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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
Date of Report May 31, 1996
(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)
_______________________________________
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Item 2.
On May 31, 1996, Precision Castparts Corp. ("PCC")
purchased 100% of the outstanding capital stock of The
Olofsson Corporation ("Olofsson") from Thomas H. Corson,
John L. Hobey, Thomas J. McGrath, W. Sydnor Settle and The
W. Sydnor Settle 1996 Family Trust. Olofsson, which will be
included in the results of PCC Specialty Products, Inc., is
a designer and manufacturer of a broad line of computer-
controlled metalworking machine systems. The purchase price
of $52.2 million was financed from cash balances, the
assumption of $10.0 million of existing debt and $32.0
million borrowed under a Credit Agreement with Bank of
America National Trust & Savings Association, as Agent.
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 August 13,
1996.
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 as soon as practicable, but not later than
August 13, 1996.
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Page 2
(c) Exhibits.
(1) Stock Purchase Agreement by and among PCC
Specialty Products, Inc., and The Stockholders of
The Olofsson Corporation, April 25, 1996.
Schedules that have been omitted will be
furnished supplementally to the Commission
upon request.
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 June 14, 1996 /s/ W.D. Larsson
______________________________
W. D. Larsson
Vice President and
Chief Financial Officer
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EDGAR: OLOF_8K
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STOCK PURCHASE AGREEMENT
by and among
PCC SPECIALTY PRODUCTS, INC.
and
THE STOCKHOLDERS
of
THE OLOFSSON CORPORATION
April 25, 1996
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TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE AND SALE OF SHARES; CLOSING
1.1 Purchase and Sale 1
1.2 Purchase Price 1
1.3 Earn-Out 1
1.4 Closing 2
1.5 Deliveries at Closing 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
2.1 Authority 5
2.2 Title 7
2.3 Organization of Company; Qualification 7
2.4 Capitalization 8
2.5 Subsidiaries and Investments 9
2.6 Financial Statements 9
2.7 Absence of Certain Changes or Events 11
2.8 Properties; Title 12
2.9 Intellectual Property 13
2.10 Environmental Matters 14
2.11 Insurance 15
2.12 Labor Matters 16
2.13 ERISA; Benefit Plans 16
2.14 Certain Contracts and Arrangements 17
2.15 Legal Proceedings, Etc. 19
2.16 Tax Matters 19
2.17 Transactions with Stockholders, Officers,
Directors, Etc. 21
2.18 [INTENTIONALLY OMITTED] 21
2.19 Officers, Directors and Employees 22
2.20 Other Liabilities 22
2.21 Compliance with Laws; Licenses and Permits 22
2.22 Products 23
2.23 Disclaimer of Other Representations and Warranties;
Disclosure; Bring-Down 23
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization 24
3.2 Authority Relative to this Agreement 24
3.3 Consents and Approvals; No Violation 25
3.4 Financing 25
3.5 Purchase for Investment 25
3.6 Bring-Down 26
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ARTICLE IV. COVENANTS OF THE PARTIES
4.1 Conduct of Business 26
4.2 Access to Information 27
4.3 Consents 28
4.4 Filings 28
4.5 Furnishing Information; Announcements 29
4.6 Certain Employee Benefits 29
4.7 Efforts to Consummate 30
4.8 Notification of Certain Matters; Further Financial
Reports 30
4.9 Tax Returns 31
4.10 Non-Solicitation 31
4.11 1995 ISO Plan and Hobey ISO; Shareholders' Agreement 32
4.12 Certain Expenses 32
4.13 Kincheloe Facility 32
ARTICLE V. CONDITIONS TO OBLIGATIONS OF BUYER
5.1 Representations and Warranties; Performance of
Obligations; Certificate 33
5.2 Authorization; Consents 34
5.3 Absence of Litigation 35
5.4 Kincheloe Facility 35
5.5 Legislation 36
5.6 Casualty Loss 36
ARTICLE VI. CONDITIONS TO OBLIGATIONS OF STOCKHOLDERS
6.1 Representations and Warranties; Performance of
Obligations; Certificate 36
6.2 Absence of Litigation 37
6.3 Severance Agreements; Disclosure and Noncompetition Agr
eements 37
6.4 Authorization; Consents 37
6.5 Legislation 37
6.6 Pay-Off of Trafalgar House 37
6.7 Kincheloe Facility 38
6.8 Payment of Expenses 38
ARTICLE VII. TERMINATION AND ABANDONMENT
7.1 Termination 38
7.2 Procedure and Effect of Termination 39
ARTICLE VIII. INDEMNIFICATION; ESCROW FUND
8.1 Indemnification 39
8.2 Remedies 42
8.3 Undertakings 43
8.4 Certain Limitations 43
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8.5 Tax Indemnification 43
8.6 Indemnification Escrow 44
ARTICLE IX. MISCELLANEOUS
9.1 Survival 44
9.2 Expenses 45
9.3 Headings 45
9.4 Notices 45
9.5 Assignment 46
9.6 Entire Agreement 47
9.7 Modifications, Amendments and Waivers 47
9.8 Counterparts 47
9.9 Governing Law 47
9.10 Accounting Terms 47
9.11 Certain Definitions 47
9.12 Severability 52
9.13 Specific Performance 52
9.14 Third Parties 52
9.15 Consent to Jurisdiction 52
9.16 Stockholders' Obligations 53
9.17 Interpretation 53
9.18 Brokerage, Etc. Expenses 53
9.19 Stockholders' Representative 54
9.20 Transfer Tax 55
9.21 Stockholders' and Exhibit 1 Party's Waiver and
Release of Claims 55
SIGNATURES 56
GUARANTEE 56
Page iii
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INDEX OF DEFINED TERMS
Term Section
Accounts Payable Component Annex A-1
Affiliate 9.11
Agreement Preamble
Benefit Plans 2.13(a)
Buyer Preamble
Capitalized Lease Debt 9.11
Change in Control Annex B
CHMS 9.11
Closing 1.4
Closing Date 1.4
Closing Date Employees 4.7(a)
Code 2.13(a)
Commonly Controlled Entity 2.13(a)
Common Stock 2.4(a)
Company Preamble
Company Products 2.22
Company Property 2.10(a)
Confidentiality Agreement 4.2(b)
Debt Annex A-1
Debt Purchase Price Adjustment Annex A-1
Department of Justice 4.5
Determination Date Annex A-1
Disputes Auditor Annex B
Earn-Out 1.3
Earn-Out Period Annex B
EDC of Chippewa County 4.13
Environmental Laws 2.10(a)
ERISA 2.13(a)
Escrow Agent 1.5(c)
Escrow Agreement 1.5(c)
Escrow Fund 1.5(c)
Estimate Annex A-1
Exhibit 1 Party Preamble
Final Calculation Annex B
Final Determination Date 7.1(b)
Final Recalculation Annex B
FTC 4.5
Generally Accepted Accounting Principles 9.11
Hazardous Materials 2.10(a)
Hobey ISO 9.11
HSR Act 2.1
Indemnified Party 8.1(c)
Indemnifying Party 8.1(c)
Intellectual Property 2.9
Interim Kincheloe Lease Payments 9.11
IRS 9.11
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Kincheloe Lease 5.4
Kincheloe Transaction 5.4
Knowledge 9.11
Legal Expenses 8.1(a)
Lien 9.11
Losses 8.1(a)
Material Adverse Effect 9.11
Material Contracts 2.14(a)
PBGC 2.13(a)
Permits 2.21
Olofsson Gross Profit Annex B
Owned Real Property 2.8(a)
Person 9.11
Preliminary Calculation Annex B
Preliminary Recalculation Annex B
Projections 2.6(e)
Proposal 4.10(b)
Proposed IPO Documents 9.11
Pro Rata Percentage 9.11
Purchase Price 1.2
Real Property Leases 2.8(a)
Reasonable Efforts 9.11
Required Majority of Shareholders 9.19(b)
Shares Preamble
Stockholders Preamble
Stockholders' Representative 9.19(a)
Subsidiaries 2.5
Tangible Property 2.8(a)
Tax Benefits Purchase Price Adjustment Annex A-1
Taxes 9.11
Tax Returns 9.11
Terms Annex A-1
Trafalgar House 9.11
W. Sydnor Settle Family Trust 9.11; Exhibit 1
WARN 4.6(b)
1985 Asset Purchase Agreement 9.11
1990 Loan and Security Agreement 9.11
1990 Loan and Security Agreement
Termination Conditions 9.11
1994 Balance Sheet and 1995 Balance Sheet 2.6
1995 ISO Plan 9.11
Page v
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Exhibits
Exhibit 1 -- Exhibit 1 Party
Annexes
Annex A-1 -- Purchase Price Adjustment
Annex A-2 -- Description of Stockholders' Holdings
Annex B -- Determination of Earn-Out
Annex C -- Form of Severance Agreements
Annex D -- Form of Disclosure and Noncompetition Agreement
Annex E-1 -- Form of Opinion of Counsel for Stockholders
Annex E-2 -- Form of Opinion of Counsel for Exhibit 1 Party
Annex F -- Form of Opinion of Counsel for Buyer
Annex G -- Form of Escrow Agreement
Annex H -- Kincheloe Lease
Schedules
Schedule 2.3 -- Location of Real and
Personal Property
Schedule 2.3-2 -- Charter Documents
Schedule 2.4 -- Capitalization
Schedule 2.5 -- Subsidiaries
Schedule 2.7 -- Certain Changes or Events
Schedule 2.8 -- Properties; Title
Schedule 2.9 -- Intellectual Property
Schedule 2.10 -- Environmental Matters
Schedule 2.11 -- Insurance
Schedule 2.12 -- Labor Matters
Schedule 2.13 -- ERISA; Benefit Plans
Schedule 2.14 -- Material Contracts
Schedule 2.15 -- Litigation
Schedule 2.16 -- Tax Matters
Schedule 2.17 -- Insider Transactions
Schedule 2.19 -- Officers, Directors and Employees
Schedule 2.21 -- Permits
Schedule 2.22 -- Products
Schedule 6.8 -- Company Expenses
Schedule 9.19 -- Stockholders' Representative
Page vi
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made on
April 25, 1996 by and among PCC SPECIALTY PRODUCTS, INC., a
Delaware corporation ("Buyer"), THOMAS H. CORSON, JOHN L. HOBEY,
THOMAS J. MCGRATH and W. SYDNOR SETTLE (each a "Stockholder" and,
collectively, the "Stockholders"), and that certain other
shareholder of THE OLOFSSON CORPORATION, a Delaware corporation
(the "Company"), listed on Exhibit 1 hereto (the "Exhibit 1
Party").
The Stockholders and the Exhibit 1 Party are the owners of
all of the issued and outstanding capital stock (the "Shares") of
the Company. The Stockholders and the Exhibit 1 Party desire to
sell to Buyer and Buyer desires to purchase from the Stockholders
and the Exhibit 1 Party all of the Shares for the price, upon the
terms and subject to the conditions hereinafter set forth.
Capitalized terms not otherwise defined at the time of usage
shall have the meanings designated in Section 9.11 hereof.
In consideration of the premises and of the respective
covenants and agreements contained herein, the parties agree as
follows:
ARTICLE I
Purchase and Sale of Shares; Closing
1.1 Purchase and Sale. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, the
Stockholders and the Exhibit 1 Party shall sell and transfer to
Buyer, and Buyer shall purchase and accept from the Stockholders
and the Exhibit 1 Party, all of the outstanding Shares.
1.2 Purchase Price. The Buyer agrees to pay to the
Stockholders and the Exhibit 1 Party at the Closing $28,238,970
in the aggregate (or approximately $11.30 per Share), by wire
transfer in immediately available funds (the "Purchase Price").
The Purchase Price shall be allocated among the Stockholders and
the Exhibit 1 Party in accordance with their respective Pro Rata
Percentages, and shall be subject to adjustment as set forth on
Annex A-1 hereto.
1.3 Earn-Out. In addition to the Purchase Price, the Buyer
shall pay to the Stockholders and the Exhibit 1 Party on or
before April 1, 1998, in accordance with their respective Pro
Rata Percentages, an additional amount, up to a maximum of
$3,125,000 in cash (the "Earn-Out"), if and to the extent that
certain performance objectives are met, as determined in
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accordance with Annex B hereto. The payment of the Earn-Out on
or before April 1, 1998 shall be subject to adjustment as set
forth on Annex B hereto.
1.4 Closing. Subject to the conditions set forth in this
Agreement, the purchase and sale of the Shares pursuant to this
Agreement (the "Closing") shall take place at the offices of
Dykema Gossett PLLC, Detroit, Michigan commencing at 10:00 a.m.,
local time, (a) on the fifth (5th) business day following the
later of (i) the date on which all of the conditions set forth in
Articles V and VI hereto have been fulfilled to the satisfaction
of, or are waived by, the party whose obligations hereunder are
so conditioned, or (ii) the expiration of the applicable waiting
period under HRS Act, without receipt by the Buyer, the Company
or the Stockholders of notice from the Department of Justice or
the FTC of any contemplated legal action to restrain or nullify
the transactions contemplated by this Agreement, or (b) on such
other date, time and place which is agreed to in writing by Buyer
and the Stockholders (the "Closing Date"); provided, however,
that the Stockholders may postpone the Closing Date one time for
up to ten business days without the agreement of the Buyer in the
event that the Debt Purchase Price Adjustment determined in
accordance with Annex A-1 hereto would result in a reduction of
the Purchase Price in an amount equal to or greater than
$500,000. The Closing shall be deemed to have taken place at the
time at which it concludes, which is herein called the "Effective
Time".
1.5 Deliveries at the Closing. Subject to the conditions
set forth in this Agreement, at the Closing:
(a) The stockholders and the Exhibit 1 Party shall
deliver to Buyer:
(i) certificates representing all the
Shares, endorsed in blank in proper form for transfer
or accompanied by stock powers endorsed in blank;
(ii) letters, dated the Closing Date, from
each member of the Board of Directors of the Company
and any Subsidiaries and from each of their officers
stating that such director or officer resigns such
position effective at the consummation of the Closing;
(iii) the Certificate of the Stockholders
and the Exhibit 1 Party referred to in Section 5.1(c);
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(iv) Severance Agreements executed by Messrs.
