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): October 14, 1998
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ICC Technologies, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-13865 23-2368845
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(Commission File Number) (IRS Employer Identification No.)
44 West 18th Street, New York, New York 10011
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(Address of principal executive offices, including zip code)
(212) 634-6950
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(Registrant's telephone number)
330 South Warminster Road, Hatboro, PA 19040
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(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Sale of Partnership Interests in Fresh Air Solutions, L.P.
General
On October 14, 1998 (the "Closing Date"), ICC Technologies, Inc.
("ICC"), through its wholly-owned subsidiary, ICC Desiccant Technologies, Inc.,
a Delaware corporation ("Seller"), sold a majority of its partnership interests
in Fresh Air Solutions, L.P. ("FAS"), a Pennsylvania limited partnership engaged
in the business of developing, manufacturing and distributing desiccant-based
climate control systems, to Wilshap Investments, LLC ("Buyer"), an unaffiliated
Delaware limited liability company owned by William A. Wilson, an executive
officer of FAS and a former officer and director of ICC, and Andrew Shapiro, a
former director of ICC.
Seller's principal assets consisted of a 1% general partnership
interest in FAS and an 89% limited partnership interest in FAS, which, in turn,
in addition to FAS' operating assets also owned a 20% limited partnership
interest ("Hexcore Interest") in Engelhard Hexcore, L.P. ("Hexcore"), a Delaware
limited partnership controlled by Engelhard Corporation through its wholly-owned
subsidiary Engelhard DT, Inc. Hexcore is engaged in the business of designing,
manufacturing, and selling products fabricated from honeycomb substrate, and
rotors or wheels or similar products used in climate control systems. As a
result of the sale, Buyer replaced Seller as the sole general partner of FAS and
Seller retained, as its sole asset, a 32.4% passive investment limited
partnership interest in FAS. ICC will account for its continuing interest in FAS
using the equity method of accounting.
Basic Terms of the Purchase and Sale Agreement
Purchased Interests. Pursuant to the terms of the Purchase and Sale
Agreement Relating to Partnership Interests in Fresh Air Solutions, L.P., dated
October 14, 1998, between Seller and Buyer ("Purchase and Sale Agreement"),
Seller sold its entire 1% general partnership interest and a 56.6% limited
partnership interest in FAS (collectively referred to as the "FAS Partnership
Interests") to Buyer in consideration for the purchase price and subject to the
assumption of liabilities described below.
Purchase Price. In consideration for the transfer and sale by Seller of
the FAS Partnership Interests, Buyer paid $1,500,000, of which $1,125,000 was
paid in cash to Seller and $375,000 was paid by delivery of an unsecured
promissory note ("Note") issued by FAS, the principal amount of which, together
with accrued interest thereon at the rate of 8%, is payable in full on October
14, 2000. The Buyer has guaranteed up to a maximum of 60% of the principal
amount of the Note.
Assumption of Liabilities. As a condition to the sale of the FAS
Partnership Interests, Buyer agreed to assume, pay, perform and discharge (i)
all of the liabilities of Seller, in its capacity as general partner of FAS or
otherwise relating to or arising out of the FAS business, and FAS known by
William A. Wilson or Manfred Hanuschek, the chief financial officer of FAS and
former chief executive of ICC, regardless of when they arose; and (ii) all
liabilities of Seller, in its capacity as the general partner of FAS or
otherwise relating to or arising out of the business of FAS, and FAS which arose
on or after November 18, 1997, whether or not known by ICC, Seller or Buyer or
any of their
<PAGE>
respective principals, and (iii) all liabilities of ICC relating to or arising
out of the FAS business known by William A. Wilson or Manfred Hanuschek
(regardless of when they arose) or which arose on or after November 18, 1997
(whether or not known by ICC, Seller or Buyer or any of their respective
principals) including, without limitation, all liabilities that ICC and Seller
have under or associated with the revolving credit loan from Mellon Bank, N.A.
to FAS pursuant to a Promissory Note dated February 27, 1998 by and between FAS
and Mellon Bank, N.A. ("Mellon Loan"), and the Agreement of Lease between 330
South Warminster Associates, L.P. and Engelhard/ICC dated February 21, 1997
(which was assigned by Engelhard/ICC to FAS on February 27, 1998) ("Hatboro
Lease"), as well as certain other liabilities enumerated in Section 1 of the
Purchase and Sale Agreement insofar as such enumerated liabilities come within
the meaning of the assumed liabilities as described above.
Representations and Warranties. The Seller and Buyer made customary
representations and warranties to each other, including as to organization,
authorization, non-contravention, title and known liabilities of FAS.
Conditions to Obligation to Close. The sale of the FAS Partnership
Interests was subject to customary conditions to closing, including the
execution and delivery of documents and instruments and the receipt of approvals
and consents necessary to effectuate the sale of the FAS Partnership Interests
and the withdrawal of Seller as the general partner of FAS and the admission of
Buyer as the sole general partner of FAS. In addition, it was a condition to
closing that Engelhard Corporation enter into an agreement with William A.
Wilson to purchase the Hexcore Interest from FAS on such terms as were disclosed
to ICC and Seller prior to closing. As a condition to Seller's obligation to
close on the sale, Seller was released from all liability under the Mellon Loan
by Mellon Bank, N.A. and ICC and Seller were released from all liability under
the Hatboro Lease by the landlord of such property.
Indemnification. The Seller and Buyer have each agreed to indemnify the
other for any breach of any representations, warranties, or covenants by the
indemnifying party contained in the Purchase and Sale Agreement.
Post-Closing Covenants.
Change of Name. Seller agreed to change its name to a name not
substantially similar to its current name within 10 days from closing.
Right of First Refusal. If Seller desires to directly transfer
any of its remaining limited partnership interest in FAS, Seller has agreed to
give written notice of such offer to Buyer. Buyer shall have the option to
participate in the purchase of Seller's partnership interests for the price and
upon the other terms and conditions contained in the offer, so long as Buyer
purchases all of the remaining partnership interests so offered by Seller.
Come Along Rights. If Buyer desires to transfer any of its
partnership interests in FAS, Buyer has agreed to give written notice of such
intended transfer to Seller. Seller shall have the option to participate in the
proposed transfer, upon the same terms and conditions as Buyer, up to that
percentage of Seller's remaining limited partnership interest in FAS equaling
the product of (i) a fraction, the numerator of which is the percentage of
Seller's remaining limited partnership interest in FAS as of the date of such
proposed transfer and the denominator of which is the percentage of aggregate
general and limited partnership interests actually owned as of the date of such
written
2
<PAGE>
notice by Buyer and Seller, multiplied by (ii) the partnership interest proposed
to be transferred by Buyer.
No Board Representation. Following the closing, neither ICC
nor Seller shall have the right to have any representatives elected to the Board
of Directors or other governing body of Buyer.
3
<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information.
Page No.
--------
Unaudited Pro Forma Financial Information 4
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 5
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the six months ended June 30, 1998 6
Unaudited Pro Forma Balance Sheet as of June 30, 1998 7
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 8
3
<PAGE>
Unaudited Pro Forma Financial Information
Basis of Presentation:
The following Unaudited Pro Forma Condensed Consolidated Statements of Income
for the twelve months ended December 31, 1997 assumes that the acquisition of
Rare Medium, Inc. ("Rare Medium") occurred on January 1, 1997. This presentation
entails adding the results of operations of Rare Medium to those reported by the
Company in its Form 10-K for the twelve months ended December 31, 1997, and
making certain pro forma adjustments as described in the Notes to Unaudited Pro
Forma Financial Statements.
