<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 1998
U.S. Industrial Services, Inc.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-22388 99-0273889
- ---------------------------- --------------- -------------------
(State or other jurisdiction Commission File (I.R.S. Employer
of incorporation) Number Identification No.)
8111 Preston Road, Suite 715, Dallas, Texas 75225
--------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (214) 891-9698
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
This Form 8-K/A, Amendment Number 1, amends and supplements the Form 8-K
dated December 15, 1998 (the "Original Form 8-K") filed by U.S. Industrial
Services, Inc. The sole purpose of this Amendment Number 1 is to include
Exhibit 7(b)(1) Pro Forma Financial Information, which was omitted in the
original filing. This Amendment Number 1 hereby amends and restates the
Original Form 8-K in its entirety and reads as follows:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 30, 1998 ("Closing Date"), J. L. Manta, Inc., an Illinois
corporation ("Manta") and wholly-owned subsidiary of U.S. Industrial
Services, Inc. ("Registrant"), consummated the sale of substantially all of
its assets ("Assets") to Kenny Industrial Services, L.L.C., a Delaware
limited liability company ("Kenny"). The sale was effected pursuant to an
Amended and Restated Asset Purchase Agreement (the "Agreement"), dated as of
November 30, 1998, by and among Kenny, Manta and Registrant. The purchase
price ("Purchase Price") for the Assets under the Agreement was $23,000,000,
subject to post-closing adjustments as described in the Agreement. The
Purchase Price was paid by Kenny to Manta on the Closing Date as follows:
$3,000,000 in cash and promissory notes in the aggregate face amount of
$20,000,000.
<PAGE>
The foregoing description of the Agreement is qualified in its entirety
by the full text of the Agreement which is incorporated by reference herein
as set forth under Exhibit 2.
ITEM 7. PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b)(1) Pro-Forma Financial Information
U.S. INDUSTRIAL SERVICES, INC. AND J.L. MANTA, INC.
INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet includes
the accounts of U.S. Industrial Services, Inc. ("the Company") as of
September 30, 1998. The unaudited pro forma condensed statement of operations
include the results of operations of the Company for the year ended
September 30, 1998. The unaudited pro forma condensed balance sheet has been
prepared to give effect to the sale by the Company of certain assets and
liabilities of J.L. Manta, Inc. ("Manta") as if the transaction occurred on
September 30, 1998. The unuadited pro forma condensed combined statement of
operations has been prepared as if the sale occurred on October 1, 1997. The
unaudited pro forma condensed combined financial information has been
prepared utilizing the audited historical financial statements and
accompanying notes.
The unaudited pro forma condensed financial statements are provided for
informational purposes only and do not purport to be indicative of the
Company's financial position or results of operations that would have been
reported had this transaction occurred on the dates indicated above, nor the
financial condition or results of operations which will be reported in the
future.
<PAGE>
U.S. INDUSTRIAL SERVICES, INC. AND J.L. MANTA, INC.
PROFORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
U.S.
INDUSTRIAL PRO FORMA CONSOLIDATED
SERVICES, INC. ADJUSTMENTS PRO FORMA
------------- ----------- ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 2,349 $ 5,000 4 $ 5,658
(1,691) 3
Accounts receivable trade, net 15,844 (12,927) 3 2,917
Notes receivable 58 18,000 4 18,000
(58) 3
Costs and estimated earnings in excess of billings 1,456 (1,329) 3 127
Deferred income tax 3,972 3,972
Other current assets 1,163 (150) 4 252
(761) 3
------- -------- -------
TOTAL CURRENT ASSETS 24,842 6,084 30,926
------- -------- -------
PLANT, PROPERTY, AND EQUIPMENT, net 6,633 (6,197) 3 436
------- -------- -------
OTHER ASSETS
Goodwill net of accumulated amortization 4,041 (1,590) 4 2,213
(238) 3
Other assets 1,943 (613) 4 478
(852) 3
------- -------- -------
5,984 (3,293) 2,691
------- -------- -------
TOTAL ASSETS $37,459 $(3,406) $34,053
------- -------- -------
------- -------- -------
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $9,355 $(200) 4 $1,124
(8,031) 3
Current portion of long-term debt 8,895 (6,475) 4 1,123
(1,297) 3
Billings in excess of costs and estimated earnings 630 (622) 3 8
Other current liabilities 2,067 (52) 3 2,015
------- -------- -------
TOTAL CURRENT LIABILITIES 20,947 (16,677) 4,270
------- -------- -------
LONG TERM LIABILITIES
Long-term debt 3,999 (1,041) 4 (640)
(3,598) 3
------- -------- -------
3,999 (4,639) (640)
------- -------- -------
TOTAL LIABILITIES 24,946 (21,316) 3,630
------- -------- -------
SHAREHOLDERS' EQUITY
Common stock 3,082 0 3,082
Additional paid-in capital 19,642 19,642
Retained earnings (9,323) 17,910 8,587
Unrealized loss on investment (888) (888)
------- -------- -------
12,513 17,910 30,423
------- -------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $37,459 $(3,406) $34,053
------- -------- -------
------- -------- -------
</TABLE>
<PAGE>
U.S. INDUSTRIAL SERVICES, INC. AND J.L. MANTA, INC.
PROFORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
U.S.
INDUSTRIAL PRO FORMA CONSOLIDATED
SERVICES, INC. ADJUSTMENTS PRO FORMA
------------- ----------- ------------
<S> <C> <C> <C>
REVENUE $58,397 $(46,520) 2 $11,877
------- -------- -------
COSTS AND EXPENSES
Cost of revenue 47,050 (39,231) 2 7,819
Selling, general and administrative expense 10,150 (3,788) 2 6,153
(209) 5
Other (income), expense, net 669 (354) 2 (52)
(367) 5
------- -------- -------
57,869 (43,949) 13,920
------- -------- -------
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) 528 (2,571) (2,043)
INCOME TAX EXPENSE (BENEFIT) (3,809) 3,809 2 0
------- -------- -------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 4,337 (6,380) (2,043)
DISCONTINUED OPERATIONS 506 506
------- -------- -------
NET INCOME (LOSS) $ 4,843 $ (6,380) $(1,537)
------- -------- -------
------- -------- -------
Net income (loss) per share from continuing operations 1.23 (0.58)
Weighted average number of common
shares outstanding 3,514,004 3,514,004
</TABLE>
<PAGE>
U.S. INDUSTRIAL SERVICES, INC. AND J.L. MANTA, INC.
NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
ASSUMPTIONS:
1 Proforma statements have been prepared based on fiscal year ending
September 30, 1998 audited financial statements for U.S. Industrial
Services, Inc.
2 To records proceeds of $5 million and $18 million of notes
receivable for the sale of certain Manta assets and liabilities
from Kenny Industrial Services LLC
3 To reverse out certain Manta assets and liabilities sold
4 To reverse out debt incurred to finance the original Manta
acquisition, retention bonus, and the related goodwill
5 Non-recurring costs as follows have been elmininated from the
Company's financial statements:
<TABLE>
<CAPTION>
<S> <C>
Selling, general and administrative expense:
Goodwill amortization 71
Retention bonus amortization 138
---
209
---
Other (income), expense, net:
Interest expense - former Manta stockholders 98
Interest expense - convertible promissory note 269
---
367
---
</TABLE>
<PAGE>
(c) Exhibits
2. Amended and Restated Asset Purchase Agreement, dated as of
November 30, 1998, among Kenny Industrial Services, L.L.C.,
J. L. Manta, Inc. and U.S. Industrial Services, Inc.
99(a). Press Release dated December 3, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. INDUSTRIAL SERVICES, INC.
(Registrant)
Dated: December 16, 1998 By: /s/ C. Thomas Mulligan
------------------------------------
C. Thomas Mulligan
Chief Financial Officer and General Counsel
<PAGE>
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
By and Among
KENNY INDUSTRIAL SERVICES, L.L.C.,
J.L. MANTA, INC.,
and
U.S. INDUSTRIAL SERVICES, INC.
dated as of
November 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Basic Transaction.. . . . . . . . . . . . . . . . . . . . . . .7
(a) Purchase and Sale of Assets . . . . . . . . . . . . . . . . . .7
(b) Assumption of Liabilities . . . . . . . . . . . . . . . . . . .7
(c) Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . .7
(d) The Closing . . . . . . . . . . . . . . . . . . . . . . . . . .8
(e) Deliveries at the Closing . . . . . . . . . . . . . . . . . . .8
(f) Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . .8
(g) Adjustment to Purchase Price. . . . . . . . . . . . . . . . . .9
(h) Consent of Stockholders . . . . . . . . . . . . . . . . . . . .9
(i) Assumption of Employee Benefit Plans. . . . . . . . . . . . . 10
(j) Withdrawal Liability. . . . . . . . . . . . . . . . . . . . . 10
Section 3. Representations and Warranties of the Seller and the
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Organization; Qualification and Corporate Power . . . . . . . 10
(b) Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Noncontravention. . . . . . . . . . . . . . . . . . . . . . . 11
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Subsidiaries; Joint Ventures. . . . . . . . . . . . . . . . . 12
(g) Financial Statements. . . . . . . . . . . . . . . . . . . . . 12
(h) Events Subsequent to Most Recent Fiscal Year End. . . . . . . 12
(i) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 15
(j) Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . 15
(k) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Real Property . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Intellectual Property . . . . . . . . . . . . . . . . . . . . 18
(n) Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . 19
(o) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(p) Notes and Accounts Receivable . . . . . . . . . . . . . . . . 21
(q) Unbilled Revenues . . . . . . . . . . . . . . . . . . . . . . 21
(r) Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . 21
(s) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(t) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
CONTINUED
<TABLE>
<S> <C>
(u) Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(v) Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(w) Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(x) Collective Bargaining Agreements. . . . . . . . . . . . . . . 23
(y) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 23
(z) Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . 25
(aa) Environment, Health, and Safety.. . . . . . . . . . . . . . . 25
(bb) Certain Business Relationships with the Seller. . . . . . . . 26
(cc) Conformance with Standard of Care . . . . . . . . . . . . . . 26
(dd) Relationships with Customers. . . . . . . . . . . . . . . . . 26
(ee) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 27
(ff) Claims with Respect to Stock Purchase . . . . . . . . . . . . 27
(gg) Board Approval. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4. Representations and Warranties of the Buyer . . . . . . . . . 27
(a) Organization of the Buyer . . . . . . . . . . . . . . . . . . 27
(b) Authorization of Transaction. . . . . . . . . . . . . . . . . 27
(c) Noncontravention. . . . . . . . . . . . . . . . . . . . . . . 27
(d) Hart-Scott-Rodino Filing . . . . . . . . . . . . . . . . . . 28
(e) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . 28
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Notices and Consents. . . . . . . . . . . . . . . . . . . . . 28
(c) Operation of Business . . . . . . . . . . . . . . . . . . . . 28
(d) Preservation of Business. . . . . . . . . . . . . . . . . . . 28
(e) Full Access . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Notice of Developments. . . . . . . . . . . . . . . . . . . . 29
(g) Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Transition. . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6. Post-Closing Covenants. . . . . . . . . . . . . . . . . . . . 29
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Litigation Support. . . . . . . . . . . . . . . . . . . . . . 29
(c) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
CONTINUED
<TABLE>
<S> <C>
(f) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Title Insurance . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7. Conditions to Obligation to Close . . . . . . . . . . . . . . 30
(a) Conditions to Obligation of the Buyer . . . . . . . . . . . . 30
(b) Conditions to Obligation of the Seller. . . . . . . . . . . . 31
Section 8. Survival and Indemnification. . . . . . . . . . . . . . . . . 32
(a) Survival of Representations, Warranties and Covenants . . . . 32
(b) Indemnification Provisions for the Benefit of the Buyer . . . 32
(c) Indemnification Provisions for the Benefit of the Seller. . . 33
(d) Matters Involving Third Parties . . . . . . . . . . . . . . . 33
(e) Adverse Consequences. . . . . . . . . . . . . . . . . . . . . 34
(f) Recoupment. . . . . . . . . . . . . . . . . . . . . . . . . . 34
(g) Indemnification Payments. . . . . . . . . . . . . . . . . . . 34
(h) Other Indemnification Provisions. . . . . . . . . . . . . . . 34
Section 9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Termination of Agreement. . . . . . . . . . . . . . . . . . . 35
(b) Effect of Termination . . . . . . . . . . . . . . . . . . . . 35
(c) Specific Performance. . . . . . . . . . . . . . . . . . . . . 35
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Press Releases and Public Announcements . . . . . . . . . . . 35
(b) No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 35
(c) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 35
(d) Succession and Assignment . . . . . . . . . . . . . . . . . . 36
(e) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 36
(f) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(g) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(h) Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . 37
(i) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . 37
(j) Severability. . . . . . . . . . . . . . . . . . . . . . . . . 37
(k) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(l) Construction. . . . . . . . . . . . . . . . . . . . . . . . . 38
(m) Incorporation of Exhibits and Schedules . . . . . . . . . . . 38
(n) Specific Performance. . . . . . . . . . . . . . . . . . . . . 38
(o) Submission to Jurisdiction. . . . . . . . . . . . . . . . . . 38
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit A - Form of First Promissory Note
Exhibit B - Form of Second Promissory Note
Exhibit C - Form of Third Promissory Note
Exhibit D - Form of Fourth Promissory Note
Exhibit E - Form of Assignment
Exhibit F - Form of Assumption
Exhibit G - Stockholders Consent
Exhibit H - Shareholder Consent
Exhibit I - Financial Statements
Exhibit J - Form of Legal Opinion of Counsel to Seller
Exhibit K- Form of Employee Consent
SCHEDULE 1
DISCLOSURE SCHEDULE
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
Agreement entered into as of November 30, 1998 (the "AGREEMENT"), by and
among Kenny Industrial Services, L.L.C., a Delaware limited liability company
(the "BUYER"), J.L. Manta, Inc., an Illinois corporation (the "SELLER"), and
U.S. Industrial Services, Inc., a Delaware corporation, (the "STOCKHOLDER").
