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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
June 3, 1997
GIANT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or jurisdiction of incorporation)
1-10398 86-0642718
(Commission File Number) (IRS Employer Identification No.)
23733 North Scottsdale Road
Scottsdale, Arizona 85255
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(602) 585-8888
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 3, 1997, Giant Industries Arizona, Inc., ("Giant
Arizona"), a wholly-owned subsidiary of Giant Industries, Inc.,
("Giant"), purchased all of the issued and outstanding common
stock of Phoenix Fuel Co., Inc. from J. W. Wilhoit, as Trustee of
the Wilhoit Trust Agreement Dated 12/26/74, Katherine C. Lahowetz,
as Trustee of the Theresa Ann Wilhoit Grantor Retained Annuity Trust
Dated 4/4/97, Katherine C. Lahowetz, and Katherine C. Lahowetz, as
Custodian for the Benefit of Emily Lahowetz, a minor (collectively,
the "Shareholders"), for $30,000,000 in cash, determined as a result
of arms'-length negotiations. The Shareholders are not affiliated
with Giant Arizona or Giant.
Phoenix Fuel Co., Inc. is an independent industrial/commercial
petroleum products distributor. The company has fuel sales of
approximately 16,000 barrels per day, including gasoline, diesel fuel,
burner fuel, jet fuel, aviation fuel and kerosene. In addition, the
Company distributes oils and lubricants such as motor oil, hydraulic
oil, gear oil, cutting oil and grease.
The company has nine bulk petroleum distribution plants,
twenty cardlock fueling operations, a lubricant storage and
distribution facility and operates a fleet of forty finished
product truck transports. These assets and related operations are
located throughout the state of Arizona and will continue to be
used in a manner consistent with their previous operation.
The purchase was funded under Giant's Credit Agreement,
(the "Agreement"), dated October 4, 1995, as amended, with a
number of banks as follows: Bank of America National Trust and
Savings Association, as Agent; Bank of America Illinois, as
issuing Bank and as a Bank; First National Bank of Chicago
(successor to NBD Bank, by assignment), as a Bank; and Union Bank
of California, N.A. (formerly known as Union Bank), as a Bank.
Phoenix Fuel Company, Inc. will be a guarantor under the
Agreement and the Indenture, dated as of November 29, 1993 among
Giant, as Issuer, the Subsidiary Guarantors, as guarantors, and
NBD Bank, National Association, as Trustee, relating to
$100,000,000 of 9 3/4% Senior Subordinated Notes due 2003.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
No financial statements will be filed under this Item
7(a) pursuant to Rule 3-05 of Regulation S-X because none of the
materiality tests exceed the 20% level.
(b) Pro Forma Financial Information.
No pro forma financial statements will be filed under
this Item 7(b) pursuant to Rule 11-01(c) of Regulation S-X.
(c) Exhibits.
The Exhibits listed on the accompanying Index to
Exhibits immediately following the signature page are filed as a
part of, or incorporated by reference into, this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GIANT INDUSTRIES, INC.
/s/ A. WAYNE DAVENPORT
--------------------------------------------
A. Wayne Davenport
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: June 16, 1997
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GIANT INDUSTRIES, INC.
CURRENT REPORT ON FORM 8-K
JUNE 3, 1997
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1*/** Stock Purchase Agreement, dated April 30, 1997, by
and among Phoenix Fuel Co., Inc., (the "Company",
J. W. Wilhoit, as Trustee of the Wilhoit Trust
Agreement Dated 12/26/74, Katherine C. Lahowetz,
as Trustee of the Theresa Ann Wilhoit Grantor
Retained Annuity Trust Dated 4/4/97, Katherine C.
Lahowetz, and Katherine C. Lahowetz, as Custodian
for the Benefit of Emily Lahowetz, a minor
(collectively, the "Shareholders") and Giant
Industries Arizona, Inc., (the "Purchaser").
4.1 Credit Agreement, dated October 4, 1995, among
Giant Industries, Inc., as Borrower, Giant
Industries Arizona, Inc., Ciniza Production
Company, San Juan Refining Company, Giant
Exploration & Production Company, and Giant Four
Corners, Inc., as Guarantors, and Bank of America
National Trust and Savings Association, as Agent,
Bank of America Illinois, as a Bank and Letter of
Credit Issuing Bank and the Other Financial
Institutions Parties hereto. Incorporated by
reference to Exhibit 4.1 to the Company's Report
on Form 8-K for the period October 4, 1995, File
No. 1-10398.
4.2 First Amendment, dated May 15, 1996, to Credit
Agreement, dated October 4, 1995, among Giant
Industries, Inc., as Borrower, Giant Industries
Arizona, Inc., Giant Exploration & Production
Company, Giant Four Corners, Inc., San Juan
Refining Company and Ciniza Production Company,
as Guarantors, and Bank of America National Trust
and Savings Association, as Agent, Bank of America
Illinois, as issuing Bank and as a Bank, NBD Bank
as a Bank, and Union Bank, as a Bank.
Incorporated by reference to Exhibit 4.2 to the
Company's Report on Form 8-K for the period May
28, 1997, File No. 1-10398.
4.3 Second Amendment, dated May 23, 1997, to Credit
Agreement, dated October 4, 1995, among Giant
Industries, Inc., as Borrower, Giant Industries
Arizona, Inc., Giant Exploration & Production
Company, San Juan Refining Company, Giant Four
Corners, Inc. and Ciniza Production Company, as
Guarantors, and Bank of America National Trust and
Savings Association, as Agent, Bank of America
Illinois, as issuing Bank and as a Bank, First
National Bank of Chicago (successor to NBD Bank,
by assignment), as a Bank, and Union Bank of
California, N.A. (formerly known as Union Bank),
as a Bank. Incorporated by reference to Exhibit
4.3 to the Company's Report on Form 8-K for the
period May 28, 1997, File No. 1-10398.
_____________
* - Filed herewith.
** - Certain exhibits listed in the Stock Purchase Agreement are
not filed herewith. Copies of the omitted exhibits will be
furnished supplementally to the Commission upon request.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 30, 1997, by
and among Phoenix Fuel Co., Inc., an Arizona corporation (the
"COMPANY"); J.W. Wilhoit, as Trustee of the Wilhoit Trust
Agreement Dated 12/26/74, Katherine C. Lahowetz, as Trustee of
the Theresa Ann Wilhoit Grantor Retained Annuity Trust Dated
4/4/97, Katherine C. Lahowetz, and Katherine C. Lahowetz, as
Custodian for the Benefit of Emily Lahowetz, a Minor
(collectively, the "SHAREHOLDERS"); and Giant Industries
Arizona, Inc., an Arizona corporation (the "PURCHASER").
RECITALS:
WHEREAS, the Company is engaged in the business of
purchasing, terminaling, transporting, marketing and selling
petroleum products and chemicals and providing trucking and
other services in connection with petroleum products and
chemicals (the "BUSINESS").
WHEREAS, the Shareholders desire to sell, and the Purchaser
desires to purchase, all of the issued and outstanding shares
(the "SHARES") of the capital stock of the Company, all upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the
Purchaser, the Company and the Shareholders hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this
Agreement, capitalized terms shall have meanings assigned to
them in EXHIBIT A.
ARTICLE II
SALE AND TRANSFER OF SHARES; CLOSING
SECTION 2.01 DELIVERY OF SHARES. On the terms and subject
to the conditions of this Agreement, at the Closing, the
Shareholders shall sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser shall purchase from the
Shareholders, the Shares.
SECTION 2.02 PURCHASE PRICE. The purchase price for the
Shares shall be $30,000,000 (the "PURCHASE PRICE"). On the
terms and subject to the conditions of this Agreement, the
Purchase Price shall be paid in cash at the Closing by the
Purchaser to the Shareholders as follows: (1) $17,477,143 to
J.W. Wilhoit, as Trustee of the Wilhoit Trust Agreement Dated
12/26/74 (for 326.24 Shares); (2) $10,982,143 to Katherine C.
Lahowetz, as Trustee of the Theresa Ann Wilhoit Grantor Retained
Annuity Trust Dated 4/4/97 (for 205.00 Shares); (3) $770,357 to
Katherine C. Lahowetz (for 14.38 Shares); and (4) $770,357 to
Katherine C. Lahowetz, as Custodian for the Benefit of Emily
Lahowetz, a Minor (for 14.38 Shares).
SECTION 2.03 CLOSING. Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares
contemplated by this Agreement shall take place at a closing
(the "CLOSING)" to be held at the offices of Fennemore Craig,
3003 North Central Avenue, Suite 2600, Phoenix, Arizona 85012-
2913, or at such other place as may be mutually agreed upon by
the Purchaser and the Shareholders Representative, on the
Closing Date. The Closing Date shall be June 2, 1997 or as soon
thereafter is practicable as set forth herein.
SECTION 2.04 CLOSING DELIVERIES BY THE COMPANY AND THE
SHAREHOLDERS. At the Closing, the Company and the Shareholders,
as the case may be, shall deliver or cause to be delivered to
the Purchaser:
(a) certificates representing the Shares, duly endorsed
(or accompanied by duly executed stock powers) for transfer to
the Purchaser;
(b) a receipt for the Purchase Price;
(c) a certificate signed by a duly authorized officer of
the Company and by the Shareholders Representative to the
effect that: (i) the covenants and agreements contained in this
Agreement to be complied with by the Company and the
Shareholders on or before the Closing have been complied with in
all material respects; and (ii) the representations and
warranties of the Company and the Shareholders are true and
correct as of the Closing Date;
(d) true and complete copies, certified by a duly
authorized officer of the Company, of the resolutions duly and
validly adopted by the Board of Directors of the Company and the
Shareholders evidencing their authorization of the execution and
delivery of this Agreement and all other documents to be
delivered hereunder and the consummation of the transactions
contemplated hereby;
(e) all original executed Consents;
(f) the duly executed Noncompetition Agreement;
(g) the legal opinion of Jennings, Strouss & Salmon,
P.L.C., counsel to the Company and the Shareholders, addressed
to the Purchaser and dated the Closing Date, substantially in
the form of EXHIBIT C;
(h) resignations, effective as of the Closing Date, of
all officers and directors of the Company; and
(i) such other documents as the Purchaser may reasonably
request.