Prior to February 27, 1998, the Company conducted operations through
Engelhard/ICC, a general partnership formed in February 1994, in which the
Company, along with Engelhard Corporation ("Engelhard"), each owned, indirectly,
a 50% general partnership interest. At that time, the Company was essentially a
holding company for the partnership interests and, its investment in the
Partnership was accounted for using the equity method of accounting.
In February 1998, a restructuring of the Engelhard/ICC partnership occurred,
resulting in its division into two separate operating partnerships: Fresh Air
Solutions LP ("Fresh Air Solutions") and Engelhard HexCore LP ("Engelhard
HexCore"). ICC indirectly owned 90% of Fresh Air Solutions and 20% of Engelhard
HexCore. Engelhard indirectly owned 10% of Fresh Air Solutions and 80% of
Engelhard HexCore. In the following Unaudited Pro Forma Condensed Consolidated
Statements of Income for the twelve months ended December 31, 1997, the effect
of the sale of the 57.6% interest in Fresh Air Solutions is illustrated by
adjusting the equity in interest in the net loss of Engelhard/ICC reported for
1997 by the amount that is estimated to have related to the operations which
were, as of the restructuring, included in FAS.
Pursuant to the Restructuring, the Company obtained full management control of
Fresh Air Solutions, L.P. as of January 1, 1998 and was responsible for
providing full financial support. Accordingly, as of that date, the Company
consolidated the assets and liabilities of Fresh Air Solutions, and from that
date the results of operations as reported by the Company included 100% of the
results of operations of Fresh Air Solutions, L.P.
The Unaudited Pro Forma Condensed Consolidated Statements of Income for the six
months ended June 30, 1998 assumes that the sale of the 57.6% interest in Fresh
Air Solutions occurred as of January 1, 1998, and also that the acquisition of
Rare Medium occurred on January 1, 1998. This presentation entails adding the
results of operations of Rare Medium to those reported by the Company in its
Second Quarter Form 10-Q for the six months ended June 30, 1998, and deducting
the results of operations of Fresh Air Solutions for this period, which were
included therein, except for the 32.4% interest in FAS which has been retained.
The acquisition of Rare Medium has been accounted for under the purchase method
of accounting. The purchase price has been allocated based on the fair values of
the assets acquired and liabilities assumed as of the date of acquisition. The
unaudited pro forma financial statements do not purport to represent what the
Company's results of operations or financial position actually would have been
had the acquisition or the sale occurred on the dates specified, or to project
the Company's results of operations or financial position for any future period
or date. The pro forma adjustments are based upon available information and do
not reflect any benefits from economies which might be achieved from the
combined operations. In the opinion of management all adjustments have been made
that are necessary to present fairly the unaudited pro forma financial
statements. The unaudited pro forma balance sheets and statements of operations
should be read in conjunction with the audited financial statements and notes
thereto of the respective companies.
4
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1997
<TABLE>
<CAPTION>
ICC (1) Rare (2) Adj. (3) Total
------- -------- -------- -----
<S> <C> <C> <C> <C>
Revenue $ -- $3,856,223 $ 3,856,223
Cost of sales -- 1,538,678 1,538,678
------------ ---------- ----------- ----------
Gross profit -- 2,317,545 -- 2,317,545
Operating expenses:
General and administrative 1,991,594 1,349,494 -- 3,341,088
Equity interest in net loss of -- -- -- --
Engelhard / ICC 11,985,361 -- (10,993,601) 991,760
Amortization of goodwill -- -- 14,980,875 14,980,875
Stock-based compensation -- 4,088,641 -- 4,088,641
Finders fee -- 500,000 -- 500,000
------------ ---------- ----------- -----------
Total operating expenses 13,976,955 5,938,135 3,987,274 23,902,364
------------ ---------- ----------- -----------
Income (loss) from operations (13,976,955) (3,620,590) (3,987,274) (21,584,819)
Other income / (expense)
Interest and other income 492,870 21,921 -- 514,791
Interest expense -- -- (1,887,000) (1,887,000)
------------ ---------- ----------- -----------
Total other income / (expense) 492,870 21,921 (1,887,000) (1,372,209)
------------ ---------- ----------- -----------
Income (loss) before provision for
income taxes (13,484,085) (3,598,669) (5,874,274) (22,957,028)
Provision for income taxes -- 29,135 -- 29,135
------------ ---------- ----------- -----------
Net loss $(13,484,085) $(3,627,804) $(5,874,274) $(22,986,163)
============ =========== =========== ============
Net loss per common share $ (0.63) $ (1.38) $ (0.90)
============ =========== ============
Weighted average common shares 21,339,635 $ 4,269,300 25,608,935
============ =========== ============
</TABLE>
5
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
ICC (4) FAS (5) Q1 Rare (6) Adj. (7) Total
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 3,799,473 $(2,784,383) $ 1,041,532 $ -- $ 2,056,622
Operating expenses:
Cost of revenue 3,987,353 (3,261,400) 620,428 -- 1,346,381
General and administrative 4,961,485 (2,669,151) 650,006 -- 2,942,340
Amortization of intangible assets 3,807,755 -- -- 3,807,755 7,615,510
----------- ----------- ----------- ----------- ------------
Total operating expenses 12,756,593 (5,930,551) 1,270,434 3,807,755 11,904,231
----------- ----------- ----------- ----------- ------------
Loss from operations (8,957,120) 3,146,168 (228,902) (3,807,755) (9,847,609)
Other income (expense):
Gain on restructuring of Engelhard 24,256,769 510,540 -- -- 24,767,309
Interest and other income 226,832 (24,360) 6,167 -- 208,639
Interest expense (493,691) 95,324 (1,208) (471,750) (871,325)
Equity interest in net
loss of investment (133,450) -- -- -- (133,450)
Loss on sale of FAS -- -- -- (1,355,953) (1,355,953)
----------- ----------- ----------- ----------- ------------
Total other income (expense) 23,856,460 581,504 4,959 (1,827,703) 22,615,220
----------- ----------- ----------- ----------- ------------
Net income (loss) $14,899,340 $ 3,727,672 $ (223,943) $(5,635,458) $ 12,767,611
=========== =========== =========== =========== ============
Net loss per common share $ 0.60 $ 0.52
=========== ============
Weighted average common shares 24,691,994 24,691,994
=========== ============
</TABLE>
6
<PAGE>
Unaudited Pro Forma Balance Sheet
As of June 30, 1998
<TABLE>
<CAPTION>
ICC (8) FAS (9) Adj. (10) Total
------------ ------------ ------------ ------------
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 4,887,503 $ (2,018,312) $ 1,125,000 $ 3,994,191
Accounts receivable less allowance
for doubtful accounts 2,682,865 (1,341,569) 1,341,296
Inventories / work in process 3,074,333 (2,734,033) 340,300
Prepaid expenses and other current
assets 564,371 (250,206) 314,165
Prepaid expenses and other
current assets 157,772 157,772
------------ ------------ ------------ ------------
Total current assets 11,366,844 (6,344,120) 1,125,000 6,147,724
Restricted cash equivalents -- --
Property, plant and equipment, net 3,329,652 (2,292,720) 1,036,932
Note receivable -- 375,000 375,000
Goodwill, net 41,935,300 41,935,300
Other assets, net 47,460 (410) 1 47,051
------------ ------------ ------------ ------------
Total assets $ 56,679,256 $ (8,637,250) $ 1,500,001 $ 49,542,007
============ ============ ============ ============
CURRENT LIABILITIES:
Accounts payable and
accrued expenses 5,518,607 (3,687,618) -- 1,830,989
Deferred taxes payable --
Income taxes payable --
Deferred revenue 317,688 317,688
Loan payable to stockholder --
------------ ------------ ------------ ------------
5,836,295 (3,687,618) -- 2,148,677
Notes payable 24,293,678 (2,093,678) 22,200,000
Deferred rent payable 70,082 70,082
------------ ------------ ------------ ------------
Total liabilities 30,200,055 (5,781,296) -- 24,418,759
Commitments
STOCKHOLDERS' EQUITY:
Common stock 259,969 259,969
Additional paid-in capital 65,909,609 65,909,609
Note receivable from director (230,467) (230,467)
Retained earnings (deficit) (39,288,480) (2,855,764) 1,500,001 (40,644,433)
Treasury common stock (171,430) (171,430)
------------ ------------ ------------ ------------
Total stockholders' equity 26,479,201 (2,855,954) 1,500,001 25,123,248
------------ ------------ ------------ ------------
Total liabilities and
stockholders' equity $ 56,679,256 $ (8,637,250) $ 1,500,001 $ 49,542,007
============ ============ ============ ============
</TABLE>
7
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
1. Represents the audited Consolidated Statement of Operations of registrant
as reported in the Company's Annual Report on Form 10-K-A for the year
ended December 31, 1997. These amounts include the operations of the FAS'
climate control systems business, which at that time was conducted through
an unconsolidated partnership Engelhard / ICC, on the equity method of
accounting.
