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 6, 1995
________________________________________
THERMO PROCESS SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation or
organization)
12068 Market Street 48150
Livonia, Michigan (Zip Code)
(Address of principal executive offices)
(617) 622-1000
(Registrant's telephone number
including area code)
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Item 2. Acquisition or Disposition of Assets
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On February 6, 1995, Thermo Process Systems Inc. (the "Company")
acquired all of the issued and outstanding capital stock of Engineering,
Technology and Knowledge Corporation ("ETKC") from Nord Est S.A., a French
industrial company ("Nord Est"). ETKC's sole subsidiary, Elson T. Killam
Associates, Inc. ("Killam Associates"), is a leading provider of
comprehensive environmental consulting and professional engineering
services in New Jersey, Pennsylvania, Ohio and New York.
The purchase price for ETKC's stock was $12.5 million in cash and a
zero coupon promissory note with a face value of $28 million and a present
value of $22.3 million, payable in February and May, 1998. The purchase
price is subject to a post-closing adjustment, and will either be (i)
increased by the amount by which ETKC's net tangible book value as of
January 29, 1995 exceeds $9,920,000; or (ii) decreased by the amount by
which $9,920,000 exceeds ETKC's net tangible book value as of such date.
In addition, the Company has guaranteed the payment by ETKC and/or Killam
Associates of approximately $1.7 million in indebtedness. The Company has
also agreed to pay, after the third anniversary date of the closing, an
amount equal to 30% of the amount by which ETKC's cumulative net income for
the three-year period ending on such anniversary, after taxes, depreciation
and goodwill, exceeds $13 million.
In a related transaction, certain members of Killam Associates' senior
management (the "Killam Management") exchanged outstanding options to
purchase shares of Killam Associates' capital stock for options to purchase
an aggregate of 847,678 shares of the Company's common stock. Additional
options to purchase shares of Killam Associates' capital stock were
canceled in exchange for cash payments to the Killam Management in the
aggregate amount of approximately $1.9 million.
The acquisition was made pursuant to a Stock Purchase and Sale
Agreement (the "Agreement") entered into on February 6, 1995, to be
effective as of January 29, 1995, among the Company, Nord Est and the
Killam Management. The purchase price was based on the Company's
determination of the fair market value of Killam Associate's business, and
the terms of the Agreement were determined by arms' length negotiation
among the parties.
The Company has no present intention to use ETKC's plant, equipment or
other assets for purposes materially different from the purposes for which
such assets were used prior to the acquisition. However, the Company will
review ETKC's business and assets, corporate structure, capitalization,
operations, properties, policies, management and personnel and, upon
completion of this review, may develop alternative plans or proposals,
including mergers, transfers of a material amount of assets or other
transactions or changes relating to such business.
ETKC had consolidated gross revenues and operating profits (before
non-recurring items, interest and taxes) of approximately $40.2 million and
$3.4 million, respectively, for the year ended December 31, 1993. ETKC's
consolidated gross revenues and operating profits are estimated to be $42.0
million and $5.6 million, respectively, for the year ended December 31,
1994.
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Item 2. Acquisition or Disposition of Assets (continued)
The Company borrowed the cash portion of the purchase price, including
cash used to collateralize the promissory note delivered to Nord Est, from
Thermo Electron Corporation pursuant to a $38 million promissory note due
June 1, 1997. Thermo Electron Corporation indirectly owns approximately 80%
of the outstanding capital stock of the Company.
Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Financial Statements of Business Acquired: as it is
impracticable to file such information at this time, it will
be filed by amendment on or prior to April 21, 1995.
(b) Pro Forma Combined Condensed Financial Information: as it is
impracticable to file such information at this time, it will
be filed by amendment on or prior to April 21, 1995.
(c) Exhibits
1. Stock Purchase and Sale Agreement made and entered into on
February 6, 1995, to be effective as of January 29, 1995,
by and between Nord Est S.A., Thermo Process Systems Inc.,
and Emil C. Herkert, Kenneth L. Zippler, Franklin O.
Williamson, Jr., Fletcher N. Platt, Jr., Eugene J.
Destefano, Meint Olthof and Stanley P. Kaltnecker, Jr.
2. $28,000,000 Secured Promissory Note dated as of January
29, 1995 issued by Thermo Process Systems Inc. to Nord Est
S.A.
3. $38,000,000 Promissory Note dated as of February 21, 1995
issued by Thermo Process Systems Inc. to Thermo Electron
Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized, on this 21st day of February
1995.
THERMO PROCESS SYSTEMS INC.
/s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
STOCK PURCHASE AND SALE AGREEMENT
by and among
Nord Est S.A.
(as Seller),
Thermo Process Systems Inc.
(as Buyer)
and
Emil C. Herkert
Kenneth L. Zippler
Franklin O. Williamson, Jr.
Fletcher N. Platt, Jr.
Eugene J. Destefano
Meint Olthof
Stanley P. Kaltnecker, Jr.
(collectively, Management)
Effective as of January 29, 1995
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STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement is made and entered
into on February 6, 1995, to be effective as of January 29, 1995,
by and between Nord Est S.A., a French societe anonyme (the
"Seller"), Thermo Process Systems Inc., a Delaware corporation
(the "Buyer"), and Emil C. Herkert, Kenneth L. Zippler, Franklin
O. Williamson, Jr., Fletcher N. Platt, Jr., Eugene J. Destefano,
Meint Olthof and Stanley P. Kaltnecker, Jr. (such individuals,
individually and collectively, "Management").
WITNESSETH:
WHEREAS, Seller owns 100% of the issued and outstanding
shares (the "Shares") of the capital stock of Engineering
Technology and Knowledge Corporation, a Delaware corporation
("ETKC");
WHEREAS, ETKC owns 100% of the issued and outstanding shares
of the capital stock of Elson T. Killam Associates, Inc., a New
Jersey corporation ("Killam");
WHEREAS, Buyer wishes to purchase, and Seller wishes to
sell, the Shares, upon the terms and conditions herewith set
forth below; and
WHEREAS, Management collectively own options to purchase
shares of the capital stock of Killam representing, in the
aggregate, 1,590 shares of the outstanding capital stock of
Killam, and Buyer also wishes to make or cause to be made payment
to Management in cancellation of certain of such options, and
exchange the remaining portion of such options for options to
acquire common stock of Buyer;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, agreements and provisions herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
Section 1.1. Delivery of Outstanding Shares. At the
Closing (as defined in Section 2.1 hereof), and subject to the
terms and conditions contained in this Agreement, Seller shall
transfer to Buyer and Buyer shall acquire from Seller, effective
as of the close of business on January 29, 1995 (the "Effective
Date"), all right, title and interest in and to the Shares, free
and clear of all liens, encumbrances, charges, equities or
restrictions.
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Section 1.2. Purchase Price. In exchange for the Shares,
and subject to the terms and conditions contained in this
Agreement, Buyer shall:
(a) pay to Seller at the Closing $12,500,000 in cash
(the "ETKC Cash Consideration"), plus interest on $34,800,000
from the Effective Date through the date of the Closing (the
"Closing Date"); and
(b) deliver to Seller at the Closing Buyer's
promissory note, in the form set forth as Exhibit A to this
Agreement (the "Note"), representing the obligation of Buyer to
pay to Seller $28,000,000 in cash, net of any withholding
obligation.
Section 1.3. Adjustment to the Purchase Price.
(a) Within 90 days after the Closing Date, Buyer and
Seller shall jointly prepare a consolidated balance sheet of ETKC
and its subsidiaries as of the Effective Date (the "Effective
Date Balance Sheet"). The Purchase Price, as defined below,
shall then be either (i) increased by the amount by which the Net
Tangible Book Value of ETKC (as defined below) as calculated from
the Effective Date Balance Sheet exceeds $9,920,000; or (ii)
decreased by the amount by which $9,920,000 exceeds the Net
Tangible Book Value of ETKC as calculated from the Effective Date
Balance Sheet (such amount, as the case may be, the "Price
Adjustment").
(b) Within 10 days after determination of the Price
Adjustment, Buyer or Seller, as the case may be, shall pay the
amount thereof to the other, by certified or bank check in New
York Clearing House Funds or by wire transfer to such account as
the recipient may specify, together with interest from the
Effective Date, calculated at a rate equal to the rate announced
from time to time by First National Bank of Boston as its "base
rate" (or the legal rate of interest, if lower).
(c) If Buyer and Seller are unable to agree to the
Price Adjustment by the close of business on the 90th day after
the Closing Date, then the parties shall retain Arthur Andersen
L.L.P. to resolve any dispute between them and the Price
Adjustment determined by Arthur Andersen L.L.P. shall be binding
upon the parties. Buyer and Seller shall each be responsible for
one-half of Arthur Andersen L.L.P.'s fees and expenses.
(d) For purposes of this Agreement, the term "Net
Tangible Book Value of ETKC" shall be determined in accordance
with generally accepted accounting principles consistently
applied (except that in determining such book value, no provision
shall be included for a general tax reserve) and shall be defined
as (i) the consolidated shareholder's equity of ETKC and its
subsidiaries as of December 31, 1993, plus (ii) the net income of
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ETKC and its subsidiaries for the period beginning on January 1,
1994 and ending as of the close of business on the Effective Date
(before taking into account any charge for compensation expense
or other costs or expenses related to Killam's stock option
program (including without limitation payments made in respect of
the cancellation of options currently outstanding under such
stock option program), the Buyer Options, as such term is defined
below, contemplated to be issued in place of the options
outstanding under Killam's stock option program, any of the
transactions contemplated in Section 4.9 hereof and charges for
post-retirement healthcare costs), less (iii) goodwill on the
consolidated balance sheet of ETKC and its subsidiaries as of the
Effective Date, less (iv) the amount reflected on such balance
sheet for the "building option" at the Effective Date, less (v)
$1,500,000 (representing an amount agreed by Seller and Buyer to
equal the anticipated costs of ETKC's future post-retirement
health care obligations as of the Effective Date). For purposes
of determining the Net Tangible Book Value of ETKC, there shall
be accrued on the Effective Date Balance Sheet cash bonuses
payable to management personnel of Killam and its Subsidiaries,
including Management, in the amount of $700,000 for the period
from January 1, 1994 through December 31, 1994 and $30,000 for
the period from January 1, 1995 through and including the
Effective Date. In addition, certain fees and expenses incurred
in connection with the consummation of the transactions
contemplated hereby, including without limitation certain
payments to be made to Management pursuant to that certain Letter
Agreement dated January 24, 1995 among Management and Seller (the
"Letter Agreement"), fees and expenses payable to Gerschel &
Company, Inc., Compagnie Financiere de Paribas or its affiliates
and Environmental Financial Consulting Group, as well as certain
legal fees and expenses, may be paid by ETKC or its subsidiaries
on or before the Closing Date as Seller in its discretion may
determine; provided, however, that such fees and expenses shall
be accrued for in the Effective Date Balance Sheet.
(e) Any adjustments made pursuant to this Section 1.3
shall not be charged against the deductible described in Section
5.3(a).
Section 1.4. Earn-Out. Buyer shall pay, as soon as
practicable after the third anniversary of the Effective Date,
and in any event within 90 days after such third anniversary, (a)
to Seller, an amount, net of any withholding obligation, equal to
24% of the amount by which ETKC's cumulative net income for the
three-year period ending on such third anniversary exceeds
$13,000,000 and (b) to Management, an amount, net of any
withholding obligation, equal to 6% of the amount by which ETKC's
cumulative net income for the three-year period ending on such
third anniversary exceeds $13,000,000 (such payments,
collectively, the "Earn-Out"). For purposes of this Agreement,
ETKC's "net income" shall mean the net income of ETKC and its
subsidiaries, or their successors-in-interest, earned from the
business operated by ETKC as of the Effective Date (the
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"Business") (excluding income from extraordinary transactions),
as measured in accordance with Buyer's usual accounting
procedures consistently applied, after taxes, depreciation,
goodwill (including goodwill associated with the acquisition of
ETKC by Buyer) and payment of the annual management fee to Thermo
Electron Corporation, Buyer's parent corporation ("Thermo
Electron"), in an amount not to exceed 1.5% of ETKC's gross
revenues per year; provided that such accounting procedures are
consistent with generally accepted accounting principles.
Section 1.5. Cancellation and Exchange of Killam Options.
At the Closing, and subject to the terms and conditions contained
in this Agreement, Management shall (i) cancel options to
purchase that number of shares of the capital stock of Killam as
is set forth opposite such member of Management's name in Column
1 of Schedule 1.5 hereto (the "Killam Canceled Options"), and
(ii) execute and deliver to Buyer an option exchange agreement in
the form of Exhibit B hereto ("Option Agreement"), pursuant to
which each member of Management will exchange the number of
options to purchase shares of Killam's capital stock set forth
opposite such member of Management's name in Column 2 of Schedule
1.5 hereto (the "Killam Options") for options to purchase such
number of shares of Buyer's common stock, $.10 par value per
share, as is set forth opposite such member of Management's name
in Column 3 of Schedule 1.5 hereto (the "Buyer Options"). In
exchange for the Killam Canceled Options, Buyer agrees to pay
Killam at the Closing and cause Killam to pay to Management, the
day following the Closing, in cash, the amount set forth
opposite such member of Management's name in Column 4 of Schedule
1.5 hereto (the "Killam Cash Consideration").
ARTICLE 2
CLOSING
Section 2.1. Time and Place of Closing. The closing of the
transactions contemplated by this Agreement (the "Closing") shall
take place immediately upon the execution of this Agreement by
all of the parties hereto.
Section 2.2. Action to be Taken by Buyer at the Closing.
