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) February 2, 1994
SPARTECH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-5911 43-0761773
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7777 Bonhomme Avenue, Suite 1001, Clayton, Missouri 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 721-4242
<PAGE>
SPARTECH CORPORATION
FORM 8-K
Item 2. Acquisition or Disposition of Assets
On February 2, 1994, Spartech Corporation ("the Company")
completed the acquisition of Product Components, Inc. ("ProCom")
and ProCom's affiliates. The purchase included two rigid plastic
sheet and rollstock manufacturing plants, located in Richmond,
Indiana and Clare, Michigan, along with various other assets
of ProCom.
The acquired assets were used by ProCom in the business
of manufacturing and selling extruded rigid plastic sheet & roll-
stock produced from various resins, including polyethylenes, high
impact polystyrenes, crystal polystyrenes, acrylonitrile-
butadiene-styrenes, high impact acrylics and other related
specialty alloys and blends. ProCom's rigid plastic sheet &
rollstock was sold to a large group of manufacturers, who
thermoformed, cut and trimmed the plastic sheet & rollstock into
end products, such as golf carts, material handling systems,
and automotive/recreational vehicle parts. The Company
intends to use the acquired assets in the same manner as ProCom.
The purchase price for Procom's net assets, exclusive of
working capital purchased, totaled $8 million of which $7 million
was paid in cash, subject to post-closing adjustments. The
purchase price was determined by arms' length negotiations
between the parties. To facilitate the funding of the purchase,
the Company amended its credit arrangement with Chemical Bank by
increasing the limit on its revolving credit loan from $30
million to $38 million.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
At present, it is impractical for the Company to provide
required financial statements for the acquired business, but such
financial statements will be filed by an amendment to this report
within 60 days after the time for filing this report.
(b) Pro forma financial information.
At present, it is impractical for the Company to provide
required pro forma financial information relative to the acquired
business, but such financial information will be filed by an
amendment to this report within 60 days after the time for
filing this report.
(c) Exhibits
2 Asset Purchase Agreement dated January 11, 1994
(Exclusive of exhibits and schedules referred to
in said agreement)
99 Spartech Corporation Press Release issued on
February 3, 1994
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SPARTECH CORPORATION
Date 2/14/94 By /S/ David B. Mueller
David B. Mueller
Vice President of Finance and
Chief Financial Officer<PAGE>
EXHIBIT 2<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
SPARTECH CORPORATION,
as Buyer,
AND
PRODUCT COMPONENTS, INC.,
as Seller,
January 11, 1994
<PAGE>
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Included Assets . . . . . . . . . . . . . . . . . . . . . 2
1.1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 3
1.2 Purchase.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 The Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . 4
1.3.2 Payment of Purchase Price . . . . . . . . . . . . . . . . 4
1.3.3 Allocation of Purchase Price. . . . . . . . . . . . . . . 5
1.4 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . 6
1.5 Closing Balance Statement. . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
CLOSING ITEMS TO BE DELIVERED THIRD PARTY CONSENTS
AND FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.2 Items to be Delivered at Closing. . . . . . . . . . . . . . . . .10
2.3 Third Party Consents. . . . . . . . . . . . . . . . . . . . . . .11
2.4 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . .12
3.1 Representations and Warranties of Seller and the
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.1.1 Corporate Existence . . . . . . . . . . . . . . . . . . .12
3.1.2 Power; Authorization; Enforceable
Obligations. . . . . . . . . . . . . . . . . . . . . . .12
3.1.3 No Interest in Other Entities . . . . . . . . . . . . . .13
3.1.4 Validity of Contemplated Transactions, etc. . . . . . . .13
3.1.5 No Third Party Options. . . . . . . . . . . . . . . . . .13
3.1.6 Financial Statements. . . . . . . . . . . . . . . . . . .13
3.1.7 Accounts Receivable . . . . . . . . . . . . . . . . . . .14
3.1.8 Inventory . . . . . . . . . . . . . . . . . . . . . . . .14
3.1.9 Absence of Undisclosed Liabilities. . . . . . . . . . . .14
3.1.10 Tax and Other Returns and Reports . . . . . . . . . . . .15
3.1.11 Books of Account. . . . . . . . . . . . . . . . . . . . .15
3.1.12 Existing Condition. . . . . . . . . . . . . . . . . . . .16
3.1.13 Title to Properties . . . . . . . . . . . . . . . . . . .17
3.1.14 Condition of Tangible Assets. . . . . . . . . . . . . . .18
3.1.15 Compliance with Law; Authorizations . . . . . . . . . . .18
3.1.16 Transactions With Affiliates. . . . . . . . . . . . . . .18
3.1.17 Litigation. . . . . . . . . . . . . . . . . . . . . . . .19
3.1.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . .19
3.1.19 Contracts and Commitments . . . . . . . . . . . . . . . .19
3.1.20 Additional Information. . . . . . . . . . . . . . . . . .21
3.1.21 Labor Matters . . . . . . . . . . . . . . . . . . . . . .22
3.1.22 Employee Benefit Plans and Arrangements . . . . . . . . .22
3.1.23 Intellectual Property Matters . . . . . . . . . . . . . .23
3.1.24 Environmental Matters . . . . . . . . . . . . . . . . . .23
3.1.25 Real Property . . . . . . . . . . . . . . . . . . . . . .25
3.1.26 Availability of Documents . . . . . . . . . . . . . . . .26
3.1.27 Assets. . . . . . . . . . . . . . . . . . . . . . . . . .26
3.1.28 Conditions Affecting Seller . . . . . . . . . . . . . . .27
3.1.29 Consents and Approvals. . . . . . . . . . . . . . . . . .27
3.1.30 Completeness of Disclosure. . . . . . . . . . . . . . . .27
3.2 Representations and Warranties of Purchaser . . . . . . . . . . .27
3.2.1 Corporate Existence . . . . . . . . . . . . . . . . . . .27
3.2.2 Corporate Power; Authorization;
Enforceable Obligations. . . . . . . . . . . . . . . . .27
3.2.3 Validity of Contemplated
Transactions, etc. . . . . . . . . . . . . . . . . . . .28
3.3 Survival of Representations and Warranties. . . . . . . . . . . .28
ARTICLE IV
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
4.1 Indemnification by Seller and Stockholders. . . . . . . . . . . .28
4.2 Indemnification by Purchaser. . . . . . . . . . . . . . . . . . .29
4.3 Indemnification Procedures. . . . . . . . . . . . . . . . . . . .29
4.4 Limits on Indemnification . . . . . . . . . . . . . . . . . . . .31
4.5 Compliance with Bulk Sales Laws . . . . . . . . . . . . . . . . .32
4.6 Other Rights and Remedies Not Affected. . . . . . . . . . . . . .32
ARTICLE V
CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . .32
5.1 Accuracy of Representations and Warranties . . . . . . . . . . .32
5.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . .32
5.3 No Material Change. . . . . . . . . . . . . . . . . . . . . . . .33
5.4 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .33
5.5 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . .33
5.6 Environmental and Structural Inspection . . . . . . . . . . . . .33
5.7 Title Insurance. . . . . . . . . . . . . . . . . . . . . . . . .33
5.8 Consulting and Noncompetition Agreement . . . . . . . . . . . . .33
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER. . . . . . . . . . . . . . . . . . . . .34
6.1 Accuracy of Representations and Warranties . . . . . . . . . . .34
6.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . .34
6.3 Legal Proceeding . . . . . . . . . . . . . . . . . . . . . . . .34
6.4 Consulting and Noncompetition Agreement. . . . . . . . . . . . .34
ARTICLE VII
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
7.1 Access to Information. . . . . . . . . . . . . . . . . . . . . .34
7.2 No Shopping. . . . . . . . . . . . . . . . . . . . . . . . . . .34
7.3 Relocation of Lines. . . . . . . . . . . . . . . . . . . . . . .35
7.4 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . .35
7.5 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
7.6 Discharge of Business Obligations . . . . . . . . . . . . . . . .35
7.7 Maintenance of Books and Records. . . . . . . . . . . . . . . . .36
7.8 Payments Received . . . . . . . . . . . . . . . . . . . . . . . .36
7.9 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . .37
7.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
7.11 Completion of Schedules . . . . . . . . . . . . . . . . . . . . .38
ARTICLE VIII
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.1 Brokers' and Finders' Fees. . . . . . . . . . . . . . . . . . . .39
9.2 Sales, Transfer and Documentary Taxes. etc. . . . . . . . . . . .39
9.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.4 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.5 Contents of Agreement; Parties in Interest; etc.. . . . . . . . .40
9.6 Assignment and Binding Effect . . . . . . . . . . . . . . . . . .40
9.7 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.9 Missouri Law to Govern. . . . . . . . . . . . . . . . . . . . . .41
9.10 No Benefit to Others . . . . . . . . . . . . . . . . . . . . . .41
9.11 Headings, Gender and "Person." . . . . . . . . . . . . . . . . .41
9.12 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . .42
9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.15 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.20 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
SCHEDULES
3.1.1 Qualification To Do Business
3.1.9 Undisclosed Liabilities
3.1.13 Liens
3.1.14 Lease Property
3.1.15 Permits and Authorizations
3.1.16 Affiliate Transactions
3.1.17 Litigation
3.1.19 Contracts and Commitments
3.1.20 Additional Information
3.1.22 Employee Benefit Plans
3.1.23 Intellectual Property
3.1.24 Environmental Matters
3.1.25 Real Property
3.1.29 Consents and Approvals
EXHIBITS
A Opinion of Seller's Counsel
B Opinion of Purchaser's Counsel
C Consulting and Noncompetition Agreement
D Purchase Price Calculation Example
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 11, 1994, by
and among Spartech Corporation, a Delaware corporation
("Purchaser"), Product Components, Inc., a Florida corporation
("Seller"), and Claude Cason, Jr., the majority stockholder of
Seller (the "Stockholder").
W I T N E S S E T H:
WHEREAS, Seller has been and is engaged in the business of
manufacturing and selling extruded plastic sheet produced from
various resins, including polyethylenes, polypropylenes, high
impact polystyrenes, crystal polystyrenes, acrylonitrile-
butadiene-styrenes, high impact acrylics and other related
specialty alloys and blends (the "Business");
WHEREAS, Purchaser desires to acquire from Seller and
certain affiliates of Seller, namely C.C.E., Inc., PCI
Manufacturing and Claude Cason, Sr. (collectively referred to as
the "Related Parties"), and Seller desires to sell to Purchaser,
and to cause the Related Parties to transfer to Buyer, the
Business and certain of the assets of Seller and the Related
Parties, except for certain Excluded Assets (as hereinafter
defined), all upon and subject to the terms and conditions
hereinafter set forth; and
WHEREAS, the Stockholder owns a majority of the outstanding
common stock of Seller and will receive substantial benefit as a
result of the performance by Purchaser of its obligations under
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants, representations, warranties and agreements
herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Sale. At the Closing hereunder (as defined in Section
2.1 hereof) and except as otherwise specifically provided in this
Section 1.1, Seller shall, and shall cause the Related Parties
to, grant, sell, convey, assign, transfer and deliver to
Purchaser, upon and subject to the terms and conditions of this
Agreement, all right and title and interest of Seller and the
Related Parties in and to (a) the Business as a going concern,
and (b) all of the assets, properties and rights of Seller and
the Related Parties constituting the Business or used therein, of
every kind and description, real, personal and mixed, tangible
and intangible, wherever situated (which Business, goodwill,
assets, properties and rights are herein sometimes called the
"Assets"), free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever, except Permitted Liens as
defined in Section 3.1.13 hereof.