2. Represents the results of operations of Rare Medium for the year ended
December 31, 1997, as included in the registrant's Report on From 8-K/A
dated June 25, 1998.
3. Includes pro forma adjustments to: (i) reduce the equity interest in the
net loss of Engelhard / ICC to an estimate of the loss except for the 32.4%
equity interest retained in FAS; (ii) recognize amortization of goodwill
using a three-year amortization period relating to the acquisition of Rare
Medium; and (iii) recognize one year of interest at 8.5% on the $22.2
million note which was partial consideration for the acquisition of Rare
Medium.
4. Represents the unaudited Condensed Consolidated Statement of Operations of
registrant as reported in the Company's Quarterly Report on Form 10-Q for
the six months ended June 30, 1998. These amounts include the results of
operations of Rare Medium from its acquisition by the Company in April
through June 30, 1998.
5. Represents a reduction of the unaudited results of operations of FAS for
the six month ended June 30, 1998. These amounts were included in the
reported results of operation for the registrant for this period.
6. Represents the unaudited results of operations of Rare Medium for the first
quarter of 1998. This period's results of operations were not included in
the registrant's reported results of operations for the six months ended
June 30, 1998, due to Rare Medium's being acquired on April 15, 1998.
7. Adjustments include: (i) recognition of a loss of $1,355,953 on the sale of
the 57.6% interest in FAS by the Company; (ii) pro forma recognition of
interest expense and amortization of goodwill for the first quarter as a
result of the acquisition of Rare Medium.
8. Represents the unaudited Condensed Consolidated Balance Sheet of registrant
as reported in the Company's Quarterly Report on Form 10-Q for the six
months ended June 30, 1998. These amounts include the assets and
liabilities of Rare Medium and FAS.
9. Represents a reduction of the amounts shown on the unaudited Condensed
Consolidated Balance Sheet of registrant by the unaudited Condensed Balance
Sheet of FAS as of June 30, 1998.
10. Adjustments include the receipt of $1,125,000 of cash and a $375,000 note,
the valuation of the remaining 32.4% interest in FAS at $1, and the
recognition of a loss on the disposition in the amount of $1,355,953.
8
<PAGE>
(c) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Purchase and Sale Agreement Relating to Partnership Interests
in Fresh Air Solutions, L.P. by and between ICC Desiccant
Technologies, Inc. and Wilshap Investments, LLC dated as of
October 14, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
ICC TECHNOLOGIES, INC.
Registrant
By: /s/ Glenn S. Meyers
----------------------------
Glenn S. Meyers, President
and Chief Executive Officer
Date: October 29, 1998
9
Exhibit 2.1
Purchase and Sale Agreement Relating to Partnership Interests in Fresh
Air Solutions, L.P. by and between ICC Desiccant Technologies, Inc. and Wilshap
Investments, LLC dated as of October 14, 1998.
<PAGE>
PURCHASE AND SALE AGREEMENT
RELATING TO PARTNERSHIP INTERESTS IN
FRESH AIR SOLUTIONS, L.P.
BY AND BETWEEN
ICC DESICCANT TECHNOLOGIES, INC.
AND
WILSHAP INVESTMENTS, LLC
October 14, 1998
<PAGE>
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS..........................2
The Purchased Interests.....................................................2
Purchase Price..............................................................2
Assumption of Liabilities...................................................2
Escrowed Funds..............................................................4
Allocation of Purchase Price................................................4
SECTION 2. THE CLOSING.........................................................4
The Closing.................................................................4
Deliveries at the Closing...................................................4
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER............................4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................6
SECTION 5. PRE-CLOSING COVENANTS...............................................8
General.....................................................................8
Notices and Consents........................................................8
Notice of Development.......................................................8
SECTION 6. POST-CLOSING COVENANTS..............................................8
Further Assurances..........................................................8
Litigation Support..........................................................8
Transition..................................................................9
Amendment to Company's Articles of Incorporation............................9
Right of First Refusal......................................................9
Come Along Rights..........................................................10
No Board Representation....................................................10
No Capital Requirements....................................................11
`34 Act Compliance and Regulatory Filings..................................11
Insurance..................................................................11
Employee Benefit Plans.....................................................11
SECTION 7. CONDITIONS TO OBLIGATION TO CLOSE..................................11
Conditions to Obligation of the Buyer......................................11
Conditions to Obligation of the Sellers....................................13
SECTION 8. REMEDIES FOR BREACHES OF THIS AGREEMENT............................14
Survival of Representations and Warranties.................................14
Indemnification Provisions for Benefit of the Buyer........................15
Indemnification Provisions for Benefit of the Seller and ICC...............15
Matters Involving Third Parties............................................15
Determination of Adverse Consequences......................................16
Sole Remedy................................................................16
SECTION 9. MISCELLANEOUS......................................................17
Press Releases and Public Announcements....................................17
No Third-Party Beneficiaries...............................................17
Entire Agreement...........................................................17
Succession and Assignment..................................................17
i
<PAGE>
Counterparts...............................................................17
Headings...................................................................17
Notices....................................................................17
Governing Law..............................................................18
Amendments and Waivers.....................................................18
Remedies Cumulative........................................................19
Enforceability.............................................................19
Expenses...................................................................19
Construction...............................................................19
Incorporation of Exhibits, Appendices, and Schedules.......................19
Specific Performance.......................................................19
APPENDICES
Appendix I Definitions Appendix
Appendix II Disclosure Schedule (Seller)
Appendix III Disclosure Schedule (Buyer)
Appendix III-A Most Recent Financial Statements
EXHIBITS
Exhibit A Form of Promissory Note
ii
<PAGE>
PURCHASE AND SALE AGREEMENT
RELATING TO PARTNERSHIP INTERESTS IN FRESH AIR SOLUTIONS, L.P.
This Purchase and Sale Purchase Agreement Relating to Partnership
Interests in Fresh Air Solutions, L.P. (the "Agreement") is entered into on
October 14, 1998, by and between ICC Desiccant Technologies, Inc. (the
"Seller"), a Delaware corporation and wholly-owned subsidiary of ICC
Technologies, Inc., a Delaware corporation ("ICC"), and Wilshap Investments,
LLC, a Delaware limited liability company ("Buyer"). The Seller and Buyer are
sometimes collectively referred to herein as the "Parties."