The Buyer, the Seller and the Stockholder are referred to collectively herein
as the "PARTIES" and individually referred to as a "PARTY."
This Agreement amends and restates the Asset Purchase Agreement dated
November 23, 1998 by and among the Buyer, the Seller and the Stockholder.
This Agreement contemplates a transaction in which the Buyer will
purchase substantially all of the assets (and assume certain of the
liabilities) of the Seller in return for cash and promissory notes.
Now, therefore, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
Section 1. DEFINITIONS.
"ACCOUNTANT" shall have the meaning set forth in Section 2(g)(ii) below.
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Seller, INCLUDING all of its (a) tangible personal property
(such as inventories of raw materials, supplies, packaging goods, and
finished goods, equipment, manufactured and purchased parts, machinery, goods
in process, furniture, automobiles, trucks, tractors, trailers, tools, jigs,
and dies), (b) agreements, contracts, indentures, mortgages, instruments,
Security Interests, guaranties, other similar arrangements, and rights
thereunder, (c) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, exemptions, and similar rights
obtained from governments and governmental agencies (the "PERMITS"), (d)
Intellectual Property (including but not limited to the names "J.L. Manta"
and "HMS Services" and all variations thereon), goodwill associated
therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions, (e) real property, fixtures, improvements, and fittings
thereon, leaseholds and subleaseholds therein, and easements, rights-of-way,
and other appurtenants thereto (such as appurtenant rights in and to public
streets), (f) leases, subleases, and rights thereunder, (g) prepayments,
prepaid expenses, and deferred items, claims, deposits, refunds, causes of
action, choses in action, rights of recovery, rights of set off, and rights
of recoupment (excluding any such item relating to the payment of Taxes), (h)
accounts, notes, and other receivables (including all receivables of P.W.
Stevens, St. Louis), (i) securities, (j) books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials, (k) Cash, including
any proceeds from the sale of the real property at 7525 South Chicago Avenue,
Chicago, Illinois, (l) all rights of Stockholder under the Stock Purchase
Agreement (as defined below), and (m) all interest in United Trades Insurance
Company, a Cayman Islands exempt stock insurance company; PROVIDED, HOWEVER,
that the Acquired Assets shall not include (i) the corporate charter,
qualifications to conduct business as a foreign corporation, arrangements
with registered agents relating to foreign qualifications, taxpayer, and
other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of the Seller as a corporation, (ii) any of the
rights of the Seller under this Agreement, or (iii) those certain obligations
not to exceed $2,800,000 owing from the Stockholder to the Seller (the "USIS
OBLIGATIONS").
<PAGE>
"ADJUSTED PURCHASE PRICE" shall have the meaning set forth in Section
2(c) below.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunction, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts
paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses,
and fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth in the preface above.
"ASSOCIATE" when used to indicate a relationship with any person means
(i) any corporation, partnership, limited liability company or other entity
of which such person is an officer, manager, member or partner or is,
directly or indirectly, the beneficial owner of any class of equity
securities, partnership interests or membership interests; or (ii) any trust
or other estate in which such person has a beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity; or (iii)
any relative or spouse of such person, or any relative of such spouse; or
(iv) any corporation, partnership, limited liability company of which any
relative or spouse of such person, or any relative of such spouse, is
an officer, manager, member or partner or is, directly or indirectly, the
beneficial owner of any class of equity securities, partnership interests or
membership interests; or (v) any trust or other estate in which any relative
or spouse of such person, or any relative of such spouse, has a beneficial
interest or as to which such person serves as a trustee or in a similar
fiduciary capacity.
"ASSUMED LIABILITIES" means (a) all trade account payables and accrued
expenses of the Seller which arose in the ordinary course of business and are
set forth on the Most Recent Balance Sheet, (b) all trade account payables
and accrued expenses of the Seller which have arisen after the Most Recent
Balance Sheet in the ordinary course of business, (c) all obligations of the
Seller under the agreements, contracts, leases, licenses, and other
arrangements referred to in the definition of Acquired Assets, either (i) to
furnish goods, services, and other non-Cash benefits to another party after
the Closing or (ii) to pay for goods, services, and other non-Cash benefits
that another party will furnish to it after the Closing, (d) all lease
obligations of the Seller not to exceed $3,500,000 under the Equipment Lease
Agreement dated August 14, 1998 by and between LaSalle National Leasing
Corporation and the Seller, (e) all indebtedness of the Seller not to exceed
$4,900,000 under the Credit Agreement dated February 2, 1998 by and between
the Seller and LaSalle National Bank, (f) all Liabilities and obligations of
the Seller under its Employee Benefit Plans, (g) any obligations under the
collective bargaining agreements specifically listed in Section 3(x) of the
Disclosure Schedule and obligations that are contemplated by any successor
clause in such collective bargaining agreements, and (h) all other
Liabilities and obligations of the Seller set forth on Schedule 1 attached
hereto under an express statement to the effect that the definition of
Assumed Liabilities will include the Liabilities and obligations so
disclosed; PROVIDED, HOWEVER, that the Assumed Liabilities shall not include
(i) any Liability of the Seller for unpaid Taxes or for income, transfer,
sales, use, and other Taxes arising in connection with the consummation of
the transactions contemplated hereby, (ii) any obligation of the Seller to
indemnify any Person (including the Stockholder) by reason of the fact that
such Person was a director, officer, employee, or agent of the Seller or was
serving at the request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such indemnification
is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or
otherwise), (iii) any
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Liability of the Seller for costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, or (iv) any
Liability or obligation of the Seller under this Agreement.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or which is reasonably likely to
form the basis for any specified consequence.
"BUYER" has the meaning set forth in the preface above.
"BUYER'S TRANSACTION DOCUMENTS" means this Agreement, the Promissory
Notes, and any and all other documents required to be executed and delivered
by the Buyer at the Closing.
"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"CLOSING" has the meaning set forth in Section 2(d) below.
"CLOSING DATE" has the meaning set forth in Section 2(d) below.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in Section 2(g)
below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the business
and affairs of the Seller which the Seller currently regards or treats as
confidential and proprietary and that is not generally available to the
public as of the date of this Agreement.
"CONTRACT STATEMENT" has the meaning set forth in Section 3(o)(xiii)
below.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth in Code
Sec. 1563.
"CUSTOMER CONTRACTS" means all of the Seller's contracts, purchase
orders, customer accounts, time and material accounts, and other rights to
provide services to customers of the Seller, whether oral or written, in
force and effect as of the Closing Date, other than (i) fixed price or
lump-sum contracts and agreements which provide for lump-sum or fixed-price
payments to the Seller of less than $300,000, or (ii) "time and materials"
contracts and agreements in respect of which the Seller has earned revenue of
less than $300,000 for the 12 months prior to the date hereof or in respect
of which the Seller is anticipated to earn revenue of less than $300,000 for
the 12 months prior to the Closing Date.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below.
"DRAFT CLOSING DATE BALANCE SHEET" has the meaning set forth in Section
2(g) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(b) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan, or (e) any bonus,
incentive, severance, stock option, stock purchase, short-
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term disability plan or other material fringe benefit plan, program or
arrangement, including policies concerning holidays, vacations and salary
continuation during short absences for illness or otherwise.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENCUMBRANCES" means any liens, charges, mortgages, suretyships,
attachments, encumbrances, pledges, Security Interests, Taxes, options,
warrants, purchase rights, contracts, commitments, equities, demands, claims,
exceptions, title defects, licenses, conditions, equitable interests,
preemptive rights, rights of first refusal, restrictions of any kind.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance
Control Act, the Emergency Planning and Community Right to Know Act of 1986,
the Hazardous Material Transportation Agreement, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees and rulings promulgated or entered thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning
pollution or protection of the environment, public health and safety, or
employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials (including petroleum products and
asbestos) or wastes into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes ("HAZARDOUS SUBSTANCES").
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESTIMATED STOCKHOLDER EQUITY" shall mean the Seller's good faith
estimate of the Stockholder Equity as of the Closing Date as set forth on a
certificate signed by an officer of the Seller delivered to the Buyer at
least two business days prior to the Closing Date.
"FINANCIAL STATEMENT" has the meaning set forth in Section 3(g) below.
"FIRST PROMISSORY NOTE" has the meaning set forth in Section 2(c) below.
"FORMER STOCKHOLDERS" has the meaning set forth in Section 3(ff) below.
"FOURTH PROMISSORY NOTE" has the meaning set forth in Section 2(c) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HAZARDOUS SUBSTANCES" has the meaning set forth in the definition of
Environmental, Health, and Safety Laws.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(d) below.
