<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Period Ended March 8, 1995
(Date of Earliest Event Reported)
_______________________________________
Precision Castparts Corp.
(Exact name of registrant as specified in its charter)
State of Oregon 1-10348 93-0460598
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation of File No.) Identification No.)
organization
4600 S.E. Harney Drive
Portland, Oregon 97206-0898
Registrant's telephone number,
including area code: Telephone: (503) 777-3881
No Change
(Former name or address, if changed since last report)
_______________________________________
</Page>
<PAGE>
Item 2.
On March 8, 1995, Precision Castparts Corp. ("PCC")
purchased 100% of the outstanding capital stock of Quamco,
Inc. ("Quamco") from Columbus II Limited Partnership, an
investor group led by Overseas Partners, Inc., and other
shareholders. Quamco, which will be operated as PCC
Specialty Products, Inc., is a designer, manufacturer and
marketer of premium metal working tools and machines,
specialty powdered metal parts, and other specialty
industrial components. The purchase price of $89.9 million,
included the assumption or retirement of existing debt. The
transaction was financed from cash balances, the assumption
of $8.2 million of existing debt, and $12.2 million borrowed
from Wachovia Bank of Georgia, Istitutio Bancario San Paolo
di Torino and Banca Nazionale del Lavoro.
Item 7.
Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements.
Pursuant to Item 7(a)(4) of Form 8-K, it is
currently impracticable to file the required financial
statements; therefore, these financial statements will be
filed as soon as practicable, but not later than May 22,
1995.
Pursuant to Item 7(b)(2) of Form 8-K, it is
currently impracticable to file the pro forma financial
information; therefore, the pro forma financial information
will be filed under cover of Form 8 as soon as practicable,
but not later than May 22, 1995.
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<PAGE>
Page 2
(c) Exhibits.
(1) Agreement and Plan of Merger among Quamco, Inc.,
Precision Castparts Corp. and the Shareholders Named Herein
(Shareholders of Quamco, Inc.), as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned hereunto duly
authorized.
PRECISION CASTPARTS CORP.
Dated March 23, 1995 /s/ W.D. Larsson
______________________________
W. D. Larsson
Vice President and
Chief Financial Officer
</Page>
35
<PAGE>
AGREEMENT AND PLAN OF MERGER dated
as of January 19, 1995, among
PRECISION CASTPARTS CORP., an
Oregon corporation ("Parent"),
QUAMCO, INC., a Delaware
corporation (the "Company"),
COLUMBUS II LIMITED PARTNERSHIP, a
Delaware limited partnership
("Columbus"), and each of the other
Shareholders named herein.
The respective Boards of Directors of the Company
and Parent have duly adopted and approved this Agreement
and Plan of Merger (this "Agreement") and the business
combination between Parent and the Company to be effected
hereby through the merger of a newly formed, wholly-owned
subsidiary of Parent incorporated under the laws of
Delaware ("Sub") with and into the Company, with the
Company to be the survivor, pursuant and subject to the
terms and conditions of this Agreement and the General
Corporation Law of the State of Delaware (the "Delaware
Statute").
NOW, THEREFORE, in consideration of the mutual
benefits to be derived from this Agreement and of the
representations, warranties, agreements and conditions
contained in this Agreement, the parties agree as follows:
I DEFINITIONS
.1. Certain Definitions. As used in this Agreement, the
following terms have the corresponding meanings:
"Aggregate Exercise Price" means the
aggregate exercise price received by the Company in
cash (or deemed to have been received by the Company
pursuant to Section 3.3), between the date of this
Agreement and the Closing Date, inclusive, upon the
exercise of (i) the Columbus Warrant or (ii) any
Company Options.
"Aggregate Indebtedness" means the Heller
Amount plus the Rico Amount plus the Columbus Amount
plus the IDRB Amount.
"Aggregate Purchase Price" has the meaning
given in Section 2.1.
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<PAGE>
"Applicable Percentage" means, with respect
to any Shareholder, the quotient, in percentage form,
of (i) the number of Company Shares held of record by
such Shareholder immediately prior to the Effective
Time, as set forth on Schedule 1, divided by (ii) the
total number of Company Shares held by all
Shareholders.
"Best Knowledge of the Company" means and
includes the actual knowledge after due inquiry of
each of the officers, directors and employees of the
Company listed in Schedule 3.
"Business Day" means any day other than a
Saturday, a Sunday or a day on which banks are
permitted to close in the City and State of New York.
"Code" means the Internal Revenue Code of
1986, as amended.
"Columbus" means Columbus II Limited
Partnership, a Delaware limited partnership.
"Columbus Amount" means the aggregate unpaid
principal amount of, accrued unpaid interest on, and
prepayment or other penalties due on the Columbus
Notes, and any and all other liabilities owing to
Columbus, Overseas Partners, Inc. or their affiliates
as of the Closing.
"Columbus Loan Agreement" means the Loan
Agreement dated April 30, 1992, between the Company
and Columbus.
"Columbus Notes" means the Junior
Subordinated Promissory Note dated April 30, 1992,
payable to the order of Columbus, in the aggregate
original principal amount of $2,500,000, issued
pursuant to the Columbus Loan Agreement, plus any and
all additional promissory notes issued to Columbus
subsequent to April 30, 1992.
"Columbus Warrant" means the Warrant to
Purchase Capital Stock of Quamco, Inc. dated April 30,
1992, issued pursuant to the Columbus Loan Agreement
and representing the right to purchase 447,480 shares
of Company Common Stock as amended prior to the
Closing Date to permit exercise prior to the Closing
Date.
"Company Common Stock" means the Common
Stock, $.01 par value, of the Company.
"Company Option Plan" means the Quamco, Inc.
1994 Employee Stock Option Plan.
</Page>
<PAGE>
"Company Options" means options to purchase
up to 122,485 shares of Company Common Stock granted
by the Company to certain Management Stockholders
pursuant to the Company Option Plan.
"Company Shares" means the shares of Company
Common Stock issued and outstanding immediately prior
to the Effective Time, including shares issued upon
the exercise of Company Options and the Columbus
Warrant, in each case as set forth on Schedule 1.
"Disclosure Letter" means a letter dated as
of the date hereof and delivered by the Company to
Parent, setting forth certain information regarding
the Company called for by this Agreement.
"Dissenting Shareholders" means any
shareholders of the Company who dissent from the
Merger and comply with the Delaware Statute concerning
the right of holders of Company Shares to seek
appraisal of their shares.
"Escrow Agent" means First Interstate Bank
of Oregon, N.A., as escrow agent under the Escrow
Agreement.
"Escrow Agreement" means an escrow agreement
in substantially the form of Exhibit A hereto.
"Escrow Amount" means $5,000,000.
"GAAP" means generally accepted accounting
principles in the United States.
"Governmental Authority" means any Federal,
state or local governmental department, commission,
board, bureau, agency, instrumentality or court.
"Heller" means Heller Financial, Inc., a
Delaware corporation.
"Heller Amount" means the aggregate unpaid
principal amount of, accrued unpaid interest on, and
prepayment or other penalties due on, the Heller
Notes, all amounts due pursuant to the Heller Shadow
Warrant, and any and all other liabilities of the
Company and its Subsidiaries to Heller and its
affiliates, as of the Closing.
"Heller Credit Agreement" means the Amended
and Restated Credit Agreement dated as of April 28,
1992, between Heller and the Company, as amended.
</Page>
<PAGE>
"Heller Notes" means each of the following:
(i) the promissory note captioned "Term A" and dated December
13, 1989, made by the Company in the original principal amount of
$16,000,000, as amended by an allonge dated April 28, 1992;
(ii) the promissory note captioned "Term Note B" and dated
December 13, 1989, made by the Company in the original principal
amount of $12,000,000, as amended by an allonge dated April 28,
1992; and
(iii) the promissory note captioned "Revolving Note" and
dated December 13, 1989, made by the Company in the original
maximum principal amount of $12,0000,000, as amended by an
allonge dated April 28, 1992, which increased the maximum
principal amount thereof to $15,000,000.
"Heller Shadow Warrant" means the warrant
certificate issued pursuant to the Shadow Warrant
Agreement dated as of December 13, 1989, between Quacq
Corporation, a Delaware corporation and predecessor of
the Company, and Heller, as amended by the Amendment
of Shadow Warrant Agreement dated as of April 28,
1992, between the Company and Heller.
"IDRB Amount" means the aggregate unpaid
principal amount of, and accrued and unpaid interest
on, outstanding borrowings of the Company pursuant to
the Loan and Trust Agreement dated as of July 1, 1988
among the Massachusetts Industrial Finance Agency, the
Company and State Street Bank and Trust Company (as
successor to Bank of New England, N.A.), as amended,
relating to the Agency's Industrial Development
Revenue Refunding Bonds (Quamco, Inc. - 1988 Series A
and 1988 Series B), as of the Closing.
"Intellectual Property Rights" means and
includes all patents, patent applications, trademarks,
trademark applications, trade names, service marks,
service mark applications, copyrights, franchises,
trade secrets and proprietary processes.
"Laws" means and includes all Federal, state
and local statutes, laws, rules and regulations
applicable to the Company and its subsidiaries and any
and all judgments, orders and decrees binding upon the
Company and its subsidiaries or any of their
respective properties issued by any court or other
Governmental Authority with jurisdiction over the
Company or its subsidiaries or such property.
</Page>
<PAGE>
"Liens" means and includes any security
interests, judgments, liens, pledges, claims, charges,
rights of first refusal, mortgages or other encumbranc
es upon legal or beneficial ownership, or upon any
rights, title or interests pertaining thereto.
"Management Shareholders" means each of the
persons set forth on Schedule 2.
"Material Adverse Effect" means a material
adverse effect on the business or financial condition
of the Company and its Subsidiaries, taken as a whole.
"Merger" has the meaning given in Section
2.1.
"Merger Consideration" means the Aggregate
Purchase Price, less the Aggregate Indebtedness, plus
the Aggregate Exercise Price.
"Parent" has the meaning given in the
preamble to this Agreement.
"Per Share Amount" means an amount equal to
the quotient of (i) (A) the Merger Consideration less
(B) the Escrow Amount divided by (ii) the number of
Company Shares.
"Person" means any individual, corporation,
partnership, company, association, trust, estate or
Governmental Authority.
"Rico" means Rico Header Tools, Inc., a
Rhode Island corporation.
"Rico Amount" means the aggregate unpaid
principal amount of, accrued unpaid interest on, and
prepayment or other penalties due on the Rico Seller
Notes, the remaining amount payable pursuant to
Section 8.2 of the Rico Stock Purchase Agreement, and
any and all other liabilities owed by the Company and
its Subsidiaries to the Rico Sellers, as of the
Closing.
"Rico Collateral Agreements" means (i) a
Security Agreement, dated as of April 28, 1992, among
the Company, Rico and each of the Rico Sellers and
(ii) five mortgages or deeds of trust, each dated as
of April 28, 1992, in the forms attached to the Rico
Stock Purchase Agreement, which Security Agreement and
mortgages and/or deeds of trust were entered into
pursuant to the Rico Stock Purchase Agreement to
secure the obligations of the Company under the Rico
Seller Notes.
</Page>
<PAGE>
"Rico Seller Notes" means the several
Secured Subordinated Promissory Notes of the Company,
each dated as of April 28, 1992, payable to the Rico
Sellers, respectively, in the aggregate original
principal amount of $3,500,000, issued pursuant to the
Rico Stock Purchase Agreement.
"Rico Sellers" means Prudence B. Bishop,
Edwin S. Barton, Ralph G. Barton and Charlotte B.
Sornborger, the former shareholders of Rico.
"Rico Stock Purchase Agreement" means the
Stock Purchase Agreement dated as of April 28, 1992,
among the Company, Rico and the Rico Sellers.
"Shareholders" means the shareholders listed
on Schedule 1 which term shall include all
shareholders who become signatories to this Agreement
prior to the Closing.
"Subsidiary" means a corporation, 50 percent
or more of the voting capital stock of which is owned
by the Company or another Subsidiary, and
"Subsidiaries" shall mean all corporations that are a
Subsidiary.
"Tax" means any of the Taxes and "Taxes"
means, with respect to any Person, all income taxes
(including any tax on or based upon net income, or
gross income, or income as specially defined, or
earnings, or profits, or selected items of income,
earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, environmental,
excise, severance, stamp, occupation, premium,
property and windfall profits taxes, alternative or
add-on minimum taxes, customs duties and other taxes,
fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties,
additions to tax and additional amounts imposed by any
taxing authority (domestic or foreign) on such Person.
.2. Interpretation. Whenever reference is made in this
Agreement to any Article, Section, Schedule or Exhibit, such
reference shall be to an Article or Section of this Agreement or
to a Schedule or Exhibit attached hereto, unless otherwise
indicated. Pronouns used in this Agreement include the
masculine, feminine, neuter, singular and plural meanings
thereof, unless the context otherwise requires. The term
"including" means "including, without limitation," for all
purposes of this Agreement.
</Page>
</Page>
.3. Accounting Terms. Except as otherwise expressly provided
in this Agreement, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, consistently applied,
and all financial statements or accounting determinations
required in this Agreement to be prepared or made in accordance
with GAAP shall be prepared or made in accordance with GAAP
applied on a consistent basis.
II THE MERGER
.1. Acquisition of the Company. This Agreement provides for
the acquisition of the Company through the merger (the "Merger")
of Sub with and into the Company, with the Company being the
survivor. The net aggregate consideration payable by Parent
and/or Sub to acquire the Company shall be $89,900,000 (the
"Aggregate Purchase Price").
.2. The Merger. In accordance with and subject to the
provisions of this Agreement and the Delaware Statute, at the
Effective Time, Sub shall be merged with and into the Company,
which, at and after the Effective Time, shall be and is sometimes
referred to in this Agreement as the "Surviving Corporation".
Sub and the Company are sometimes referred to in this Agreement
as the "Constituent Corporations".