At the Closing, in addition to the taking of such other action as
may be provided in this Agreement, Buyer shall (i) deliver the
ETKC Cash Consideration and the Note (collectively, the "Purchase
Price") to Seller, (ii) execute and deliver a custody agreement
in the form of Exhibit C hereto (the "Custody Agreement"), (iii)
execute and deliver a pledge agreement in the form of Exhibit C-2
(the "Pledge Agreement") (iv) deliver to the custodian under the
Custody Agreement (the "Custodian") a U.S. Treasury security the
material economic terms of which are identical to those of the
Note, together with a stock power executed in blank with
signature guarantees in proper form for the transfer of such
security, as security for the payment of the Note by Buyer, (v)
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deliver the Killam Cash Consideration to Killam (vi) execute and
deliver to Management an amendment in the form of Exhibit D
hereto (the "Amendment Agreement") to that certain Shareholders'
Agreement dated January 29, 1995 (the "Shareholders' Agreement"),
(vii) cause ETKC and its subsidiaries to execute and deliver to
the individuals listed in Schedule 2.2 Release and
Indemnification Agreements in the form of Exhibit D-1, (viii)
execute and deliver to Management the Option Agreements, and (ix)
deliver the closing certificates, documents and opinions of
counsel as may be requested by counsel to Seller and Management.
Section 2.3. Action to be Taken by Seller at the Closing.
At the Closing, in addition to the taking of such other action as
may be provided in this Agreement, (i) Seller shall deliver
certificates for the Shares to Buyer, duly endorsed to Buyer or
accompanied by duly executed stock powers, (ii) Seller shall
execute and deliver the Custody Agreement, (iii) Seller shall
deliver to Buyer copies of the Certificate of Incorporation of
ETKC and of Killam, as amended to date, certified by the
Secretary of State of the States of Delaware and New Jersey,
respectively, and copies of the bylaws of ETKC and of Killam, as
amended to date, certified by an officer of ETKC and Killam,
respectively, (iv) Seller shall pay to Management $100,000 in
cash, as provided for in paragraph 1 of the Letter Agreement, (v)
Seller shall deliver to Buyer duly executed letters of
resignation, effective as of the Closing Date, of all directors
and officers of ETKC and of each of its subsidiaries, and (vi)
Seller shall deliver to Buyer the closing certificates, documents
and opinions of counsel as may be requested by counsel to Buyer.
Section 2.4. Action to be Taken by Management at the
Closing. At the Closing, in addition to the taking of such other
action as may be provided in this Agreement, Management shall (i)
execute and deliver to Buyer option cancellation certificates in
the form of Exhibit E hereto (the "Option Cancellation
Certificates"), (ii) execute and deliver to Buyer the Option
Agreements, (iii) execute and deliver to Buyer noncompetition
agreements in the form of Exhibit F hereto ("Noncompetition
Agreements"), (iv) execute and deliver to Buyer the Amendment
Agreement, and (v) deliver the closing certificates, documents
and opinions of counsel as may be requested by counsel to Buyer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Seller.
Seller represents and warrants to Buyer that, as of the Closing
Date, except as set forth on the disclosure schedule attached
hereto as Exhibit G (the "Disclosure Schedule"):
(a) Authority. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
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hereby to be performed by Seller, have been duly and validly
authorized by all necessary corporate action on the part of
Seller. This Agreement and the Escrow Agreement constitute valid
and binding obligations of Seller enforceable against Seller in
accordance with the terms hereof and thereof, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the rights of creditors or by general principles of equity.
Neither the execution, delivery and performance of this Agreement
by Seller, nor the consummation of the transactions contemplated
hereby will (i) conflict with or result in a violation, breach,
termination or acceleration of, or default under (or would result
in such a violation, breach, termination, acceleration or default
with the giving of notice or passage of time, or both) any of the
terms, conditions or provisions of the charter documents or
bylaws of Seller or the certificate of incorporation or bylaws of
ETKC or the certificate of incorporation or bylaws of Killam,
each as amended, or of any note, bond, mortgage, indenture,
agreement or other instrument or obligation to which Seller or,
to the knowledge of Seller, ETKC or Killam is a party or by which
Seller or, to the knowledge of Seller, ETKC or Killam, or any of
their respective properties or assets may be bound or materially
negatively affected; (ii) result in the violation of any order,
writ, injunction, decree, statute, rule or regulation applicable
to Seller, ETKC or Killam, or their respective properties or
assets; or (iii) result in the imposition of any lien,
encumbrance, charge or claim upon the Shares or any of the assets
of ETKC or Killam, except, in the case of each of the subsections
of this Section 3.1(a), for such conflicts, violations, breaches,
terminations, accelerations, defaults and impositions which would
not have a material adverse effect upon the business, assets or
financial condition of ETKC and its subsidiaries taken together
as a whole. Except for a filing under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
no consent or approval by, or notification to or filing with, any
court, governmental authority or third party is required in
connection with the execution, delivery and performance of this
Agreement by Seller or the consummation of the transactions
contemplated hereby to be performed by Seller.
(b) Ownership of Shares; Authority to Transfer. The
Shares are not encumbered and are freely transferable by Seller.
Seller holds good and marketable title to the Shares to be
transferred to Buyer hereunder and no third party is entitled to
claim any right thereto or make any claim thereon. The transfer
of the Shares to Buyer pursuant to this Agreement will vest in
Buyer title to the Shares, free and clear of all liens, claims,
equities, options, calls, voting trusts, agreements, commitments
and encumbrances whatsoever.
(c) Organization and Qualification. ETKC is a
corporation validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power
and authority to own, operate and lease its properties and to
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carry on its business as it is now being conducted. ETKC is not
qualified as a foreign corporation to do business in any other
jurisdiction.
(d) Capitalization. The authorized capital stock of
ETKC consists of 1,500,000 shares of Voting Common Stock, 500,000
shares of Non-Voting Common Stock and 500,000 shares of Preferred
Stock. There is no other capital stock of ETKC authorized for
issuance. There are 1,050,000 shares of ETKC's Voting Common
Stock issued and outstanding, and 235,715 shares of ETKC's
Non-Voting Common Stock issued and outstanding, and these shares
collectively constitute the total issued and outstanding share
capital of ETKC. All of such shares have been duly authorized
and validly issued, are fully paid, nonassessable and free of
preemptive rights. There are no existing or outstanding options
to purchase shares of ETKC's capital stock. Except as set forth
on the Disclosure Schedule, no shares of ETKC's capital stock are
reserved for issuance and there are no warrants, convertible
instruments or other rights, agreements or commitments,
contingent or otherwise, obligating ETKC to issue, sell or
purchase shares of capital stock. The books of account, minute
books, stock certificate books and stock ledgers, are complete
and correct in all material respects and accurately reflect the
conduct of the business and affairs of ETKC. There are 6,360
shares of Killam's Class A Common Stock issued and outstanding,
and these shares constitute the total issued and outstanding
share capital of Killam. All of such shares have been duly
authorized and validly issued, are owned by ETKC, are fully paid,
nonassessable and free of preemptive rights.
(e) Subsidiaries of ETKC. ETKC has no Subsidiaries
(as defined below) other than Killam and wholly-owned
subsidiaries of Killam. To the knowledge of Seller, ETKC is not
a partner or joint venturer with any other person. To the
knowledge of Seller, ETKC is not subject to any obligation,
contingent or otherwise, to provide funds to or make an
investment (in the form of a loan, capital contribution or
otherwise) in any entity. For purposes of this Agreement, a
Subsidiary of a corporation shall mean an entity of which 50% or
more of the effective voting power or equity interest is owned
directly or indirectly by such corporation.
(f) Taxes. ETKC has accurately prepared and duly and
timely filed all tax and other returns and reports which were
required to be filed, in respect of all U.S. Federal income taxes
and penalties or interest associated therewith (collectively
"Federal Income Taxes") and all state and local, income
franchise, excise, sales, use, property (real and personal) and
payroll taxes and penalties or interest associated therewith
(collectively, "Taxes"). Seller has delivered to Buyer true and
complete copies of the Federal Income Tax returns and income Tax
returns filed by ETKC with the Federal government or any state
governmental authority in respect of 1991, 1992 and 1993. The
Federal Income Tax return of ETKC for the year ended December 31,
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1991 was audited by the Internal Revenue Service. No deficiency
for any Federal Income Tax has been asserted against ETKC with
respect to any taxable year or period ending on or prior to the
Effective Date. No waivers of any statutes of limitation are in
effect in respect of any Federal Income Taxes with respect to any
taxable year or period ending on or prior to the Effective Date.
There are no claims pending or, to the knowledge of Seller,
threatened, against ETKC for past due Federal Income Taxes with
respect to any taxable year or period ending on or prior to the
Effective Date, except to the extent accrued for or reserved
against in the Effective Date Balance Sheet, nor, to the
knowledge of Seller, is there any basis for any such claim. ETKC
will not have any liability for Federal Income Taxes for or in
respect of any period or periods ending on or prior to the
Effective Date, except to the extent accrued for or reserved
against in the Effective Date Balance Sheet. None of the Tax
returns of ETKC has been or is being audited or examined by the
governmental department or agency having jurisdiction, nor has
any deficiency for any Tax been asserted against ETKC with
respect to any taxable year or period ending prior to the
Effective Date, except to the extent accrued for or reserved
against in the Effective Date Balance Sheet. No waivers of any
statutes of limitation are in effect in respect of any Taxes with
respect to any taxable year or period ending on or prior to the
Effective Date. There are no claims pending or threatened
against ETKC for past due Taxes with respect to any taxable year
or period ending on or prior to the Effective Date, except to the
extent accrued for or reserved against in the Effective Date
Balance Sheet, nor, to the knowledge of Seller and Management, is
there any basis for any such claim. ETKC will not have any
liability for Taxes for or in respect of any period or periods
ending on or prior to the Effective Date, except to the extent
accrued for or reserved against in the Effective Date Balance
Sheet.
(g) Brokers and Finders. Seller has not on behalf of
ETKC or Killam employed any broker, agent or finder other than
Gerschel & Company, Inc. and affiliates of Compagnie Financiere
de Paribas in connection with the transactions contemplated
hereby. Seller has not and will not incur any liability on
behalf of ETKC or Killam for any brokerage fees, agents'
commissions or finders' fees in connection with the transactions
contemplated hereby, except to the extent paid on or prior to the
Effective Date or reserved for or accrued against on the
Effective Date Balance Sheet. It is understood that fees payable
to Gerschel & Company, Inc., Compagnie Financiere de Paribas or
its affiliates and Environmental Financial Consulting Group, as
well as certain legal fees and expenses, may be accrued for in
the Effective Date Balance Sheet.
(h) Hart-Scott-Rodino Filing. Seller has complied in
all material respects with all applicable requirements under the
HSR Act, and the rules and regulations promulgated thereunder,
relating to making, filing with and furnishing information to the
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Federal Trade Commission and the United States Department of
Justice in connection with the transactions contemplated hereby.
Section 3.2. Representations and Warranties of Management.
Each member of Management represents and warrants to Buyer that,
as of the Closing Date, except as set forth on the Disclosure
Schedule:
(a) Authority. The execution and delivery of this
Agreement by Management, and the consummation of the transactions
contemplated hereby to be performed by Management, have been duly
and validly authorized by all necessary action on the part of
such member of Management. This Agreement, the Amendment
Agreement and the Noncompetition Agreements constitute the valid
and binding obligations of such member of Management enforceable
against him in accordance with the terms hereof and thereof,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors or by general principles of
equity. Neither the execution, delivery and performance of this
Agreement by him, nor the consummation of the transactions
contemplated hereby to be performed by Management will (i)
conflict with or result in a violation, breach, termination or
acceleration of, or default under (or would result in such a
violation, breach, termination, acceleration or default with the
giving of notice or passage of time, or both) any of the terms,
conditions or provisions of the certificate of incorporation or
bylaws of Killam, each as amended, or of any note, bond,
mortgage, indenture, agreement or other instrument or obligation
to which he or, to his knowledge, Killam is a party or by which
he or, to his knowledge, Killam, or any of their respective
properties or assets may be bound or materially negatively
affected; (ii) result in the violation of any order, writ,
injunction, decree, statute, rule or regulation applicable to
him, Killam, or their respective properties or assets; or (iii)
result in the imposition of any lien, encumbrance, charge or
claim upon any of the assets of Killam, except, in the case of
each of the subsections of this Section 3.2(a), for such
conflicts, violations, breaches, terminations, accelerations,
defaults and impositions which would not have a material adverse
effect upon the business, assets or financial condition of Killam
and its subsidiaries taken together as a whole. No consent or
approval by, or notification to or filing with, any court,
governmental authority or third party is required in connection
with the execution, delivery and performance of this Agreement by
such member of Management or the consummation of the transactions
contemplated hereby to be performed by such member of Management.
(b) Certain Investment Representations.
(i) He has, in connection with his decision to
acquire the Buyer Options, relied solely upon Buyer's
Confidential Placement Memorandum dated January 29, 1995 and
the documents incorporated therein by reference; and
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(ii) Taking into account the personnel and
resources he can practically bring to bear on the
acquisition of the Buyer Options contemplated hereby, is
knowledgeable, sophisticated and experienced in making, and
is able to make, decisions with respect to investments in
securities presenting an investment decision like that
involved in the acquisition of the Buyer Options, including
investments in securities issued by Buyer, and to assess the
risks and merits presented by the acquisition of the Buyer
Options, and has requested, received, reviewed and
considered all information he deems relevant in making an
informed decision to acquire the Buyer Options.
(c) Brokers and Finders. Management has not on behalf
of Killam employed any broker, agent or finder other than
Environmental Financial Consulting Group in connection with the
transactions contemplated hereby. Management has not and will
not incur any liability on behalf of Killam for any brokerage
fees, agents' commissions or finders' fees in connection with the
transactions contemplated hereby to be performed by Management,
except to the extent paid on or prior to the Effective Date or
reserved for or accrued against on the Effective Date Balance
Sheet. It is understood that fees payable to Gerschel & Company,
Inc., Compagnie Financiere de Paribas or its affiliates and
Environmental Financial Consulting Group, as well as certain
legal fees and expenses, may be accrued for in the Effective Date
Balance Sheet.
