for the current policy
year and each of the five (5) preceding policy years:
(i) A summary of the loss experience under each policy;
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(ii) A statement describing each claim under an insurance
policy for an amount in excess of $10,000, which sets forth:
(A) The name of the claimant;
(B) A description of the policy by insurer, type of
insurance, and period of coverage; and
(C) The amount and a brief description of the claim;
and
(iii) A statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Schedule 2.16(d):
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company or director thereof:
(A) Are valid, outstanding, and enforceable;
(B) Are issued by an insurer that is financially
sound and reputable;
(C) Taken together, provide adequate insurance
coverage for the assets and the operations of the Acquired Companies for all
risks to which the Acquired Companies are normally exposed;
(D) Are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a party or by which
any of them is bound; and
(E) Will continue in full force and effect following
the consummation of the Contemplated Transactions.
(ii) No Seller or Acquired Company has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or that the
issuer of any policy is not willing or able to perform its obligations
thereunder.
(iii) The Acquired Companies have paid all premiums due,
and have otherwise performed all of their respective obligations, under each
policy to which any Acquired Company is a party or that provides coverage to any
Acquired Company or director thereof.
(iv) The Acquired Companies have given notice to the
insurer of all claims that may be insured thereby.
2.17 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.17:
(a) Each Acquired Company is, and at all times prior to the date
hereof has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. No Seller or Acquired
Company has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any actual or
threatened order, notice, or other communication from (i) any Governmental Body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any
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Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the
Acquired Companies, threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has or had an
interest.
(c) No Seller or Acquired Company has Knowledge of any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held responsible, received, any Order, notice, communications, inquiry, warning,
citation, summons, directive, or any other indication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company had an interest, or with respect to any property or facility to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or, to the Knowledge of
Sellers and the Acquired Companies, with respect to any other properties and
assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company (or any predecessor), has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. No
Seller, Acquired Company, any other Person for whose conduct they are or may be
held responsible, or to the Knowledge of Sellers and the Acquired Companies, any
other Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company has
or had an interest except in full compliance with all applicable Environmental
Laws.
(f) There has been no Release or, to the Knowledge of Sellers and the
Acquired Companies, threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
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generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has or had an interest, or to the Knowledge of Sellers and the Acquired
Companies any geologically or hydrologically adjoining property, whether by
Sellers, any Acquired Company, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Sellers or any Acquired Company pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.
2.18 EMPLOYEES.
(a) Schedule 2.18 contains a complete and accurate list of the
following information for each employee or director of the Acquired Companies,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since December 31, 1996; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any Acquired Company's pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
(b) No former or current employee or current or former director of
any Acquired Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement, between such employee or director and any other entity or
person ("Proprietary Rights Agreement") that in any way adversely affected,
affects, or will affect (i) the performance of his duties as an employee or
director of the Acquired Companies, or (ii) the ability of any Acquired Company
to conduct its business, including any Proprietary Rights Agreement with Sellers
or the Acquired Companies by any such employee or director. To Sellers'
Knowledge, no director, officer, or other key employee of any Acquired Company
intends to terminate his employment with such Acquired Company.
(c) Schedule 2.18 also contains a complete and accurate list of
the following information for each retired employee or director of the Acquired
Companies, or their dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.
2.19 LABOR DISPUTES; COMPLIANCE. Since December 31, 1992, no
Acquired Company has been or is a party to any collective bargaining or other
labor Contract. Since December 31, 1992, there has not been, there is not
presently pending or existing, and to Sellers' Knowledge there is not threatened
any strike, slowdown, picketing, work stoppage, labor arbitration or proceeding
in respect of the grievance of any employee, application or complaint filed by
an employee or union with the National Labor Relations Board or any comparable
Governmental Body, organizational activity, or other labor dispute against or
affecting any of the Acquired Companies or their premises, and no application
for certification of a collective bargaining agent is pending or to Sellers'
Knowledge is threatened. To Sellers' Knowledge no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
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labor dispute. This is no lockout of any employees by any Acquired Company, and
no such action is contemplated by any Acquired Company. Each Acquired Company
has complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. No Acquired Company is
liable for the payment of any taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
2.20 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets -- The term "Intellectual
Property Assets" includes:
(i) The name B & W Metal Fabricators, Inc., all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) All patents and patent applications (collectively,
"Patents");
(iii) All copyrights in both published works and unpublished
works that are material to the Acquired Companies' businesses (collectively,
"Copyrights");
(iv) All rights in mask works (collectively, "Rights in Mask
Works"); and
(v) All know-how, trade secrets, confidential information,
software, technical information, process technology, plans, drawings, and
blueprints (collectively, "Trade Secrets"); owned, used, or licensed by any
Acquired Company as licensee or licensor.
(b) Agreements -- Schedule 2.20(b) contains a complete and accurate
list and summary description, including any royalties paid or received by the
Acquired Companies, of all agreements relating to the Intellectual Property
Assets to which any Acquired Company is a party or by which any Acquired Company
is bound, except for any license implied by the sale of a product and common
software programs with a value of less than $1,000. There are no outstanding
and, to Sellers' Knowledge, no threatened disputes or disagreements with respect
to any such agreement.
(c) Know-How Necessary for the Business -- Except as otherwise
disclosed in Schedule 2.20(c):
(i) The Intellectual Property Assets are all those necessary for
the operation of the Acquired Companies' businesses as they are currently
conducted. One or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Intellectual Property Assets, free and
clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims, and has the right to use without payment to a third party
all of the Intellectual Property Assets.
(ii) All employees of each Acquired Company have executed written
agreements with one or more of the Acquired Companies that assign to one or more
of the Acquired Companies all rights to any inventions, improvements,
discoveries, or information relating to the business of any Acquired Company. No
employee of any Acquired Company has entered into any agreement that restricts
or limits in any way the scope or type of work in which the employee may be
engaged
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or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than one or more of the Acquired Companies.
(d) Patents
(i) Schedule 2.20(d) contains a complete and accurate list and
summary description of all Patents. One or more of the Acquired Companies is the
owner of all right, title, and interest in and to each of the Patents, free and
clear of all liens, security interests, charges, encumbrances, entities, and
other adverse claims.
(ii) All of the Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposing proceeding. To Sellers'
Knowledge, there is no potentially interfering patent or patent application of
any third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has
been challenged or threatened in any way. None of the products manufactured and
sold, nor any process or know-how used, by any Acquired Company infringes or is
alleged to infringe any patent or other proprietary right of any other Person.
(e) Trademarks
(i) Schedule 2.20(e) contains a complete and accurate list and
summary description of all Marks. One or more of the Acquired Companies is the
owner of all right, title, and interest in and to each of the Marks, free and
clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims.
(ii) Except as otherwise set forth in Schedule 2.20(e), all
Marks have been registered with the United States Patent and Trademark Office
and are currently in compliance with all formal legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such action is
threatened with respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) No Mark is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the Marks used by any Acquired
Company infringes or is alleged to infringe any trade name, trademark, or
service mark of any third party.
(f) Copyrights
(i) Schedule 2.20(f) contains a complete and accurate list and
summary description of all Copyrights. One or more of the Acquired Companies is
the owner of all right, title, and interest in and to each of the Copyrights,
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free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) Except as otherwise disclosed in Schedule 2.20(f), all
Copyrights have been registered and are currently in compliance with formal
legal requirements, are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the date of Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has
been challenged or threatened in any way. None of the subject matter of any of
the Copyrights infringes or is alleged to infringe any copyright of any third
party.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the special knowledge or memory of others.