.3. Closing. Unless this Agreement shall have been terminated
and the transactions contemplated by this Agreement abandoned
pursuant to the provisions of Section 8.1, and subject to the
provisions of Article VI, the closing of the Merger ("Closing")
shall take place at 10:00 a.m., Eastern Time, on the date that is
the fifth Business Day after all conditions set forth in Article
VI have been satisfied or waived in accordance with Section 8.2,
(to the extent such conditions may be waived), or such other date
or time as is agreed to by the parties (the "Closing Date"). The
Closing shall take place at the offices of Baker & Botts, L.L.P.,
885 Third Avenue, New York, New York 10022, unless another place
is agreed to in writing by the parties.
.4. Effective Time of the Merger. Subject to the provisions
of this Agreement, on the Closing Date the Surviving Corporation
shall execute, deliver and file a certificate of merger with
respect to the Merger (the "Certificate of Merger") in accordance
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<PAGE>
.5. with Section 251 of the Delaware Statute. The Merger shall
become effective (the "Effective Time") upon the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware.
.6. Effect of Merger. (a) At the Effective Time, the
separate existence of Sub shall cease and Sub shall be merged
with and into the Surviving Corporation, and the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be
subject to all the restrictions, disabilities and duties of each
of the Constituent Corporations.
(a) At the Effective Time, all and singular, the rights,
privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all
debts due to any of the Constituent Corporations on whatever
account, as well for stock subscriptions as all other things in
action or belonging to each of the Constituent Corporations shall
be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of the several and respective
Constituent Corporations, and the title to any real estate vested
by deed or otherwise, under the laws of the State of Delaware, in
either of the Constituent Corporations, shall not revert or be in
any way impaired by reason of the Delaware Statute; but all
rights of creditors and all liens upon any property of either of
the Constituent Corporations shall be preserved unimpaired, and
all debts, liabilities and duties of the respective Constituent
Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred or
contracted by it.
<PAGE>
<PAGE>
.7. Certificate of Incorporation, By-Laws, Directors and
Officers of Surviving Corporation. At the Effective Time, (i)
the certificate of incorporation of the Company shall be the
certificate of incorporation of the Surviving Corporation until
altered, amended or repealed as provided in the Delaware Statute,
(ii) the by-laws of the Company shall be the by-laws of the
Surviving Corporation until altered, amended or repealed as
provided in the Delaware Statute or in the certificate of
incorporation of the Surviving Corporation or in said by-laws,
(iii) the directors of Sub shall be the directors of the
Surviving Corporation and (iv) the officers of the Sub shall
become the officers of the Surviving Corporation.
III EFFECT OF MERGER ON CAPITAL STOCK
OF CONSTITUENT CORPORATIONS; PAYMENT OF CASH CONSIDERATION
AND EXCHANGE OF CERTIFICATES
.1. Effect on Capital Stock. At the Effective Time, subject
and pursuant to the terms of this Agreement and the Delaware
Statute, by virtue of the Merger and without any action on the
part of the Constituent Corporations or the holders of the
capital stock of the Constituent Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share
of common stock, $.01 par value, of Sub shall be converted into
one share of common stock, $.01 par value, of the Surviving
Corporation.
</Page>
(b) Cancellation of Certain Shares of the Company Common
Stock. Each share of the Company Common Stock that is owned by
the Company as treasury stock and each share of the Company
Common Stock that is owned by Parent or Sub shall be canceled and
no consideration shall be delivered in exchange therefor.
(c) Company Shares. Each of the Company Shares (other than
shares held by Dissenting Shareholders, if any) shall be
converted into the right to receive the Per Share Amount, in the
manner provided in Section 3.3.
(d) Dissenting Shares. Each of the Company Shares held by
a Dissenting Shareholder, if any, shall not be converted as
described in Section 3.1(c) but shall be converted into the right
to receive such consideration as may be determined to be due to
such Dissenting Shareholder pursuant to the Delaware Statute;
provided, however, that each Company Share held at the Effective
Time by a Dissenting Shareholder who shall, after the Effective
Time, withdraw his demand for appraisal or lose or fail to
perfect his right of appraisal as provided in the Delaware
Statute shall be deemed to be converted, as of the Effective
time, into the right to receive an amount in cash equal to the
Per Share amount without interest. After the Effective Time, as
provided in the Delaware Statute, no Dissenting Shareholder will
be entitled to vote the Company Shares subject to such Dissenting
Shareholder's demand for appraisal for any purpose or be entitled
to the payment of dividends or other distribution on such Company
Shares.
.2. Options and Warrants. It is contemplated that, at or
before the Closing, the Company Options and the Columbus Warrant
will be exercised in full by the holders thereof, in accordance
with their respective terms. Any such options and/or warrant
exercised on the Closing Date shall be deemed for all purposes
hereof to have been exercised, and the shares of Company Common
Stock issuable upon such exercise shall be deemed for all
purposes hereof to have been duly issued and paid for, as of
immediately prior to the Effective Time. Any options and/or
warrants not exercised at or before the Closing Date shall be
cancelled.
.3. Payment of Merger Consideration. At the Effective Time,
the Surviving Corporation shall pay to the Shareholder's
Representative for the benefit of the Shareholders, by wire
transfer of immediately available funds, an amount equal to the
product of (i) the number of Company Shares held by the
Shareholders immediately prior to the Effective Time, as set
</Page>
<PAGE>
against receipt of one or more certificates representing in
the aggregate such number of Company Shares, duly endorsed
for transfer pursuant hereto or accompanied by duly
executed stock powers in proper form therefor; provided,
however, that if any Management Shareholder or Columbus
exercises a Company Option or the Columbus Warrant on the
Closing Date pursuant to Section 3.2, the Surviving
Corporation shall, in lieu of receiving payment of the
exercise price thereof, deduct from the amount that would
otherwise be payable to such Management Shareholder or
Columbus pursuant to this Section 3.3 the aggregate
exercise price payable by such Management Shareholder or
Columbus upon the exercise of such Company Option or
Columbus Warrant. The Shareholder's Representative shall
promptly distribute the amounts so received to the
Shareholders based on their respective holdings of Company
Shares after deduction of amounts sufficient to pay the
expenses of the Company and the Shareholders contemplated
by Section 8.3.
.4. Cancellation of Certain Indebtedness. (a) At the
Closing, Sub shall pay to Heller, by wire transfer of immediately
available funds, the Heller Amount, against receipt of the Heller
Shadow Warrant and the Heller Notes, and any other instruments
represented in the Heller Amount, duly endorsed for surrender and
cancellation as provided herein and accompanied by such
instruments of cancellation and/or release as Sub may reasonably
request from Heller.
(a) At the Closing, Sub shall pay to the Rico Sellers, by wire
transfer of immediately available funds, the Rico Amount, against
receipt of the Rico Seller Notes and any other instruments
represented in the Rico Amount, duly endorsed for surrender and
cancellation as provided herein and accompanied by such
instruments of cancellation and/or release as Sub may reasonably
request from the Rico Sellers.
(b) At the Closing, Sub shall pay to Columbus, by wire
transfer of immediately available funds, the Columbus Amount,
against receipt of the Columbus Notes and any other instruments
represented in the Columbus Amount, duly endorsed for surrender
and cancellation as provided herein and accompanied by such
instruments of cancellation and/or release as Sub may reasonably
request from Columbus.
.5. Availability of Funds. Parent shall make available to Sub
(or, on or after the Effective Time, to the Surviving
Corporation) all funds needed to consummate its obligations under
this Agreement and shall take all actions necessary to cause Sub
(or, on or after the Effective Time, shall cause the Surviving
Corporation) to comply with its obligations under this Agreement.
</Page>
<PAGE>
.6. Payment of Escrow Funds. (a) At the Closing, Sub shall
pay to the Escrow Agent the Escrow Amount, which amount (the
"Escrow Fund") shall be payable by the Escrow Agent subject to
the provisions of, and as prescribed in, the Escrow Agreement.
(a) The Escrow Amount shall constitute a portion of, and
not an addition to, the maximum indemnity provided under Section
7.4(c). The Escrow Fund shall remain at the $5,000,000 level
(before giving effect to any amounts paid from escrow pursuant to
rights of indemnity under this Agreement) until the date that is
two years after the date of the Closing. On the second, third
and fourth anniversaries of the Closing, the Escrow Fund shall be
reduced to an amount equal to the greater of (a) the balance of
the Escrow Fund that is subject to pending claims for indemnity
on such anniversary date, and (b) $4,000,000 (second
anniversary), $3,000,000 (third anniversary) and $2,000,000
(fourth anniversary), respectively. At the fifth anniversary,
the Escrow Fund shall be reduced to the greater of (a) the
balance of the Escrow Fund that is subject to pending claims for
indemnity on such anniversary date, and (b) zero. Any amounts
made available as a result of such reductions shall be promptly
paid to the Shareholders in accordance with their respective
Applicable Percentages. The Escrow Fund shall be the first
source for payment of claims of indemnity by Parent and/or the
Surviving Corporation under Article VII of the Agreement, and
claims for indemnity against the Shareholders or any individual
Shareholder shall be satisfied solely from the Escrow Fund unless
and until it is exhausted or would be exhausted if the claim is
valid, in which case claims against the Shareholders or any
individual Shareholder are permitted.
</Page>
<PAGE>
IV REPRESENTATIONS AND WARRANTIES
.1. Representations and Warranties of Each Shareholder. Each
Shareholder hereby represents and warrants to Parent and Sub,
severally as to such Shareholder and not as to any other
Shareholder, as follows:
(a) Title. Such Shareholder is the beneficial and record
owner of, and has good and marketable title to, the Company
Shares set forth opposite the name of such Shareholder on
Schedule 1, free and clear of all Liens, other than the pledge to
and Liens of Heller under the Quamco Holders Pledge Agreement (as
defined in the Heller Credit Agreement), as amended. Except as
provided in the Disclosure Letter and as provided for in this
Agreement, there are no agreements or understandings between such
Shareholder and any other Person with respect to the voting, sale
or disposition of any Company Shares, or any other matter
pertaining to the Company Shares.
(b) Authority. Such Shareholder has the full and absolute
power and authority to enter into and perform its obligations
under this Agreement, and this Agreement is a valid and binding
obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms. Neither the
execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby nor
compliance by such Shareholder with any of the provisions hereof
will conflict with or result in a breach or default (or give rise
to any right of termination, cancellation or acceleration) under
any term of any instrument or agreement to which such Shareholder
is a party or violate any applicable laws, which conflict,
breach, default or violation would prevent the consummation of
the transactions contemplated by this Agreement, result in a Lien
on or against any Shares or any assets, rights or properties of
the Company or any Subsidiary, give rise to any claim against the
Company, Parent, Sub or the Surviving Corporation or otherwise
result in a Material Adverse Effect. Except as contemplated by
this Agreement, no permit, authorization, consent or approval of
or by, or any notification of or filing with, any Person
(governmental or private) is required in connection with the
execution and delivery by such Shareholder of this Agreement, or
the performance by such Shareholder of its obligations hereunder.
</Page>
<PAGE>
.2. Additional Representations and Warranties of Columbus. In
addition to the representations and warranties of Columbus, as
one of the Shareholders, set forth in Section 4.1, Columbus
hereby represents and warrants to Parent and Sub as follows:
(a) Limited Partnership. Columbus is a limited partnership
duly existing and in good standing under the laws of the State of
Delaware.
(b) Power. Columbus has the power and authority to enter into
this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(c) Authority. The execution and delivery of this Agreement
by Columbus and the performance by Columbus of its obligations
hereunder have been duly and validly authorized by all requisite
limited partnership action on the part of Columbus.
(d) Columbus Warrant. Columbus is the lawful holder and
beneficial owner of the Columbus Warrant. Columbus is legally
entitled to exercise the Columbus Warrant, and the exercise
thereof will not conflict with or result in a breach or default
under any instrument or agreement to which Columbus or the
Company is a party, or result in a Lien on or against any Shares
or any assets, rights or properties of the Company or any
Subsidiary.
(e) Representations and Warranties of Columbus, the
Shareholders, and the Company. Columbus, the Shareholders, and
the Company represent and warrant to Parent and Sub as follows:
(f) Organization; Good Standing; Qualification and Power.
Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry
on its business as now being conducted. The Company has all
requisite power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. Each of the Company and its
Subsidiaries is duly qualified and in good standing to do
business in all jurisdictions in which the nature of its business
or the ownership or leasing of its properties make such
qualification necessary, except any jurisdictions where </Page>
<PAGE>
the failure to qualify or be in good standing would not
result in a Material Adverse Effect. The Disclosure Letter
contains true and complete lists of all jurisdictions in
which the Company and each of its Subsidiaries are
qualified and in good standing to do business,
respectively. The Company has delivered to Parent true and
correct copies of the certificate of incorporation and
by-laws of the Company and each of its Subsidiaries,
respectively, as in effect on the date hereof.
(g) Equity Investments. Except for Rico, and except as
otherwise set forth in the Disclosure Letter, the Company has no
Subsidiaries, and neither the Company nor any of its Subsidiaries
owns any capital stock or other proprietary interest, directly or
indirectly, in any Person.
(h) Capital Stock; Securities. (i) The authorized capital
stock of the Company consists of 12,500,000 shares of Company
Common Stock, of which 9,377,515 shares are validly issued and
outstanding and 122,485 shares are held in the Company's
treasury, and 1,000 shares of Preferred Stock, par value $.01 per
share, none of which are issued and outstanding. All the Company
Shares have been, or at the Closing will be, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. In the aggregate, the Shareholders and the other Company
shareholders listed on Schedule 1A are the holders of record of
all outstanding shares of Company Common Stock. Except as
provided in the Disclosure Letter, there are no options, warrants
or other rights granted by the Company to acquire any capital
stock of the Company (other than the Company Options and the
Columbus Warrant and the Heller Shadow Warrant), or any voting
agreements, voting trusts or other agreements or understandings
to which the Company is a party or by which it is bound with
respect to any capital stock of the Company.