Section 3.3. Certain Definitions. Unless and except to the
extent expressly indicated otherwise, when used in Section 3.4 of
this Agreement:
(i) any reference to ETKC contained in Section
3.4 shall be deemed to mean ETKC and its Subsidiaries taken
together as a whole (other than in the case of any
representation or warranty in Section 3.4 made by
Management, in which case any such reference shall be deemed
to mean Killam and its Subsidiaries taken together as a
whole); and any reference to Killam contained in Section 3.4
(other than Sections 3.4(a) and 3.4(b)) shall be deemed to
mean Killam and its Subsidiaries taken together as a whole;
(ii) the term "knowledge," when used with respect
to any party to this Agreement, shall mean the actual
knowledge of such party and the knowledge such party would
have acquired after conducting an investigation concerning
the relevant matters as such party reasonably determined to
be adequate and appropriate under the circumstances;
provided, that Seller and each member of Management shall
specifically be attributed with, and be deemed to possess,
the knowledge of Seller and each member of Management;
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(iii) Management shall not be attributed with, or
be deemed to possess, solely by virtue of the preceding
clause (ii), the knowledge of Seller with respect to matters
specifically related to ETKC but not to Killam; and
(iv) the term "ordinary course of business" shall
mean the ordinary course of business of ETKC or of Killam
consistent with its past custom and practice.
Section 3.4. Representations and Warranties by Seller and
Management. Seller and Management represent and warrant
(severally and not jointly, but subject in each case to the
attribution of knowledge pursuant to Section 3.3(ii)) to Buyer
that, as of the Closing Date, except as set forth on the
Disclosure Schedule:
(a) Organization and Qualification. Killam is a
corporation validly existing and in good standing under the laws
of the State of New Jersey and has all requisite corporate power
and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted. Killam is
duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction listed on the Disclosure
Schedule.
(b) Capitalization. The authorized capital stock of
Killam consists of 45,000 shares of Class A Common Stock and
5,000 shares of Class B Common Stock. There is no other capital
stock of Killam authorized for issuance. There are 6,360 shares
of Killam's Class A Common Stock issued and outstanding, and
these shares constitute the total issued and outstanding share
capital of Killam. There are no existing or outstanding options
to purchase shares of Killam's common stock other than the Killam
Options. Other than with respect to the Killam Options, no
shares of Killam's capital stock are reserved for issuance and
there are no warrants, convertible instruments or other rights,
agreements or commitments, contingent or otherwise, obligating
Killam to issue, sell or purchase shares of capital stock. The
minute books, stock certificate books and stock ledgers, are
complete and correct in all material respects and accurately
reflect the conduct of the business and affairs of Killam.
(c) Subsidiaries of Killam. Set forth on the
Disclosure Schedule is a list of all Subsidiaries of Killam as of
the Closing Date hereof, including, with respect to each such
Subsidiary, its jurisdiction of incorporation. All of the
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid, nonassessable and
free of preemptive rights, and is owned beneficially and of
record by Killam or by another Subsidiary free and clear of any
lien, right, encumbrance or restriction of any nature, including,
without limitation, any lien, right, encumbrance or restriction
on transfer or voting. No shares of any such Subsidiary's
capital stock are reserved for issuance, and there are no
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options, warrants, convertible instruments or other rights,
agreements or commitments, contingent or otherwise, obligating a
Subsidiary to issue, sell or purchase capital stock. To the
knowledge of Seller and Management, Killam is not a partner or
joint venturer with any other person. To the knowledge of Seller
and Management, Killam is not subject to any obligation,
contingent or otherwise, to provide funds to or make an
investment (in the form of a loan, capital contribution or
otherwise) in any entity other than ETKC or one of its
Subsidiaries. Each such Subsidiary is in good standing under the
laws of its jurisdiction of incorporation and has all requisite
power and authority to own, operate and lease its properties and
to carry on its respective business as it is now being conducted.
Seller and Management have delivered to Buyer complete and
correct copies of the charter and bylaws of each such Subsidiary,
as amended. Each such Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction listed on the Disclosure Schedule.
(d) Financial Statements. Seller has delivered to
Buyer prior to the execution of this Agreement true and complete
copies of: (i) the audited consolidated balance sheets of ETKC
as at December 31, 1993 and 1992, and audited consolidated
statements of earnings and cash flows for the years ended
December 31, 1993 and 1992 accompanied by the report thereon by
Arthur Andersen & Co., (ii) the audited consolidated balance
sheet of ETKC as at October 31, 1994, and (iii) the unaudited
consolidated balance sheet of ETKC as at December 31, 1994 (the
"Balance Sheet") (all of the financial statements referred to in
this Section 3.4(d), collectively, the "Financial Statements").
The audited balance sheet as at October 31, 1994 and the Balance
Sheet fairly present the financial condition of ETKC as at
October 31, 1994 and December 31, 1994, respectively, and the
other Financial Statements fairly present the financial
condition, results of operations and cash flows of ETKC as at the
dates and for the periods indicated, in each case in accordance
with generally accepted accounting principles applied on a basis
consistent with previous years. Since the date of the Balance
Sheet, there has been no material adverse change in the financial
condition, assets, liabilities, earnings, business or prospects
of ETKC.
(e) [Intentionally left blank.]
(f) No Undisclosed Liabilities. To the knowledge of
Seller and Management, ETKC has no liabilities or obligations of
any nature, other than (i) liabilities reflected on the Balance
Sheet (in amounts not in excess of those included for such
liabilities on the Balance Sheet), (ii) liabilities which are not
required under generally accepted accounting principles to be
accrued for or reserved against on the Balance Sheet and which
were incurred in the ordinary course of business and which would
not have a material adverse effect upon the business, assets or
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financial condition of ETKC, and (iii) liabilities incurred after
the date of the Balance Sheet either in the ordinary course of
business or in contemplation of the transactions contemplated by
this Agreement, which would not have a material adverse effect
upon the business, assets or financial condition of ETKC.
(g) Properties; Environmental and Health and Safety
Matters. ETKC has good and marketable title to, or a valid and
continuing leasehold interest in, all properties and assets, real
and personal, reflected on the Balance Sheet, free and clear of
all mortgages, liens, attachments, pledges, encumbrances or
security interests of any nature whatsoever. To the knowledge of
Seller and Management, ETKC has never owned any real estate. To
the knowledge of Seller and Management, all leases pursuant to
which ETKC leases real or personal property are in good standing,
and are valid and in full force and effect in accordance with
their respective terms. To the knowledge of Seller and
Management, there are no uncured defaults under any such leases
attributable to ETKC which would have a material adverse effect
upon the business, assets or financial condition of ETKC, and no
event has occurred that (whether or not with notice, lapse of
time or both) would constitute such a default. To the knowledge
of Seller and Management, all buildings, improvements, machinery,
equipment, vehicles and items of tangible personal property used
in connection with the operations of ETKC or Killam are adequate
for the uses to which they are being put.
To the knowledge of Seller and Management, and except
for such units and occurrences which would not have a material
adverse effect upon the business, assets or financial condition
of ETKC, the Disclosure Schedule accurately sets forth or
describes:
(i) (A) landfills, surface impoundments, pits,
ponds, lagoons, underground injection wells, waste piles,
land treatment units and incinerators used by ETKC for the
handling, treatment, recycling, reuse, storage and disposal
(hereinafter "management") of Hazardous Materials (as
defined below) and (B) all underground, in-ground or
on-ground storage tanks on property which has been or is
currently owned or leased by ETKC (including its
predecessors in interest);
(ii) for all units identified in clause (i)(A),
information on the time period used, type of Hazardous
Material, method of management, and whether there has been
evidence of releases of Hazardous Materials from such units
onto the ground or subsurface or into groundwater or surface
waters;
(iii) for all tanks identified in clause (i)(B),
information on the time period used, Hazardous Material
being stored, and when and what tests, if any, have been
conducted regarding tank integrity and test results, and
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whether there are releases of Hazardous Material from such
units onto the ground or subsurface or into groundwater or
surface waters;
(iv) any evidence, including sample results, of
soil, surface water, or groundwater contamination by
Hazardous Materials on or migrating from property which has
been or is currently owned or leased by ETKC which is not
addressed by clauses (ii) or (iii);
(v) a list of all sites to which hazardous
wastes, as such term is defined under the Resources
Conservation and Recovery Act, as amended ("RCRA")
(hereinafter, "Hazardous Wastes") have been sent by ETKC
since January 1, 1992, the owner or operator of such
off-site facilities, the transporter of such Hazardous
Wastes, and type of Hazardous Wastes;
(vi) reports of releases (including, but not
limited to, continuous release reports) of Hazardous
Material occurring on or from facilities owned or leased by
ETKC and reported to (A) the National Response Center, State
Emergency Response Commissions, Local Emergency Planning
Committees or the United States Environmental Protection
Agency (the "EPA") pursuant to requirements of the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("CERCLA"), RCRA,
the Clean Water Act ("CWA") or other Federal statutes; or
(B) any state or local governmental authority;
(vii) noncompliance by ETKC with conditions of
environmental permits or licenses issued pursuant to, or
other requirements of, the Clean Air Act, CWA, RCRA, the
Toxic Substances Control Act of 1976 ("TSCA"), the Safe
Drinking Water Act, CERCLA or similar state or local
statutes, laws, ordinances, rules or regulations;
(viii) Hazardous Waste Manifest Discrepancy
Reports, RCRA biennial reports or similar state reports,
Discharge Monitoring Reports, air emission monitoring
reports and air emission inventories, filed by ETKC with any
government agency since January 1, 1992;
(ix) Reports of environmental audits conducted of
facilities owned or leased by ETKC, and action plans and
progress reports responding to audit findings. Such audits
include audits conducted by ETKC and its consultants,
insurance companies or governmental agencies;
(x) Written claims, litigation and other legal
proceedings (including but not limited to notices of
violation, notices of noncompliance, citations, orders,
investigation reports, consent orders, consent decrees and
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administrative or judicial enforcement proceedings) seeking
or alleging money damages (resulting from injury to person
or property), injunctive relief, remedial action, fines,
penalties or any other remedy by reason of (A) violation of
or noncompliance with any law, regulation, rule or
requirement of law or regulation relating to pollution or
protection of the environment ("Environmental Laws"), or any
permit, license or registration issued thereunder; or (B)
the disposal, discharge or release into the environment of
Hazardous Materials; or (C) the ownership, operation or use
of any landfill, surface impoundment, pit, pond, lagoon,
underground injection well, waste pile, land treatment unit,
wastewater treatment plant, air pollution control equipment,
or any other unit used for disposal of Hazardous Materials;
including, in all cases, all legal proceedings which have
been concluded (e.g., a judgment or consent decree has been
entered) but pursuant to which work is ongoing (e.g., a
decree requiring remedial activity to be undertaken);
(xi) All permits and licenses and pending
applications for permits and licenses for facilities which
are currently owned or leased by ETKC, including
notifications to governmental agencies required by Sections
3010(a) (notice of hazardous waste activity) and 9002
(underground storage tanks) of RCRA and by comparable state
laws, and notices and reports required pursuant to Sections
302, 311, 312 and 313 of Title III of the Superfund
Amendments and Reauthorization Act of 1986 and comparable
state laws;
(xii) All current and expired or terminated
contracts involving the off-site transportation or
management of Hazardous Wastes generated by ETKC that were
in effect at any time since January 1, 1992; and
(xiii) A description of the manner in which any
asbestos-containing material in a friable condition is used
or otherwise present at any facility which is currently
owned or leased by ETKC.
To the knowledge of Seller and Management, ETKC is not
in violation of any law, regulation or ordinance (including
without limitation, laws, regulations or ordinances relating to
building, health code, zoning, environmental, land use or similar
matters) relating to its properties or facilities. To the
knowledge of Seller and Management, the real property occupied or
used by ETKC is not subject to any condition that requires
clean-up or remediation by ETKC. To the knowledge of Seller and
Management, such properties do not contain any Hazardous Material
(as defined below), nor has any Hazardous Material been
discharged or spilled thereon. To the knowledge of Seller and
Management, ETKC has never owned or operated a Hazardous Waste
landfill or any Hazardous Waste treatment, storage or disposal
facility. To the knowledge of Seller and Management, there are
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no past or present events, conditions, circumstances, activities,
practices, incidents, actions or plans of ETKC or its
predecessors, either collectively, individually or severally,
which may interfere with or prevent continued compliance, or
which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding,
hearing, or investigation, based on or related to the disposal,
storage, handling, manufacture, processing, distribution, use,
treatment, or transport, or the emission, discharge, release or
threatened release into the environment, of any pollutant or
waste, whether or not by ETKC or affecting its properties, and in
each case which would have a material adverse effect upon the
business, assets or financial condition of ETKC. To the
knowledge of Seller and Management, there are no proceedings
affecting any of the real properties currently owned or leased by
ETKC pending or threatened which would have a material adverse
effect on the present or future use of any such property for the
purposes for which it was acquired or the purpose for which it is
used. To the knowledge of Seller and Management, ETKC has not
received any written notice from any governmental agency or other
party alleging any liability with regard to the real property
occupied or used by ETKC now or at any time or with regard to any
off-site environmental conditions.
For purposes of this Agreement, "Hazardous Materials"
shall mean (a) any substance defined as a "hazardous substance"
under CERCLA, (b) any petroleum or petroleum-based products, (c)
any chemical substance or mixture regulated under the TSCA, (d)
any "toxic pollutant" under the CWA, and (e) any similar
contaminant deemed "hazardous" or "toxic" and regulated under any
applicable state statute similar to such Federal statutes and
relating to pollution control or environmental matters; but only
if such substances, products, mixtures, pollutants or
contaminants described in this paragraph are present in
quantities or concentrations of a magnitude sufficient to give
rise to an obligation on the part of ETKC, under such applicable
statute, to remediate such contamination and which obligation to
remediate is enforced by the applicable governmental authority or
agency.