(ii) Sellers and the Acquired Companies have taken all
reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iii) One or more of the Acquired Companies has good title and
an absolute (but not necessarily exclusive) right to use the Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature, and, to
Sellers' Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Acquired Companies) or to
the detriment of the Acquired Companies. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
2.21 CERTAIN PAYMENTS. Since December 31, 1992, no Acquired Company
or director, officer, agent, or employee of any Acquired Company, or to Sellers'
Knowledge any other Person associated with or acting for or on behalf of any
Acquired Company, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of any Acquired
Company or any affiliate of an Acquired Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Companies.
2.22 DISCLOSURE.
(a) No representation or warranty of Sellers in this Agreement and
no statement in the Schedules omits to state a material fact necessary to make
the statements herein or therein, in light of the circumstances in which they
were made, not misleading.
(b) No notice given pursuant to Section 4.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
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(c) There is no fact known to any Seller that has specific
application to any Seller or any Acquired Company (other than general economic
or industry conditions) and that materially adversely affects or, as far as
either Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of the
Acquired Companies (on a consolidated basis) that has not been set forth in this
Agreement or the Schedules.
2.23 RELATIONSHIPS WITH RELATED PERSONS. Except as otherwise
disclosed in Schedule 2.23, no Seller or any Related Person of Sellers or of any
Acquired Company has, or since January 1, 1995 has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Acquired Companies' businesses. No Seller or any
Related Person of Sellers or of any Acquired Company owns, or since January 1,
1995 has owned, of record or as a beneficial owner, an equity interest or any
other financial or profit interest in any Person that has (i) had business
dealings or a material financial interest in any transaction with any Acquired
Company other than business dealings or transactions conducted in the Ordinary
Course of Business with the Acquired Companies at substantially prevailing
market prices and on substantially prevailing market terms, or (ii) engaged in
competition with any Acquired Company with respect to any line of the products
or services of such Acquired Company (a "Competing Business") in any market
presently served by such Acquired Company except for less than one percent of
the outstanding capital stock of any Competing Business that is publicly traded
on any recognized exchange or in the over-the-counter market. Except as set
forth in Schedule 2.23, no Seller or any Related Person of Sellers or of any
Acquired Company is a party to any Contract with, or has any claim or right
against, any Acquired Company.
2.24 BROKERS OR FINDERS. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Employment Agreement and the
Promissory Notes (collectively, the "Buyer's Closing Documents"), the Buyer's
Closing Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 3.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
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(i) Any provision of Buyer's Organizational Documents;
(ii) Any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) Any Legal Requirement or Order to which Buyer may be
subject; or
(iv) Any Contract to which Buyer is a party or by which Buyer
may be bound.
Except as set forth in Schedule 3.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
3.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
3.5 BROKERS OR FINDERS. Buyer and its officers an agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Sellers harmless from any such
payment alleged to be due by and through Buyer as a result of the action of
Buyer or its officers or agents.
4. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, Sellers will, and will cause each Acquired Company and its
Representatives to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to each Acquired Company's personnel, properties (including
subsurface testing), contracts, books and records, and other documents and data,
(b) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
4.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES. Between
the date of this Agreement and the Closing Date, Sellers will, and will cause
each Acquired Company to:
(a) Conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) Use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services of the
current officers, employees and agents of such Acquired Company, and maintain
the relations and goodwill with suppliers, customers, landlords, creditors,
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employees, agents, and others having business relationships with such Acquired
Company;
(c) Confer with Buyer concerning operational matters of a material
nature; and
(d) Otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of such Acquired Company.
4.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date, Sellers
will not, and will cause each Acquired Company not to, without the prior consent
of Buyer, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 2.14 is likely to occur.
4.4 REQUIRED APPROVALS. As promptly as practicable after the date
of this Agreement, Sellers will, and will cause each Acquired Company to, make
all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, Sellers will, and will cause each Acquired Company to, (a)
cooperate with Buyer with respect to all filings that Buyer elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Buyer in obtaining all consents identified
in Schedule 3.2.
4.5 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Seller will promptly notify Buyer in writing if such Seller
or any Acquired Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Sellers' representations and warranties as of the
date of this Agreement, or if such Seller or any Acquired Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
if the Schedules were dated the date of the occurrence or discovery of any such
fact or condition, Sellers will promptly deliver to Buyer a supplement to the
Schedules specifying such change. During the same period, each Seller will
promptly notify Buyer of the occurrence of any Breach of any covenant of Sellers
in this Section 4 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
4.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as
expressly provided in this Agreement, Sellers will cause all indebtedness of any
Related Person to any Acquired Company to be paid in full prior to Closing.
4.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause each Acquired
Company and each of their Representatives not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets (other
than in the Ordinary Course of Business) of any Acquired Company, or any of the
capital stock of any Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
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4.8 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, Sellers will use their Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
5. COVENANTS OF BUYER PRIOR TO CLOSING DATE
5.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable
after the date of this Agreement, Buyer will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Buyer will, and will cause each Related Person to,
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(ii) cooperate with Sellers in obtaining all consents identified in Schedule
2.2; provided that this Agreement will not require Buyer to dispose of or make
any change in any portion of its business or to incur any other burden to obtain
a Governmental Authorization.
5.2 BEST EFFORTS. Except as set forth in the proviso to Section
5.1, between the date of this Agreement and the Closing Date, Buyer will use its
Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified or referred to in this Section 6.
"Acquired Companies" -- The Company and its Subsidiaries, collectively.
"Applicable Contract" -- Any Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by any Acquired Company is
or may become bound.
"Best Efforts" -- The efforts that a prudent person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"Breach" -- A "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by a Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Buyer" -- As defined in the first paragraph of this Agreement.
"Closing" -- As defined in Section 1.3.
"Closing Date" -- The date and time as of which the Closing actually
takes place.
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"Code" -- The Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code of 1986, as amended, or any successor law.
"Company" -- As defined in the second paragraph of this Agreement.
"Consent" -- Any approval, consent, ratification, waiver, or other
authorization (including any governmental Authorization).
"Contemplated Transactions" -- All of the transactions contemplated by
this Agreement, including without limitation: (a) the sale of the Shares by
Sellers to Buyer; (b) the execution, delivery, and performance of the Promissory
Notes, the Employment Agreement, the Noncompetition Agreements, and the Sellers'
Releases; (c) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement; and (d) Buyer's acquisition and ownership
of the Shares and exercise of control over the Acquired Companies.
"Contract" -- Any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages" -- As defined in Section 10.2.
"Employment Agreement" -- As defined in Section 1.4(a)(iii).
"Encumbrances" -- Any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting (in the case of any security), transfer, receipt of income, or exercise
of any other attribute of ownership.
"Environment" -- Soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwater, drinking
water supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- Any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and relating to:
(a) Any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) Fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) Financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law of Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by an
Governmental Body or any other Person) and for any natural resource damages; or
(d) Any other compliance, corrective, or remedial measures required
under Environmental Law or Occupational Safety and Health Law.
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The terms "removal," "remedial," and "response action" will include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ? 9601 et seq., as amended
("CERCLA").
"Environmental Law" -- Any Legal Requirement designed:
(a) To advise appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations or discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) To prevent or acceptably minimize the release of pollutants or
hazardous substances or materials into the Environment;
(c) To reduce the quantities, prevent the release, and minimize the
hazardous characteristics of wastes that are generated;
(d) To assure that products are designed, formulated, packaged, or used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) To protect resources, species, or ecological amenities;
(f) To acceptably minimize the risks inherent in transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) To clean up pollutants that have been released, prevent the threat
of release, or pay the costs of such clean up or prevention; or
(h) To make responsible parties pay private parties, or groups of them,
for damages done to their health or Environment, or to permit self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA" -- The Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities" -- Any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company (or any
predecessor Person) and any buildings, plants, structures, or equipment
currently or formerly owned, leased, or operated by any Acquired Company (or any
predecessor Person).