(i) The issued and outstanding shares of capital stock of Rico
consist of 11,041 shares of Common Stock, $1.00 par value ("Rico
Common Stock"), all of which shares are owned beneficially and of
record by the Company and have been pledged by the Company to
Heller pursuant to the Borrower Pledge Agreement (as defined in
the Heller Credit Agreement). All the outstanding shares of Rico
Common Stock have been validly issued, are fully paid and
nonassessable and are not subject to preemptive rights. Except
as provided in the Disclosure Letter, there are no options,
warrants or other rights to acquire any capital stock of Rico, or
any voting agreements, voting trusts or other agreements or
understandings (other than the Borrower Pledge Agreement and the
Heller Credit Agreement) to which Rico or the Company is a party
or by which Rico or the Company is bound with respect to any
capital stock of Rico.
</Page>
<PAGE>
(i) Authority; No Conflicts. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the
Company, and this Agreement has been duly and validly executed
and delivered by the Company and is a valid and binding
obligation of the Company, enforceable in accordance with its
terms. Except as provided in the Disclosure Letter, neither the
execution, delivery or performance of this Agreement by the
Company, nor the consummation of any transaction contemplated
hereby, nor compliance by the Company with any provision hereof
will (i) conflict with or result in a breach of any provision of
the certificate of incorporation or by-laws of the Company, (ii)
cause a default (or give rise to any third-party right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage or
indenture, or any other material instrument, obligation or
agreement to which the Company is a party or by which the Company
or any of its properties or assets may be bound or (iii) violate
any material Law. Except as provided in the Disclosure Letter,
no permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person (governmental or
private) is required in connection with the execution, delivery
or performance by the Company of this Agreement or the
consummation of the transactions contemplated hereby, other than
the filing of a pre-merger notification report under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(j) Financial Information. Attached to the Disclosure Letter
are the audited consolidated balance sheet of the Company and its
Subsidiaries as at October 30, 1994, and the related audited
statements of operations, shareholders' equity and cash flows for
the fiscal year then ended (including the notes thereto and other
financial information included therein), including the report
(the "Report") of Arthur Andersen & Co., independent certified
public accountants for the Company (collectively, the "Financial
Statements"). Except as provided in the Disclosure Letter or set
forth in the Report, the Financial Statements (A) conform to the
books and records of the Company and the Subsidiaries in all
material respects, (B) fairly present the consolidated financial
position of the Company and its Subsidiaries as of the dates
indicated and the results of operations, shareholders' equity and
cash flows thereof for the respective periods indicated and (C)
were prepared in accordance with GAAP, consistently applied.
Prior to the Closing Date the Company will deliver to Parent
revised versions of the Financial Statements appropriately
modified to permit removal of the qualification contained in the
third and fourth paragraphs of the Report. When delivered, such
revised versions of the Financial Statements shall constitute the
Financial Statements for all purposes of this Agreement.
</Page>
<PAGE>
(k) Absence of Undisclosed Liabilities. Except as provided in
the Disclosure Letter, as of October 30, 1994, (i) neither the
Company nor its Subsidiaries had any material liability of any
nature that was not provided for or disclosed in the Financial
Statements to the extent required by GAAP, (ii) all liability
reserves established by the Company in the Financial Statements
were in accordance with GAAP and (iii) there were no material
loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975) that were not provided
for or disclosed in the Financial Statements in accordance with
GAAP.
(l) Absence of Changes. Except as provided in the Disclosure
Letter, since October 30, 1994, the Company and its Subsidiaries
have been operated in the ordinary course and there has not been:
(i) any material adverse change in the business,
condition
(financial or otherwise), assets, liabilities, operations or
results of operations of the Company and its Subsidiaries, taken
as a whole;
(ii) any uninsured damage, destruction or loss in an
aggregate
amount exceeding $50,000 of any tangible assets or property of
the Company or its Subsidiaries;
(iii) any material obligation or liability
created or
incurred by the Company or its Subsidiaries or any material
transaction, contract or commitment entered into by the Company
or its Subsidiaries outside the ordinary course of business;
(iv) any declaration, setting aside or payment of any
dividend
or other distribution of assets with respect to any shares of
capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition of any such shares of
capital stock;
(v) any material general increase in the
compensation of
employees of the Company or its Subsidiaries or any increase or
prepayment of compensation to any officer, director or executive
employee thereof, or the entering into of any material employment
contract with any officer, director or employee, or the making,
forgiveness or other change in the terms of any material loan to,
any officer or director of the Company or its Subsidiaries;
</Page>
<PAGE>
(vi) any license, sale, transfer, pledge, mortgage or
other
disposition of any material asset of the Company or its
Subsidiaries other than sales of inventory for fair value in the
ordinary course of business;
(vii) any change in the accounting methods,
principles or
practices followed by the Company or its Subsidiaries;
(viii) any event, occurrence or condition which,
individually or in the aggregate, has, or is reasonably likely to
have, a Material Adverse Effect (other than as a result of
general economic conditions);
(ix) any entry into any commitment or transaction that,
individually or in the aggregate, has or is reasonably likely to
have a Material Adverse Effect (other than as a result of general
economic conditions);
(x) any amendment or change in the articles of
incorporation,
bylaws or comparable governing instruments of the Company or its
Subsidiaries;
(xi) any taking of any action referred to in Section
5.2
Conduct of Business, except as would have been permitted or
required thereby had it been applicable at the time of such
action;
(xii) any revaluation by the Company or its
Subsidiaries of
any of their respective assets, including, without limitation,
write-downs of inventory or write-offs of accounts receivable, in
each case, other than in the ordinary course of business
consistent with past practices;
(xiii) any material labor dispute, problem or
grievance,
other than routine individual grievances, or any significant
activity or material proceeding by a labor union or
representative thereof to organize any employees of the Company
or any of its Subsidiaries, which employees were not subject to a
collective bargaining agreement at October 30, 1994; or
(xiv) any cancellation of material indebtedness
due to the
Company or any of its Subsidiaries, or any waiver or release of
any material rights of the Company or its Subsidiaries except in
the ordinary course of business and for fair value.
</Page>
<PAGE>
(m) Title to Properties. Except as provided in the
Disclosure
Letter, the Company or its Subsidiaries has good and marketable
title to all material properties reflected in the Financial
Statements or acquired after October 30, 1994 (except inventory
and other properties disposed of since October 30, 1994, and
accounts or notes receivable paid since October 30, 1994), free
and clear of all Liens other than (i) Liens for current taxes not
yet due and payable, (ii) mechanics', carriers', workmen's and
similar Liens arising in the ordinary course of business in
respect of amounts that are not yet due and payable or are being
disputed in good faith, and (iii) as to real property only, minor
Liens that do not individually or in the aggregate materially
affect the marketability or insurability of such property and do
not materially impair the use of such property in the business of
the Company and/or its Subsidiaries as currently conducted. The
Disclosure Letter sets forth a list of all real property owned of
record or beneficially by the Company and its Subsidiaries.
(n) Tax Matters. Except as provided in the Disclosure
Letter,
(i) the Company and each of its Subsidiaries has
filed all
returns, declarations of estimated tax, tax reports, information
returns and statements for periods ending on or before the date
hereof (other than those which are not yet due or for which
extensions have been granted) relating to any Taxes with respect
to any income, properties or operations of the Company and its
Subsidiaries prior to such date (collectively, "Returns") and all
such Returns are correct and complete in accordance with
applicable laws, regulations, and administrative requirements;
(ii) the provision for liability for taxes included
in the
October 30, 1994, audited balance sheet will be adequate to pay
in full all tax liabilities owed by the Company for any periods
that end on or prior to October 30, 1994;
(iii) the Company has made, or will have made
on or
prior to the Closing Date, adequate provision on its books and
records for all taxes that will become payable for any periods
that end on or before the Closing Date for which no returns have
yet been filed and for periods that begin on or before the
Closing Date and end after the Closing Date to the extent such
taxes are attributable to the portion of the periods ending on
the Closing Date;
<PAGE>
<PAGE>
(iv) no audits or disputes are pending before any
Governmental Authority with respect to any Returns of the Company
and no material unresolved questions or claims concerning Taxes
of the Company or its Subsidiaries exist, and neither the Company
nor its Subsidiaries has waived any Statute of Limitations for
any open tax years;
(v) neither the Company nor any predecessor has
waived or
granted any extension of the statute of limitations applicable to
any Return or Tax claim or otherwise granted any extension of
time during which a tax assessment or deficiency assessment may
be made;
(vi) the Company is not and has not been a party to
any tax
sharing agreement with any other Person;
(vii) the Company has not made a currently
effective
election under Section 1362(a) of the Code to be taxed as an "S
corporation";
(viii) the Company has not made an election to be
treated
as a "consenting corporation" under Section 341(f) of the Code
and has not been a personal holding company within the meaning of
Section 542 of the Code during the five-year period preceding the
date hereof;
(ix) the federal income tax returns of the Company
and its
Subsidiaries have been examined by the Internal Revenue Service
for all periods ended through October 31, 1991, and the time for
assessment of any deficiency with respect to all periods that
ended through October 31, 1990, has expired;
(x) since October 30, 1994, the Company has not
incurred
any liability for any Taxes except in the ordinary and regular
course of business;
(xi) neither the Company nor its Subsidiaries has
at any
time filed a consolidated or combined tax return as a member of a
group other than a group consisting of the Company and one or
more of the Subsidiaries;
</Page>
<PAGE>
(xii) the Company and its Subsidiaries have made
available to Parent all written reports of and written
communications with respect to each of them from Internal Revenue
Service agents and the corresponding agents of state, local and
foreign jurisdictions with respect to Returns or reports of the
Company or its Subsidiaries with respect to all periods ended
after October 31, 1990;
(xiii) the Company or its Subsidiaries (A) have
not
agreed to and are not required to make any adjustment pursuant to
Section 481(a) of the Code; (B) have no knowledge that the
Internal Revenue Service has proposed any such adjustment or
change in accounting method with respect to them; and (C) do not
have any application pending with any taxing authority requesting
permission for any change in accounting method;
(xiv) no property owned by the Company or its
Subsidiaries is property that Parent or the Company or its
Subsidiaries is or will be required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect
immediately before enactment of the Tax Reform Act of 1986;
(xv) there is no employment or employment related
contract,
agreement, plan or arrangement covering any person that,
individually or collectively, as a consequence of this
transaction could give rise to the payment of any amount by
Parent or the Surviving Corporation that would not be deductible
by Parent or the Surviving Corporation by reason of Section 280G
of the Code;
(xvi) except as provided for on the Disclosure
Schedule,
neither the Company nor its Subsidiaries owns an interest in any
(A) domestic international sales corporation, (B) foreign sales
corporation, (C) controlled foreign corporation, or (D) passive
foreign investment company; and
(xvii) except as provided on the Disclosure
Schedule,
neither the Company nor its Subsidiaries is a party (other than
as an investor) to any industrial development bond.
</Page>
<PAGE>
(o) Intellectual Property Rights. The Company or its
Subsidiaries owns or has the right to use all Intellectual
Property Rights that are necessary to permit the business of the
Company and its Subsidiaries, as currently conducted, to be
carried on after the Closing Date (collectively, the "Requisite
Rights"). The Disclosure Letter contains a list of all patents
and registered trademarks held by the Company or its Subsidiaries
and all pending applications therefor filed by the Company or its
Subsidiaries with respect to any Requisite Rights. The Company
or its Subsidiaries has not received notice that any of the
Requisite Rights violate or infringe upon the Intellectual
Property Rights of any other Person.
(p) Agreements, Etc. The Disclosure Letter
contains a list of all material written contracts,
agreements and other instruments currently in effect to
which the Company or any of its Subsidiaries is a party
that were not made in the ordinary course of business or
that were made in the ordinary course of business and are
referred to in clauses (i) through (xiii) of this Section
4.3(k) ("Material Contracts"). Except as provided in the
Disclosure Letter, neither the Company nor any Subsidiary
is a party to any written contract, agreement or other
instrument of the type specified in any of the following
clauses (i) through (xiii):
(i) collective bargaining or other material agreement
with any
labor union;
(ii) contract with or commitment for the employment or
retention of any officer, employee or consultant with annual
wages, consulting or similar fees or annual salary in excess of
$100,000;
(iii) profit-sharing, bonus, stock option, pension,
retirement, stock purchase, hospitalization, insurance or similar
plan or agreement providing the foregoing types of benefits to
any current officer or employee;
(iv) indenture, mortgage, promissory note, loan
agreement or
other agreement or commitment for the borrowing of money;
(v) lease of real property;
(vi) lease of personal property involving payments by
the
Company or any of its Subsidiaries to any third party in excess
of $100,000 per year;
(vii) contract or commitment for capital
expenditures in
excess of $25,000;
</Page>
<PAGE>
(viii) guaranty of obligations of any other Person;
(ix) agreement materially restricting the Company or any
of its
Subsidiaries from doing business anywhere in the world or
materially limiting the business in which it may engage;
(x) agreement with respect to the licensing of any
Intellectual Property Rights (or any similar agreement) involving
payments by the Company or any of its Subsidiaries to any third
party in excess of $100,000 per year;
(xi) agreement for the sale or disposition of any
material
assets, property or rights of the Company or any of its
Subsidiaries other than in the ordinary course of business and
for fair value;
(xii) material distribution, distributorship,
dealership,
franchise, sales representative, sales agency, manufacturer's
representative or similar agreement; or
(xiii) any agreement under which the Company or any
of its
Subsidiaries has agreed to indemnify any third party, which
obligation has not expired.
Except as provided in the Disclosure Letter, the Company
and its Subsidiaries have performed all material
obligations required to be performed under the Material
Contracts, and neither the Company nor any Subsidiary is in
default in any material respect under any Material
Contract.