John L. Hobey and William F. Crabtree in substantially
the form of Annex C hereto;
(v) Disclosure and Noncompetition Agreements
executed by Messrs. Hobey and Crabtree in substantially
the form of Annex D hereto;
(vi) opinions of counsel to the Stockholders
and to the Exhibit 1 Party in substantially the form of
Annex E-1 hereto and Annex E-2 hereto, respectively,
provided that if the Kincheloe Transaction is not
consummated at the Closing, the opinions set forth in
Annex E-1 relative thereto shall be rendered at the
time of any such consummation;
(vii)a Certification, signed by an authorized
officer of the Company and dated the Closing Date,
pursuant to Section 1445(b) of the Code and Treasury
Regulation 1.897-2, to the effect that the Company is
not a "United States real property holding corporation"
as defined in Section 897 of said Code;
(viii)Certificates of good standing relative
to the Company and its Subsidiaries, dated as of a
recent date prior to the Closing, from the Delaware
Secretary of State (as to legal existence and good
standing) and from the Michigan Department of Commerce
(as to good standing with regard to foreign
qualification); and
(ix) Such other documents, agreements,
certificates and instruments as are described in
Articles IV and V hereof to be delivered at the Closing
by the Stockholders or the Exhibit 1 Party.
(b) Buyer shall deliver:
(i) by wire transfer in immediately
available funds to the accounts designated by the
Stockholders and the Exhibit 1 Party, the Purchase
Price in accordance with the Pro Rata Percentages;
(ii) the Certificate of Buyer referred to in
Section 6.1(c);
(iii)each of the Agreements described in
Section 6.3;
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(iv) an opinion of counsel to Buyer in
substantially the form of Annex F hereto, provided that
if the Kincheloe Transaction is not consummated at the
Closing, the opinions set forth in Annex F relative
thereto shall be rendered at the time of any such
consummation;
(v) evidence satisfactory to the
Stockholders of the payment in full of the Company's
indebtedness to Trafalgar House; and
(vi) evidence satisfactory to the
Stockholders of the payment in full of the expenses set
forth in Section 6.8.
(vii)Certificate of good standing relative to
the Buyer, dated as of a recent date prior to the
Closing, from the Delaware Secretary of State (as to
legal existence and good standing); and
(viii)Such other documents, agreements,
certificates and instruments as are described in
Articles IV and VI hereof to be delivered at the
Closing by the Buyer.
(c) Simultaneously with the deliveries described in
this Section 1.5:
(i) the Stockholders, Buyer and, if
applicable, the Exhibit 1 Party shall execute an escrow
agreement (the "Escrow Agreement") in substantially the
form of Annex G hereto with the escrow agent identified
therein (the "Escrow Agent"); and
(ii) each Stockholder and, if applicable, the
Exhibit 1 Party will deposit with the Escrow Agent the
sum set forth therein relative to (A) if applicable, an
amount equal to the Capitalized Lease Debt pursuant to
Section 4.13(b), (B) the $1,000,000 for the
indemnification escrow described in Section 8.6, and
(C) if applicable, the amount relative to the Debt
Purchase Price Adjustment pursuant to subsection (iv)
of Annex A-1.
The Stockholders and, if applicable, the Exhibit 1 Party hereby
direct the Buyer to deduct such amounts from the sums to be
delivered directly to the Stockholders, and to deposit the sum on
their behalf with the Escrow Agent. The deposited amounts shall
constitute the "Escrow Fund", as defined in the Escrow Agreement.
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ARTICLE II
Representations and Warranties of Stockholders
Each Stockholder and Exhibit 1 Party, severally and not
jointly, represents and warrants to the Buyer that the following
representations and warranties are true and correct on the date
hereof, provided that the Exhibit 1 Party does not make any
representations or warranties except for those set forth below in
Sections 2.1(b) and 2.2(b):
2.1 Authority.
(a) Each Stockholder has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby. This Agreement has been duly executed by
each Stockholder and constitutes a binding and legally
enforceable obligation of each Stockholder in accordance with its
terms. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the
compliance with the terms of this Agreement do not and will not
(at present or with notice of lapse of time or both): (i) result
in any breach of any provision of the terms of any agreement or
other instrument to which the Company or such Stockholder is a
party or by which the Company or such Stockholder or any of their
respective properties are bound; (ii) result in a breach of any
provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of
termination or acceleration in respect of, any agreement,
commitment, understanding, arrangement or restriction of any kind
to which the Company or such Stockholder is a party or to which
the Company or such Stockholder or any of their respective
properties are subject other than with respect to the obligations
under the New Notes as described and defined in the 1985 Asset
Purchase Agreement (which 1985 Asset Purchase Agreement will
terminate and be of no further force or effect at such time as
the Company's indebtedness arising under the New Notes (as
described in Annex A-l(i)(a)(2)) is paid in full) and other than
with respect to the 1990 Loan and Security Agreement (which 1990
Loan and Security Agreement can be terminated by the Company
subject to the 1990 Loan and Security Agreement Termination
Conditions); (iii) result in the creation of any Lien upon, or
any person obtaining the right to acquire, any properties, assets
or rights of the Stockholder or the Company; (iv) violate any
law, ordinance, code, rule, regulation, decree, order or ruling
of any court or governmental authority, to which the Company,
such Stockholder or any of their respective properties are
subject; or (v) require any authorization, consent, order, permit
or approval of, or notice to, or filing, registration or
qualification with, any governmental, administrative or judicial
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authority to which the Company, such Stockholder or any of their
respective properties are subject except as may be required to be
in compliance with the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and except as may be required under the 1985 Asset Purchase
Agreement and under the 1990 Loan and Security Agreement.
(b) The Exhibit 1 Party has full power and authority
to enter into this Agreement and to carry out the transactions
contemplated hereby. This Agreement has been duly executed by
the Exhibit 1 Party and constitutes a binding and legally
enforceable obligation of the Exhibit 1 Party in accordance with
its terms. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the
compliance with the terms of this Agreement do not and will not
(at present or with notice of lapse of time or both): (i) result
in any breach of any provision of the terms of any agreement or
other instrument to which the Exhibit 1 Party is a party or by
which the Exhibit 1 Party or any of its properties is bound;
(ii) result in a breach of any provision of, constitute a default
under, result in the modification or cancellation of, or give
rise to any right of termination or acceleration in respect of,
any agreement, commitment, understanding, arrangement or
restriction of any kind to which the Company or the Exhibit 1
Party is a party or to which the Company or the Exhibit 1 Party
or any of their respective properties are subject other than with
respect to the obligations under the New Notes as described and
defined in the 1985 Asset Purchase Agreement (which 1985 Asset
Purchase Agreement will terminate and be of no further force or
effect at such time as the Company's indebtedness arising under
the New Notes is paid in full) and other than with respect to the
1990 Loan and Security Agreement (which 1990 Loan and Security
Agreement can be terminated by the Company subject to the 1990
Loan and Security Agreement Termination Conditions); (iii) result
in the creation of any Lien upon, or any person obtaining the
right to acquire, any properties, assets or rights of the Exhibit
1 Party; (iv) violate any law, ordinance, code, rule, regulation,
decree, order or ruling of any court or governmental authority,
to which the Exhibit 1 Party or any of its properties are
subject; or (v) require any authorization, consent, order, permit
or approval of, or notice to, or filing, registration or
qualification with, any governmental, administrative or judicial
authority to which the Exhibit 1 Party or any of its properties
are subject except as may be required to be in compliance with
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the provisions of the HSR Act and except as may be required under
the 1985 Asset Purchase Agreement and under the 1990 Loan and
Security Agreement.
2.2 Title.
(a) Each Stockholder has good and valid title to the
Shares owned by it and is the sole record and beneficial owner of
such Shares, free and clear of any and all Liens. No Stockholder
will hereafter sell, convey or otherwise transfer the Shares
owned by such Stockholder or any interest therein (except to the
Buyer at the Closing). Upon delivery of the Shares to the Buyer
and full payment therefor as contemplated hereby, the Buyer shall
acquire good, valid and marketable title to all of the Shares
owned by each such Stockholder, free and clear of all Liens,
other than those arising from acts of the Buyer.
(b) The Exhibit 1 Party has good and valid title to
the Shares owned by it and is the sole record and beneficial
owner of such Shares, free and clear of any and all Liens. The
Exhibit 1 Party will not hereafter sell, convey or otherwise
transfer the Shares owned by the Exhibit 1 Party or any interest
therein (except to the Buyer at the Closing). Upon delivery of
the Shares to the Buyer and full payment therefor as contemplated
hereby, the Buyer shall acquire good, valid and marketable title
to all of the Shares owned by the Exhibit 1 Party, free and clear
of all Liens, other than those arising from acts of the Buyer.
2.3 Organization of Company; Qualification. The Company is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being
conducted. Each Subsidiary is a corporation duly organized and
validly existing and in good standing under the laws of the State
of Delaware and each Subsidiary has all requisite corporate power
and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Company and
each of its Subsidiaries are duly qualified or licensed to do
business as a foreign corporation and in good standing in the
State of Michigan. Attached as Schedule 2.3-1 is a list of those
locations in which the Company or a Subsidiary owns or leases (as
lessee) real or personal property. The failure of the Company or
a Subsidiary to be qualified as a foreign corporation in any
jurisdiction other than the State of Michigan will not have a
Material Adverse Effect. Except as set forth on Schedule 2.3-1,
the Company is not a lessor of any Real Property. Attached as
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Schedule 2.3-2 are complete and correct copies of the Certificate
of Incorporation (or other charter document) and Bylaws, as
currently in effect, of the Company and each of its Subsidiaries.
2.4 Capitalization.
(a) At the date hereof, the authorized capital stock
of the Company consists of 2,600,000 shares of Common Stock, par
value $.0l per share (the "Common Stock"), of which 2,210,433
shares are presently issued and outstanding and 289,567 shares
are reserved for issuance pursuant to the Hobey ISO. All such
outstanding shares of the Company's capital stock are validly
issued, fully paid and nonassessable and all are owned,
beneficially and of record, in the aggregate by the Stockholders
and the Exhibit 1 Party. Except as set forth on Schedule 2.4,
other than this Agreement, there is no security, option, warrant,
right, call, subscription, agreement, commitment or understanding
of any nature whatsoever, fixed or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other
disposition of any shares of stock of the Company or any
Subsidiary or any securities convertible into, or exchangeable
for, or other rights to acquire, any shares of stock or other
equity securities of the Company or any Subsidiary, or
(ii) obligates the Company or any Subsidiary to grant, offer or
enter into any of the foregoing.
There are no outstanding contractual obligations of the Company
to repurchase, redeem or otherwise acquire any outstanding shares
of its capital stock or any of the capital stock or other equity
interests of its Subsidiaries.
(b) Except for (i) this Agreement and (ii) the shares
of capital stock of each Subsidiary described on Schedule 2.4,
there are no shares of capital stock of the Company or of any
Subsidiary authorized, issued or outstanding, and there are no
outstanding subscriptions, options, warrants, rights, stock-based
or stock-related awards or convertible or exchangeable securities
or other agreements or commitments to which the Company, any
Subsidiary or any Stockholder is a party or by which the Company,
any Subsidiary or any Stockholder may be bound of any character
relating to, or obligating the Company, any Subsidiary or any
Stockholder to issue, grant, award, transfer or sell any issued
or unissued shares of its capital stock or other securities of
the Company or any Subsidiary (including, without limitation, any
agreement or commitment obligating the Company or any Subsidiary
to enter into any employee compensation arrangement based on any
valuation or transaction price of, or change of ownership in,
shares of capital stock or other securities). Except as set
forth in Schedule 2.4, there are no voting trusts, proxies or
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other agreements or understandings to which the Company or any
Subsidiary or any Stockholder or Exhibit 1 Party is a party with
respect to the (A) voting of capital stock or other securities of
the Company or any Subsidiary, (B) dividends or distributions on
account of such capital stock or (C) the transfer or disposition
of such capital stock.
2.5 Subsidiaries and Investments. Schedule 2.5 hereto sets
forth the name of each corporation of which the Company
beneficially owns, directly or indirectly, any outstanding voting
stock (each, a "Subsidiary" and, collectively the
"Subsidiaries"). Schedule 2.5 also sets forth the jurisdiction
of incorporation or organization of each Subsidiary and each
jurisdiction in which any Subsidiary is qualified or licensed to
do business as a foreign corporation or other entity. All of the
issued and outstanding shares of capital stock of each Subsidiary
are validly issued, fully paid and non-assessable, and held by
the Company. Except for the Company's ownership of the
Subsidiaries, neither the Company nor any Subsidiary directly or
indirectly owns or has an equity or debt security interest in any
other Person.
2.6 Financial Statements.
(a) The Company has previously furnished to Buyer
(i) the audited consolidated balance sheets of the Company as of
December 31, 1994 and 1993, and (ii) the related audited
consolidated statements of operations, statements of
stockholders' equity and statements of cash flows for the fiscal
years ended December 31, 1992, 1993 and 1994, together with the
related notes thereto and the report thereon of KPMG Peat Marwick
LLP. The Company has also furnished to Buyer the unaudited
consolidated balance sheet and related unaudited consolidated
statement of operations of the Company for the fiscal year ended
December 31, 1995.
(b) The consolidated balance sheet of the Company as
of December 31, 1994, together with the related notes thereto and
the report thereon of KPMG Peat Marwick LLP, is hereinafter
referred to as the "1994 Balance Sheet". Except as set forth on
Schedule 2.16 with respect to Taxes and except as reflected on
the 1994 Balance Sheet, at the date of the 1994 Balance Sheet,
the Company did not have (i) any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or
responsibility required by Generally Accepted Accounting
Principles to be set forth on a balance sheet as of such date
that were not fully and adequately reflected or reserved against
on the 1994 Balance Sheet, which would have a Material Adverse
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Effect, or (ii) valuation reserves of accounts receivables or
inventories that differ materially from the valuation reserves
that would be required by Generally Accepted Accounting
Principles to be set forth on a balance sheet as of such date.
Except as set forth on Schedule 2.16 with respect to Taxes, all
liability reserves established in the 1994 Balance Sheet were in
accordance with Generally Accepted Accounting Principles and
there were no material loss contingencies (as that term is
defined by the Financial Accounting Standards Board in March
1975) that were not provided for or disclosed in the 1994 Balance
Sheet in accordance with Generally Accepted Accounting
Principles.
(c) Except as described on Schedule 2.16 with respect
to Taxes, all such financial statements are in accordance with
the books and records of the Company and its Subsidiaries. The
balance sheets included in the financial statements referred to
in this Section 2.6 (including the related notes thereto) present
fairly the financial position of the Company as of their
respective dates, and each of the related statements of
operations and (where applicable) stockholders' equity and cash
flows included therein (including the related notes thereto)
present fairly the results of operations and (where applicable)
cash flows for the fiscal years or periods then ended, subject,
in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, and all such financial
statements have been prepared in conformity with Generally
Accepted Accounting Principles applied on a consistent basis,
except as otherwise expressly noted therein, except as described
on Schedule 2.16 with respect to Taxes, and except, as to
unaudited financial statements, that no statements of
stockholders' equity have been prepared, and no notes to such
financial statements are included. Notwithstanding the
foregoing, notes to said unaudited financial statements are not
necessary to have said statements present fairly the financial
position of the Company as of its date or the results of
operations for the unaudited period then ended, subject to such
normal year-end audit adjustments.