BACKGROUND
The Seller is the sole general partner of Fresh Air Solutions, L.P., a
Pennsylvania limited partnership ("FAS"), which is engaged in the business of
developing, manufacturing and distributing desiccant-based climate control
systems ("FAS Business"). In addition to its 1% general partnership interest in
FAS, Seller's principal assets consist of an 89% limited partnership interest in
FAS and a 20% limited partnership interest in Engelhard Hexcore, L.P., a
Delaware limited partnership ("Hexcore"). Hexcore is engaged in the business of
designing, manufacturing, assembling, marketing and selling products fabricated
from honeycomb substrate, and any and all rotors or wheels or similar products
used in climate control systems. The sole general partner of Hexcore is
Engelhard DT, Inc. ("Engelhard DT"), a Delaware corporation and wholly-owned
subsidiary of Engelhard Corporation ("Engelhard"). Engelhard DT also holds a 79%
limited partnership interest as the other limited partner of Hexcore and a 10%
limited partnership interest in FAS.
Buyer desires to purchase from the Seller, and the Seller desires to
sell to the Buyer, its entire 1% general partnership interest in FAS and a 56.6%
limited partnership interest in FAS (such partnership interests are collectively
referred to herein as the "Partnership Interests"), and Seller desires to
withdraw as a general partner of FAS and Buyer desires to be admitted as the
sole general partner of FAS and as a limited partner of FAS, subject to the
terms and conditions set forth in this Agreement (the "Transaction").
Certain of the principals of Buyer have been serving as executives of
the Seller and FAS or their respective predecessors for approximately three
years, and have been serving as control persons of Seller and FAS since at least
November 18, 1997.
Initially capitalized terms not defined elsewhere in the body of this
Agreement shall have the respective meanings given to such terms in the
Definitions Appendix attached as Appendix I to this Agreement. Accounting terms
not defined in the body of this Agreement or in the Definitions Appendix shall
have the respective meanings given to such terms under GAAP.
NOW, THEREFORE, in consideration of the premises, the mutual promises
and representations, warranties, and covenants contained herein, and intending
to be legally bound
<PAGE>
hereby, the Parties agree as follows:
SECTION 1. PURCHASE AND SALE OF PARTNERSHIP INTERESTS.
(a) Purchased Interests. Subject to the terms and conditions of this
Agreement, at Closing, the Seller shall sell, transfer, convey and deliver to
the Buyer all of its right, title and interest in the Partnership Interests free
and clear of any and all liens, charges, Security Interests or encumbrances of
any nature (collectively, the "Encumbrances"), except any Encumbrances related
to the Assumed Liabilities.
(b) Purchase Price. Buyer agrees to pay or cause to be paid $1,500,000
to Seller at Closing ("Purchase Price") in consideration for the transfer by the
Seller to the Buyer of the Partnership Interests and the covenants and other
provisions set forth herein, which purchase price is payable as follows:
(i) Buyer shall pay Seller $1,125,000, less the dollar amount
of the Escrowed Funds, by wire transfer of immediately available funds in
accordance with Seller's instructions (the "Cash Payment"); and
(ii) Buyer shall cause FAS to pay Seller $375,000 by delivery
of a promissory note in the form attached hereto as Exhibit A (the "Note") and
made a part hereof.
(c) Assumption of Liabilities.
(i) Buyer shall as part of the consideration for the transfer
and sale of the Partnership Interests and otherwise in accordance with the
Transaction, assume, pay, perform and discharge (A) all Liabilities of Seller,
in its capacity as the general partner of FAS or otherwise relating to or
arising out of the FAS Business, and FAS known by William A. Wilson or Manfred
Hanuschek, whether or not disclosed on the Most Recent Balance Sheets or
Seller's or Buyer's Disclosure Schedules (hereinafter defined) and regardless of
when they arose, (B) all Liabilities of Seller, in its capacity as the general
partner of FAS or otherwise relating to or arising out of the FAS Business, and
FAS which arose on or after November 18, 1997, whether or not known by ICC,
Seller or Buyer or any of their respective principals, and (C) all Liabilities
of ICC relating to or arising out of the FAS Business known by William A. Wilson
or Manfred Hanuschek (whether or not disclosed on the Most Recent Balance Sheets
or Seller's or Buyer's Disclosure Schedules and regardless of when they arose)
or which arose on or after November 18, 1997 (whether or not known by ICC,
Seller or Buyer or any of their respective principals), including, without
limitation, the following specific Liabilities in accordance with their
respective terms, as such exist on the date hereof or as such are incurred in
the Ordinary Course of Business between the date hereof and the Closing Date but
only insofar as such Liabilities come within the meaning of clauses (A), (B) or
(C) above (collectively, the "Assumed Liabilities"):
(1) any and all Liabilities that ICC and the Seller have
under or associated with the Mellon Loan, adjusted as of the
Closing Date;
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(2) any and all Liabilities that ICC and the Seller have
under or associated with the Hatboro Lease;
(3) any and all Liabilities that ICC and the Seller have
under or associated with the Arsenal Lawsuit;
(4) the Balance Sheet Liabilities, adjusted as of the
Closing Date;
(5) any and all Liabilities for Seller's and FAS' employee
wages, salaries, payroll taxes and accrued, earned and deferred
vacations or sick pay;
(6) any and all Liabilities for the obligations of ICC,
Seller and FAS under the contracts, agreements, commitments and
equipment leases related to or arising out of the FAS Business;
(7) any and all Liabilities of ICC, Seller and FAS related
to or arising out of any employment, consulting or similar
contract or unemployment compensation benefits or costs, worker's
compensation claims, employee pension benefit plans, employee
welfare benefit plans, or any other employment plans or policies,
related to or arising out of the FAS Business, including, without
limitation, that certain Employee Benefits Agreement dated
February 27, 1998 by and between Hexcore (as successor to
Engelhard/ICC), FAS and ICC;
(8) any and all Liabilities of ICC, Seller and FAS under
Environmental Laws, any costs and expenses of any proceeding
relating thereto and any costs and expenses of avoiding any such
Liabilities related to or arising out of the ownership, leasing
or operation of FAS or the FAS Business;
(9) any and all Liabilities of ICC, Seller and FAS arising
out of, or related to, warranty claims or product liability
claims for products shipped, or services provided, by FAS or its
predecessors conducting the FAS Business;
(10) any and all Liabilities of ICC, Seller and FAS related
to or arising out of the branch office of FAS or its predecessors
conducting the FAS Business located in the Republic of South
Korea; and
(11) any and all Liabilities of ICC, Seller and FAS under
that certain Royalty Agreement dated February 7, 1994 among
Engelhard/ICC, James Coellner and Dean Calton, and under that
certain Agreement dated February 27, 1998 among ICC, Seller, ICC
Investment, L.P., Engelhard, Engelhard DT, Engelhard/ICC and FAS
relating to the resolution of any obligations under such Royalty
Agreement.
(ii) Except as set forth in subsection 1(c)(i) above, the
Buyer shall not, by virtue of its purchase of the Partnership Interests or
otherwise in connection with the Transaction, assume or become responsible for
any Liabilities whatsoever, whether or not related to the FAS Business.
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(iii) Notwithstanding anything herein to the contrary, Buyer
shall not assume or be responsible for, and the term "Assumed Liabilities" shall
not include, any federal, state or local tax Liability of ICC or Seller (a)
related to the restructuring transactions described and agreed to in that
certain Master Agreement among ICC Technologies, Inc., ICC Desiccant
Technologies, Inc., ICC Investment L.P., Engelhard Corporation, Engelhard DT,
Inc. and Engelhard/ICC dated as of November 17, 1997 and consummated on or about
February 27, 1998 (the "Restructuring"), or (b) incurred by Seller or ICC as a
result of the transaction contemplated by this Agreement, provided, however,
that, at Seller's election, Buyer shall pay one half of any Federal Alternative
Minimum Tax (the "AMT") owed by Seller in connection with the Restructuring up
to a maximum of $100,000 pursuant to the following terms and conditions: Buyer
shall cause FAS to pay such portion of the AMT by delivery of a note dated the
date of the tax payment payable over a three year period, Buyer shall guaranty
60% of such note, and Seller will credit Buyer with Buyer's pro rata portion of
any tax credit that Seller obtains in connection with the payment of the AMT.