SECTION 2.05 CLOSING DELIVERIES BY THE PURCHASER. At the
Closing, the Purchaser shall deliver to the Shareholders:
(a) the Purchase Price payable in cash or in
immediately available funds;
(b) a certificate signed by a duly authorized officer
of the Purchaser to the effect that: (i) the covenants and
agreements contained in this Agreement to be complied with by
the Purchaser on or before the Closing have been complied with
in all material respects; and (ii) the representations and
warranties of the Purchaser are true and correct as of the
Closing Date;
(c) true and complete copies, certified by a duly
authorized officer of the Purchaser, of resolutions duly and
validly adopted by the Purchaser evidencing its authorization of
the execution and delivery of this Agreement and all other
documents hereunder and the consummation of the transactions
contemplated hereby;
(d) the legal opinion of Fennemore Craig, P.C., counsel
to the Purchaser, addressed to the Shareholders and dated the
Closing Date, substantially in the form of EXHIBIT D; and
(e) such other documents as the Shareholders may
reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS
As an inducement to the Purchaser to enter into this
Agreement, the Company and the Shareholders hereby jointly and
severally (except as otherwise expressly noted in this Article
III) make the following representations and warranties to the
Purchaser:
SECTION 3.01 AUTHORITY OF THE SHAREHOLDERS; TITLE TO
SHARES. Each of the Shareholders individually and not jointly
represents and warrants to the Purchaser that: (a) such
Shareholder has all legal capacity to enter into this Agreement
and to carry out his obligations hereunder and to consummate the
transactions contemplated hereby; (b) this Agreement has been
duly executed and delivered by such Shareholder, and (assuming
due authorization, execution and delivery by the other parties
hereto) this Agreement constitutes a legal, valid and binding
obligation of the Shareholder enforceable against the
Shareholder in accordance with its terms, subject to the effect
of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to the
effects of general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in
equity); and (c) such Shareholder is the record and beneficial
owner of the Shares indicated by his name in Section 2.02 of
this Agreement, free and clear of all Encumbrances, and such
Shareholder has full power and authority to, and at the Closing
shall, transfer good and valid title to such Shares free and
clear of any Encumbrances.
SECTION 3.02 ORGANIZATION, QUALIFICATION AND AUTHORITY OF
THE COMPANY; CAPITALIZATION.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Arizona and has all requisite corporate power and
authority to own, operate or lease the properties and assets now
owned or leased by it, to carry on the Business as it has been
and is currently conducted, to enter into this Agreement, to
carry out its obligations under this Agreement, and to
consummate the transactions contemplated hereby. To the
Company s and the Shareholders knowledge, the Company is duly
licensed or qualified to transact business and is in good
standing in each jurisdiction where the operation of the
Business makes such licensing or qualification necessary or
desirable, except where the failure to be so licensed or
qualified would not result in a Material Adverse Effect. True
and correct copies of the Articles of Incorporation and Bylaws
of the Company, each as in effect on the date hereof, have been,
or will be on or before the Purchaser s receipt of the
Disclosure Schedule, delivered by the Company to the Purchaser.
The execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated
hereby have been duly authorized by all requisite action on the
part of the Company. This Agreement has been duly executed and
delivered by the Company, and (assuming due authorization,
execution and delivery by the other parties hereto) this
Agreement constitutes the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with
its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or other similar laws affecting
creditors' rights and remedies generally and by the effect of
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(b) The authorized capitalization of the Company
consists of 5,000 shares of Common Stock, par value $100 per
share, of which 560 Shares are issued and outstanding. All of
the Shares are validly issued, fully paid and non-assessable.
There are no outstanding rights, warrants, options or agreements
with respect to any class of capital stock of the Company
including, without limitation, agreements granting to any Person
rights to acquire any capital stock or agreements with respect
to the voting thereof. Except for the Shares, there are no
other outstanding equity securities of the Company. To the
Company s and the Shareholders knowledge, no Taxes or payments
to Governmental Authorities will be due from the Purchaser upon
transfer of the Shares as contemplated by this Agreement.
SECTION 3.03 CORPORATE BOOKS AND RECORDS. The minute
books of the Company contain accurate records of all meetings
and accurately reflect all other actions taken by the Board of
Directors, all committees of the Board of Directors and the
shareholders of the Company. Complete and accurate copies of
all such minute books and of the stock register of the Company
have been made available by the Company for inspection by the
Purchaser. At the Closing, all of those books and records will
be in the possession of the Company.
SECTION 3.04 NO CONFLICT. The execution, delivery and
performance of this Agreement by the Company and the
Shareholders do not and will not (a) violate, conflict with or
result in the breach of any provision of the Articles of
Incorporation or Bylaws of the Company, (b) conflict with or
violate any Law or Governmental Order applicable to the Company,
the Shareholders or any of their respective assets, properties
or businesses, or (c) except as set forth in the Disclosure
Schedule, conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any
consent or approval under, or give to any other Person any
rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Company
pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, sublease, license, permit,
authorization, franchise or other instrument or arrangement to
which the Company is a party or by which any of its assets or
properties are bound or affected.
SECTION 3.05 GOVERNMENTAL CONSENTS AND APPROVALS.
Except for Hart-Scott-Rodino Act approval and as set forth in
SECTION 3.05 of the Disclosure Schedule, the execution, delivery
and performance of this Agreement by the Company and the
Shareholders do not and will not require any Consent or other
order of, action by, filing with or notification to, any
Governmental Authority.
SECTION 3.06 FINANCIAL INFORMATION; BOOKS AND RECORDS.
(a) True and complete copies of the balance sheets of
the Company at December 31, 1996, 1995 and 1994 and the related
statements of income and retained earnings and cash flows of the
Company for the years then ended, together with all related
notes and schedules thereto, accompanied by the audit reports of
Arthur Andersen LLP dated March 14, 1997, March 14, 1996 and
March 30, 1995, respectively, and of the unaudited balance sheet
of the Company at March 31, 1997 and the related statements of
income and retained earnings and cash flows of the Company for
the three months then ended, together with all related notes and
schedules thereto (collectively, the "FINANCIAL STATEMENTS"),
have been, or will be on or before the Purchaser s receipt of
the Disclosure Schedule, delivered by the Company to the
Purchaser. The Financial Statements (i) were prepared in
accordance with the books of account and other financial records
of the Company; (ii) present fairly the financial condition and
the results of operations and cash flows of the Company as of
the dates thereof or for the periods covered thereby, subject in
the case of the unaudited Financial Statements to normal
recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, have a Material Adverse
Effect); and (iii) have been prepared in accordance with
generally accepted accounting practices consistently applied,
except, in the case of the unaudited Financial Statements, for
the lack of explanatory footnote disclosures. Such footnote
disclosures, if included with the unaudited Financial
Statements, would be substantially similar in description and
content to the footnote disclosure in the audited Financial
Statements for the year ended December 31, 1996.
(b) The books of account and other financial records of
the Company: (i) have been maintained, and reflect all items of
income and expense and all assets and Liabilities required to be
reflected therein, in accordance with good business and
accounting practices; and (ii) are in all material respects
complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies.
(c) Except as disclosed in the Disclosure Schedule,
there are no Liabilities of the Company, other than Liabilities
(i) reflected or reserved against on the March 31, 1997 Balance
Sheet, or (ii) such other Liabilities that do not and could not
result in, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.07 ACCOUNTS RECEIVABLE. Accounts Receivable
reflected on the March 31, 1997 Balance Sheet and created since
that date to the Closing Date are (subject to the reserves
established therefor) collectible in the ordinary course of
business at the aggregate recorded amounts thereof, and arise
from bona fide, arm's length transactions between unrelated
parties in the ordinary course of the Company's Business.
SECTION 3.08 INVENTORIES. Except as set forth in SECTION
3.08 of the Disclosure Schedule, the Company has good and
marketable title to its Inventories free and clear of all
Encumbrances. The Inventories are in good and merchantable
condition in all material respects, are suitable and usable for
the purposes for which they are intended, and comply in all
material respects with applicable standards and regulations of
Governmental Authorities.
SECTION 3.09 CONDUCT IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES, EVENTS AND CONDITIONS. Since the Balance Sheet
Date, except for the execution and delivery of this Agreement,
the Business has been conducted in all material respects in the
ordinary course and consistent with past practice. As
amplification and not limitation of the foregoing, except as
disclosed in SECTION 3.09 of the Disclosure Schedule, since the
Balance Sheet Date, neither the Company nor any of the
Shareholders has:
(i) permitted or allowed the assets or properties
of the Company to be subjected to Encumbrance(s) exceeding
$150,000 in the aggregate;
(ii) materially written down or written up the
value of any Inventories or Accounts Receivable or revalued any
assets or properties of the Company;
(iii) amended, terminated, cancelled or
compromised any material claims of the Company or waived any
other material rights of the Company;
(iv) sold, transferred, leased, subleased,
licensed or otherwise disposed of any properties or assets,
other than (a) the sale of Inventories in the ordinary course of
business consistent with past practice and (b) the sale of
equipment which is no longer used or useful in the Business or
which is promptly replaced with equipment of equivalent or
better kind, condition and value;
(v) issued or sold any capital stock, notes, bonds
or other securities, or any option, warrant or other right to
acquire the same, of the Company;
(vi) redeemed any of the capital stock or
declared, made or paid any dividends or distributions (whether
in cash, securities or other property) to the Shareholders,
other than distributions not to exceed the amount of the
Company s net income (as determined by Arthur Andersen LLP in
accordance with generally acceptable accounting principles) for
the period beginning on January 1, 1997 and ending on May 31,
1997 as provided in Section 5.13;
(vii) made any capital expenditure or commitment
for any capital expenditure in excess of $50,000 individually or
$250,000 in the aggregate;
(viii) made any material changes in the customary
methods of operations of the Company or the Business, including,
without limitation, practices and policies relating to
purchasing, Inventories, contracts, marketing, selling and
pricing;
(ix) made any express or deemed election or
settled or compromised any Liability with respect to Taxes of
the Company;
(x) except for trade debt incurred in the ordinary
course of business, permitted the Company to incur any
Indebtedness in excess of $10,000 individually or $15,000 in the
aggregate;
(xi) permitted the Company to make any loan to,
guarantee any Indebtedness of or otherwise incur any
Indebtedness on behalf of any Person except for a loan to an
employee of $1,600;
(xii) failed to pay any creditor any amount owed
to such creditor on a timely basis consistent with past
practice;
(xiii) (A) granted any increase, or announced any
increase, in the wages, salaries, compensation, bonuses,
incentives, pension, severance or other benefits payable by the
Company to any of its employees or consultants, or (B)
established any benefits under any Plan, in either case except
as required by law or involving ordinary increases consistent
with the past practice of the Company;
(xiv) entered into any contract, agreement,
arrangement or transaction with any of its directors, officers,
employees or the Shareholders (or with any relative,
beneficiary, spouse or Affiliate of such Persons);
(xv) suffered any Material Adverse Effect; or
(xvi) agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 3.09 or
granted any options to purchase, rights of first refusal, rights
of first offer or any other similar rights with respect to any
of the actions specified in this Section 3.09, except as
expressly contemplated by this Agreement.