(d) The Stockholders will deliver to the Buyer by
April 18, 1996 (or as soon thereafter as practicable) the audited
consolidated balance sheet and related audited consolidated
statement of operations of the Company for the fiscal year ended
December 31, 1995. Upon such delivery, (i) the representations
and warranties made in this Section 2.6 as to the audited
financial statements of the Company for earlier fiscal years
shall also apply to said delivered financial statements, and
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(ii) the references in this Agreement to the 1994 Balance Sheet
shall also become references to the "1995 Balance Sheet", which
term shall refer to the consolidated balance sheet of the Company
as of December 31, 1995, together with the related notes thereto
and the report thereon of KPMG Peat Marwick LLP.
(e) Without making any representation or warranty
concerning whether the Company will achieve results contained in
the projections previously delivered to the Buyer and attached to
Annex B hereto (the "Projections"), the Stockholders confirm that
the Projections were prepared for and used by the Board of
Directors of the Company for 1996 planning purposes and, to the
knowledge of the Stockholders, were prepared in good faith and
based upon reasonable assumptions as of the date the Projections
were prepared.
2.7 Absence of Certain Changes or Events. Except as set
forth or reflected in the financial statements listed in Section
2.6, except for the approximately $658,000 of the costs and
expenses associated with the recently proposed and aborted
initial public offering of the Company's Common Stock, including
the negotiation, preparation and filing of the Proposed IPO
Documents, except as set forth in Schedule 2.7 hereto and except
as otherwise expressly contemplated by this Agreement, since
September 30, 1995 there has not been: (a) any Material Adverse
Effect; (b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock, property
or any combination thereof) in respect of the Company's capital
stock or the stock or other equity interests of any Subsidiary of
the Company, or any repurchase, redemption or other acquisition
by the Company or any Subsidiary of any shares of capital stock
or other equity interests of the Company or any Subsidiary;
(c) any damage, destruction or casualty loss, whether covered by
insurance or not, adversely affecting the business, operations or
financial condition of the Company and its Subsidiaries taken as
a whole; (d) any change by the Company or any Subsidiary in
accounting methods, principles or practices; (e) any borrowing of
money except for short-term bank borrowings and the incurrence of
accounts payable in the ordinary course of business; (f) any
increase in the direct or indirect compensation of employees,
directors, consultants or other agents, or any accrual for or
commitment to make the same hereafter, other than merit increases
to Persons other than directors, officers or Stockholders made in
the ordinary course of business and which are not, in the
aggregate, material; (g) any prepayment of compensation or any
liability, any forgiveness or reduction of debt of any Person
(except in the amount of payments received), or the making of any
loan or advance except travel advances in the ordinary course of
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business and consistent with past practice; (h) any payment of or
commitment to pay termination or severance pay, except payments
of termination pay to Persons other than directors, officers or
Stockholders in the ordinary course of business and which are
not, in the aggregate, material; (i) except in the ordinary
course of business: the entry into of any lease (as lessor or
lessee), the sale, abandonment or other disposition or property,
the granting or incurrence of any Lien on any assets or other
properties, or the acquisition of assets; or (j) any revaluation
of assets, including write-downs of inventory and write-offs of
accounts receivable other than in the ordinary course of business
consistent with past practices.
2.8 Properties; Title.
(a) Schedule 2.8 hereto sets forth a list of all real
property owned by the Company (the "Owned Real Property") and
also lists any lease pursuant to which the Company leases real
property as lessee (the "Real Property Leases"). Except as set
forth on Schedule 2.8 hereto, the buildings, facilities,
machinery, equipment, furniture, leasehold and other
improvements, fixtures, vehicles, structures, any related
capitalized items and other tangible property material to the
business or operations of the Company (the "Tangible Property")
are suitable for their current use.
(b) The Company has (i) good, valid and marketable fee
simple title to all of the real property reflected in the 1994
Balance Sheet, including those listed on Schedule 2.8 hereto, as
being owned by it, (ii) good, valid and marketable title to the
Tangible Property and all of the other assets reflected on the
1994 Balance Sheet, except as disposed of in the ordinary course
of business, and (iii) valid leasehold interests in all real
properties listed on Schedule 2.8 hereto as leased by it, in each
case with respect to subsections (i)-(iii) above, free and clear
of all Liens other than (A) those listed on Schedule 2.8 hereto,
(B) Liens for current taxes, assessments or governmental charges
not yet due and delinquent, (C) Liens which do not, individually
or in the aggregate, materially interfere with the use of the
real properties or materially detract from their value, (D) Liens
of mechanics, materialmen, laborers, warehousemen, carriers and
other similar common law or statutory liens arising in the
ordinary course of business which are not yet due and payable or,
if due and payable, have been adequately bonded or are being
contested in good faith and (E) zoning, entitlement and other
land use and environmental regulations by governmental agencies.
The Company and its Subsidiaries enjoy peaceful and undisturbed
possession under all Real Property Leases.
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(c) Prior to the date hereof, the Stockholders made
available to the Buyer for review accurate and complete copies of
the following documents delivered by the Company in connection
with the closing, on or about May 4, 1990, of the Company's $15
million principal amount Credit Facility with Barclays Business
Credit, Inc.: (i) title reports, together with copies of
recorded instruments affecting title, judgments, UCC searches and
municipal searches relative to (A) Griffin Road, West Branch,
Michigan, (B) Rensen Street, Lansing, Michigan, (C) Lyons Avenue,
Lansing Michigan, and (D) South Valley Street, West Branch,
Michigan; (ii) surveys certified to "BBCI with Flood Hazard
Certification" with respect to the real property described above
in subsections (i)(A)-(D); and (iii) documentation relative to
the zoning classification/evidence of zoning compliance with
respect to the real property described above in subsections
(i)(A)-(D). The real property described above in subsections
(i)(A)-(D) is a list of the Owned Real Property.
2.9 Intellectual Property. The Company owns or has the
right to use pursuant to license, sublicense, agreement or
permission all Intellectual Property (as defined below)
reasonably necessary for the operation of its business as
presently conducted. The Company has not received any charge,
complaint, claim, demand or notice alleging any pending
interference, infringement, misappropriation or violation with or
of any Intellectual Property rights of a third party (including
any claims that the Company must license or refrain from using
any Intellectual Property rights of a third party) Schedule 2.9
hereto sets forth a complete and correct list of (a) all
unexpired United States and foreign patents and patent
applications, registered trademarks and service marks and
registered copyrights owned by the Company, and all material
licenses of third parties and other agreements relating thereto
and (b) all agreements relating to third party Intellectual
Property that the Company is licensed or authorized to use. With
respect to each item of Intellectual Property identified on
Schedule 2.9 that the Company is licensed or authorized to use,
the license, sublicense, agreement or permission covering such
item (i) is legal, valid, binding, enforceable and in full force
and effect and (ii) has not, to the knowledge of the
Stockholders, been breached by any party thereto. As used
herein, "Intellectual Property" means all U.S. and foreign
patents, patent applications, inventions, trade secrets, know-
how, registered or unregistered trademarks, trade names, service
marks (including the goodwill associated therewith) and
copyrights.
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2.10 Environmental Matters.
(a) Definitions. "Hazardous Material" means any
hazardous, toxic, radioactive or infectious substance, material
or waste as defined, listed or regulated under any Environmental
Law, and includes without limitation petroleum oil and its
fractions. "Environmental Laws" means all Laws pertaining to the
protection of human health (including worker safety and health)
or the environment, as such laws are in effect as of the date of
this Agreement. "Company Property" means any real property now
or previously owned by the Company.
(b) Compliance with Laws. Except as set forth in
Schedule 2.10, the Company possesses all material permits,
licenses and other authorizations required to conduct its
business as now conducted insofar as all Environmental Laws are
concerned, except where the failure to possess such is not
reasonably likely to have a Material Adverse Effect; no violation
exists in respect of any such material permit, license or other
authorization, and no proceeding is pending or, to the knowledge
of the Stockholders, threatened, to revoke or limit any such
material permit, license or other authorization; the Company is
in compliance with all Environmental Laws, the failure to be in
compliance with which would be reasonably likely to have a
Material Adverse Effect; and no incident regarding any
environmental matter has occurred in connection with the business
of the Company that was required to be reported to a governmental
authority under any Environmental Law that was not so reported,
the failure to report which would be reasonably likely to have a
Material Adverse Effect.
(c) Potential Claims. Except as set forth in Schedule
2,10, no written notice, request for information, citation,
summons or other order has been received, no complaint has been
received, no penalty has been assessed which remains unpaid and
no investigation or review is pending or threatened by any
governmental authority or any other person with respect to any
alleged failure by the Company to comply with any Environmental
Law or with respect to any generation, treatment, storage,
recycling, transportation, disposal, release or other handling of
any Hazardous Materials for which the Company may be liable.
(d) Underground Storage Tanks. Except as described in
Schedule 2.10, there are no underground storage tanks (whether or
not excluded from regulation under any Environmental Law) at any
Company Property or otherwise owned or operated by the Company,
including any underground storage tanks in use, out of service,
closed or decommissioned in place. Except as described in
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Schedule 2.10, all underground storage tanks at any Company
Property, and those installed by the Company on any property
leased by it since December 7, 1985, have been properly
decommissioned in compliance with all applicable Environmental
Laws.
(e) Contamination. Except as set forth on Schedule
2.10, or in compliance with Environmental Laws, no Hazardous
Material has been disposed of, spilled, leaked or otherwise
released in, under or from the Company Property or in, under or
from property leased by the Company during the applicable lease
term. Except as set forth in Schedule 2.10, no Hazardous
Material (i) is or has been used, treated, stored, generated,
manufactured or otherwise handled at the Company Property except
in the ordinary course of business and in compliance with
Environmental Laws, or (ii) has come to be located in, on or
under the Company Property.
(f) Liability. The Company is not liable under the
Comprehensive Environmental Response, Compensation and Liability
Act or any comparable state Environmental Law for response costs,
natural resources damages or other claims (including
administrative orders) arising out of the release or threatened
release of any Hazardous Material, including claims relating to
the Company Property or other property, or any contract or
agreement of the Company.
(g) Records. The Company has disclosed on Schedule
2.10 and provided to the Buyer true, complete and correct copies
of any reports, studies, investigations, audits, analysis, tests
or other monitoring in the possession of the Company or its
attorneys or conducted or prepared for the Company pertaining to
any environmental matter relating to the Company, its past or
present operations or any Company Property or other property,
including matters relating to compliance with Environmental Laws,
employee safety or contamination of the environment.
2.11 Insurance. Schedule 2.11 hereto sets forth a listing
and a brief description of the type, amount of coverage and term
of all policies of fire, liability, worker's compensation and
other forms of insurance owned or held by and insuring the
Company, each of which is in full force and effect. No notice of
cancellation or termination has been received with respect to any
such policy. With respect to such insurance, to the knowledge of
the Stockholders, there has been no failure to give a required
notice to the insurer and no material inaccuracy in the
application therefor by the Company. Such policies are valid,
outstanding and enforceable policies and will not in any way be
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affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. The insurance policies to which
the Company are parties provide, in the reasonable judgment of
Company management, adequate insurance coverage for the assets
and operations of the Company in light of present insurance
market conditions. Except as described on Schedule 2.11 hereto,
there are no outstanding claims by the Company under any such
insurance policies except for routine claims under worker's
compensation and employee benefit plans. All notices required to
have been given by the Company to any insurance company have been
timely and duly given.
2.12 Labor Matters. Except as set forth on Schedule 2.12
hereto, the Company is not a party to or subject to any labor
union or collective bargaining agreement. To the knowledge of
the Stockholders, the Company is in compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours except
where the failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect. The Company is not
engaged in any unfair labor practice except where any such
engagement would not reasonably be expected to have a Material
Adverse Effect. There is not pending or, to the knowledge of the
Stockholders, threatened against the Company (i) any labor
strike, slowdown, stoppage, or (ii) any material grievance or
arbitration proceeding arising out of or under any collective
bargaining agreements, or (iii) any unfair labor practice
complaint against the Company before the National Labor Relations
Board.
2.13 ERISA; Benefit Plans.
(a) Except as set forth on Schedule 2,13, there are no
present or former employee benefit plans or arrangements of any
type (including, without limitation, plans described in section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended and the regulations thereunder ("ERISA")) ("Benefit
Plans"), under which the Company has or in the future could have
directly, or indirectly through a Commonly Controlled Entity
(within the meaning of sections 414(b), (c), (m) or (o) of the
Code and the regulations thereunder), any liability with respect
to any current or former employee or director of the Company, or
any beneficiary of any of them, or any Commonly Controlled
Entity. Except for the Benefit Plans listed on Schedule 2.13,
the Company has not contributed to any Benefit Plan that is or
was, within six (6) years from the date hereof, subject to
Title IV of ERISA.
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(b) With respect to each Benefit Plan, except as set
forth on Schedule 2.13, (i) if intended to qualify under Code
section 401(a), such Benefit Plan so qualifies, and its related
trust is exempt from taxation under Code section 501(a),
(ii) such Benefit Plan has been administered in accordance with
its terms and applicable law, and (iii) no "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975
of the Code has occurred.
(c) With respect to each Benefit Plan which is a
"welfare plan" (as defined in ERISA section 3(l)), except as set
forth on Schedule 2.13 (i) no such plan provides medical or death
benefits with respect to current or former employees beyond their
termination of employment (other than coverage mandated by law),
and (ii) the Company and any Commonly Controlled Entity have
complied with Code Section 4980B.
(d) The obligations of the Company under all Benefit
Plans (including all payments due to any Person with respect to
such Benefit Plans) are accurately reflected in the 1994 Balance
Sheet in accordance with Generally Accepted Accounting Principles
and the applicable disclosure statements of the Financial
Accounting Standards Board or disclosed on Schedule 2.13. Except
as set forth on Schedule 2.13, the Company does not have any post-
retirement or post-employment benefit obligations, except
pursuant to the Benefit Plans.
(e) The consummation of the transactions contemplated
by this Agreement will not accelerate the time of payment or
vesting, or increase the amount of compensation due to any
individual under any agreement or other understanding to which
the Company is a party.
(f) To the extent requested by the Buyer, the Company
has provided the Buyer with copies of all Benefit Plan documents,
including plan and trust documents, annual reports for the two
most recent plan years, determination letters, appointments of
fiduciaries, asset investment materials, consultant, servicer or
advisor agreements, and insurance contracts and policies.