(h) Governmental Authorizations. To the knowledge of
Seller and Management, set forth on the Disclosure Schedule is a
complete and accurate list of all governmental permits, licenses,
franchises, concessions, zoning variances and other governmental
approvals, authorizations and orders which have been obtained in
connection with the conduct of the business now being conducted
by ETKC. To the knowledge of Seller and Management, such
approvals, authorizations and orders constitute all governmental
approvals, authorizations and orders which are required under all
applicable Federal, state or local laws and regulations for the
operation of the business being conducted by ETKC as such
business has been heretofore conducted. To the knowledge of
Seller and Management, all such approvals, authorizations and
orders are presently in full force and effect, ETKC is in
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compliance with the requirements thereof (except for minor
violations that would not result in a suspension or forfeiture
thereof and for other violations which claim would not have a
material adverse effect upon the business, assets or financial
condition of ETKC and its Subsidiaries taken together as a
whole), no suspension or cancellation of any such approval,
authorization or order is threatened, and the execution of this
Agreement and the consummation of the transactions contemplated
herein will not adversely affect the validity or effectiveness
of, and will not require, for retention thereof after such change
of ownership, the consent or approval of any party to, or any
other person or 4.71 having jurisdiction of, any such approval,
authorization or order. To the knowledge of Seller and
Management, there are no disputes pending between ETKC and any
governmental authority about its respective operations as
presently being conducted. To the knowledge of Seller and
Management, Buyer has been furnished or provided with an
opportunity to review all material reports and applications filed
by ETKC with any 4.71 in the last three years.
(i) Intangibles. To the knowledge of Seller and
Management, set forth on the Disclosure Schedule is an accurate
list and description of all patents, trademarks, trade names,
service marks, brand names and copyrights, and registrations and
applications therefor, used in the conduct of the business of
ETKC or the use of which is necessary for the business of ETKC as
now being conducted (the "Intangibles") and all licenses,
sublicenses or other rights or obligations entered into or
granted by or to ETKC with respect thereto. To the knowledge of
Seller and Management, ETKC owns or possesses adequate rights to
use, free and clear of any obligation of payment, encumbrance,
lien or claim, all such Intangibles. To the knowledge of Seller
and Management, no person has made any claim or demand upon ETKC
pertaining to, and no proceeding is pending or threatened which
challenges, the rights of ETKC in respect of any Intangibles. To
the knowledge of Seller and Management, ETKC has not infringed or
engaged in the unauthorized use of any patent, trademark, trade
name, service mark, brand name or copyright, or any invention,
technology, technical know-how, process, design, trade secret or
other intellectual property of any third party.
(j) Insurance. To the knowledge of Seller and
Management, ETKC is not in default with respect to any provisions
of any policy of general liability, fire, title or other form of
insurance held by it, except for defaults that would not result
in a cancellation of any such policy or a denial of coverage
thereunder, ETKC is current in the payment of all premiums due or
has reserved for such premiums due on such insurance, and ETKC
has not failed to give any notice or present any claim thereunder
in due and timely fashion, except where such failure would not
result in a cancellation of any such policy or a denial of
coverage thereunder. All policies of insurance held by ETKC are
listed on the Disclosure Schedule. To the knowledge of Seller
and Management, under the terms of the policy relating thereto,
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no such insurance will be automatically terminated or canceled by
reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby.
(k) Employee Benefit Plans. For the purposes of this
Section 3.4(k), the following definitions shall apply:
(i) Accumulated Funding Deficiency: An "accumulated
funding deficiency" as defined in ERISA Section 302(a)(2) or
the last two sentences of Section 412(a) of the Code.
(ii) Complete Withdrawal: A "complete withdrawal"
from a Multiemployer Plan as defined in Section 4203 of
ERISA.
(iii) ERISA: The Employee Retirement Income Security
Act of 1974, as amended and in effect at the time of
execution of this Agreement.
(iv) ERISA Affiliate: ERISA Affiliate shall mean any
member of any controlled group of corporations, group of
trades or businesses under common control, or affiliated
service group (as defined for purposes of Section 414(b),
(c) and (m), respectively, of the Code) which includes ETKC.
(v) Multiemployer Plan: A "multiemployer plan" as
defined in ERISA Section 3(37) or Section 414(f) of the
Code.
(vi) Partial Withdrawal: A "partial withdrawal" from
a Multiemployer Plan as defined in Section 4205 of ERISA.
(vii) Plan Termination: A termination of a Pension
Plan, whether partial or complete, within the meaning of
Title IV of ERISA.
(viii) PBGC: The Pension Benefit Guaranty
Corporation.
(ix) Pension Plan: A "pension plan" or "employee
pension benefit plan" as defined in Section 3(2) of ERISA.
(x) Prohibited Transaction: A "prohibited
transaction" as defined in ERISA Section 406 or Section
4975(c) of the Code.
(xi) Reportable Event: A "reportable event" as
defined in Section 4043(b) of ERISA.
(xii) Welfare Plan: A "welfare plan" or an "employee
welfare benefit plan" as defined in Section 3(1) of ERISA.
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To the knowledge of Seller and Management, except for
instances of noncompliance and other events which would not
jeopardize the qualification of any Pension Plan or Welfare Plan
under the Code or under ERISA and which would not otherwise have
a material adverse effect upon the business, assets or financial
condition of ETKC:
(i) ETKC does not maintain or contribute to any
Pension Plan or any Welfare Plan, and neither ETKC nor any
ERISA Affiliate contributes to any Multiemployer Plan. All
Pension Plans and Welfare Plans of ETKC have been
administered in compliance with their terms, ERISA and,
where applicable, the Code. The Internal Revenue Service
has issued a favorable determination letter with respect to
the qualification of each such Pension Plan which is
intended to qualify under Section 401(a) of the Code and the
exemption of any corresponding trust. A copy of the most
recent determination letter for each Pension Plan has been
furnished to Buyer, and nothing has occurred since the date
of each such determination letter that would cause the
relevant Pension Plan or trust to lose such qualification or
exemption. With respect to each Pension Plan: (1) there is
no fact, including, without limitation, any Reportable
Event, that exists that would constitute grounds for
termination of such Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee
to administer such plan, in each case as contemplated by
ERISA; (2) neither ETKC nor any fiduciary, trustee or
administrator of any Pension Plan or Welfare Plan has
engaged in any Prohibited Transaction that would subject
ETKC to any tax or any penalty imposed by ERISA or the Code;
(3) ETKC has no liability to the PBGC (other than for
payment of premiums); and (4) there is no Accumulated
Funding Deficiency with respect to any Pension Plan
maintained by ETKC or by any ERISA Affiliate, whether or not
waived.
(ii) No Pension Plan or Welfare Plan, ETKC or any
ERISA Affiliate, or any "party in interest" or "disqualified
person" (as such terms are defined in Section 3 of ERISA and
Section 4975 of the Code) with respect to any Pension Plan
or Welfare Plan has taken any action including the making of
any investment, or failed to take any action, that would
subject any of them or any other person to any liability for
any tax or for breach of fiduciary duty with respect to or
in connection with any Pension Plan or Welfare Plan. No
Pension Plan or Welfare Plan, administrator or fiduciary of
any Pension Plan or Welfare Plan, or ETKC has any liability
under any provision of any applicable law by reason of any
communication or failure to communicate with respect to or
in connection with any Pension Plan or Welfare Plan, or any
filing or failure to file with any governmental entity. No
Pension Plan or Welfare Plan, administrator or fiduciary of
any Pension Plan or Welfare Plan, or ETKC or any ERISA
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Affiliate has any liability to any plan participant,
beneficiary or other person under any provision of any
applicable law by reason of any payment of benefits or other
amounts or failure to pay benefits or any other amounts, or
by reason of any credit or failure to give credit for any
benefits or rights (such as, but not limited to, vesting
rights) with respect to benefits under or in connection with
any Pension Plan or Welfare Plan, other than benefit claims
in the normal administration of each Pension Plan or Welfare
Plan. ETKC is not delinquent or in arrears on any amounts
owed to, or with respect to any contributions under, any
Pension Plan or Welfare Plan. No person is a participant in
or eligible for participation (without regard to age or
service) in, any Pension Plan or Welfare Plan who is not a
present or former employee of ETKC or a beneficiary of such
an employee. None of the Pension Plans or Welfare Plans
provides for continuing accrual of benefits or coverage for
any participant or beneficiary of a participant after such
participant's termination of employment with ETKC other than
Killam's post-retirement medical plan.
(iii) There has been no Plan Termination that has
occurred during the five-year period ending on the Closing
Date. ETKC has not incurred any liability under Title IV of
ERISA with respect to any Pension Plan maintained by a trade
or business (whether or not incorporated) which is under
common control with, or part of a controlled group of
corporations with, ETKC, within the meaning of Sections
414(b) or (c) of the Code. No event has occurred and no
condition exists with respect to any Pension Plan or Welfare
Plan that would subject ETKC to any tax under Section 4972,
4977, 4979 or 4980B of the Code or to a fine under ERISA
Section 502(c) with respect to any such plan. No Welfare
Plan is funded with a trust or other funding vehicle, other
than insurance policies. There has occurred no Complete
Withdrawal or Partial Withdrawal with respect to any
Multiemployer Plan that would cause ETKC to incur any
liability under or as a result of ERISA other than to the
extent reserved for or accrued against in the Balance Sheet,
and all payments required to be made to any such Plan by
ETKC under any applicable collective bargaining agreements
have been made. There are no actions, arbitrations or
claims pending or threatened with respect to any Pension
Plan, Welfare Plan or other employee benefit plans or any
fiduciary or sponsor thereof.
(l) Descriptions and Lists. To the knowledge of
Seller and Management, set forth on the Disclosure Schedule is an
accurate and complete list of the following oral or written
contracts, agreements, leases and other documents presently in
effect to which ETKC is a party or by which it or its respective
properties or assets are bound, other than agreements and other
commitments which would not have a material adverse effect upon
the business, assets or financial condition of ETKC and other
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than agreements and other commitments the termination of which
would not have a material adverse effect upon the business,
assets or financial condition of ETKC:
(i) a list of all interests in real property
owned or leased by ETKC;
(ii) a list of (A) each customer that accounted
for more than $100,000 of ETKC's revenues during calendar
1994; (B) each agreement containing any covenant restricting
the freedom of ETKC to compete in any line of business or
area or with any person; (C) each agreement obligating,
absolutely or on a contingent basis, ETKC to make payments
to a third party based on its future sales, revenues or
earnings from a product or service; and (D) each agreement
of ETKC not made in the ordinary course of business which is
not otherwise disclosed pursuant to another section of the
Disclosure Schedule;
(iii) a list of (A) the names and salaries,
bonuses and vacation allowances of all present officers and
employees of ETKC, including the last date of any increase
in such persons' compensation; (B) any persons on leave of
absence or who are currently collecting disability payments;
and (C) all employment, consulting or similar compensation
agreements of ETKC which may not be terminated without
penalty within 60 days after the Closing;
(iv) a list of all bonus, incentive compensation,
deferred compensation, profit-sharing, stock option,
retirement, pension, severance, death benefit or other
fringe benefit plans, agreements or arrangements of ETKC in
effect, or under which any amounts remain unpaid on the
Closing Date;
(v) a list of all labor unions or other
organizations representing any employees of ETKC;
(vi) a list of each agreement or other instrument
or arrangement defining the terms on which any outstanding
indebtedness of ETKC has been issued;
(vii) a list of each outstanding commitment by
ETKC to make a capital expenditure, capital addition or
capital improvement involving an amount in excess of
$250,000;
(viii) the name and location of every bank in
which ETKC has an account, safe deposit box or line of
credit, the identifying number of all such accounts and safe
deposit boxes, and the names of all persons having power to
borrow, discount debt obligations, cash or draw checks or
otherwise act on behalf of the respective corporation in any
dealings with such banks;
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(ix) all industrial hygiene surveys prepared by
or on behalf of ETKC since January 1, 1990, to the extent
reasonably available from the records of ETKC;
(x) summaries of all epidemiological or
toxicological studies conducted by or on behalf of ETKC
since January 1, 1990, to the extent reasonably available
from the records of ETKC;
(xi) all occupational safety and health reports
filed with governmental agencies or instrumentalities by or
on behalf of ETKC since January 1, 1990, to the extent
reasonably available from the records of ETKC;
(xii) annual summaries of workers compensation
liabilities of ETKC since January 1, 1990, to the extent
reasonably available from the records of ETKC;
(xiii) all citations, notices of violations,
orders, consent orders, administrative or judicial
enforcement proceedings from governmental agencies or
instrumentalities with respect to health or safety matters
currently pending against ETKC;
(xiv) all medical surveillance programs currently
provided for employees involved with raw materials and
products (including waste products) used or produced, to the
extent reasonably available from the records of ETKC;
(xv) a list of each accident or event which has
resulted in, or may result in, a claim against ETKC that
personal injury, property damage or economic loss was caused
by ETKC or involved any employee of ETKC in his capacity as
an employee, to the extent reasonably available from the
records of ETKC; and
(xvi) a list of all claims (other than health and
dental claims) filed and currently pending under the
insurance policies listed pursuant to Section 3.4(j)
(including, in their aggregate amount, employee benefit
claims other than health or dental insurance claims).
(m) Validity. To the knowledge of Seller and
Management, there is no default on the part of ETKC, or basis on
which, with notice or lapse of time or both (including notice of
this Agreement), a default would exist, in any obligation on the
part of ETKC to be performed under any lease, contract, plan,
policy or other instrument or arrangement referred to in Section
3.4(l) that would entitle any other party to or beneficiary under
any such lease, contract, plan, policy or other instrument or
arrangement to unilaterally terminate or seek relief under such
lease, contract, plan, policy or other instrument or arrangement.