(d) Escrowed Funds. The Parties acknowledge that Buyer previously
deposited with Mesirov Gelman Jaffe Cramer & Jamieson, LLP ("Escrow Agent") the
sum of $250,000 to be held by the Escrow Agent subject to the terms of a certain
letter agreement dated September 29, 1998 between William A. Wilson and Seller.
Such sums deposited with the Escrow Agent shall hereafter be referred to as the
"Escrowed Funds."
(e) Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets of FAS based upon the fair market values of such assets as
determined by the mutual agreement of the Parties.
SECTION 2. THE CLOSING.
(a) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Mesirov Gelman
Jaffe Cramer & Jamieson, LLP, 1735 Market Street, Philadelphia, Pennsylvania,
commencing at 9:00 a.m. local time on the date hereof (the "Closing Date"). The
Parties hereby acknowledge that the Closing is taking place upon the execution
and delivery of this Agreement by the Parties.
(b) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, and (ii) the Buyer will deliver to the
Sellers the Purchase Price and the various certificates, instruments, and
documents referred to in Section 7(b) below. All of the foregoing deliveries
will be deemed to be made simultaneously and none shall be deemed completed
until all have been completed.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller represents and warrants to the Buyer that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the
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disclosure schedules (the "Seller's Disclosure Schedules") delivered by the
Seller to the Buyer on the date hereof and attached as Appendix II to this
Agreement. The Seller's Disclosure Schedules shall be deemed adequate to
disclose an exception to a representation or warranty made herein, provided the
Seller's Disclosure Schedules identify the exception with reasonable
particularity and describe the relevant facts in reasonable detail. The Seller's
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 3.
Accordingly, Seller represents and warrants to the Buyer as follows:
(a) Organization, Qualification, and Corporate Power. The
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. The Seller has full corporate power and authority and
all licenses, permits, and authorizations necessary to carry on the businesses
in which it is engaged and to own and use the properties owned and used by it.
(b) Authorization of Transaction. Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
Seller's obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms and
conditions, except as such enforcement may be limited by Equitable Principles.
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency or
any other parties which has not already been obtained in order to consummate the
transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller is subject or any provision of its
certificate of incorporation or bylaws, or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Seller is a party or by which it is bound or to which any
of Seller's assets is subject.
(d) Title. The Seller is the sole true and lawful beneficial
and record owner of the Partnership Interests. Upon delivery of the Partnership
Interests with evidence of such delivery acceptable to the Buyer and the other
documents required to be delivered by Seller under Section 7 hereof and payment
by the Buyer of the Purchase Price and the other documents required to be
delivered by Buyer under Section 7 hereof, the Seller will convey to the Buyer
good and valid title to the Partnership Interests, in accordance with the terms
of the Fresh Air Solutions, L.P. Limited Partnership Agreement, dated February
27, 1998 (the "FAS Partnership Agreement"), free and clear of any and all
Encumbrances, except any Encumbrances related to the Assumed Liabilities.
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(e) Brokers' Fees. Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(f) Authority of General Partner. Upon effectuation of the
transfer and sale of the general partnership interest in FAS by Seller at
Closing, in accordance with the terms of the FAS Partnership Agreement, the
general partner of FAS has the right to pledge the assets of FAS to secure the
repayment of any loan made to FAS by any party, including the general partner or
an Affiliate of the general partner of FAS, and the transfer and sale of the
general partnership interest in FAS by Seller to Buyer hereunder will permit
Buyer to do all the acts that the Seller, as general partner of FAS, is
permitted to do under the FAS Partnership Agreement.
(g) Liabilities. To the knowledge of the President and the
Chief Financial Officer of ICC, there are no material Liabilities of ICC, FAS or
Seller other than (i) as reflected on the Most Recent Balance Sheets or as
incurred in the Ordinary Course of Business between the dates thereof and the
Closing Date, (ii) as expressly contemplated under Sections 1(c)(i)(1), (2),
(3), (4), (7), (10) or (11) above, or (iii) as described in reports and other
filings by ICC with the Securities and Exchange Commission under the Securities
Act of 1933, as amended ("Securities Act"), and the Securities Exchange Act of
1934, as amended ("Exchange Act").
(h) Disclosure. The representations and warranties contained
in this Section 3 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
The Buyer represents and warrants to the Seller, that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the disclosure
schedules (the "Buyer's Disclosure Schedules") delivered by the Buyer to the
Seller on the date hereof (and as updated as of and delivered on the Closing
Date) and attached as Appendix III to this Agreement. The Buyer's Disclosure
Schedules shall be deemed adequate to disclose an exception to a representation
or warranty made herein, provided the Buyer's Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. The Buyer's Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
Accordingly, the Buyer represents and warrants to the Seller as
follows:
(a) Organization of the Buyer. The Buyer is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Delaware and is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the failure to so qualify would not have a material
adverse effect on the Buyer and the conduct of its business.
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(b) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms and conditions, except as
such enforcement may be limited by Equitable Principles. The Buyer need not give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency or any other parties which has
not already been obtained in order to consummate the transactions contemplated
by this Agreement.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its certificate of formation or operating agreement, or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by which the Buyer is
bound or to which any of its assets is subject.
(d) Brokers' Fees. The Buyer does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any Seller
could become liable or obligated.
(e) Most Recent Financial Statements. Attached hereto as
Appendix III-A are the following financial statements of the Seller
(collectively the "Most Recent Financial Statements"): unaudited consolidated
balance sheets of Seller and FAS (the "Most Recent Balance Sheets") and
unaudited consolidated statements of income of Seller and FAS as of, and for the
six months ended, June 30, 1998 and as of, and for eight months ended August 31,
1998, which have been prepared by the principals of Buyer. The Most Recent
Financial Statements have been prepared on a basis consistent with GAAP
throughout the periods covered thereby, present fairly the consolidated
financial condition of the Seller and FAS as of such date, present fairly the
consolidated results of operations of the Seller and FAS for such period, and
are correct and complete and consistent with the books and records of the Seller
and FAS (which books and records are correct and complete in all material
respects).
(f) Liabilities. To the knowledge of William A. Wilson and
Manfred Hanuschek, there are no material Liabilities of ICC, FAS or Seller other
than (i) as reflected on the Most Recent Balance Sheets or as incurred in the
Ordinary Course of Business between the dates thereof and the Closing Date, (ii)
as expressly contemplated under Sections 1(c)(i)(1), (2), (3), (4), (7), (10) or
(11) above, or (iii) as described in reports and other filings by ICC with the
Securities and Exchange Commission under the Securities Act and the Exchange
Act.
(g) Disclosure. The representations and warranties contained
in this Section 4 do not contain any untrue statement of a material fact or omit
to state any material fact
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necessary in order to make the statements and information contained in this
Section 4 not misleading.
SECTION 5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
(a) General. Each of the Parties will use his or its
reasonable best efforts and take all action and do all things reasonably
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section 7 below).
(b) Notices and Consents. Each of the Parties will give any
notices to, make any filings with, and use his or its best efforts to obtain any
authorizations, consents, and approvals of third parties, governments and
governmental agencies necessary or desirable in connection with the consummation
of the transactions contemplated by this Agreement.
(c) Notice of Development. Each Party will give prompt written
notice to the other of any material adverse development causing a breach of any
of its representations and warranties under Section 3, in the case of Seller, or
under Section 4, in the case of Buyer. No disclosures by any Party pursuant to
this Section 5(c), however, shall be deemed to amend or supplement such Party's
disclosure schedules or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
SECTION 6. POST-CLOSING COVENANTS.