2.14 Certain Contracts and Arrangements.
(a) Except as listed in Schedule 2.14 hereto, as
disclosed or reflected in the 1994 Balance Sheet or as otherwise
disclosed in this Agreement, the Company is not a party to any:
(i) employment agreement, consulting
agreement, severance agreement or other agreement,
arrangement or understanding not terminable at the will
of the Company without penalty;
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(ii) indenture, mortgage, note, installment
obligation, agreement or other instrument or document
relating to the borrowing of money by the Company or
the guaranty of any obligation for the borrowing of
money by the Company;
(iii)as of March 15, 1996, purchase orders
for raw materials, equipment or supplies, in each case
in excess of $25,000;
(iv) as of March 15, 1996, sales orders for
machine tools, in each case in excess of $100,000;
(v) other contract, agreement, commitment
arrangement or understanding (other than those covered
by (iii) and (iv) above) which is not terminable by the
Company on 30 or fewer days' notice at any time without
penalty and which involves the receipt or payment by
the Company of more than $10,000;
(vi) partnership, joint venture, shareholder
or similar agreement;
(vii)guaranty of obligations of any Person
other than the Company, letter of credit, currency or
interest rate exchange or other derivative agreement,
keep-well or similar instrument or agreement in excess
of $10,000;
(viii)any agreement containing non-
competition or other limitations restricting the
conduct of the business (geographically or by type of
business) of the Company;
(ix) manufacturer's representative agreement,
brokers agreement, distributorship or dealer agreement
or other agreement relating to the sale or distribution
of products to or by persons;
(x) any agreement entered into relating to
the acquisition or disposition of businesses, product
lines or a material amount of assets, except those
agreements entered into in the ordinary course of
business; or
(xi) any indemnification agreement with an
employee of the Company, except for indemnification
provisions relative thereto contained in the
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Certificates of Incorporation or Bylaws of the Company
and its Subsidiaries.
The contracts listed on Schedule 2.14, as well as the foregoing,
are collectively referred to as the "Material Contracts". The
Company has made available to the Buyer true and complete copies
of all Material Contracts.
(b) All purchase orders and all sales orders and
commitments of the Company have been entered into in the ordinary
course of business consistent with past practices. As of the
date set forth above in Sections 2.14(a)(iii) and (iv), as the
case may be, the Company has not made commitments to buy or sell
goods in the future at fixed prices except pursuant to said
purchase and sale orders and except for purchase and sale orders
below the dollar amounts requiring disclosure on Schedule 2.14.
Substantially all of the costs incurred by the Company under
sales orders cancellable by customers are recoverable from such
customers.
(c) Except as described in Schedule 2.14 hereto, no
material default or alleged material default exists under any of
the Material Contracts. Each of the Material Contracts is now
valid, in full force and effect and enforceable in accordance
with its terms and the Company is not in default with respect to
its obligations under such contracts, agreements, commitments,
arrangements or understandings. In addition, except as described
in Schedule 2.14 hereto, to the knowledge of the Stockholders
(i) there is no event which, with the passage of time or notice
or both, will result in a default by the Company under a Material
Contract, and (ii) the parties (other than the Company) to the
Material Contracts are not in default with respect to any such
parties' obligations thereunder.
2.15 Legal Proceedings, Etc. Schedule 2.15 contains a
description of all pending litigation against the Company, except
for workers' compensation matters which arose in the ordinary
course of business. There is no claim, suit, action, proceeding
or investigation pending or, to the knowledge of the
Stockholders, threatened in writing against the Company wherein a
result adverse to the Company's interests would have a Material
Adverse Effect, or would prevent or delay the transactions
contemplated in this Agreement. The Company is not subject to
any outstanding order, writ, injunction or decree.
2.16 Tax Matters.
(a) Except as set forth on Schedule 2.16, the Company
has: (i) filed with the appropriate governmental authorities, in
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a timely manner, all Tax Returns that it is required to file
through the date hereof and with respect to any claims by the IRS
or other applicable governmental taxing authority, such Tax
Returns are accurate and complete in all respects; (ii) duly paid
in full or made provision for the payment of all Taxes shown to
be due on such Tax Returns and all deficiencies and assessments
of Taxes of which written notice has been received by the Company
in respect thereof, or which are otherwise due; (iii) made full
and adequate provision on its books and records in accordance
with Generally Accepted Accounting Principles for the payment of
all Taxes required to be accrued through the date hereof in
accordance with Generally Accepted Accounting Principles; and
(iv) not incurred any liability for Taxes from the date of the
1994 Balance Sheet up to and including the date hereof, other
than a Tax liability incurred in the ordinary course of business.
(b) Except as set forth on Schedule 2.16, (i) there
are no audits or disputes of any of such Tax Returns in progress
before or by any governmental authority, there are no threatened
audits or disputes of any such Tax Returns as to which the
Company has received written notice, and there exists no
unresolved claim concerning Taxes, (ii) the Company has neither
waived any statute of limitations for any open Tax years, nor
waived or granted any extension of the statute of limitations
applicable to any Tax Return or claim in respect thereof, nor
otherwise granted, requested or received any extension of time
during which a Tax assessment or deficiency in respect of Taxes
may be made, (iii) there is not presently in force and effect a
power of attorney granted by the Company with respect to Taxes,
and (iv) the Company is not and has not been a party to any tax
sharing agreement with any other Person.
(c) The Company (i) is not a United States Real
Property Holding Corporation as defined in Section 897(c)(2) of
the Code, (ii) has not filed a consent to the application of
Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a "subsection (f) asset" (as
such term is defined in Section 341(f)(4) of the Code), (iii) 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, and (iv) had made all sales and other transactions
between the Company and the Subsidiaries at arm's length prices
and commercial terms and in compliance with Section 482 of the
Code.
(d) Except as set forth on Schedule 2,16, (i) the
federal income Tax Returns of the Company have been examined by
the IRS for all periods ended through December 31, 1990 and the
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time for assessment of any deficiency with respect to all periods
that ended through December 31, 1991 has expired, (ii) the
Company has not at any time filed a consolidated or combined Tax
Return as a member of an affiliated group (within the meaning of
Section 1504 of the Code), other than as a group the common
parent of which is or was the Company, and has no liability for
Taxes of any other person under Treas. Reg. Section 1.1502-6 (or
any similar provision of state or local law), as a transferee or
successor, by contract or otherwise, (iii) the Company has
provided to the Buyer copies of all written reports of and
written communications from IRS agents and the corresponding
agents of state, local and foreign jurisdictions with respect to
Tax Returns or reports of the Company with respect to all periods
ended after April 30, 1993, (iv) the Company has not agreed to
and is not required to make any adjustment pursuant to Section
481(a) of the Code, has no knowledge that the IRS has proposed
any such adjustment or change in accounting method with respect
to the Company, and does not have any application pending with
any taxing authority requesting permission for any change in
accounting method, (v) no property owned by the Company is
property that the Company is required to treat as being owned by
another Person pursuant to the provisions of Section 168(f)(5) of
the Code, (vi) there is no arrangement covering any Person that,
individually or collectively, as a consequence of the
transactions contemplated by this Agreement could give rise to
the payment of any amount that would not be deductible by the
Company by reason of Section 280G of the Code, (vii) the Company
is not a party to any industrial development bond, and (viii) the
Company has not entered into Section 267 transactions.
2.17 Transactions with Stockholders, Officers, Directors,
Etc. Other than as disclosed on Schedule 2.17 hereto and other
than accrued but unpaid salary due from the end of the last pay
period and routine employee benefits, there are no amounts owing
from the Company or any Subsidiary to any present or former
stockholder, affiliate, officer, director, member or employee of
the Company or any Subsidiary, nor are there any amounts owing
from any such person to the Company or to any Subsidiary, other
than advances for travel, moving or other expenses in the
ordinary course of business consistent with past practices, nor
have there been since September 30, 1995 nor are there currently
pending any transactions between the Company or any Subsidiary
and any such person.
2.18 [THIS SECTION HAS BEEN INTENTIONALLY OMITTED.]
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2.19 Officers, Directors and Employees.
(a) Schedule 2.19 hereto sets forth (i) the name and
total current annual rate of compensation (including bonuses,
commissions or incentive compensation) of each officer and
director of the Company and (ii) the name, aggregate amount of
total annual compensation (including bonuses, commissions or
incentive compensation) paid for federal income tax purposes
during calendar year 1994 and 1995 and the annualized 1996 base
salary (based on current rate of pay) being paid to each other
employee whose current annualized base pay is in excess of
$80,000 in total annual compensation during such year. Except as
otherwise contemplated with respect to the resignations described
in Section 1.5(a)(ii), none of the Persons referred to in clause
(i) or (ii) above has notified the Company or been notified by
the Company that he, she or it will cancel or otherwise terminate
such Person's relationship with the Company. There are no
commitments by the Company to increase the compensation of any
Person listed on Schedule 2.19.
(b) Schedule 2.19 sets forth a true, correct and
complete list of all the individuals who (i) are officers and
directors of the Company on the date hereof, or (ii) were
officers and directors of the Company at any time within 12
months prior to the date hereof.
2.20 Other Liabilities.
(a) Securities Laws Liabilities. The Company has not
purchased or sold securities in violation of any federal or state
securities laws.
(b) Suppliers and Customers. To the knowledge of the
Stockholders, the relationships of the Company with its suppliers
and customers are satisfactory commercial working relationships.
(c) Product Recalls. Without guaranteeing the amount
of warranty or any other expense, the Stockholders have no
knowledge of defects in standard components of machine system
families that would result in a product recall within twelve (12)
months of the Closing in respect of products sold by the Company
prior to the Closing.
2.21 Compliance with Laws; Licenses and Permits. Except as
set forth on Schedule 2.21, the Company (a) is in material
compliance with all applicable laws, except where the failure to
be in compliance is not reasonably likely to have a Material
Adverse Effect, and (b) has all permits, orders, approvals and
registrations (the "Permits") that are material or necessary to
the conduct of its business, all the Permits are in full force
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and effect, there are no material violations in respect of any
Permit and no proceeding is pending or, to the knowledge of the
Stockholders, threatened to revoke or limit any permits, except
where the failure to have any Permits or the failure of such
Permits to be in full force and effect is not reasonably likely
to have a Material Adverse Effect. Nothing in this Section 2.21
shall be deemed to relate to the Environmental Laws which are
covered by Section 2.10 hereof.
2.22 Products. Except as set forth on Schedule 2.22, since
December 7, 1985, the Company has not received any statements,
citations or decisions by any governmental authority that any
product manufactured at any time by it ("Company Products") is
defective or unsafe or fails to meet any standards promulgated by
any such governmental authority, and there have been no recalls
ordered by any such governmental authority with respect to any
Company Product. To the knowledge of the Stockholders, (a) all
product labeling and safety warning precautions required by law
or by the terms of the Company's insurance policies applicable to
employees and customers have been given or taken, and (b) there
is no latent or overt design manufacturing or other defect in any
Company Product. The warranty reserves on the Company's books
and records as at December 31, 1995 are adequate to satisfy the
anticipated customer warranty costs with respect to the Company
Products based on the warranty policies of the Company in effect
as of the date hereof.
2.23 Disclaimer of Other Representations and Warranties;
Disclosure; Bring-Down.
(a) The Stockholders do not make, and have not made,
any representations or warranties relating to the Company or any
Subsidiaries in connection with the transactions contemplated
hereby other than those expressly set forth in this Article II.
It is understood that any cost estimates, projections or other
predictions, any data, any financial information or any memoranda
or offering materials or presentations (including but not limited
to the Proposed IPO Documents) are not and shall not be deemed to
be or to include representations or warranties of the
Stockholders, except to the extent otherwise expressly covered by
the representations and warranties of the Stockholders hereunder.
No Person has been authorized by the Stockholders or the Exhibit
1 Party to make any representation or warranty relating to the
Company or any Subsidiary, the businesses of the Company or any
Subsidiary or otherwise in connection with the transactions
contemplated hereby except as set forth in this Article II and,
if made, such representation or warranty must not be relied upon
as having been authorized by the Company, any Subsidiary or any
of the Stockholders or Exhibit 1 Party.
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(b) Notwithstanding anything to the contrary contained
in this Agreement or in any of the Exhibits, Annexes or
Schedules, any information disclosed in one Exhibit, Annex or
Schedule shall be deemed to be disclosed in this Agreement and in
all Exhibits, Annexes and Schedules. Certain information set
forth in the Annexes and the Schedules are included solely for
informational purposes and may not be required to be disclosed
pursuant to this Agreement. The disclosure of any information
shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the
representations and warranties made by the Stockholders in this
Agreement or that it is material, nor shall such information be
deemed to establish a standard of materiality (and the actual
standard of materiality may be higher or lower than the matters
disclosed by such information).
(c) All documents, contracts and other agreements
listed on the Schedules to the Agreement which have been provided
to the Buyer for its review in connection with the transactions
contemplated by this Agreement are true, complete and authentic.
(d) The representations and warranties contained in
this Article II shall be true and complete in all material
respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on and as of the Closing Date, with references to the date
hereof thereupon also meaning the Closing Date; provided that, a
representation and warranty limited by a materiality standard
shall instead be true and complete in accordance with its terms.
ARTICLE III
Representations and Warranties of Buyer
Buyer represents and warrants to the Stockholders and the
Exhibit 1 Party that the following representations and warranties
are true and correct on the date hereof:
3.1 Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its state
of incorporation.
3.2 Authority Relative to this Agreement. Buyer has all
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Buyer,
and no other corporate proceedings on the part of Buyer are
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necessary to authorize this Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement has
been duly and validly executed and delivered by Buyer and
constitutes a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
3.3 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by Buyer nor the
consummation of the transactions contemplated hereby will
(a) result in any breach of any provision of the Certificate of
Incorporation or Bylaws (or other similar governing documents) of
Buyer, (b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or
regulatory authority, except in connection with the HSR Act,
(c) assuming compliance with the HSR Act, violate any order,
writ, injunction, decree, statute, rule or regulation applicable
to Buyer or any of its assets, which violation would in the
opinion of Buyer have a material adverse effect on the business,
operations or financial condition of Buyer and its subsidiaries
taken as a whole or impair in any material respect its ability to
consummate the transactions contemplated hereby, (d) result in a
violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other
instrument or obligation to which Buyer or any of its
subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (e) violate any order,
writ, injunction, decree, statute, rule or regulation applicable
to Buyer, any of its subsidiaries or any of their properties or
assets, except in the case of (d) and (e) for violations,
breaches or defaults which would not individually or in the
aggregate, have a material adverse effect on Buyer and its
subsidiaries taken as a whole.
3.4 Financing. Buyer has sufficient funds available
(through existing credit arrangements or otherwise) to purchase
all of the Shares and to pay all fees and expenses related to the
transactions contemplated by this Agreement to be paid by the
Buyer.