"Governmental Authorization" -- Any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" -- Any:
(a) Nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) Federal, state, local, municipal, foreign, or other government;
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(c) Governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) Multi-national organization or body; or
(e) Body exercising, or entitled or purporting to exercise any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity" -- The distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of hazardous materials in, or under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials" -- Includes any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14), (33) of CERCLA
or the regulations designated pursuant to Section 102 of CERCLA and found at 40
C.F.R. ? 302), including any element, compound, mixture, solution, or substance
that is or may be designated pursuant to Section 102 of CERCLA; (ii) substance
that is or may be designated pursuant to Section 311(b)(2)(A) of the Federal
Water Pollution Control Act, as amended (33 U.S.C. ?? 1251, 1321(b)(2)(A))
("FWPCA"); (iii) hazardous waste having the characteristics identified under or
listed pursuant to Section 3001 of the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ?? 6901, 6921) ("RCRA") or having characteristics that may
subsequently be considered under RCRA to constitute a hazardous waste; (iv)
substance containing petroleum, as that term is defined in Section 9001(8) of
RCRA; (v) toxic pollutant that is or may be listed under Section 307(a) of
FWPCA; (vi) hazardous air pollutant that is or may be listed under Section 112
of the Clean Air Act, as amended (42 U.S.C. ?? 7401, 7412); (vii) imminently
hazardous chemical substance or mixture with respect to which action has been or
may be taken pursuant to Section 7 of the Toxic Substances Control Act, as
amended (15 U.S.C. ?? 2601, 2606); (viii) source, special nuclear, or by-product
material as defined by the Atomic Energy Act of 1954, as amended (42 U.S.C. ?
2001 et seq.); (ix) asbestos, asbestos-containing material, or urea formaldehyde
or material that contains it; (x) waste oil and other petroleum products; and
(xi) any other toxic materials, contaminants, or hazardous substances or wastes
pursuant to any Environmental Law.
"Indemnified Persons" -- As defined in Section 10.2.
"Intellectual Property Assets" -- As defined in Section 2.20.
"IRS" -- The United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- An individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) Such individual is actually aware of such fact or other matter; or
(b) A prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
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reasonably comprehensive investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement" -- Any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance, principle
of common law, regulation, statute, or treaty.
"Noncompetition Agreements" -- As defined in Section 1.4(a)(iv).
"Occupational Safety and Health Law" -- Any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(such as those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order" -- Any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- An action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
(c) Such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the by-laws of the corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person" -- Any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- As defined in Section 2.11.
"Proceeding" -- Any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
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informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Promissory Notes" -- As defined in Section 1.4(b)(ii).
"Related Person" -- With respect to a particular individual:
(a) Each other member of such individual's Family;
(b) Any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) Any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) Any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a) Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) Any Person that holds a Material Interest in such specified Person;
(c) Each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) Any Person in which such specified Person holds a Material
Interest; and
(e) Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
"Release" -- Any spilling, leading, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"Representative" -- With respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Schedules" -- The schedules delivered by Sellers to Buyer concurrently
with the execution and delivery of this Agreement.
"Securities Act" -- The Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
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"Sellers" -- As defined in the second paragraph of this Agreement.
"Sellers' Releases" -- As defined in Section 1.4.
"Shares" -- As defined in the second paragraph of this Agreement.
"Subsidiary" -- With respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"Tax" -- Any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part).
7.1 ACCURACY OF REPRESENTATION.
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Schedules.
(b) Each of Sellers' representations and warranties in Sections
2.3, 2.10, and 2.22 must have been accurate in all respects as of the date of
this Agreement, and must be accurate in all respects as of the Closing Date as
if made on the Closing Date, without giving effect to any supplement to the
Schedules.
7.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each Seller must have delivered each of the documents required
to be delivered by such Seller pursuant to Section 1.4, and each of the other
covenants and obligations in Sections 4.4 and 4.8 must have been performed and
complied with in all respects.
7.3 CONSENTS. Each of the Consents identified in Schedule 2.2
must have been obtained and must be in full force and effect.
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7.4 ADDITIONAL DOCUMENTS. Sellers must have caused the
following documents to be delivered to Buyer:
(a) An opinion of Kilpatrick, Stockton LLP, dated the Closing
Date, in the Form of Exhibit 7.4(a);
(b) Such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of, or the
compliance by either Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iv) evidencing the satisfaction of
any condition referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, an Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Acquired Companies, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
7.7 NO PROHIBITION. Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated with
Buyer to suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
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(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 1.4 and must have made the cash payments
required to be made by Buyer pursuant to Section 1.4(b)(i).
8.3 CONSENTS. Each of the Consents identified in Schedule 2.2
must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Sellers:
(a) An opinion of Husch & Eppenberger, dated the Closing Date, in
the form of Exhibit 8.4; and
(b) Such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (iv) evidencing
the satisfaction of any condition referred to in this Section 8, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
8.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the sale of the
Shares by Sellers to Buyer, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) By either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) By Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or
(ii) By Sellers, if any of the conditions in Section 8 has not
been satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to comply with
their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date;
(c) By mutual consent of Buyer and Sellers; or
(d) By either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before April
30, 1998, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
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or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 11.1 and 11.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Schedules, the supplements to the Schedules,
the certificate delivered pursuant to Section 1.4, and any other certificate or
document delivered pursuant to this Agreement will survive the Closing; the
right to indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) about the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver of
any condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, reimbursement, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS -- GENERALLY.
Sellers will indemnify and hold harmless Buyer, the Acquired Companies, and
their respective Representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons"), and will reimburse the
Indemnified Persons, for any loss, liability, claim, damage, expense (including
costs of investigation and defense and reasonable attorneys' fees) or diminution
of value, whether or not involving a third-party claim (collectively,
"Damages"), arising from or in connection with:
(a) Any Breach of any representation or warranty made by such
Seller (other than any representation or warranty with regard to Taxes) in this
Agreement (without giving effect to any supplement to the Schedules), the
Schedules, the supplements to the Schedules, the certificate delivered pursuant
to Section 1.4(a)(v) (for this purpose, that certificate will be deemed to have
stated that Sellers' representations and warranties in this agreement are
accurate as of the Closing Date as if made on the Closing Date without giving
effect to any supplement to the Schedules, unless the certificate expressly
stated that the matters disclosed in a supplement have caused the condition
specified in Section 7.1 not to be satisfied), or any other certificate or
document delivered by Sellers pursuant to this Agreement;
(b) Any Breach by such Seller of any covenant or obligation of
such Seller in this Agreement;
(c) Any product shipped or manufactured by, or any services
provided by, any Acquired Company prior to the Closing Date; or
(d) Any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with such Seller or any Acquired
Company (or
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any Person acting on their behalf) in connection with any of the Contemplated
Transactions.
10.3 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS -- TAXES. In
addition to the provisions of Section 10.2, Sellers will indemnify and hold
harmless Buyer, the Acquired Companies, and the other Indemnified Persons, and
will reimburse Buyer, the Acquired Companies, and the other Indemnified Persons,
and will reimburse Buyer, the Acquired Companies, and any other Indemnified
Person, for any Damages arising from or in connection with any unpaid Taxes (but
not penalties or interest) of any Acquired Company assessed by the IRS for any
period ending prior to January 1, 1998.
10.4 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer will
indemnify and hold harmless Sellers, and will reimburse Sellers, for any Damages
arising from or in connection with (a) any Breach of any representation or
warranty made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this agreement, (b) any Breach by Buyer of any covenant or
obligation of Buyer in this Agreement, or (c) any claim by any Person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with Buyer
(or any Person acting on its behalf) in connection with any of the Contemplated
Transactions.