SECTION 3.10 LITIGATION. SECTION 3.10 of the Disclosure
Schedule sets forth an accurate and complete list of (a) all
Actions in the past three years, including Actions commenced
prior thereto which have not yet been resolved, by or against
the Company (or by or against any Affiliate thereof and relating
to the Business or the Company), or affecting any of the assets
or properties of the Company or the Business, and (b) all
Actions which to the actual knowledge of the Company or the
Shareholders are currently threatened to be brought. To the
Company s and the Shareholders knowledge, none of the matters
disclosed in SECTION 3.10 of the Disclosure Schedule has had or
could have a Material Adverse Effect or could affect the
legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 3.11 COMPLIANCE WITH LAWS. The Company has
conducted and continues to conduct the Business substantially in
accordance with all material Laws and Governmental Orders
applicable to Company or its properties or assets, and the
Company is not in material violation of any such Law or
Governmental Order. SECTION 3.11 of the Disclosure Schedule
identifies each Governmental Order applicable to the Company or
any of its properties or assets, and no such Governmental Order
has or has had a Material Adverse Effect. The Company has not
received any citation from the Occupational Safety and Health
Administration or any comparable administration of any state or
local jurisdiction (an "Administration") or any Administration
inspector setting forth any respect in which the facilities or
operations of the Company are not in compliance with OSHA, which
non-compliance has not been corrected or remedied to the
satisfaction of such Administration or inspector.
SECTION 3.12 ENVIRONMENTAL AND OTHER PERMITS AND LICENSES;
RELATED MATTERS.
(a) The Company currently holds all the health and
safety and other permits, licenses, authorizations,
certificates, exemptions and approvals of Governmental
Authorities (collectively, "PERMITS"), including, without
limitation, Environmental Permits, necessary for the current
use, occupancy and operation of each asset and property of the
Company and the conduct of the Business, except where the
failure to have such Permit would not have a Material Adverse
Effect, and all such Permits and Environmental Permits are in
full force and effect. Neither the Company nor any of the
Shareholders has received any notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying
or refusing to renew any Permit or Environmental Permit or
providing written notice of violations under any Environmental
Law which have not been resolved. The Company is in all
material respects in compliance with the Permits and all
applicable Environmental Laws. SECTION 3.12(a) of the
Disclosure Schedule identifies all Permits that will require the
consent of any Governmental Authority to consummate the
transactions contemplated by this Agreement.
(b) All equipment owned or used by the Company,
including, but not limited to above ground storage tanks,
underground storage tanks, and piping associated with such
tanks, is in substantial compliance with all applicable Permits
and Environmental Laws, and can be operated in the ordinary
course of business in substantial compliance with all applicable
Permits and Environmental Laws.
(c) Except as disclosed in SECTION 3.12(c) of the
Disclosure Schedule: (i) Hazardous Materials have not been
generated, used, treated, handled or stored on, or transported
to or from (other than petroleum products handled, stored or
transported in the normal course of business), or Released on
any Owned Real Property or Leased Real Property by the Company,
and the Company is unaware of any such generation, use,
treatment, handling, storage, transportation, or Release by any
other Person, including but not limited to any predecessor in
interest; (ii) the Company has reported all Releases of
Hazardous Material in accordance with Environmental Laws; (iii)
the Company has not Released any Hazardous Materials, and is not
responsible or liable for any Release of Hazardous Materials,
which must be Remediated under applicable Environmental Law
(including, but not limited to, any Release which results in the
presence of Hazardous Materials in the environment in quantities
or amounts that exceed Remediation action levels specified by
regulation or by governmental policy or guideline) or that any
Person or Governmental Authority has requested or required to be
Remediated; (iv) the Company has disposed of all wastes,
including those containing Hazardous Materials, in material
compliance with all applicable Environmental Laws and
Environmental Permits; (v) there are no past, pending or, to the
knowledge of the Company and the Shareholders, threatened
Environmental Claims against the Company or any of its assets or
properties; (vi) the Company has not transported or arranged for
the transportation of any Hazardous Materials to any location
that is listed or proposed for listing on the National
Priorities List under CERCLA or on the CERCLIS or any analogous
state list or which is the subject of any Environmental Claim;
and (vii) neither the Company nor any Governmental Authority is
conducting any Remediation on or related to the Owned Real
Property, the Leased Real Property or the Business.
SECTION 3.13 MATERIAL CONTRACTS.
(a) SECTION 3.13(a) of the Disclosure Schedule lists
each of the following material contracts and agreements
(including, without limitation, oral and informal arrangements)
of the Company (such contracts and agreements listed or
otherwise disclosed in SECTION 3.13(a) of the Disclosure
Schedule, and all agreements relating to Intellectual Property
Rights set forth in SECTION 3.14(a) of the Disclosure Schedule,
being collectively referred to as "MATERIAL CONTRACTS"). The
Company has delivered, or will deliver on or before the
Purchaser s receipt of the Disclosure Schedule, to the Purchaser
correct and complete copies of all Material Contracts:
(i) each contract, agreement, invoice, purchase
order and other arrangement, for the purchase of Inventory,
spare parts, other materials or personal property with any
supplier or for the furnishing of services to the Company or
otherwise related to the Business under the terms of which the
Company: (A) is likely to pay or otherwise give consideration
of more than $100,000 in the aggregate during the twelve month
period ending December 31, 1997, (B) is likely to pay or
otherwise give consideration of more than $100,000 in the
aggregate over the remaining term of such contract, or
(C) cannot be cancelled by the Company without penalty of
$25,000 or more in the aggregate on 30 days' or less notice;
(ii) each contract, agreement, invoice, sales
order and other arrangement, for the sale of Inventory or other
personal property or for the furnishing of services by the
Company which: (A) is likely to involve consideration of more
than $100,000 in the aggregate during the twelve month period
ending December 31, 1997, (B) is likely to involve consideration
of more than $100,000 in the aggregate over the remaining term
of the contract, or (C) cannot be cancelled by the Company
without penalty of $25,000 or more in the aggregate on 30 days'
or less notice;
(iii) all broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales
promotion, market research, marketing consulting and advertising
contracts and agreements to which the Company is a party;
(iv) all management contracts, employment
agreements and contracts with independent contractors or
consultants (or similar arrangements) to which the Company is a
party and which are not cancelable without penalty or further
payment on 30 days' or less notice;
(v) all contracts and agreements relating to
Indebtedness of the Company;
(vi) all contracts and agreements that limit the
ability of the Company to compete in any line of business or
with any Person or in any geographic area or during any period
of time;
(vii) all contracts and agreements between or
among the Company and any Affiliate, officer, director,
employee, shareholder or "associate" (as such term is defined in
SEC Rule 405) of the Company, whether now in effect or in effect
at any time during the three years preceding the date of this
Agreement; and
(viii) all other contracts and agreements, whether
or not made in the ordinary course of business, which are
material to the Company or the conduct of the Business.
(b) Each Material Contract is valid and binding on the
respective parties thereto and is in full force and effect.
Neither Company nor any Shareholder has received any actual
notice that the Company is in breach of or default under any
Material Contract or that any event occurred or failed to occur
which, with the giving of notice or passage of time or both,
would constitute a breach of or default under any Material
Contract.
(c) To the Company s knowledge and the Shareholders
actual knowledge, no other party to any Material Contract is in
breach thereof or default thereunder in any material respect nor
has any event occurred or failed to occur which, with the giving
of the notice or passage of time or both, would constitute a
material breach of or default under any Material Contract by any
other party to any Material Contract.
(d) There is no contract, agreement or other
arrangement granting any Person any preferential right to
purchase any of the properties or assets of the Company.
(e) There is no contract, agreement or other
arrangement the performance of which by the Company would have a
Material Adverse Effect.
SECTION 3.14 INTELLECTUAL PROPERTY RIGHTS.
(a) SECTION 3.14(a) of the Disclosure Schedule sets
forth: (i) all Intellectual Property Rights and all pending
registrations and applications therefor, owned by, used by or
licensed to the Company or in which the Company has any
interest, indicating which are owned and which are licensed, and
(ii) all contracts, agreements or other arrangements under which
the Company has granted, or is obligated to grant, rights to
others to use, reproduce, market or exploit any Intellectual
Property Rights. No Intellectual Property Rights, other than
those set forth in SECTION 3.14(a) of the Disclosure Schedule,
are necessary for the conduct of the Company's Business.