(q) Litigation; Orders. Except as provided in the
Disclosure
Letter, there are no (i) actions, suits, claims, investigations
or legal or administrative or arbitration proceedings pending or,
to the Best Knowledge of the Company, threatened against the
Company or any of its Subsidiaries, whether at law or in equity,
or before or by any Government Authority, or (ii) any judgments,
decrees, injunctions or orders of any Government Authority
against the Company or any of its Subsidiaries.
</Page>
(r)
Compliance; Licenses and Permits. Except
as to environmental matters, which are addressed in Section
4.3(q), the Company and its Subsidiaries have complied in
all material respects with all material Laws. The Company
and each of its Subsidiaries has all material Federal,
state, local and foreign governmental licenses and permits
necessary in the conduct of their business (other than any
such licenses and permits the absence of which would not,
individually or in the aggregate, result in a Material
Adverse Effect) and is in compliance therewith in all
material respects. No licenses or permits will expire
prior to January 1, 1996, which expiration would cause a
Material Adverse Effect, and the Company has not been
notified of any proceedings to revoke or limit any license
or permit.
(s) Employee Benefit Plans. (i) The Disclosure Letter
identifies each "employee benefit plan", as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), currently or previously maintained or entered
into by the Company or any of its Subsidiaries for the benefit of
any employee or former employee under which the Company or any of
its Subsidiaries has any present or future obligation or
liability (the "Employee Plans"). Copies of all Employee Plans
(and, if applicable, related trust agreements), and all
amendments thereto have been furnished to Parent. The only
Employee Plans that individually or collectively would constitute
an "employee pension benefit plan" as defined in Section 3(2) of
ERISA (collectively, the "Pension Plans") are identified as such
in the Disclosure Letter.
(i) No Pension Plan constitutes or since the
enactment of
ERISA has constituted, a "multiemployer plan", as defined in
Section 3(37) of ERISA, and no Pension Plan currently or
previously maintained by the Company or any of its Subsidiaries
is subject to Title IV of ERISA. No "prohibited transaction", as
defined in Section 406 of ERISA or Section 4975 of the Code,
which would give rise to any liability or cause or permit any
Employee Plan to cease to be qualified under Section 401(a) of
the Code, has occurred with respect to any Employee Plan that is
covered by Title I of ERISA, excluding transactions effected
pursuant to a statutory or administrative exemption. No
"reportable event" as defined in Section 4043 of ERISA, which
would give rise to any liability or cause or permit any Employee
Plan to cease to be qualified under Section 401(a) of the Code
other than any such event for which the thirty-day notice period
has been waived, has occurred with respect to any Employee Plan.
Up to and including the period ending immediately prior to the
Effective Time, the Company has made all contributions required
to be made by the Company to each Pension Plan.
</Page>
<PAGE>
(ii) Each Pension Plan that is intended to be
qualified under
Section 401(a) of the Code is so qualified, and each trust
forming a part thereof is exempt from tax pursuant to Section
501(a) of the Code. The Company has furnished to Parent copies
of the most recent IRS determination letters with respect to any
such Pension Plans for which a determination letter from the IRS
has been requested. Each Pension Plan has been maintained
substantially in compliance with its terms and with the
requirements prescribed by applicable Law.
(iii) All contributions, reimbursements, premium
payments
and other payments required to have been made under or with
respect to each Employee Plan as of or prior to the date hereof
have been made or adequate reserves therefor have been or will be
provided, and no accumulated funding deficiency (as defined in
Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Employee Plan. The Company or a Subsidiary, as
applicable, has the right to terminate, cease participation in,
or withdraw from any Employee Plan as of the Effective Time
without further liability for any benefits, or contributions
thereunder.
(iv) Based on the assumptions labeled as "Assumptions"
set
forth in Exhibit A of Schedule 4.3(n) of the Disclosure Letter,
there is no plan termination liability or withdrawal liability
under Title IV of ERISA with respect to the Pension Plan, and
there would be no such termination liability or withdrawal
liability of the Pension Plan if the Pension Plan were terminated
or withdrawn as of the Closing Date.
(v) All Employee Plans can be terminated as of the
Effective
Time without any liability of the Company or any of its
Subsidiaries, as applicable, for any contributions or benefits in
excess of those already paid as of the time of termination.
(t) Insurance . The Disclosure Letter contains a list of all
policies of liability, theft, fidelity, life, fire, product
liability, health and other forms of insurance held by the
Company or any of the Subsidiaries (specifying the insurer,
amount of coverage, type of insurance, policy number and any
material pending claims thereunder). All such policies of
insurance are valid and enforceable policies and are outstanding
and in force and all premiums with respect thereto that are
currently due and payable have been paid, and neither the Company
nor any Subsidiary has received notice of cancellation or non-
renewal.
(u) Brokers. Except as provided in the Disclosure Letter,
neither the Company nor any Shareholder has employed any broker
or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger.
</Page>
<PAGE>
(v) Environmental Matters. The Company and its Subsidiaries
have obtained all material permits, licenses and other
authorizations that are required to conduct their business under
all Laws relating to the environment or the release of Hazardous
Materials (as hereinafter defined) into the environment as in
effect on the date hereof ("Environmental Laws"). The Company
and its Subsidiaries are in material compliance with the terms
and conditions of all such permits, licenses and authorizations,
and are also in material compliance with all other conditions and
requirements contained in any applicable Environmental Law. In
addition, except as set forth in the Disclosure Letter:
(i) No written notice, request for information,
citation,
summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is
pending or to the Best Knowledge of the Company threatened by any
Governmental Authority or any other Person with respect to any
alleged failure by the Company or any of its Subsidiaries to have
any permit, license or authorization required in connection with
the conduct of its business or with respect to any generation,
treatment, storage, recycling, transportation, disposal of, or
release (as defined in 42 U.S.C. 9601(22) ("Release")) of, any
toxic, caustic or otherwise hazardous substance regulated as such
under any Environmental Laws ("Hazardous Materials") by the
Company or any of its Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries
has
handled any Hazardous Material in violation of any Environmental
Law; there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property currently owned
or leased by the Company or any of its Subsidiaries ("Company
Property") in violation of any Environmental Law; and no
Hazardous Materials have been Released, in any material quantity,
at, under or from any Company Property.
(iii) Neither the Company nor any of its Subsidiaries
has
transported or arranged for the transportation, disposal or
treatment of any Hazardous Material to or at any location listed
on the National Priorities List under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended, or listed for possible inclusion on the National
Priorities List under the Comprehensive Environmental Response,
Compensation, and Liability and Information System by the
Environmental Protection Agency or any comparable list
established by any other Governmental Authority.
(iv) There have been no environmental investigations,
studies,
audits, tests, reviews or other analyses conducted by the Company
in relation to any Company Property that have not been provided
to Parent.
</Page>
<PAGE>
(v) Neither the Company nor any of its Subsidiaries has
transported or arranged for the transportation, disposal or
treatment of any Hazardous Material to or at any off-site
location that would create liability under the Comprehensive
Environmental Response, Compensation, and Liability Act, as in
effect on the date hereof, or under any comparable Environmental
Law for response costs, natural resource damages, or other claims
arising out of the Release or threatened Release of any Hazardous
Material and neither the Company nor any Subsidiary has any
contractual obligation under which it has or could have liability
under the Comprehensive Environmental, Response, Compensation,
and Liability Act, as in effect on the date hereof, or under any
comparable Environmental Law.
(vi) The Company's audited consolidated balance sheet at
October 30, 1994 makes adequate provision for all liabilities
related to environmental matters of the Company and its
Subsidiaries in accordance with GAAP.
(w) Prior Securities Transactions. Neither the Company nor
any of its Subsidiaries has purchased or sold securities in
violation of any federal or state securities Laws, and no claims
of securities law violations has been asserted, or to the Best
Knowledge of the Company, threatened against the Company or any
of its Subsidiaries;
.3. Representations and Warranties of Parent and Sub. Parent
hereby represents and warrants to the Company as follows:
(a) Organization; Good Standing; Power. Parent is and Sub
will be, a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, with
all requisite corporate power and authority to own, lease and
operate its properties, to carry on its business as now being
conducted and to enter into and consummate the transactions
contemplated by this Agreement.
(b) Authority; No Conflicts. The execution and delivery by
Parent of this Agreement, the consummation of the Merger and the
performance of all other obligations of Parent and Sub under this
Agreement have been, or in the case of Sub will be, duly and
validly authorized by all necessary corporate action on the parts
of Parent and Sub. This Agreement is a valid and binding
obligation of Parent, enforceable in accordance with its terms.
Neither the execution, delivery and performance of this Agreement
by Parent nor the consummation of the transactions contemplated
hereby nor compliance by Parent or Sub with any of the provisions
hereof will conflict with or result in a breach or default (or
give rise to any right of termination, cancellation or
</Page>
<PAGE>
acceleration) under any term of any instrument or agreement
to which Parent is, or Sub will be, a party or violate any
applicable laws, which conflict, breach, default or
violation would prevent the consummation of the
transactions contemplated by this Agreement, result in a
Lien on or against any Company Shares, any of the Merger
Consideration or any assets, rights, properties or
securities of the Company, Parent or Sub, or give rise to
any claim against the Company, Parent, Sub or any
Shareholder. Except as contemplated by this Agreement, no
permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person (governmental or
private) is required in connection with the execution and
delivery by Parent of this Agreement, or the performance by
Parent and Sub of their respective obligations hereunder.
(c) Investment Representation. The Company Shares will be
acquired by Parent in the Merger for its own account only, for
investment purposes and not with a view to their distribution.
Parent understands that the Shares have not been registered under
the Securities Act of 1933 and must be held indefinitely unless
and until they are subsequently registered under said Act or an
exemption from such registration is available.
(d) Financial Resources of Parent and Sub. Parent has cash
available and/or other existing unutilized borrowing or other
facilities which together are sufficient to enable it to
consummate the transactions contemplated by this Agreement.
(e) Interim Operations of Sub. Sub will be formed solely
for
the purpose of engaging in the transactions contemplated hereby,
will engage in no other business activities, will have no
liabilities (whether matured or unmatured, fixed or contingent)
and will have conducted its operations only as contemplated
hereby.
(f) Section 338 Election. Neither Parent nor Sub will make an
election under Section 338 of the Code with respect to the Merger
or to Parent's acquisitions of the Company Shares.
</Page>
<PAGE>
V ACTIONS PRIOR TO THE CLOSING
.1. Access to Records and Properties of the Company;
Confidentiality. (a) From and after the date hereof until the
Closing, the Company shall afford to Parent and its authorized
representatives, including its counsel and accountants and
financing sources, free and full access at all reasonable times
to the properties, books and records of the Company and its
Subsidiaries, so that Parent may have full opportunity to make
such investigation as it shall reasonably desire to make of the
affairs of the Company and its Subsidiaries.
(a) Prior to the Closing Date, each of the Company and its
Subsidiaries (on the one hand) and Parent (on the other hand)
agree to retain in strict confidence all information conveyed to
either such party (the "Receiving Party") by the other party (the
"Conveying Party"), regarding the terms of this Agreement, the
transactions contemplated hereby and the business or financial
condition of the Conveying Party, or any other confidential or
proprietary information, unless such information is or becomes
available to the Receiving Party on a nonconfidential basis from
a source other than the Conveying Party that is entitled to
possess and convey the same. The Receiving Party will use such
information only in connection with its consideration of this
agreement and the transactions contemplated hereby and will not
otherwise use it in its business or disclose it to others, except
to its employees and representatives who require such information
to perform their duties in connection with this Agreement or such
transactions and agree not to disclose or use such information
except as provided herein. The Receiving Party agrees that it
shall be responsible for any breach of this Section 5.1(b) by
such persons. In the event that this Agreement is terminated
without the Merger having been consummated as provided herein,
the Receiving Party shall return all information provided to it
relating to the Conveying Party, this Agreement or the
transactions contemplated hereby, whether in written, computer-
readable or other form, including any memoranda, notes or other
writings prepared by the Receiving Party or its representatives
based on such information, together with all copies thereof in
the possession of the Receiving Party or to which the Receiving
Party has access.
</Page>
<PAGE>
.2. Conduct of Business. (a) Except, in the case of each
provision of this Section 5.2, as otherwise expressly provided in
this Agreement, or in the Company's Fiscal Year 1995 Financial
Plan as set forth in the Company Disclosure Letter, during the
period from the date of this Agreement to the Closing Date, the
Company shall, and shall cause its Subsidiaries to, conduct its
and their business in accordance with the provisions of this
Section 5.2.
(a) The Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its business only in, and not take
any action except in, the ordinary and usual course of business
and consistent with past practice, (ii) maintain its assets in
good condition and repair and in material compliance with
applicable governmental, quasi-governmental, and other regulatory
agency requirements and guidelines and use its reasonable best
efforts to maintain insurance with respect thereto of the same
types and amounts currently in force, and (iii) perform in all
material respects its obligations under all material contracts
applicable to it.
(b) The Company shall not, and shall not permit its
Subsidiaries to, make or propose any change or amendment in their
respective articles of incorporation or bylaws or comparable
governing instruments.
(c) The Company shall not, and shall not permit its
Subsidiaries to, issue, pledge or sell any shares of capital
stock or any other securities of, or partnership, joint venture
or other equity interests in, any of them, or issue options,
warrants or rights of any kind to acquire, or any securities
convertible into, exchangeable for or representing a right to
purchase or receive, or enter into any contract, plan,
understanding or arrangement with respect to the issuance of, any
shares of capital stock or any other securities of, or
partnership, joint venture or other equity interests in, any of
them (other than pursuant to the exercise of the Company Options
or the Columbus Warrant outstanding on the date of this Agreement
consistent with the provisions and intent of this Agreement and
the transactions contemplated hereby), or enter into any
arrangement, plan, understanding or contract with respect to the
purchase or voting of shares of their capital stock or
partnership, joint venture or other equity interests, or adjust,
split, combine or reclassify any of their securities, or make any
other changes in their capital structures.