10.5 TIME LIMITATIONS. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 2.3, 2.9, 2.11, and 2.17,
unless on or before December 31, 2003, Sellers are given notice of claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Buyer; a claim with respect to Section 2.3, 2.9, 2.11, or 2.17, or
a claim for indemnification or reimbursement not based upon any representation
or warranty or any covenant or obligation to be performed and complied with
prior to the Closing Date, may be made at any time. If the Closing occurs, Buyer
will have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before December 31, 2003,
Buyer is given notice of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers.
10.6 LIMITATIONS ON AMOUNT -- SELLERS. Sellers will have no
liability (for indemnification or otherwise) with respect to the matters
described in clause (a) or (c) or, to the extent relating to any failure to
perform or comply prior to the Closing Date, clause (b) of Section 10.2, or
under Section 10.3, until the total of all Damages with respect to such matters
exceeds $25,000, and then only for the amount by which such Damages exceed
$25,000. Buie's aggregate liability for claims for indemnification under Section
10.2 shall not exceed the lesser of 83% of the Damages, or $83,000, and Butler's
liability for claims for indemnity under Section 10.2 shall not exceed the
lesser of 17% of the Damages, or $17,000 Buie's liability for claims for
indemnification under Section 10.3 shall not exceed the lesser of 75% of the
Damages, or $150,000, and Butler's liability for claims for indemnification
under Section 10.3 shall not exceed $50,000. However, this Section 10.6 will not
apply to indemnification sought pursuant to Section 10.2 hereof for any Breach
of any of Sellers' representations and warranties of which either Seller had
Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional Breach by either Seller of any covenant or
obligation, and Sellers will be jointly and severally liable for all Damages
with respect to such Breaches.
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10.7 LIMITATIONS ON AMOUNT -- BUYER. Buyer will have no liability
(for indemnification or otherwise) with respect to the matters described in
clause (a) or (b) of Section 10.4 until the total of all Damages with respect to
such matters exceeds $25,000, and then only for the amount by which such Damages
exceed $25,000. However, this Section 10.7 will not apply to any Breach of any
of Buyer's representations and warranties of which Buyer had Knowledge at any
time prior to the date on which such representation and warranty is made or any
intentional Breach by Buyer of any covenant or obligation, and Buyer will be
liable for all Damages with respect to such Breaches.
10.8 RIGHT OF SET-OFF. Upon notice to Sellers specifying in
reasonable detail the basis for such set-off, Buyer shall, to the extent the
unpaid principal balance of the Promissory Notes allow, set off any amount to
which it may be entitled under this Section 10 against amounts otherwise payable
under the Promissory Notes against principal installments inverse to the order
of their maturity. The exercise of such right of set-off by Buyer in good faith,
whether or not ultimately determined to be justified, will not constitute an
event of default under the Promissory Notes or any instrument securing a
Promissory Note. Such set-off shall not constitute an election of remedies or
limit Buyer in any manner to collect any amounts remaining due under Section 10
after such set-off.
10.9 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section
10.2, 10.3, or 10.4, of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 10.9(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
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paid in full by the indemnifying party; and (iii) the indemnifying party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and indemnifying party does not, within ten (10)
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such claim anywhere in the
world.
10.10 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
1. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. Sellers will cause the
Acquired Companies not to incur any out-of-pocket expenses in connection with
this Agreement. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer determines.
Unless consented to by Buyer in advance or required by Legal Requirements, prior
to the Closing Sellers shall, and shall cause the Acquired Companies to, keep
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Acquired Companies' employees, customers, and
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Acquired
Companies to maintain in confidence, any written, oral, or other information
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obtained in confidence from another party or an Acquired Company in connection
with this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyer's request cause the Acquired Companies to waive, any cause of
action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential information of the
Acquired Companies except for the intentional competitive misuse by Buyer of
such trade secrets or confidential information.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by first class mail, postage prepaid, or (c) when received by the
addressee, if sent by a national recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
Sellers: Joe Buie and Ernie Butler
c/o B & W Metal Fabricators, Inc.
P.O. Box 729
Welcome, NC 27374
Telecopy No. 336-731-8005
With a Copy
to: John R. Perkinson, Jr., Esq.
Kilpatrick, Stockton LLP
1001 West 4th Street
Winston-Salem, NC 27101
Telecopy No. (336) 607-7500
Buyer: Morton Industrial Group, Inc.
1021 West Birchwood
P.O. Box 429
Morton, Illinois 61550
Attention: William D. Morton, President
Telecopy No.: (309) 263-1841
With a Copy
to: Gene A. Petersen, Esq.
Husch & Eppenberger
101 S.W. Adams, Suite 800
Peoria, Illinois 61602
Telecopy No.: (309) 637-4928
11.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement
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may be brought against any of the parties in the courts of the States
of Illinois or North Carolina, or, if it has or can acquire jurisdiction, in the
United States District Court for any district of Illinois or North Carolina and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instances for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.9 SCHEDULES.
(a) The disclosures in the schedules to this Agreement, and those in
any supplement thereto, must relate only to the representations and warranties
in the section of the Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the schedules to this Agreement (other than
an exception set forth as such in the Schedules with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld, except that Buyer
may assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
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be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this agreement and their successors and assigns.
11.11 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.12 SECTION HEADINGS; CONSTRUCTION. The headings of sections of this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Sections" refer to the corresponding
sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
11.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
Error! Bookmark not defined.11.14 GOVERNING LAW. This Agreement will be
governed by and construed under the laws of the State of Illinois without regard
to conflicts of laws principles.
11.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Buyer: Sellers:
MORTON INDUSTRIAL GROUP, INC.
By: /s/ Daryl R. Lindemann /s/ Joseph T. Buie, Jr.
-------------------------- ---------------------------
Daryl R. Lindemann, Joseph T. Buie, Jr.
Vice President
/s/ Ernest J. Butler
---------------------------
Ernest J. Butler
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EXHIBIT 10.3
NON-NEGOTIABLE PROMISSORY NOTE
(SUBORDINATED)
$2,474,000.00 April 8, 1998
FOR VALUE RECEIVED, MORTON INDUSTRIAL GROUP, INC., a Georgia
corporation ("Maker"), promises to pay to JOSEPH T. BUIE, JR., an individual
resident in North Carolina ("Payee"), in lawful money of the United States of
America, the principal sum of Two Million Four Hundred Seventy-four Thousand
Dollars ($2,474,000.00), together with interest in arrears on the unpaid
principal balance at an annual rate equal to 7%, in the manner provided below.
Interest shall be calculated on the basis of a year of 365 days and charged for
the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated April 8,
1998, by and between Maker, Payee and Ernest J. Butler (the "Agreement"), and is
subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR UNDER THE
ILLINOIS SECURITIES LAW OF 1953, AND IT MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE NOTE UNDER THOSE
ACTS, OR AN OPINION OF COUNSEL FOR THE MAKER THAT SUCH REGISTRATION IS NOT
REQUIRED.
1. Payments.
1.1 Principal and Interest. This Note shall be payable in
forty (40) equal consecutive quarterly installments of $86,520.95 each
commencing on July 8, 1998, and on each October 8, January 8, April 8, and
July 8 thereafter until paid in full. Payments shall be first applied to
accrued but unpaid interest and the balance to the unpaid principal of this
Note.
1.2 Manner of Payment. All payments of principal and interest
on this Note shall be made at 270 Salem Road, Welcome, North Carolina or at such
other place in the United States of America as Payee shall designate to Maker in
writing. If any payment of principal or interest on this Note is due on a day
which is not a business day, such payment shall be due on the next succeeding
business day, and such extension of time shall be taken into account in
calculating the amount of interest payable under this Note. "Business day" means
any day other than a Saturday, Sunday or legal holiday in the State of Illinois.
1.3 Prepayment. Maker may, without premium or penalty, at any
time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
<PAGE> 2
the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order to their maturity.
1.4 Right of Set-Off. Maker shall have the right to withhold
and set off against any amount due hereunder the amount of any claim for
indemnification, reimbursement or payment that Maker may have under the
Agreement, as provided in Section 10.8 thereof.