(b) The Company either (i) owns and holds good and
valid title to, or (ii) licenses, in either case free and clear
of all Encumbrances, all the Intellectual Property Rights used
in the conduct of its Business. To the Company s and the
Shareholders knowledge, the Company is not infringing upon or
otherwise acting adversely to the right or claimed right of any
Person under or with respect to any Intellectual Property
Rights, nor has the Company or any of the Shareholders received
written notice of any such claim. The Company is not (i)
obligated pursuant to any contract to make any payments by way
of royalties, fees or otherwise with respect to any Intellectual
Property Rights, or (ii) a licensor in respect of any
Intellectual Property Rights. All licensing agreements pursuant
to which the Company is a licensee of any Intellectual Property
Rights are valid and binding on the Company and, to the
Company's and the Shareholders knowledge, the other parties
thereto, in accordance with their respective terms and are in
full force and effect, and (i) no breach or default by the
Company or event which, with notice or lapse of time or both,
could constitute a breach or default by the Company, exists with
respect thereto, (ii) no party thereto has given notice or
asserted to the Company that the Company is in default
thereunder, and (iii) to the knowledge of the Company and the
Shareholders, no other party thereto is in breach or default
thereunder.
(c) To the Company's knowledge and the Shareholders'
actual knowledge, no third party is infringing on any of the
Intellectual Property Rights relating to or used in the conduct
of the Business.
(d) The Company is not in any way making any unlawful
or wrongful use of any confidential information, customer lists
or trade secrets of any third party, including without
limitation to the Company s and the Shareholders knowledge any
former employer of any present or past employee of the Company.
SECTION 3.15 TANGIBLE PERSONAL PROPERTY.
(a) SECTION 3.15 of the Disclosure Schedule lists each
distinct group of machinery, equipment, tools, supplies,
furniture, fixtures, personalty, vehicles, rolling stock and
other tangible personal property (the "TANGIBLE PERSONAL
PROPERTY") used in the Business or owned or leased by the
Company.
(b) The Company has delivered, or will deliver on or
before the Purchaser s receipt of the Disclosure Schedule, to
the Purchaser correct and complete copies of all leases and
subleases for Tangible Personal Property. With respect to each
of such leases and subleases:
(i) such lease or sublease is legal, valid,
binding, enforceable and in full force and effect and represents
the entire agreement between the respective lessor and lessee
with respect to such property;
(ii) neither the Company nor any Shareholder has:
(A) received any notice of cancellation or termination under
such lease or sublease and no lessor has any right of
termination or cancellation under such lease or sublease except
in connection with a default of the Company thereunder, or (B)
received any notice of a breach or default under such lease or
sublease, which breach or default has not been cured; and
(iii) neither the Company nor any Shareholder nor
(to the knowledge of the Company and the Shareholders) any other
party to such lease or sublease, is in breach or default in any
material respect, and, to the knowledge of the Company and the
Shareholders, no event has occurred that, with notice or lapse
of time would constitute such a breach or default or permit
termination, modification or acceleration under such lease or
sublease.
(c) The Company has the full right to exercise any
renewal options contained in the leases and subleases pertaining
to the Tangible Personal Property on the terms and conditions
therein and upon due exercise would be entitled to enjoy the use
of each item of leased Tangible Personal Property for the full
term of such renewal options.
(d) All of the Company s assets and properties
constituting Tangible Personal Property are in good and
serviceable condition (subject to normal wear and tear) and are
suitable for the uses for which they are intended.
SECTION 3.16 OWNED REAL PROPERTY; LEASED REAL PROPERTY.
(a) The Owned Real Property is described in SECTION
3.16(a) of the Disclosure Schedule. The Company has good and
marketable fee simple title to the Owned Real Property free and
clear of any and all Encumbrances other than minor Encumbrances
that do not affect the use or value of the Owned Real Property.
(b) The Leased Real Property is described in SECTION
3.16(b) of the Disclosure Schedule and, except as described
therein, the Company does not lease any real property. The
Company has delivered, or will deliver on or before the
Purchaser s receipt of the Disclosure Schedule, to the Purchaser
correct and complete copies of all leases and subleases for
Leased Real Property. With respect to each of such leases and
subleases:
(i) such lease or sublease is legal, valid,
binding, enforceable and in full force and effect and represents
the entire agreement between the respective lessor and lessee
with respect to such property;
(ii) neither the Company nor any Shareholder has:
(A) received any notice of cancellation or termination under
such lease or sublease and no lessor has any right of
termination or cancellation under such lease or sublease except
in connection with a default of the Company thereunder, or (B)
received any notice of a breach or default under such lease or
sublease, which breach or default has not been cured; and
(iii) neither the Company nor any Shareholder nor
(to the knowledge of the Company and the Shareholders) any other
party to such lease or sublease, is in breach or default in any
material respect, and, to the knowledge of the Company and the
Shareholders, no event has occurred that, with notice or lapse
of time would constitute such a breach or default or permit
termination, modification or acceleration under such lease or
sublease.
(c) The Company presently enjoys peaceful and quiet
possession of its Owned Real Property and Leased Real Property
and, to the knowledge of the Company and the Shareholders, there
is no condemnation or eminent domain proceeding pending or
threatened against any Owned Real Property or Leased Real
Property. The Company has the full right to exercise any
renewal options contained in the leases and subleases pertaining
to the Leased Real Property on the terms and conditions therein
and upon due exercise would be entitled to enjoy the use of each
Leased Real Property for the full term of such renewal options.
SECTION 3.17 ASSETS. The Company owns, leases or has the
legal right to use all the properties and assets, including
without limitation the Intellectual Property Rights, the Owned
Real Property, the Leased Real Property and the Tangible
Personal Property, used or intended to be used in the conduct of
the Business or otherwise owned, or leased or used by the
Company, and, with respect to contract rights, the Company is a
party to and enjoys the benefit of all contracts, agreements and
other arrangements used or intended to be used by the Company in
or relating to the conduct of the Business. Except as disclosed
in SECTION 3.17 of the Disclosure Schedule, the Company has good
and marketable title to, or, in the case of leased or subleased
properties or assets, valid and subsisting leasehold interests
in all such assets and properties, free and clear of all
Encumbrances except minor Encumbrances that do not affect the
use or value of such assets and properties, and such assets and
properties constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and
necessary in the conduct of, the Business.
SECTION 3.18 SUPPLIERS AND CUSTOMERS.
(a) SECTION 3.18(a) of the Disclosure Schedule lists
the names and addresses of the Company's ten largest suppliers
of petroleum products (other than lubricants) during the 12-
month period ended December 31, 1996 and the amount for which
each such supplier invoiced the Company during such period.
Except as disclosed in SECTION 3.18(a) of the Disclosure
Schedule, neither the Company nor any of the Shareholders has
received any notice or has any reason to believe that any such
supplier will not sell such petroleum products to the Company at
any time after the date of this Agreement on terms and
conditions similar to those imposed on current sales to the
Business, subject to general and customary price changes.
(b) SECTION 3.18(b) of the Disclosure Schedule lists
the names and addresses of all of the Company s suppliers of
lubricants during the 12-month period ended December 31, 1996
and the amount for which each such supplier invoiced the Company
during such period. Except as disclosed in SECTION 3.18(b) of
the Disclosure Schedule, neither the Company nor any of the
Shareholders has received any notice or has any reason to
believe that any such supplier will not sell such lubricants to
the Company at any time after the date of this Agreement on
terms and conditions similar to those imposed on current sales
to the Business, subject to general and customary price changes.
(c) SECTION 3.18(c) of the Disclosure Schedule lists
the names and addresses of the Company s ten largest customers
of diesel fuel, its ten largest customers of gasoline, and its
ten largest customers of lubrication products during the 12-
month period ended December 31, 1996 and the amount for which
the Company invoiced each such customer during such period.
Except as disclosed in SECTION 3.18(c) of the Disclosure
Schedule, neither the Company nor any of the Shareholders has
received any notice or has any reason to believe that any such
customer will not purchase such products from the Company at any
time after the date of this Agreement on terms and conditions
similar to those imposed on current purchases from the Business.
SECTION 3.19 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) SECTION 3.19(a) of the Disclosure Schedule lists
the names, titles, current annual compensation rates, effective
dates of such current compensation, the amounts of the last
increase in compensation rates and the dates of hire of all the
Company s employees, as well as the amount of any bonus paid or
accrued with respect to the year ended December 31, 1996, and,
except for amounts set forth in SECTION 3.09 of the Disclosure
Schedule, any amounts of bonus paid, accrued or expected to be
paid with respect to any periods beginning thereafter.
(b) Except as disclosed in SECTION 3.19(b) of the
Disclosure Schedule, the Company has not ever established or
promised to establish any Plan for the benefit of its employees.
With respect to Plans disclosed in SECTION 3.19(b) of the
Disclosure Schedule, the Company will make available to the
Purchaser correct and complete copies of each such Plan and each
material document prepared in connection with each such Plan.
Except as set forth in SECTION 3.19(b) of the Disclosure
Schedule, (i) none of such Plans is a multi-employer plan within
the meaning of ERISA; (ii) none of such Plans promises or
provides retiree medical or life insurance benefits to any
person; (iii) none of such Plans promises or provides severance
benefits or benefits contingent upon a change in ownership or
control, within the meaning of Section 280G of the Code; (iv)
none of such Plans is or is required to be qualified under
Section 401(a) of the Code; (v) none of such Plans is subject to
Title IV of ERISA; and (vi) the Company has not incurred any
liability under, and the Company has complied in all respects
with, the Worker Adjustment Retraining Notification Act of 1988,
and no fact or event exists that could give rise to liability
under such act.
SECTION 3.20 LABOR MATTERS. No collective bargaining or
other labor union contracts are applicable to employees of the
Company. There never has been, nor is there pending or to the
knowledge of the Company or the Shareholders threatened, a labor
dispute, strike or work stoppage against the Company. To the
knowledge of the Company and the Shareholders, neither the
Company nor any Shareholder, nor any of their respective
representatives or employees, has committed any unfair labor
practices in connection with the operation of the Company. The
Company has complied with all applicable Laws relating to the
employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of social
security and similar Taxes, and the Company is not liable for
any arrears of wages or any Taxes or penalties for failure to
comply with any of the foregoing.
SECTION 3.21 TAXES.