The Parties agree as follows after the Closing:
(a) Further Assurances. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 8 below). The Seller acknowledges and agrees that from and after the
Closing the Buyer may from time to time request copies of all documents, books,
records, Tax records, agreements and financial data of any sort relating to the
Seller and FAS, and the Seller shall promptly make available copies of the same
related to the period before the Closing to the Buyer following receipt by the
Seller of a written request therefor. Buyer acknowledges and agrees that the
Seller will be entitled to possession of all original documents, books, records,
Tax records, agreements and financial data of any sort relating to the Seller or
FAS for the period prior to the Closing.
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
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occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, the other Party or Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. Neither the Seller nor the Buyer will take any
action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the Seller
from maintaining the same business relationships with the Buyer or FAS after the
Closing as it maintained with the Seller or FAS prior to the Closing. Seller
will refer all customer inquiries relating to the businesses of the Seller or
FAS to the Buyer from and after the Closing.
(d) Amendment to Seller's Articles of Incorporation. Seller
shall amend its Certificate of Incorporation changing its name from "ICC
Desiccant Technologies, Inc." to a name which is not substantially similar to
the current name of the Seller, within ten (10) days following Closing.
(e) Right of First Refusal.
(i) If at any time following Closing Seller desires to
Transfer any or all of its remaining limited partnership interest
in FAS ("Seller's Remaining FAS Interest"), Seller shall give
written notice of such offer (the "Transfer Notice") to Buyer.
The Transfer Notice shall state the terms and conditions of such
offer, including the name of the prospective purchaser, the
proposed purchase price for such Seller's Remaining Interest
("Offer Price"), payment terms (including a description of any
proposed non-cash consideration ), the type of disposition and
the percentage of Seller's Remaining Interest to be transferred
(("Offered Interest"). The Transfer Notice shall further state
(A) that the Buyer or its designee may acquire any of the Offered
Interest for the price and upon the other terms and conditions,
including deferred payment (if applicable), set forth in the
offer and in accordance with the terms of this Section 6(e), and
(B) that the Buyer or its designee may not purchase any of such
Offered Interest unless the Buyer or its designee purchases all
of such Offered Interest.
(ii) For a period of thirty (30) days after receipt of the
Transfer Notice (the "Option Period"), the Buyer or its designee
may, by notice in writing to the Seller, elect in writing to
purchase all, but not less than all, of the Offered Interest at
the Offer Price. The closing of the purchase of Offered Interest
pursuant to this Section 6(e) shall take place at the principal
office of the Seller on the tenth (10th) day after the expiration
of the Option Period. At such closing, the Buyer or its designee
shall deliver to the Seller against delivery of reasonably
satisfactory evidence of transfer of the Offered Interest being
acquired by the Buyer or its designee, the Offer Price, on the
same terms as set forth in the Transfer Notice (including any
non-cash consideration described therein), payable in respect of
the Offered Interest being purchased by the Buyer or its
designee. All of the foregoing deliveries will be deemed to be
made simultaneously and none shall be deemed completed until all
have been completed.
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(iii) If the Buyer or its designee does not elect to
purchase all of the Offered Interest, all, but not less than all,
of the Offered Interest may be Transferred, but only in
accordance with the terms of the Transfer Notice, within sixty
(60) days after expiration of the Option Period, after which, if
the Offered Interest has not been Transferred, all restrictions
contained herein shall again be in full force and effect.
(f) Come Along Rights.
(i) If at any time following Closing Buyer desires to
Transfer any or all of its partnership interest in FAS, Buyer
shall give prior written notice of such intended Transfer to
Seller. Such notice (the "Participation Notice") shall set forth
the terms and conditions of such proposed Transfer, including the
name of the prospective transferee, the percentage general and/or
limited partnership interest in FAS proposed to be transferred
(the "Participation Interest") by Buyer, the purchase price
proposed to by paid therefor and the payment terms and type of
transfer to be effectuated. Such Participation Notice shall state
that Seller or its designee may participate in such proposed
Transfer on the same terms and conditions as Buyer in accordance
with the terms set forth in subsection 6(f)(ii) below.
(ii) For a period of thirty (30) days after receipt of the
Participation Notice ("Participation Period"), Seller or its
designee may by notice in writing to Buyer elect to participate
in such proposed Transfer (upon the same terms and conditions as
the Buyer) up to that percentage of Seller's Remaining FAS
Interest owned by Seller as shall equal the product of (A) a
fraction, the numerator of which is the percentage of Seller's
Remaining FAS Interest owned by Seller as of the date of such
proposed Transfer and the denominator of which is the percentage
of aggregate general and limited partnership interests actually
owned as of the date of such Participation Notice by the Buyer
and Seller, respectively, multiplied by (B) the Participation
Interest. The Participation Interest to be sold by Buyer shall be
reduced to the extent necessary to provide for such sale of
Seller's Remaining FAS Interest by Seller.
(iii) At the closing of any proposed Transfer in respect of
which a Participation Notice has been delivered, Seller, together
with Buyer, shall deliver to the proposed transferee reasonable
evidence of transfer of the percentage partnership interests in
FAS to be sold thereto and shall each receive in exchange
therefor the consideration to be paid or delivered by the
proposed transferee in respect of such partnership interests as
described in the Participation Notice.
(iv) If the Seller or its designee does not elect to sell
any of its Remaining FAS Interest, all, or any portion of, the
Participation Interest may be Transferred by Buyer, but only in
accordance with the terms of the Participation Notice, within
sixty (60) days after expiration of the Participation Period,
after which, if all of the Participation Interest has not been
Transferred, all restrictions contained herein shall again be in
full force and effect.
(g) No Board Representation. Following the Closing, neither
ICC nor the Seller shall have the right to have any representatives elected to
the Board of Directors or other governing body of Buyer.
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(h) No Capital Requirements. Following the Closing, neither
ICC, Seller nor Rare Medium, Inc., a New York corporation and wholly-owned
subsidiary of ICC, shall have any obligation to invest in, loan to, or otherwise
be responsible for any obligations of, FAS, Buyer or Hexcore.
(i) '34 Act Compliance and Regulatory Filings. Following the
Closing, the Buyer shall timely provide such financial and other information
relating to FAS and the FAS Business which is requested by Seller and ICC from
time to time, and otherwise cooperate with Seller and ICC, to enable ICC to
comply with its disclosure obligations and filing requirements under the
Exchange Act and other securities laws, or as may be required to comply with
other governmental regulations, or as otherwise may be required in conducting
the Ordinary Course of Business from time to time.
(j) Insurance. Upon Closing and for a period of at lease three
years thereafter, Buyer shall maintain in effect all general liability,
property, workers compensation, environmental and other insurance policies under
which ICC and Seller are currently named as insured persons, maintain the types
and amounts of coverage under such insurance policies and shall cause ICC and
Seller to continue to be named as insured persons under all such policies during
such period.
(k) Employee Benefit Plans.Within 30 days of the Closing Date,
Seller shall cause ICC to use its best efforts to transfer sponsorship of each
of the ICC Technologies 401(k) profit sharing plan and the ICC Technologies
cafeteria plan and any other welfare plan offered to employees of FAS
(collectively, the "Plans") to Buyer or FAS, and Buyer shall, or shall cause FAS
to, become the sponsor and adopt such Plans for continued participation in such
Plans by the employees of FAS. Buyer shall undertake the administration of such
Plans during the period following the Closing Date through the effectuation of
such transfer of sponsorship. In the event that ICC is unable for any reason to
effectuate the transfer of sponsorship of the Plans, then Buyer shall,
consistent with its obligations under applicable law, cause FAS to adopt such
profit sharing and medical, dental, cafeteria and other welfare plans as Buyer
chooses and ICC shall at its option, consistent with its obligations under
applicable law, terminate the Plans.