1.1.1 Included Assets. The Assets shall include
without limitation the following assets, properties and rights
owned by Seller or the Related Parties relating to the Business,
except as otherwise expressly set forth in Section 1.1.2 hereof:
(a) 13 extrusion lines and auxiliary equipment;
(b) all machinery, equipment, tools, vehicles,
furniture, furnishings, leasehold improvements, goods and
other tangible personal property;
(c) all prepaid items, unbilled costs and fees, and
accounts, notes and other receivables relating to the
Business and receivables due from Seller's employees hired
by Purchaser;
(d) all supplies and inventories and office and other
supplies;
(e) to the extent permitted by applicable law, all
rights under any written or oral contract, agreement, lease,
plan, instrument, registration, license, certificate of
occupancy, other permit or approval or any nature, or other
document, commitment, arrangement, undertaking, practice or
authorization;
(f) all rights under any patent, trademark, service
mark, trade name or copyright, whether registered or
unregistered, and any applications therefor;
(g) all technologies, methods, data bases, trade
secrets, know-how, inventions, formulas, recipes, process
sheets and mixing instructions and other intellectual
property used in the Business or under development;
(h) all computer hardware, software (including
documentation and related object and source codes) and
peripherals;
(i) all rights or choses in action arising out of
occurrences before or after the Closing, including without
limitation all rights under express or implied warranties
relating to the Assets;
(j) all assets and properties reflected on the Closing
Balance Sheet as defined in Section 1.5;
(k) all information, files, records, data, plans,
contracts and recorded knowledge, including customer and
supplier lists, related to the foregoing;
(l) all goodwill of the Business;
(m) the real property located in Richmond, Indiana and
Clare, Michigan described on Schedule 3.1.25 hereto,
including without limitation all appurtenances and
improvements thereto, including all rights, privileges and
appurtenant easements, minerals, hydrocarbons, water and
other substances on and under such property, as well as all
development rights, air rights, and water rights relating
thereto and any other easements, rights-of-way or
appurtenances used in connection with the beneficial use and
enjoyment thereof and all buildings and fixtures thereon,
including without limit all structures and improvements
attached thereto, together with any surveys relating
thereto; and
(n) cash and cash equivalents relating to the
Business.
1.1.2 Excluded Assets. Notwithstanding the foregoing,
the Assets shall not include any of the following (the "Excluded
Assets"):
(a) any assets, properties or rights of Seller used
exclusively in the business of rubber related products
manufactured and marketed by Seller's "Promat" division
operated in Richmond, Indiana, including without limit four
extrusion lines relating to "Promat" products and ancillary
equipment listed on Schedule 1.1.2, accounts receivable due
from "Promat" customers in the approximate amount of
$300,000 and "Promat" inventory in the approximate amount of
$100,000;
(b) the corporate seal, certificate of incorporation,
minute books, stock books, tax returns, books of account or
other records having to do with the corporate organization
of Seller;
(c) the rights which accrue or will accrue to Seller
under this Agreement;
(d) the rights to any of Seller's claims for any
federal, state, local, or foreign income tax refunds;
(e) the assets, properties or rights set forth on
Schedule 1.1.2.;
(f) Accounts receivable due from Injectech (Aeropro)
in the approximate amount of $472,000;
(g) Notes and receivables due from employees of the
Business not hired by Purchaser.
1.2 Purchase. At the Closing hereunder, Purchaser shall
purchase the Assets from Seller and the Related Parties, upon and
subject to the terms and conditions of this Agreement and in
reliance on the representations, warranties and covenants of
Seller and the Stockholder contained herein, in exchange for the
Purchase Price (hereinafter defined in Section 1.3 hereof). In
addition, Purchaser shall assume at the Closing and agree to pay,
discharge or perform, as appropriate, certain liabilities and
obligations of Seller only to the extent and as provided in this
Agreement. Except as specifically provided in this Agreement,
Purchaser shall not assume and shall not be responsible for any
liabilities or obligations of the Business or Seller.
1.3 The Purchase Price.
1.3.1 Purchase Price. The Purchase Price shall be an
amount equal to the sum of the following, but in no event more
than $13,700,000:
(a) The amount of Seller's accounts receivables due
from customers of the Business assigned to Buyer at the
Closing consistent with Seller's historical accounting but
before any allowances for bad debts;
(b) The value of Seller's inventory transferred to
Buyer at the Closing valued in accordance with Seller's
historical accounting after adjustments from book value to
actual physical inventory count; and
(c) $5,000,000 representing the agreed value the value
of Seller's and the Related Parties' land, buildings and
equipment transferred to Buyer at the Closing.
1.3.2 Payment of Purchase Price.
(a) The Purchase Price up to a maximum of $13,700,000
shall be paid as follows:
(i) By Buyer assuming Seller's accounts payable,
accrued liabilities, including accrued payroll taxes,
and indebtedness to banks and/or Durakon Industries,
Inc. relating to the Business existing as of the
Closing up to a maximum of $12,700,000.
(ii) $1,000,000 in cash at Closing; provided,
however, that to the extent that the sum of Promat
receivables and inventory and Injectech (Aeropro)
receivables included in Excluded Assets are less than
$872,000, the Purchase Price shall be increased by such
amount which shall be paid in cash at Closing, but in
no event shall such cash portion of the Purchase Price
exceed $1,872,000 in the aggregate.
(b) To the extent that the sum of accounts payable,
accrued liabilities, indebtedness to banks and/or Durakon
Industries, Inc. assumed by Buyer and cash paid at Closing
exceeds the Purchase Price by more than $300,000, the cash
portion of the Purchase Price shall be reduced by an amount
equal to 50% of such excess.
(c) The Purchase Price shall be preliminarily
determined at Closing based upon Seller's Interim Balance
Sheet (as hereinafter defined) after increasing Seller's
accrued reserve for returned goods by $50,000 above Seller's
historical reserve for returned goods subject to adjustment
pursuant to Section 1.5 hereof. Six months after Closing,
the unused portion, if any, of such $50,000 reserve shall be
paid to Seller.
(d) By notice to Purchaser given at least three
business days prior to the Closing, Seller may designate
equipment related to Seller's "Promat" division (the "Promat
Equipment") referred to in Section 1.1.2(a) of this
Agreement which Seller does not wish to retain as part of
the Excluded Assets. In such event, the equipment so
designated by Seller shall be included in the Assets
transferred to Purchaser at Closing. The cash portion of
the Purchase Price shall be adjusted at Closing based upon
such list of Promat Equipment as ultimately determined by
reducing such cash amount to the extent the value of such
Promat Equipment exceeds $600,000 and increasing such cash
amount to the extent such value is less than $600,000;
provided, however, that regardless of the value of the
equipment so designated by Seller in no event shall the cash
portion of the Purchase Price be increased by more than
$100,000. In making such adjustments, the Promat Equipment
shall be valued at the amounts shown on Schedule 1.1.2.
(e) The Purchase Price and the amount of cash payable
to Seller at Closing shall be calculated in accordance with
the example attached hereto as Exhibit D.
1.3.3 Allocation of Purchase Price. The Purchase
Price, the liabilities assumed by Purchaser in accordance with
Section 1.4 hereof and any non-recourse liabilities to which any
Asset is subject, as finally determined, shall be allocated among
the Assets acquired hereunder by mutual agreement of the parties.
If the parties cannot agree on such allocations within 90 days
after the Closing, Seller, Stockholder and Purchaser hereby agree
that the Assets shall be valued for purposes of the allocation
under this Section 1.3.3 in accordance with a written appraisal
made by a nationally recognized appraisal firm to be selected by
Purchaser, and in accordance with the requirements of Section
1060 of the Internal Revenue Code. Such appraisal shall be
conducted at Purchaser's sole direction and completed no less
than 30 days prior to the earlier to occur of the due date,
including extensions, for filing the U.S. federal income tax
return for either Seller or Purchaser for the fiscal year which
includes the Closing Date. The cost of such appraisal shall be
borne by Purchaser. Seller and Purchaser agree to make all
appropriate tax filings on a basis consistent with such appraisal
and to exchange drafts of any information returns required by
Section 1060 of the Internal Revenue Code, and all similar state
statutes, ten days prior to filing any such return. Seller,
Purchaser and the Stockholder hereby covenant and agree not to
take a position on any income tax return, before any governmental
agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the
terms of this Section 1.3.3 or Schedule 1.3.3.
1.4 Assumption of Liabilities. At the Closing hereunder
and except as otherwise specifically provided in this Section
1.4, Purchaser shall assume and agree to pay, discharge or
perform, as appropriate, the following liabilities and
obligations of Seller:
(a) all liabilities and obligations of Seller in
respect of the Business existing as of the Interim Balance
Sheet Date used in calculating the Purchase Price, but only
if and to the extent that the same are accrued or reserved
for on the Interim Balance Sheet and remain unpaid and
undischarged on the Closing Date;
(b) all liabilities and obligations of Seller arising
in the regular and ordinary course of the Business between
the Interim Balance Sheet Date and the Closing Date, but
only if and to the extent that the same remain unpaid and
undischarged on the Closing Date and are accrued or reserved
for on the Closing Balance Sheet, but also including any
liabilities of Seller for refunds of unearned vendor
rebates;
(c) all liabilities and obligations of Seller with
respect to product returns after Closing relating to goods
shipped by Seller prior to Closing to the extent reserved
against in Seller's Closing Balance Sheet and 50% of such
liabilities and obligations not so reserved against, with
Seller continuing to be responsible for the balance thereof;
(d) the prosecution of any pending collection claims
and lawsuits to collect Seller's accounts receivables, but
excluding any liabilities based upon action of Seller prior
to the Closing; and
(e) all liabilities and obligations of Seller in
respect of the agreements, contracts, commitments and leases
which are specifically identified in any list called for by
subsections (a), (b), (c), (e) or (f) of Section 3.1.19
hereof or not required to be identified on any such list in
accordance with the provisions of Section 3.1.19, except
that Purchaser shall not assume or agree to pay, discharge
or perform any:
(i) liabilities or obligations of the aforesaid
character existing as of the Interim Balance Sheet Date, and
which under generally accepted accounting principles should
have been accrued or reserved for on a balance sheet or the
notes thereto as a liability or obligation, if and to the
extent that the same were not accrued or reserved for on the
Interim Balance Sheet;
(ii) liabilities or obligations of the aforesaid
character existing as of the Closing Date, and which under
generally accepted accounting principles should have been
accrued or reserved for on a balance sheet or the notes
thereto as a liability or obligation, if and to the extent
that the same were not accrued or reserved for on the
Closing Balance Sheet;
(iii) liabilities or obligations arising out of
any breach by Seller of any provision of any agreement,
contract, commitment or lease referred to in this subsection
(c), including but not limited to liabilities or obligations
arising out of Seller's failure to perform any agreement,
contract, commitment or lease in accordance with its terms
prior to the Closing.
In no event, however, shall Purchaser assume or
incur any liability or obligation under this Section 1.4 or
otherwise in respect of any of the following:
(iv) except as otherwise expressly provided
herein, any "Indebtedness" of Seller or any Related Party,
which for purposes of this Agreement shall mean and include
(i) except to the extent expressly assumed hereunder, all
obligations for borrowed money or other extensions of
credit, whether or not secured, absolute or contingent
including, without limitation, unmatured reimbursement
obligations arising from letters of credit or guarantees
issued for the account of or on behalf of Seller or any
Related Party; (ii) all obligations representing the
deferred purchase price of property other than accounts
payable arising in connection with the purchase of inventory
whether or not secured; (iii) all obligations evidenced by
bonds, notes, debentures or other similar instruments; (iv)
all obligations secured by any mortgage, pledge, security
interest or other lien on property owned or acquired by
Seller or any Related Party whether or not the obligations
secured thereby shall have been assumed; (v) all obligations
as lessee under capital leases; (vi) all guarantees; and
(vii) all obligations which are due and payable out of the
proceeds of, or production from, property now or hereafter
owned or acquired by Seller or any Related Party.