(d) The Company shall not, and shall not permit any of its
Subsidiaries to, declare, set aside, pay or make any dividend or
other distribution or payment (whether in cash, stock or
property) with respect to, or purchase or redeem, any shares of
the capital stock of any of them.
</Page>
<PAGE>
(e) The Company shall, to the extent within its control,
(i) preserve intact the business organization of the Company and
its Subsidiaries and use its reasonable best efforts to keep
available the services of its and their present officers and key
employees, and (ii) preserve the good will of customers,
suppliers and others having business relationships with the
Company and its Subsidiaries.
(f) Except as required by law or pursuant to existing
contracts that are listed in the Disclosure Letter, the Company
shall not, and shall not permit any of its Subsidiaries to,
(i) adopt, enter into, amend or terminate any Employee Plan or
any employment, severance or consulting agreements with any
employee (each an "Employee Agreement"); (ii) hire any key
employee or increase in any manner the compensation or benefits
of, or forgive any indebtedness of, any employee other than
regular seniority or merit raises or bonuses in the ordinary
course of business, consistent with past practice; (iii) pay or
provide any benefit other than benefits required pursuant to any
Employee Agreement or Employee Plan (including, without
limitation, the granting of stock options, stock appreciation
rights, stock related or based awards, or restricted stock, or
the removal of existing restrictions in any benefit plan or
agreement or awards made thereunder but excluding the vesting of
any outstanding Company Options), or contribute to or otherwise
fund or secure the benefits or compensation provided under any
Employee Agreement or Employee Plan; or (iv) enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing.
(g) The Company shall not, and shall not permit any of its
Subsidiaries to: (i) incur or assume any indebtedness (other
than borrowings in the ordinary course of business under its
currently existing revolving credit line and the creation of
accounts payable in the ordinary course of business); prepay any
indebtedness; make any loans, advances or capital contributions
to, or investments in, any other Person (other than a wholly-
owned Subsidiary of the Company and other than the reimbursement
or advance of expenses incurred by employees of the Company and
its Subsidiaries in the ordinary course of business); or issue or
sell any debt securities or guarantee any indebtedness.
(h) Without the prior consent of Parent (which shall not be
unreasonably withheld or delayed), the Company shall not, and
shall not permit any of its Subsidiaries to, pay, discharge or
satisfy any material claims, liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business, consistent with past practices,
of claims, liabilities and obligations that individually do not
exceed $25,000 (other than pursuant to refunding borrowings under
its currently existing revolving
</Page>
<PAGE>
credit line or the payment of accounts payable in the
ordinary course of business).any of its Subsidiaries to,
enter into any contract, agreement, commitment, plan,
understanding or arrangement to do any of the foregoing set
forth in clauses (i) or (ii) above.
(i) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) encumber, sell, lease or otherwise dispose
of or acquire any assets other than in the ordinary course of
business and for fair value, (ii) authorize, propose or enter
into or announce an intention to authorize, propose or enter into
or recommend, or announce an intention to recommend, an agreement
in principle or definitive agreement with respect to any merger,
consolidation, other business combination, liquidation or
dissolution pursuant to which the Company or any of its
Subsidiaries would be acquired or would acquire or dispose of (in
any such case, by merger, consolidation, acquisition or
disposition of stock or assets, or similar transaction) material
assets (other than sales of assets to ordinary course customers
by the Company or its Subsidiaries or other sales of assets in
the ordinary course up to $25,000 in any instance), (iii) change
any of the material accounting principles or practices used by
it, unless required by GAAP, (iv) file any Return or make any Tax
election or settle or compromise any Tax liability, in each case,
without the prior consent of Parent (which shall not be
unreasonably withheld), (v) enter into, amend, or extend any
material collective bargaining or other labor agreement, except
as necessary to comply with labor laws, (vi) without the prior
consent of Parent (which shall not be unreasonably withheld or
delayed), waive, release, grant or transfer any rights of
material value, except waivers, releases, grants and transfers of
rights in the ordinary course of the Company's and its
Subsidiaries' businesses, the value of which does not exceed
$25,000 in any instance, (vii) without the prior consent of
Parent (which shall not be unreasonably withheld or delayed),
modify or change in any material respect any existing material
license, lease, contract or other instrument, (viii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly or indirectly, contingently or otherwise) for
the obligations of any other Person, (ix) make any capital
expenditures greater than $25,000 in any instance or enter into
or modify any material commitment or transaction outside the
ordinary course of business, or (x) enter into any contract,
agreement, commitment, plan, understanding or arrangement to do
any of the foregoing.
</Page>
<PAGE>
(j) In connection with the continuing operation of the
businesses of the Company and its Subsidiaries between the date
of this Agreement and the Closing Date, the Company shall use
reasonable efforts to consult in good faith on a regular and
frequent basis with representatives of Parent to report material
operational developments and the general status of ongoing
operations pursuant to procedures reasonably requested by Parent.
The Company acknowledges that any such consultation shall not
constitute a waiver by Parent of any rights it may have under
this Agreement, and that Parent shall have no liability or
responsibility for any actions of the Company or its
Subsidiaries, or any of their respective officers or directors,
with respect to matters which are the subject of such
consultations unless it expressly consents to such action in
writing.
(k) The Company shall provide unaudited monthly balance
sheets, income statements and statements of cash flow within 15
Business Days after the end of each month. The Company shall
provide monthly comparisons of actual results versus the Fiscal
Year 1995 Financial Plan and provide detailed explanations of
major variances.
(l) The Company shall not, and shall not permit any of its
Subsidiaries to, take, or agree to take, any of the actions
prohibited in this Section 5.2 or any action which would make any
representation or warranty of the Company or any Shareholder
contained in this Agreement untrue or incorrect in any respect as
of the date when made.
(m) Columbus shall not directly or indirectly authorize and
shall not to the fullest extent legally entitled to do in its
capacity as a shareholder of the Company, permit the Company or
any of its Subsidiaries to take any action that would violate the
Company's or Shareholders' covenants and agreements in this
Section 5.2.
.3. Consents; Efforts to Consummate. Subject to the terms and
conditions herein provided, the Company and Parent shall use
their respective reasonable best efforts to take or cause to be
taken all actions and do or cause to be done all things
reasonably necessary, proper or advisable to consummate and make
effective, as soon as reasonably practicable, the transactions
contemplated hereby, including obtaining all consents,
authorizations, orders and approvals of any third party, whether
private or governmental, required in connection with the
consummation of the transactions contemplated hereby, and
including filing a Pre-merger Notification and Report Form under
Section 7A of the Clayton Act (the "H-S-R Act").
</Page>
<PAGE>
.4. Shareholders' Meeting. The Company shall, to the extent
necessary to consummate its obligations under this Agreement:
(a) take all actions necessary to duly call, give notice of,
convene and hold an annual or special meeting of its shareholders
as soon as reasonably practicable for the purpose of considering
and taking action upon this Agreement.
(b) use its best efforts to obtain the necessary approvals
by
the requisite percentage of its shareholders of this Agreement.
At the meeting of the shareholders of the
Company, Columbus and each of the other Shareholders will
vote all Company Shares owned by it in favor of approval of
the transactions contemplated by this Agreement.
.5. No Solicitation, etc. Neither Columbus nor the Company
shall, and neither shall permit Rico or any other Subsidiary or
any of their affiliates to, or authorize or permit any of their
respective officers, directors or employees to, or any financial
advisor, attorney, accountant or other advisor, agent or
representative of Columbus, to, directly or indirectly, solicit,
initiate, participate in any way in negotiations or discussions
with respect to, knowingly encourage in any way (including by way
of furnishing non-public information), endorse or enter into any
agreement with respect to, knowingly afford any access to the
properties not generally available, books or records of the
Company or any of its Subsidiaries with respect to, or otherwise
assist or knowingly take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to or result in, any Proposal.
The Company or Columbus shall immediately advise Parent orally
(and promptly confirm in writing) of any Proposal or any
inquiries or discussions with respect thereto. As used in this
Agreement, "Proposal" shall mean any tender or exchange offer or
merger (other than the Merger), consolidation, liquidation,
reorganization, sale of capital stock, sale of assets or other
business combination, acquisition or similar transaction
involving the Company or any of its Subsidiaries, or offer to
acquire in any manner any equity interest in the Company or any
of its Subsidiaries or a substantial portion of the assets of the
Company or any of its Subsidiaries, or any proposal with respect
to any of the foregoing other than sales of assets in the
ordinary course of the Company's and the Subsidiaries' businesses
for fair value.
</Page>
<PAGE>
.6. Shareholders' Representative. (a) The Shareholders,
for
themselves and their personal representatives and other
successors, hereby constitute and appoint the Person set forth on
Schedule 5.6 as agent and attorney-in-fact for the Shareholders,
and each of them (the "Shareholders' Representative"), with full
power and authority (including power of substitution), except as
otherwise expressly provided in this Agreement, in the name of
and for and on behalf of the Shareholders or in its own name as
Shareholders' Representative, to take all actions required or
permitted to be taken by the Shareholders, or any of them, under
this Agreement (including the giving and receiving of all
reports, notices and consents). The authority conferred under
this Section 5.6 is an agency coupled with an interest, and all
authority conferred hereby is irrevocable and not subject to
termination by the Shareholders or any of them, or by operation
of law, whether by the death or incapacity of any Shareholder,
the termination of any trust or estate or the occurrence of any
other event. If any Shareholder should die or become
incapacitated, if any trust or estate should terminate or if any
other such event should occur, any action taken by the
Shareholders' Representative pursuant to this Section 5.6 shall
be as valid as if such death or incapacity, termination or other
event had not occurred, regardless of whether or not the
Shareholders' Representative or Parent shall have received notice
of such death, incapacity, termination or other event. Any
notice given to the Shareholders' Representative pursuant to
Section 8.7 shall constitute effective notice to all
Shareholders, and Parent or any other Person may rely on any
notice, consent, election or other communication received from
the Shareholders' Representative as if such notice, consent,
election or other communication had been received from all
Shareholders on whose behalf it was given.
(a) The Shareholders' Representative may resign upon 20
days
prior written notice to Parent, the Company and each Shareholder.
Upon the death, resignation, removal or incapacity of the
Shareholders' Representative, the Shareholders shall appoint a
successor Shareholders' Representative, by written consent of the
Shareholders holding 66 2/3% of the Company Shares as at
immediately prior to the Effective Time (the "Required Majority
of Shareholders"), and any successor Shareholders' Representative
so appointed shall constitute the Shareholders' Representative as
provided in this Section 5.6 to the same effect as if such
successor Shareholders' Representative had been the Shareholders'
Representative named in this Section 5.6. The Shareholders may
remove the Shareholders' Representative at any time, by written
consent of the Required Majority of Shareholders. The
Shareholders shall give Parent written notice of the appointment
or removal of any Shareholders' Representative pursuant to this
Section 5.6(b), including a copy of the written consent of the
Required Majority of Shareholders relating
</Page>
<PAGE>
thereto, as soon as practicable after any such appointment
or removal, and such appointment or removal shall not be
effective as against Parent until such notice shall have
been given, unless Parent shall have actual knowledge of
such appointment or removal.
VI CONDITIONS TO CLOSING
.1. Conditions To Each Party's Obligations. The obligations
of each party to be performed under this Agreement are subject to
the satisfaction of each of the following conditions unless
waived (to the extent such conditions can be waived) by all the
parties hereto:
(a) Legal Action. No temporary restraining order,
preliminary
injunction or permanent injunction or other order preventing the
consummation of any of the transactions contemplated hereby shall
have been issued by any Federal or state court and remain in
effect. Each party agrees to use its best efforts to have any
such injunction lifted.
(b) Legislation. No Federal or state statute, rule or
regulation shall have been enacted that prohibits, restricts or
materially delays the consummation of any of the transactions
contemplated hereby or of any of the conditions precedent to the
consummation of such transactions.
(c) Governmental Approvals. All authorizations, consents,
orders or approvals of, declarations or filings with, and
expirations of waiting periods imposed by, any Governmental
Authority that are necessary for the consummation of the
transactions contemplated hereby, if any, shall have been filed,
shall have occurred and shall have been obtained (as the case may
be). The waiting period under the H-S-R Act shall have expired
or been terminated.
.2. Conditions To Obligations Of Parent and Sub. The
obligations of Parent and Sub hereunder to be performed at the
Closing are subject to the satisfaction of each of the following
conditions unless waived by Parent:
</Page>
<PAGE>
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Shareholders
(including Columbus) and the Company in this Agreement shall be
true and correct in all material respects on the Closing Date
with the same effect as if such representations and warranties
had been made at and as of the Closing Date, and Parent shall
have received a certificate signed by an authorized officer of
the Company and by the Shareholder Representative to the effect
of this Section 6.2(a).
(b) Performance of Obligations. The Company and the
Shareholders shall have performed in all material respects all
obligations required to be performed by it and them under this
Agreement prior to the Closing Date, and Parent shall have
received a certificate signed by an authorized officer of the
Company and by the Shareholder Representative to the effect of
this Section 6.2(b).
(c) Consents and Approvals. Parent shall have received the
consents of each of the Persons set forth on Schedule 6.2(c) in
form and substance reasonably satisfactory to Parent and counsel
to Parent, and any consents required pursuant to Industrial
Revenue Bond documents and related agreements.
(d) Certain Obligations of the Company to Heller.
Concurrently with the Closing, and after giving effect to the
delivery of the Heller Amount pursuant to Section 3.4(a), (i) all
obligations of the Company to Heller pursuant to the Heller Notes
and the Heller Shadow Warrant shall have been satisfied and/or
discharged in full, (ii) the Heller Notes and the Heller Shadow
Warrant shall have been cancelled and surrendered to Sub, and
(iii) Heller shall have released all security interests of Heller
in the property and assets of the Company and the Company Shares
pursuant to the Heller Credit Agreement or any Loan Document or
Security Document (as defined therein).
(e) Options and Warrants. The Columbus Warrant (if not
previously exercised) and any Company Options outstanding on the
Closing Date shall have been exercised in full as of immediately
prior to the Effective Time, as provided in Section 3.2.