2. Covenants.
The Maker covenants that so long as this Note shall be outstanding:
2.1 Office. The Maker will maintain an office at 1021 West
Birchwood, Morton, Illinois or at such other place in the United States as
the Maker may designate by written notice given pursuant to Payee, where
notices, presentations and demands to or upon the Maker in respect of this Note
may be made or given.
2.2 Taxes. The Maker will promptly cause to be paid and
discharged all lawful taxes, assessments and governmental charges or levies
imposed upon the Maker or any Subsidiary or upon the income and profits of, or
upon any property belonging to the Maker or any Subsidiary before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such property or
any part thereof; provided, however, that the Maker shall not be required to
cause to be paid and discharged any such tax, assessment, charge, levy or claim
so long as the amount or validity thereof shall be contested in good faith by
appropriate proceedings, and the Maker or such Subsidiary, as the case may be,
shall set aside on its books reserves with respect thereto which the Maker and
the independent public accountants who are at the time employed to audit the
books and accounts of the Maker or such Subsidiary consider adequate.
2.3 Properties. The Maker will at all times cause its physical
property and the physical property of its Subsidiaries used or desirable in the
conduct of the business of the Maker or its Subsidiaries to be maintained,
preserved, protected and kept in good repair, working order and condition, and
from time to time cause to be made all needful and proper repairs, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may in the opinion of the Maker be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section 2.3 shall require the Maker or any Subsidiary to maintain, preserve,
protect or keep in good repair, working order or condition any physical property
which, in the sole discretion of the Maker, is obsolete or surplus or unfit for
use or may not be used advantageously in the conduct of the business of the
Maker or such Subsidiary, as the case may be.
2.4 Books of Record. The Maker will at all times keep, and
cause each Subsidiary to keep, true and complete books of record and accounts in
accordance with generally accepted accounting principles and practices.
2.5 Existence. The Maker will at all times cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, and the corporate existence, rights and
franchises of each Subsidiary, and comply with and cause each Subsidiary to
comply with, all laws and governmental requirements applicable to the Maker or
such Subsidiary; provided, however, that nothing in this Section 2.5 shall (1)
require the Maker or any Subsidiary to maintain, preserve or renew any right or
franchise which in the opinion of the board of directors of the Maker is not
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necessary or desirable in the conduct of the business of the Maker or of such
Subsidiary, as the case may be; or (2) prevent the termination of the corporate
existence of any Subsidiary if in the opinion of the board of directors of the
Maker such termination is in the best interest of the Maker and not
disadvantageous to the holders of the Notes; or (3) prevent any consolidation or
merger involving the Maker or a Subsidiary.
3. Subordination of Note.
3.1 Subordination. The Maker, for itself, its successors and
assigns, covenants and agrees, and the holder of this Note by his acceptance
thereof likewise covenants and agrees, that the payment of the principal of and
interest on the Note shall be subordinate and subject, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of all Senior Indebtedness.
3.2 Liquidation. Upon any distribution of assets of the Maker
upon any dissolution, winding up, liquidation or reorganization of the Maker,
whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other dissolution, winding up,
liquidation or reorganization of the Maker:
(a) Any Senior Indebtedness shall first be paid
in full, or provision made for such payment in full of the principal thereof,
and premium, if any, and interest thereon, before any payment is made on account
of the principal of, or interest on, the Note;
(b) Any payment or distribution of assets of the
Maker of any kind or character, whether in cash, property or securities (other
than stock of the maker as reorganized or readjusted or securities of the Maker
or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Section 3 with respect to the Note, to the payment of all
Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment), to which
the holder of the Note would be entitled except for the provisions of this
Section 3 shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or other trustee or agent, directly to the holders of
Senior Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the principal of, and premium,
if any, and interest on, the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution,
or provision therefor, to the holders of such Senior Indebtedness; and
(c) In the event that, notwithstanding the
foregoing, any payment or distribution of assets of the Maker of any kind or
character, whether in cash, property or securities (other than stock of the
Maker as reorganized or readjusted or securities of the Maker or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Section 3 with
respect to the Note, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), shall be received by the holder of the Note
before all Senior Indebtedness is paid in full, or provision made for its
payment, such payment or distribution shall be paid over to the holders of
Senior Indebtedness remaining unpaid or
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<PAGE> 4
unprovided for or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, as provided in the foregoing paragraph
3.2(b), for application to the payment of such Senior Indebtedness until all
such Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.
3.3 Subrogation. Subject to the payment in full of all Senior
Indebtedness and termination of each commitment to extend any Senior
Indebtedness, the holder of the Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Maker applicable to the Senior Indebtedness until
the principal of and interest on the Note shall be paid in full, and no such
payments or distributions in respect of the Note of cash, property or securities
distributable to the Senior Indebtedness under the provisions hereof shall, as
between the Maker, its creditors other than the holders of Senior Indebtedness,
and the holder of the Note, be deemed to be a payment by the Maker to or on
account of Note. It is understood that the provisions of this Section 3 are and
are intended solely for the purposes of defining the relative rights of the
holder of the Note, on the one hand, and the holders of the Senior Indebtedness,
on the other hand. Nothing contained in this Section 3 is intended to or shall
impair, as between the Maker, its creditors other than the holders of Senior
Indebtedness, and the holder of the Note, the absolute and unconditional
obligation of the Maker to pay to the holder of the Note the principal of and
interest on the Note as and when the same shall become due and payable in
accordance with its terms, or is intended to or shall affect the relative rights
of the holder of the Note and creditors of the Maker other than the holders of
the Senior Indebtedness; nor shall anything herein or therein prevent the holder
of the Note from exercising all remedies otherwise permitted by applicable law
upon default under the Note, subject to the rights, if any, under this Section 3
of the holders of Senior Indebtedness in respect of cash, property or securities
of the Maker received upon the exercise of any such remedy.
3.4 Rights Upon Distribution. Upon any distribution of assets
of the Maker referred to in this Section 3, the holder of the Note shall be
entitled to rely upon a certificate of the liquidating trustee or agent or other
person making any distribution to such holder for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other indebtedness of the Maker, the amount thereof or
payable thereon and all other fact pertinent thereto or to this Section 3.
3.5 Default on Senior Indebtedness. If there shall have
occurred a default in the principal of (or premium, if any) or interest on any
Senior Indebtedness, then, unless and until such default shall have been cured
within any period of grace expressly applicable to such Senior Indebtedness, or
waived in accordance with the terms of such Senior Indebtedness, by the
requisite holders thereof, no payment of principal or interest shall be made by
the Maker on the Note, and no holder of the Note shall be entitled to receive
any such payment. Nothing contained in this Section 3 shall, however, (1) affect
the obligation of the Maker to make, or to prevent the Maker from making, at any
time, except during the pendency of any dissolution, winding up, liquidation, or
reorganization proceedings or except as provided in the first sentence of this
Section 3.5, payments of principal of or interest on the Note, or (2) prevent
the application by any paying agent of any monies deposited with it by the Maker
to the payment of or on account of the principal of, or interest on, the Note,
if, at the time of such deposit, the paying agent did not have written notice of
any event prohibiting the making of such payment or deposit by the Maker, or (3)
be construed as preventing the occurrence of any Event of Default hereunder.