(v) any product liability or similar claim for
injury to person or property, regardless of when made or
asserted, which arises out of or is based upon any express
or implied representation, warranty, agreement or guarantee
made by Seller or any Related Party, or alleged to have been
made by Seller or any Related Party, or which is imposed or
asserted to be imposed by operation of law, in connection
with any service performed or product sold or leased by or
on behalf of Seller or any Related Party on or prior to the
Closing, including without limitation any claim relating to
any product delivered in connection with the performance of
such service and any claim seeking recovery for
consequential damage, lost revenue or income;
(vi) any federal, state or local income or other
tax (A) payable with respect to the business, assets,
properties or operations of Seller, any Related Party or the
Stockholder or any member of any affiliated group of which
any of them is a member for any period prior to the Closing
Date, or (B) incident to or arising as a consequence of the
negotiation or consummation by Seller or the Stockholder or
any member of any affiliated group of which any of them is a
member of this Agreement and the transactions contemplated
hereby;
(vii) any liability or obligation exclusively
relating to, under or in connection with any of the Excluded
Assets;
(viii) except to the extent set forth in Seller's
Closing Balance Sheet or pursuant to Section 1.4(e) any
liability or obligation arising prior to or as a result of
the Closing to any employees, agents or independent
contractors of Seller, whether or not employed by Purchaser
after the Closing (including without limitation any bonus or
bonuses payable as the result of the consummation of the
transactions contemplated hereby), or under any benefit
arrangement with respect thereto;
(ix) any liability or obligation of Seller or the
Stockholder arising or incurred in connection with the
negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby and fees and expenses
of counsel, accountants and other experts; or
(x) any liability to Seller, the Stockholder, the
Related Parties or any of their respective affiliates to the
extent that the aggregate of assumed liabilities to such
parties exceeds $200,000 exclusive of obligations to the
Stockholder arising under the Consulting and Noncompetition
Agreement provided for herein.
The liabilities of Seller assumed by Purchaser under this
Agreement are referred to herein as the "Assumed Liabilities."
The liabilities of Seller not assumed by Purchaser under this
Agreement are referred to herein as the "Excluded Liabilities."
1.5 Closing Balance Sheet. Not later than 30 days after
the Closing Date, Seller shall deliver to Purchaser a balance
sheet of the Business as of the Closing Date, prepared
consistently with the Interim Balance Sheets ("Seller's Closing
Balance Sheet"). In connection with preparation of Seller's
Closing Balance Sheet, Seller shall perform a physical inventory
on the Closing Date, and Purchaser shall have the right to have a
representative present at all times during such physical
inventory. Seller's Closing Balance Sheet shall (i) specifically
identify all assets reflected thereon which are deemed by Seller
to be Excluded Assets and all liabilities reflected thereon which
are deemed by Seller to be Excluded Liabilities, (ii) shall
include as liabilities any liabilities of the Related Parties
assumed by Purchaser and (iii) shall include a reserve for
returned goods $50,000 greater than Seller's historical reserve
for returned goods. Purchaser shall review, or cause its
independent accountants to review, Seller's Closing Balance Sheet
within 30 days of receipt thereof by Purchaser. Upon completion
of such review, Purchaser shall deliver to Seller a balance sheet
of the Business at the Closing Date which shall contain all
revisions deemed to be appropriate by Purchaser from the Seller's
Closing Balance Sheet (the "Purchaser's Closing Balance Sheet"),
including any revised identification of any Excluded Assets or
Excluded Liabilities.
Any dispute which may arise between Seller and
purchaser as to such financial statements and the calculation of
the Purchase Price shall be resolved in the following manner:
(a) Seller, if it disputes the Purchaser's Closing
Balance Sheet or the calculation of the Purchase Price,
shall notify Purchaser in writing within 15 days after
Seller's receipt of Purchaser's Closing Balance Sheet; such
notice shall specify in reasonable detail the nature of the
dispute;
(b) during the 15 day period following the date of
such notice, Seller and Purchaser shall attempt to resolve
such dispute and to determine the appropriateness of the
Purchaser's Balance Sheet or the calculation of the Purchase
Price; and
(c) if at the end of the 15 day period specified in
subsection (b) above, Seller and Purchaser shall have failed
to reach a written agreement with respect to such dispute,
the matter shall be referred to the accounting firm of Ernst
& Young, independent certified public accountants (the
"Arbitrator"), which shall act as an arbitrator and shall
issue its report as to the balance sheet or the calculation
of the Purchase Price within 60 days after such dispute is
referred to the Arbitrator. Each of the parties hereto
shall bear all costs and expenses incurred by it in
connection with such arbitration, except that the fees and
expenses of the Arbitrator hereunder shall be borne equally
by Seller and Purchaser. This provision for arbitration
shall be specifically enforceable by the parties and the
decision of the Arbitrator in accordance with the provisions
hereof shall be final and binding and there shall be no
right of appeal therefrom.
References in this Agreement to the "Closing Balance
Sheet" shall mean the balance sheet of the Business at the
Closing Date, as agreed to or finally determined in accordance
with this Section 1.5. The "Adjustment Date" shall be the later
of the 15th day after delivery by Purchaser of the Purchaser's
Closing Balance Sheet pursuant hereto, or the date upon which any
dispute concerning the balance sheet of the Business at the
Closing Date or the amount of the Net Assets is resolved.
If the Purchase Price is adjusted as a result of the
Closing Balance Sheet, the party owing the adjustment shall pay
the same within ten days of such determination. If the Purchase
Price is reduced and Seller has not paid Purchaser the amount of
such adjustment within ten days of such determination, Purchaser
may offset the amount due against any payments due Seller or any
of the Related Parties.
ARTICLE II
CLOSING ITEMS TO BE DELIVERED THIRD PARTY CONSENTS
AND FURTHER ASSURANCES
2.1 Closing. The closing (the "Closing") of the sale and
purchase of the Assets shall take place at 10:00 a.m., local
time, on January 31, 1994 at the offices of Seller, 941 Broadmoor
Terrace, Richmond, Indiana 47374. The date of the Closing is
sometimes herein referred to as the "Closing Date."
2.2 Items to be Delivered at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the
following:
(i) Bills of sale from Seller and the
Related Parties;
(ii) Assignments of contracts and leases
included in the Assets;
(iii) General warranty deeds for Real Property
included in the Assets;
(iv) Certified copies of resolutions of
Seller's Board of Directors and the stockholder authorizing
the sale of the Assets and the execution, delivery and
performance of this Agreement by Seller;
(v) Pay-off letters, UCC-3 termination
statements, releases and other documents needed to release
all liens or security interests on the Assets, except with
respect to indebtedness assumed by Purchaser;
(vi) An opinion of Seller's counsel in the
form of Exhibit A; and
(vii) Such other documents, certificates or
instruments as Buyer may reasonably request or which are
appropriate to complete the transactions contemplated by
this Agreement.
Simultaneously with such delivery, Seller shall take all such
steps as may be required to put Purchaser in actual possession
and operating control of the Assets.
(b) Purchaser shall deliver to or for the account of
Seller the following:
(i) the cash portion of the Purchase Price;
(ii) an opinion of Buyer's counsel in the
form of Exhibit B; and
(iii) such other documents, instruments or
certificates receipt of which is a condition to the
performance of Seller's obligations under this Agreement.
2.3 Third Party Consents. To the extent that Seller's
rights under any agreement, contract, commitment, lease,
Authorization (as defined in Section 3.1.15) or other Asset to be
assigned to Purchaser hereunder may not be assigned without the
consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be
unlawful, and Seller, at its expense, shall use its best efforts
to obtain any such required consent(s) as promptly as possible.
If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's
rights under the Asset in question so that Purchaser would not in
effect acquire the benefit of all such rights, Seller, to the
maximum extent permitted by law and the Asset, shall act after
the Closing as Purchaser's agent in order to obtain for it the
benefits thereunder and shall cooperate, to the maximum extent
permitted by law and the Asset, with Purchaser in any other
reasonable arrangement designed to provide such benefits to
Purchaser.
2.4 Further Assurances. Seller and the Stockholder from
time to time after the Closing, at Purchaser's request, will
execute, acknowledge and deliver to Purchaser such other
instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents,
certifications and further assurances as Purchaser may reasonably
require in order to vest more effectively in Purchaser, or to put
Purchaser more fully in possession of, any of the Assets, or to
better enable Purchaser to complete, perform or discharge any of
the liabilities or obligations assumed by Purchaser at the
Closing pursuant to Section 1.4 hereof. Each of the parties
hereto will cooperate with the other and execute and deliver to
the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller and the
Stockholder. Seller and the Stockholder hereby jointly and
severally represent and warrant to Purchaser as follows:
3.1.1 Corporate Existence. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the
corporate power and authority to carry on the Business as
presently conducted and to own, operate and lease the Assets.
Seller is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the failure
to be so qualified could have a material adverse effect on Seller
or the Business, all of which jurisdictions where Seller is so
qualified are listed on Schedule 3.1.1 hereto.
3.1.2 Power; Authorization; Enforceable Obligations.
Each of Seller and the Stockholder has the power, authority and
legal right to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Seller
and the Stockholder have been duly authorized by all necessary
corporate and stockholder action. This Agreement and the other
agreements, documents and instruments delivered by Seller or the
Stockholder in connection herewith (the "Seller's Documents")
have been duly executed and delivered on behalf of Seller and the
Stockholder by duly authorized officers of Seller and the
Stockholder, and this Agreement and the Seller's Documents
constitute the legal, valid and binding obligations of such of
Seller and the Stockholder as shall be a party thereto,
enforceable against such party in accordance with their
respective terms.
3.1.3 No Interest in Other Entities. No shares of any
corporation or any ownership or other investment interest, either
of record, beneficially or equitably, in any association,
partnership, joint venture or other legal entity are included in
the Assets.
3.1.4 Validity of Contemplated Transactions, etc. The
execution, delivery and performance of this Agreement by Seller
and the Stockholder does not and will not violate, conflict with
or result in the breach of any term, condition or provision of,
or require the consent of any other person under, (a) any
existing law, ordinance, or governmental rule or regulation to
which Seller or the Stockholder is subject, (b) any judgment,
order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which
is applicable to Seller or the Stockholder, (c) the charter
documents of Seller or any securities issued by Seller, or (d)
except for required consents to be obtained from Seller's lenders
prior to Closing, any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization, or other instrument,
document or understanding, oral or written, to which Seller or
the Stockholder is a party, by which Seller or the Stockholder
may have rights or by which any of the Assets may be bound or
affected, or give any person with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing
rights or obligations of Seller or the Stockholder thereunder.
Except as aforesaid, no authorization, approval or consent of,
and no registration or filing with, any governmental or
regulatory official, body or authority is required in connection
with the execution, delivery or performance of this Agreement by
Seller or any Stockholder.
3.1.5 No Third Party Options. There are no existing
agreements, options, commitments or rights with, of or to any
person to acquire any of Seller's or the Related Parties' assets,
properties or rights included in the Assets or any interest
therein, except for those contracts entered into in the normal
course of business consistent with past practice for the sale of
inventory of Seller.