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"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names
(including but not limited to the names "J.L. Manta" and "HMS Services" and
all variations thereon), together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and
all applications, registrations, and renewals in connection therewith, (e)
all trade secrets and confidential business information (including customer
and supplier lists, ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, pricing and cost
information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"JOINT VENTURE" has the meaning set forth in Section 3(f)(ii) below.
"JOINT VENTURE AGREEMENTS" has the meaning set forth in Section 3(f)(ii)
below.
"LANDLORD" has the meaning set forth in Section 5(l)(i) below.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, financial condition, operations, results of operations or future
prospects of the Seller.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
3(g) below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 3(g)
below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 3(g)
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"ORDINARY COURSE CONTRACTS" has the meaning set forth in Section
3(h)(ii) below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PARTY" and "PARTIES" have the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITS" has the meaning set forth in the definition of Acquired Assets.
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"PERMITTED ENCUMBRANCES" means (i) liens for Taxes, assessments and
other governmental charges not yet due and payable, or being contested in
good faith by permissible proceedings and set forth in Section 3(e) and
Section 3(l) of the Disclosure Schedule; (ii) customary retention of title
provisions contained in contracts with suppliers for purchase of goods or
equipment entered into in the Ordinary Course of Business pending payment for
such goods or equipment in accordance with customary payment terms; and (iii)
mechanics', warehousemen's, landlords' and other similar statutory liens
incurred in the Ordinary Course of Business; provided, however, that such
statutory liens have not resulted from any failure to pay amounts due and
owing in the Ordinary Course of Business; (iv) easements, rights-of-way,
covenants, conditions and other restrictions which do not materially
interfere with the present use, occupancy or operation of any real property
owned or leased by the Seller; (v) roads and highways, spurs and switch
tracts, and rights-of-way of any railroad serving any real property owned by
Seller; (vi) planning, zoning, business and other similar governmental
regulations; (vii) unrecorded easements or rights-of-way for any utilities
providing utility services to any real property owned by the Seller;
(viii) encroachments which do not materially interfere with the use,
occupancy or operation of any real property owned by the Seller and
which are disclosed on the survey for which affirmative title insurance
coverage against removal in form reasonably satisfactory to Buyer is obtained
at Seller's expense; (ix) all matters disclosed on the survey; and (x) the
mortgage in favor of Northern Indiana Public Service Company in the original
principal amount of $280,000. Set forth in Section 3(e) of the Disclosure
Schedule is a list or copies of such Permitted Encumbrances.
"PERSON" means an individual, a general or limited partnership, a
limited liability company, a limited liability partnership, a corporation
(including any non-profit corporation), an association, a joint stock
company, a trust, a joint venture, an estate, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"PRELIMINARY PURCHASE PRICE" has the meaning set forth in Section 2(c)
below.
"PROMISSORY NOTES" has the meaning set forth in Section 2(c) below.
"PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
"REPRESENTATIVES" means directors, officers, employees, partners,
affiliates, agents, advisors, or representatives of a Person.
"REQUIRED CONSENTS" means the consents and approvals identified in
Section 5(b) of the Disclosure Schedule. The Seller will use its best
efforts to receive and complete the Required Consents prior to Closing.
After Closing, the Seller will use its reasonable best efforts to assist
Buyer in securing the Required Consents that Buyer has not received before
the Closing.
"SECOND PROMISSORY NOTE" has the meaning set forth in Section 2(c) below.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money, and (e) Permitted
Encumbrances.
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"SELLER" has the meaning set forth in the preface above.
"SELLER'S TRANSACTION DOCUMENTS" means this Agreement and any and all
other documents required to be executed and delivered by the Seller at the
Closing.
"SHARE" means any share of the common stock, no par value per share, of
the Seller.
"SHAREHOLDER CONSENT" has the meaning set forth in Section 2(h).
"STOCKHOLDER" has the meaning set forth in the preface above.
"STOCKHOLDER EQUITY" means the stockholder equity of the Seller as
computed in accordance with GAAP, provided the following items shall be
excluded from the definition of Stockholder Equity: all prepaid expenses, the
USIS Obligations, and all goodwill.
"STOCKHOLDERS CONSENT" has the meaning set forth in Section 2(h).
"STOCK PURCHASE AGREEMENT" has the meaning set forth in Section 3(ff)
below.
"SUBCONTRACT" means any subcontracts, agreements, contracts, or
commitments with any subcontractors, vendors or suppliers of any labor or
material with respect to any project which is the subject of any of the
Customer Contracts, other than those that (i) can be terminated, without any
cost or liability to the Seller, upon 30 days or less notice, or (ii) involve
less than $10,000 when aggregated with all other such subcontracts,
agreements, contracts or commitments.
"SUBCONTRACT STATEMENT" has the meaning set forth in Section 3(o)(xiv)
below.
"SUBSIDIARY" means any corporation or other form of business
organization with respect to which a specified Person (or a Subsidiary
thereof) owns a majority of the common stock or other ownership interest or
has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors of other Person entitled to direct the management
and control of such business organization.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including
interest and penalty, or additions thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(d) below.
"THIRD PROMISSORY NOTE" has the meaning set forth in Section 2(c) below.
"USIS OBLIGATIONS" has the meaning set forth in the definition of
Acquired Assets.
"WARN" has the meaning set forth in Section 3(w) below.
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Section 2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller,
and the Seller agrees to sell, transfer, convey, and deliver to the Buyer,
all of the Acquired Assets at the Closing free and clear of any Security
Interests for the consideration with respect to the Acquired Assets
specified below in this Section 2.
(b) ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing. The Buyer
will not assume or have any responsibility, however, with respect to any
other obligation or Liability of the Seller not included within the
definition of Assumed Liabilities.
(c) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the
Closing an amount equal to $23,000,000 less the amount, if any, by which
the Estimated Stockholders Equity is less than $8,000,000 (the "PRELIMINARY
PURCHASE PRICE"). The Preliminary Purchase Price shall be paid by the
Buyer as follows: (i) an amount equal to the Preliminary Purchase Price
less $20,000,000 shall be paid to the Seller by delivery of cash payable by
wire transfer or delivery of other immediately available funds; (ii) a
secured subordinated promissory note with a maturity date on the first
anniversary of the issuance date of the promissory note (the "First
Promissory Note") in the form attached hereto as Exhibit A in the aggregate
principal amount of $1,000,000 shall be delivered to the Seller, (iii) a
secured subordinated promissory note, $1,000,000 of which will mature on
the second anniversary of the issuance date of the promissory note,
$1,000,000 will mature on the third anniversary of the issuance date of the
promissory note, and $1,000,000 will mature on the fourth anniversary of
the issuance date of the promissory note (the "SECOND PROMISSORY NOTE") in
the form attached hereto as Exhibit B in the aggregate principal amount of
$3,000,000 shall be delivered to the Seller, (iv) a secured subordinated
promissory note with a maturity date on the fourth anniversary of the
issuance date of the promissory note (the "THIRD PROMISSORY NOTE") in the
form attached hereto as Exhibit C in the aggregate principal amount of
$1,000,000 shall be delivered to the Seller, and (v) a secured promissory
note with a maturity date on or before December 15, 1998 (the "FOURTH
PROMISSORY NOTE") in the form attached hereto as Exhibit D in the aggregate
principal amount of $15,000,000 shall be delivered to the Seller. The
First, Second, Third, and Fourth Promissory Notes will collectively be
referred to as the "PROMISSORY NOTES". The Preliminary Purchase Price will
be subject to post-Closing adjustment, as set forth in Section 2(g) below
and, as so adjusted is referred to herein as the "ADJUSTED PURCHASE PRICE",
and to additional post-Closing adjustment, and, as so additionally
adjusted, is referred to herein as the "PURCHASE PRICE".
(d) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of
McDermott, Will & Emery, 227 West Monroe Street, Chicago Illinois 60606,
commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the Closing
itself) or such other date as the Parties may mutually determine; provided,
however, that the Closing Date shall be no later than November 30, 1998
(the "CLOSING DATE").
(e) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyer the
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various certificates, instruments, and documents referred to in Section
6(a) below; (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 6(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and
deliver to the Buyer (A) an assignment in the form attached hereto as
Exhibit E, (B) for real property being sold and transferred to Buyer,
Seller shall deliver to Buyer a recordable special warranty deed and
such other instruments related thereto in order to cause such deed to be
accepted for recording by the Lake County Recorder of Deeds, and (C) for
Acquired Assets other than real property referred to in (B), such other
instruments of sale, transfer, conveyance, and assignment as the Buyer
and its counsel may request; (iv) the Buyer will execute, acknowledge
(if appropriate), and deliver to the Seller (A) an assumption in the
form attached hereto as Exhibit F, (B) such other instruments of
assumption as the Seller and its counsel may request and (C) all
collateral documents necessary to perfect the Seller's security interest
under the First, Second, Third and Fourth Promissory Notes, including
without limitation mortgages, security agreements, financing statements,
and collateral assignments; and (v) the Buyer will deliver to the Seller
the consideration specified in Section 2(c) above.
(f) ALLOCATION. The Parties agree to allocate the Preliminary
Purchase Price (and all other capitalizable costs) among the Acquired
Assets for all purposes (including financial accounting and tax purposes)
in accordance with an allocation schedule in form and substance to be
mutually agreed upon by the parties and delivered prior to the filing of
Buyer's Federal income tax return for the year 1998, as amended to reflect
any adjustment set forth in Section 2(g), Section 8, and Section 9 below.
(g) ADJUSTMENT TO PURCHASE PRICE.
(i) Within 60 days after the Closing Date, the Seller will
prepare and deliver to the Buyer (A) a draft consolidated balance
sheet (the "DRAFT CLOSING DATE BALANCE SHEET") for the Acquired
Assets and the Assumed Liabilities as of the close of business on
the Closing Date, and (B) a computation and determination of the
Adjusted Purchase Price in accordance with the provisions of this
Section 2(g). The Seller will prepare the Draft Closing Date
Balance Sheet in accordance with GAAP.
(ii) If the Buyer has any objections to the Draft Closing
Date Balance Sheet, it will deliver a detailed statement describing
its objections to the Buyer within 30 days after receiving the
Draft Closing Date Balance Sheet. The Buyer and the Seller will
use reasonable efforts to resolve any such objections themselves.
If the Parties do not obtain a final resolution within 30 days
after the Seller has received the statement of objections, however,
the Buyer and the Seller will select an accounting firm mutually
acceptable to them to resolve any remaining objections. If the
Buyer and the Seller are unable to agree on the choice of an
accounting firm, they will select a nationally recognized
accounting firm by lot (the "ACCOUNTANT"), which shall be jointly
instructed by the Buyer and the Seller to determine the Stockholder
Equity and the Adjusted Purchase Price. The Accountant shall
deliver to each of the Buyer and Seller its determinations within
30 days after receiving the joint instructions from the Buyer and
the Seller, and the determinations of the Accountant shall be set
forth in writing and will be conclusive and binding upon the
Parties. The expenses of the Accountant shall be borne equally by
the Buyer and the Seller. The Seller will give the Buyer the Draft
Closing Date Balance Sheet, revised to reflect the Accountant's
determinations. The "CLOSING DATE BALANCE SHEET" shall mean the
Draft Closing Date Balance Sheet, together with any revisions
thereto pursuant to this Section 2(g)(ii), including the
determination of the Accountant. The
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"ADJUSTED PURCHASE PRICE" shall mean the Preliminary Purchase
Price, together with any revisions thereto pursuant to this Section
2(g)(ii), including the determination of the Accountant.