(a) The Company and the Shareholders have duly filed
with the relevant Tax authorities all returns with respect to
Taxes relating to the Company, including without limitation
estimated tax returns and other information returns and reports
which are required to be filed by them and each such document is
complete, correct and in accordance with all requirements of
applicable Law. The Company and the Shareholders have paid and
discharged all Taxes shown as due on all Tax returns and have
paid all other Taxes as are due, other than such Taxes as are
being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with generally accepted accounting principles. All
Taxes required to be withheld, collected or deposited by Company
have been timely withheld, collected or deposited and, to the
extent required, have been paid to the relevant Tax authority.
To the knowledge of the Company and the Shareholders, neither
the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or threatening to assert against the
Company or the Shareholders any deficiency or claim for
additional Taxes or interest thereon or penalties in connection
therewith. The Company has not granted any waiver of any
statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. There are no Tax liens
on any of the assets or properties of the Company or the
Business.
(b) The Company is a qualified "S Corporation" as such
term is defined and used in Section 1361 of the Code and a valid
election under Section 1362 of the Code will remain in effect
through the Closing Date. Except as disclosed in SECTION
3.21(b) of the Disclosure Schedule, since the date of its
incorporation, the Company has been a qualified "S Corporation"
with a valid election continuously in effect for all state
income tax purposes in each state where the Company files or is
required to file income tax returns. Except as disclosed in
SECTION 3.21(b) of the Disclosure Schedule, the Company has not
filed (nor has it been required to file) any income tax return
in any jurisdiction as a "C Corporation" as such term is defined
and used in Section 1361 of the Code or any equivalent provision
of any state Tax Laws.
SECTION 3.22 INSURANCE. SECTION 3.22 of the Disclosure
Schedule lists each material insurance policy (including but not
limited to policies providing property, casualty, liability,
workers' compensation, theft, emissions, machinery, bond and
surety arrangements) to which the Company is a party, named
insured or otherwise the beneficiary of coverage. Each such
policy is in full force and effect. Neither the Company nor, to
the knowledge of the Company and the Shareholders, any other
party to such a policy, is in breach or default (including any
breach or default with respect to the payment of premiums or the
giving of notices), and to the knowledge of the Company and the
Shareholders, no event has occurred that, with notice or lapse
of time or both, would constitute such a breach or default or
permit termination or modification of such policy.
SECTION 3.23 BROKERS. No broker, finder, investment banker
or other Person is entitled to any brokerage, finder's or other
fee or commission or compensation in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or the
Shareholders.
SECTION 3.24 ABSENCE OF CERTAIN BUSINESS PRACTICES.
Neither the Company, nor any Shareholder, nor any officer,
employee or agent of the Company, nor any other Person acting on
behalf of any of them, has, directly or indirectly, given or
agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other Person who is or may be
in a position to help or hinder the Company (or assist the
Company in connection with any actual or proposed transaction)
which: (i) subjects the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceedings; (ii)
if not given in the past, might have had a Material Adverse
Effect; or (iii) if not continued in the future, might have a
Material Adverse Effect or which might subject the Company to
suit or penalty in any private or governmental litigation or
proceeding.
SECTION 3.25 FULL DISCLOSURE.
(a) Neither the Company nor any Shareholder is aware of
any fact or facts pertaining to the Company, the Business or the
assets or properties of the Company which could have a Material
Adverse Effect and which have not been disclosed in the
Disclosure Schedule or otherwise disclosed to the Purchaser by
the Company or the Shareholders in writing.
(b) No representation or warranty of the Company or the
Shareholders, respectively, in this Agreement, nor any statement
or certificate furnished or to be furnished to the Purchaser
pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement and the Ancillary
Agreements, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company and the Shareholders to
enter into this Agreement, the Purchaser represents and warrants
to the Company and the Shareholders as follows:
SECTION 4.01 ORGANIZATION AND AUTHORITY OF THE PURCHASER.
The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arizona and
has all requisite corporate power and authority to enter into
this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The Purchaser
will seek approval by its Board of Directors of the execution
and delivery of this Agreement within ten days following the
date hereof. When such approved is obtained, the execution and
delivery of this Agreement by Purchaser will have been duly
authorized by all requisite action on the part of the Purchaser.
This Agreement will be duly executed and delivered by the
Purchaser and (assuming due authorization, execution and
delivery by the Company and the Shareholders) this Agreement
will constitute a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with
its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or other similar laws affecting
creditors' rights and remedies generally and by the effect of
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
SECTION 4.02 NO CONFLICT. The execution, delivery and
performance of this Agreement by the Purchaser do not and will
not (a) violate, conflict with or result in the breach of any
provision of the Articles of Incorporation or Bylaws of the
Purchaser, (b) conflict with or violate any Law or Governmental
Order applicable to the Purchaser, or (c) conflict with, or
result in any breach or default or other event which would have,
or be reasonably likely to have, a material adverse effect on
the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.
SECTION 4.03 CONSENTS AND APPROVALS. Except for Hart-
Scott-Rodino Act approval, the execution and delivery of this
Agreement by the Purchaser do not and will not require any
consent, approval, authorization, waiver, clearance or other
order of, action by, filing with, or notification to, any
Governmental Authority or any other Person.
SECTION 4.04 INVESTMENT. The Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities
Act of 1933, as amended (the "1933 Act"), and is acquiring the
Shares pursuant to this Agreement for its own account for
investment and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the 1933
Act.
SECTION 4.05 BROKERS. No broker, finder, investment banker
or other Person is entitled to any brokerage, finder's or other
fee or commission or compensation in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 CONDUCT OF BUSINESS PRIOR TO CLOSING. The
Company and the Shareholders, jointly and severally, covenant
that prior to the Closing, without the Purchaser's consent, the
Company and the Shareholders shall not:
(a) take or authorize any of the actions set forth in
Section 3.09;
(b) issue or sell any shares of the Company's capital
stock of any class, or issue or sell any securities convertible
into, or options with respect to, or warrants to purchase or
rights to subscribe to, any shares of its capital stock of any
class, or make any commitment to issue or sell any such shares
or securities;
(c) directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate
with, provide non-public information to, or consider the merits
of any unsolicited inquiry or proposal from any Person (other
than the Purchaser) relating to the merger, consolidation or
acquisition of the Company or any of the assets or properties of
the Company (other than acquisitions of Inventories in the
ordinary course of business);
(d) change the Company s Articles of Incorporation or
Bylaws; or
(e) agree or commit to do or authorize any of the
foregoing.
SECTION 5.02 SHAREHOLDERS COOPERATION AFTER THE CLOSING;
FURTHER ACTION. At any time and from time to time after the
Closing, the Shareholders shall execute and deliver to the
Purchaser such other instruments and take such other actions as
the Purchaser may reasonably request more effectively to vest
title to the Shares in the Purchaser and, to the full extent
permitted by law, to put the Purchaser in actual possession and
operating control of the Company and its assets, properties and
the Business. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary,
proper or advisable under applicable Laws, and execute and
deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and to consummate and
make effective the transactions contemplated hereby. The
Company and the Shareholders will provide such information
(including financial information) as is reasonably required by
Purchaser for any Report on Form 8-K to be filed by Purchaser
with the Securities and Exchange Commission in connection with
this transaction.
SECTION 5.03 CONFIDENTIALITY.
(a) The Shareholders covenant and agree to, and will
cause their respective Affiliates, trustees, beneficiaries,
employees and agents to: (i) treat and hold as confidential
(and not disclose or provide access to any Person to) all
information relating to trade secrets, processes, price lists,
customer lists, raw materials, supplier lists, pricing and
marketing plans, policies and strategies, operations methods,
and any other Intellectual Property Rights or other confidential
information with respect to the Business or the Company; (ii) in
the event that the Shareholders or any of their Affiliates,
trustees, beneficiaries, employees or agents become legally
compelled to disclose any information, provide the Purchaser
with prompt written notice of such requirement so that the
Purchaser may seek a protective order or other remedy or waive
compliance with this Section 5.03; and (iii) promptly furnish
(prior to or at the Closing) to the Purchaser any and all copies
(in whatever form or medium) of all such confidential
information then in the possession of the Shareholders or any of
their respective Affiliates, trustees, beneficiaries, employees
and agents and destroy any and all additional copies then in the
their possession of such information and of analyses,
compilations, studies or other documents prepared, in whole or
in part, on the basis thereof; PROVIDED, HOWEVER, that this
sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in
breach of this Agreement by the Shareholders or their
Affiliates, trustees, beneficiaries, employees or agents.
(b) All information furnished by any Shareholder or the
Company to the Purchaser pursuant to this Agreement shall be
treated as the property of such Shareholder or the Company until
the Closing Date and shall be kept confidential by the Purchaser
until the Closing Date. If the Closing does not occur, the
Purchaser shall return to the Shareholders or the Company all
documents and other materials containing, reflecting or
referring to such information, shall keep confidential all such
information, and shall not directly or indirectly use such
information for any competitive or commercial purpose. The
Purchaser s obligation to keep such information confidential and
to not use such information shall continue for a period of two
years from the date the transactions contemplated by this
Agreement are abandoned and shall extend to the directors,
officers, employees and agents of the Purchaser. The Purchaser
shall take all necessary action to inform such persons of the
obligation of confidentiality set forth in this Section 5.03(b).
The obligation to keep such information confidential shall not
apply to any information which the Purchaser can demonstrate (i)
was already in its possession prior to the disclosure thereof by
any Shareholder or the Company to the Purchaser, (ii) was then
available to the public, (iii) became known to the public
through no fault of the Purchaser or any of its directors,
officers, employees or agents, or (iv) was disclosed to the
Purchaser by a third party unaffiliated with the Purchaser who,
to the knowledge of the Purchaser, was not bound by an
obligation of confidentiality to the Shareholders or the
Company, nor shall the obligation to keep such information
confidential apply to disclosures required to be made in
accordance with any Law.
SECTION 5.04 REMEDIES FOR BREACH OF COVENANTS. The
Shareholders agree and acknowledge that remedies at Law for any
breach of their obligations under Section 5.03(a) hereof are
inadequate and that in addition thereto the Purchaser and/or the
Company shall be entitled to seek equitable relief, including
injunctive relief and specific performance, in the event of any
such breach, without the necessity of demonstrating the
inadequacy of monetary damages. The Purchaser agrees and
acknowledges that remedies at Law for any breach of its
obligations under Section 5.03(b) hereof is inadequate and that
in addition thereto the Company and/or the Shareholders shall be
entitled to seek equitable relief, including injunctive relief
and specific performance, in the event of any such breach,
without the necessity of demonstrating the inadequacy of
monetary damages.