3.5 Purchase for Investment. The Buyer is purchasing the
Shares hereunder solely for the Buyer's own account, for
investment and not with a view to any further sale or
distribution thereof. The Buyer understands that the Shares have
not been registered under the Securities Act of 1993, as amended,
or under any state securities or Blue Sky laws. For purposes of
exemptions from registration under applicable securities laws
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only, the Buyer acknowledges that it possesses sufficient
information to understand the merits and the risks associated
with its investment in the Shares. Notwithstanding the
foregoing, the Buyer has the right to rely fully upon each of the
representations, warranties, covenants and agreements of the
Stockholders and the Exhibit 1 Party contained in this Agreement.
3.6 Bring-Down. The representations and warranties
contained in this Article III shall be true and complete in all
material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties
had been made on and as of the Closing Date, with references to
the date hereof thereupon also meaning the Closing Date; provided
that, a representation and warranty limited by a materiality
standard shall instead be true and complete in accordance with
its terms.
ARTICLE IV
Covenants of the Parties
4.1 Conduct of Business. Except as authorized or permitted
by this Agreement, during the period from the date of this
Agreement to the Closing Date, Stockholders will cause the
Company to conduct its business and operations according to its
ordinary and usual course of business and consistent with past
practices. Without limiting the generality of the foregoing,
and, except as expressly contemplated in this Agreement, prior to
the Closing Date, without the prior written consent of Buyer
(which consent will not be unreasonably withheld), Stockholders
will cause the Company not to, and will cause the Company not to
permit any Subsidiary to:
(a) (i) create, incur or assume any indebtedness,
including obligations in respect of capital leases but excluding
(A) purchase money mortgages granted in connection with the
acquisition of property in the ordinary course of business
consistent with past practices not exceeding $10,000 in the
aggregate; and (B) borrowings under existing credit facilities
for working capital purposes in the ordinary course of business;
or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person or persons except in the ordinary
course of business consistent with past practices not exceeding
individually or in the aggregate $10,000; provided, that (1) the
Company and its Subsidiaries may endorse negotiable instruments
in the ordinary course of business consistent with past practices
and (2) the Company may assume, guarantee, endorse or otherwise
become liable or responsible for obligations of a Subsidiary in
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the ordinary course of business consistent with past practices,
without regard to the limitation in this clause (ii) so long as
the incurrence of such obligations of a Subsidiary would not be
in violation of or cause a breach under this Agreement, including
(without limitation) clause (i) above;
(b) except with respect to any exercise by Mr. Hobey
of the Hobey ISO granted pursuant to the 1995 ISO Plan and except
with respect to the Kincheloe Transaction, declare, set aside or
pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital
stock or other equity interests, or issue, pledge or sell any
shares of its capital stock or other equity interests or other
securities convertible into, exchangeable for or conferring the
right to acquire shares of its capital stock or other equity
interests, or repurchase or redeem or otherwise acquire any
shares of its capital stock or other equity interests or such
other securities;
(c) (i) increase the rate or terms of compensation
payable or to become payable by the Company or any Subsidiary to
its directors or officers (excluding any increases occurring in
the ordinary course of business consistent with past practices);
or (ii) increase the rate or terms of any, or commit itself to
any additional, bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any
such directors, officers, or any other employees (except for
merit increases to employees other than directors, officers, or
Stockholders made in the ordinary course of business consistent
with past practices);
(d) amend its Certificate of Incorporation or Bylaws,
merge, consolidate or amalgamate with or into any other Person,
subdivide, combine or reclassify any shares of its capital stock,
equity interests or other securities;
(e) take or omit to take any other action that would
be reasonably expected to cause any of the representations and
warranties contained in Article II hereof to be untrue; or
(f) enter into any contract, agreement, arrangement or
other understanding to do any act prohibited by, or to refrain
from doing any act required by, any of the foregoing provisions
of this Section 4.1.
4.2 Access to Information.
(a) Between the date of this Agreement and the Closing
Date, the Stockholders will cause the Company, during ordinary
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business hours, (i) to give Buyer and its authorized
representatives reasonable access to all customers, books,
records, plants, offices and other facilities and properties of
the Company, (ii) to permit Buyer to make such inspections
thereof as Buyer may reasonably request, including discussions
with representatives of customers, and (iii) to cause its
officers and advisors to furnish Buyer with such financial and
operating data and other information with respect to the business
and properties of the Company, including information for
environmental and legal due diligence, as Buyer may from time to
time reasonably request. Any such inspection or investigation
shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Company.
In addition, the Company shall not be required to take any action
which would constitute a waiver of the attorney-client privilege
and the Company need not supply the Buyer with any information
which the Company is under a legal obligation not to supply;
provided, however, that a failure to furnish information pursuant
to this sentence shall not alter any of the representations and
warranties of the Stockholders pursuant to Article II.
(b) Any information provided to the Buyer or its
representatives pursuant to this Agreement by the Company, and
any information provided to the Company or its representatives
pursuant to this Agreement by the Buyer, shall, prior to Closing
be held in confidence pursuant to the terms of a certain
Confidentiality Agreement between the Buyer and the Company dated
[November 13], 1995 (the "Confidentiality Agreement"). The
Confidentiality Agreement shall not be affected by the
termination of this Agreement and shall survive any such
termination.
4.3 Consents. Except as to matters otherwise expressly
covered herein by representations and warranties and by covenants
of the Buyer and the Stockholders, respectively, the Buyer and
Stockholders will use their respective best efforts to obtain
consents of all Persons and governmental authorities necessary to
the consummation of the transactions contemplated by this
Agreement.
4.4 Filings. Within three (3) business days after the date
hereof, the Stockholders will cause the Company to, and Buyer
will, file with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department
of Justice (the "Department of Justice") pursuant to the HSR Act
all requisite documents and notifications in connection with the
transactions contemplated by this Agreement, and any other
federal, state or local governmental authority all
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such other filings and submissions under laws and regulations
applicable to the Buyer, the Stockholders or Exhibit 1 Party, if
any, as may be required of the Buyer, the Stockholders or Exhibit
1 Party for the consummation of the transactions contemplated by
this Agreement. The parties will coordinate and cooperate with
one another in exchanging such information and providing such
reasonable assistance as may be requested in connection with all
of the foregoing.
4.5 Furnishing Information; Announcements. The
Stockholders will, as soon as practicable after reasonable
request therefor, furnish, and will cause the Company to furnish,
to the Buyer all the information concerning the Company required
for inclusion in any statement or application made by the Buyer
to any governmental or regulatory body in connection with the
transactions contemplated by this Agreement. Neither the
Stockholders nor the Buyer shall issue any press releases or
otherwise make any public statement with respect to the
transactions contemplated hereby, without the prior consent of
the other party hereto, except as, in the reasonable judgment of
the party determining to issue such press release or make such
public statement, is otherwise required by law or by any stock
exchange on which the shares of the Buyer are listed, but only
after prompt prior notice to the other parties hereto and after
the prior opportunity for such other parties to review and
comment upon such press release or public statement.
4.6 Certain Employee Benefits.
(a) The Buyer shall ensure that all persons who were
employed by the Company and its Subsidiaries immediately
preceding the Closing, including those on vacation, leave of
absence or disability (the "Closing Date Employees"), will be
employed by the Company, its Subsidiaries or the Buyer on and
after the Closing Date for a period of at least 60 days, on
substantially the same terms (including salary, employee
benefits, job responsibility and location) as those provided to
Closing Date Employees immediately prior to the Closing Date,
except as otherwise provided in this Section 4.6.
(b) The Buyer shall not, and shall cause the Company
and its Subsidiaries not to, at any time prior to 60 days after
the Closing Date, effectuate a "plant closing" or "mass layoff"
as those terms are defined in the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN") affecting in whole
or in part any facility, site of employment, operating unit or
employee of the Company or any Subsidiary without complying fully
with the requirements of WARN.
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(c) Without limiting the Buyer's obligations under
Article VIII hereof, the Buyer hereby agrees to indemnify the
Stockholders and Exhibit 1 Party and to defend and hold them
harmless from and against any and all claims, losses, damages,
expenses, obligations and liabilities (including but not limited
to costs of collection, attorney's fees (whether or not incurred
directly by the Stockholders or Exhibit 1 Party in connection
with any action, suit, proceeding or claim against the Buyer
hereunder)) and other costs of defense arising out of or with
respect to any material violation of Section 4.6.
(d) Effective as of the Closing Date and for a period
of three (3) months thereafter, the Buyer shall cause the Company
to continue to maintain, as sponsoring employer, the employee
benefit plans listed on Schedule 2.13, and to continue health and
welfare benefits, as well as vacation and life insurance benefits
that are comparable to those currently provided by the Company.
4.7 Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees
to use its reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper or advisable (subject to applicable laws and regulations)
to consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Closing any
further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties hereto and the
Company, as applicable, shall take or cause to be taken all such
necessary action.
4.8 Notification of Certain Matters; Further Financial
Reports. Between the date hereof and the Closing, the
Stockholders will cause the Company to give prompt notice in
writing to Buyer of: (a) the occurrence of any event which has
resulted in a Material Adverse Effect that could result in the
failure to satisfy a condition specified in Article V hereof; and
(b) any notice or other communication from any third person
alleging that the consent of such third person is or may be
required in connection with the transactions contemplated by this
Agreement. In addition, between the date hereof and the Closing,
(i) the Stockholders shall cause the Company to make its officers
available at reasonable times on reasonable notice to consult
with representatives of the Buyer regarding material operational
developments and the general status of ongoing operations, and
(ii) the Stockholders shall also cause the Company to provide
promptly to the Buyer (A) financial reports prepared in the
ordinary course of business, and (B) such other information as
the Buyer may reasonably request, promptly upon such request.
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4.9 Tax Returns.
(a) The Stockholders shall cause the Company to
prepare and file, in a timely manner, all Tax Returns required to
be filed by the Company after the date hereof and on or before
the Closing Date with respect to any Tax, and on or before the
Closing Date will cause the Company to pay or establish adequate
reserves for all amounts due therewith. In addition, the
Stockholders shall prepare, in a timely manner, all Tax Returns
required to be filed by the Company after the Closing Date with
respect to the period ending on or prior to the Closing Date and,
in connection therewith, the Buyer will cause the Company to
provide the Stockholders and their authorized representatives
with reasonable access to all books and records relative to the
preparation of such returns. All such Tax Returns filed after
the date hereof under this Section 4.9 will be subject to Buyer's
review. All such Tax Returns required to be filed after the date
hereof (a) shall, with respect to any claims by the IRS or other
applicable governmental taxing authority, be accurate and
complete in all respects, (b) shall be prepared, and any
elections with respect to such Tax Returns shall be made, to the
extent permitted by law, in a manner consistent with prior
practice with respect to the Company, (c) shall contain only
those deductions which are approved by KPMG Peat Marwick LLP, and
(d) as to the Form 1139 NOL Carry Back Tax Return, shall be
prepared by KPMG Peat Marwick LLP. Without limiting the
foregoing, the Tax Return related to the period from January 1,
1996 to the Closing Date shall include customer advances as
contemplated by the Form 3115 discussed in (b) below. The
Stockholders and the Buyer, as the case may be, will cause the
Company to comply with this Section 4.9.
(b) The Stockholders shall cause the Company to file
prior to the Closing Date a Form 3115 adopting a change in
revenue recognition of customer advances.
4.10 Non-Solicitation.
(a) If this Agreement is terminated, the Buyer will
not, for a period of two years thereafter, directly or
indirectly, solicit, encourage, entice or induce any Person who
is an employee of the Company at the date hereof or at any time
hereafter that precedes such termination, to terminate his or her
employment with the Company, nor may the Buyer employ any such
employee during the first year of such two year period (except to
the extent such failure to employ would subject the Buyer to
fines or penalties assessed by a governmental authority or to
damage claims by the Person not so employed). The Buyer agrees
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that money damages will not be an adequate remedy and that the
Company shall be entitled to equitable relief, including but not
limited to injunction, in the event of any breach by the Buyer of
this Section 4.10, in addition to any other remedies available to
the Stockholders or the Company at law.
(b) From the date hereof through the Final Termination
Date, the Stockholders shall not directly or indirectly solicit,
initiate or participate in any way in, negotiations or
discussions with respect to any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead
to or result in, any Proposal. "Proposal" shall mean any offer
of merger, consolidation, liquidation, reorganization, sale of
any capital stock, sale of any assets or other business
combination, or acquisition or similar transaction involving the
Stockholders or the Company, or any proposal with respect to any
of the foregoing (other than sales of assets in the ordinary
course of the Company's businesses as otherwise permitted under
this Agreement, and other than as expressly contemplated by this
Agreement). If on the Final Termination Date, the Stockholders
have the right to terminate this Agreement pursuant to Section
7.1(b) hereof, but elect not to exercise such right, all
covenants contained in this Section 4.10(b) shall no longer have
any effect for actions thereafter occurring.
4.11 1995 ISO Plan and Hobey ISO; Shareholders' Agreement.
By the Closing, the Stockholders shall take such actions as are
necessary to (a) cancel the 1995 ISO Plan and to ensure that all
options previously granted thereunder (i.e., consisting of the
Hobey ISO) shall have been exercised in full as of the Closing
Date, and (b) to terminate the Shareholders' Agreement described
on Schedule 2.4.
4.12 Certain Expenses. From the date hereof through the
Closing Date, the Stockholders shall be authorized to take such
actions as are necessary to cause the Company to pay those
expenses described in Section 6.8 and in subsection (i)(a)(9) of
Annex A-1 attached hereto.
4.13 Kincheloe Facility.
(a) From the date hereof through the Closing Date the
Stockholders will use their respective reasonable efforts to
obtain the consent of the Economic Development Corporation of
Chippewa County, a Michigan municipal corporation (the "EDC of
Chippewa County"), for purposes of authorizing the Kincheloe
Transaction.
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(b) In the event such consent is not received from the
EDC of Chippewa County, then at the Closing, pursuant to Section
1.5(c) hereof, the Stockholders and the Exhibit 1 Party shall
deposit, or cause the Buyer to deposit, an amount equal to the
Capitalized Lease Debt into escrow which shall be deposited with
the Escrow Agent, pursuant to the terms of the Escrow Agreement.
Such amount shall be part of the Escrow Fund established under
the Escrow Agreement and shall be held in escrow in accordance
with the terms of the Escrow Agreement. The rights of the
Stockholders, the Exhibit 1 Party and the Buyer to make a claim
for payment from the Escrow Fund, the terms and conditions on
which the Escrow Fund shall be held, invested and distributed and
the manner of resolving disputes pertaining to claims made on the
Escrow Fund by the parties shall be as set forth in the Escrow
Agreement.