(iii) The Seller will make the work papers and back up
materials used in preparing the Draft Closing Date Balance Sheet
available to the Buyer and its accountants and other
representatives at reasonable times and upon reasonable notice at
any time during (A) the preparation by the Buyer of the Draft
Closing Date Balance Sheet, (B) the review by the Buyer of the
Draft Closing Date Balance Sheet, and (C) the resolution by the
Parties of any objection thereto.
(iv) The Adjusted Purchase Price will be determined by:
(A) reducing the Preliminary Purchase Price by the
amount, if any, by which the Estimated Stockholder Equity
exceeds the Stockholder Equity as of the close of business on
the Closing Date; and
(B) increasing the Preliminary Purchase Price by
the amount, if any, by which the Estimated Stockholder Equity
is less than the Stockholder Equity as of the close of
business on the Closing Date; provided that the Purchase Price
will not exceed $23,000,000.
(h) CONSENT OF STOCKHOLDERS. Simultaneously with the execution and
delivery of this Agreement, (i) American Eco Corporation and U.S.I.S.
Acquisition, L.L.C. have executed a consent to the execution of this
Agreement and the consummation of the transactions contemplated hereby, a
form of which is attached hereto as Exhibit G (the "STOCKHOLDERS CONSENT")
and (ii) U.S. Industrial Services, Inc. has executed a consent to the
execution of this Agreement and the consummation of the transactions
contemplated hereby, a form of which is attached hereto as Exhibit H (the
"SHAREHOLDER CONSENT").
(i) ASSUMPTION OF EMPLOYEE BENEFIT PLANS. Buyer agrees that it
shall, effective on the Closing Date, assume all Employee Benefit Plans
maintained by the Seller, and all duties, rights and obligations
thereunder. Buyer also agrees to assume all rights and obligations as a
participating employer in the union plans set forth in Section 3(y) of the
Disclosure Schedule, effective as of the Closing Date. Seller and Buyer
agree that they shall cooperate in resolving any and all transitional
issues which may arise in connection with the assumption of and
participation in such plans by Buyer, including, without limitation, the
crediting of past service, payment of contributions, compliance testing,
and the filing of reports with governmental agencies.
(j) WITHDRAWAL LIABILITY. With respect to each Multiemployer Plan
listed in Section 3(y) of the Disclosure Schedule, Buyer agrees that it
will be obligated to contribute to all such Plans, on and after the Closing
Date, with respect to the Seller's operations, for substantially the same
number of contribution base units for which Seller had an obligation to
contribute prior to the Closing Date. Buyer and Seller further agree that
if this transaction results in an assessment of withdrawal liability
against the Seller with respect to any Multiemployer Plan, they shall take
any and all actions which are necessary to satisfy the "sale of asset
exception" under Section 4204 of ERISA, including, without limitation, the
posting of a bond (or bonds) by the Buyer with the expense to be split
equally by Buyer and Seller in accordance with ERISA Section 4204(a)(1)(C)
within a reasonable period of time after the Closing Date. In connection
with the foregoing, Seller agrees that it shall remain secondarily liable
in accordance with ERISA Section
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4204(a)(1)(C) for any withdrawal liability it would have had to a
Multiemployer Plan with respect to its operations if the Buyer incurs a
complete or partial withdrawal with respect to a Multiemployer Plan
within the first five plan years of such plan beginning after the
Closing Date and Buyer's withdrawal liability is not paid. If Seller
were to withdraw as of the Closing Date from each of the Multiemployer
Plans listed in Section 3(y) of the Disclosure Schedule in a complete
withdrawal under Section 4203 of ERISA, Seller's aggregate withdrawal
liability to such plans under Subtitle E of ERISA would not exceed an
amount set forth on the Most Recent Balance Sheet, except where such
amount would not have a Material Adverse Effect.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
STOCKHOLDER. Subject to the limitations set forth in the last sentence of
Section 8(a) hereof, the Seller and the Stockholder jointly and severally
represent and warrant that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3), except as set forth in the disclosure schedule accompanying this
Agreement (the "DISCLOSURE SCHEDULE"). A disclosure in the Disclosure
Schedule with respect to a particular lettered or numbered paragraph in this
Section 3 shall not be deemed to be an adequate disclosure or exception with
respect to any representation or warranty of the Seller and Stockholder
contained in any other lettered or numbered paragraph in this Section 3
unless such other lettered or numbered paragraph is specifically referenced
in the disclosure. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 3.
(a) ORGANIZATION; QUALIFICATION AND CORPORATE POWER. Each of the
Seller and the Stockholder is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Seller is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification
is required, except where the failure to so qualify would not have a
Material Adverse Effect. Each of the Seller and the Stockholder has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and each of the other Seller's
Transaction Documents and to perform its obligations hereunder and
thereunder, as the case may be. Without limiting the generality of the
foregoing, each of the Stockholders and the board of directors of the
Seller has duly authorized the execution, delivery, and performance of this
Agreement by the Seller. This Agreement and each of the Seller's
Transaction Documents constitutes the valid and legally binding obligation
of the Seller and the Stockholder, as the case may be, enforceable in
accordance with its terms and conditions. The Seller has full corporate
power and authority and all licenses, permits, and authorizations necessary
to carry on the businesses in which it is engaged and in which it presently
proposes to engage and to own and use the properties owned and used by it,
except for such licenses, permits and authorizations where the failure to
possess or to have obtained will not have a Material Adverse Effect.
Section 3(a) of the Disclosure Schedule lists the directors and officers of
the Seller. The Seller has delivered to the Buyer correct and complete
copies of the certificate of incorporation and bylaws of the Seller (as
amended to date).
(b) CAPITALIZATION.
(i) The Stockholder owns 100% of the issued and outstanding
stock of the Seller.
(ii) American Eco Corporation and U.S.I.S. Acquisition, L.L.C.
together own more than 50% of the issued and outstanding stock of the
Stockholder.
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(c) NONCONTRAVENTION. Except as otherwise set forth in Section 3(c)
of the Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either the Seller or the
Stockholder is subject or any provision of the charter or bylaws of either
the Seller or the Stockholder or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either the Seller or the Stockholder is a party or by
which it is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets), except in
the case of each of the immediately preceding clauses (A) and (B), for
such violations, conflicts, defaults or breaches that will not,
individually or in the aggregate, result in any Liability to the Company.
Neither the Seller nor the Stockholder needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement, except as set forth on
Section 3(c) of the Disclosure Schedule.
(d) BROKERS' FEES. Neither the Seller nor the Stockholder has any
Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Buyer may be liable.
(e) TITLE TO ASSETS . The Seller has good and marketable title to,
or a valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Encumbrances, except
for Permitted Encumbrances and properties and assets that are either (i)
not shown on the Most Recent Balance Sheet and are not material or
necessary for the operation of the business and operations of the Seller or
(ii) disposed of in the Ordinary Course of Business since the date of such
Most Recent Balance Sheet.
(f) SUBSIDIARIES; JOINT VENTURES.
(i) The Seller does not have any Subsidiaries.
(ii) Section 3(f) of the Disclosure Schedule sets forth a
list of each entity in which the Seller holds or has the right to
acquire five percent (5%) or more of the equity, partnership, or
other interest of such entity (each such entity, except
Subsidiaries, being referred to as a "JOINT VENTURE") and a list of
all material agreements relating thereto to which the Seller is a
party ("JOINT VENTURE AGREEMENTS"). The Seller and, to the
Seller's knowledge, each counterpart, is in compliance in all
material respects with all of the terms, conditions, and
obligations binding upon each of them in respect of each of the
Joint Venture Agreements, and as of the date hereof none of the
respective Joint Venture Agreements has been terminated. The Seller
has delivered true and correct copies of each Joint Venture
Agreement, as amended, modified or supplemented, to the Buyer and
all waivers executed thereunder. The Seller's interest in each of
the Joint Ventures is directly owned by the Seller as indicated on
the Disclosure Schedule and, except for any restriction on transfer
contained in the Joint Venture Agreements, is free and clear of any
material Lien or any other limitation or restriction (including any
restriction on the right to vote, if any, sell, or otherwise
dispose of such interest). There are no outstanding obligations of
the Seller to fund or make a further investment in any Joint
Venture, other
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than those that are described in Section 3(f) of the Disclosure
Schedule.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit I are the
following financial statements (collectively, the "FINANCIAL STATEMENTS"):
(i) audited balance sheets and statements of income, retained earnings, and
cash flows as of and for (A) the fiscal years ended June 30, 1995, June 30,
1996, and June 30, 1997 and (B) the four months ended October 31, 1997 (the
"MOST RECENT FISCAL YEAR END") for the Seller; and (ii) unaudited balance
sheet and statements of income, retained earnings, and cash flows (the
"MOST RECENT FINANCIAL STATEMENTS") as of and for the fiscal year ended
September 30, 1998 (the "MOST RECENT FISCAL MONTH END") for the Seller.
The Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the
Seller as of such dates and the results of operations of the Seller for
such periods, are correct and complete, and are consistent with the books
and records of the Seller (which books and records are correct and complete
in all material respects).