SECTION 7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction or waiver of the following
conditions:
(i) the representations and warranties set forth in Section
3 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) Seller shall have performed and complied with all of
its covenants and agreements hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign
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jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, (C) affect
adversely the right of the Buyer to own the Partnership
Interests, or (D) affect adversely the right of the Seller or
Buyer to own its respective assets and to operate its respective
businesses and acquire additional businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(iv) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified
above in Section 7(a)(i)-(iii) is satisfied in all respects;
(v) immediately prior to the Closing the Seller shall have
assigned to FAS its 20% limited partnership interest in Hexcore
("Hexcore Interest") pursuant to an Assignment and Assumption of
Hexcore Partnership Interest Agreement, in a form reasonably
satisfactory to Buyer and Buyer's counsel, and Seller shall have
delivered a fully executed copy thereof, which assignment shall
have been consented to in writing by Engelhard;
(vi) the Seller shall have delivered to Buyer an executed
Assignment and Assumption of FAS Partnership Interest Agreement
transferring the Partnership Interests to Buyer in a form
reasonably satisfactory to Buyer and Buyer's counsel, which
assignment shall have been consented to in writing by Engelhard;
(vii) Seller shall have delivered to Buyer an executed
Admission of Partner/Amendment to Partnership Agreement
evidencing the admission of Buyer to FAS as a general partner and
a limited partner in FAS, and Seller's withdrawal as a general
partner of FAS, in a form reasonably satisfactory to Buyer and
Buyer's counsel, which agreement shall be acknowledged in writing
by Engelhard;
(viii) prior to or simultaneous with the Closing of the
Transaction contemplated hereby, Engelhard shall have entered
into a legally binding agreement with FAS in accordance with the
terms of that certain letter agreement dated June 12, 1998, as
amended by a letter agreement dated September 2, 1998 (the
"Engelhard Letter Agreement"), the terms of which have been
disclosed by the principals of Buyer to Seller and ICC;
(ix) the Buyer's Members and each of Seller's and ICC's
Board of Directors and Seller's sole stockholder, ICC shall have
approved the transactions set forth herein;
(x) an opinion of Seller's counsel that all approvals
legally required to be obtained by Seller to consummate the
Transaction contemplated hereby have been obtained, which opinion
is in a form reasonably satisfactory to Buyer's counsel; and
(xi) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Buyer.
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The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of
the Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants and agreements hereunder in all material respects
through the Closing.
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified
above in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) immediately prior to the Closing the Seller shall have
assigned to FAS its Hexcore Interest pursuant to an Assignment
and Assumption of Hexcore Partnership Interest Agreement
referenced in Section 7(a)(v) above, in a form reasonably
satisfactory to Seller and Seller's counsel, which assignment
shall have been consented to in writing by Engelhard;
(vi) Each of Seller's and ICC's Board of Directors, Seller's
sole stockholder, ICC and Buyer's Members shall have approved the
transaction described in this Agreement;
(vii) the Buyer shall have executed and delivered to Seller
the Assignment and Assumption of FAS Partnership Interest
Agreement referenced in Section 7(a)(vi) above in a form
satisfactory to Seller;
(viii) the Buyer shall have executed and delivered to Seller
an Assignment and Assumption of Liabilities Agreement evidencing
Buyer's assumption of the Assumed Liabilities in a form
reasonably satisfactory to Seller;
(ix) the Buyer shall have executed and delivered to Seller
the Admission of Partner/Amendment of Partnership Agreement
referenced in Section 7(a)(vii) reasonably satisfactory to
Seller;
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(x) prior to or simultaneous with the Closing of the
Transaction contemplated hereby, Engelhard shall have entered
into a legally binding agreement with FAS in accordance with the
terms of the Engelhard Letter Agreement, the terms of which have
been disclosed by the principals of Buyer to Seller and ICC;
(xi) ICC and Seller shall have received, in form and
substance satisfactory to ICC and Seller, a release of Seller's
Liabilities under the Mellon Loan (or in the absence thereof, the
personal indemnification of Seller by William A. Wilson) and a
release of ICC's and Seller's Liabilities under the Hatboro
Lease;
(xii) ICC and Seller shall have received, in form and
substance satisfactory to ICC, a release of any and all
Liabilities of ICC and Seller to Engelhard, except for those
Liabilities which relate to ICC's or Seller's ability to buy
desiccant wheels from an entity other than Engelhard;
(xiii) ICC and Seller shall have received a Fairness
Opinion, in form and substance and from a financial institution
satisfactory to ICC and Seller, that the consideration to be
received by Seller from Buyer in the Transaction is fair from a
financial point of view;
(xiv) William A. Wilson shall have resigned as a director,
President and Chief Executive Officer of Seller;
(xv) William A. Wilson, individually and as an officer of
Seller and FAS, shall have delivered to Seller a certificate, in
a form reasonably satisfactory to Seller, certifying as to the
accuracy in all material respects of the Most Recent Financial
Statements; and
(xvi) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 7(b) if it
executes a writing so stating at or prior to the Closing.
SECTION 8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
respective representations, warranties and covenants of each of the Seller and
Buyer contained in this Agreement shall survive the Closing hereunder and
continue in full force and effect for a period of twelve months thereafter,
provided, however, nothing herein shall be construed to cause the termination of
the agreements set forth in Sections 1 and 6 and this Section 8 (including,
without limitation, Buyer's obligation to pay or cause to be paid the Purchase
Price as set forth in Section 1(b) and Buyer's assumption of the Assumed
Liabilities pursuant to Section 1(c)) upon expiration of such twelve month
period, which agreements shall remain in full force and effect thereafter.
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(b) Indemnification Provisions for Benefit of the Buyer In the
event the Seller breaches (or in the event any third party alleges facts that,
if true, would mean the Seller has breached) any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to Section 8(a) above, provided that the
Buyer makes a written claim for indemnification against the Seller pursuant to
Section 9(g) below within such survival period, then the Seller agrees to
indemnify the Buyer from and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach or the alleged breach. Notwithstanding
anything contained herein to the contrary, the Seller agrees to indemnify the
Buyer from and against the entirety of any Adverse Consequences the Buyer may
suffer resulting from, arising out of, or relating to, any Liabilities which are
not Assumed Liabilities as defined under Section 1(c) and the other agreements
referenced in the proviso to Section 8(a) above, without reference to any
survival period set forth herein.
(c) Indemnification Provisions for Benefit of the Seller and
ICC. In the event the Buyer breaches (or in the event any third party alleges
facts that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained in this Agreement, and, if
there is an applicable survival period pursuant to Section 8(a) above, provided
that the Seller or ICC makes a written claim for indemnification against the
Buyer pursuant to Section 9(g) below within such survival period, then the Buyer
agrees to indemnify the Seller and ICC from and against the entirety of any
Adverse Consequences the Seller or ICC may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Seller or
ICC may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach or the
alleged breach. Notwithstanding anything contained herein to the contrary, the
Buyer agrees to indemnify the Seller and ICC from and against the entirety of
any Adverse Consequences the Seller or ICC may suffer resulting from, arising
out of, or relating to, any of the Assumed Liabilities and the other agreements
referenced in the proviso to Section 8(a) above, without reference to any
survival period set forth herein.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
Section 8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is prejudiced thereby.
(ii) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified Party
in writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and
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against the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts the defense of the
Third Party Claim actively, competently and diligently.
(iii) As long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section
8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in Section 8(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third
Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith),
(B) the Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs, fees and expenses
(including attorneys' and other professional fees) of defending
against the Third Party Claim, and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Section 8.