(c) In the event such consent is received from the EDC
of Chippewa County on or before the expiration of 120 days after
the Closing Date, (i) the Buyer and the Stockholders shall
promptly take such actions as are necessary to consummate (or to
have the Company and CHMS, as the case may be, consummate) the
Kincheloe Transaction, including the execution and delivery of
the Kincheloe Lease by the Company and CHMS and the delivery by
the Buyer and the Stockholders of their respective opinions of
legal counsel relative to the Kincheloe Transaction as
contemplated in Sections 1.5(a)(vi) and 1.5(b)(iv), respectively,
and (ii) upon the consummation of the Kincheloe Transaction, the
parties hereto shall promptly direct the Escrow Agent to
distribute the Escrow Funds deposited in escrow pursuant to
subsection (b) above, with the Buyer to receive an amount equal
to the Interim Kincheloe Lease Payments and with the Stockholders
and the Exhibit 1 Party to receive the balance in accordance with
their respective Pro Rata Percentages.
ARTICLE V
Conditions To Obligations Of Buyer
The obligations of Buyer required to be performed by it at
the Closing shall be subject to the satisfaction, at or prior to
the Closing, of each of the following conditions, each of which
may be waived by Buyer as provided herein except as otherwise
required by applicable law:
5.1 Representations and Warranties; Performance of
Obligations; Certificate.
(a) Each of the representations and warranties of the
Stockholders and the Exhibit 1 Party contained in this Agreement
shall be true in all material respects at and as of the Closing,
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except for changes permitted or authorized by this Agreement and
except to the extent that any representation or warranty is made
as of a specified date, in which case, such representation and
warranty shall be true in all material respects as of such date;
provided that a breach of any representation or warranty shall
not constitute a failure of the condition contained in this
Section 5.1(a) if such breach, either alone, or in conjunction
with all other breaches, has not had, and would not reasonably be
expected to have, a Material Adverse Effect.
(b) Each of the obligations of the Stockholders and
Exhibit 1 Party required by this Agreement to be performed by
them at or prior to the Closing shall have been duly performed
and complied with in all material respects as of the Closing;
provided that non-performance of an obligation at any time shall
not constitute a failure of the condition contained in this
Section 5.1(b) if such non-performance is not a material breach
of such obligation.
(c) At the Closing, the Buyer shall have received a
certificate, dated the Closing Date and duly executed by the
Stockholders and the Exhibit 1 Party, to the effect that the
conditions set forth in the preceding two paragraphs have been
satisfied.
(d) Breaches of representations or warranties or
failures to perform obligations, as described above, the Buyer
shall have the following rights: (i) if the foregoing do not
result in a condition which entitles the Buyer to elect not to
effect the Closing, then the Buyer's rights under this Agreement
shall not be affected with respect to any such breaches or
failures; and (ii) if the foregoing do result in a condition
which entitles the Buyer to elect not to effect the Closing and
if the Buyer elects to effect the Closing, then the Buyer's
rights under this Agreement shall not be affected with respect to
any such breaches or failures. Immediately prior to the Closing,
the Buyer shall be obligated to notify the Stockholders in
writing if it has knowledge of the existence of any such breaches
or failures as described above (for purposes of this Section
5.1(d) only, the knowledge of the Buyer means the knowledge of
John Prosser, James Bergman and/or Donna Ragan), but without the
duty of investigation referred to in the definition of "To the
knowledge" in Section 9.11.
5.2 Authorization; Consents. Any filings required to be
made under the HSR Act as contemplated in Section 4.4 in
connection with the transactions contemplated hereby shall have
been made and all applicable waiting periods with respect to each
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such filings, including any extensions thereof, shall have
expired or been terminated. All notices to, and declarations,
filings and registrations with, and consents, authorizations,
approvals and waivers from, governmental and regulatory bodies
pursuant to the HSR Act required to consummate the transactions
contemplated hereby shall have been made or obtained. This
Section 5.2 shall not affect the obligations of the parties under
Section 4.7 hereof. Notwithstanding any provision in this
Section 5.2 to the contrary, this Section 5.2 shall not pertain
to the failure to receive the consent of the EDC of Chippewa
County authorizing the Kincheloe Transaction.
5.3 Absence of Litigation. No order, stay, injunction or
decree of any court of competent jurisdiction shall be in effect
(a) that prevents or delays the consummation of any of the
transactions contemplated hereby, (b) that would impose any
material limitation on the ability of Buyer effectively to
exercise full rights of ownership of the Shares or (c) that would
require the divestiture by the Buyer, the Company or any of their
respective affiliates, of shares of stock or any business, assets
or property of any of them, or that would impose any material
limitation on the ability of any of them to conduct its business
or own stock, assets or property. No action, suit or proceeding
before any court or any governmental or regulatory entity shall
be pending (or threatened by any governmental or regulatory
entity), and no investigation by any governmental or regulatory
entity shall have been commenced (and be pending) (i) seeking to
restrain or prohibit (or questioning the validity or legality of)
the consummation of the transactions contemplated by this
Agreement, (ii) seeking to require the divestiture by the Buyer,
the Company or any of their respective affiliates, of shares of
stock or any business, assets or property of any of them, or to
impose any material limitation on the ability of any of them to
conduct its business or own stock, assets or property, or
(iii) seeking material damages in connection therewith.
5.4 Kincheloe Facility. In the event the consent of the
EDC of Chippewa County described in Section 4.13(a) is received
on or prior to the Closing Date, the Stockholders (utilizing
CHMS) shall have acquired from the Company the Company's interest
as lessee of the two (2) parcels of land and as installment
purchaser of the two (2) buildings comprising the Company's
Kincheloe, Michigan manufacturing facility, as more fully
described in Items 4, 5, 7, 8 and 9 on Schedule 2.8 under the
caption "Real Property Leases--Kincheloe, Michigan," in
consideration of the assumption of the capital lease and
installment contract obligations related thereto; and the
Stockholders and the Company shall have entered into a lease of
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such facility in the form attached hereto as Annex H (the
"Kincheloe Lease") (the foregoing are collectively referred to as
the "Kincheloe Transaction"). The foregoing acquisition shall be
effected without representations, warranties or other obligations
by, for or of the Company and the Stockholders shall have
obtained the release of the Company from such capital lease and
installment contract obligations (subject to the execution and
delivery of the Kincheloe Lease).
5.5 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.
5.6 Casualty Loss. No casualty loss shall have occurred
with respect to the Company or its business and properties which
is reasonably expected to have a Material Adverse Effect.
ARTICLE VI
Conditions To Obligations Of
Stockholders And Exhibit 1 Party
The obligations of the Stockholders and the Exhibit 1 Party
required to be performed by them at the Closing shall be subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions, each of which may be waived by the
Stockholders or the Exhibit 1 Party as provided herein except as
otherwise required by applicable law:
6.1 Representations and Warranties; Performance of
Obligations; Certificate.
(a) Each of the representations and warranties of the
Buyer contained in this Agreement shall be true in all material
respects at and as of the Closing, except for changes permitted
or contemplated by this Agreement and except to the extent that
any representation or warranty is made as of a specified date, in
which case, such representation and warranty shall be true in all
material respects as of such date.
(b) Each of the obligations of the Buyer required by
this Agreement to be performed by it at or prior to the Closing
shall have been duly performed and complied with in all material
respects as of the Closing.
(c) At the Closing, the Stockholders shall have
received a certificate, dated the Closing Date and duly executed
by the President of the Buyer, to the effect that the conditions
set forth in the preceding two paragraphs have been satisfied.
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6.2 Absence of Litigation. No order, stay, injunction or
decree shall have been issued by any court and be in effect
restraining or prohibiting the consummation of the transactions
contemplated hereby. No action, suit or proceeding before any
court or any governmental or regulatory entity shall be pending
(or threatened by any governmental or regulatory entity), and no
investigation by any governmental or regulatory entity shall have
been commenced (and be pending) seeking to restrain or prohibit
(or questioning the validity or legality of) the consummation of
the transactions contemplated by this Agreement.
6.3 Severance Agreements; Disclosure and Noncompetition
Agreements. The Company shall have entered into Severance
Agreements and into Disclosure and Noncompetition Agreements with
Messrs. John L. Hobey and William F. Crabtree containing the
terms and in substantially the form set forth on Annex C and
Annex D, respectively, and such other terms and conditions
mutually agreeable to the affected parties and the Buyer.
6.4 Authorization; Consents. Any filings required to be
made under the HSR Act as contemplated in Section 4.4 in
connection with the transactions contemplated hereby shall have
been made and all applicable waiting periods with respect to each
such filings, including any extensions thereof, shall have
expired or been terminated. All notices to, and declarations,
filings and registrations with, and consents, authorizations,
approvals and waivers from, governmental and regulatory bodies
pursuant to the HSR Act, as well as Trafalgar House pursuant to
the 1985 Asset Purchase Agreement and Fleet Capital Corporation
pursuant to the 1990 Loan and Security Agreement, required to
consummate the transactions contemplated hereby shall have been
made or obtained. This Section 6.4 shall not affect the
obligations of the parties under Section 4.7 hereof.
Notwithstanding any provision in this Section 6.4 to the
contrary, this Section 6.4 shall not pertain to the failure to
receive the consent of the EDC of Chippewa County authorizing the
Kincheloe Transaction.
6.5 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.
6.6 Pay-off of Trafalgar House. Buyer shall have delivered
to the Stockholders evidence of the payment in full of the
Company's indebtedness to Trafalgar House.
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6.7 Kincheloe Facility. In the event the consent of the
EDC of Chippewa County described in Section 4.13(a) is received
on or prior to the Closing Date, the Stockholders (utilizing
CHMS) shall have acquired from the Company the Company's interest
as lessee of the two (2) parcels of land and the two (2)
buildings comprising the Company's Kincheloe, Michigan
manufacturing facility, as more fully described in Items 4, 5, 7,
8 and 9 on Schedule 2.8 under the caption "Real Property Leases--
Kincheloe, Michigan", in consideration of the assumption of the
capital lease and installment contract obligations related
thereto; and the Stockholders and the Company shall have entered
into the Kincheloe Lease (the foregoing are collectively referred
to as the "Kincheloe Transaction"). The foregoing acquisition
shall be effected without representations, warranties or other
obligations by, for or of the Company and the Stockholders shall
have obtained the release of the Company from such capital lease
and installment contract obligations (subject to the execution
and delivery of the Kincheloe Lease).
6.8 Payment of Expenses. The Buyer shall have delivered to
the Stockholders evidence of the payment in full of the amounts
listed or reflected on Schedule 6.8 hereto (relating to, among
other things, the amounts described in Items 2, 3 and 4 on
Schedule 2.17, the fees and expenses of the Company's proposed
initial public offering, and the fees and expenses in connection
with this Agreement) which are payable by the Company and the
Buyer, as the case may be.
ARTICLE VII
Termination and Abandonment
7.1 Termination. This Agreement may be terminated at any
time prior to the date of Closing:
(a) by mutual consent of the Stockholders and the
Buyer;
(b) by the Stockholders or the Buyer at any time after
the later to occur of June 15, 1996 or, if later, the business
day immediately following the Closing Date set by the
Stockholders pursuant to their right to postpone the Closing Date
pursuant to Section 1.4 hereof (the "Final Termination Date"),
provided that, if the Closing has not occurred by the Final
Termination Date as the result of a breach of this Agreement,
then any party responsible for such breach may not avail itself
of the right under this Section 7.1(b), and provided further that
in any such event, the non-breaching party(ies) shall not be
deprived of any remedy hereunder or at law against the breaching
party;
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(c) by Buyer, if there has been a violation or breach
by Stockholders of any agreement, representation or warranty
contained in this Agreement which has rendered the satisfaction
of any condition to the obligations of Buyer impossible and such
violation or breach has not been waived by Buyer; or
(d) by Stockholders, if there has been a violation or
breach by Buyer of any agreement, representation or warranty
contained in this Agreement which has rendered the satisfaction
of any condition to the obligations of Stockholders impossible
and such violation or breach has not been waived by Stockholders.
7.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions
contemplated hereby by any or all of the parties pursuant to
Section 7.1, written notice thereof shall forthwith be given by
the terminating party to the other party and, in such event, this
Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the
parties hereto; provided, however, that the foregoing shall not
be construed to deprive any party hereto of any remedy hereunder
or at law if this Agreement is terminated in violation of this
Agreement or if it is terminated pursuant to Section 7.1(c) or
(d) hereof.
ARTICLE VIII
Indemnification; Escrow Fund
8.1 Indemnification. The parties shall indemnify each
other as set forth below:
(a) The Stockholders shall, severally and not jointly,
in accordance with their respective Pro Rata Percentages (for
purposes of this Section 8.1(a), the Pro Rata Percentage
attributable to Mr. Settle shall be 27.4% (i.e., the sum of the
Pro Rata Percentage for Mr. Settle, individually, plus the Pro
Rata Percentage for the W. Sydnor Settle Family Trust)),
indemnify and hold harmless the Buyer from and against any and
all losses, damages, liabilities and claims ("Losses") arising
out of, based upon or resulting from (i) any inaccuracy as of the
date hereof or as of the Closing Date of any representation or
warranty of the Stockholders which is contained in this
Agreement, (ii) any breach or nonfulfillment by the Stockholders
or the Exhibit 1 Party of any of their covenants, agreements or
other obligations contained in this Agreement, or (iii) costs and
expenses reasonably and actually incurred by the Buyer or the
Company if required by an order, agreement or other requirement
of the Michigan Department of Environmental Quality in order to
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obtain an industrial closure (including any audit thereof)
relating to the underground storage tanks formerly located at the
Company's Lansing, Michigan facility pursuant to Part 213 of
Public Act No. 451 of 1994 (MCLA 324.21301, et seq.) which
industrial closure may contain such deed or use restrictions as
may be reasonably associated therewith, provided that such
restrictions shall not materially interfere with the use of the
underlying real property as compared to the manner in which it is
being used as of the date hereof. The Stockholders shall
reimburse Buyer for any and all fees, costs and expenses of any
kind related thereto (including, without limitation, any and all
Legal Expenses (as defined below)) and, for purposes hereof, such
fees, costs and expenses shall be deemed to be Losses. As used
herein, "Legal Expenses" of a person shall mean any and all fees,
costs and expenses of any kind reasonably incurred by such person
and its counsel in investigating, preparing for, defending
against or providing evidence, producing documents or taking
other action with respect to, any threatened or asserted claim.
(b) Buyer shall indemnify and hold harmless the
Stockholders and the Exhibit 1 Party from and against any and all
Losses arising out of, based upon or resulting from (i) any
inaccuracy as of the date hereof or as of the Closing Date of any
representation or warranty of Buyer which is contained in this
Agreement, or (ii) any breach by Buyer of any of its covenants,
agreements or other obligations contained in this Agreement. The
Buyer shall reimburse the Stockholders and the Exhibit 1 Party
for any and all fees, costs and expenses of any kind related
thereto (including, without limitation, any and all Legal
Expenses) and, for purposes hereof, such fees, costs and expenses
shall be deemed to be Losses.