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in
the business, financial condition, operations, results of operations, or
future prospects of the Seller that has or would have a Material Adverse
Effect. Without limiting the generality of the foregoing, since that date
and except either (A) as expressly required hereunder or expressly required
under any of the other Seller's Transaction Documents, or (B) as otherwise
set forth in Section 3(h) of the Disclosure Schedule:
(i) the Seller has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for
a fair consideration in the Ordinary Course of Business;
(ii) the Seller has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either (x) involving more than
$500,000, individually, for the provision of labor, services or
materials for customers entered into in the Ordinary Course of
Business ("ORDINARY COURSE CONTRACTS"); (y) involving more than
$500,000, individually or in the aggregate, excluding all Ordinary
Course Contracts; or (z) outside of the Ordinary Course of
Business;
(iii) no party (including the Seller) has accelerated,
terminated (except with respect to those agreements, contracts,
leases or licenses which have expired by their express terms),
modified, or canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses)
involving more than $500,000, individually or in the aggregate, to
which the Seller is a party or by which it is bound;
(iv) the Seller has not imposed any Security Interest upon
any of its assets, tangible or intangible, other than in connection
with the acquisition of machinery and equipment in the Ordinary
Course of Business;
(v) the Seller has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$500,000, individually or in the aggregate, or outside the Ordinary
Course of Business;
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(vi) the Seller has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $15,000 or outside the
Ordinary Course of Business;
(vii) the Seller has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation
either involving more than $15,000, individually or in the
aggregate, other than in connection with the acquisition of
machinery and equipment in the Ordinary Course of Business;
(viii) the Seller has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course
of Business;
(ix) the Seller has not canceled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either (A) involving the Seller, the Seller's directors or
officers, any Associate of the Seller, any Associate of the
Seller's directors or officers, or any of the Seller Receivables,
or (B) outside the Ordinary Course of Business;
(x) the Seller has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
articles of incorporation or bylaws of the Seller;
(xii) the Seller has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(xiii) the Seller has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) the Seller has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to any
of its material property in excess of $500,000, individually or in
the aggregate;
(xv) the Seller has not made any loan to, entered into any
incentive compensation or bonus agreement or program, distributed
or agreed to distribute any funds outside of the Ordinary Course of
Business to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(xvi) except as expressly provided in this Agreement or any
of the other Seller's Transaction Documents, the Seller has not
made any loan to, entered into any incentive compensation or bonus
agreement or program, distributed or agreed to distribute any funds
outside of the Ordinary Course of Business to, or entered into any
other transaction with, any of the stockholders;
(xvii) except as expressly provided by this Agreement or any of
the other
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<PAGE>
Seller's Transaction Documents, the Seller has not entered into any
agreement, contract, lease or license, written or oral, or modified
the terms of any existing agreement, contract, lease or license,
with the Stockholder or any of the Seller's directors or officers
or with any Associate of the Stockholder or Associate of any of the
Seller's directors or officers;
(xviii) other than "at will" employments entered into in the
Ordinary Course of Business which do not provide for any agreements
with respect to severance pay, the Seller has not entered into any
employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
(xix) the Seller has not granted any increase in the base
compensation, incentive compensation or bonus of any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(xx) the Seller has not granted any increase in the base
compensation, incentive compensation or any bonus to the employees
of the Seller outside the Ordinary Course of Business;
(xxi) the Seller has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xxii) the Seller has not made any other change in employment
terms for any of its directors or officers, outside the Ordinary
Course of Business and has not paid any severance or made any
commitment to pay any severance to any director or officer ;
(xxiii) the Seller has not made or pledged to make any
charitable or other capital contribution outside the Ordinary
Course of Business;
(xxiv) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Seller;
(xxv) the Seller has not made or committed to make any
acquisition of all or substantially all of the assets or property
of any business or any stock of any business; and
(xxvi) the Seller has not committed to any of the foregoing.
(i) UNDISCLOSED LIABILITIES. The Seller has no Liability (and, to the
Seller's knowledge, there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability) except for: (i) Liabilities
set forth on the face of the Most Recent Balance Sheet (ii) Liabilities
which have arisen after the Most Recent Fiscal Year End in the Ordinary
Course of Business (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law); (iii) Liabilities
disclosed in Schedule 1 attached hereto (including the obligation of the
Seller to perform the express terms and provisions of any contract or
agreement described in the Disclosure Schedule other than as a result of a
breach or a default under such contracts or agreements, unless such breach
or default would not be required to be disclosed under the express terms of
the Seller's representations and
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<PAGE>
warranties set forth herein): (iv) Permitted Encumbrances; and (v) any
obligations of the Seller to perform the express terms and provisions of
any agreement, note, bond or debt security that is not expressly required
to be disclosed in the Disclosure Schedule under Section 3(h) above, other
than as a result of a breach or default under such agreement, note, bond
or debt security unless such breach or default would not be required to be
disclosed under the express terms of any of the Seller's representations
or warranties set forth herein.
(j) LEGAL COMPLIANCE. The Seller and its Affiliates have operated
from November 18, 1997, and the Seller and its Affiliates will continue to
operate through the Closing Date, in compliance in all material respects
with all conditions and requirements of all applicable federal, state and
local laws, statutes, ordinances, rules, regulations, permits, policies,
guidelines, orders, franchises, authorizations and consents, except where
the failure to so comply would not have a Material Adverse Effect, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging
any failure so to comply.
(k) TAX MATTERS.
(i) Except as set forth on Section 3(k) of the Disclosure
Schedule, there are no Security Interests on the assets of the
Seller that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed
to by the Seller since June 30, 1993.
(l) REAL PROPERTY.
(i) Section 3(l)(i) of the Disclosure Schedule lists and
describes briefly all real property that the Seller owns. With
respect to each such parcel of owned real property:
(A) the Seller is and at Closing will be the only
record, legal and beneficial owner of and has (or will have at
Closing) fee simple title to the parcel of real property, free
and clear of any Encumbrance other than the Permitted
Encumbrances;
(B) there are no pending or, to the knowledge of
the Seller, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other
matters affecting adversely the current use, occupancy, or
value thereof;
(C) to the knowledge of the Seller, (1) the legal
description for the parcel contained in the deed thereof
describes such parcel fully and adequately, (2) except as
disclosed on the survey, the buildings and improvements are
located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or
buildings or improvements thereon are subject to
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"permitted non-conforming use" or "permitted non-conforming
structure" classifications), and (3) except as disclosed on
the survey, do not encroach on any easement which may burden
the land, the land does not serve any adjoining property for
any purpose inconsistent with the use of the land, and the
property is not located within any flood plain or subject to
any similar type of restriction for which any permits or
licenses necessary to the use thereof have not been obtained;
(D) all facilities have received all approvals of
governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof
(except for such approvals, licenses and permits where the
failure to receive the same would not have a Material Adverse
Effect) and have been operated and maintained in accordance
with applicable laws, rules, and regulations, except for such
failure(s), which, individually or in the aggregate, would not
have a Material Adverse Effect;
(E) other than as set forth in Section 3(l)(i) of
the Disclosure Schedule, there are no leases, subleases,
licenses, concessions, or other agreements, written or oral,
granting to any party or parties other than Seller the right
of use or occupancy of any portion of the real property;
(F) there are no outstanding options or rights of
first refusal to purchase the parcel of real property, or any
portion thereof or interest therein;
(G) there are no parties (other than the Seller) in
possession of the parcel of real property, other than tenants
under any leases disclosed in Section 3(l)(i) of the
Disclosure Schedule who are in possession of space to which
they are entitled;
(H) all facilities located on the parcel of real
property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm
sewer, if applicable, all of which services are adequate in
accordance with all applicable laws, ordinances, rules, and
regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting the
parcel of real property; and
(I) each parcel of real property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefiting the parcel of real property.
(ii) Section 3(l)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the
Seller. The Seller has not permitted the occupancy of any third
party with respect to the real property listed on Section 3(l)(ii)
of the Disclosure Schedule or subleased or assigned its rights in
such property. The Seller has delivered to the Buyer correct and
complete copies of the leases listed in Section 3(l)(ii) of the
Disclosure Schedule (as amended to date). With respect to each
lease listed in Section 3(l)(ii) of the Disclosure Schedule:
(A) the lease is legal, valid, binding, enforceable,
and in full force and
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effect;
(B) subject to the delivery of the Required
Consents, the lease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(C) the Seller is not, and to the Seller's
knowledge, no other party to the lease or sublease is in
breach or default, and no event has occurred with respect to
the Seller, or to the Seller's knowledge, which, with notice
or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) the Seller has not, and to the Seller's knowledge,
no other party to the lease has repudiated any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease;
(F) the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold;
(G) all facilities leased thereunder have received
all approvals of governmental authorities (including licenses
and permits) required in connection with the operation thereof
and have been operated and maintained in all material respects
in accordance with applicable laws, rules, and regulations,
except where failure to so maintain or operate such facilities
would not have a Material Adverse Effect;
(H) all facilities leased thereunder are supplied
with utilities and other services necessary for the operation
of said facilities; and
(I) the owner of the warehouse located at 141 East
141st Street, Hammond, Indiana and leased to the Seller has
good and marketable title to the parcel of real property free
and clear of any Security Interest (except for Security
Interests created solely by Alpha Steel), easement, covenant,
or other restriction, except for real estate taxes not yet due
and payable and installments of special assessments not yet
delinquent and recorded easements, covenants, and other
restrictions, in each case which do not impair the current use
or occupancy of the property subject thereto.
(m) INTELLECTUAL PROPERTY.
(i) The Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of the
Seller as presently conducted. Each item of Intellectual Property
owned or used by the Seller immediately prior to the Closing
hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the
Closing hereunder. The Seller has taken all necessary and
desirable action to maintain and protect each item of Intellectual
Property that it owns or uses.
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<PAGE>
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of the
Seller and its directors and officers (and employees with
responsibility for Intellectual Property matters) has never
received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation
(including any claim that the Seller must license or refrain from
using any Intellectual Property rights of any third party).
Neither the Seller, nor any of its directors and officers (and
employees with responsibility for Intellectual Property matters for
the Seller) has any Basis for believing that any third party has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the Seller.
(iii) Section 3(m)(iii) of the Disclosure Schedule identifies
each patent or registration which has been issued to the Seller
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which
the Seller has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which the Seller has granted to any third party with
respect to any of its Intellectual Property (together with any
exceptions). The Seller has delivered to the Buyer correct and
complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has
made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution
(if applicable) of each such item. Section 3(m)(iii) of the
Disclosure Schedule also identifies each trade name or unregistered
trademark used by the Seller in connection with any of its
businesses. With respect to each item of Intellectual Property
required to be identified in Section 3(m)(iii) of the Disclosure
Schedule:
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear of any
Encumbrance, except for the Permitted Encumbrances;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending,
or to the Seller's knowledge, is threatened which challenges
the legality, validity, enforceability, use, or ownership of
the item; and
(D) the Seller has never agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item,
except as provided in any license or agreement with respect to
any of its Intellectual Property to the extent such licenses
or agreements are set forth in Section 3(m) of the Disclosure
Schedule.
(iv) Except for "shrink wrap" licenses relating to
non-customized software purchased by the Seller for use in its
operations, each item of Intellectual Property that any third party
owns and that the Seller uses pursuant to license, sublicense,
agreement, or other permission identified on Section 3(m)(iv) of
the Disclosure Schedule. The Seller has delivered to the Buyer
correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to
each such item of used Intellectual Property required to be
identified in Section 3(m)(iv) of the Disclosure
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Schedule:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) subject to the delivery of the Required
Consents, the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in
full force and effect on terms which are, in all material
respects, substantially the same as the terms in effect
immediately prior to the consummation of the transactions
contemplated hereby (including the assignments and assumptions
referred to in Section 2 above);
(C) the Seller is not, and to the Seller's
knowledge, no other party of such license, sublicense,
agreement, or permission is in breach or default thereunder,
and to the Seller's knowledge, no event has occurred which
with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(D) to the Seller's knowledge, no party to the
license, sublicense, agreement, or permission has repudiated
any provision thereof;
(E) to the Seller's knowledge, the underlying item
of Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(F) to the Seller's knowledge, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand is pending or threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(G) except as set forth on Section 3(m)(iv) of the
Disclosure Schedule, the Seller has not granted any sublicense
or similar right with respect to the license, sublicense,
agreement, or permission.
(v) Except as set forth in Section 3(m)(v) of the
Disclosure Schedule, to the knowledge of the Seller, the Seller is
not interfering with, infringing upon, misappropriating, or in
conflict with, any Intellectual Property rights of third parties as
a result of the operation of its businesses as presently conducted.
(n) TANGIBLE ASSETS. Section 3(n) of the Disclosure Schedule lists
all of the Seller's machinery, equipment and other tangible assets other
than real property. The Seller owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its
business as presently conducted, and each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it
presently is used and presently is proposed to be used.