(f) Tax Status Certification. Parent shall have received a
certification, signed by any authorized officer of the Company
and dated within 15 days prior to the Closing Date, pursuant to
Section 1445(b) of the Code and Treasury Regulation Section 1.897-
2, to the effect that the Company is not a "United States real
property holding corporation" as defined in Section 897 of the
Code.
</Page>
</Page>
(g) Opinion of Counsel. Parent shall have received opinions
of Baker & Botts, L.L.P. special counsel for the Company, and of
Bowditch & Dewey, counsel for the Company (collectively, "Company
Counsel"), each dated the date of the Closing, in a form
reasonably satisfactory to Parent.
(h) Acceptance by Counsel. The certificates and other
documents delivered by the Company hereunder, or on its behalf,
and the Closing and other proceedings relating thereto, shall be
reasonably acceptable to Stoel Rives Boley Jones & Grey counsel
to Parent ("Parent Counsel").
(i) Certain Obligations of the Company to Rico Sellers.
Concurrently with the Closing, and after giving effect to the
delivery of the Rico Amount pursuant to Section 3.4(b), (i) all
obligations to the Rico Sellers shall have been satisfied and/or
discharged in full, including but not limited to the obligations
under Section 8.2 of the Rico Stock Purchase Agreement, (ii) the
Rico Seller Notes shall have been cancelled and surrendered to
Parent, and (iii) the Rico Sellers shall have released all
security interests in the property and assets of the Company and
its Subsidiaries under the Rico Collateral Agreement.
(j) Certain Obligations of Company to Columbus.
Concurrently
with the Closing, and after giving effect of the delivery of the
Columbus Amount pursuant to Section 3.4(c), (i) all obligations
to Columbus and to Overseas Partners, Inc. shall have been
satisfied and/or discharged in full, (ii) the Columbus Notes
shall have been cancelled and surrendered to Parent, (iii) the
Columbus Warrant shall have been exercised or cancelled, and
(iv) Columbus and Overseas Partners, Inc. shall have released all
interests in the property and assets of the Company under the
Columbus Loan Agreement, the Management Agreement dated
December 13, 1989, as amended, or otherwise.
(k) Resignations of Subsidiary Officers and Directors.
Parent
shall have received written resignations of each Person who is an
officer or director of any Subsidiary of the Company.
.3. Conditions to Obligations of the Company and the
Shareholders. The obligations of the Company and the
Shareholders hereunder to be performed at the Closing are subject
to the satisfaction of each of the following conditions unless
waived by the Company and the Shareholder Representative:
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<PAGE>
(a) Accuracy of Representations and Warranties. All
representations and warranties made by Parent in this Agreement
shall be true and correct in all material respects on the Closing
Date with the same effect as if such representations and
warranties had been made at and as of the Closing Date, and the
Company shall have received a certificate signed by an authorized
officer of Parent to that effect.
(b) Performance of Obligations. Parent and Sub shall have
performed in all material respects the obligations required to be
performed by them under this Agreement prior to the Closing Date,
and the Company shall have received a certificate signed by an
authorized officer of Parent to that effect.
(c) Opinion of Counsel. The Company and the Shareholders
shall have received an opinion of Parent Counsel, dated the date
of the Closing, in a form reasonably satisfactory to the Company
and Shareholders.
(d) Acceptance by Counsel. The certificates and other
documents delivered by Parent hereunder, or on its behalf, and
the Closing and other proceedings relating thereto, shall be
reasonably acceptable to Company Counsel.
.4. Pension Plan Closing Condition. On or prior to the
Closing Date, the Company will deliver to Parent and Sub an
opinion of William A. Mercer, Inc. as to the conformance of the
computations summarized in Exhibit A to Schedule 4.3(n) of the
Disclosure Letter (the "Plan Schedule") with FAS 87 and FAS 88 as
at the date set forth in the Plan Schedule or a later practicable
date. If the Mercer Opinion indicates that, based on the
assumptions set forth in the Plan Schedule, potential plan
termination or plan withdrawal liability under Title IV of ERISA
with respect to the Pension Plan would be less than or equal to
$500,000, the parties will proceed with the Closing subject to
the satisfaction or waiver of the other conditions in the
Section 6. If the Mercer Opinion indicates that such potential
liability would be in excess of $500,000, the Shareholders may
terminate this Agreement in accordance with Section 8(b), unless
Parent agrees to waive any claim for indemnification for breach
under Section 4.3(n)(v).
</Page>
<PAGE>
VII INDEMNIFICATION
.1. Definitions. As used in this Article VII, the following
terms shall have the corresponding following meanings:
"Claim" means a claim, demand, action, suit,
proceeding or cause of action.
"Event of Indemnification" means the
untruth, inaccuracy or breach of any representation,
warranty, agreement or covenant of the Company or any
Shareholder contained in this Agreement (including the
Disclosure Letter and all Schedules and Exhibits).
"Indemnified Persons" means and includes
Parent, the Surviving Corporation and their respective
officers, directors, employees, successors and
assigns.
"Indemnifying Person" means each of the
Shareholders, severally and not jointly, pro rata in
accordance with their respective Applicable
Percentages.
"Losses" means any and all losses, costs,
damages, liabilities, assessments and expenses
(including interest, penalties and reasonable
attorney's fees) sustained, suffered or incurred by
any Indemnified Person, whether or not involving any
Claim by a third party.
"Survival Date" means (i) in the case of any
Event of Indemnification relating to the untruth,
inaccuracy or breach of any representation, warranty,
covenant or agreement contained in Section 4.3(i) with
respect to any taxable year of the Company or any
Shareholder, the expiration of the statute of
limitations for such taxable year in accordance with
applicable law and regulations; (ii) in the case of
any Event of Indemnification relating to
Sections 4.1(a) and 4.2(d), for an unlimited period of
time; (iii) in the case of any Event of
Indemnification relating to Section 4.3(q), or set
forth in Section 7.2 (b) or (c), the date which is
five years after the Closing Date; and (iv) in the
case of any other Event of Indemnification, May 15,
1996.
</Page>
<PAGE>
.2. Indemnification. (a) Subject to the limitations
contained in Section 7.4, from and after the Closing, each of the
Shareholders, severally and not jointly, in accordance with their
respective Applicable Percentages, shall indemnify and hold
harmless the Indemnified Persons, and each of them, from and
against such Shareholder's pro rata share of any and all Losses
net of proceeds actually received from any form of insurance or
any other source of reimbursement arising from or in connection
with any Event of Indemnification other than an Event of
Indemnification resulting from the untruth, inaccuracy or breach
of Section 4.3(q), which indemnity is separately addressed under
subsections (b) and (c) below.
(a) Subject to the limitations contained in
Section 7.4,
the Shareholders, severally and not jointly, in accordance with
their Applicable Percentages, shall indemnify and hold harmless
the Indemnified Persons from and against any and all
Environmental Costs (as hereinafter defined), net of proceeds
actually received from any form of insurance, indemnity by prior
owner or any other source of reimbursement ("Collateral Sources")
sought or claimed by any Person, including any Governmental
Authority, based upon the violation of any Environmental Law, or
relating to the use, treatment, handling, storage, disposal or
release of Hazardous Material by the Company or any Subsidiary,
in connection with any properties, operations or assets of the
Company or its subsidiaries that were abandoned, sold,
transferred or otherwise disposed of by the Company or any
Subsidiary prior to the Closing (including properties formerly
leased).
For purposes of this Section
"Environmental Costs" means (i) any cleanup costs,
remediation, removal, or other response costs, fees of
counsel, investigation costs (including fees of
consultants, counsel and other experts in connection with
any environmental investigation or testing), claims,
Losses, liabilities, obligations, payments, fines,
penalties and damages, which are (A) required by any
Governmental Authority under an applicable Environmental
Law or (B) that is required by Environmental Law, is
requested by a Governmental Authority or that a
Governmental Authority would have jurisdiction and
authority to impose under an applicable Environmental Law,
provided that for purposes of this subparagraph (B), such
costs must be reasonable, cost effective (as that term is
used in the National Contingency Plan, 40 CFR 300.430),
and consistent with the usage (for example, industrial
versus residential) of the affected property immediately
prior to the Closing; and (ii) all costs of litigation,
appeal, settlement or payment of judgment in connection
with the proceeding Morrone v. Quamco, including but not
limited to fees of counsel, expert costs and court costs.
</Page>
<PAGE>
(b) Subject to the limitations contained in
Section 7.4,
the Shareholders, severally and not jointly, in accordance with
their Applicable Percentages, shall indemnify and hold harmless
the Indemnified Persons against any and all Environmental Costs
(as defined in 7.2(b)), net of proceeds received by the
Indemnified Persons from Collateral Sources, with respect to
properties owned or leased by the Company or any of its
Subsidiaries at the Closing and operations of the Company and any
of its Subsidiaries on currently owned properties prior to
Closing as follows:
(i) Environmental Costs incurred with respect to
continuation
of environmental remediation programs that are in effect at
Closing (without expansion of the scope or character of the
remediation program in response to a requirement of a
Governmental Authority) shall not be subject to this special
indemnity and the Indemnified Persons shall be entitled to
indemnity, if any, under Section 7.2(c)(ii);
(ii) With respect to Environmental Costs incurred in
connection
with expansion of the scope or character of existing remediation
programs in response to a requirement of a Governmental
Authority, or any Event of Indemnification resulting from the
untruth, inaccuracy or breach of representation or warranty
contained in Section 4.3(q), the Indemnified Persons shall be
entitled to be indemnified for all Environmental Costs incurred
in excess of $150,000 (without regard to the $150,000 threshold
in Section 7.4(b) below).
.3. Notice and Defense of Third Party Claims. The obligations
and liabilities of the Indemnifying Person with respect to Claims
resulting from the assertion of liability by third parties (each,
a "Third Party Claim") shall be subject to the following terms
and conditions:
(a) The Indemnified Persons shall give prompt written
notice
to the Indemnifying Person of any Third Party Claim that might
give rise to a Claim by the Indemnified Persons against the
Indemnifying Person based on the indemnity agreement contained in
Section 7.2, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known. Such notice
shall be accompanied by copies of all relevant documentation with
respect to such Third Party Claim, including any summons,
complaint or other pleading which may have been served or any
written demand or other document or other instrument received.
</Page>
<PAGE>
(b) The Indemnifying Person may participate in the
defense of
any Third Party Claim and may assume the defense thereof with
counsel satisfactory to the Indemnified Persons. If an
Indemnified Person shall reasonably conclude that its interests
in any legal action are materially different from those of the
Indemnifying Person or that it may have material defenses that
are different from or in addition to those available to the
Indemnifying Person, such Indemnified Person may use separate
counsel to assert such defenses and otherwise participate in the
defense of such action. If the Indemnifying Person shall assume
the defense of any Third Party Claim as provided in this Section
7.3(b), they shall not be liable for any legal expenses
subsequently incurred by any Indemnified Persons (other than any
legal expenses incurred by an Indemnified Person pursuant to the
preceding sentence).
(c) Neither any Indemnified Person nor the Indemnifying
Person
shall make any settlement of any Third Party Claim without the
written consent of the other, which consent shall not be
unreasonably withheld; provided, however, that in the case of any
Claim for monetary damages, if the Indemnifying Person requests
any Indemnified Person to accept a proposed financial settlement
or compromise with respect to any such Claim (and stands ready to
pay all amounts due hereunder with respect thereto), and such
Indemnified Person withholds its consent thereto, the obligation
of the Indemnifying Person to such Indemnified Person under this
Article VII with respect to such Claim shall not thereafter
exceed the aggregate amount that the Indemnifying Person would
have paid hereunder in connection with such settlement or
compromise (including reimbursable expenses to the date thereof).
.4. Limitations of Indemnification. (a) The Indemnifying
Person shall not be liable under this Agreement or otherwise in
respect of any Event of Indemnification, unless an Indemnified
Person gives written notice to the Indemnifying Person, stating
the circumstances relating to such Event of Indemnification (to
the extent such circumstances are then known), on or before the
Survival Date with respect to such Event of Indemnification.
(a) The Indemnified Person shall not have the right to be
indemnified pursuant to this Agreement unless and until the
Indemnified Persons have incurred on a cumulative basis since the
date of this Agreement aggregate Losses, after receipt of any
insurance proceeds relating thereto but prior to any
indemnification hereunder, in an amount exceeding $150,000.
</Page>
<PAGE>
(b) The maximum liability ("Maximum Liability") of the
Indemnifying Persons under this Agreement or otherwise in respect
of any and all Events of Indemnification shall not in the
aggregate exceed (i) an amount equal to the Merger Consideration
for any Claims made for indemnification prior to May 15, 1996 and
(ii) an amount equal to the Escrow Amount (or any amount not
subject to Claims pursuant to clause (i) if less than the Escrow
Amount) for claims made for indemnification on or after
May 15, 1996. The maximum liability of each Shareholder under
this Agreement or otherwise in respect of any and all Events of
Indemnification shall not in the aggregate exceed the product of
(i) the Maximum Liability times (ii) the Applicable Percentage of
such Shareholder.
(c) Any indemnification obligations under Section 7.2 shall
be satisfied first by application of amounts on deposit with the
Escrow Agent pursuant to the Escrow Agreement.
(d) The Shareholders shall not have any liability
for any
Losses incurred, as a result of any breach of a representation or
warranty or otherwise, as a result of the failure of the
Surviving Corporation or Parent to receive, or the obligation of
Parent or the Surviving Corporation to repay all or any portion
of the potential tax refunds discussed in paragraph 4.3(i) of the
Disclosure Letter unless and only to the extent that such refunds
were received prior to the Closing and were applied to the
reduction of outstanding indebtedness or directly or indirectly
applied to the benefit of the shareholders of the Company.