SECTION 5.05 FINANCIAL STATEMENTS. The Company shall
promptly provide the Purchaser with copies of any financial
statements prepared with respect to the Company dated or
prepared subsequent to the Balance Sheet Date, which financial
statements shall include the unaudited balance sheet of the
Company at April 30, 1997 and May 31, 1997 and the related
statements of income and retained earnings and cash flows of the
Company for the four and five months, respectively, then ended,
together with all related notes and schedules thereto. The
Company and the Shareholders covenant that the May 31, 1997
balance sheet shall not be materially and adversely different
from the December 31, 1996 balance sheet. By delivering such
financial statements, the Company and the Shareholders jointly
and severally make the same representations and warranties to
the Purchaser with respect to such financial statements as they
made with respect to the Financial Statements pursuant in
Section 3.06(a) of this Agreement.
SECTION 5.06 PRESERVATION OF ASSETS AND RELATIONSHIPS.
After the date hereof and through the Closing, the Company shall
use its best efforts to preserve intact the assets and
properties of the Company and to keep available the services of
its officers and employees and maintain good relationships with
suppliers, customers and others having business relationships
with the Company.
SECTION 5.07 TRANSFER OF SHARES. The Shareholders agree
that after the date hereof and through the Closing, without the
Purchaser's consent, the Shareholders will not sell, transfer,
mortgage, pledge or otherwise dispose of or encumber all or any
part of the Shares.
SECTION 5.08 AGREEMENT TO VOTE. The Shareholders agree to
vote or cause to be voted all Shares in favor of the
transactions contemplated by this Agreement and against any
action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of the Company or the Shareholders under this
Agreement.
SECTION 5.09 REPRESENTATIONS AND WARRANTIES. Through the
Closing Date, each of the parties shall refrain from taking any
action which would render any of its representations or
warranties in this Agreement inaccurate as of the Closing Date.
SECTION 5.10 DUE DILIGENCE INVESTIGATION.
(a) From the date of this Agreement and through May
23, 1997 (the "DUE DILIGENCE PERIOD"), the Shareholders will,
and will cause the Company to, give to the Purchaser and its
counsel, accountants, auditors, and their consultants and
representatives, full access during normal business hours and
such additional hours as the Purchaser may reasonably request to
all of the Company s assets, properties, books, contracts,
commitments and records, permit Purchaser to conduct soil, air
and groundwater sampling in connection with its examination of
the assets, and furnish the Purchaser during the Due Diligence
Period other information concerning the Business, assets,
properties, rights and personnel of the Company as the Purchaser
or its representatives may reasonably request. From time to
time during the Due Diligence Period, the Shareholders will, and
will cause the Company to, permit the Purchaser to make and
cooperate and assist the Purchaser in making such investigations
as may be reasonably requested by the Purchaser to enable the
Purchaser to determine compliance by the Company and the
Shareholders with the terms of this Agreement.
(b) The condition to Closing set forth in Section
7.02(i) shall be deemed satisfied unless, within one business
day after the Due Diligence Period, the Purchaser notifies the
Company and the Shareholder Representative that the Purchaser s
due diligence investigation has revealed matter(s): (i) which,
in the reasonable judgment of the Purchaser, indicate that the
Company and its business, prospects, assets and financial
condition are not substantially as represented by the Company
and the Shareholders in this Agreement; or (ii) which, in the
reasonable judgment of a comparable industry third party
purchasing a company comparable to the Company, would, alone or
in the aggregate, cause such a third party not to purchase the
Company.
SECTION 5.11 HART-SCOTT-RODINO ACT. As promptly as
practicable following the date of this Agreement, the Purchaser
and the Shareholders shall prepare and file with the Federal
Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice ("DOJ"), Notification and Report Forms
with respect to the transactions contemplated by this Agreement,
which Forms shall comply with the provisions of the Hart-Scott-
Rodino Act and the regulations promulgated thereunder. The
parties shall cooperate with and assist one another as may
reasonably be requested in connection with the preparation and
submission of such filings. The parties agree to promptly
furnish the FTC and the DOJ with any additional information
requested by either of them in connection with such filings.
SECTION 5.12 BENEFITS TO EMPLOYEES.
(a) The Purchaser agrees to cause the Company to
continue the existing incentive bonus programs as set forth in
SECTION 5.12(a) of the Disclosure Schedule through December 31,
1997.
(b) The Company has adopted or will adopt prior to
Closing a Termination Allowance Plan No. 1 (the "TERMINATION
PLAN"), which shall be substantially in the form attached hereto
as EXHIBIT E. The Purchaser agrees to cause the Company to
retain, on an at-will basis, all employees of the Company as of
the Closing Date. The Company may, however, terminate any such
employees at any time after the Closing Date, and payment of
severance pay pursuant to the Termination Plan shall be the
Company s sole obligation to employees who are terminated after
the Closing Date. The Termination Plan shall provide for the
payment of severance pay of one month s salary for each year of
employment by the Company, up to a maximum of one year s salary,
for any employee terminated by the Company within 12 months
following the Closing Date unless such employee is terminated
for "Cause" as defined in the Termination Plan.
(c) Prior to the Closing Date, the Company will enter
into employment agreements (the "EMPLOYMENT AGREEMENTS") with
six certain key employees of the Company which will include an
aggregate stay-on bonus for all such key employees of
$1,200,000, with such bonus to be: (i) allocated such that no
one key employee receives more than $300,000; (ii) allocated in
a manner reasonably acceptable to the Shareholders
Representative; and (iii) paid in such manner as the Purchaser
determines in its reasonable discretion (including cash or stock
or options of the Purchaser or an Affiliate of the Purchaser).
Such Employment Agreements shall be satisfactory to the
Purchaser in its reasonable discretion.
SECTION 5.13 DISTRIBUTIONS. The Shareholders agree that
they will cause the Company to estimate the distributions
relating to the period beginning on January 1, 1997 and ending
on May 31, 1997 contemplated by Section 3.09(vi) before the
Closing and will cause the Company to pay such distributions to
the Shareholders immediately before or at the Closing. The
parties agree that the actual net income for such period shall
be calculated by the Company with the advice of its independent
accountants as soon as practicable after the Closing, and that
any difference between the estimated and actual amounts shall be
paid by the Company to the Shareholders or by the Shareholders
to the Company, as the case may be, by no later than June 15,
1997.
SECTION 5.14 RIGHTS OF FIRST REFUSAL. The Company shall
use its best efforts to obtain the waiver (with each such waiver
to be in form and substance satisfactory to the Purchaser in its
reasonable discretion) or expiration without exercise of all
rights of first refusal held by any Person relating to the
Company or the Business or any of the assets or properties of
the Company or the Business.
SECTION 5.15 TRANSFER OF SHARES AND OPERATION OF THE
BUSINESS AFTER THE CLOSING. In consideration of the sale of the
Shares to the Purchaser, the Purchaser agrees, for a term of
three (3) years after the Closing Date, to: (a) not sell,
convey, lease or transfer the Shares, the Company, the Business
or the significant properties and assets of the Company; and (b)
own and operate the Company and the Business.
ARTICLE VI
TAX MATTERS
SECTION 6.01 COOPERATION AND EXCHANGE OF INFORMATION. The
Company, the Shareholders and the Purchaser will provide each
other with such cooperation and information as any of them
reasonably may request of the other in filing any Tax return
determining a liability for Taxes or a right to a refund of
Taxes, or participating in or conducting any audit or other
proceeding in respect of Taxes.
SECTION 6.02 CONVEYANCE TAXES. The Shareholders shall be
liable for, and the Shareholders jointly and severally covenant
and agree that they shall hold the Purchaser harmless against,
any transfer or conveyance Taxes which become payable in
connection with the transactions contemplated by this Agreement.
SECTION 6.03 INDEMNIFICATION.
(a) The Shareholders shall be liable for and shall
jointly and severally indemnify, defend and hold harmless the
Purchaser, the Company and any successors thereto from and
against all Taxes imposed on the Shareholders or the Company
with respect to the Company for (i) all years or periods of the
Company ending on or prior to the Closing Date, and (ii) all
years or periods beginning before the Closing Date and ending
after the Closing Date to the extent that the Taxes are
allocable to the portion of such period ending on the Closing
Date, and from and against any gain recognized by the
Shareholders or the Company upon or as a result of the
transactions contemplated by this Agreement.
(b) The Purchaser shall be liable for and shall
indemnify, defend and hold harmless the Shareholders from and
against all Taxes for: (i) all years or periods of the Company
ending after the Closing Date, and (ii) all years or periods
beginning before the Closing Date and ending after the Closing
Date to the extent that the Taxes are allocable to the portion
of such period ending after the Closing Date.
SECTION 6.04 ALLOCATIONS. For purposes of this Agreement,
in the case of any Tax that is imposed on a periodic basis and
is payable for a period that begins before the Closing Date and
ends after the Closing Date, the portion of such Taxes payable
for the period ending on the Closing Date shall be (i) in the
case of any Tax other than a Tax based upon or measured by
income, the amount of such Tax for the entire period multiplied
by a fraction the numerator of which is the number of days in
the period ending on the Closing Date and the denominator of
which is the number of days in the entire period, and (ii) in
the case of any Tax based upon or measured by income, the amount
which would be payable if the taxable year ended on the Closing
Date, as determined on the basis of the permanent financial
records of the Company, including workpapers. Any credit shall
be prorated based upon the fraction employed in clause (i) of
the preceding sentence. In the case of any Tax based upon or
measured by capital (including net worth or long-term debt) or
intangibles, any amount thereof required to be allocated under
this paragraph (b) shall be computed by reference to the level
of such items on the Closing Date.
SECTION 6.05 RETURNS.