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<PAGE> 5
3.6 Acceleration of Subordinated Note. The holder of this
Note shall not take any action to accelerate or demand payment or otherwise
enforce collection of this Note or to foreclose or otherwise enforce collection
of this Note or to foreclose or otherwise realize upon any security or guaranty
given to secure or guaranty the Note, in which case unless the holder shall, ten
(10) days prior to taking of any such action, have provided the Agent for the
Lenders under the Credit Agreement by and among the Maker, Morton Metalcraft
Co., Morton Metalcraft Co. of North Carolina and Harris Trust & Savings Bank
dated January 20, 1998 and Maker with notice of the occurrence of the default
giving rise to such action. Any provisions of this Section 3.6 to the contrary
notwithstanding, the restrictions contained in this section shall no longer
apply upon the first to occur of the following (i) the institution of bankruptcy
proceedings by or against the Maker; (ii) the acceleration of the Senior
Indebtedness; or (iii) the payment of other satisfaction of all of the Senior
Indebtedness.
3.7 No Notice of Consent of Holder Needed. Any renewal or
extension of the time of payment of any Senior Indebtedness or the exercise by
the holders of Senior Indebtedness of any of their rights under the Senior
Indebtedness, including without limitation the waiver of default thereunder or
the release of any security therefor, may be made or done all without notice to
or assent from the holders of the Note. No compromise, alteration, amendment,
modification, extension, renewal or other change of, or waiver, consent or other
action in respect of, any liability or obligations under or in respect of, or of
any of the terms, covenants or conditions of any indenture or other instrument
under which any Senior Indebtedness is outstanding or of such Senior
Indebtedness, and no release of property securing any Senior Indebtedness,
whether or not such release is in accordance with the provisions of any
applicable documents, shall in any way alter or affect any of the provisions of
this Section 3.
4. Default.
4.1 Events of Default. The occurrence of any one or more of
the following events with respect to Maker shall constitute an event of default
hereunder ("Event of Default").
(a) If Maker shall fail to pay when due any
payment of principal of interest on this Note and such failure continues for
fifteen (15) days after Payee notifies Maker thereof in writing; provided,
however, that the exercise by Maker in good faith of its right of set-off
pursuant to Section 1.4 above, whether or not ultimately determined to be
justified, shall not constitute an Event of Default.
(b) If, pursuant to or within the meaning the
United States Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law"), Maker shall (i) commence a
voluntary case or proceeding; (ii) consent to the entry of an order for relief
against it in an involuntary care; (iii) consent to the appointment of a
trustee, receiver, assignee, liquidator or similar official; (iv) make an
assignment for the benefit of its creditors; or (v) admit in writing its
inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that (i) is for relief against Maker
in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator
or similar official for Maker or substantially all of Maker's properties, or
(iii) orders the liquidation of Maker, and in each case the order or decree is
not dismissed within one hundred twenty (120) days.
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<PAGE> 6
4.2 Notice by Maker. Maker shall notify Payee in writing
within five (5) days of the occurrence of any Event of Default of which Maker
receives notice.
4.3 Remedies. Except as otherwise provided in Section 3.6
hereof, upon the occurrence of an Event of Default hereunder (unless all Events
of Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses of collection incurred by or on behalf of
Payee as a result of an Event of Default, including, without limitation,
reasonable attorneys' fees.
5. Definitions. For purposes of this Note:
5.1 "Subsidiary" shall mean any corporation a majority of the
shares of capital stock of which having voting power for the election of
directors is at the time owned directly or indirectly by the Maker and its other
subsidiaries.
5.2 The term "Senior Indebtedness" shall mean the principal of
the premium, if any, and interest on the following, whether outstanding on the
date of execution of this Note or thereafter incurred, assumed or guaranteed:
(1) indebtedness (other than this Note and the Note of even date made by Maker
payable to Ernest J. Butler) of the Maker or any Subsidiary for money borrowed
by the Maker; (2) indebtedness of the Maker or any Subsidiary for money borrowed
(including for such purposes, letters of credit and bankers' acceptances) by
others and guaranteed or assumed, directly or indirectly, by the Maker; (3)
indebtedness incurred, assumed or guaranteed by the Maker in connection with the
acquisition by it or a Subsidiary of any other businesses, properties or other
assets (other than merchandise or similar property acquired in the ordinary
course of business); or (4) renewals, extensions or refunding of indebtedness of
the kinds described in the preceding Clauses (1), (2) and (3); but the term
"Senior Indebtedness" shall not include any indebtedness which by its terms is
subordinate or subject in right of payment to any other indebtedness of the
Maker.
6. Miscellaneous.
6.1 Waiver. The rights and remedies of Payee under this Note
shall be cumulative and not alternative. No waiver by Payee of any right or
remedy under this Note shall be effective unless in a writing signed by Payee.
No failure to exercise, delay in exercising, or single or partial exercise of
any right or remedy by Payee, and no course of dealing between Maker and Payee
shall constitute a waiver of, or shall preclude any other or further exercise of
the same right or remedy. Maker hereby waives presentment, demand, protect, and
notice of dishonor and protest.
6.2 Notices. Any notice required or permitted to be given
hereunder shall be given in accordance with Section 11.4 of the Agreement.
6.3 Severability. If any provision in this Note is construed
to be invalid, illegal or unenforceable, then the remaining provisions shall not
in any way be affected thereby and shall be enforced without regard thereto.
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<PAGE> 7
6.4 Governing Law. This Note shall be construed and enforced
in accordance with and governed by the laws of the State of Illinois.
6.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will or, in
default thereof, by operation of law.
6.6 Section Headings. The section and subsection headings in
this Note are for convenience of reference only, do not constitute a part of
this Note, and shall not affect its interpretation.
6.7 References. All words used in this Note shall be construed
to be of such number and gender as the context requires or permits. Unless a
particular context clearly provides otherwise, the words "hereof" and
"hereunder" and similar references refers to this Note in its entirety and not
to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
stated above.
MORTON INDUSTRIAL GROUP, INC.
By: /s/ Daryl R. Lindemann
----------------------------------
Title: Vice President
-----------------------------
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<PAGE> 1
EXHIBIT 10.4
NON-NEGOTIABLE PROMISSORY NOTE
(SUBORDINATED)
$1,176,000.00 April 8, 1998
FOR VALUE RECEIVED, MORTON INDUSTRIAL GROUP, INC., a Georgia
corporation ("Maker"), promises to pay to ERNEST J. BUTLER, an individual
resident in North Carolina ("Payee"), in lawful money of the United States of
America, the principal sum of One Million One Hundred Seventy-six Thousand
Dollars ($1,176,000.00), together with interest in arrears on the unpaid
principal balance at an annual rate equal to 7%, in the manner provided below.
Interest shall be calculated on the basis of a year of 365 days and charged for
the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated April 8,
1998, by and between Maker, Payee and Joseph T. Buie, Jr. (the "Agreement"), and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR UNDER THE
ILLINOIS SECURITIES LAW OF 1953, AND IT MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE NOTE UNDER THOSE
ACTS, OR AN OPINION OF COUNSEL FOR THE MAKER THAT SUCH REGISTRATION IS NOT
REQUIRED.
1. Payments.
1.1 Principal and Interest. This Note shall be payable in
forty (40) equal consecutive quarterly installments of $41,127.18 each
commencing on July 8, 1998, and on each October 8, January 8, April 8, and July
8 thereafter until paid in full. Payments shall be first applied to accrued but
unpaid interest and the balance to the unpaid principal of this Note.
1.2 Manner of Payment. All payments of principal and interest
on this Note shall be made at 270 Salem Road, Welcome, North Carolina or at such
other place in the United States of America as Payee shall designate to Maker in
writing. If any payment of principal or interest on this Note is due on a day
which is not a business day, such payment shall be due on the next succeeding
business day, and such extension of time shall be taken into account in
calculating the amount of interest payable under this Note. "Business day" means
any day other than a Saturday, Sunday or legal holiday in the State of Illinois.
1.3 Prepayment. Maker may, without premium or penalty, at any
time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order to their maturity.
<PAGE> 2
1.4 Right of Set-Off. Maker shall have the right to withhold
and set off against any amount due hereunder the amount of any claim for
indemnification, reimbursement or payment that Maker may have under the
Agreement, as provided in Section 10.8 thereof.