(c) Promptly after receipt by any person entitled to
indemnification under this Section 8.1 (an "Indemnified Party")
of notice of the commencement of any action by a third party in
respect of which the Indemnified Party will seek indemnification
hereunder, the Indemnified Party shall notify each person that is
obligated to provide such indemnification (an "Indemnifying
Party") thereof in writing, but any failure to so notify the
Indemnifying Party shall not relieve it from any liability that
it may have to the Indemnified Party other than to the extent the
Indemnifying Party is actually prejudiced thereby. The
Indemnifying Party shall be entitled to participate in the
defense of such action and, provided that within 15 days after
receipt of such written notice the Indemnifying Party confirms in
writing its responsibility therefor and reasonably demonstrates
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that it will be able to pay the full amount of potential
liability in connection with any such claim, to assume control of
such defense with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that:
(i) the Indemnified Party shall be entitled
to participate in the defense of such claim and to
employ counsel at its own expense to assist in the
handling of such claim; provided, however, that the
employment of such counsel shall be at the expense of
the Indemnifying Party if the Indemnified Party
determines in good faith that such participation is
appropriate in light of defenses not available to the
Indemnifying Party, conflicts of interest or other
similar circumstances;
(ii) the Indemnifying Party shall obtain the
prior written approval of the Indemnified Party before
entering into any settlement of such claim or ceasing
to defend against such claim (with such approval not to
be unreasonably withheld);
(iii) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff
to each Indemnified Party of a release from all
liability in respect of such claim; and
(iv) the Indemnifying Party shall not be
entitled to control (but shall be entitled to
participate at its own expense in the defense of), and
the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of (A) any
claim to the extent the claim seeks an order,
injunction, non-monetary or other equitable relief
against the Indemnified Party which, if successful,
could materially interfere with the business,
operations, assets, condition (financial or otherwise)
or prospects of the Indemnified Party or (B) any claim
relating to Taxes.
After written notice by the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of any
such action, as well as confirmation in writing and demonstration
of ability to pay by the Indemnifying Party in the manner
described above in this subsection (c), the Indemnifying Party
shall not be liable to such Indemnified Party hereunder for any
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<PAGE>
Legal Expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs
of investigation and of liaison counsel for the Indemnified
Party; provided, however, that the Indemnifying Party shall be
liable for such Legal Expenses if the Indemnified Party
determines in good faith that the incurrence of the same is
appropriate in light of defenses not available to the
Indemnifying Party, conflicts of interest or other similar
circumstances. If the Indemnifying Party does not assume control
of the defense of such claim as provided in this Section 8.1(c),
the Indemnified Party shall have the right to defend such claim
in such manner as it may deem appropriate at the cost and expense
of the Indemnifying Party, and the Indemnifying Party will
promptly reimburse the Indemnified Party therefor in accordance
with this Section 8.1. The reimbursement of fees, costs and
expenses required by this Section 8.1 shall be made by periodic
payments during the course of the investigations or defense, as
and when bills are received or expenses incurred.
(d) In the event that the Indemnifying Party shall be
obligated to indemnify the Indemnified Party pursuant to this
Section 8.1, the Indemnifying Party shall, upon payment of such
indemnity in full, be subrogated to all rights of the Indemnified
Party with respect to the Losses to which such indemnification
relates.
(e) All indemnification or reimbursement payments
required pursuant to this Agreement shall be made net of all tax
and insurance benefits actually received by the Indemnified
Party. In the event that any claim for indemnification asserted
hereunder is, or may be, the subject of any insurance coverage or
other right to indemnification or contribution from any third
person, the Indemnified Parties expressly agree that they shall
promptly notify the applicable insurance carrier of any such
claim or loss and tender defense thereof to such carrier, and
shall also promptly notify any potential third party indemnitor
or contributor which may be liable for any portion of such losses
or claims. The Indemnified Parties agree to pursue, at the cost
and expense of the Indemnifying Party, such claims diligently and
to reasonably cooperate, at the cost and expense of the
Indemnifying Party, with each party indemnitor applicable
insurance carrier and third party indemnitor or contributor.
8.2 Remedies. Except as otherwise specifically provided in
this Agreement, the sole and exclusive remedy of the Buyer, the
Stockholders and the Exhibit 1 Party hereunder shall be
restricted to the indemnification rights set forth in this
Article VIII. Without limiting the generality of the foregoing,
the sole and exclusive remedy of the Buyer hereunder for any
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<PAGE>
breach by the Exhibit 1 Party under this Agreement of any
representations and warranties (including those in Section 2.1(b)
and 2.2(b)) or any covenants or agreements shall be restricted to
the indemnification rights set forth in this Article VIII
pursuant to which Mr. Settle, individually, and not the Exhibit 1
Party, shall, in addition to his indemnification obligations with
respect to his Shares, provide indemnification on behalf of, and
in lieu of, the Exhibit 1 Party.
8.3 Undertakings. Prior to the assertion of any claims for
indemnification under this Agreement, the Indemnified Party shall
utilize all reasonable efforts, consistent with normal practices
and policies and good commercial practice, to mitigate such
Losses.
8.4 Certain Limitations. Notwithstanding any other
provision in this Agreement to the contrary, the liability of the
Stockholders or the Buyer, as applicable, for claims under this
Agreement shall be limited by the following:
(a) No claim or claims shall be asserted by the Buyer,
the Stockholders or the Exhibit 1 Party pursuant to the
provisions of this Article VIII, unless and to the extent that
the amount of such Indemnified Party's damages exceeds $125,000
in the aggregate, in which event such Indemnified Party shall be
entitled to receive only those damages exceeding $125,000,
provided that the limitations set forth in this Section 8.4(a)
shall not apply to a claim asserted pursuant to Section
8.1(a)(iii).
(b) The aggregate amount of damages recoverable
pursuant to the provisions of Article VIII by the Buyer shall be
limited to $3,400,000 in the aggregate. The maximum amount of
damages recoverable against any Stockholder under this Agreement
shall not in the aggregate exceed the product of $3,400,000 times
the Pro Rata Percentage of such Stockholder (for purposes of this
Section 8.4(b), the Pro Rata Percentage attributable to
Mr. Settle shall be 27.4% (i.e., the sum of the Pro Rata
Percentage for Mr. Settle, individually, plus the Pro Rata
Percentage for the W. Sydnor Settle Family Trust)).
8.5 Tax Indemnification. Notwithstanding and in addition
to the other provisions of Section 8.4, the Stockholders will
indemnify the Buyer for Losses arising from the estimated or
extension payments for the Tax Returns for the fiscal year ended
December 31, 1995 and for any other period ending on or before
the Closing Date to the extent such payments were insufficient or
not timely paid or such Tax Returns were not timely filed and
only to the extent the foregoing were not reflected on or accrued
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<PAGE>
in the Company's books and records as of the Closing Date. The
indemnification in this Section 8.5 is exclusive of the
limitations on indemnification set forth in Section 8.4.
8.6 Indemnification Escrow.
(a) At the Closing, pursuant to Section 1.5(c) hereof,
the Stockholders shall deposit, or cause the Buyer to deposit,
$1,000,000 into escrow which shall be deposited with the Escrow
Agent, pursuant to the terms of the Escrow Agreement. Such
amount shall be part of the Escrow Fund established under the
Escrow Agreement and shall be held in escrow in accordance with
the terms of the Escrow Agreement.
(b) The rights of the Buyer to make a claim for
payment from the Escrow Fund, the terms and conditions on which
the Escrow Fund shall be held, invested and distributed and the
manner of resolving disputes pertaining to claims made on the
Escrow Fund by an Indemnified Party shall be as set forth in the
Escrow Agreement.
ARTICLE IX
Miscellaneous
9.1 Survival. All representations, warranties, covenants
and agreements shall survive the execution and delivery hereof
and the Closing hereunder, subject to the following. All
representations and warranties of the Buyer contained in this
Agreement or in any agreement, Exhibit, Annex, Schedule,
certificate, document or statement delivered pursuant hereto
shall survive the Closing and not terminate. All representations
and warranties of the Stockholders and the Exhibit 1 Party
contained in this Agreement or in any agreement, Exhibit, Annex,
Schedule, certificate, document or statement delivered pursuant
hereto, shall survive the Closing for a period: (a) with respect
to Sections 2.1, 2.2 and 2.4, continuing for an unlimited period
of time; (b) with respect to Section 2.10 (Environmental
Matters), ending three (3) years after the Closing Date; (c) with
respect to Section 2.16 (Tax Matters), ending 90 days after the
expiration of the statute of limitations in accordance with
applicable law for the taxable year of the Company to which such
representation and warranty relates, without giving effect to any
extensions of such statutes of limitations granted on or
subsequent to the Closing Date, provided, however, that the Buyer
shall have no liability to the Stockholders for refusing to
extend any such statute of limitations without the express
written consent of the Stockholders if the effect of such refusal
is to cause the taxing authority to issue an assessment,
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including a so-called "jeopardy assessment", prior to the
Expiration of such statute of limitations; and (d) otherwise
ending thirty (30) months after the Closing Date. The liability
of any party under Article VIII hereof shall not terminate with
respect to any claim, whether or not fixed as to liability or
liquidated as to amount, with respect to which such party has
been given written notice prior to the termination date thereof.
9.2 Expenses. Except as otherwise permitted or authorized
in this Agreement, each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys,
accountants, investment bankers or others engaged by such party)
in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated
hereby are consummated.
9.3 Headings. Section headings herein are for convenience
of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the
provisions hereof.
9.4 Notices. All notices or other communications required
or permitted hereunder shall be given in writing and shall be
deemed sufficient if delivered by hand (including by courier),
mailed by registered or certified mail, postage prepaid (return
receipt requested), or sent by facsimile, as follows:
(a) If to the Stockholders or the Exhibit 1 Party, to
the Stockholders' Representative, initially:
W. Sydnor Settle
c/o Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
(212-455-2990; fax 212-455-2502)
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Facsimile: (313) 568-6915
Confirmation: (313) 568-6975
Attention: Fredrick M. Miller, Esq.
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<PAGE>
and to:
Holland Kaufmann & Bartels
289 Greenwich Avenue
Greenwich, Connecticut 06830
Facsimile: (203) 869-4648
Confirmation: (203) 869-5600
Attention: Charles B. Kaufmann, III, Esq.
(b) If to Buyer:
PCC Speciality Products, Inc.
18 Industrial Park
Holden, MA 01520
Facsimile: (508) 829-7719
Confirmation: (508) 829-3732
Attention: John M. Prosser, President
with a copy to:
Bowditch & Dewey
311 Main Street
Worcester, MA 01608
Facsimile: (508) 756-7636
Confirmation: (508) 791-3511
Attention: John R. Blake, Esq.
or such other address as shall be furnished in writing by such
party, and any such notice or communication shall be effective
and be deemed to have been given as of the date so delivered or,
if mailed upon receipt thereof, or if by facsimile on production
of a transmission report by the machine from which the facsimile
was sent which indicates that the facsimile was sent in its
entirety to the facsimile number of the recipient; provided,
however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given
only upon its receipt.
9.5 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns, and the provisions of Article VIII hereof shall inure to
the benefit of the Indemnified Parties referred to therein;
provided, however, that neither this Agreement nor any of the
rights, interests, or obligations hereunder may be assigned by
any of the parties hereto without the prior written consent of
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the other parties, except that this Agreement and such rights,
interests and obligations may be assigned by Buyer to an
Affiliate (provided that Buyer is not relieved of its liability
hereunder).
9.6 Entire Agreement. This Agreement (including the
Exhibits, Schedules and Annexes hereto) embodies the entire
agreement and understanding of the parties with respect to the
transactions contemplated hereby and supersedes all prior or
contemporaneous written or oral commitments, arrangements or
understandings with respect thereto. There are no restrictions,
agreements, promises, warranties, covenants or undertakings with
respect to the transactions contemplated hereby other than those
expressly set forth herein.
9.7 Modifications, Amendments and Waivers. At any time
prior to the Closing, to the extent permitted by law, (a) Buyer
and the Stockholders may, by written agreement, modify, amend or
supplement any term or provision of this Agreement and (b) any
term or provision of this Agreement may be waived in writing by
the party which is entitled to the benefits thereof.
9.8 Counterparts. This Agreement may be executed with
counterpart signature pages or in two or more counterparts, all
of which shall be considered one and the same agreement and each
of which shall be deemed an original.
9.9 Governing Law. This Agreement shall be governed by the
laws of the State of Michigan (regardless of the laws that might
be applicable under principles of conflicts of law) as to all
matters including, but not limited to, matters of validity,
construction, effect and performance.
9.10 Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with Generally
Accepted Accounting Principles on the date hereof.
9.11 Certain Definitions. For purposes of this Agreement:
An "Affiliate" or "affiliate" of a specified
person is a person that directly or indirectly, through
one or more intermediaries, controls, or is controlled
by, or is under common control with, the person
specified.
"Capitalized Lease Debt" shall mean the capital
lease payments, determined in accordance with Generally
Accepted Accounting Principles, as of the Closing Date
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due by the Company with respect to the Company's
interest as lessee of the two (2) parcels of land and
as installment purchaser of the two (2) buildings
comprising the Company's Kincheloe, Michigan
manufacturing facility, as more fully described in
Items 4, 5, 7, 8 and 9 on Schedule 2.8 under the
caption "Real Property Leases -- Kincheloe, Michigan".
At March 31, the Capitalized Lease Debt was
approximately $798,000.
"CHMS" shall mean CHMS, L.L.C., a Michigan limited
liability company organized by the Stockholders for
purposes of, among other things, consummating the
Kincheloe Transaction, including the execution and
delivery of the Kincheloe Lease as the landlord
thereunder.
"Generally Accepted Accounting Principles" shall
mean generally accepted accounting principles
consistent with those used by the Company and its
Subsidiaries in connection with the preparation of the
1994 Balance Sheet.
"Hobey ISO" shall mean the incentive stock option
granted to John L. Hobey under the 1995 ISO Plan
relative to purchase of 289,567 shares of the Company's
Common Stock for an aggregate purchase price of
$113,970.
"Interim Kincheloe Lease Payments" shall mean an
amount equal to the payments made during the period
beginning on the Closing Date and ending on the date of
consummation of the Kincheloe Transaction by the
Company as lessee of the two (2) parcels of land and as
installment purchaser of the two (2) buildings
comprising the Company's Kincheloe, Michigan
manufacturing facility, as more fully described in
Items 4, 5, 7, 8 and 9 on Schedule 2.8 under the
caption "Real Property Leases -- Kincheloe, Michigan",
with respect to the capital lease and installment
contract obligations related thereto.
"IRS" shall mean the Internal Revenue Service.