(e) Determination of Adverse Consequences. Adverse Consequences shall
include interest at the Applicable Rate from the date the Adverse Consequence is
incurred to the date the Adverse Consequence has been paid. All indemnification
payments under this Section 8 shall be deemed adjustments to the Purchase Price.
(f) Sole Remedy. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or common law
remedy any Party may have with respect to the transactions contemplated by this
Agreement, except that the foregoing indemnification provisions shall be the
sole remedy that the Buyer may have against the Seller with respect to the
transactions contemplated by this Agreement.
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SECTION 9. MISCELLANEOUS.
(a) Press Releases and Public Announcements. Following the date hereof,
neither Seller nor Buyer shall issue any press release or make any public
announcement relating to the subject matter of the transaction described herein
without the prior written approval of the other Party; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by applicable law (in which case the disclosing Party will use its best efforts
to advise the other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. Except with respect to the rights and
remedies conferred upon ICC under Sections 1(c), 6(i) and (j), and 8(c), this
Agreement shall not confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof. No Party has made any representations to any other Party or otherwise
induced any party to enter into this Agreement other than as set forth in
writing in this Agreement and the documents referred to herein.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent by a nationally
recognized overnight courier service which provides a receipt for delivery, and
addressed to the intended recipient as set forth below:
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If to Seller: Copy to:
ICC Desiccant Technologies, Inc. Robert Lewis, Esq.
c/o ICC Technologies, Inc. Rare Medium, Inc.
44 West 18th Street, 6th Floor 44 West 18th Street, 6th Floor
New York, NY 10011 New York, NY 10011
Att: Glenn S. Meyers, President
and
Richard P. Jaffe, Esquire
Mesirov Gelman Jaffe Cramer &
Jamieson, LLP
1735 Market Street, Suite 3800
Philadelphia, PA 19103-7598
If to Buyer: Copy to:
Wilshap Investments, LLC Justin Klein, Esquire
330 South Warminster Road Ballard Spahr Andrews & Ingersoll, LLP
Hatboro, PA 19040 1735 Market Street, Suite 5100
Att: William A. Wilson, President Philadelphia, PA 19103-7599
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, facsimile, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania without giving effect to any choice or conflict of law provision or
rule (whether of the Commonwealth of Pennsylvania or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
Commonwealth of Pennsylvania.
(i) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Parties. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent
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default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Remedies Cumulative. No remedy conferred upon the Buyer by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by the Buyer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Buyer from
time to time and as often as may be deemed expedient or necessary by the Buyer
in its sole discretion.
(k) Enforceability. If any provision of this Agreement shall
be invalid or unenforceable, in whole or in part, then such provision shall be
deemed to be modified or restricted to the extent and in the manner necessary to
render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if such provision had been
originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.
(l) Expenses. Each of the Parties will bear its own costs and
expenses (including legal, accounting, broker and investment banker and other
professional fees and expenses) incurred in connection with this Agreement and
the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumptions or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Appendices, and Schedules. The
Exhibits, Appendices, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or
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injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other remedy to
which they may be entitled, at law or in equity.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
ICC DESICCANT TECHNOLOGIES, INC.
By: /s/ Glenn S. Meyers
-------------------------
Glenn S. Meyers
Executive Vice President
WILSHAP INVESTMENTS, LLC
By: /s/ William A. Wilson
--------------------------
William A. Wilson
President
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APPENDIX I
DEFINITIONS APPENDIX
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Applicable Rate" means the interest rate charged by Buyer's primary lender
or any successor primary lender from time to time.
"Arsenal Lawsuit" means that certain lawsuit captioned, ICC Desiccant
Technologies, Inc., Engelhard DT, Inc. v. Arsenal, Inc., filed in the Court of
Common Pleas of Philadelphia County, Pennsylvania.
"Assumed Liabilities" has the meaning set forth in Section 1(c).
"Balance Sheet Liabilities" means the Liabilities identified on the
Seller's Most Recent Balance Sheets.
"Buyer" has the meaning set forth in the preface of this Agreement.
"Buyer's Disclosure Schedules" has the meaning set forth in Section 4 of
this Agreement.
"Cash Payment" has the meaning set forth in Section 1(b)(i) of this
Agreement.
"Closing" has the meaning set forth in Section 2(a) of this Agreement.
"Closing Date" has the meaning set forth in Section 2(a) of this Agreement.
"Code" means the Internal Revenue code of 1986, as amended.
"Environmental Laws" means all Federal, state, local and foreign laws and
regulations, codes, orders, decrees, judgments, injunctions or consent orders
applicable to the FAS Business, and all notices or requests for information
received by Seller or FAS relating to the FAS Business issued, promulgated,
approved or entered thereunder relating to public health or safety, worker
health or safety, or pollution (including noise and radiation pollution), damage
to or protection of the environment including, without limitation, laws relating
to emissions, discharges, Releases or threatened Releases (as defined in CERCLA)
of pollutants, contaminants, chemicals, or industrial, toxic or Hazardous
Substances, or wastes into the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, generation, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or Hazardous Substances, or
wastes.
<PAGE>
"Equitable Principles" means bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principals of equity (whether applied in a proceeding at
law or in equity).
"Escrow Agent" has the meaning set forth in Section 1(d) of this Agreement.
"Escrowed Funds" has the meaning set forth in Section 1(d) of this
Agreement.
"FAS" has the meaning set forth in the preambles to this Agreement.
"FAS Business" has the meaning set forth in preambles to this Agreement.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Hatboro Lease" means that certain Agreement of Lease between 330 South
Warminster Associates, L.P. and Engelhard/ICC dated February 21, 1997 (which was
assigned by Engelhard/ICC to FAS on February 27, 1998).
"Hazardous Substances" means all Hazardous Substances as defined in CERCLA
or in OSHA's Hazardous Communication Standard and petroleum products and waste
and all radioactive materials and waste.
"Hexcore" has the meaning set forth in the preambles to this Agreement.
"Indemnified Party" has the meaning set forth in Section 8(d) of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 8(d) of this
Agreement.
"Indemnity Limit" has the meaning set forth in Section 8(b) of this
Agreement.
"Liability" or "Liabilities" means any and all liabilities or obligations
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or uncured, whether liquidated or unliquidated, and
whether due or to become due) of any nature, including, without limitation, any
liability for Taxes, violation of law, tort, or claims arising under contract.
"Mellon Loan" means that certain revolving credit loan from Mellon Bank,
N.A. to FAS pursuant to a Promissory Note dated February 27, 1998 by and between
FAS and Mellon Bank, N.A.
"Most Recent Balance Sheets" means the Seller's balance sheet dated as of
June 30, 1998 and August 31, 1998, as identified in Section 4(e) of this
Agreement.
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"Most Recent Financial Statements" has the meaning set forth in Section
4(e) of this Agreement.
"Note" has the meaning set forth in Section 1(b)(ii) of this Agreement.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" has the meaning set forth in the preface of this Agreement.
"Partnership Interests" or "Interests" has the meaning set forth in the
Preface of this Agreement.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a government entity (or any department, agency,
or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 1(b) of this
Agreement.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge
(including, without limitation, any and all sales or transfer taxes associated
with the transfer of the vehicles comprising the Purchased Asset hereunder), or
other security interest, other than (a) mechanic's, materialmen's, and similar
liens, (b) liens for Taxes not yet due and payable, (c) purchase money liens and
liens securing rental payments under capital lease arrangements, and (d) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Seller" has the meaning set forth in the preface of this Agreement.
"Seller's Disclosure Schedules" has the meaning set forth in Section 3 of
this Agreement.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, petroleum,
sales, use, fuel, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning set forth in Section 8(d) of this
Agreement.
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"Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, assign or in any
other way encumber or dispose of, directly, a partnership interest in FAS.
4