2. Covenants.
The Maker covenants that so long as this Note shall be outstanding:
2.1 Office. The Maker will maintain an office at 1021 West
Birchwood, Morton, Illinois or at such other place in the United States as
the Maker may designate by written notice given pursuant to Payee, where
notices, presentations and demands to or upon the Maker in respect of this Note
may be made or given.
2.2 Taxes. The Maker will promptly cause to be paid and
discharged all lawful taxes, assessments and governmental charges or levies
imposed upon the Maker or any Subsidiary or upon the income and profits of, or
upon any property belonging to the Maker or any Subsidiary before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such property or
any part thereof; provided, however, that the Maker shall not be required to
cause to be paid and discharged any such tax, assessment, charge, levy or claim
so long as the amount or validity thereof shall be contested in good faith by
appropriate proceedings, and the Maker or such Subsidiary, as the case may be,
shall set aside on its books reserves with respect thereto which the Maker and
the independent public accountants who are at the time employed to audit the
books and accounts of the Maker or such Subsidiary consider adequate.
2.3 Properties. The Maker will at all times cause its physical
property and the physical property of its Subsidiaries used or desirable in the
conduct of the business of the Maker or its Subsidiaries to be maintained,
preserved, protected and kept in good repair, working order and condition, and
from time to time cause to be made all needful and proper repairs, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may in the opinion of the Maker be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section 2.3 shall require the Maker or any Subsidiary to maintain, preserve,
protect or keep in good repair, working order or condition any physical property
which, in the sole discretion of the Maker, is obsolete or surplus or unfit for
use or may not be used advantageously in the conduct of the business of the
Maker or such Subsidiary, as the case may be.
2.4 Books of Record. The Maker will at all times keep, and
cause each Subsidiary to keep, true and complete books of record and accounts in
accordance with generally accepted accounting principles and practices.
2.5 Existence. The Maker will at all times cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, and the corporate existence, rights and
franchises of each Subsidiary, and comply with and cause each Subsidiary to
comply with, all laws and governmental requirements applicable to the Maker or
such Subsidiary; provided, however, that nothing in this Section 2.5 shall (1)
require the Maker or any Subsidiary to maintain, preserve or renew any right or
franchise which in the opinion of the board of directors of the Maker is not
necessary or desirable in the conduct of the business of the Maker or of such
Subsidiary, as the case may be; or (2) prevent the termination of the corporate
existence of any Subsidiary if in the opinion of the board of directors of the
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<PAGE> 3
Maker such termination is in the best interest of the Maker and not
disadvantageous to the holders of the Notes; or (3) prevent any consolidation or
merger involving the Maker or a Subsidiary.
3. Subordination of Note.
3.1 Subordination. The Maker, for itself, its successors and
assigns, covenants and agrees, and the holder of this Note by his acceptance
thereof likewise covenants and agrees, that the payment of the principal of and
interest on the Note shall be subordinate and subject, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of all Senior Indebtedness.
3.2 Liquidation. Upon any distribution of assets of the Maker
upon any dissolution, winding up, liquidation or reorganization of the Maker,
whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other dissolution, winding up,
liquidation or reorganization of the Maker:
(a) Any Senior Indebtedness shall first be paid in full,
or provision made for such payment in full of the principal thereof, and
premium, if any, and interest thereon, before any payment is made on account of
the principal of, or interest on, the Note;
(b) Any payment or distribution of assets of the Maker
of any kind or character, whether in cash, property or securities (other than
stock of the maker as reorganized or readjusted or securities of the Maker or
any other corporation provided for by a plan of reorganization or readjustment
the payment of which is subordinate, at least to the extent provided in this
Section 3 with respect to the Note, to the payment of all Senior Indebtedness
at the time outstanding and to any securities issued in respect thereof under
any such plan of reorganization or readjustment), to which the holder of the
Note would be entitled except for the provisions of this Section 3 shall be
paid by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or other trustee or agent, directly to the holders of Senior
Indebtedness or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the principal of, and premium, if any,
and interest on, the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness; and
(c) In the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Maker of any kind or
character, whether in cash, property or securities (other than stock of the
Maker as reorganized or readjusted or securities of the Maker or any other
corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this
Section 3 with respect to the Note, to the payment of all Senior Indebtedness
at the time outstanding and to any securities issued in respect thereof under
any such plan of reorganization or readjustment), shall be received by the
holder of the Note before all Senior Indebtedness is paid in full, or provision
made for its payment, such payment or distribution shall be paid over to the
holders of Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, as provided in the foregoing paragraph
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<PAGE> 4
3.2(b), for application to the payment of such Senior Indebtedness until all
such Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.
3.3 Subrogation. Subject to the payment in full of all Senior
Indebtedness and termination of each commitment to extend any Senior
Indebtedness, the holder of the Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Maker applicable to the Senior Indebtedness until
the principal of and interest on the Note shall be paid in full, and no such
payments or distributions in respect of the Note of cash, property or securities
distributable to the Senior Indebtedness under the provisions hereof shall, as
between the Maker, its creditors other than the holders of Senior Indebtedness,
and the holder of the Note, be deemed to be a payment by the Maker to or on
account of Note. It is understood that the provisions of this Section 3 are and
are intended solely for the purposes of defining the relative rights of the
holder of the Note, on the one hand, and the holders of the Senior Indebtedness,
on the other hand. Nothing contained in this Section 3 is intended to or shall
impair, as between the Maker, its creditors other than the holders of Senior
Indebtedness, and the holder of the Note, the absolute and unconditional
obligation of the Maker to pay to the holder of the Note the principal of and
interest on the Note as and when the same shall become due and payable in
accordance with its terms, or is intended to or shall affect the relative rights
of the holder of the Note and creditors of the Maker other than the holders of
the Senior Indebtedness; nor shall anything herein or therein prevent the holder
of the Note from exercising all remedies otherwise permitted by applicable law
upon default under the Note, subject to the rights, if any, under this Section 3
of the holders of Senior Indebtedness in respect of cash, property or securities
of the Maker received upon the exercise of any such remedy.
3.4 Rights Upon Distribution. Upon any distribution of assets
of the Maker referred to in this Section 3, the holder of the Note shall be
entitled to rely upon a certificate of the liquidating trustee or agent or other
person making any distribution to such holder for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other indebtedness of the Maker, the amount thereof or
payable thereon and all other fact pertinent thereto or to this Section 3.
3.5 Default on Senior Indebtedness. If there shall have
occurred a default in the principal of (or premium, if any) or interest on any
Senior Indebtedness, then, unless and until such default shall have been cured
within any period of grace expressly applicable to such Senior Indebtedness, or
waived in accordance with the terms of such Senior Indebtedness, by the
requisite holders thereof, no payment of principal or interest shall be made by
the Maker on the Note, and no holder of the Note shall be entitled to receive
any such payment. Nothing contained in this Section 3 shall, however, (1) affect
the obligation of the Maker to make, or to prevent the Maker from making, at any
time, except during the pendency of any dissolution, winding up, liquidation, or
reorganization proceedings or except as provided in the first sentence of this
Section 3.5, payments of principal of or interest on the Note, or (2) prevent
the application by any paying agent of any monies deposited with it by the Maker
to the payment of or on account of the principal of, or interest on, the Note,
if, at the time of such deposit, the paying agent did not have written notice of
any event prohibiting the making of such payment or deposit by the Maker, or (3)
be construed as preventing the occurrence of any Event of Default hereunder.