"Lien" shall mean any pledge, lien (including
without limitation any tax lien), charge, claim,
encumbrance, security interest, mortgage, option,
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restriction on transfer (including without limitation
any buy-sell agreement or right of first refusal or
offer), forfeiture, penalty, equity or other right of
another person of every nature and description
whatsoever.
"Material Adverse Effect" shall mean a loss,
expense or cost to the Company or any Subsidiary which
is, or with reasonable probability might be, materially
adverse to the business, operations, assets,
properties, results of operations or financial
condition of the Company and its Subsidiaries taken as
a whole, it being understood that a loss, expense or
cost to the Company or any Subsidiary shall be rendered
materially adverse only if the present value of such
loss, expense or cost to the Buyer, calculated at a
discount rate of 10% per annum, after taking into
account all tax effects, (i) exceeds $800,000, with
respect to the use of such term for purposes of the
conditions set forth in Article V hereof, and
(ii) $10,000 with respect to the use of such term for
all other purposes in this Agreement. The definition
of a Material Adverse Effect is used in this Agreement
solely as a means of measuring representations,
warranties or covenants, as the case may be, and any
Losses for purposes of Article VIII arising from a
breach of a representation, warranty or covenant shall
not be reduced by that portion of the Loss which is
below the aforesaid dollar measurement level for a
Material Adverse Effect.
"Person" or "person" shall mean an individual or
any corporation, partnership, joint venture,
association, limited liability company, trust,
unincorporated organization, or other legal entity or a
government or governmental entity.
"Pro Rata Percentage" means, with respect to a
Stockholder and the Exhibit 1 Party, the quotient, in
percentage form, of (a) the number of Shares held by
such Stockholder and Exhibit 1 Party immediately prior
to the Effective Time, divided by (b) the total number
of Shares.
"Proposed IPO Documents" shall mean the several
documents negotiated, prepared and/or filed in
connection with the recently proposed and aborted
initial public offering of the Company's Common Stock,
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including but not limited to the Registration Statement
on Form S-1 (registration number 33-95612), as well as
the several amendments thereto, and the preliminary
prospectus related thereto subject to completion, dated
September 14, 1995, which were filed with the
Securities and Exchange Commission.
"Reasonable efforts" shall be deemed to not
include any obligation on the part of any person to
undertake any liabilities or perform any acts (except
liabilities or performance, other than any reasonable
efforts obligations expressly required to be undertaken
by the terms of this Agreement) which, in the case of
any such liabilities or acts, are materially burdensome
or unduly expensive to such person; provided, however,
that notwithstanding the foregoing, the term
"reasonable efforts" shall include an obligation to
take such actions which are normally incident to or
reasonably foreseeable in connection with such
obligation or the transactions contemplated hereby.
"Taxes" shall mean all taxes (including single
business tax), charges, fees, levies or other
assessments including, without limitation, income,
excise, property, transfer, payroll, withholding,
employment, value added, capital, net worth, estimated,
sales, use and franchise taxes, imposed by the United
States, or any state, county, local or foreign
government or subdivision or agency thereof, and
including any interest, penalties or additions
attributable thereto.
"Tax Return" shall mean any report, return,
document, declaration or other information or filing
required to be supplied to any taxing authority or
jurisdiction (domestic or foreign) with respect to
Taxes, including information returns, any documents
with respect to or accompanying payments of estimated
Taxes or requests for extension of time in which to
file any such report, return, document, declaration or
other information, including any schedule or attachment
thereto or amendment thereof.
"To the knowledge," or "known," and words of
similar import shall mean the actual knowledge of a
person after having made reasonable investigation,
including, where appropriate, inquiry of the
appropriate persons having responsibility for such
matter or having access to the relevant information.
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"Trafalgar House" shall mean Trafalgar House Inc.,
a Delaware corporation, formerly known as John Brown
Inc. and successor-in-interest to JRS Machine Tool,
Inc.
"W. Sydnor Settle Family Trust" shall mean the
W. Sydnor Settle 1996 Family Trust, James M. Cotter,
Trustee, under agreement dated February 9, 1996. The
W. Sydnor Settle Family Trust is the only Exhibit 1
Party.
"1985 Asset Purchase Agreement" shall mean the
Asset Purchase Agreement, dated November 29, 1985,
among The Olofsson Corporation (later known as JRS
Machine Tool, Inc. and no longer in existence),
Olofsson Fabrication Service, Inc., a wholly-owned
subsidiary of the then named The Olofsson Corporation
(later known as CEB Fabrication,, Inc.), Sanctuary
Holdings, Ltd., John Brown P.L.C., the Company (f/k/a
Norcor Manufacturing, Inc.), and Cordier Enterprises,
Inc. (later known as Metalcor, Inc. and, effective
July 26, 1995, merged with and into the Company)
("Metalcor"), as amended through Amendment No. 5
thereto, dated June 28, 1995, among Trafalgar House,
the Company and Metalcor, Inc., pertaining to, among
other things, the Company's subordinated debt.
"1990 Loan and Security Agreement" shall mean the
Loan and Security Agreement, dated May 2, 1990, between
the Company and Barclays Business Credit, Inc., as
amended through the Fifth Amendment thereto, dated
June 16, 1995, between the Company and Shawmut Capital
Corporation (successor-in-interest to Barclays Business
Credit, Inc.).
"1990 Loan and Security Agreement Termination
Conditions" shall mean the satisfaction of each of the
following conditions, each of which are more fully
described in and qualified in their entirety by the
1990 Loan and Security Agreement (particularly, Section
3.5 thereof): (i) the Company shall have given Fleet
Capital Corporation 90 days prior written notice of its
intent to terminate the 1990 Loan and Security
Agreement; (ii) the Company shall have paid in full all
Obligations (which, as used in this paragraph, shall
have the meaning as defined in the 1990 Loan and
Security Agreement) under the 1990 Loan and Security
Agreement; (iii) the Letter of Credit (which, as used
in this paragraph, shall have the meaning as defined in
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the 1990 Loan and Security Agreement) either shall have
expired or shall have been replaced; (iv) Fleet Bank,
N.A. shall have been released from its obligations
under the Letter of Credit; and (v) Fleet Capital
Corporation shall have been released from its
obligations under the LC Guaranty (which, as used in
this paragraph shall have the meaning as defined in the
1990 Loan and Security Agreement).
"1995 ISO Plan" shall mean The Olofsson
Corporation Incentive Stock Option Plan adopted by the
Company on June 22, 1995 for the purpose of assuming
all obligations of Metalcor, Inc. (formerly, Cordier
Enterprises Inc.) under the Metalcor, Inc. 1993
Incentive Stock Option Plan arising by reason of the
merger of Metalcor, Inc. into the Company.
9.12 Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement shall not be affected
thereby and this Agreement will be construed and enforced as if
such invalid, illegal or unenforceable provisions had not been
included herein. To the extent permitted by applicable law, each
party waives any provision of law which renders any provision of
this Agreement invalid, illegal or unenforceable in any respect.
9.13 Specific Performance. The Buyer, the Stockholders and
the Exhibit 1 Party recognize that any breach of the terms of
this Agreement may give rise to irreparable harm for which money
damages would not be an adequate remedy, and accordingly agree
that, in addition to other remedies, any non-breaching party
shall be entitled to enforce the terms of this Agreement by a
decree of specific performance without the necessity of proving
the inadequacy as a remedy of money damages.
9.14 Third Parties. Nothing in this Agreement shall be
deemed to be for the benefit of, or enforceable by or on behalf
of any party, including, without limitation, any employee or
former employee of the Company or of any Subsidiary, any
dependent or beneficiary of any such employee, any labor union or
other party or organization, any obligee, owner or holder of any
obligation or liability, other than the parties to this Agreement
and the Indemnified Parties.
9.15 Consent to Jurisdiction. Each of the parties hereto
executing this Agreement hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of
the State of Michigan or the courts of the United States of
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America located in the State of Michigan for any actions, suits
or proceedings arising out of or relating to this Agreement and
the transactions contemplated hereby or thereby and agrees not to
commence any action, suit or proceeding relating hereto or
thereto except in such courts, and further agrees that service of
any process, summons, notice or document by United States
registered or certified mail shall be effective service of
process for any action, suit or proceeding brought in any such
court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to personal jurisdiction and
the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby or
thereby, in the courts of the State of Michigan, or the courts of
United States of America located in the State of Michigan, and
hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in
an inconvenient forum.
9.16 Stockholders' Obligations. The obligations of the
Stockholders and the Exhibit 1 Party hereunder shall be several
and not joint.
9.17 Interpretation. Whenever reference is made in this
Agreement to any Section, Schedule, Annex or Exhibit, such
reference shall be to a Section of this Agreement or a Schedule,
Annex or Exhibit attached hereto, unless otherwise indicated. In
addition, whenever reference is made in this Agreement to the
"Agreement", such reference shall be to the Agreement, as well as
to any Schedule, Annex or Exhibit attached hereto. All
references in this Agreement to the Company include the
Subsidiaries unless the context indicates otherwise. The term
"including" means "including, without limitation", for all
purposes of this Agreement. Terms in the singular include the
plural. Notwithstanding anything in this Agreement to the
contrary, except with respect to the representations and
warranties made by the Exhibit 1 Party in Sections 2.1(b) and
2.2(b), the representations and warranties made in this Agreement
with respect to an Exhibit 1 Party are made only by that
Stockholder who transferred any of the Shares to such Exhibit 1
Party.
9.18 Brokerage, Etc. Expenses. Except for (i) the
obligations of the Stockholders to pay the fees payable to A. G.
Edwards & Sons, Inc. as described in Section 9.2, and (ii) the
obligations of the Buyer to pay the fees of Lazard Freres Co. LLC
in connection with the transactions contemplated hereby, each
party hereto represents and warrants to the other party hereto
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that no broker, finder, agent or similar intermediary has acted
on the former's behalf in connection with this Agreement or the
transactions contemplated hereby, and that there are no
investment banking fees, brokerage commissions, finders, fees or
similar fees or commissions payable in connection therewith based
on any agreement, arrangement or understanding with or any action
taken by the former. Each party hereto agrees to indemnify and
save the other harmless from any claim or demand for commission
or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of
the Buyer, on the one hand, or the Stockholders or the Company on
the other hand, and to bear the cost of reasonable legal expenses
incurred in defending against any such claim.
9.19 Stockholders' Representative.
(a) Appointment and Authority. The Stockholders and
the Exhibit 1 Party, for themselves and their personal
representatives and other successors, hereby constitute and
appoint the person set forth on Schedule 9.19 (the "Stockholders'
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
Stockholders and the Exhibit 1 Party or in its own name as
Stockholders' Representative, to take all actions required or
permitted to be taken by the Stockholders and the Exhibit 1
Party, or any of them, under this Agreement (including the giving
and receiving of all reports, notices and consents). The
authority conferred under this Section 9.19 is an agency coupled
with an interest, and all authority conferred hereby is
irrevocable and not subject to termination by the Stockholders,
the Exhibit 1 Party or by any of them, or by operation of law,
whether by the death or incapacity of any Stockholder or Exhibit
1 Party, the termination of any trust or estate or the occurrence
of any other event. If any Stockholder or the Exhibit 1 Party
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 Stockholders' Representative pursuant to this
Section 9.19 shall be as valid as if such death or incapacity,
termination or other event had not occurred, regardless of
whether or not the Stockholders' Representative or the Buyer
shall have received notice of such death, incapacity, termination
or other event. Any notice given to the Stockholders'
Representative pursuant to Section 9.19 shall constitute
effective notice to all Stockholders and the Exhibit 1 Party and
the Buyer or any other person may rely on any notice, consent,
election or other communication received from the Stockholders'
Representative as if it had been received from all Stockholders
and the Exhibit 1 Party on whose behalf it was given.
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(b) Successors. The Stockholders' Representative may
resign upon 20 days prior written notice to Buyer and each other
Stockholder and the Exhibit 1 Party. Upon the death,
resignation, removal or incapacity of the Stockholders'
Representative, the Stockholders shall appoint a successor
Stockholders' Representative, by written consent of a majority of
the Stockholders (the "Required Majority of Shareholders"), and
any successor Stockholders' Representative so appointed shall
constitute the Stockholders' Representative to the same effect as
if originally named on Schedule 9.19. The Stockholders may
remove the Stockholders' Representative at any time, by written
consent of the Required Majority of Shareholders. The
Stockholders shall give the Buyer and the Exhibit 1 Party written
notice of the appointment or removal of any Stockholders'
Representative pursuant to this Section 9.19 including a copy of
the written consent of the Required Majority of Shareholders
relating thereto, as soon as practicable after any such
appointment or removal, and such appointment or removal shall not
be effective as against the Buyer until such notice shall have
been given, unless the Buyer shall have actual knowledge of such
appointment or removal.
9.20 Transfer Tax. Any transfer or similar tax payable in
connection or as a result of the purchase and sale of the Shares
pursuant to this Agreement shall be borne by the Stockholders.
9.21 Stockholders' and Exhibit 1 Party's Waiver and Release
of Claims. Each Stockholder represents and warrants to the Buyer
that, as of the Closing, such Stockholder and the Exhibit 1 Party
will not have claims or rights against the Company or any
Subsidiary whatsoever other than for current salary, directors'
fees and reimbursement for travel and similar business expenses,
which shall be treated as liabilities in the Company's
consolidated financial statements, and rights as a Stockholder.
Each Stockholder and Exhibit 1 Party hereby, effective with the
Effective Time, waives and releases the Company and each
Subsidiary from any and all liability of any type to such
Stockholder or Exhibit 1 Party or such Stockholder's or Exhibit 1
Party's affiliates other than such salary, directors' fees and
expense reimbursement claims and such Stockholder's rights.
Notwithstanding anything herein to the contrary, nothing in this
Section 9.21 shall be deemed to preclude any rights the
Stockholders and Exhibit 1 Parties may have for indemnification
by the Company or any Subsidiary with respect to service as a
director or an officer, except as to derivative actions first
asserted after the Closing against such Stockholder or such
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Exhibit 1 Party by the other Stockholders or by the Exhibit 1
Party or by former stockholders of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
Witness: Buyer:
_____________________________ PCC SPECIALITY PRODUCTS, INC.
/s/ John M. Prosser
By:_________________________________
JOHN M. PROSSER
Its: President
_______________________________
Stockholders:
_____________________________ /s/ Thomas H. Corson
_____________________________
THOMAS H. CORSON
_____________________________ /s/ John L. Hobey
_____________________________
JOHN L. HOBEY
_____________________________ /s/ Thomas J. McGrath
_____________________________
THOMAS J. MCGRATH
Exhibit 1 Party:
W. SYDNOR SETTLE 1996 FAMILY
TRUST, U/A DATED FEBRUARY 9, 1996
_____________________________ /s/ James M. Cotter
By:___________________________
James M. Cotter, Trustee
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