(o) CONTRACTS. Section 3(o) of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for the
lease of personal
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property which involves annual payments in excess of $10,000 and
which may not be terminated by the Seller for any reason and
without payment of any premium or penalty upon 30 days' notice to
or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products,
or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of
more than one year and involves the payment or receipt of any
amount in excess of $10,000;
(iii) any agreement concerning the Seller's investments or
equity participation in a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation which involves the payment of any amount in excess of
$10,000;
(v) any agreement concerning confidentiality or
noncompetition or other commitment limiting the ability of a party
to compete in any line of business, with any person or in any
geographic area, whether for the benefit of the Seller or of a
third party;
(vi) any agreement involving the Stockholder and its
Affiliates (other than the Seller);
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan
or arrangement for the benefit of the Seller's current or former
directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(xi) any agreement under which the consequences of a default
or termination could have a Material Adverse Effect; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$10,000 and may not be terminated by the Seller for any reason and
without penalty or premium upon thirty (30) days' written notice;
(xiii) a list of all of the Customer Contracts and the status
thereof (the "CONTRACT STATEMENT");
(xiv) a list of all of the Subcontracts and the status
thereof including specifically the following information with
respect to each such Subcontract: contract number, name and address
of subcontractor, vendor or supplier, a description of work to be
performed
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thereunder, original Subcontract price, value and description of
all approved change orders, the value and description of all
unapproved change order requests by any such subcontractor, vendor
or supplier, subcontract billings to date by any such
subcontractor, vendor or supplier, and payments made by the Seller
to such subcontractor, vendor or supplier to date (the "SUBCONTRACT
STATEMENT");
(xv) each other agreement, contract, or commitment (other
than Customer Contracts not listed on Section 3(o)(xv) of the
Disclosure Schedule) which contain terms providing for the
termination, default, loss of rights or privileges, acceleration of
payment, or any other change in the terms or conditions of such
document upon the sale or exchange of a majority of the common
stock of the Seller or upon any change in control of the Seller,
except where any such termination, default, loss of rights or
privileges, acceleration of payment or other change in terms or
conditions would not have a Material Adverse Effect.
The Seller has made available to the Buyer (or its representatives) a
correct and complete copy of each written agreement listed in Section 3(o)
of the Disclosure Schedule (as amended to date) that is in existence and a
written summary, contained in Section 3(o) of the Disclosure Schedule,
setting forth the terms and conditions of each oral agreement referred to
in Section 3(o) of the Disclosure Schedule. With respect to each such
agreement: (A) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (B) subject to the procurement of consent to
assignment in accordance with Section 5(b) or Section 6(d) of this
Agreement, the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above) and for a
period of one year thereafter; (C) the Seller is not, and to the Seller's
knowledge, no other party thereto is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) the Seller, and to the Seller's knowledge, no other
party has repudiated any provision of the agreement.
(p) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth in Section
3(p) of the Disclosure Schedule, all notes and accounts receivable of the
Seller are reflected properly on its books and records, and (i) arose out
of bona fide, arms' length transactions, (ii) are in all material respects
valid receivables subject to no setoffs or counterclaims, (iii) are current
and collectible, and (iv) will be collected in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto), as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Seller.
(q) UNBILLED REVENUES. All of the unbilled revenue and disbursements
reflected in the Most Recent Financial Statements have been properly
determined on a basis consistent with applicable contract terms and such
amounts will become good and collectible accounts receivable in the
Ordinary Course of Business.
(r) POWERS OF ATTORNEY. Other than as set forth in Section 3(r) of
the Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Seller.
(s) INSURANCE. Section 3(s) of the Disclosure Schedule describes any
self-insurance arrangements affecting the Seller, whether underwritten
individually by the Company or jointly with others. Section 3(s) of the
Disclosure Schedule also sets forth the following information with
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respect to such self-insurance arrangements and each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Seller
has been a party, a named insured, or otherwise the beneficiary of coverage
at any time within the past four years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such self-insurance arrangement and insurance
policy: (A) the arrangement or policy is legal, valid, binding,
enforceable, and in full force and effect in accordance with its express
terms; (B) the arrangement or the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on terms that following
the consummation of the transactions contemplated hereby are, in all
material respects, substantially the same as the terms in effect
immediately prior to the consummation of the transactions contemplated
hereunder; (C) neither the Seller nor, to Seller's knowledge, any other
party to the arrangement or the policy, is in breach or default (including
with respect to the payment of premiums or the giving of notices), and no
event has occurred which, with notice or the lapse of time, would
constitute such a breach or default by the Seller, or, to Seller's
knowledge, a breach or default by any other party to the arrangement or the
policy, or permit termination, modification, or acceleration, under the
arrangement or the policy; and (D) neither the Seller nor, to the Seller's
knowledge, any other party to the arrangement or the policy, has repudiated
any provision thereof. The Seller has been covered during the past six
years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period.
(t) LITIGATION. Section 3(t) of the Disclosure Schedule sets forth
each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party
or, to the knowledge of the Seller and the directors and officers (and
employees with responsibility for litigation matters) of the Seller, is
threatened to be made a party to any action, charge, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator. None of the Seller and the directors and
officers (and employees with responsibility for litigation matters) of the
Seller has knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation to be brought or threatened against the Seller
other than those listed on Section 3(t) of the Disclosure Schedule. Section
3(t) of the Disclosure Schedule also sets forth the Seller's reserves for
each of the actions, suits, proceedings, hearings, and investigations that
it has recorded on its books and records and reported on the balance sheet
of its Most Recent Financial Statements.
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(u) WARRANTY. Each product manufactured, sold, leased, or delivered
by the Seller and each service rendered by the Seller has been in
conformity in all material respects with all applicable contractual
commitments and all express and implied warranties, and the Seller has no
Liability that would have a Material Adverse Effect (and to Seller's
knowledge there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against the Seller that would give rise to any Liability that would have a
Material Adverse Effect) for replacement or repair thereof or other damages
in connection therewith, subject only to the reserve for warranty claims
set forth on the face of the Most Recent Balance Sheet. Except as set
forth in Section 3(u) of the Disclosure Schedule, no product manufactured,
sold, leased, or delivered by the Seller and no service rendered by the
Seller is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions. Section 3(u) of the Disclosure
Schedule includes copies of the standard terms and conditions for the
Seller (containing applicable guaranty, warranty, and indemnity
provisions).
(v) LIABILITY. Except as disclosed in Section 3(v) of the Disclosure
Schedule and except for any Liabilities which, individually or in the
aggregate, would not have a Material Adverse Effect, the Seller has no
Liability (and, to Seller's knowledge, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Seller that would give rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Seller and any service rendered by the Seller.
(w) EMPLOYEES. Section 3(w) of the Disclosure Schedule lists each
employee of the Seller and each employee's respective job title or position
and current salary. To the knowledge of the Seller and the directors and
officers (and employees with responsibility for employment matters) of the
Seller, no executive, key employee, or group of employees has any plans to
terminate employment with the Seller. Except as set forth in Section 3(w)
of the Disclosure Schedule, consummation of the transactions contemplated
by this Agreement will not (A) entitle any Person to severance pay,
unemployment compensation, or any similar compensation, (B) accelerate any
time of payment or vesting or increase the amount of any compensation due
to any Person, (C) entitle any Person to any parachute payment within the
meaning of Section 280G of the Code, or (D) will not also constitute a
breach of any contract of employment. The Seller has not incurred or
reasonably expects to incur any liability or obligation under the Workers
Adjustment Retraining Notification Act or any similar state law ("WARN")
prior to or after the Closing; and within the six month period immediately
following the Closing Date, the Seller and no Person who together with whom
the Seller would be treated as an "employer" for purposes of WARN will
incur any such liability if, during such six month period, only
terminations of employment of not more than 50 employees occur in the
normal course of operations.
(x) COLLECTIVE BARGAINING AGREEMENTS. Except as set forth on Section
3(x) of the Disclosure Schedule, the Seller is not a party to, bound by or
currently negotiating any collective bargaining agreement or any other
agreement with a labor union. There is not pending or, to the knowledge of
the Seller, threatened, any labor dispute, strike, work stoppage,
grievance, claim of unfair labor practices, or other collective bargaining
disputes. The Seller has not committed any unfair labor practices or
violated any collective bargaining provision.
(y) EMPLOYEE BENEFITS.
(i) Section 3(y) of the Disclosure Schedule lists each
Employee Benefit Plan that the
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Seller maintains or to which the Seller contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and summary plan descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan, to the extent applicable.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Seller. All premiums or
other payments for all periods ending on or before the Closing
Date have been paid with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and which is described on
Section 3(y) of the Disclosure Schedule as meeting the
requirements of Code Sec. 401(a), meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has within the
last three years, either received a favorable determination
letter from the Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Seller has made available to the Buyer
correct and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Seller and the Controlled Group of Corporations which includes the
Seller maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension
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Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(B) There have been no prohibited transactions,
within the meaning set forth in ERISA Section 406 and Code
Section 4975, with respect to any such Employee Benefit Plan.
No fiduciary, within the meaning set forth in ERISA Section
3(21), has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the
Seller's knowledge, threatened. The Seller does not have any
knowledge of any basis for any such action, suit, proceeding,
hearing, or investigation.
(C) The Seller has not incurred, nor will incur,
any Liability to the PBGC (other than PBGC premium payments)
or otherwise under Title IV of ERISA or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) Except as provided on Section 3(y) of the Disclosure
Schedule, the Seller, and the other members of the Controlled Group
of Corporations that includes the Seller contributes to, ever has
contributed to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Seller does not maintain and has never maintained,
does not contribute and has never contributed, or ever has been
required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with
Code Sec. 4980B).
(z) GUARANTIES. Except as set forth in Section 3(z) of the Disclosure
Schedule, the Seller is not a guarantor nor is otherwise liable for any
Liability or obligation (including indebtedness) of any other Person other
than as endorser of checks received by it and deposited in the Ordinary
Course of Business.
(aa) ENVIRONMENT, HEALTH, AND SAFETY.
(i) The Seller and its Affiliates have complied in all
material respects with all Environmental, Health, and Safety Laws,
and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been served, filed, or
commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the
Seller and its Affiliates have obtained and been in compliance in
all material respects with all of the terms and conditions of all
permits, licenses, and other authorizations which are required
under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
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contained in, all Environmental, Health, and Safety Laws.
(ii) Except as set forth in Section 3(aa)(ii) of the
Disclosure Schedule, the Seller has no Liability and none of the
Seller and its Affiliates has handled, transported, stored, treated
or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any
substance or condition, allowed or arranged for any third person to
transport, store, treat, or dispose of waste, (including, but not
limited to asbestos or asbestos-containing materials), to or at (1)
any location other than a site lawfully permitted to receive such
waste for such purposes or (2) any location designated for remedial
action pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, as from time to time amended, or
any similar federal or state statute assigning responsibility for
the cost of investigating or remediating releases of contaminants
into the environment; nor has the Seller performed, arranged for,
or allowed by any method or procedure, such transportation or
disposal in contravention of state or federal laws and regulations
or in any other manner which gives rise to any Liability
whatsoever; and the Seller has not disposed, nor has it allowed or
arranged for third parties to dispose, of waste upon property owned
or leased by it, except as permitted by law. Without limiting the
generality of the foregoing, except as set forth in Section
3(aa)(ii) of the Disclosure Schedule, the Seller has not received
any notification (including requests for information directed to
it) from any governmental agency asserting that it is or may be a
"potentially responsible person" for a remedial action at a waste
storage, treatment, or disposal facility, pursuant to the
provisions of CERCLA, or any similar federal or state statute
assigning responsibility for the costs of investigating or
remediating releases or contaminants into the environment. There
has been no release (for the purpose of any applicable
environmental law) of any hazardous waste or hazardous substance
on, into, or beneath any real property owned or leased by the
Seller, and the Seller does not have any Liability for any remedial
or corrective action on any real property. The Seller has not
owned or operated any property or facility in any manner that forms
the Basis for any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Seller giving rise
to any Liability) for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal
injury to any employee or other individual, or for any reason under
any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of
the Seller and its predecessors and Affiliates have been and are
free of Hazardous Substances, except as permitted by law.