3.1.6 Financial Statements. Seller has delivered to
Purchaser true and complete copies of (a) the balance sheets of
Seller at May 31, 1993, 1992 and 1991 and the related statements
of income, retained earnings and cash flows for the fiscal years
then ended, certified by Seller's Auditors; and (b) an unaudited
balance sheet of Seller at November 30, 1993 and related
statement of income, for the six month period then ended, all of
which have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved. Such balance sheets, including the related notes,
fairly present the financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Seller at
the dates indicated and such statements of income, retained
earnings and cash flows fairly present the results of operations,
changes in retained earnings and cash flows of Seller for the
periods indicated. The unaudited financial statement as at and
for the period ending November 30, 1993 contains all adjustments,
necessary to present fairly in all material respects the
financial position for the period then ended. Subject to
inventory adjustments based on a physical count, the Interim
Balance Sheet specifically identifies the assets and liabilities
which, if the Closing had been held on the Interim Balance Sheet
Date, would have been transferred to or assumed by Purchaser in
accordance herewith. References in this Agreement to the
"Interim Balance Sheet" shall mean the balance sheet of the
Business as at November 30, 1993 referred to above; and
references in this Agreement to the "Interim Balance Sheet Date"
shall be deemed to refer to November 30, 1993.
3.1.7 Accounts Receivable. The accounts receivable of
Seller arising from the Business as set forth on the Interim
Balance Sheet or arising since the date thereof are valid and
genuine; have arisen solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions
in the ordinary course of business consistent with past practice
and are not subject to any known defenses, set-offs or
counterclaims, except as set forth on Schedule 3.1.17.
3.1.8 Inventory. All inventory of Seller used in the
conduct of the Business, including without limitation raw
materials, work-in process and finished goods, reflected in the
Interim Balance Sheet or acquired since the date thereof, was
acquired and has been maintained in the ordinary course of the
Business; and will not be adulterated, misbranded, mispackaged or
mislabeled within the meaning of, or in violation of, any
applicable local, state or federal laws or regulations.
Purchaser is otherwise accepting Seller's inventory "as is".
Seller is not under any liability or obligation with respect to
the return of inventory in the possession of customers.
3.1.9 Absence of Undisclosed Liabilities. Except as
set forth in Schedule 3.1.9, Seller has no liabilities or
obligations with respect to the Business, either direct or
indirect, matured or unmatured or absolute, contingent or
otherwise, except:
(a) those liabilities or obligations set forth on the
Interim Balance Sheet and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of
business under any agreement, contract, commitment, lease or
plan specifically disclosed on Schedule 3.1.9 or not
required to be disclosed because of the term or amount
involved; and
(c) those liabilities or obligations incurred
consistently with past business practice, in or as a result
of the normal and ordinary course of business since the
Interim Balance Sheet Date.
For purposes of this Agreement, the term "liabilities"
shall include, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or
inchoate, liquidated or unliquidated, secured or unsecured.
3.1.10 Tax and Other Returns and Reports. All
federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by
Seller (the "Tax Returns") with respect to any federal, state,
local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions
(including without limitation all income tax, unemployment
compensation, social security, payroll, sales and use, excise
privilege, property, ad valorem, franchise, license, school and
any other tax or similar governmental charge or imposition under
laws of the United States or any state or municipal or political
subdivision thereof or any foreign country or political
subdivision thereof) (the "Taxes") have been filed with the
appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax
Returns properly reflect the liabilities of Seller for Taxes for
the periods, property or events covered thereby. All Taxes,
including without limitation those which are called for by the
Tax Returns or heretofore or hereafter claimed to be due by any
taxing authority from Seller, have been properly accrued or paid.
Seller has not received any notice of assessment or proposed
assessment in connection with any Tax Returns and there are no
pending Tax examinations of or Tax claims asserted against Seller
or any of its assets or properties. Seller has not extended, or
waived the application of, any statute of limitations of any
jurisdiction regarding the assessment or collection of any Taxes.
There are no Tax liens (other than any lien for current Taxes not
yet due and payable) on any of the assets or properties of
Seller. Except for the possible reassessment of real property in
Richmond, Indiana, Seller has no knowledge of any basis for any
additional assessment of any Taxes. Seller has made all deposits
required by law to be made with respect to employees' withholding
and other employment taxes, including without limitation the
portion of such deposits relating to Taxes imposed upon Seller.
3.1.11 Books of Account. Subject to inventory
adjustments after a physical inventory count, the books, records
and accounts of Seller maintained with respect to the Business
accurately and fairly reflect, in reasonable detail, the
transactions and assets and liabilities of Seller with respect to
the Business in all material respects. Seller has not engaged in
any transaction with respect to the Business, maintained any bank
account for the Business or used any of the funds of Seller in
the conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the
normally maintained books and records of the business.
3.1.12 Existing Condition. Since the Interim Balance
Sheet Date, Seller with respect to the Business has not:
(a) incurred any liabilities, other than liabilities
incurred in the ordinary course of business consistent with
past practice, or discharged or satisfied any lien or
encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice,
or failed to pay or discharge when due any liabilities;
(b) sold, encumbered, assigned or transferred any
assets or properties which would have been included in the
Assets if the Closing had been held on the Interim Balance
Sheet Date or on any date since then, except for the sale of
inventory in the ordinary course of business consistent with
past practice;
(c) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or
subjected any of its Assets to any mortgage, lien, pledge,
security interest, conditional sales contract or other
encumbrance of any nature whatsoever, except for Permitted
Liens (hereinafter defined in Section 3.1.13);
(d) made or suffered any amendment or termination of
any material agreement, contract, commitment, lease or plan
to which it is a party or by which it is bound, or
cancelled, modified or waived any substantial debts or
claims held by it or waived any rights of substantial value,
whether or not in the ordinary course of business;
(e) suffered any damage, destruction or loss, whether
or not covered by insurance (i) materially and adversely
affecting its business, operations, assets, properties or
prospects, or (ii) of any item or items carried on its books
of account individually or in the aggregate at more than
$25,000; or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of supplies or utility
or other services required to conduct its business and
operations;
(f) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event
or condition of any similar character which has had or might
have an adverse effect on its business, operations, assets,
properties or prospects;
(g) made any material change in the customary methods
used in operating the Business (including its marketing,
selling and pricing practices and policies);
(h) except for completion of a building expansion in
Richmond, Indiana, made commitments or agreements for
capital expenditures or capital additions or betterments
exceeding in the aggregate $25,000 except such as may be
involved in ordinary repair, maintenance or replacement of
its assets;
(i) except for a year-end bonus to the Stockholder,
increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary
business expenses) or loan to, any of its employees or made
any increase in, or any addition to, other benefits to which
any of its employees may be entitled;
(j) except for accounting treatment of property tax
accruals, changed any of the accounting principles followed
by it or the methods of applying such principles;
(k) except for the shutdown of Seller's Elkhart,
Indiana facility, entered into any transaction other than in
the ordinary course of business consistent with past
practice; or
(l) agreed, whether in writing or otherwise, to take
any of the actions set forth in this Section 3.1.12.
3.1.13 Title to Properties. Seller has good, valid
and marketable title to all of its properties and assets included
in the Assets, including without limitation all properties and
assets reflected in the Interim Balance Sheet (except for
inventory sold since the Interim Balance Sheet Date in the
ordinary course of business consistent with past practice) free
and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and other encumbrances and defects
of title of any nature whatsoever, except for (a) liens for
current real or personal property Taxes not yet due and payable,
(b) liens disclosed on Schedule 3.1.13 hereto, and (c) worker's,
carrier's and materialman's liens that are immaterial in
character, amount, and extent, and which do not detract from the
value or interfere with the present or proposed use of the
properties they affect ("Permitted Liens").
3.1.14 Condition of Tangible Assets. All buildings,
structures, facilities, equipment and other material items of
tangible property and assets which would be included in the
Assets if the Closing took place on the date hereof are in
operating condition and repair sufficient to permit continued
operation of the Business as previously conducted, subject to
normal wear and maintenance, are usable in the regular and
ordinary course of business and conform to all applicable laws,
ordinances, codes, rules and regulations, and Authorizations
relating to their construction, use and operation. No person
other than Seller owns any equipment or other tangible assets or
properties situated on the premises of Seller or necessary to the
operation of the business of Seller, except for leased items
disclosed on Schedule 3.1.14 hereto and for items of immaterial
value and hand tools owned by employees.
3.1.15 Compliance with Law; Authorizations. Except as
set forth on Schedule 3.1.15, Seller has complied with each, and
is not in violation in any material respect of any, law,
ordinance, or governmental or regulatory rule or regulation,
whether federal, state, local or foreign, to which Seller's
business, operations, assets or properties is subject
("Regulations"). Seller owns, holds, possesses or lawfully uses
in the operation of its business all franchises, licenses,
permits, easements, rights, applications, filings, registrations
and other authorizations ("Authorizations") which are in any
manner necessary for it to conduct its business as now or
previously conducted or for the ownership and use of the assets
owned or used by Seller in the conduct of the business of Seller,
free and clear of all liens, charges, restrictions and
encumbrances and in compliance with all Regulations. All such
Authorizations are listed and described on Schedule 3.1.15
hereto. Seller is not in default, nor has it received any notice
of any claim of default, with respect to any such Authorization.
All such Authorizations are renewable by their terms or in the
ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than
routine filing fees. None of such Authorizations will be
adversely affected by consummation of the transactions
contemplated hereby. No stockholder, director, officer, employee
or former employee of Seller or any affiliates of Seller, or any
other person, owns or has any proprietary, financial or other
interest (direct or indirect) in any Authorization which Seller
owns, possesses or uses in the operation of the business of
Seller as now or previously conducted.
3.1.16 Transactions With Affiliates. Except as set
forth on Schedule 3.1.16 hereto, no stockholder, director,
officer or employee of Seller, or any member of his or her
immediate family or any other of its, his or her affiliates, owns
or has a 5% or more ownership interest in any corporation or
other entity that is or was during the last three years a party
to, or in any property which is or was during the last three
years the subject of, any material contract, agreement or
understanding, business arrangement or relationship with Seller.
3.1.17 Litigation. Except as set forth on Schedule
3.1.17, no litigation, including any arbitration, investigation
or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending
or, to the best knowledge of Seller and the Stockholders,
threatened against Seller or which relates to the assets of
Seller or the Business or the transactions contemplated by this
Agreement, nor does Seller or the Stockholder know of any
reasonably likely basis for any such litigation, arbitration,
investigation or proceeding, the result of which could adversely
affect Seller, its assets or the transactions contemplated
hereby. Seller is not a party to or subject to the provisions of
any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or
authority which may adversely affect Seller, its assets or the
transactions contemplated hereby.
3.1.18 Insurance. Seller has, with respect to the
Assets and the Business, with financial sound insurers of
nationally recognized stature and responsibility, insurance of
such a nature, with such terms and in such amounts as is
customary in the case of corporations of established reputations
engaged in the same or similar businesses and similarly situated.
Such policies are in full force and effect on the date hereof,
and Seller has not received notice of cancellation with respect
to any such policy.