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(n) No Changes. To the knowledge of Seller and
Management, since the date of the Balance Sheet, there has not
been:
(i) any damage, destruction or loss (whether or
not covered by insurance) to property materially adversely
affecting the condition (financial or otherwise), assets,
liabilities, earnings or business of ETKC;
(ii) any declaration, setting aside or payment of
any dividend, or other distribution, in respect of the
capital stock of ETKC or any direct or indirect redemption,
purchase or other acquisition of such stock;
(iii) any issuance or sale by ETKC of any bonds
or other corporate securities;
(iv) any amendment, termination or waiver of any
right belonging to ETKC except for amendments, terminations
or waivers which would not have a material adverse effect
upon the business, assets or financial condition of ETKC;
(v) any increase in the compensation or benefits
payable or to become payable by ETKC to any of its
respective officers or employees except for ordinary
increases for non-management employees in accordance with
prior practice; or
(vi) any other action or event not in the
ordinary course of business.
(o) Litigation or Proceedings. To the knowledge of
Seller and Management, ETKC is not engaged in, or a party to, or
threatened with, any claim or legal action or other proceeding
before any court, arbitration panel or administrative agency, or
any governmental investigation. To the knowledge of Seller and
Management, there are no orders, rulings, decrees, judgments or
stipulations to which ETKC is a party by or with any court,
arbitrator or administrative agency adversely affecting ETKC or
its business or properties.
(p) Compliance with Laws. To the knowledge of Seller
and Management and except with respect to matters set forth in
Sections 3.1(f) and 3.4(g) and (k), as to which no representation
or warranty, implied or expressed, is made in this Section
3.4(p), ETKC (i) is not in violation of any applicable building,
zoning, occupational safety and health, or other Federal, state
or local law, ordinance, regulation, rule, order or governmental
policy applicable to its plants, structures or equipment or the
operation thereof, or any employment, equal opportunity or
similar law, ordinance, regulation, rule, order or governmental
policy, or any other Federal, state or local law, ordinance,
regulation, rule, order or governmental policy applicable to it,
or to its respective business or assets; (ii) has not received
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any complaint which is currently pending from any governmental
authority, and none is threatened, alleging that it has violated
any such law, ordinance, regulation, order or policy; (iii) has
not received any notice from any governmental authority of any
pending proceedings to take all or any part of its properties
(whether leased or owned) by condemnation or right of eminent
domain and no such proceeding is threatened; and (iv) is not a
party to any agreement or instrument, or subject to any charter
or other corporate restriction or judgment, order, writ,
injunction, rule, regulation, code or ordinance, which has a
material adverse effect upon the business, assets or financial
condition of ETKC.
(q) Labor Matters. To the knowledge of Seller and
Management, there are no labor organizing activities, election
petitions or proceedings, labor strikes, disputes, slowdowns,
work stoppages or unfair labor practice complaints, pending or
threatened against ETKC or between ETKC and any of its employees,
nor have there been any such activities or controversies within
the two years prior to this Agreement. To the knowledge of
Seller and Management, no labor grievance has been filed with any
Federal or state governmental agency and no arbitration
proceeding has arisen out of or under collective bargaining
agreements and is pending and no claim therefor has been
asserted.
(r) Powers of Attorney. To the knowledge of Seller
and Management, ETKC has no powers of attorney or similar
authorizations outstanding.
(s) No Termination of Relationship. To the knowledge
of Seller and Management, no relationship between ETKC and any
distributor, customer, supplier, lender, employee or other person
may be terminated as a result of the execution of this Agreement.
(t) Backlog; Quotations. The Disclosure Schedule
contains an accurate list of all firm purchase orders and
commitments for services and products that make up the backlog of
ETKC as of approximately January 15, 1995 (other than with
respect to the Killam division known as "Killam East," as to
which such date is approximately December 25, 1994), as well as
the sum of such backlog. To the knowledge of Seller and
Management, such orders and commitments, together with any
quotations for work which are outstanding at this time, contain,
in the aggregate, terms and conditions that are consistent with
the practices of ETKC in the ordinary course of business prior to
the Closing Date.
Section 3.5. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller and Management that, as
of the Closing Date:
(a) Organization and Good Standing. Buyer is a
corporation validly existing and in good standing under the laws
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of the State of Delaware, and has all requisite corporate power
and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
(b) Authority. The execution and delivery of this
Agreement by Buyer, and the consummation of the transactions
contemplated hereby to be performed by Buyer, have been duly and
validly authorized by all necessary corporate action on the part
of Buyer. This Agreement, the Note, the Custody Agreement, the
Pledge Agreement, the Amendment Agreement and the Option
Agreements (the "Agreements") constitute valid and binding
obligations of Buyer enforceable against Buyer in accordance with
the terms hereof and thereof, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors or by
general principles of equity. Neither the execution, delivery
and performance of the Agreements by Buyer, nor the consummation
of the transactions contemplated hereby or thereby will (i)
conflict with or result in a violation, breach, termination or
acceleration of, or default under (or would result in such a
violation, breach, termination, acceleration or default with the
giving of notice or passage of time, or both) any of the terms,
conditions or provisions of the certificate of incorporation or
bylaws of Buyer, each as amended, or of any note, bond, mortgage,
indenture, agreement or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or
assets may be bound or affected; or (ii) result in the violation
of any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or its properties or assets.
Except for a filing under the HSR Act, and filings with certain
states under "blue sky" laws with respect to the Buyer Options,
no consent or approval by, or notification to or filing with, any
court, governmental authority or third party is required in
connection with the execution, delivery and performance of the
Agreements by Buyer or the consummation of the transactions
contemplated hereby.
(c) Brokers and Finders. Buyer has not employed any
broker, agent or finder, or incur or will incur any liability for
any brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated hereby.
(d) Hart-Scott-Rodino Filing. Buyer has complied in
all material respects with all applicable requirements under the
HSR Act, and the rules and regulations promulgated thereunder,
relating to making, filing with and furnishing information to the
Federal Trade Commission and the United States Department of
Justice in connection with the transactions contemplated hereby.
(e) Due Diligence; Responsibility to Notify. Buyer
and its representatives have been afforded access to the books,
records and premises of ETKC and its Subsidiaries and have been
given the opportunity to meet with officers, employees and other
representatives of ETKC and its Subsidiaries for the purpose of
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obtaining information with respect to the business of ETKC and
its Subsidiaries in order to determine whether to proceed with
the transactions contemplated by this Agreement. Buyer is not
aware of any event, condition or circumstance occurring at any
time on or prior to the Closing Date which would cause any
representation or warranty made by Seller or Management in this
Agreement to be misleading, inaccurate or false or which would
constitute a violation or breach of this Agreement, and such
failure of Buyer to so notify the other parties hereto shall
preclude Buyer from asserting any claim against the other parties
in respect of such matter.
The Pledge Agreement creates a valid security interest
in favor of Seller in the Collateral (as such term is defined in
the Pledge Agreement), including, without limitation, the U.S.
Treasury security subject to the Pledge Agreement (the "Pledged
Securities") and, upon the registration of the Custodian, as
agent for Seller, as the owner of the Pledged Securities, Seller
shall have a perfected first priority security interest in such
Pledged Securities.
ARTICLE 4
CERTAIN COVENANTS
Section 4.1. Expenses. Except as may be otherwise
expressly contemplated hereby, all expenses paid or incurred by
any party hereto shall be borne by such party. All sales,
transfer or similar taxes required to be paid in respect of the
transfer of the Shares contemplated hereby shall be the
responsibility of Seller. Notwithstanding the foregoing, this
Section 4.1 shall not be construed as relieving any party from
any liability which it may have for any breach of any
representation or warranty made by it herein or any failure to
perform any obligation or comply with any covenant imposed on it
herein.
Section 4.2. Further Assurances. From time to time and at
any time after the Closing, and without further expense to the
requesting party, each party will execute and furnish to the
requesting party all documents and will do or cause to be done
all other things that the requesting party may reasonably request
in order to give full effect to this Agreement and to effectuate
the intent of the parties.
Section 4.3. Confidentiality of Information. Seller agrees
that (a) it has obtained and may in the future obtain
confidential and proprietary information about ETKC, Killam,
Buyer or any parent, subsidiary or affiliate of Buyer (as the
case may be, a "TPS Entity"), including, but not limited to,
business plans strategies, customer lists, and financial and
statistical information and (b) it will not disclose, directly or
indirectly, such information or use it for any purpose other than
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for such TPS Entity's benefit. The obligations of
confidentiality in this Section 4.3 shall not apply to any
information which (a) was known to Seller or to the public prior
to receipt by Seller from another party hereto; (b) is or becomes
generally available to the public other than as a breach of this
Agreement by Seller; (c) is disclosed to Seller by a third party
having a legal right to make such disclosure (e.g., other than by
employees, auditors and other representatives of the parties to
this Agreement); or (d) is required to be disclosed in compliance
with applicable law or legal process. The obligations under this
Section 4.3 shall terminate on the second anniversary of the
Closing Date.
Seller agrees that damages are an inadequate remedy for
any breach of this Section 4.3 and that Buyer shall, whether or
not it is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or
threatened breach hereof.
Section 4.4. Releases.
(a) Seller hereby releases, holds harmless and forever
discharges ETKC and Killam, their respective successors, assigns,
agents, servants, employees, principals, directors, officers,
administrators, stockholders, affiliates, subsidiaries and
related companies, including, without limitation, Management, of
and from any and all actions, causes of action, claims, demands,
costs, liabilities, losses, expenses and compensation, past,
present or future, known or unknown, which it ever had, now has
or may have against any of the foregoing arising from actions,
omissions, circumstances or conditions that existed on or prior
to the Closing Date; provided, however, that nothing contained in
this Section 4.4(a) shall be deemed to relieve ETKC or Management
of any obligation imposed on it or them by this Agreement; and
further provided, that nothing contained in this Section 4.4(a)
shall be deemed to relieve ETKC of its obligation to pay when due
loans payable by ETKC to Nord Est Finance in the principal amount
of $1,500,000. This release is binding on Seller's agents,
servants, employees, affiliates, related companies, assigns and
successors in interest.
(b) Management hereby releases, holds harmless and
forever discharges Seller, ETKC and Killam, and their respective
successors, assigns, agents, servants, employees, principals,
directors, officers, administrators, stockholders, affiliates,
subsidiaries and related companies of and from any and all
actions, causes of action, claims, demands, costs, liabilities,
losses, expenses and compensation, past, present or future, known
or unknown, which it ever had, now has or may have against any of
the foregoing arising from actions, omissions, circumstances or
conditions that existed on or prior to the Closing Date,
including without limitation any claim for or with respect to any
portion of the Purchase Price; provided, however, that nothing
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contained in this Section 4.4(b) shall be deemed to relieve
Seller, ETKC or Killam of any obligation imposed on them by this
Agreement. This release is binding on Management's agents,
servants, employees, affiliates, related companies, assigns and
successors in interest.
(c) ETKC hereby releases, holds harmless and forever
discharges, and concurrently with the execution and delivery of
this Agreement, ETKC shall cause each of its Subsidiaries to
release, hold harmless and forever discharge, Seller, Management
and their successors, assigns, agents, servants, employees,
principals, directors, officers, administrators, stockholders,
affiliates, subsidiaries and related companies of and from any
and all actions, causes of action, claims, demands, costs,
liabilities, losses, expenses and compensation, past, present or
future, known or unknown, which it ever had, now has or may have
against Seller or Management arising from actions, omissions,
circumstances or conditions that existed on or prior to the
Closing Date; provided, however, that nothing contained in this
Section 4.4(c) shall be deemed to relieve Seller or Management of
any obligation imposed on them by this Agreement. This release
is binding on ETKC's agents, servants, employees, affiliates,
related companies, assigns and successors in interest.
Section 4.5. Covenant Against Competition; Solicitation and
Hiring of Former Employees. For a period of five years after the
Effective Date, Seller shall not, directly or indirectly:
(a) engage in any business that provides any services
or products competitive with those offered by ETKC or Killam as
of the Effective Date in the states of Alabama, New Jersey, New
York, Ohio and/or Pennsylvania, or
(b) without the prior written consent of Buyer, (i)
solicit any person employed by ETKC or Killam (or any of their
affiliates) on the Effective Date to terminate his employment
with ETKC or Killam (or any of such affiliates) or to become an
employee of Seller or any affiliate of Seller, or (ii) hire any
such employee except Eugene Leventis and except for employees
involuntarily terminated by ETKC or Killam (or any of their
affiliates).
The parties hereto agree that the scope, duration and
geographic area of the covenant against competition set forth in
Section 4.5(a) above are reasonable. If any court of competent
jurisdiction determines that the scope, duration or geographic
area are unreasonable and that such provision is to that extent
unenforceable, the parties hereto agree that the provision shall
remain in full force and effect for the greatest scope, the
greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that such
noncompetition provision shall be deemed to be a series of
separate covenants, one for each and every county of each and
every state in which this provision is intended to be effective.
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Seller agrees that damages are an inadequate remedy for
any breach of this Section 4.5 and that Buyer shall, whether or
not it is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or
threatened breach hereof. The parties acknowledge that for
purposes of this Section 4.5, the prohibitions on Seller shall
apply to Nord Est S.A. only.
Section 4.6. Payment of Certain Indebtedness. Buyer hereby
irrevocably and unconditionally covenants to cause and guarantee
that (a) ETKC shall pay the loan payable by ETKC to Nord Est
Finance in the principal amount of $1,500,000, together with
accrued interest thereon, when and as due, and (b) Killam shall
pay the loans payable by Killam to Banque Nationale de Paris
("BNP") (i) in the principal amount of $200,000, pursuant to the
Term Loan Agreement dated February 27, 1987 between Killam and
BNP, together with accrued interest thereon, when and as due, and
(ii) outstanding as of the Closing Date pursuant to the Revolving
Credit Facility dated March 31, 1994 between Killam and BNP
together with accrued interest thereon, when and as due.
Section 4.7. Tax Matters.