(a) The Shareholders, at the Company s expense, shall
prepare and timely file, or shall prepare for the Company to
timely file, any income and franchise Tax reports and returns
for any period which ends on or prior to the Closing Date and
which are required to be filed after the Closing Date. All such
returns and reports shall be prepared using Tax accounting
methods and principles, including depreciation methods and other
accounting methods which may be elected or adopted annually,
which are consistent with those used in the returns and reports
of the filing party for preceding Tax periods, unless a
different treatment is required by law. In preparing such
returns and reports, neither the Shareholders nor the Company
shall make any election with respect to the computation of any
item of income, deduction or credit of the Company inconsistent
with the preparation of prior years Tax returns. The
Shareholders will submit to the Purchaser for its review and
approval, at least ten days before the due date for filing,
copies of all such returns and reports of Taxes which they are
obligated to file under this Agreement and shall, in good faith,
consider all comments made by the Purchaser. Subject to Section
6.03, the Shareholders shall timely pay any unpaid liability for
Taxes reflected on each return and report prepared by them
pursuant to this Agreement. The Shareholders shall deliver to
the Purchaser a complete and accurate copy of each return and
report prepared by them pursuant to this paragraph, and make
available to the Purchaser copies of the permanent financial
records (including tax workpapers) with respect to the Company
used to prepare such return or report within 60 days after the
date the return or report is filed with the applicable Tax
authority.
(b) The Purchaser or the Company shall timely prepare
and file all other required Tax returns and reports for the
Company which include any period on or prior to the Closing Date
and are due after the Closing Date. The Shareholders shall not
challenge and agree to be bound by any returns and reports
prepared and filed by the Purchaser or the Company pursuant to
the provisions of this paragraph (b), provided that such returns
and reports are prepared and filed on a basis substantially
consistent with prior years.
(c) The Shareholders shall promptly provide to the
Purchaser after the date hereof a true and complete copy of any
amendment or adjustment to a return or report of Taxes or other
document filed with or issued by a Tax authority after the
Closing Date to the extent that such amendment or adjustment
affects the Purchaser s or the Company s liability for Taxes
hereunder.
SECTION 6.06 SECTION 338(H)(10) ELECTION. The Shareholders
agree to make a timely Section 338(h)(10) election pursuant to
Regulation 1.338(h)(10)-1(d) jointly with the Purchaser with
respect to the acquisition of the Company on Form 8023A and in
accordance with the instructions to such form. The Shareholders
agree to report on the Company s final S Corporation tax return
the deemed sale gain resulting from such elections in accordance
with Section 338 and Regulation 1.338(h)(10)-1(e). The
Shareholders shall submit to the Purchaser for its review and
approval a proposed valuation of the assets of the Company
deemed to have been sold at least 60 days prior to the due date
for filing any Tax return reporting such deemed sale gain. The
parties agree to negotiate in good faith such valuation. If the
Purchaser and the Shareholders cannot agree on a valuation of
the assets, the parties agree to hire Ernst & Young LLP to
perform a valuation study of the assets and the parties shall
share equally the cost of such study and agreed to be bound by
the results.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND THE
COMPANY. The obligations of the Shareholders and the Company to
consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct when made and
shall be true and correct in all material respects as of the
Closing with the same force and effect as if made as of the
Closing, the covenants and agreements contained in this
Agreement to be complied with by the Purchaser on or before the
Closing shall have been complied with in all material respects,
and the Company shall have received a certificate of the
Purchaser to such effect signed by a duly authorized officer
thereof;
(b) NO PROCEEDING OR LITIGATION. No Action shall have
been commenced or threatened against the Shareholders, the
Company or the Purchaser, seeking to restrain or materially
alter the transaction contemplated hereby which, in the
reasonable good faith determination of the Company and the
Shareholders, is likely to render it impossible or unlawful to
consummate the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that the provision of this Section 7.01(b)
shall not apply if any of the Shareholders or the Company has
solicited or encouraged any such Action;
(c) RESOLUTIONS. The Company shall have received
certified copies of the resolutions of the Purchaser evidencing
its authorization of the execution and delivery of this
Agreement and the other agreements, documents and instruments
referenced herein, and the consummation of the transactions
contemplated hereby and thereby;
(d) CLOSING DOCUMENTS. The Purchaser shall be prepared
to deliver the closing documents set forth in Section 2.05 of
this Agreement; and
(e) HART-SCOTT RODINO ACT APPROVAL. The waiting period
(and any extension hereof) applicable to this Agreement under
the Hart-Scott-Rodino Act shall have terminated or expired
without the Purchaser being obligated to divest any assets or
take any other actions that the Purchaser believes would have
a Material Adverse Effect;
7.02 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Shareholders and the
Company contained in this Agreement shall have been true and
correct when made and shall be true and correct in all material
respects as of the Closing with the same force and effect as if
made as of the Closing, the covenants and agreements contained
in this Agreement to be complied with by the Shareholders and
the Company on or before the Closing shall have been complied
with in all material respects, and the Purchaser shall have
received a certificate of the Shareholders and the Company to
such effect signed by the Shareholders and a duly authorized
officer of the Company;
(b) NO PROCEEDING OR LITIGATION. No Action shall have
been commenced or threatened against the Shareholders, the
Company or the Purchaser, seeking to restrain or materially and
adversely alter the transactions contemplated hereby which in
the reasonable good faith determination of the Purchaser is
likely to render it impossible or unlawful to consummate the
transactions contemplated by this Agreement or which could have
a Material Adverse Effect; PROVIDED, HOWEVER, that the
provisions of this Section 7.02(b) shall not apply if the
Purchaser has solicited or encouraged any such Action;
(c) RESOLUTIONS. The Purchaser shall have received
certified copies of the resolutions of the Company and the
Shareholders evidencing their authorization of the execution and
delivery of this Agreement and the other agreements, documents
and instruments referenced herein, and the consummation of the
transactions contemplated hereby and thereby;
(d) CONSENTS AND APPROVALS. The Shareholders, the
Company and the Purchaser shall have received, each in form and
substance satisfactory to the Purchaser in its reasonable
discretion, all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement;
(e) CLOSING DOCUMENTS. The Company and the
Shareholders shall be prepared to deliver the closing documents
set forth in Section 2.04 of this Agreement;
(f) PURCHASER S BOARD APPROVAL. Within ten days
following the date of this Agreement, the Board of Directors of
the Purchaser shall have authorized the execution and delivery
of this Agreement and the other agreements, documents and
instruments referenced herein, and the consummation of the
transactions contemplated hereby and thereby;
(g) HART-SCOTT-RODINO ACT APPROVAL. The
waiting period (and any extension thereof) applicable to this
Agreement under the Hart-Scott-Rodino Act shall have terminated
or expired without the Purchaser being obligated to divest any
assets or take any other actions that the Purchaser believes
would have a Material Adverse Effect;
(h) EMPLOYMENT AGREEMENTS AND NONCOMPETITION AGREEMENT.
The Company shall have entered into the Employment Agreements
with the applicable employees in form and substance satisfactory
to the Purchaser in its reasonable discretion, and Bill Wilhoit
shall have entered into the Noncompetition Agreement;
(i) DUE DILIGENCE. Subject to the provisions of
Section 5.10(b), the Purchaser shall be satisfied in its
reasonable discretion with the results of its due diligence
investigation of the Company pursuant Section 5.10 (a); and
(j) RIGHTS OF FIRST REFUSAL. All rights of first
refusal held by any Person relating to the Company or the
Business or any of the assets or properties of the Company or
the Business shall have been waived (with each such waiver to
be in form and substance satisfactory to the Purchaser in its
reasonable discretion) or shall have expired without exercise.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 INDEMNIFICATION BY THE SHAREHOLDERS.
Subject to the provisions of Sections 8.03 and 8.04, the
Purchaser and its Affiliates, officers, directors, employees,
agents, successors and assigns (each a "PURCHASER INDEMNIFIED
PARTY") shall be indemnified and held harmless, jointly and
severally, by the Shareholders for any and all Liabilities,
losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation,
attorneys' and consultants' fees and expenses) actually suffered
or incurred by the Purchaser Indemnified Parties (including,
without limitation, any Action brought or otherwise initiated by
any of them) (hereinafter a "LOSS"), arising out of or resulting
from:
(a) the breach of any representation or warranty made
by the Company or the Shareholders contained in this Agreement
or in any other document delivered by the Company or the
Shareholders pursuant to or in connection with this Agreement;
or
(b) the breach of any covenant or agreement by the
Company or the Shareholders contained in this Agreement or in
any other document delivered by the Company or the Shareholders
pursuant to or in connection with this Agreement.
SECTION 8.02 INDEMNIFICATION BY THE PURCHASER. The
Shareholders and their Affiliates, officers, directors,
trustees, employees, agents, successors and assigns (each a
"SHAREHOLDER INDEMNIFIED PARTY") shall be indemnified and held
harmless by the Purchaser for any and all Losses actually
suffered or incurred by the Shareholder Indemnified Parties
(including, without limitation, any Action brought or otherwise
initiated by any of them), arising out of or resulting from:
(a) the breach of any representation or warranty made
by the Purchaser contained in this Agreement or in any other
document delivered by the Purchaser pursuant to or in connection
with this Agreement;
(b) the breach of any covenant or agreement by the
Purchaser contained in this Agreement or in any other document
delivered by the Purchaser pursuant to or in connection with
this Agreement; or
(c) the payment by J.W. Wilhoit of amounts which he has
personally guaranteed and which he becomes obligated to pay as a
result of the Company s breach after the Closing Date of
equipment leases delivered to the Purchaser pursuant to Section
3.15(b) or Material Contracts delivered to the Purchaser
pursuant to Section 3.13(a).
SECTION 8.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company and the
Shareholders contained in this Agreement shall survive the Closing
for a period of one year; PROVIDED, HOWEVER, that: (a) the
representations and warranties dealing with Tax matters shall
survive for a period equal to the applicable statute of
limitations; (b) the representations and warranties set forth
in Section 3.10 shall survive for a period equal to the
applicable statute of limitations with respect to
any Action described therein; (c) the representations and
warranties with respect to Environmental matters, Environmental
Claims, Environmental Laws and Environmental Permits shall
survive for a period of three years; (d) the representations and
warranties set forth in Sections 3.01, 3.02 and 3.17 shall
survive indefinitely; and (e) the Purchaser Indemnified Parties
right to seek indemnification pursuant to Section 8.01 for any
Action brought by a third party shall survive for a period equal
to the applicable statute of limitations with respect to any
such Action.