3.1.19 Contracts and Commitments. Except as described
on Schedule 3.1.19 hereto, Seller is not a party to any written
or oral:
(a) agreement, contract or commitment with any present
or former employee or consultant or for the employment of
any person, including any consultant, who is engaged in the
conduct of the Business;
(b) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products, or for
the performance of services by a third party which supplies,
products or services are used in the conduct of the Business
involving in any one case $50,000 or more;
(c) agreement, contract or commitment to sell or
supply products ("Goods Contracts") or to perform services
("Services Contracts") in connection with the Business
involving in any one case $50,000 or more;
(d) agreement, contract or commitment relating to the
Business not otherwise listed on the Schedule 3.1.19 hereto,
and continuing over a period of more than six months from
the date hereof, or exceeding $25,000 in value (other than
the type of agreement, contract or commitment referred to in
subsection (b) or (c) hereof);
(e) distribution, dealer, representative or sales
agency agreement, contract or commitment relating to the
Business;
(f) lease under which Seller is either lessor or
lessee relating to the Assets or any property at which the
Assets are located:
(g) note, debenture, bond, equipment trust agreement,
letter of credit agreement, loan agreement or other contract
or commitment for the borrowing or lending of money relating
to the Business or agreement or arrangement for a line of
credit or guarantee, pledge or undertaking of the
indebtedness of any other person relating to the Business:
(h) agreement, contract or commitment for any
charitable or political contribution relating to the
Business;
(i) commitment or agreement for any capital
expenditure or leasehold improvement in excess of $25,000
relating to the Business;
(j) agreement, contract or commitment limiting or
restraining Seller, the Business or any successor thereto
from engaging or competing in any manner or in any business,
nor, to Seller's or any Stockholder's knowledge, is any
employee of Seller engaged in the conduct of the Business
subject to any such agreement, contract or commitment;
(k) license, franchise, distributorship or other
agreement which relates in whole or in part to any software,
patent, trademark, tradename, service mark or copyright or
to any ideas, technical assistance or other know-how of or
used by Seller in the conduct of the Business; or
(l) material agreement, contract or commitment
relating to the Business not made in the ordinary course of
business.
Seller is, and to Seller's and Stockholder's best
knowledge all other parties thereto are, in compliance with the
provisions of each of the agreements, contracts, commitments,
leases, plans and other instruments, documents and undertakings
listed on Schedule 3.1.19 in response to this Section, or not
required to be listed therein because of the amount thereof,
under which Purchaser is to acquire rights or obligations
hereunder; Seller is not, and to Seller's and Stockholder's best
knowledge no other party thereto is, in default in the
performance, observance or fulfillment of any material
obligation, covenant or condition contained therein; and no event
has occurred which with or without the giving of notice or lapse
of time, or both, would constitute a default thereunder. No
written or oral agreement, contract or commitment described
therein requires the consent of any party to its assignment in
connection with the transactions contemplated hereby. Except as
disclosed on Schedule 3.1.19, each Goods Contract and each
Services Contract is in one of the forms attached to Schedule
3.1.19 with only such changes thereto as are necessary to reflect
applicable fees, products, and time periods and such other
changes therein as do not materially affect the rights or
obligations of Seller thereunder.
3.1.20 Additional Information. Schedule 3.1.20 hereto
contains accurate lists and summary descriptions of the
following:
(a) all equipment, furniture and fixtures of Seller
included in the Assets as of the Interim Balance Sheet Date
with an original cost or current market value in excess of
$10,000, specifying such items as are owned and such as are
leased and, with respect to the owned property, specifying
its cost or current value and, with respect to the leased
property as to which Seller is lessee, specifying the
identity of the lessor, the rental rate and the unexpired
term of the lease;
(b) the name and address of every bank and other
financial institution in which Seller or its affiliates
maintain an account (whether checking, savings or
otherwise), lock box or safe deposit box for the Business,
and the account numbers and names of persons having signing
authority or other access thereto;
(c) the names and titles of and current annual base
salary or hourly rates for all employees of Seller engaged
in the conduct of the Business, together with a statement of
the full amount and nature of any other remuneration,
whether in cash or kind, paid to each such person during the
past or current fiscal year or payable to each such person
in the future and the bonuses accrued for each such person,
and the vacation and severance benefits to which each such
person is entitled; and
(d) all names under which Seller has conducted any
business or which it has otherwise used during the last five
years.
3.1.21 Labor Matters. Seller has not suffered any
strike, slowdown, picketing or work stoppage by any union or
other group of employees affecting the business of Seller. Seller
is not a party to any collective bargaining agreement; no such
agreement determines the terms and conditions of employment of
any employee of Seller; no collective bargaining agent has been
certified as a representative of any of the employees of Seller;
and no representation campaign or election is now in progress
with respect to any of the employees of Seller. Except as set
forth in Schedule 3.1.17, Seller (a) has been and is in
compliance in all material respects with all laws, rules,
regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and
hours, (b) is not liable for any arrears of wages or penalties
for failure to comply with any of the foregoing, and (c) has not
engaged in any unfair labor practice or discriminated on the
basis of race, color, religion, sex, national origin, age or
handicap in its employment practices, and no complaints are
pending or, to the best knowledge of Seller or the Stockholder,
threatened against Seller before any federal state or local
court, board, department, commission or agency regarding any such
unfair labor practice or discrimination.
3.1.22 Employee Benefit Plans and Arrangements.
(a) Schedule 3.1.22 hereto contains a complete list of
all employee benefit plans, whether formal or informal,
whether or not set forth in writing, and whether covering
one person or more than one person, sponsored or maintained
by the Company. For the purposes hereof, the term "employee
benefit plan" includes all plans, funds, programs, policies,
arrangements, practices, customs and understandings
providing benefits of economic value to any employee, former
employee, or present or former beneficiary, dependent or
assignee of any such employee or former employee other than
regular salary, wages or commissions paid substantially
concurrently with the performance of the services for which
paid. Without limitation, the term "employee benefit plan"
includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all employee
pension benefit plans within the meaning of section 3(2) of
ERISA. Each plan providing benefits which are funded through
a policy of insurance is indicated by the word "insured"
placed by the listing of the plan in Schedule 3.1.22.
(b) Except as disclosed on Schedule 3.1.22, with
respect to all employees and former employees of Seller and
Related Parties, Seller does not maintain, contribute to or
have any liability under (including any current or potential
multi-employer withdrawal liability under Title IV of ERISA)
under any employee benefit plan.
(c) Except as disclosed on Schedule 3.1.22, no
employee of Seller or a Related Party has a medical
condition which would be excluded from coverage as a pre-
existing condition under Purchaser's medical plan.
3.1.23 Intellectual Property Matters. Seller in the
conduct of the Business did not and does not utilize or otherwise
have any rights in any patent (including patent applications),
trademark, tradename, service mark, copyright, software, trade
secret or know-how except for those listed on Schedule 3.1.23
hereto (the "Intellectual Property"), all of which are owned by
Seller free and clear of any liens, claims, charges or
encumbrances. Seller does not infringe upon or unlawfully or
wrongfully use any patent, trademark, tradename, service mark,
copyright or trade secret owned or claimed by another. Seller is
not in default under, and has not received any notice of any
claim of infringement or any other claim or proceeding relating
to any such patent, trademark, tradename, service mark, copyright
or trade secret. No present or former employee of Seller and no
other person owns or has any proprietary, financial or other
interest, direct or indirect, in whole or in part, in any patent,
trademark, tradename, service mark or copyright, or in any
application therefor, or in any trade secret, which Seller owns,
possesses or uses in its operations as now or heretofore
conducted. Schedule 3.1.23 lists all confidentiality or non-
disclosure agreements to which Seller or any of Seller's
employees engaged in the Business is a party which relates to the
Business. Seller has not granted any licenses or other rights to
any of the Intellectual Property. Except as set forth on Schedule
3.1.23, Seller has not made any claim of any violation or
infringement by others of its rights to the Intellectual
Property, and is not aware of any basis for the making of any
such claim.
3.1.24 Environmental Matters.
(a) Except as set forth on Schedule 3.1.24 hereto,
Seller has obtained all permits, licenses and other
authorizations which are required in connection with the
conduct of the Business under Regulations relating to
pollution or protection of the environment, including
Regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes
("Hazardous Substances") into the environment (including
without limitation ambient air, surface water, groundwater,
or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Substances (the
"Environmental Regulations").
(b) Except as set forth on Schedule 3.1.24, Seller
maintains and is in full compliance in the conduct of the
Business with all terms and conditions of the required
permits, licenses and Authorizations, and is also in full
compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules and timetables, contained in the
Environmental Regulations or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved
thereunder.
(c) Except as set forth on Schedule 3.1.24, Seller is
not aware of, nor has Seller nor any of the Related Parties
received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent
compliance or continued compliance with the Environmental
Regulations or any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, or which may
give rise to any common law or legal liability, or otherwise
form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or
related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the
environment, of any Hazardous Substance.
(d) Except as set forth on Schedule 3.1.24, there is
no civil, criminal or administrative action, suit, demand,
claim, hearing, notice or demand letter, notice of
violation, investigation, or proceeding pending or
threatened against Seller in connection with the conduct of
the Business relating in any way to the Environmental
Regulations or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(e) Seller agrees to cooperate with Purchaser in
connection with Purchaser's application for the transfer,
renewal or issuance of any permits, licenses, approvals or
other authorizations or to satisfy any regulatory
requirements involving Seller's business.
(f) The Assets are not being and have not been used
for the generation, use, storage, manufacture,
transportation, treatment or disposal of Hazardous
Substances, except us permitted by, and in compliance with,
all applicable Environmental Regulations. There is not and
there has not been any underground storage tank used in
connection with the Business or located on the Real Property
(as hereinafter defined).
3.1.25 Real Property.
(a) Real Property Defined. All real property
(including, without limitation, all interests in and rights
to real property) and improvements located thereon which are
owned or leased by Seller and used in connection with the
Business or included in the Assets (the "Real Property") are
listed on Schedule 3.1.25 hereto.
(b) No Owned Real Property. Seller does not own any
Real Property except as listed on Schedule 3.1.25.
(c) Leased Real Property. With respect to the Real
Property that is leased by Seller:
(i) Seller has previously delivered to Purchaser
a true and complete copy of every lease and sublease to
which Seller is a tenant or subtenant (the "Leases"), and
has described each Lease on Schedule 3.1.25 by listing the
name of the landlord or sublandlord, a description of the
leased premises, the commencement and expiration dates of
the current term, the security deposited by Seller with the
landlord or sublandlord, if any, the monthly rental
(including base and all additional rents), whether Seller
may assign the Lease to Purchaser, and whether the consent
of the landlord or sublandlord is required for such an
assignment;
(ii) each Lease is in full force and effect and
has not been assigned, modified, supplemented or amended
except as listed on Schedule 3.1.25, and neither Seller nor
the landlord or sublandlord under any Lease is in default
under any of the Leases, and no circumstances or state of
facts presently exists which, with the giving of notice or
passage of time, or both, would permit the landlord or
sublandlord under any Lease to terminate any Lease; and
(iii) at Closing, Seller shall assign to the
Purchaser all right, title and interest of Seller in and to
all Leases (and shall deliver to Purchaser original copies
of all consents required for such assignments) and all
security deposits made by Seller pursuant to any of the
Leases, including, but not limited to, the security deposits
listed on the Disclosure Schedule, together with all
interest earned on such deposits.
(d) Eminent Domain. Neither Seller nor any
Stockholder has received any notice, oral or written, or has
any reason to believe, that any governmental body having the
power of eminent domain over the Real Property has commenced
or intends to exercise the power of eminent domain or a
similar power with respect to all or any part of the Real
Property.