(a) Seller shall prepare or cause to be prepared when
due all returns in respect of Federal Income Taxes and Taxes of
ETKC and its Subsidiaries for any taxable years or periods ending
on or prior to the Closing Date in accordance with ETKC's and its
Subsidiaries' past custom and practice. Seller shall allow Buyer
opportunity to review and comment on such returns. In the case
of any such return, Buyer shall cause ETKC and its Subsidiaries
to sign and file such returns and pay any Federal Income Tax and
Tax due on a timely basis upon delivery by Seller of the
completed return to Buyer and receipt of payment from Seller of
any Federal Income Tax and Tax shown as due on such return,
(i) reduced by the amount of such Federal Income
Taxes and Taxes that have been accrued for or reserved
against in the Effective Date Balance Sheet,
(ii) reduced by the amount of any estimated
payments of Federal Income Taxes or Taxes, as the case may
be, and
(iii) with respect to Federal Income Taxes and
Taxes of ETKC and its Subsidiaries attributable to the
taxable period beginning January 1, 1995 and ending on the
Closing Date (the "Straddle Period"), reduced (or increased)
by the amount by which the Federal Income Taxes or Taxes (as
the case may be) of ETKC and its Subsidiaries attributable
to the Straddle Period (which amount shall not be less than
zero) exceed (or are less than) the Federal Income Taxes or
Taxes (as the case may be) that would have been imposed on
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ETKC and its Subsidiaries with respect to a taxable year
beginning January 1, 1995 and ending on the Effective Date,
determined in accordance with ETKC's and its Subsidiaries'
past custom and practice; provided, that any expenses
incurred by ETKC and its Subsidiaries within the Straddle
Period in connection with the transactions contemplated by
this Agreement (including, without limitation, brokerage,
accounting, attorneys' fees and compensatory payments made
to Management) shall be deemed to have been accrued on the
day prior to the Effective Date, regardless of when actually
accrued, but only to the extent that such expenses are
accrued on the Effective Date Balance Sheet; and provided
further that notwithstanding anything in this Agreement to
the contrary and for the purposes of the avoidance of doubt,
any additional amount payable by Seller to Buyer pursuant to
this clause (iii) shall be deemed to be a payment with
respect to Seller's obligation, if any, under Article 5 to
indemnify the Buyer in respect of any Federal Income Taxes
or Taxes incurred with respect to any Straddle Period to the
extent that any net tax loss which is attributable to the
portion of the Straddle Period following the Effective Date
and which resulted in the payment of such additional amount
is disallowed.
(b) Buyer and the Seller shall cooperate fully, as and
to the extent reasonably requested by the other party, in
connection with the preparation and filing of Federal Income Tax
and Tax Returns pursuant to this Section 4.7 and any audit,
litigation or other proceeding with respect to Federal Income
Taxes and Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records,
files, books, documents and information which are reasonably
relevant to any such preparation, filing, audit, litigation or
other proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Buyer agrees to
retain all books, files, documents, information and records with
respect to Federal Income Tax and Tax matters pertinent to ETKC
and its Subsidiaries relating to any tax periods ending on or
prior to the Closing Date and any tax periods beginning before
the Closing Date and ending after the Closing Date until the
expiration of any applicable statute of limitations or extensions
thereof.
(c) Any refunds or credits of Federal Income Taxes and
Taxes (including interest thereon) received by or credited to
ETKC or any of its Subsidiaries attributable to taxable years or
periods ending on or before the Effective Date (not including any
refund or credit attributable to the carryback of losses,
credits, or other items attributable to taxable years or periods
ending after the Effective Date) shall be for the benefit of
Seller, and Buyer shall use its best efforts to obtain such
refunds and shall cause ETKC and its Subsidiaries to pay over to
Seller any such refunds immediately upon receipt thereof;
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provided that notwithstanding anything to the contrary in the
foregoing, all other refunds or credits shall be for the benefit
of Buyer; provided further that, for purposes of this Section
4.7(c), any taxable year or period beginning before the Effective
Date and ending after the Effective Date (x) shall be deemed to
consist of two hypothetical taxable years, the first taxable year
ending on the Effective Date and the second beginning immediately
after the Effective Date; (y) items of income, loss, credit or
other items shall be apportioned between such two hypothetical
taxable years on the basis of a closing of the books of ETKC and
Subsidiaries as of the end of the Effective Date; and (z) any
expenses incurred by ETKC and its Subsidiaries within the
Straddle Period in connection with the transactions contemplated
by this Agreement (including, without limitation, brokerage,
accounting, attorneys' fees and compensatory payments made to
Management) shall be deemed to have been accrued on the day prior
to the Effective Date, regardless of when actually accrued, but
only to the extent that such expenses are accrued on the
Effective Date Balance Sheet.
Section 4.8. Maintenance of Certain Insurance Policies;
Additional Insurance. Buyer covenants to maintain in full force
and effect all liability insurance policies, including without
limitation professional liability insurance policies, maintained
by ETKC or any of its subsidiaries as of the Effective Date (or
to maintain in full force and effect equivalent policies) for a
period of not less than two years after the Effective Date,
provided that such insurance is available to Buyer on
commercially reasonable terms. If such insurance is available to
Buyer on commercially reasonable terms, but is not so maintained,
then Damages, as such term is defined in Section 5.6, shall not
include any amount which would have been recoverable from the
insurer had such insurance policies been maintained. If Buyer
shall cause ETKC to cancel any such insurance policies, Buyer
shall provide Seller and Management with thirty (30) days prior
written notice of such cancellation. Notwithstanding the
foregoing, Buyer reserves the right at any time and from time to
time to increase the deductibles under any such policies,
provided that Damages, as such term is defined in Section 5.6,
shall not include the amount of any increase in such deductibles.
Buyer further covenants to use reasonable efforts to increase the
amount of professional liability insurance coverage maintained by
ETKC to not less than $10,000,000 and to make such increase
retroactive for a period of five years prior to the Effective
Date, provided in each case that such additional insurance is
available to Buyer on commercially reasonable terms, and
provided, further, that the cost of such additional expense shall
not be accrued as an expense or capitalized on the Effective Date
Balance Sheet in determining the Net Tangible Book Value of ETKC
as of the Effective Date.
Section 4.9. Certain Compensation and Related Matters.
Buyer covenants solely with Management as follows:
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(a) Management Base Salaries. Buyer will continue to
pay Management after the Closing at rates equal to their base
salaries in effect as of the Effective Date. Such base salaries
will be subject to review annually in accordance with Buyer's
standard policies. Management acknowledges that (i) such
policies will require, among other things, that salary
recommendations be approved by both the Compensation Committee of
Buyer's Board of Directors and the Operating Committee of Thermo
Electron and (ii) because Buyer reviews salaries annually after
the end of its fiscal year, Buyer intends to move toward a single
annual salary review for Management, as soon as is consistent
with proper and equitable implementation. Nothing in this
Section 4.9(a) or elsewhere in this Agreement is intended to
confer upon any member of Management any right to continued
employment.
(b) Cash Bonuses. Buyer will pay such cash bonuses to
management personnel of Killam and its Subsidiaries, including
Management, with respect to calendar year 1994 in the amount of
$700,000 and with respect to the period from January 1, 1995
through the Effective Date in the amount of $30,000, which
amounts will be accrued on the Effective Date Balance Sheet
pursuant to Section 1.3(d). The timing of the payment of such
bonuses shall be consistent with Killam's past practices. Buyer
will pay cash bonuses to management personnel of Killam and its
Subsidiaries, including Management, with respect to calendar year
1995 at the rate of 12% of the pretax income of Killam and its
Subsidiaries after payment of the annual management fee to Thermo
Electron, but without reduction for the amortization of the
increased goodwill on Buyer's books associated with the
acquisition of ETKC. Management acknowledges that the management
fee referred to in the preceding sentence is a fee paid by all
subsidiaries of Thermo Electron, that such fee currently equals
1.25% of each subsidiary's gross revenues, and that such fee may
be changed by mutual agreement of Thermo Electron and Buyer.
Bonuses with respect to calendar year 1995 not accrued for on the
Effective Date Balance Sheet will be prorated from the Effective
Date through December 31, 1995. Buyer and Management agree to
discuss late in calendar 1995 or early in calendar 1996 the terms
on which bonuses with respect to calendar years 1996 and beyond
would be paid to management personnel of Killam and its
Subsidiaries. Management acknowledges, however, that such
bonuses would be (a) linked to meeting certain minimum pretax
income expectations to be determined prior to the beginning of
each year and (b) paid as a percentage of the pretax income of
Killam and its Subsidiaries, after (i) amortizing not more than
$750,000 of the increased goodwill (excluding amortization of the
building intangible) on Buyer's books associated with acquisition
of ETKC and (ii) payment of the annual management fee to Thermo
Electron. Buyer agrees that neither (i) interest payable or
accrued with respect to the Note nor (ii) any compensation
charges for tax and/or financial accounting purposes attributable
to the exchange of the Killam Options, the exercise of any Buyer
Options and the payment of the option exercise price therefor
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will be charged against the income of Killam and its Subsidiaries
for purposes of calculating the payment of bonuses.
(c) Floor Price on Buyer Shares. In the event that
any member of Management desires to sell in the open market any
or all of the shares of Buyer's common stock that may be issued
upon exercise of the Buyer Options at any time prior to January
29, 2002, (subject to the resale restrictions in the
Shareholders' Agreement and the Amendment Agreement) but cannot
do so at prices equal to at least $8.00 per share, as adjusted
for stock dividends, stock splits, reclassifications and similar
events (the "Floor Price"), Buyer will either, in its discretion,
buy any such shares that cannot be sold for at least the Floor
Price for an amount equal to the Floor Price or (ii) permit such
member of Management to sell such shares in the open market at
such price or prices as may be obtainable and pay to such member
an amount which is equal to the difference between the Floor
Price and the amount which such member received (before taking
into account commissions, taxes and other transaction costs) upon
such sales. Each member of Management agrees, as a condition to
such agreements by Buyer, to give Buyer reasonable prior written
notice of any such intention to sell such shares and to consult
with Buyer as to the timing of such sales.
(d) Grants of Additional Options. Within 60 days
after the Closing, Buyer will grant options to purchase an
aggregate of 500,000 shares of Buyer's common stock to such
persons, and in such amounts, as may be mutually agreeable to
Management and Buyer. All such options (i) will be granted
pursuant to Buyer's Equity Incentive Plan, a copy of which has
been previously provided to Management, (ii) will be evidenced by
stock option agreements in substantially the form of Exhibit H
hereto, and (iii) will be exercisable at a price equal to the
fair market value of the stock on the date of approval by the
Board of Directors.
(e) Retirement Plans. To the extent permitted by
ERISA and other applicable law, (i) Killam's employees will
continue to participate in Killam's existing Salaried Employees
Savings and Investment Plan (the "401(k) Plan"), and (ii) Killam
will continue to be permitted to make matching contributions to
the 401(k) Plan in accordance with the terms of such plan. As
soon as practicable after the Closing, Buyer will cause the
401(k) Plan to be amended so that it will conform to the
description set forth on Exhibit I hereto (the "Plan Amendment").
Buyer explicitly reserves the right, however, to further amend
the 401(k) Plan from time to time to change the annual
profit-sharing contribution from the amount set forth in the Plan
Amendment after consultation with Management.
(f) Employee Stock Purchase Plan. All otherwise
eligible Killam employees, including Management, will be entitled
to participate in any employee stock purchase plan adopted from
time to time by Buyer, in accordance with the terms thereof.
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(g) Post-Retirement Medical Plan. As soon as
practicable after the Closing, Buyer will cause Killam's
post-retirement medical plan to be amended so that it will
conform to the description set forth on Exhibit I hereto.
(h) Defined Benefit Retirement Plan. As soon as
practicable after the Closing, Buyer shall, at its discretion,
either terminate or freeze Killam's current defined benefit
retirement plan, consistent with the description set forth on
Exhibit I hereto.
(i) Other Employee Benefit Policies and Programs.
Except as otherwise provided in this Section 4.9 and except to
the extent required by applicable law from time to time, Thermo
will not make any material changes in any employee benefit
policies and programs of Killam and its Subsidiaries, such as
vacation policies, life insurance programs and health insurance
programs, for a period of two years after the Closing. If, as a
result of changes to the employee benefit policies and programs
applicable to Buyer's other employees over such two-year period,
material differences between such policies and programs and the
policies and programs of Killam and its Subsidiaries develop or
are identified, Buyer reserves the right thereafter to require
such policies and programs to be conformed to Buyer's policies
and programs.
Section 4.10. Certain Environmental Matters.
Buyer shall, in its sole discretion, determine within
one year after the Effective Date whether any further action is
required as a result of certain groundwater sampling conducted on
the Killam property at 21-27 Bleeker Street in Millburn, New
Jersey, during Buyer's due diligence process.
Irrespective of any further sampling and investigation,
if at any time prior to the fifth anniversary of the Effective
Date Killam shall be required by any applicable governmental
agency to take corrective or remedial action with regard to
perchloroethelyne or trichloroethylyne at 21-27 Bleeker Street in
Millburn, New Jersey discovered during Buyer's due diligence
process, then (a) Buyer shall notify Seller and Management of
such request and (b) within ten days after presentation of
Buyer's statement or statements setting forth its out-of-pocket
costs incurred in connection with any monitoring, reporting
and/or remediation in response to such agency's requirements,
Seller shall pay to Buyer 89% of the amounts set forth on such
statement or statements and Management shall pay to Buyer 11% of
the amounts set forth on such statement or statements; provided,
however, that the aggregate liability of Seller and Management to
Buyer under this Section 4.10 shall be $200,000.
Section 4.11. Management Bonuses. Seller covenants with
Buyer and Management that it will accrue cash bonuses for
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management personnel of Killam and its subsidiaries, including
Management, on the Effective Date Balance Sheet in the amount of
$700,000 for 1994 and $30,000 for the period from January 1, 1995
through the Effective Date.