(iv) Except as set forth in Section 3(aa)(ii) of the
Disclosure Schedule, no underground storage tanks, as defined in
the Resource Conservation and Recovery Act of 1970, as amended or
under any applicable state law, are present on any of the
properties used by the Seller, and no such tanks were previously
abandoned or removed.
(bb) CERTAIN BUSINESS RELATIONSHIPS WITH THE SELLER. Except as
otherwise set forth in Section 3(bb) of the Disclosure Schedule, none of
the Stockholder and its Affiliates has been involved in any business
arrangement or relationship with the Seller within the past 12 months, and
none of the Stockholder and its Affiliates owns any asset, tangible or
intangible, which is used in the business of the Seller.
(cc) CONFORMANCE WITH STANDARD OF CARE. The performance by the Seller
of all services
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with respect to the Customer Contracts has been conducted in all material
respects in accordance with all applicable industry standards at the time
and within the locality where the services were performed including,
without limitation, compliance in all material respects with all applicable
laws, regulations, and standards governing the provision of such services
except where the failure to so comply would not have a Material Adverse
Effect.
(dd) RELATIONSHIPS WITH CUSTOMERS. Except as set forth in Section
3(dd) of the Disclosure Schedule, no customer of the Seller, which for the
12 month period ending September 30, 1998, accounted for more than 2% of
the total revenue for the Seller, has (1) refused to honor any of its
commitments, (2) presented the Seller with written information indicating
dissatisfaction with the quality or price of the Seller's services, or (3)
indicated that it would not renew any existing vendor agreement,
maintenance agreement or blanket purchase order or that it would generally
not continue doing business with the Seller on a basis similar to that
previously conducted.
(ee) DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
(ff) CLAIMS WITH RESPECT TO STOCK PURCHASE. Neither Seller nor
Stockholder or any of their affiliates has made or threatened making any
claims under the Stock Purchase Agreement entered into as of September 30,
1997 (the "STOCK PURCHASE AGREEMENT"), by and among EIF Holdings, Inc., a
Hawaii corporation, and Leo J. Manta, Steven A. Manta, Michael J. Chakos,
John L. Manta, Allan DeLange, John L. Manta, as Trustee of Zachary Manta
Trust, John L. Manta, as Trustee of Erica Manta Trust, John L. Manta, as
Trustee of Alexander Manta Trust, Leo G. Manta, and Jon S. Claypool (the
"FORMER STOCKHOLDERS") or otherwise with respect to the transactions
contemplated under the Stock Purchase Agreement and there have been no
breaches or misrepresentations of the representations and warranties made
by Seller's Former Stockholders, Seller or Stockholder under the Stock
Purchase Agreement or any other agreements or documents executed in
connection with the transactions contemplated by the Stock Purchase
Agreement.
(gg) BOARD APPROVAL. The Boards of Directors of both the Seller and
the Stockholder have approved, ratified, confirmed and adopted the terms of
this Agreement and the consummation of all the transactions contemplated
thereby.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Seller that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4).
(a) ORGANIZATION OF THE BUYER. The Buyer is a limited liability
company duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full limited liability company power and authority) to
execute and deliver this Agreement and each of the Buyer's Transaction
Documents to which it is a party and to perform its obligations hereunder
and thereunder. Each of this Agreement and the Buyer's Transaction
Documents to which it is a party constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions.
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(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement or any of the other Buyer's Transaction Documents, nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws, (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Buyer is a party or by which it is bound or
to which any of its assets is subject, or (iii) result in the imposition of
any Security Interest upon any of its assets other than any financing
obtained by Buyer in connection with this Agreement and the other Buyer's
Transaction Documents, and except in the case of each of the immediately
preceding clauses (i), (ii) and (iii) for such violations, conflicts,
defaults or breaches that will not, individually or in the aggregate,
either (A) result in the failure of the Buyer to deliver the Purchase
Price, or (B) otherwise adversely affect the ability of the Buyer to
perform its other obligations hereunder in accordance with the terms hereof
or the terms of any of the other Buyer's Transaction Documents. The Buyer
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated
by this Agreement (including the assignments and assumptions referred to in
Section 2 above).
(d) HART-SCOTT-RODINO FILING. No notification or other filing is
required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, in connection with the transactions contemplated by
this Agreement.
(e) BROKERS' FEES. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
Section 5. PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Section 7 below).
(b) NOTICES AND CONSENTS. The Seller will use its best efforts to
obtain the Required Consents as set forth in Section 5(b) of the Disclosure
Schedule. The Seller will give any notices to third parties and will use
its best efforts to obtain any third party consents, that the Buyer may
reasonably request in connection with the matters referred to in Section
3(c) above. Each of the Parties will give any notices to, make any filings
with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in
connection with the matters referred to in Section 3(c) and Section 4(c)
above.
(c) OPERATION OF BUSINESS. Except as expressly provided for in this
Agreement, the Seller will not engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, except as expressly provided for
in this Agreement, the Seller will not (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock or
redeem, purchase, or
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otherwise acquire any of its capital stock, (ii) declare, set aside, agree
to pay or pay any bonus or other compensation outside the Ordinary Course
of Business, (iii) loan, guaranty or agree to loan or guaranty any amount
to any of the Seller or third party, or (iv) otherwise engage in any
practice, take any action, or enter into any transaction which would be
required to be disclosed under Section 3(h) above.
(d) PRESERVATION OF BUSINESS. The Seller will use its best efforts to
keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees,
consistent with past custom and practice.
(e) FULL ACCESS. The Seller will permit representatives of the Buyer
to have full access at all reasonable times, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents
of or pertaining to the Seller.
(f) NOTICE OF DEVELOPMENTS. Each of the Seller and the Stockholder
will give prompt written notice to the Buyer of any material adverse
development of which it becomes aware that causes a breach of any of the
representations and warranties in Section 3 above. The Buyer will give
prompt written notice to the Seller and the Stockholder of any material
adverse development of which any of it becomes aware that causes a breach
of any of its own representations and warranties in Section 4 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be
deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. Until such time as this Agreement shall have been
terminated, neither the Seller nor the Stockholder will (i) solicit,
initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets of, the Seller
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or
seek any of the foregoing. During the term hereof, each of the Seller and
the Stockholder will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) TRANSITION. Prior to the Closing, the Seller will not take any
action that is intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Seller
from maintaining the same business relationships with the Seller after the
Closing as it maintained with the Seller prior to the Closing.
Section 6. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is reasonably necessary to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution
and delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor
under Section 8 below). The Seller acknowledge and agree that from and
after the Closing the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements, and
financial data of any
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sort relating to the Seller.
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any claim brought under or pursuant to this Agreement or any of
Seller's Transaction Documents or Buyer's Transaction Documents or
otherwise in connection with any of the transactions contemplated under
this Agreement or any of the Seller's Transaction Documents or Buyer's
Transaction Documents or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving
the Seller, each of the other Parties will cooperate with it and its
counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost
and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 8
below).
(c) CONFIDENTIALITY. The Seller will treat and hold as confidential
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential
Information which are in his or its possession. In the event that the
Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any
Confidential Information, the Seller will notify the Buyer promptly of the
request or requirement so that the Buyer may seek an appropriate protective
order or waive compliance with the provisions of this Section 6(c). If, in
the absence of a protective order or the receipt of a waiver hereunder, the
Seller is, on the advice of counsel, compelled or required by applicable
law to disclose any Confidential Information to any tribunal, the Seller
may disclose the Confidential Information to the tribunal; PROVIDED,
HOWEVER, that the Seller shall use its reasonable best efforts to obtain,
at the request and sole expense of the Buyer, an order or other assurance
that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to
the time of disclosure.
(d) CONSENTS. The Seller will use its best efforts to receive and
complete the Required Consents should the Buyer require cooperation from
the Seller in obtaining such Required Consents.
(e) EMPLOYEES. Effective as of the Closing Date, Buyer shall offer
employment to all employees who are actively employed by the Seller
immediately prior to Closing.
(f) FINANCING. Seller will cooperate with Buyer in securing
financing in connection with the consummation of the transactions
contemplated in this Agreement. No default under the Fourth Promissory
Note shall have occurred if the Seller defaults under this covenant Section
6(f).
(g) TITLE INSURANCE. The Seller will obtain the following title
insurance commitments, policies, and riders in preparation for the Closing
with respect to each parcel of real estate that the Seller owns, an ALTA
Owner's Policy of Title Insurance Form B-1970 (or equivalent policy
reasonably acceptable to the Buyer if the real property is located in a
state in which an ALTA Owner's Policy of Title Insurance Form B-1970 is not
available) issued by a title insurer
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reasonably satisfactory to the Buyer, in such amount as the parties
shall stipulate in the allocation schedule in form and substance to be
mutually agreed upon by the parties to be the fair market value of such
real property (including all improvements located thereon), insuring
title to such real property to be in the Seller as of the Closing
(subject only to the Permitted Encumbrances). At time of delivery of
title commitments, Seller shall also deliver to Buyer legible copies of
all Schedule B exceptions thereto. Each title insurance policy
delivered under this Section 5(h) shall as of Closing (A) insure title
to the real property and all recorded easements benefiting such real
property, (B) contain an "extended coverage endorsement" insuring over
the general exceptions contained customarily in such policies, (C)
contain an endorsement insuring that the real property described in the
title insurance policy is the same real estate as shown on the survey
delivered with respect to such property, and (D) if the real property
consists of more than one record parcel, contain a "contiguity"
endorsement insuring that all of the record parcels are contiguous to
one another.
Section 7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) the Seller shall have used its best efforts to procure all
of the Required Consents, all of the title insurance commitments,
policies, and riders specified in Section 5(h) above;
(iv) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own
any of the Acquired Assets, to operate the former businesses of the
Seller, or (D) affect adversely the right of the Seller to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer no later
than the second business day prior to the Closing Date an officer's
certificate setting forth the Estimated Stockholder's Equity;
(vi) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified
above in Section 6(a)(i)-(v) is satisfied in all respects;
(vii) the Buyer shall have received from counsel to the
Seller an opinion in form and substance as set forth in Exhibit J
attached hereto, addressed to the Buyer, and dated as of the
Closing Date;
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(viii) each of the Seller and the Buyer shall have received
all other authorizations, consents, and approvals of governments
and governmental agencies referred to in Section 3(c) and Section
4(c) above;
(ix) the Seller shall have delivered to the Buyer a consent
in the form attached hereto as Exhibit K for each of the employees
list on attached Schedule 7(a)(ix); and
(x) all actions to be taken by the Seller in connection
with consummation of each of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Buyer. The Buyer may
waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transact ions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified
above in Section 6(b)(i)-(iii) is satisfied in all respects;
(v) the Seller shall have received from counsel to the
Buyer an opinion in form and substance to be mutually agreed upon
by the parties, addressed to the Seller, and dated as of the
Closing Date;
(vi) the Seller and the Buyer shall have received all other
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(c) and Section 4(c)
above; and
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be satisfactory
in form and substance to the Seller. The Seller may waive any
condition specified in this Section 6(b) if it executes a writing
so stating at or prior to the Closing.