(e) No Violations. The Real Property and the present
uses thereof comply in all material respects with all
Regulations of all governmental bodies having jurisdiction
over the Real Property, and neither Seller nor Stockholder
has received any notice, oral or written, from any
governmental body, and neither Seller nor Stockholder has
any reason to believe that the Real Property or any
improvements erected or situate thereon, or the uses
conducted thereon or therein, violate any Regulation of any
governmental body having jurisdiction over the Real
Property.
(f) Improvements. The improvements located on the
Real Property are in condition sufficient for the continued
operation of the Business as previously conducted and are
structurally sound, and no known condition exists requiring
material repairs, alterations or corrections.
(g) Executory Contracts. Set forth on Schedule 3.1.25
is a description of all executory contracts made by or on
behalf of Seller, or by which Seller is bound, with respect
to the Real Property ("Executory Contracts") including,
without limitation, operation, management, maintenance,
utility, and construction contracts. Prior to the date
hereof, Seller has delivered to Purchaser a true and
complete copy (the original execution copy, if available) of
each of the Executory Contracts.
3.1.26 Availability of Documents. Seller has made
available to Purchaser copies of all documents, including without
limitation all agreements, contracts, commitments, insurance
policies, leases, plans, instruments, undertakings,
Authorizations, permits, licenses, patents, trademarks,
tradenames, service marks, copyrights and applications therefor
listed on any schedule hereto or referred to herein. Such copies
are true and complete and include all amendments, supplements and
modifications thereto or waivers currently in effect thereunder.
3.1.27 Assets. The Assets include all rights and
property necessary to the conduct of the Business by Purchaser in
the manner it is presently conducted by Seller and no property
excluded from the Assets under Section 1.1 hereof constitutes
property or rights material to the Business, except as set forth
on Schedule 1.1.2.
3.1.28 Conditions Affecting Seller. Seller has used
its best efforts to keep available for Purchaser the services of
the employees, agents, customers and suppliers of Seller active
in the conduct of the Business.
3.1.29 Consents and Approvals. Except for consents
required by the terms of the contracts, commitments, agreements
or franchises listed in Schedule 3.1.29 hereto, the holders of
any indebtedness of Seller, the lessors or lessees of any real or
personal property or assets leased by Seller, the parties (other
than Seller) to any contract, commitment or agreement to which
Seller is a party or subject, any governmental or regulatory
official, body or authority or any other person which owns or has
authority to grant any franchise and any governmental, judicial
or regulatory official, body or authority having jurisdiction
over the Stockholder, Seller or Purchaser, to the extent that
their consent or approval is required or necessary under the
pertinent debt, lease, contract, commitment or agreement or other
document or instrument or under applicable orders, laws, rules or
regulations, for the consummation of the transactions
contemplated hereby in the manner herein provided, have granted
such consent or approval.
3.1.30 Completeness of Disclosure. No representation
or warranty by Seller or the Stockholder in this Agreement nor
any certificate, schedule, statement, document or instrument
furnished or to be furnished to Purchaser pursuant hereto, or in
connection with the negotiation, execution or performance of this
Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make any
statement herein or therein not misleading.
3.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
3.2.1 Corporate Existence. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware.
3.2.2 Corporate Power; Authorization; Enforceable
Obligations. Purchaser has the corporate power, authority and
legal right to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary corporate
action. This Agreement and the other agreements, documents and
instruments delivered by Purchaser in connection herewith (the
"Purchaser's Documents") have been duly executed and delivered by
duly authorized officers of Purchaser, and this Agreement and the
Purchaser's Documents constitute the legal, valid and binding
obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms.
3.2.3 Validity of Contemplated Transactions, etc. The
execution, delivery and performance of this Agreement by
Purchaser does not and will not violate, conflict with or result
in the breach of any term, condition or provision of, or require
the consent of any other party to, (a) any existing law,
ordinance, or governmental rule or regulation to which Purchaser
is subject, (b) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory
official, body or authority which is applicable to Purchaser, (c)
the charter documents or By-laws of, or any securities issued by,
Purchaser, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or
understanding, oral or written, to which Purchaser is a party or
by which Purchaser is otherwise bound. Except as aforesaid, no
authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery
and performance of this Agreement by Purchaser.
3.3 Survival of Representations and Warranties. All
representations and warranties made by the parties in this
Agreement or in any certificate, schedule, statement, document or
instrument furnished hereunder or in connection with negotiation,
execution and performance of this Agreement shall survive the
Closing. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon
the representations and warranties set forth herein and therein.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification by Seller and Stockholders. Except as
otherwise limited by this Article IV, Purchaser and its officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by Seller and the Stockholder,
jointly and severally, from any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments
and penalties (including, without limitation, reasonable legal
costs and expenses) suffered or incurred by any of them
(hereinafter a "Purchaser Loss"), arising out of or resulting
from:
(a) the breach of any representation or warranty by
Seller or the Stockholder contained herein or in any
exhibit, schedule or certificate delivered under this
Agreement;
(b) the breach of any covenant or agreement by Seller
or the Stockholder contained herein or in any document
delivered hereunder at the Closing;
(c) the failure of Seller to pay or otherwise
discharge the Excluded Liabilities;
(d) any violation by Seller of, or failure by Seller
to comply with, the bulk transfer laws of any state or the
fraudulent conveyance or preferential transfer laws of the
United States or any state other than with respect to
indebtedness reflected on Seller's Closing Balance Sheet; or
(e) any failure by Seller to comply with the Worker
Adjustment and Retraining Notification Act of 1988 with
respect to the termination of any employees of Seller prior
to the Closing Date.
4.2 Indemnification by Purchaser. Except as otherwise
limited by this Article IV, Seller and its officers, directors,
employees, agents, successors and assigns shall be indemnified
and held harmless by Purchaser from any and all liabilities,
losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation,
reasonable legal costs and expenses) suffered or incurred by any
of them (hereinafter a "Seller Loss") arising out of or resulting
from:
(a) the breach of any representation or warranty by
Purchaser contained herein;
(b) the breach of any covenant or agreement by
Purchaser contained herein or in any document delivered
hereunder at the Closing; or
(c) the failure of Purchaser to pay or otherwise
discharge the Assumed Liabilities.
4.3 Indemnification Procedures.
(a) For the purposes of this Section 4.3, the term
"Indemnitee" shall refer to the person indemnified, or
entitled, or claiming to be entitled, to be indemnified,
pursuant to the provisions of Section 4.1 or 4.2, as the
case may be; the term "Indemnitor" shall refer to the person
having the obligation to indemnify pursuant to such
provisions; and "Losses" shall refer to the "Seller Losses"
or the "Purchaser Losses," as the case may be.
(b) An Indemnitee shall give written notice (a "Notice
of Claim") to the Indemnitor within 30 days after the
Indemnitee has knowledge of any claim (including a Third
Party Claim, as hereinafter defined) which an Indemnitee has
determined has given or could give rise to a right of
indemnification under this Agreement. No failure to give
such Notice of Claim shall affect the indemnification
obligations of the Indemnitor hereunder, except to the
extent Indemnitor can demonstrate such failure materially
prejudiced such Indemnitor's ability to successfully defend
the matter giving rise to the claim. The Notice of Claim
shall state the nature of the claim and the amount of the
Loss, if known, and the Indemnitor shall have a period of 30
days to reply to such Notice of Claim.
(c) The obligations and liabilities of an Indemnitor
under this Article IV with respect to losses arising from
claims of any third party that are subject to the
indemnification provisions provided for in this Article IV
("Third Party Claims") shall be governed by the following
additional terms and conditions: The Indemnitee at the time
it gives a Notice of Claim to the Indemnitor of the Third
Party Claim shall advise the Indemnitor that Indemnitor
shall be permitted, at Indemnitor's option, to assume and
control the defense of such Third Party Claim at
Indemnitor's expense and through counsel of Indemnitor's
choice if Indemnitor gives notice within the 30 day period
specified above of Indemnitor's intention to do so to the
Indemnitee and confirms that the Third Party Claim is one
with respect to which the Indemnitor is obligated to
indemnify. In the event the Indemnitor exercises
Indemnitor's right to undertake the defense against any such
Third Party Claim as provided above, the Indemnitee shall
cooperate with the Indemnitor in such defense and make
available to the Indemnitor all witnesses, pertinent
records, materials and information in Indemnitee's
possession or under Indemnitee's control relating thereto as
is reasonably required by the Indemnitor and the Indemnitee
may participate by Indemnitee's own counsel and at
Indemnitee's own expense in defense of such Third Party
Claim; provided, however, that the Indemnitor shall
thereafter consult with the Indemnitee upon the Indemnitee's
reasonable request for such consultation from time to time
with respect to such Third Party Claim. Except for the
settlement of a Third Party Claim which involves the payment
of money only, no Third Party Claim for which the Indemnitor
has elected to defend may be settled by the Indemnitor
without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld or delayed. If the
Indemnitee does not receive written notice within said
period that the Indemnitor has elected to assume the defense
of such Third Party Claim, the Indemnitee may elect to
assume such defense, assisted by counsel of Indemnitee's own
choosing; provided however, the Indemnitee shall thereafter
consult with the Indemnitor upon the Indemnitor's reasonable
request for such consultation from time to time with respect
to such Third Party Claim. Whether or not Indemnitee elects
to assume the defense of such Third Party Claim, the
Indemnitor shall not be relieved of Indemnitor's obligations
hereunder. The Indemnitee will give the Indemnitor at least
15 days notice of any proposed settlement or compromise of
any Third Party Claim it has elected to defend, during which
time the Indemnitor may assume the defense of, and
responsibility for, such Third Party Claim and if it does so
the proposed settlement or compromise may not be made. In
the event the Indemnitee is, directly or indirectly,
conducting the defense against any such Third Party Claim,
the Indemnitor shall cooperate with the Indemnitee in such
defense and make available to Indemnitee all such witnesses,
records, materials and information in Indemnitor's
possession or under Indemnitor's control relating thereto as
is reasonably required by the Indemnitee and the Indemnitor
may participate by Indemnitor's own counsel and at
Indemnitor's own expense in the defense of such Third Party
Action.
(d) Any claim by an Indemnitee with respect to Losses
which do not result from a Third Party Claim will be
asserted in the same manner as specified in Section 4.3(b)
above. If the Indemnitor does not respond to such claim
within the 30 day period specified in Section 4.3(b), the
Indemnitor will be deemed to have rejected such claim, in
which event the Indemnitee will be free to pursue such
remedies as may be available to the Indemnitee under and as
limited by this Agreement.
4.4 Limits on Indemnification. No claim may be made
against Seller or the Stockholder under this Article IV for
breach of a representation or warranty contained in this
Agreement or in any exhibit, schedule or certificate delivered
under this Agreement unless and only to the extent the aggregate
of all Purchaser Losses exceed $100,000 (the "Seller Basket") and
then only with respect to that portion of Purchaser Losses which
exceed the Seller Basket; provided, however, that the Seller
Basket shall not apply with respect to Purchaser Losses to the
extent the same are incurred as the result of any breach of a
representation or warranty contained in Sections 3.1.2, 3.1.7,
3.1.10, 3.1.15, 3.1.17, 3.1.23, 3.1.24, 3.1.29, 9.1(a) or to the
extent the same relates to any one of the foregoing Sections. No
claim may be made against Purchaser under this Article IV for any
breach of a representation or warranty contained in this
Agreement or in any exhibit, schedule or certificate delivered
under this Agreement unless and only to the extent the aggregate
of all Seller Losses exceed $100,000 (the "Purchaser Basket"),
and then only with respect to that portion of Seller's Losses
which exceed the Purchaser Basket; provided, however, that the
Purchaser Basket shall not apply with respect to Seller Losses to
the extent the same are incurred as the result of any breach of a
representation or warranty contained in Sections 3.2.2 or 9.1(b).