ARTICLE 5
INDEMNIFICATION
Section 5.1. Indemnification by Seller. Subject to the
provisions of Section 5.3, Buyer upon its demand shall be
indemnified by Seller for all Damages (as defined in Section 5.6
below) suffered by Buyer as a result of:
(i) the inaccuracy of any representation or warranty
made by Seller in this Agreement (including Sections 3.1 and
3.4) or in any other document executed by Seller at the
Closing; and
(ii) any failure by Seller to perform any obligation
of Seller, or to comply with any covenant or agreement of
Seller, specified herein (including without limitation the
covenants set forth in Article 4) or in any other document
executed by Seller at the Closing.
Buyer shall give Seller prompt notice of any claim,
action or proceeding by a third party which is reasonably likely
to result in a claim for indemnification under this Section 5.1.
Subject to the provisions of Section 5.2.A, Seller shall have the
right, at its expense and with counsel selected by Seller, to
defend, contest, protest, settle and otherwise control the
resolution of any such claim, action or proceeding. Seller shall
keep Buyer apprised of developments with respect to any such
claim, action or proceeding, and Buyer shall have the right to
consult with Seller, and to participate therein, subject to
Seller's right of control thereof, at Buyer's expense and with
counsel selected by Buyer. If Seller shall notify Buyer that
Seller has elected to assume any such defense, contest or
protest, Seller shall not be liable to Buyer hereunder for any
legal or other expense subsequently incurred by Buyer in
connection therewith.
Section 5.2. Indemnification by Management. Subject to the
provisions of Section 5.3, Buyer upon its demand shall be
indemnified by Management for all Damages suffered by Buyer as a
result of:
(i) the inaccuracy of any representation or warranty
made by Management in this Agreement (including Sections 3.2
and 3.4) or in any other document executed by Management at
the Closing; and
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(ii) any failure by Management to perform any
obligation of Management, or to comply with any covenant or
agreement of Management, specified herein (including without
limitation the covenants set forth in Article 4) or in any
other document executed by Management at the Closing.
Buyer shall give Management prompt notice of any claim,
action or proceeding by a third party which is reasonably likely
to result in a claim for indemnification under this Section 5.2.
Subject to the provisions of Section 5.2.A, Management shall have
the right, at its expense and with counsel selected by
Management, to defend, contest, protest, settle and otherwise
control the resolution of any such claim, action or proceeding.
Management shall keep Buyer apprised of developments with respect
to any such claim, action or proceeding, and Buyer shall have the
right to consult with Management, and to participate therein,
subject to Management's right of control thereof, at Buyer's
expense and with counsel selected by Buyer. If Management shall
notify Buyer that Management has elected to assume any such
defense, contest or protest, Management shall not be liable to
Buyer hereunder for any legal or other expense subsequently
incurred by Buyer in connection therewith.
Section 5.2.A Defense of Claim Involving Joint Liability.
Buyer shall give Management and Seller prompt notice of any
claim, action or proceeding by a third party which is reasonably
likely to result in a claim for indemnification against both
Seller and Management under this Article 5. Seller shall have
the right, at its expense and with counsel selected by Seller, to
defend, contest and protest any such claim, and Management shall
have the right, at its expense and with counsel selected by
Management, to consult with Seller and to participate in (but not
control) the defense of such claim, action or proceeding by a
third party; provided that Management shall have the right, at
their expense, to defend, contest, protest, settle and otherwise
control the resolution of any such claim, which Seller has
declined to defend. The defending party shall keep the other
parties apprised of developments with respect to any such claim,
action or proceeding. If either Seller or Management proposes to
settle any such claim for which Seller and Management are jointly
responsible, such party shall notify the other party in writing
of the terms of such proposed settlement. If the party receiving
the notice objects to such settlement terms, then it may take
over and continue, at its own expense, the defense of such third
party claim, but only if the party proposing the settlement is
then released by such third party from any liability in respect
of such claim in excess of the amount it would have paid in such
proposed settlement. If the defending party shall notify Buyer
that the defending party has elected to assume any such defense,
contest or protest, it shall not be liable to Buyer hereunder for
any legal or other expense subsequently incurred by Buyer in
connection therewith.
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Section 5.3. Limitation of Liability of Seller and
Management.
(a) Except as set forth below, the right of Buyer to
be indemnified pursuant to Sections 5.1(i) and 5.2(i) shall not
apply until the sum of the Damages suffered by Buyer on a
cumulative basis exceeds $250,000, in which case Buyer shall be
entitled to recover 100% of the Damages suffered in excess of
$250,000 (subject to the remainder of this Section 5.3).
Notwithstanding the foregoing, Buyer shall be entitled to recover
the Damages suffered by it with respect to claims based solely on
representations and warranties in Section 3.1(f), irrespective of
whether such Damages equal or exceed $250,000. Notwithstanding
the terms of this Section 5.3(a), no liability of Seller or
Management to Buyer pursuant to Section 4.10 hereof shall be
considered to be Damages for purposes of the first sentence of
this Section 5.3(a).
(b) The right of Buyer to be indemnified pursuant to
Section 5.1(i) shall:
(i) apply to claims based solely on representations
and warranties in Section 3.1 (other than (A) the first two
sentences of Section 3.1(a), (B) the first five sentences of
Section 3.1(d) and (C) Section 3.1(f)) and Section 3.4
(other than (A) the first two sentences of Section 3.4(a)
and (B) the first five sentences of Section 3.4(b)) only if
asserted by Buyer before the second anniversary of the
Effective Date; and
(ii) apply to claims based solely on
representations and warranties in Section 3.1(f) only if
asserted by Buyer before any applicable statute of
limitations for unpaid Income Taxes and Taxes, respectively,
shall expire.
(c) The right of Buyer to be indemnified pursuant to
Section 5.2(i) shall apply to claims based solely on
representations and warranties in Section 3.4 (other than (A) the
first two sentences of Section 3.4(a) and (B) the first five
sentences of Section 3.4(b)) only if asserted by Buyer before the
second anniversary of the Effective Date.
(d) The right of Buyer to be indemnified pursuant to
Sections 5.1(ii) and 5.2(ii), and with respect to any claim under
(A) the first two sentences of Section 3.1(a), (B) Section
3.1(b), (C) the first five sentences of Section 3.1(d), (D)
Section 3.2, (E) the first two sentences of Section 3.4(a) and
(F) the first five sentences of Section 3.4(b) shall survive the
execution of this Agreement indefinitely.
(e) Seller shall not be liable for more than 80% of
the Damages arising out of or in connection with the breach of
any representation or warranty set forth in Section 3.4 or for
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Damages pursuant to Section 5.1(i) in excess of $16,000,000 in
the aggregate, except for (i) claims based solely on
representations and warranties in (A) the first two sentences of
Section 3.1(a), (B) the first five sentences of Section 3.1(d),
(C) the first two sentences of Section 3.4(a) and (D) the first
five sentences of Section 3.4(b), with respect to which Seller's
liability for Damages shall be unlimited, and (ii) except for
claims based solely on representations and warranties in Section
3.1(f), with respect to which Seller's liability shall be equal
to 100% of the Damages, but shall be subject to such $16,000,000
aggregate liability limit. Seller's aggregate liability limit as
described in this Section 5.3(e) shall not be increased by any
third party claim.
(f) Management shall not be liable for more than 10%
of the Damages arising out of or in connection with the breach of
any representation or warranty set forth in Section 3.4 or
Damages pursuant to Section 5.2(i) in excess of $1,200,000 in the
aggregate, except for claims based solely on representations and
warranties in (A) Section 3.2, (B) the first two sentences of
Section 3.4(a) and (C) the first five sentences of Section
3.4(b), with respect to which Management's liability for Damage
shall be unlimited; and no member of Management shall be liable
for Damages pursuant to Section 5.2(i) (except for claims based
solely on representations and warranties in (A) Section 3.2, (B)
the first two sentences of Section 3.4(a) and (C) the first five
sentences of Section 3.4(b), with respect to which each member of
Management's liability for Damages shall be unlimited) in excess
of (i) $1,200,000 multiplied by (ii) a fraction, the numerator of
which equals the value of the Buyer Options and Killam Cash
Consideration set forth opposite such member's name in Columns 3
and 4, respectively, of Schedule 1.5 hereto, and the denominator
of which equals the aggregate value of all of the Buyer Options
and Killam Cash Consideration set forth opposite all members of
Management's names in Columns 3 and 4, respectively, of such
Schedule 1.5. Management's aggregate liability limit as
described in this Section 5.3(f) shall not be increased by any
third party claim.
(g) Notwithstanding anything to the contrary in this
Agreement, in any case in which Seller and Management shall be
jointly liable for Damages under this Article 5, Seller shall not
be liable for any Damages pursuant to Section 5.3(e) unless
Management is jointly liable for such Damages pursuant to Section
5.3(f); and Management shall not be liable for any Damages
pursuant to Section 5.3(f) unless Seller is jointly liable for
such Damages pursuant to Section 5.3(e), and neither Seller nor
Management shall have the right of contribution against the
other, absent fraud, for any sum in excess of their percentage of
such joint liability as provided in this Article 5. In the event
that Seller and Management are both liable for Damages for any
claim of Buyer under this Article 5, Buyer shall pursue such
claim against both Seller and Management for the full amount of
their respective Damages.
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Section 5.4. Indemnification by Buyer. Subject to the
provisions of Section 5.5, Seller and Management upon their
respective demand shall be indemnified by Buyer for all Damages
suffered by such parties as a result of
(i) the inaccuracy of any representation or warranty
made by Buyer in this Agreement (including Section 3.5) or
in any other document executed by Buyer at the Closing; and
(ii) any failure by Buyer to perform any obligation of
Buyer, or to comply with any covenant or agreement of Buyer,
specified herein (including without limitation the covenants
set forth in Article 4) or in any other document executed by
Buyer at the Closing.
The party seeking indemnification shall give Buyer
prompt notice of any claim, action or proceeding by a third party
which is reasonably likely to result in a claim for
indemnification under this Section 5.4. Buyer shall have the
right, at its expense, to defend, contest, protest, settle and
otherwise control the resolution of any such claim, action or
proceeding. Buyer shall keep the party seeking indemnification
apprised of developments with respect to any such claim, action
or proceeding, and such party shall have the right to consult
with Buyer, and to participate therein, subject to Buyer's right
of control thereof, at such party's expense and with counsel
selected by such party. If Buyer shall notify the party seeking
indemnification that Buyer has elected to assume any such
defense, contest or protest, Buyer shall not be liable to such
party hereunder for any legal or other expense subsequently
incurred by such party in connection therewith.
Section 5.5. Limitation of Liability of Buyer.
(a) The right of Seller and Management to be
indemnified pursuant to Section 5.4(i) shall not apply until the
sum of the Damages suffered by Seller and Management on a
cumulative basis exceeds $250,000, in which case Seller, which
shall be entitled to recover 80% of excess Damages, and
Management, which shall be entitled to recover 10% of such excess
Damages, shall together be entitled to recover 90% of the Damages
suffered in excess of $250,000 (subject to the remainder of this
Section 5.5 and except for Damages suffered by Seller due to
nonpayment of the Note or breach by Buyer of its covenants in
Section 4.6, in which case Seller shall be entitled to recover
100% of such Damages).
(b) The right of Seller and Management to be
indemnified pursuant to Section 5.4(i) shall apply to claims
based solely on representations and warranties in Section 3.5
(other than Section 3.5(a) and the first two sentences of Section
3.5(b)) only if asserted by the party seeking indemnification
before the second anniversary of the Effective Date.
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(c) The right of Seller and Management to be
indemnified pursuant to Section 5.4(ii) and with respect to any
claim under Section 3.5(a) or the first two sentences of Section
3.5(b) shall survive the execution of this Agreement
indefinitely.
(d) In no event shall Buyer be liable for Damages (i)
sustained by Seller in excess of $16,000,000 in the aggregate
(except for Damages suffered by Seller due to nonpayment of the
Note or breach by Buyer of its convenants in Section 4.6, in
which case Buyer shall be liable for 100% of such Damages) or
(ii) sustained by Management in excess of $1,200,000 in the
aggregate; provided, however, that nothing in this Section 5
shall limit the liability of Buyer to indemnify Seller in respect
of any claim asserted by a third party against Seller which is
the proper subject of indemnification hereunder if the claim
exceeds the limits set forth in this Section 5.5(d).
Section 5.6. Definition of "Damages." For the purpose of
this Article 5, the term "Damages" (a) shall be determined and
computed by reference to the effect of the compensable event on
the party or parties entitled thereto, (b) shall mean the amount
finally determined by reason of a settlement or by other final
resolution of the claim, and (c) shall be deemed to include (i)
all losses, liabilities, expenses or costs incurred by such party
or parties, including reasonable attorneys' fees, but after
reduction for all amounts recovered from any insurer or other
party liable for such Damages (it being understood that the
indemnified party shall use all reasonable efforts to effect any
such recovery) and after reduction for any tax benefit allowable
as a result of the facts giving rise to the claim for
indemnification, and (ii) interest at a rate per annum equal to
that announced from time to time by First National Bank of Boston
as its "base rate" (or the legal rate of interest, if lower) from
the date on which the amount of Damages is determined by reason
of a settlement or by another final resolution of the claim.
Section 5.7. Limitation of Liability. The liability of
Seller, Management and Buyer for money damages for the failure to
fulfill any covenant or agreement contained in this Agreement or
for the inaccuracy of any representation or warranty set forth in
this Agreement, and the source of recovery on account of any such
liability, shall be limited as provided for in this Article 5.
Nothing in this Article 5 shall limit the right of any party
hereto to seek rescission of this Agreement or other equitable
relief.
Section 5.8. Purchase Price Adjustment. As between Buyer
and Seller, except as may otherwise be required by generally
accepted accounting principles, all amounts paid pursuant to this
Article 5 shall be treated by the parties as an adjustment to the
Purchase Price.
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ARTICLE 6
GENERAL
Section 6.1. Notices. All notices, requests, demands,
consents and other communications which are required or permitted
hereunder shall be in writing, and shall be deemed given when
actually received or if earlier, two days after deposit with the
U.S. postal authorities, certified or registered mail, return
receipt requested, postage prepaid or two days after deposit with
an internationally recognized air courier or express mail,
charges prepaid, addressed as follows:
If to Buyer, ETKC or Killam:
Thermo Process Systems Inc.
c/o Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254-9046
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Seller:
Nord Est S.A.