(e) The Shareholders shall have liability for the
untruth,
inaccuracy or breach of Section 4.3(n)(v) only in connection with
a termination of the Pension Plan prior to the applicable
Survival Date and only to the extent of the lesser of (A) the
plan termination or plan withdrawal liability which would have
existed if the Plan had been terminated on the Closing Date and
(B) the plan termination or plan withdrawal liability at the date
of termination.
.5. Exclusivity of Remedies. With respect to matters
covered
by the Indemnity provided in this Article VII (including any such
matter as to which no indemnity shall be payable by reason of the
limitations contained in Section 7.4), following the Closing, the
Indemnified Persons' sole remedy therefor shall be
indemnification under this Article VII, and each such Indemnified
Person hereby waives any and all rights to pursue any other
remedy at law or in equity. Anything contained herein to the
contrary notwithstanding, in the event that this Agreement is
terminated pursuant to Section 8.1 prior to the consummation of
the Merger, neither the Company nor any other Person shall have
any liability or obligation to indemnify Parent or any other
Indemnified Person for any Losses resulting from the breach,
prior to such termination, of any representation or warranty
contained herein or in the Disclosure Letter.
</Page>
<PAGE>
.6. Officers, Directors and Employees of the Company.
Anything contained herein to the contrary notwithstanding,
nothing in this Agreement shall be construed to impose upon any
current or former officer, director or employee of the Company,
as such, any liability or obligation to indemnify Parent or any
other Indemnified Person for any Losses resulting from Events of
Indemnification, whether or not such officer, director or
employee is named on Schedule 3.
.7. Accuracy of Aggregate Indebtedness and Merger
Consideration. The parties acknowledge that all determinations
of the payoff amounts of the Heller Amount, Rico Amount, Columbus
Amount and Merger Consideration will be determined by the Company
prior to the Closing and provided to Parent and Sub. The
Shareholders agree to indemnify and hold harmless the Surviving
Corporation and Parent with respect to any claims related to the
accuracy of such amounts provided to Parent, Sub or the Surviving
Corporation and relied upon by them.
VIII MISCELLANEOUS
.1. Termination and Abandonment.
(a) General. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time
prior to the Closing:
(i) by mutual consent of the Shareholders
Representative on
behalf of the Shareholders and Parent;
(ii) by Parent if any of the conditions provided
for in
Sections 6.1 and 6.2 shall not be met on the Closing Date or
waived in writing by Parent; and
(iii) by the Shareholders if any of the conditions
provided
for in Sections 6.1 and 6.3 shall not be met on the Closing Date
or waived in writing by the Shareholders Representative on behalf
of the Shareholders.
(b) Procedure Upon Termination. In the event of
termination
and abandonment of this Agreement by Parent or the Shareholders
pursuant to subsection (a) of this Section, written notice
thereof shall promptly be given to the other parties hereto and
this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by Parent or the
Shareholders. Prior to Closing the sole remedy of any party for
any other party's breach of a covenant, representation or
warranty contained herein shall be to terminate this Agreement,
unless such breach was willful and knowing, in which event all
remedies available at law or in equity shall apply.
</Page>
<PAGE>
(c) Automatic Termination. This Agreement shall
automatically
terminate at 12:01 a.m. on the date which is 90 calendar days
after the date hereof, unless this Agreement and the transactions
contemplated hereby shall have previously closed and been
consummated, and each party shall retain all of their rights and
remedies with regard to said termination. Notwithstanding the
foregoing, the 90 day period set forth in the proceeding sentence
shall be tolled for a one-time additional period of up to 90
calendar days in the event that the transactions contemplated
hereby may not be consummated due to the pendency of a temporary
restraining order, injunction or similar judicial process.
.2. Amendment, Modification and Waiver. This Agreement shall
not be amended or modified or any provision waived except
pursuant to an instrument in writing signed by Parent and the
Company.
.3. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, the shareholders of the Company
shall bear the fees and expenses of the Shareholders and the
Company (including, without limitation, fees of attorneys,
accountants, investment bankers, finders and any brokerage or
similar fees and expenses incurred by the Company or any
Shareholder) in connection with this Agreement and the
preparation for and consummation of the transactions contemplated
hereby, and Parent shall bear the fees and expenses of Parent and
Sub (including, without limitation, fees of attorneys,
accountants, investment bankers finders and any brokerage or
similar fees and expenses incurred by the Parent or Sub) in
connection with this Agreement and the preparation for and
consummation of such transactions.
.4. Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and assigns. Anything
contained in the preceding sentence to the contrary
notwithstanding, neither this Agreement nor any right, title,
interest or obligation hereunder shall be assigned by either the
Company, on the one hand, or Parent or Sub, on the other hand,
without the prior written consent of the other party hereto.
This Agreement is not intended to confer any rights or remedies
upon any Person other than the parties hereto, as a "third-party
beneficiary" or otherwise.
</Page>
<PAGE>
.5. Entire Agreement. This Agreement, the Disclosure Letter
and the other writings and agreements referred to herein or
delivered pursuant hereto (including without limitation the
confidentiality agreement between Parent and the Company, which
shall expressly survive the execution and delivery of this
Agreement and the Closing hereunder) contain the entire
understanding of the parties with respect to its subject matter
and supersede all prior agreements and understandings between the
parties with respect thereto.
.6. Headings. The table of contents and section and paragraph
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
.7. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given if personally
delivered or if sent by telecopier, nationally-recognized
overnight courier or registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
if to the Company, to:
Quamco, Inc.
c/o Overseas Partners, Inc.
Newport Financial Center
111 Pavonia Avenue, Suite 334
Jersey City, NJ 07310
Attention: Donald Dick
with a copy to:
Baker & Botts, L.L.P.
885 Third Avenue, 19th Floor
New York, New York 10022
Attention: Kenneth S. Siegel, Esq.
Bowditch & Dewey
311 Main Street
Worcester, Massachusetts 01608
Attention: John R. Blake, Esq.
</Page>
<PAGE>
if to Shareholders' Representative, to:
Overseas Partners International
Limited
34, Chemin de la Bruyere
1197 Prangins, Switzerland
Attention: Mr. Christian Mermoud
with a copy to:
Wormser Kiely Galef & Jacobs
711 Third Avenue, 19th Floor
New York, New York 10017-4014
Attention: Todd M. Brinberg, Esq.; and
if to Parent, Sub or Surviving Corporation,
to:
Precision Castparts Corp.
4600 S.E. Harney Drive
Portland, Oregon 97206-0898
Attention: Chairman and Chief Executive
Officer
with a copy to:
Stoel Rives Boley Jones & Grey
900 S.W. Fifth Avenue
Portland, Oregon 97204-1268
Attention: Ruth A. Beyer, Esq.
or to such other address as the parties hereto to whom
notice is to be given may have furnished to the other
parties hereto in writing in accordance herewith. Any such
notice or communication shall be presumed to have been
received (a) in the case of personal delivery or telecopier
transmission, on the date of such delivery, (b) in the case
of nationally-recognized overnight courier, on the next
business day after the date sent and (c) in the case of
mailing, on the third Business Day following that on which
the piece of mail containing such communication is posted.
.8. Counterparts. This Agreement may be executed in any
number of counterparts and on separate counterparts, and each
such counterpart shall be an original instrument, but all such
counterparts together shall constitute one agreement. Signature
pages from any counterpart of this Agreement may be attached to
any other counterpart of this Agreement without in any respect
changing the effect thereof.
.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to contracts made and performed wholly therein.
</Page>
<PAGE>
.10. Publicity. No party to this Agreement shall make any
public announcement regarding the transactions contemplated
hereby without the prior written consent of Parent and the
Company, except as required by law.
.11. Shareholder Waiver and Release of Claims Against Company
and Subsidiaries. Each Shareholder represents and warrants that
neither it nor any of its affiliates has claims or rights against
the Company or any of the Company's Subsidiaries of any type
whatsoever, and each Shareholder waives and releases the Company
and its Subsidiaries from any and all liability of any type to
such Shareholder or its affiliates.
</Page>
.12.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered on the
date first above written.
QUAMCO, INC.
By___________________________
Name:
Title:
PRECISION CASTPARTS
CORP.
/s/ William D. Larsson
______________________________
Name: William D.Larsson
Title: Vice President and
Chief Financial Officer
SHAREHOLDERS:
COLUMBUS II LIMITED
PARTNERSHIP:
By: Overseas Partners
Investors,
General Partner
By: Biacor Limited,
General Partner
By
Name:
Title:
/s/ James L. Horan
James L. Horan
Address:
</Page>
<PAGE>
/s/ Arlene R. Horan
Arlene R. Horan
Address:
/s/ John M. Prosser
John M. Prosser
Address:
/s/ Sussanna L. Prosser
Sussanna L. Prosser
Address:
/s/ James C. Bergman
James C. Bergman
Address:
/s/ Joseph F. Dickson
Joseph F. Dickson
Address:
/s/ James D. Flanagan
James D. Flanagan
Address:
</Page>
<PAGE>
/s/ Jospeh V. Fraser
Joseph V. Fraser
Address:
/s/ Nancy C. Fraser
Nancy C. Fraser
Address:
/s/ Robert V. Griffin
Robert V. Griffin
Address:
/s/ Irvine G.Hetherington
Irvine G. Hetherington
Address:
/s/ Lois Hetherington
Lois Hetherington
Address:
/s/ James Moy
James Moy
Address:
</Page>
<PAGE> /s/ Roland Messier
Roland Messier
Address:
/s/ William Baldino
William Baldino
Address:
/s/ Ken Leconte
Ken Leconte
Address:
/s/ Robrt J. Kopacz
Robert J. Kopacz
Address:
/s/ James Erhardt
James Erhardt
Address:
/s/ Charles L. Bearce
Charles L. Bearce
Address:
/s/ Tony L. Littlejohn
Tony L. Littlejohn
Address:
*By
, as
attorney-in-fact
</Page>
<PAGE>
AGREEMENT AND PLAN OF MERGER
among
QUAMCO, INC.,
PRECISION CASTPARTS CORP.