4.5 Compliance with Bulk Sales Laws. Purchaser and Seller
hereby waive compliance by Purchaser and Seller with the bulk
sales law and any other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by this
Agreement. Seller and the Stockholder shall jointly and
severally indemnify Purchaser from, and hold it harmless against,
any liabilities, damages, costs and expenses resulting from or
arising out of (a) the parties' failure to comply with any of
such laws in respect of the transactions contemplated by this
Agreement, or (b) any action brought or levy made as a result
thereof, other than those liabilities which have been expressly
assumed, on such terms as expressly assumed, by Purchaser
pursuant to this Agreement.
4.6 Other Rights and Remedies Not Affected. The
indemnification rights of the parties under this Article IV are
independent of and in addition to such rights and remedies as the
parties may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any
agreement or covenant hereunder on the part of any party hereto,
including without limitation the right to seek specific
performance, rescission or restitution, none of which rights or
remedies shall be affected or diminished hereby.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Purchaser under this Agreement and under
any other agreement executed and delivered by Purchaser in
connection herewith are subject to the satisfaction of the
following conditions, any of which may be waived by Purchaser, to
be fulfilled and/or performed on or prior to the Closing:
5.1 Accuracy of Representations and Warranties. At the
time of Closing the representations and warranties of Seller
contained in this Agreement or in any other agreement executed
and delivered in connection herewith shall be true and correct in
all respects as though restated and made again at the time of the
Closing.
5.2 Performance of Covenants. Seller shall have complied
with all of Seller's agreements and covenants contained in this
Agreement and in any other agreement to be executed and delivered
in connection herewith.
5.3 No Material Change. Seller shall not have suffered any
damage, destruction or loss with respect to the Assets, whether
or not covered by insurance, materially and adversely affecting
the Assets, or the Business, and the Business shall have been
operated and managed in its customary and traditional manner so
as to permit Purchaser to continue its operation, without
interruption, following the Closing.
5.4 Legal Proceedings. No action or proceeding at law or
in equity shall have been commenced with respect to (i) the
transactions herein contemplated, or (ii) the right of Purchaser
to conduct its operations and operate the Business using the
Assets subsequent to the Closing.
5.5 Licenses and Permits. Purchaser shall have obtained
all required governmental approvals, authorizations, consents,
licenses, orders, registrations and permits of all agencies
whether federal, state or local, necessary for the operation of
the Business by Purchaser and which may be obtained prior to
Closing. Purchaser shall pursue all such matters diligently and
in good faith.
5.6 Environmental and Structural Inspection. The Real
Property shall, prior to Closing, have passed an environmental
and structural inspection to Purchaser's satisfaction with such
inspection at Purchaser's cost. This condition shall be deemed
satisfied unless Purchaser notifies Seller to the contrary within
14 days after the date hereof.
5.7 Title Insurance. Purchaser shall have received at its
own cost within ten (10) days prior to Closing a commitment to
insure title to the Real Property being sold to Purchaser from a
title insurance company acceptable to Purchaser. Such commitment
shall be for an ALTA Owner's Policy of Title Insurance (Form B,
rev. 10/17/70) in such amount as Purchaser reasonably determines
insuring fee simple title to such Real Property and the
improvements thereon subject only to such exceptions as are
acceptable to Purchaser. In the event Purchaser has not obtained
such commitment within ten (10) days prior to Closing, Purchaser
shall notify Seller and the Closing shall be extended for up to
thirty (30) days, but no more than ten (10) days after
Purchaser's receipt of such commitments. In the event such
commitment contains any exceptions which are unacceptable to
Purchaser, Purchaser shall within three (3) business days of
receipt thereof notify Seller and have the right to: (i) to
terminate this Agreement and declare it void; (ii) to waive its
objections; or (iii) to request Seller to take reasonable efforts
to cure such objections, in which case the Closing shall be
extended for a reasonable time not exceeding thirty (30) days.
5.8 Consulting and Noncompetition Agreement. Claude Cason,
Jr. shall have entered into a Consulting and Noncompetition
Agreement with Purchaser in the form of Exhibit C hereto.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement and under any
other agreement executed and delivered by Seller in connection
herewith are subject to the satisfaction of the following
conditions, any of which may be waived by Seller, to be fulfilled
and/or performed on or prior to Closing:
6.1 Accuracy of Representations and Warranties. At the
time of the Closing, the representations and warranties of
Purchaser contained in this Agreement or in any other agreement
executed and delivered in connection herewith shall be true and
correct in all respects as though restated and made again at the
time of the Closing.
6.2 Performance of Covenants. Purchaser shall have
complied with all of its covenants contained in this Agreement
and in any other agreement executed and delivered in connection
herewith.
6.3 Legal Proceeding. No action or proceeding at law or in
equity shall have been commenced (other than by Seller) with
respect to the transactions herein contemplated.
6.4 Consulting and Noncompetition Agreement. Purchaser
shall have entered into a Consulting and Noncompetition Agreement
with Claude Cason, Jr. in the form of Exhibit C.
ARTICLE VII
OTHER MATTERS
7.1 Access to Information. From the date hereof and until
the Closing, Seller will afford to Purchaser and Purchaser's
authorized representatives reasonable access to the officers,
management and employees of Seller and the Related Parties and
will make available to Purchaser such additional information
pertaining to the Assets and Business as Purchaser may reasonably
request.
7.2 No Shopping. From the date hereof and until the
Closing, Seller will not, directly or indirectly, solicit or
encourage (including by way of furnishing any nonpublic
information) any proposal for any acquisition of any portion of
the Business or Assets. If Seller receives any proposal for the
acquisition of any portion of the Business or Assets, Seller
shall promptly notify Purchaser of such proposal and the terms
thereof.
7.3 Relocation of Lines. Prior to Closing, Seller shall
breakdown and relocate (i) Seller's No. 6 line from Seller's
Elkhart, Indiana plant to Seller's Clare, Michigan plant and (ii)
Seller's other Elkhart, Indiana lines to Seller's Richmond,
Indiana plant. Within 90 days after Closing, Purchaser shall
breakdown Seller's three Promat lines so that Seller may relocate
the same to Seller's Knoxville, Tennessee plant, and Purchaser
shall notify Seller of such activities so that Seller may observe
the same.
7.4 Employee Benefits. Except to the extent included in
Seller's Closing Balance Sheet, Seller shall pay directly to each
employee of the Business that portion of all benefits (including
the arrangements, plans and programs set forth in Schedule
3.1.22) which has been accrued on behalf of that employee (or is
attributable to expenses incurred by that employee) as of the
Closing Date, and Purchaser shall assume no liability therefor.
No portion of the assets of any plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or
maintained by Seller (and no amount attributable to any such
plan, fund, program or arrangement) shall be transferred to
Purchaser, and Purchaser shall not be required to continue any
such plan, fund, program or arrangement after the Closing Date.
The amounts payable on account of all benefit arrangements shall
be determined with reference to the date of the event by reason
of which such amounts become payable, without regard to
conditions subsequent, and Purchaser shall not be liable for any
claim for insurance, reimbursement or other benefits payable by
reason of any event which occurs prior to the Closing Date. All
amounts payable directly to employees, or to any fund, program,
arrangement or plan maintained by Seller therefor shall be paid
by Seller within 30 days after the Closing Date to the extent
that such payment is not inconsistent with the terms of such
fund, program, arrangement or plan. All employees of Seller who
are employed by Purchaser on or after the Closing Date shall be
new employees of Purchaser, but any prior employment by Seller of
such employees shall be counted in determining eligibility for
any employee benefits offered by Seller.
7.5 Employees. As of the Closing Date, Purchaser shall
offer employment to, and Seller shall use its best efforts to
assist Purchaser in employing as new employees of Purchaser, all
persons presently engaged in the business who are identified by
Purchaser prior to the Closing Date (the "Employees"). Seller
shall terminate effective as of the Closing Date all employment
agreements it has with any of the Employees.
7.6 Discharge of Business Obligations. From and after the
Closing Date Seller shall pay and discharge, in accordance with
past practice but not less than on a timely basis, all
obligations and liabilities incurred prior to the Closing Date in
respect of the Business, its operations or the assets and
properties used therein (except for those expressly assumed by
Purchaser hereunder), including without limitation any
liabilities or obligations to employees, trade creditors and
customers of the Business.
7.7 Maintenance of Books and Records. Each of Seller and
Purchaser shall preserve until the seventh anniversary of the
Closing Date all records possessed or to be possessed by such
party relating to any of the assets, liabilities or business of
the Business prior to the Closing Date. After the Closing Date,
where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to
(a) the officers and employees of such party and (b) the books of
account and records of such party, but, in each case, only to the
extent relating to the assets, liabilities or business of the
Business prior to the Closing Date, and the other parties and
their representatives shall have the right to make copies of such
books and records; provided, however, that the foregoing right of
access shall not be exercisable in such a manner as to interfere
unreasonably with the normal operations and business of such
party; and further provided, that, as to so much of such
information as constitutes trade secrets or confidential business
information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose
such information except (i) as required by law, (ii) with the
prior written consent of such party, which consent shall not be
unreasonably withheld, or (iii) where such information becomes
available to the public generally, or becomes generally known to
competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other parties written notice of
its intent to destroy records, specifying with particularity the
contents of the records to be destroyed. Such records may then
be destroyed after the 30th day after such notice is given unless
another party objects to the destruction, in which case the party
seeking to destroy the records shall deliver such records to the
objecting party.
7.8 Payments Received. Seller and Purchaser each agree
that after the Closing they will hold and will promptly, but in
any event within 10 days, transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with
appropriate endorsements (using their best efforts not to convert
such checks into cash), or other property that they may receive
on or after the Closing which properly belongs to the other
party, including without limitation any insurance proceeds, and
will account to the other for all such receipts. From and after
the Closing, Purchaser shall have the right and authority to
endorse without recourse the name of Seller on any check or any
other evidences of indebtedness received by Purchaser on account
of the Business and the Assets transferred to Purchaser
hereunder.
7.9 Covenant Not to Compete.
(a) Seller agrees that for a period of five years
after the Closing Date, neither Seller nor any of its
affiliates will, directly or indirectly, as a partner, joint
venturer, employer, employee, consultant, shareholder,
principal, agent or otherwise, own, manage, operate, join,
control or participate in the ownership, management,
operation or control of any business, whether in corporate,
proprietorship or partnership form or otherwise, as more
than a five percent owner in such business, which is in any
way involved in the Business in the United States. The
parties hereto specifically acknowledge and agree that the
remedy at law for any breach of the foregoing will be
inadequate and that the Purchaser, in addition to any other
relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving
actual damage.
(b) From and after the date of this Agreement, neither
Seller nor any of its affiliates shall, directly or
indirectly, disclose or use for their own benefit, or for
the benefit of any other person, any information relating to
the Business or the Assets, except to the extent such
disclosure may be required by law.