3.6 Acceleration of Subordinated Note. The holders of this
Note shall not take any action to accelerate or demand payment or otherwise
enforce
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<PAGE> 5
collection of this Note or to foreclose or otherwise enforce collection
of this Note or to foreclose or otherwise realize upon any security or guaranty
given to secure or guaranty the Note, in which case unless the holder shall, ten
(10) days prior to taking of any such action, have provided the Agent for the
Lenders under the Credit Agreement by and among the Maker, Morton Metalcraft
Co., Morton Metalcraft Co. of North Carolina and Harris Trust & Savings Bank
dated January 20, 1998 and Maker with notice of the occurrence of the default
giving rise to such action. Any provisions of this Section 3.6 to the contrary
notwithstanding, the restrictions contained in this section shall no longer
apply upon the first to occur of the following (i) the institution of bankruptcy
proceedings by or against the Maker; (ii) the acceleration of the Senior
Indebtedness; or (iii) the payment of other satisfaction of all of the Senior
Indebtedness.
3.7 No Notice of Consent of Holder Needed. Any renewal or
extension of the time of payment of any Senior Indebtedness or the exercise by
the holders of Senior Indebtedness of any of their rights under the Senior
Indebtedness, including without limitation the waiver of default thereunder or
the release of any security therefor, may be made or done all without notice to
or assent from the holders of the Note. No compromise, alteration, amendment,
modification, extension, renewal or other change of, or waiver, consent or other
action in respect of, any liability or obligations under or in respect of, or of
any of the terms, covenants or conditions of any indenture or other instrument
under which any Senior Indebtedness is outstanding or of such Senior
Indebtedness, and no release of property securing any Senior Indebtedness,
whether or not such release is in accordance with the provisions of any
applicable documents, shall in any way alter or affect any of the provisions of
this Section 3.
4. Default.
4.1 Events of Default. The occurrence of any one or more of
the following events with respect to Maker shall constitute an event of default
hereunder ("Event of Default").
(a) If Maker shall fail to pay when due any payment of
principal of interest on this Note and such failure continues for fifteen
(15) days after Payee notifies Maker thereof in writing; provided, however,
that the exercise by Maker in good faith of its right of set-off pursuant to
Section 1.4 above, whether or not ultimately determined to be justified, shall
not constitute an Event of Default.
(b) If, pursuant to or within the meaning the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary care; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within one hundred twenty (120) days.
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4.2 Notice by Maker. Maker shall notify Payee in writing
within five (5) days of the occurrence of any Event of Default of which Maker
receives notice.
4.3 Remedies. Except as otherwise provided in Section 3.6
hereof, upon the occurrence of an Event of Default hereunder (unless all Events
of Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses of collection incurred by or on behalf of
Payee as a result of an Event of Default, including, without limitation,
reasonable attorneys' fees.
5. Definitions. For purposes of this Note:
5.1 "Subsidiary" shall mean any corporation a majority of the
shares of capital stock of which having voting power for the election of
directors is at the time owned directly or indirectly by the Maker and its other
subsidiaries.
5.2 The term "Senior Indebtedness" shall mean the principal of
the premium, if any, and interest on the following, whether outstanding on the
date of execution of this Note or thereafter incurred, assumed or guaranteed:
(1) indebtedness (other than this Note and the Note of even date made by Maker
payable to Joseph T. Buie, Jr.) of the Maker or any Subsidiary for money
borrowed by the Maker; (2) indebtedness of the Maker or any Subsidiary for money
borrowed (including for such purposes, letters of credit and bankers'
acceptances) by others and guaranteed or assumed, directly or indirectly, by the
Maker; (3) indebtedness incurred, assumed or guaranteed by the Maker in
connection with the acquisition by it or a Subsidiary of any other businesses,
properties or other assets (other than merchandise or similar property acquired
in the ordinary course of business); or (4) renewals, extensions or refunding of
indebtedness of the kinds described in the preceding Clauses (1), (2) and (3);
but the term "Senior Indebtedness" shall not include any indebtedness which by
its terms is subordinate or subject in right of payment to any other
indebtedness of the Maker.
6. Miscellaneous.
6.1 Waiver. The rights and remedies of Payee under this Note
shall be cumulative and not alternative. No waiver by Payee of any right or
remedy under this Note shall be effective unless in a writing signed by Payee.
No failure to exercise, delay in exercising, or single or partial exercise of
any right or remedy by Payee, and no course of dealing between Maker and Payee
shall constitute a waiver of, or shall preclude any other or further exercise of
the same right or remedy. Maker hereby waives presentment, demand, protect, and
notice of dishonor and protest.
6.2 Notices. Any notice required or permitted to be given
hereunder shall be given in accordance with Section 11.4 of the Agreement.
6.3 Severability. If any provision in this Note is construed
to be invalid, illegal or unenforceable, then the remaining provisions shall not
in any way be affected thereby and shall be enforced without regard thereto.
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6.4 Governing Law. This Note shall be construed and enforced
in accordance with and governed by the laws of the State of Illinois.
6.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will or, in
default thereof, by operation of law.
6.6 Section Headings. The section and subsection headings in
this Note are for convenience of reference only, do not constitute a part of
this Note, and shall not affect its interpretation.
6.7 References. All words used in this Note shall be construed
to be of such number and gender as the context requires or permits. Unless a
particular context clearly provides otherwise, the words "hereof" and
"hereunder" and similar references refers to this Note in its entirety and not
to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
stated above.
MORTON INDUSTRIAL GROUP, INC.
By: /s/ Daryl R. Lindemann
----------------------------
Title: Vice President
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EXHIBIT 99.1
MORTON INDUSTRIAL GROUP, INC. COMPLETES ACQUISITION OF B&W METAL
FABRICATORS, INC.
MORTON, IL - APRIL 8, 1998 - Morton Industrial Group, Inc. (OTC BB:MGRP) today
announced that it has completed the acquisition of B&W Metal Fabricators, Inc.,
a privately held company based in Welcome, North Carolina. B&W Metal
Fabricators, Inc. is a regional supplier of metal fabrication services whose
capabilities include shearing, bending, punching, welding, and metal preparation
and painting.
William D. Morton, Chairman, President and Chief Executive Officer of Morton
Industrial Group, Inc., stated: "We are pleased to welcome our colleagues at B&W
Metal Fabricators to the Morton Industrial Group family. A component of our
growth strategy is the pursuit of appropriate synergistic acquisition
opportunities. We believe that the acquisition of B&W is highly complementary
with our Apex, North Carolina facility and is an excellent strategic fit for
Morton Industrial Group as we expand our fabrication services capacity to meet
our growing customer needs in that region."
Morton Industrial Group, Inc. ("Morton" or the "Company") today owns Morton
Metalcraft Co., a supplier of high-quality fabricated sheet metal components and
subassemblies for the off-highway construction, agricultural and industrial
equipment markets. Its annual revenues are approximately $125 million. It
provides large original equipment manufacturers (OEMs) with a wide range of
services including design, prototype fabrication, precision tool making and
fabrication of component parts. Additional services provided by Morton include
welding, painting, subassembly, packaging, warehousing and just-in-time delivery
to customers' production lines. Over a five-year period, from 1993 to 1997,
Morton's sales have grown at an average annual compounded rate of approximately
25 percent. The Company recently acquired Carroll George Inc., a leading
supplier of composite structures and plastic-based parts, assemblies and
components to leading construction, agricultural and industrial equipment
manufacturers.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This press release contains forward looking statements (within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934), including, but not limited to, statements related to
Morton's beliefs, expectations, or intentions. These statements involve risk and
uncertainties that may cause Morton's actual results to differ significantly
from those expected, suggested, or projected. Factors that could contribute to
such differences include, but are not limited to, competition with other
fabricators; the risks associated with Morton's acquisition strategy, including
unanticipated problems, difficulties in integrating acquired businesses,
diversion of management's attention from daily operations, possible increased
interest costs, and possible adverse effects on earnings resulting from
increased goodwill amortization; introduction of new technologies that require
significant capital expenditures; and general economic and business conditions.