Section 8. SURVIVAL AND INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of
the representations,
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warranties, covenants, and agreements contained in this Agreement and in
any certificate, schedule, document, or other writing delivered pursuant
hereto have been relied upon and shall survive the Closing hereunder until
October 28, 2000. Notwithstanding anything to the contrary herein, all of
the representations, warranties, covenants, and agreements contained in
this Agreement and in any certificate, schedule, document, or other
writing delivered by the Stockholder pursuant hereto will relate only to
the period from November 18, 1997 until the Closing.
(b) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE BUYER.
(i) In the event of a misrepresentation or breach (or in
the event any third party alleges facts that, if true, would mean a
misrepresentation or breach) of any of the Seller or Stockholder's
representations, warranties, and covenants contained in this
Agreement, and, provided the Buyer makes a written claim for
indemnification against the Seller and/or the Stockholder pursuant
to Section 10(g) below within the survival period set forth in
Section 8(a) above, then the Seller and Stockholder jointly and
severally agree to indemnify the Buyer from and against any Adverse
Consequences the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the
Buyer may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the misrepresentation or breach (or the alleged
misrepresentation or breach).
(ii) The Seller and Stockholder jointly and severally agree
to indemnify the Buyer from and against any Adverse Consequences
the Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any Liability of the Seller which is
not an Assumed Liability (including any Liability of the Seller
that becomes a Liability of the Buyer under any bulk transfer law
of any jurisdiction, under any common law doctrine of de facto
merger or successor liability, or otherwise by operation of law).
(c) INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE SELLER.
(i) In the event of a misrepresentation or breach (or in
the event any third party alleges facts that, if true, would mean a
misrepresentation or breach) of any of the Buyer's representations,
warranties, and covenants contained in this Agreement, and,
provided the Seller makes written claim for indemnification against
the Buyer pursuant to Section 10(g) below within the survival
period set forth in Section 8(a) above, then the Buyer agrees to
indemnify the Seller from and against any Adverse Consequences the
Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach).
(ii) The Buyer agrees to indemnify the Seller from and
against any Adverse Consequences the Seller may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
any Assumed Liability.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect
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to any matter (a "THIRD PARTY CLAIM") which may give rise to a
claim for indemnification against the other Party (the
"INDEMNIFYING PARTY") under this Section 8, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof in
writing; PROVIDED, HOWEVER, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(ii) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party so long
as (A) the Indemnifying Party notifies the Indemnified Party in
writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will in
accordance with and subject to the terms of this Section 8,
indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, and (D) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section
8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party, and (C) the Indemnifying
Party may consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party provided the Indemnifying
Party pays any and all monetary obligations relating to such
judgment or settlement, unless: (i) such judgment or settlement
imposes any non-monetary obligation upon the Indemnified Party, or
(ii) such judgment or settlement is, in the good faith judgment of
the Indemnified Party, likely to establish a precedential custom or
practice adverse to the continuing business interests of the
Indemnified Party.
(iv) In the event any of the conditions in Section 8(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party
may defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party Claim in
any manner it may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any Indemnifying
Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Section 8.
(e) ADVERSE CONSEQUENCES. The Parties shall take into account the
time cost of money in determining Adverse Consequences for purposes of this
Section 8. All indemnification payments
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under this Section 8 shall be deemed adjustments to the Purchase Price.
(f) RECOUPMENT. Before seeking any cash indemnification payments
otherwise due from Seller or Stockholder hereunder, Buyer may recoup or set
off all or any part of any Adverse Consequences for which it is entitled to
receive indemnification from Seller under this Section 8 by giving 30 days
notice to the Seller that the Buyer is reducing the principal amount
outstanding under the Promissory Notes, either individually or collectively
as the Buyer shall determine; provided, however, that Buyer shall not
recoup or set off any amounts due on the first anniversary of the date
hereof; provided further, however, that any amount of Stockholder Equity
determined hereunder be in excess of $8,000,000 shall be credited against
any right to recoup or set off against the principal under the Promissory
Notes. Such reduction shall affect the timing and amount of payments
required under each of the Promissory Notes in the same manner as if the
Buyer had made a permitted prepayment (without premium or penalty)
thereunder.
(g) INDEMNIFICATION PAYMENTS. The Buyer's remedy for any
indemnification hereunder shall be cash indemnification payments due from
the Seller and Stockholder jointly and severally to the Buyer. An
Indemnifying Party's indemnification obligations hereunder shall be subject
to the following further limitations. Notwithstanding anything herein to
the contrary, no Party shall be entitled to receive any indemnification
payments in accordance with this Section 8 unless and until such Party is
entitled to $50,000 with respect to the aggregate amount of all claims of
such Party, whereupon such Party shall only receive indemnification
payments in excess of such amount. Furthermore, the Seller and the
Stockholder shall not have any liability for indemnification pursuant to
this Section 8 in excess of the Purchase Price.
(h) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions under this Section 8 are in addition to, and not in derogation
of, any statutory, equitable, or common law remedy any Party may have for
breach of representation, warranty, or covenant.
Section 9. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A)
in the event the Seller has breached any representation, warranty,
or covenant contained in this Agreement in any material respect, or
(B) if the Closing shall not have occurred on or before November
30, 1998, by reason of the failure of any condition precedent under
Section 6(a) hereof (unless the failure results primarily from the
Buyer itself breaching any representation, warranty, or covenant in
any material respect contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing in the
event the Buyer has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, or
(B) if the Closing shall not have occurred on or before November
30, 1998, by reason of the failure of any condition precedent under
Section 6(b) hereof (unless the failure
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results primarily from the Seller itself breaching any
representation, warranty, or covenant in any material respect
contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party, except for
any Liability of any Party then in breach or as provided in Section 9(c)
below.
(c) SPECIFIC PERFORMANCE. Notwithstanding anything in this Agreement
to the contrary including Section 10(n) below, if, on the Closing Date, the
Buyer (i) has complied with all of the conditions to Closing contained in
Section 6(b), (ii) has notified the Seller of its intention to consummate
the transactions contemplated under this Agreement, and (iii) is ready and
able to pay the Preliminary Purchase Price and furnishes evidence to that
effect to the Seller, and if the Closing does not then occur due to the
refusal of the Seller to so consummate the transactions contemplated under
this Agreement, the Buyer will be entitled to specifically enforce the
terms of this Agreement in a court of competent jurisdiction, it being
acknowledged that monetary damages due the Buyer in such case cannot be
adequately determined at law.
Section 10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. The Seller and the
Stockholder shall not issue any press release or make any public
announcement relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the Buyer.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties
and supersedes any prior understandings, agreements, or representations by
or between the Parties, written or oral, to the extent they related in any
way to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other Party; PROVIDED, HOWEVER, that the
Buyer may (i) collaterally assign any or all of its rights and interests
hereunder to any of the Buyer's lenders (ii) assign any or all of its
rights and interests hereunder to one or more of its Affiliates and (iii)
designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases the Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications
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hereunder will be in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given upon receipt if
it is sent by facsimile or reputable express courier, and addressed or
otherwise sent to the intended recipient as set forth below:
If to the Seller:
Michael J. Chakos
J.L. Manta, Inc.
5233 Hohman Avenue
Hammond, Indiana 46320
Facsimile: (219) 933-1075
Copies to:
Robert L. Graham
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Facsimile: (312) 527-0484
If to the Stockholder:
David Norris
U.S. Industrial Services, Inc.
c/o American Eco Corporation
11011 Jones Road
Houston, Texas 77070
Facsimile: (281) 774-7005
Copy to:
Gary I. Levenstein
Ungaretti & Harris
3500 Three First National Plaza
Chicago, Illinois 60602
Facsimile: (312) 977-4405
If to the Buyer:
Michael Rothman
Kenny Industrial Services, L.L.C.
2650-B Bradley Place
Chicago, Illinois 60618
Facsimile: (312) 654-4942
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Copy to:
H. George Mann
McDermott, Will & Emery
227 West Monroe Street, Suite 5500
Chicago, Illinois 60606
Facsimile: (312) 984-3669
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address or
facsimile number set forth above using any other means (including personal
delivery, messenger service, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed
to have been duly given unless and until it actually is received by the
intended recipient. Any party may change the address or facsimile number
to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF ILLINOIS WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (EITHER OF
THE STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
ILLINOIS.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
each of the Parties hereto. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby; provided all
vehicle and equipment title transfer fees and expenses which will be borne
by the Seller with respect to the first $5,000 of such costs and expenses
and thereafter shall be split equally between Buyer and Seller. The
Stockholder agrees that the Seller has not borne nor will bear any of the
costs and expenses of the Stockholder (including any of its legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation. The
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Parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in
any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of
the relative levels of specificity) which the Party has not breached
shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules (including the Disclosure Schedule) identified in this Agreement
are incorporated herein by reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter, in addition to
any other remedy to which they may be entitled, at law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Illinois in any
action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be
required of any other Party with respect thereto. Any Party may make
service on any other Party by sending or delivering a copy of the process
(i) to the Party to be served at the address and in the manner provided for
the giving of notices in Section 10(g) above. Nothing in this Section
10(o), however, shall affect the right of any Party to bring any action or
proceeding arising out of or relating to this Agreement in any other court
or to serve legal process in any other manner permitted by law or at
equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on
the judgment or in any other manner provided by law or at equity.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
KENNY INDUSTRIAL SERVICES, L.L.C.
By:
-----------------------------------
Its:
----------------------------------
J.L. MANTA, INC.
By:
-----------------------------------
Its:
----------------------------------
U.S. INDUSTRIAL SERVICES, INC.
By:
-----------------------------------
Its:
----------------------------------
<PAGE>
EXHIBIT 99(a)
PRESS RELEASE
U.S. INDUSTRIAL SERVICES NETS
$23.0 MILLION FROM SALE OF
COATINGS SUBSIDIARY
Dallas, Texas, Thursday, December 3, 1998 -- U.S. Industrial Services, Inc.
(NASDAQ-OTC Bulletin Board -- USIS) announced today that it has sold the
assets of its coatings subsidiary J. L. Manta of Chicago for US$23.0 million
to Kenny Industrial Services, LLC.
Management of U.S. Industrial Services stated that the Manta operation, which
was acquired last year, became an attractive extension for Kenny services in
the Chicago market, affording an offer to purchase that provided U.S.
Industrial Services with a substantial gain.
U.S. Industrial Services indicated that the transaction enables U.S.
Industrial Services to retire all short and long-term debt, creating a solid
foundation for additional growth through acquisition.
U.S. Industrial Services provides specialized maintenance services for
clients in the industrial and environmental sectors. The Company offers a
full range of services to its clients located throughout the United States.