(c) Seller acknowledges that in view of the nature of
the Business and the business objectives of Purchaser in
acquiring it, and the consideration paid to Seller and the
Stockholders therefor, the territorial and time limitations
contained in subsection (a) of this Section 7.9 are
reasonable and properly required for the adequate protection
of Purchaser and that in the event that any such territorial
or time limitation is deemed to be unreasonable and is then
reduced by a court of competent jurisdiction, then, as
reduced, the territorial and/or time limitation shall be
enforced. Subsections (a) and (b) of this Section 7.9
constitute independent and severable covenants and if any or
all of the provisions of either thereof are held to be
unenforceable for any reason whatsoever, it will not in any
way invalidate or affect the remainder of this Agreement,
which will remain in full force and effect. The parties
intend for the covenants of subsections (a) and (b) of this
Section 7.9 to be enforceable to the maximum extent
permitted by law, and if any reviewing court deems any of
such covenants to be unenforceable or invalid, Purchaser and
Seller authorize such court to reform (i) the unenforceable
or invalid provisions and to impose such restrictions as
reformed and (ii) the remaining provisions as it deems
reasonable. Nothing herein shall prohibit Seller from
engaging in (i) the existing business of Seller's Promat
division or (ii) producing extruded plastic sheet which has
rubber laminated to it as part of a Promat package.
7.10 Publicity. Prior to the fifth anniversary of the
Closing Date, none of Purchaser, Seller or the Stockholder shall,
nor shall any of them permit their respective then current
employees, agents, representatives or affiliates to, make or
cause to be made, any oral or written disclosure concerning the
Purchase Price paid or the other terms and conditions of the
transactions contemplated by this Agreement, without the prior
written consent of the other parties hereto. This provision
shall not apply to any disclosure required to be made by law or
applicable stock exchange rule.
7.11 Completion of Schedules and Exhibits. The parties
hereto acknowledge that this Agreement has been executed prior to
the preparation of the Schedules and Exhibits hereto. Seller
agrees to proceed with all due diligence to cause the preparation
of such Schedules by January 17, 1994. Upon review and
acceptance of such Schedules and Exhibits by Purchaser, such
Schedules and Exhibits shall be attached to this Agreement and
initialled by authorized representatives of each party hereto.
ARTICLE VIII
TERMINATION
8.1 This Agreement and the transactions contemplated herein
may be terminated and abandoned at any time prior to the Closing
under the following circumstances:
(a) By mutual consent of the Sellers and Purchaser.
(b) By either Seller or Purchaser by notice to the
other if the Closing shall not have taken place on
or prior to February 15, 1994.
(c) By the party adversely affected in the event of
any of the conditions set forth in Articles V and
VI have not been fulfilled and the performance has
not been waived by such party.
(d) By Purchaser by notice to Seller if all Schedules
and Exhibits have not been completed and accepted
pursuant to Section 7.11 hereof.
8.2 If the Agreement is terminated under this Article VIII,
the parties shall have no further liability to each other by
reason of such termination, except that if any party hereto
knowingly or wilfully breaches or defaults in any of its
representations, warranties or covenants, the other party
adversely affected may at its option seek and exercise all
remedies permitted by law and seek to recover attorneys' fees and
other expenses related to the exercise of the foregoing remedies.
ARTICLE IX
MISCELLANEOUS
9.1 Brokers' and Finders' Fees.
(a) Seller and the Stockholder represent and warrant
to Purchaser that all negotiations relative to this
Agreement have been carried on by them directly without the
intervention of any person who may be entitled to any
brokerage or finder's fee or other commission in respect of
this Agreement or the consummation of the transactions
contemplated hereby, and Seller and the Stockholder jointly
and severally agree to indemnify and hold harmless Purchaser
against any and all claims, losses, liabilities and expenses
which may be asserted against or incurred by it as a result
of Seller's or the Stockholder's dealings, arrangements or
agreements with any such person.
(b) Purchaser represents and warrants that all
negotiations relative to this Agreement have been carried on
by it directly without the intervention of any person who
may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation
of the transactions contemplated hereby, and Purchaser
agrees to indemnify and hold harmless Seller and the
Stockholder against any and all claims, losses, liabilities
and expenses which may be asserted against or incurred by
them as a result of Purchaser's dealings, arrangements or
agreements with any such person.
9.2 Sales, Transfer and Documentary Taxes. etc. The
transactions contemplated by this Agreement shall be reported by
Purchaser and Seller as an occasional sale for sales, use or
transfer tax purposes. Nonetheless, if any sales, use or
transfer taxes are payable, such taxes shall be paid by the party
upon whom such tax liability is imposed by law, or, if the tax
law does not so provide, then by the party who customarily has
such liability in accordance with local practice. Recording and
other similar fees shall be paid by the party who customarily
pays such fees in accordance with local practice.
9.3 Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out
of the provisions of this Agreement and the consummation of the
transactions contemplated hereby.
9.4 Setoff. In the event that any party hereto (an
"Obligee") shall have any claim against any other party hereto
(an "Obligor") for any amount due in accordance with the
provisions of this Agreement, including without limitation
Article IV hereof, which amount shall not have been paid, then
the Obligee shall have the right, notwithstanding any other
rights the Obligee may have against any other person, firm or
corporation, to set off the unpaid amount of any such claim
against any amounts owed by the Obligee to the Obligor under this
Agreement or any agreement contemplated hereby.
9.5 Contents of Agreement; Parties in Interest; etc. This
Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by written instrument
duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or
oral, including but not limited to the letter of intent between
Purchaser and Seller dated December 15, 1993, are superseded by
this Agreement.
9.6 Assignment and Binding Effect. This Agreement may not
be assigned prior to the Closing by any party hereto without the
prior written consent of the other parties, provided that
Purchaser may assign this Agreement to a subsidiary or affiliate
if such assignment does not relieve Purchaser of its obligations
hereunder. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns
of the Stockholder, Seller and Purchaser.
9.7 Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof
by a written instrument duly executed by such party.
9.8 Notices. All notices required to be given under the
terms of this Agreement or which any of the parties desires to
give hereunder shall be in writing and delivered personally or
sent by registered or certified mail, postage prepaid, return
receipt requested or sent by facsimile (and confirmed by
registered or certified mail), each addressed as follows:
(a) As to Seller and
the Stockholder: Product Components, Inc.
4815 Woodride Drive
Richmond, Indiana 47374
Attn: Claude Cason, Jr.
Fax: (317) 935-4685
with a copy to: Christopher W. Martin, Esq.
Ayres & Parkey
One Centre Square, Suite 650
Knoxville, Tennessee 37901
Fax: (615) 637-6050
(b) As to Purchaser: Spartech Corporation
7777 Bonhomme, Suite 1001
Clayton, Missouri 63105
Attn: President
Fax: (314) 721-1447
with a copy to: Joseph S. von Kaenel, Esq.
Armstrong, Teasdale, Schlafly
& Davis
One Metropolitan Sq., #2600
St. Louis, Missouri 63102
Fax: (314) 621-5065
or to such other address and to the attention of such other
person as the party to whom such notice is to be given may have
theretofore designated in a notice to the other party hereto,
except that Purchaser shall not be required to notify more than
one person at more than one address to give notice to both Seller
and the Stockholders. Any notice given in accordance with the
foregoing shall be deemed to have been given when delivered in
person or received by facsimile or, if mailed, on the second
business day next following the date on which it shall have been
deposited in the mails.
9.9 Missouri Law to Govern. This Agreement shall be
governed by and interpreted and enforced in accordance with the
internal laws of the State of Missouri.
9.10 No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Agreement
are for the sole benefit of the parties hereto and, in the case
of Article IV hereof, the other Indemnitees, and their heirs,
executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights
on any other persons.
9.11 Headings, Gender and "Person." All section headings
contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect
in any way the meaning or interpretation of this Agreement.
Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires. Any
reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body,
association, unincorporated organization or any others entity.
9.12 Schedules and Exhibits. All schedules and exhibits
referred to herein are intended to be and hereby are specifically
made a part of this Agreement.
9.13 Severability. Any provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
9.14 Counterparts. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such
counterpart, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This
Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the
parties. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
9.15 Guarantee. The Stockholder hereby unconditionally
guarantees to Purchaser and its affiliates the full and timely
performance of all of the obligations and agreements of Seller
hereunder. The foregoing guarantee shall include the guarantee
of the payment of all damages, costs and expenses which might
become recoverable as a result of the nonperformance of any of
the obligations or agreements so guaranteed or as a result of the
nonperformance of this guarantee. Any guaranteed person may, at
its option, proceed against the Stockholder for the performance
of any such obligation or agreement, or for damages for default
in the performance thereof, without first proceeding against any
other party or against any of its properties. The Stockholder
further agrees that his guarantee shall be an irrevocable
guarantee and shall continue in effect notwithstanding any
extension or modification of any guaranteed obligation, any
assumption of any such guaranteed obligation by any other party,
or any other act or thing which might otherwise operate as a
legal or equitable discharge of a guarantor and the Stockholder
hereby waives all special suretyship defenses and notice
requirements. Anything herein to the contrary notwithstanding,
the amount of the Stockholder's liability under this Section 9.15
shall be limited to the unpaid amount due the Stockholder under
the Consulting and the Noncompetition Agreement provided for in
this Agreement.
9.20 Affiliate. For purposes of this Agreement, the term
"affiliate" when used with respect to a party shall mean any
other party directly or indirectly controlled by, under common
control with or in control of such party.<PAGE>
IN WITNESS WHEREOF,
the parties have duly executed this Agreement as of the day and
year first above written.
SPARTECH CORPORATION STOCKHOLDER:
By:/s/ Bradley B. Buechler /s/ Claude Cason, Jr.
Name: Claude Cason, Jr.
Title: President and
Chief Executive
Officer
PRODUCT COMPONENTS, INC.
By:/s/ Claude Cason, Jr.
Name:
Title: President
<PAGE>
EXHIBIT 99<PAGE>
Company Contacts:
Bradley B. Buechler, President
and Chief Executive Officer
David B. Mueller, V.P. of Finance
and Chief Financial Officer
For Immediate Release:
Thursday, February 3, 1994
SPARTECH CORPORATION ACQUIRES
NET ASSETS OF PRODUCT COMPONENTS, INC.
ST. LOUIS, MISSOURI, February 3, 1994 -- Spartech Corporation
(AMEX-SEH) announced today that it completed its purchase of the net
assets of Product Components, Inc. ("ProCom"), a long established
manufacturer of rigid plastic sheet & rollstock, which has two
manufacturing plants and annual sales of approximately $25-$30 million.
Bradley B. Buechler, Spartech's President and Chief Executive
Officer, stated that, "This purchase is of pivotal importance in the
further expansion of the Company's national rigid sheet & rollstock
group, Spartech Plastics; it adds two new locations and significantly
improves our position in the growing polyolefin market. ProCom's two
mideastern U.S. locations, Richmond, Indiana and Clare, Michigan, will
operate as Spartech Plastics facilities in the future, expanding the
division to eight extrusion plants strategically situated throughout
the country."
Mr. Buechler further stated, "Spartech Plastics now has total
production capacity of more than 225 million pounds with projected
annual sales over the next twelve months of nearly $190 million, or
approximately 20% of the $900 million U.S. custom rigid sheet &
rollstock market. The acquisition price, exclusive of working capital
requirements, was approximately $8 million."
-more-
David B. Mueller, Spartech's Vice President of Finance and Chief
Financial Officer, stated, "Assuming volumes continue at current
levels, Spartech Corporation's total annualized sales (including our
merchant compounding division) will approximate $235 million, with
operating earnings of around $13.5 million. Spartech plans on putting
additional manufacturing equipment and capital into the newly acquired
operations over the next twelve months. Claude Cason, ProCom's prior
owner, will be a consultant to Spartech's rigid sheet & rollstock group
for the next few years, with Pat Fleming, who recently joined the
Company, becoming General Manager for Spartech Plastics' new mideastern
region."
-30-