10 Rue d'Athenes
75009 Paris, France
Attention: Michel Jacquet
With a copy to:
Sutherland, Asbill & Brennan
1270 Avenue of the Americas
New York, New York 10020-3247
Attention: Burton K. Haimes, Esq.
If to Management:
Mr. Emil C. Herkert
Killam Associates Inc.
27 Bleeker Street
P. O. Box 32
Millburn, New Jersey 07041-0032
With copies to:
Norris, McLaughlin & Marcus
721 Route 202-206
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P. O. Box 1018
Somerville, New Jersey 08876-1018
Attention: John J. Eagan, Esq.
and
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
or to such other address as any party hereto may designate in
writing to the other parties, specifying a change of address for
the purpose of this Agreement.
Section 6.2. Survival of Representations and Warranties.
Each of the representations and warranties made by the parties
hereto shall survive the Closing and the consummation of the
transactions contemplated hereby in accordance with, and to the
extent set forth in, Article 5 hereof.
Section 6.3. Entire Agreement. This Agreement, the Letter
Agreement and the other agreements contemplated to be signed by
the parties at the Closing supersede any and all oral or written
agreements or understandings heretofore made relating to the
subject matter hereof (including without limitation the letter of
intent executed by Buyer and Seller and the letter regarding
Management compensation issues executed by Buyer and Management,
each dated November 4, 1994) and collectively constitute the
entire agreement of the parties relating to the subject matter
hereof.
Section 6.4. Modification; Waiver. This Agreement may be
amended, modified or supplemented by a writing signed by the
party or parties against whom enforcement of the amendment,
modification or supplement is sought. Any party hereto may, by a
written signed instrument, extend the time for or waive the
performance of any of the obligations of another party hereto or
waive compliance by such other party with any of the covenants or
conditions contained herein.
Section 6.5. No Implied Rights or Remedies. Except as
otherwise expressly provided herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or to
give any person, firm or corporation, other than the parties
hereto, any rights or remedies under or by reason of this
Agreement. The parties hereto acknowledge that, except as
expressly provided in this Agreement, no party hereto has made or
is making any representations or warranties whatsoever, implied
or otherwise.
Section 6.6. Public Announcements. The content of any
public announcement by Buyer or Seller will be subject to the
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review and approval of Seller or Buyer, as the case may be, such
review to be timely and approval not to be unreasonably withheld.
Section 6.7. Headings. The headings in this Agreement are
inserted for convenience of reference only and shall not be a
part of or control or affect the meaning hereof.
Section 6.8. Severability. If any provision of this
Agreement shall be declared void or unenforceable by any judicial
or administrative authority, the validity of any other provision
shall not be affected thereby.
Section 6.9. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
Section 6.10. Exhibits. The Exhibits attached hereto and
referred to in this Agreement are a part of this Agreement for
all purposes.
Section 6.11. Agreement Binding. This Agreement and the
rights and duties hereunder shall be binding upon and inure to
the benefit of the successors, assigns, heirs and legal and
personal representatives of the parties hereto.
Section 6.12. Gender. In this Agreement, unless the context
requires otherwise the singular includes the plural, the plural
the singular, the masculine gender includes the neuter, masculine
and feminine genders and vice versa.
Section 6.13. Governing Law. This Agreement shall be
governed exclusively by the laws of the State of New Jersey and
the Federal laws of the United States of America.
Section 6.14. Consent to Jurisdiction. Each party to this
Agreement hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State
of New Jersey and of the United States of America located in or
having jurisdiction over Millburn, New Jersey, for any actions,
suits or proceedings arising out of or relating to this Agreement
and the transactions contemplated hereby (and each party agrees
not to commence any action, suit or proceeding relating thereto
except in such courts), and further agrees that service of any
process, summons, notice or document in accordance with the
provisions of Section 6.1 shall be effective service of process
for any action, suit or proceeding brought against such party in
any such court. Each party hereby irrevocably and
unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby, in the courts of the State
of New Jersey or of the United States of America located in or
having jurisdiction over Millburn, New Jersey, and hereby further
irrevocably and unconditionally waives and agrees not to plead or
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claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO PROCESS SYSTEMS INC. NORD EST S.A.
By: /s/ John P. Appleton By: /s/ Michel Jacquet
Printed Name: John Pl Appleton Printed Name: Michel Jacquet
Title: President Title: _____________________
FOR PURPOSES OF SECTION
/s/ Emil C. Herkert 4.4(c) ONLY:
Emil C. Herkert
ENGINEERING TECHNOLOGY AND
KNOWLEDGE CORPORATION
/s/ Kenneth L. Zippler
Kenneth L. Zippler By: /s/ Michel Jacquet
Printed Name: Michel Jacquet
/s/ Franklin O. Williamson, Jr.
Franklin O. Williamson, Jr. Title:______________________
/s/ Fletcher N. Platt, Jr.
Fletcher N. Platt, Jr.
/s/ Eugene J. Destefano
Eugene J. Destefano
/s/ Meint Olthof
Meint Olthof
/s/ Stanley P. Kaltnecker, Jr.
Stanley P. Kaltnecker, Jr.
THERMO PROCESS SYSTEMS INC.
Secured Promissory Note
Waltham, Massachusetts
$28,000,000 As of January 29, 1995
For value received, THERMO PROCESS SYSTEMS INC., a Delaware
corporation (the "Company"), hereby promises to pay to the order
of Nord Est S.A., or assigns (hereinafter referred to as the
"Payee"), the principal sum of twenty-eight million dollars
($28,000,000) or such part thereof as then remains unpaid,
without interest, except as set forth below, and net of any
withholding obligation that may apply under applicable law. The
principal amount hereof shall be payable $13,935,000 on February
15, 1998 and $14,065,000 on May 15, 1998. Principal and
interest, if any, shall be payable in lawful money of the United
States of America, in immediately available funds, at the
principal office of the Payee or at such other place as the Payee
may designate from time to time in writing to the Company. This
Note may be prepaid at any time or from time to time, in whole or
in part, without any premium or penalty.
This Note is the Note referred to in that certain Stock
Purchase and Sale Agreement effective as of the date hereof among
Payee, the Company and certain members of the management of Elson
T. Killam Associates Inc., a New Jersey corporation (the
"Agreement"), and is secured by the deposit of U.S. Treasury
securities as provided for in that certain Pledge Agreement
effective as of the date hereof between the Company and the
Payee.
The then unpaid principal amount of this Note shall be and
become immediately due and payable without notice or demand, at
the option of the Payee, upon the occurrence of any of the
following events (an "Event of Default"):
(a) the failure of the Company to pay when due the
principal amount hereof;
(b) any representation or warranty made to the Payee
by the Company in the Agreement shall prove to have been
false or misleading in any material respect as of the date
hereof;
(c) the failure of the Company to pay its debts as
they become due, the insolvency of the Company, the filing
against the Company of any petition under the U.S.
Bankruptcy Code (or the filing of any similar petition under
the insolvency law of any jurisdiction) which filing is not
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dismissed within 60 days thereafter, the filing by the
Company of any petition under the U.S. Bankruptcy Code (or
the filing by the Company of any similar petition under the
insolvency law of any jurisdiction), or the making by the
Company of an assignment or trust mortgage for the benefit
of creditors or the appointment of a receiver, custodian or
similar agent with respect to, or the taking by any such
person of possession of, any property of the Company;
(d) the sale by the Company of all or substantially
all of its assets (other than to Thermo Electron Corporation
("Thermo Electron") or to a subsidiary of Thermo Electron in
a transaction in which Thermo Electron guarantees the
payment of this Note);
(e) the merger or consolidation of the Company with or
into any other corporation (other than Thermo Electron or a
subsidiary of Thermo Electron) in a transaction in which the
Company is not the surviving entity;
(f) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within 60 days of
issuance, against or affecting the person or property of the
Company or any liability or obligation of the Company to the
holder hereof; and
(f) the suspension of the transaction of the usual
business of the Company.
Any amount that remains unpaid when due under this Note
shall bear interest, from and after such due date through the
date on which such amount is paid, at a rate per annum equal to
the rate of interest announced from time to time by The First
National Bank of Boston at its head office in Boston,
Massachusetts as its "base rate" plus 3%. In case any payment
herein provided for shall not be paid when due, the Company
further promises to pay all costs of collection, including all
reasonable attorneys' fees.
No delay or omission on the part of the Payee in exercising
any right hereunder shall operate as a waiver of such right or of
any other right of the Payee, nor shall any delay, omission or
waiver on any one occasion be deemed a bar to or waiver of the
same or any other right on any future occasion. The Company
hereby waives presentment, demand, notice of prepayment, protest
and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this
Note. The Company hereby assents to any indulgence and any
extension of time for payment of any indebtedness evidenced
hereby granted or permitted by the Payee. The Company waives
trial by jury and the right to interpose any counterclaim or
setoff of any kind whatsoever.
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The Company hereby irrevocably and unconditionally consents
to submit to the exclusive jurisdiction of the courts of the
State of New Jersey and of the United States of America located
in or having jurisdiction over Millburn, New Jersey, for any
actions, suits or proceedings arising out of or relating to this
Note (and agrees not to commence any action, suit or proceeding
relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document in accordance
with the provisions of Section 6.1 of the Agreement shall be
effective service of process for any action, suit or proceeding
brought against the Company in any such court. The Company
hereby irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out
of this Note in the courts of the State of New Jersey or of the
United States of America located in or having jurisdiction over
Millburn, New Jersey, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
This Note shall be governed by and construed in accordance
with, the laws of the Commonwealth of Massachusetts and shall
have the effect of a sealed instrument.
THERMO PROCESS SYSTEMS INC.
By: /s/ John P. Appleton
Printed Name: John P. Appleton
Title: President
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
Sandra L. Lambert
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND NOT WITH A VIEW
TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED,
MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE
SECURITIES OR (2) UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THERMO PROCESS SYSTEMS INC.
Promissory Note Due June 1, 1997
Livonia, Michigan
February 21, 1995
For value received, THERMO PROCESS SYSTEMS INC., a Delaware
corporation (the "Company"), hereby promises to pay to Thermo
Electron Corporation (hereinafter referred to as the "Payee"), or
registered assigns, on June 1, 1997, as described below, the
principal sum of thirty-eight million dollars ($38,000,000) or
such part thereof as then remains unpaid, to pay interest from
the date hereof on the whole amount of said principal sum
remaining from time to time unpaid at a rate per annum equal to
the rate of the Commercial Paper Composite Rate as reported by
Merrill Lynch Capital Markets, as an average of the last five
business days of each fiscal quarter, plus twenty-five (25) basis
points, such interest to be payable in arrears on the first day
of each fiscal quarter of the Company during the term set forth
herein, until the whole amount of the principal hereof remaining
unpaid shall become due and payable, and to pay interest on all
overdue principal and interest at a rate per annum equal to the
rate of interest announced from time to time by The First
National Bank of Boston at its head office in Boston,
Massachusetts as its "base rate" plus one percent (1%).
Principal and all accrued but unpaid interest shall be repaid on
June 1, 1997. Principal and interest shall be payable in lawful
money of the United States of America, in immediately available
funds, at the principal office of the Payee or at such other
place as the legal holder may designate from time to time in
writing to the Company. Interest shall be computed on an
actual/360-day basis.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. All
prepayments shall be applied first to accrued interest and then
to principal.
1
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The then unpaid principal amount of, and interest
outstanding on, this Note shall be and become immediately due and
payable without notice or demand, at the option of the holder
hereof, upon the occurrence of any of the following events:
(a) the failure of the Company to pay any amount due
hereunder within ten (10) days of the date when due;
(b) any representation, warranty or statement made or
furnished to the Payee by the Company in connection with
this Note or the transaction from which it arises shall
prove to have been false or misleading in any material
respect as of the date when made or furnished;
(c) the failure of the Company to pay its debts as
they become due, the insolvency of the Company, the filing
by or against the Company of any petition under the U.S.
Bankruptcy Code (or the filing of any similar petition under
the insolvency law of any jurisdiction), or the making by
the Company of an assignment or trust mortgage for the
benefit of creditors or the appointment of a receiver,
custodian or similar agent with respect to, or the taking by
any such person of possession of, any property of the
Company;
(d) the sale by the Company of all or substantially
all of its assets;
(e) the merger or consolidation of the Company with or
into any other corporation in a transaction in which the
Company is not the surviving entity;
(f) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within thirty (30) days
of issuance, against or affecting the person or property of
the Company or any liability or obligation of the Company to
the holder hereof; and
(g) the suspension of the transaction of the usual
business of the Company.
Upon surrender of this Note for transfer or exchange, a new
Note or new Notes of the same tenor dated the date to which
interest has been paid on the surrendered Note and in an
aggregate principal amount equal to the unpaid principal amount
of the Note so surrendered will be issued to, and registered in
the name of, the transferee or transferees. The Company may
treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all
other purposes.
2
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In case any payment herein provided for shall not be paid
when due, the Company further promises to pay all cost of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Payee in exercising
any right hereunder shall operate as a waiver of such right or of
any other right of the Payee, nor shall any delay, omission or
waiver on any one occasion be deemed a bar to or waiver of the
same or any other right on any future occasion. The Company
hereby waives presentment, demand, notice of prepayment, protest
and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this
Note. The undersigned hereby assents to any indulgence and any
extension of time for payment of any indebtedness evidenced
hereby granted or permitted by the Payee.
This Note shall be governed by and construed in accordance
with, the laws of the Commonwealth of Massachusetts and shall
have the effect of a sealed instrument.
THERMO PROCESS SYSTEMS INC.
By: /s/ John P. Appleton
John P. Appleton
President and Chief
Executive Officer
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
Sandra L. Lambert
Secretary
AA950510011