and
THE SHAREHOLDERS NAMED HEREIN
</Page>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS 1
1.1. Certain Definitions 1
1.2. Interpretation 6
1.3. Accounting Terms 6
ARTICLE II
THE MERGER 6
2.1. Acquisition of the Company 6
2.2. The Merger 7
2.3. Closing 7
2.4. Effective Time of the Merger 7
2.5. Effect of Merger 7
2.6. Certificate of Incorporation, By-Laws,
Directors and Officers of Surviving Corporation 8
ARTICLE III
EFFECT OF MERGER ON CAPITAL STOCK OF CONSTITUENT
CORPORATIONS; PAYMENT OF CASH CONSIDERATION AND EXCHANGE OF
CERTIFICATES 8
3.1. Effect on Capital Stock 8
(a) Capital Stock of Sub 8
(b) Cancellation of Certain Shares
of the Company Common Stock 8
(c) Company Shares. 8
(d) Dissenting
Shares 8
3.2. Options and Warrants 9
3.3. Payment of Merger Consideration. 9
3.4. Cancellation of Certain Indebtedness 9
3.5. Availability of Funds 10
3.6. Payment of Escrow Funds 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 10
4.1. Representations and Warranties of Each
Shareholder 10
(a) Title 10
(b) Authority 11
4.2. Additional Representations and Warranties
of Columbus 11
(a) Limited Partnership 11
(b) Power 11
(c) Authority 11
(d) Columbus Warrant 11
4.3. Representations and Warranties of
Columbus, the Shareholders, and the Company 12
(a) Organization; Good Standing; Qualification and Power 12
(b) Equity Investments 12
(c) Capital Stock; Securities 12
(d) Authority; No Conflicts 13
(e) Financial Information 13
(f) Absence of Undisclosed Liabilities 13
(g) Absence of Changes 14
(h) Title to Properties 15
(i) Tax Matters 15
(j) Intellectual Property Rights 17
(k) Agreements, Etc 18
(l) Litigation; Orders. 19
(m) Compliance; Licenses and Permits 19
(n) Employee Benefit Plans 19
(o) Insurance 21
(p) Brokers 21
(q) Environmental Matters 21
(r) Prior Securities Transactions 22
4.4. Representations and Warranties of Parent
and Sub 22
(a) Organization; Good Standing; Power 22
(b) Authority; No Conflicts 22
(c) Investment Representation. 23
(d) Financial Resources of Parent and Sub 23
(e) Interim Operations of Sub 23
(f) Section 338 Election 23
ARTICLE V
ACTIONS PRIOR TO THE CLOSING 23
5.1. Access to Records and Properties of the
Company; Confidentiality 23
5.2. Conduct of Business 24
5.3. Consents; Efforts to Consummate 27
5.4. Shareholders' Meeting. 27
5.5. No Solicitation, etc. 27
5.6. Shareholders' Representative. 28
ARTICLE VI
CONDITIONS TO CLOSING 29
6.1. Conditions To Each Party's Obligations 29
(a) Legal Action 29
(b) Legislation 29
(c) Governmental Approvals 29
6.2. Conditions To Obligations Of Parent and
Sub 29
(a) Accuracy of Representations and Warranties 29
(b) Performance of Obligations 30
(c) Consents and Approvals 30
(d) Certain Obligations of the Company to Heller 30
(e) Options and Warrants 30
(f) Tax Status Certification 30
(g) Opinion of Counsel 30
(h) Acceptance by Counsel 30
(i) Certain Obligations of the Company to Rico Sellers 30
(j) Certain Obligations of Company to Columbus 31
(k) Resignations of Subsidiary Officers and Directors 31
6.3. Conditions to Obligations of the Company
and the Shareholders 31
(a) Accuracy of Representations and Warranties 31
(b) Performance of Obligations 31
(c) Opinion of Counsel 31
(d) Acceptance by Counsel 31
ARTICLE VII
INDEMNIFICATION 32
7.1. Definitions 32
7.2. Indemnification 32
7.3. Notice and Defense of Third Party Claims 34
7.4. Limitations of Indemnification 34
7.5. Exclusivity of Remedies. 35
7.6. Officers, Directors and Employees of the
Company. 35
7.7. Accuracy of Aggregate Indebtedness and
Merger Consideration. 35
ARTICLE VIII
MISCELLANEOUS 36
8.1. Termination and Abandonment. 36
8.2. Amendment, Modification and Waiver 37
8.3. Expenses 37
8.4. Parties in Interest 37
8.5. Entire Agreement 37
8.6. Headings 37
8.7. Notices 37
8.8. Counterparts 38
8.9. Governing Law 39
8.10. Publicity 39
8.11. Shareholder Waiver and Release of Claims
Against Company and Subsidiaries 39
</Page>
<PAGE>
TABLE OF EXHIBITS
EXHIBIT A -- Form of Escrow Agreement
SCHEDULE 1 -- Shareholders
SCHEDULE 1A -- Other Shareholders
SCHEDULE 2 -- Management Shareholders
SCHEDULE 3 -- Certain Officers, Directors and/or
Employees of the Company
SCHEDULE 5.6 -- Shareholders' Representative
SCHEDULE 6.2(c) -- Required Consents
</Page>
<PAGE>
SCHEDULE 1
SHAREHOLDERS NUMBER OF SHARES
William P. Baldino 10,000
William P. and Maureen M. Baldino, JT 9,000
Charles L. and Vicki L. Bearce 2,000
James C. Bergman 132,159
Columbus II Limited Partnership 7,985,475
Joseph F. Dickson 83,629
James R. and Carole A. Erhardt, JT 9,000
James D. Flanagan 54,944
Joseph V. and Nancy C. Fraser, JT 135,708
Robert V. Griffin 84,877
Irvine G. and Lois Hetherington, JT 33,919
Arlene R. and James L. Horan, JT 949,980
Robert J. and Eileen M. Kopacz, JT 16,100
Kenneth A. and Mary Ellen Leconte, JT 5,000
Tony and Jan G. Littlejohn, JT 13,400
Roland A. and Donna M. Messier, JT 57,998
James Moy 32,131
John M. and Susanna L. Prosser, JT 308,160
Ronald W. Rich 24,000
</Page>
<PAGE>
SCHEDULE 1A
OTHER SHAREHOLDERS
SCHEDULE 2
MANAGEMENT SHAREHOLDERS
1. John M. Prosser
2. James C. Bergman
3. Joseph F. Dickson
4. James D. Flanagan
5. Robert V. Griffin
6. Irvine G.
Hetherington
7. James Moy
8. Roland Messier
9. William Baldino
10. Ken Leconte
11. Robert J. Kopacz
12. Ronald W. Rich
13. James R. Erhardt
14. Charles L. Bearce
15. Tony L. Littlejohn
</Page>
<PAGE>
SCHEDULE 3
CERTAIN OFFICERS, DIRECTORS AND/OR EMPLOYEES OF THE COMPANY
Name Position
John M. Prosser President and Chief Executive
Officer
James C. Bergman Vice President, Finance and Chief
Financial Officer
James D. Flanagan Vice President, Marketing,
Perishable
Tool and Specialty Machines Group
Robert V. Griffin President, Merriman
Ronald A. Messier Vice President Operations,
Perishable
Tool and Specialty Machines Group
</Page>
<PAGE>
SCHEDULE 5.6
SHAREHOLDERS' REPRESENTATIVE
Overseas Partners International Limited
</Page>
<PAGE>
SCHEDULE 6.2(c)
REQUIRED CONSENTS
In connection with the repayment of the Heller
Notes at the Closing, the Letter of Credit Guaranty, as
referred to in Note 4 to the October 30, 1994 audited
financial statements, will have to be replaced by a new
letter of credit guaranty acceptable to the holder of the
Industrial Development Revenue Bonds.
A lease, dated June 2, 1993 and expiring May 31,
1996 between the Company and Pensionfund Realty Limited,
for the Company's Canadian Office (1,500 s/f), provides
that a transfer of the Company's voting stock resulting in
a change of control is considered to be an assignment of
the lease requiring the lessor's consent. In addition, the
lessor may be required to obtain the consents of its
lenders and other third parties to the lessor's waiver of
this provision in the Company's lease.
At the Effective Time, (i) the Columbus Loan
Agreement, the Columbus Notes and the Columbus Warrant,
(ii) the Company Option Plan and the Company Options, (iii)
the Heller Credit Agreement, the Heller Notes and the
Heller Shadow Warrants, and (iv) the Rico Collateral
Agreements, the Rico Seller Notes and the Rico Stock
Purchase Agreement, will have been terminated by the
parties thereto, making any consents of the parties thereto
unnecessary.
</Page>
NY01:29382.9 03/23/95 2:06PM
<PAGE>
AMENDMENT NO. 1 (this
"Amendment") dated as of March
8, 1995, to the Agreement and
Plan of Merger dated as of
January 19, 1995 (the
"Agreement"), among Quamco,
Inc. (the "Company"), a
Delaware corporation,
Precision Castparts Corp.
("Parent"), an Oregon
corporation, and the
Shareholders of Quamco listed
on Schedule 1 attached to the
Agreement.
The parties hereto desire to amend the Agreement as set
forth herein.
NOW, THEREFORE, the parties do hereby agree as follows:
1. Capitalized terms used and not otherwise defined in
this Amendment shall have the meanings given to such terms in the
Agreement.
2. Employee Benefit Plans. The Agreement is hereby
amended as follows:
(a) Subsection (v) of Section 4.3(n) is hereby deleted in its
entirety and the following new subsections (v) and (vi) inserted
in lieu thereof:
"(v) Reference is made to the
opinion of William M. Mercer, Inc. to the
Company dated March 6, 1995 (the "Mercer
Opinion"), a true copy of which has been
provided to Parent. The Mercer Opinion sets
forth an estimate of the effects of freezing
the Pension Plan as of January 31, 1995.
Based on the assumptions and methods set
forth in or incorporated by reference in
Paragraphs 1, 2, 3 and 5 of Exhibit A.2 to
the Mercer Opinion, but using accurate data
as to (A) the demographics and census of the
participant population as of the Closing Date
and (B) the fair value of the assets of the
Pension Plan as of the Closing Date, if all
future benefit accruals in and
</Page>
<PAGE>
employee contributions to the Pension Plan
are frozen as of the Closing Date, the
Pension Plan will be considered to have been
"curtailed" within the meaning of SFAS 88,
and on the Closing Date the fair value of the
assets of the Pension Plan will not be less
than the projected benefit obligations of the
Pension Plan, in each case as determined in
conformance with SFAS 87 and SFAS 88.
(vi) Assuming for purposes of this
subsection 4.3(n)(vi) only, the validity of
all the assumptions and methods set forth in
or incorporated by reference in Exhibit A.2
to the Mercer Opinion, the calculations made
by William M. Mercer Inc. as set forth on
Exhibit A.1 to the Mercer Opinion do not
contain any material errors of calculation."
(a) Subsection (vi) of Section 4.3(n) is amended by
renumbering such subsection as subsection "(vii)", deleting the
first word of such subsection, "All", and inserting the following
words in lieu thereof:
"Except for the Pension Plan, all"
(a) Sections 6.4 and 7.4(f) are deleted in their entirety.
(b) The Disclosure Letter is amended by deleting Exhibit
A to
Schedule 4.3(n) to the Disclosure Letter, and by deleting the
last sentence of such Schedule 4.3(n).
2. Certain Tax Matters. The Agreement is hereby amended
by adding the following new Section 7.8 after the existing
Section 7.7:
"7.8. Tax Treatment of Contingent
Payment. Notwithstanding anything to the
contrary contained herein:
(a) In the event that (i) in the
Stub Return, Parent Group deducts the
Contingent Payment as an expense deductible
for tax purposes against ordinary income
during the
</Page>
<PAGE>
Service disallows such deduction, the
Indemnifying Persons shall indemnify and hold
harmless the Indemnified Persons, and each of
them, from the net cost of (A) any additional
income Taxes (including, without limitation,
any interest and/or penalties relating
thereto) payable by the Company, or payable
by Parent or any other entity within Parent
Group on behalf of the Company, with respect
to the Stub Period, as a result of the
disallowance of the deduction of the
Contingent Payment and (B) any expenses
relating thereto (including, without
limitation, reasonable fees and expenses of
attorneys and accountants); provided,
however, that the aggregate liability of the
Indemnifying Persons in respect of their
obligations under this Section 7.8 shall not
in any event exceed $500,000.00.
(b) The obligations of the
Indemnifying Persons under Section 7.8(a)
shall not be subject to, and any amounts paid
in respect thereof shall not count towards,
the limitation set forth in Section 7.4(b).
(c) The indemnity provided in
Section 7.8(a) shall be the sole and
exclusive remedy of the Indemnified Persons
with respect to the matters covered by this
Section 7.8. Without limiting the generality
of the foregoing, the failure of the Company
to file any Return or pay any Tax with
respect to the Stub Period (or any taxable
period that includes the Stub Period), as a
result of the anticipated deduction relating
to the Contingent Payment, shall not in any
event constitute a breach of any
representation, warranty, agreement or
covenant of the Company or any Shareholder
contained in this Agreement, or an Event of
Indemnification relating thereto.
4. Certain Obligations of the Company to the Rico
Sellers. (a) Anything contained in the Agreement to the contrary
notwithstanding, although the Rico Amount shall be included in
Aggregate Indebtedness and, as such, shall be deducted from
Aggregate Purchase Price in calculating Merger Consideration, all
as provided in Section 1.1, such amount shall not be paid by Sub
to the Rico Sellers at the Closing pursuant to Section 3.4(b),
but shall remain outstanding as an obligation of the Company
(and, after the Effective Time, the Surviving Corporation).
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<PAGE>
(b) Parent hereby waives the condition to Closing
set forth in Section 6.2(i) of the Agreement.
(c) In the event that the Rico Amount exceeds
$4,159,881.01, the Shareholders shall pay to the Surviving
Corporation the amount of such excess on demand. The obligations
of the Shareholders under this Section 4(c) shall not be subject
to, and any amounts paid in respect thereof shall not count
towards, the limitation set forth in Section 7.4(b). Any demand
by the Surviving Corporation pursuant to this Section 4(c) shall
be made in writing to the Shareholders' Representative.
(d) The parties hereto shall use their best
efforts to obtain, within ten Business Days after the Closing, or
as soon thereafter as possible (i) the satisfaction and/or
discharge in full of all obligations of the Surviving Corporation
to the Rico Sellers, other than the obligations (the "Non-Compete
Payment Obligations") of the Surviving Corporation under Section
8.2 of the Rico Stock Purchase Agreement, (ii) the cancellation
of the Rico Seller Notes and the surrender thereof to Parent, and
(iii) the release by the Rico Sellers of all security interests
in the property and assets of the Surviving Corporation and its
Subsidiaries under the Rico Collateral Agreements. In that
connection, the Surviving Corporation shall tender to the Rico
Sellers, against delivery of the Rico Seller Notes and
appropriate evidence of the release of such security interests,
the full amount of the Rico Amount (less the amount of the Non-
Compete Payment Obligations).
(e) The obligations of the Shareholders under
Section 4(c) of this Amendment shall terminate upon (A) the
consummation of the transactions provided for in clauses (i),
(ii) and (iii) of Section 4(d) of this Amendment and (B) delivery
to the Surviving Corporation from the Rico Sellers of written
confirmation (1) that the amount of the Non-Compete Payment
Obligations do not in the aggregate exceed $619,047.68; and
(2) that no other amount is owed to the Rico Sellers, or any of
them, by the Surviving Corporation; provided, however, that any
obligation of the Shareholders arising prior to the effectiveness
of such termination shall survive the same.
5. Definitions. The Agreement is hereby amended by
adding the following new definitions to Section 1.1 (in
alphabetical order):
"Contingent Payment" has the
meaning provided in the Shadow Warrant
Agreement.
"Parent Group" means any
consolidated group of which the Company or
Parent is a member.
"Pension Plan" means the Quamco,
Inc. Contributory Retirement Plan.
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<PAGE>
"Rico Non-Compete Payment" means
all obligations of the Company and/or Rico to
the Rico Sellers, or any of them, pursuant to
Section 8.2 of the Rico Stock Purchase
Agreement.
"SFAS" means a Statement of
Financial Accounting Standards issued by the
Financial Accounting Standards Board.
"Shadow Warrant Agreement" means
the Shadow Warrant Agreement dated as of
December 13, 1989, between Quacq Corporation,
a Delaware corporation and predecessor of the
Company by merger, and Heller, as amended
through the Closing Date.
"Stub Period" means the taxable
period of the Company beginning on October
31, 1994, and ending on the Closing Date.
"Stub Return" means all Federal
income tax Returns filed by the Company,
Parent or any other entity within Parent
Group for the taxable period of the Company
that includes the Stub Period.
6. In consideration of the mutual covenants and
agreements of Parent, the Company and the Shareholders contained
therein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned PCC
Quamco Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent, hereby adopts and becomes a party to the
Agreement, as amended hereby, to the same extent as if it were an
original signatory thereto. PCC Quamco Corp. is the corporation
referred to as Sub in the Agreement and hereby agrees to perform
all obligations of Sub thereunder.
7. Except as expressly amended hereby, the Agreement
shall remain in full force and effect.
8. This Amendment may be executed in any number of
counterparts and on separate counterparts. Each such counterpart
shall be deemed to be an original instrument, but all such
counterparts together shall constitute a single agreement.
9. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York applicable
to contracts made and performed wholly therein.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered on the date first above
written, pursuant to Section 8.2 of this Agreement.
QUAMCO, INC.
By:
Name:
Title:
PRECISION CASTPARTS CORP.
Accepted and agreed to on behalf of
each Shareholder as of the date By:
first written above: Name:
Title
OVERSEAS PARTNERS
INTERNATIONAL LIMITED,
as Shareholders' Representative PCC QUAMCO CORP.
By: By:
Name: Christian Mermoud Name:
Title:
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