If written notice of a claim has been given by the
Purchaser to the Shareholders prior to the expiration of the
applicable representations and warranties, then the relevant
representations and warranties shall survive as to such claim
until the claim has been finally resolved.
SECTION 8.04 LIMITS ON INDEMNIFICATION.
(a) The maximum aggregate amount of indemnifiable
Losses which may be recovered from the Shareholders pursuant to
Sections 6.03(a) and 8.01 shall in no event exceed $3,000,000
the "LIABILITY CAP"). Notwithstanding the preceding sentence
of this Section 8.04(a), Losses arising out of or resulting from
any breach of the representations and warranties set forth in
Section 3.01, in any portion of Section 3.02 other than the
second sentence of Section 3.02(a), and in the second sentence
of Section 3.17, Losses arising out of or resulting from Taxes
on or with respect to the income of the Company or the
Shareholders for all years and periods ending before the Closing
Date or allocable or related to any income received on or before
the Closing Date, including without limitation from any gain
recognized by the Company or the Shareholders upon or as a
result of the transactions contemplated by this Agreement, and
Losses arising out of or resulting from fraud on the part of any
Shareholder, shall not be subject to the Liability Cap and shall
be indemnifiable in full without regard to the Liability Cap.
(b) Notwithstanding the provisions of Section 8.01, the
Shareholders shall have no obligation to indemnify the Purchaser
Indemnified Parties until the aggregate amount of indemnifiable
Losses exceeds $100,000 after giving credit for any insurance
proceeds which would have been received by the Company or the
Purchaser for such Losses if the Company maintained after the
Closing Date the same insurance coverages (including
deductibles) as are in existence and in effect on the date of
this Agreement; PROVIDED, HOWEVER, that credit for such
insurance proceeds shall be given only if such insurance
coverages continue to be in effect on the Closing Date and if
such insurance coverages continue to be available to the Company
after the Closing Date at a cost similar to the cost paid by the
Company as of the date of this Agreement (the "CLAIM BASKET").
Notwithstanding the preceding sentence of this Section 8.04(b),
Losses arising out of or resulting from any breach of the
representations and warranties set forth in Section 3.01, in any
portion of Section 3.02 other than the second sentence of
Section 3.02(a), and in the second sentence of Section 3.17,
Losses arising out of or resulting from Taxes on or with respect
to the income of the Company or the Shareholders for all years
and periods ending before the Closing Date or allocable or
related to any income received on or before the Closing Date,
including without limitation from any gain recognized by the
Company or the Shareholders upon or as a result of the
transactions contemplated by this Agreement, and Losses arising
out of or resulting from fraud on the part of any Shareholder,
shall not be subject to the Claim Basket and shall be
indemnifiable in full without regard to the Claim Basket.
(c) Notwithstanding the provisions of Sections 6.03(a)
and 8.01, the Shareholders shall have no obligation to indemnify
the Purchaser Indemnified Parties with respect to any matter
disclosed in the Disclosure Schedule.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 EXPENSES. Except as otherwise specified in
this Agreement, all costs and expenses, including, without
limitation, fees and disbursements of financial advisors,
counsel, accountants, and other third parties incurred by the
Company or the Shareholders in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
Shareholders. All costs and expenses, including, without
limitation, fees and disbursements of financial advisors,
counsel, accountants and other third parties incurred by the
Purchaser in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Purchaser.
SECTION 9.02 WAIVER. At any time prior to the Closing,
the Purchaser may (a) extend the time for the performance of any
of the obligations or other acts of the Shareholders or the
Company, (b) waive any inaccuracies in the representations and
warranties of the Shareholders or the Company contained herein
or in any document delivered by the Shareholders or the Company
pursuant hereto, or (c) waive compliance with any of the
agreements or conditions of the Shareholders or the Company
contained herein. At any time prior to the Closing, the Company
and the Shareholders may (a) extend the time of performance of
any of the obligations or other acts of the Purchaser, (b) waive
any inaccuracies in the representations and warranties of the
Purchaser contained herein or in any document delivered by the
Purchaser pursuant hereto, or (c) waive compliance with any of
the agreements or conditions of the Purchaser contained herein.
Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party to be bound thereby.
Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or
condition, of this Agreement. The failure of any party to
assert any of its rights hereunder shall not constitute a waiver
of any of such rights.
SECTION 9.03 NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given or made (and shall be deemed to have been
duly given or made upon receipt) by delivery in person, by
courier service, by telecopy or telegram, or by registered or
certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice
given in accordance with this Section 9.03):
(a) if to the Company:
Phoenix Fuel Co., Inc.
2343 N. 27th Avenue
P.O. Box 6176
Phoenix, Arizona 85005
Telecopy: (602) 278-7196
Attention: Bill Wilhoit
with a copy to:
Jennings, Strouss & Salmon, P.L.C.
Two North Central Avenue
Phoenix, Arizona 85004-2393
Telecopy: (602) 253-3255
Attention: John G. (Jack) Sestak, Jr., Esq.
(b) if to the Shareholders:
Bill Wilhoit
Phoenix Fuel Co., Inc.
2343 N. 27th Avenue
P.O. Box 6176
Phoenix, Arizona 85005
(c) if to the Purchaser:
Giant Industries Arizona, Inc.
c/o Giant Industries, Inc.
Post Office Box 12999
Scottsdale, Arizona 85267-2999
Telecopy: (602) 585-8985
Attention: Morgan Gust
with a copy to:
Fennemore Craig, P.C.
3003 North Central Avenue
Suite 2600
Phoenix, Arizona 85012-2913
Telecopy: (602) 916-5999
Attention: Karen C. McConnell, Esq.
SECTION 9.04 PUBLIC ANNOUNCEMENTS. Except to the extent
that the parties consent in writing otherwise, (a) the parties
to this Agreement shall keep the existence and terms of this
Agreement confidential, and (b) no party to this Agreement shall
make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news
media. Notwithstanding the preceding sentencing, the parties
agree that the Purchaser or an Affiliate of the Purchaser may
make such disclosure (on Form 8-K, by press release or
otherwise) regarding the terms of this Agreement and the
transactions contemplated hereby as it deems necessary to comply
with applicable securities laws or the rules and regulations of
the New York Stock Exchange, including a press release following
the execution of this Agreement with respect to which the
Purchaser shall seek the Company s prior approval (which shall
not be unreasonably withheld).
SECTION 9.05 HEADINGS. The descriptive headings contained
in this Agreement are for convenience of reference only and
shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 9.06 SEVERABILITY. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible.
SECTION 9.07 ENTIRE AGREEMENT. This Agreement and the
other agreements, documents and instruments referenced herein
constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings, both written and oral, by
and among the Company, the Shareholders and the Purchaser with
respect to the subject matter hereof and thereof.
SECTION 9.08 ASSIGNMENT. This Agreement may not be
assigned by operation of Law or otherwise by the Shareholders,
the Company or the Purchaser.
SECTION 9.09 NO THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any
other Person, including, without limitation, any employee or
former employee of the Company, any legal or equitable right,
benefit or remedy of any nature whatsoever, including, without
limitation, any rights of employment for any specified period,
under or by reason of this Agreement.
SECTION 9.10 AMENDMENT. This Agreement and the Exhibits
hereto may not be amended or modified except by an instrument in
writing signed by, or on behalf of each of, the Company, the
Shareholders Representative and the Purchaser.
SECTION 9.11 GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Arizona applicable to contracts executed in and to be
performed entirely within that state.
SECTION 9.12 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 9.13 SPECIFIC PERFORMANCE. The parties hereto
agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at Law or equity without the necessity of
demonstrating the inadequacy of monetary damages.
SECTION 9.14 ARBITRATION. If any dispute, controversy or
claim arises out of or relates to this Agreement or the breach,
termination or validity thereof, and if such dispute,
controversy or claim cannot be settled through direct, good
faith discussions among the parties, the same shall be settled
by arbitration in accordance with the Arizona Uniform
Arbitration Act, A.R.S. S.S. 12-1501 through 12-1518, in effect on
the date of this Agreement. The arbitration shall be the sole
and exclusive forum for resolution of the dispute, controversy
or claim, and the award of the arbitrator shall be final and
binding to the extent permitted by law. Any arbitration shall
be conducted in Phoenix, Arizona. The prevailing party in any
such arbitration shall be reimbursed by the other party for all
costs and expenses of such arbitration, including reasonable
attorneys' fees.
SECTION 9.15 SHAREHOLDERS REPRESENTATIVE. Bill Wilhoit is
hereby appointed as representative for the Shareholders (the
"SHAREHOLDERS REPRESENTATIVE") to take all actions and make all
determinations of the Shareholders under and pursuant to this
Agreement and to receive all notices, requests and demands which
may be made upon the Shareholders or any of them under and
pursuant to this Agreement. If, after the execution of this
Agreement, Mr. Wilhoit is unable or unwilling to serve as the
Shareholders Representative, the Shareholders shall designate a
successor Shareholders Representative by vote of the holders of
a majority of the Shares and provide notice thereof to the
Company and the Purchaser.
IN WITNESS WHEREOF, the Company, the Shareholders and the
Purchaser have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto
duly authorized.
COMPANY:
PHOENIX FUEL CO., INC.
By /s/ J. W. WILHOIT
--------------------------------------
Name: J. W. Wilhoit
Title: COB
SHAREHOLDERS:
/s/ J. W. WILHOIT
----------------------------------------
J.W. Wilhoit, as Trustee of the Wilhoit Trust
Agreement Dated 12/26/74
/s/ KATHERINE C. LAHOWETZ
----------------------------------------
Katherine C. Lahowetz, as Trustee of the
Theresa Ann Wilhoit Grantor Retained Annuity
Trust Dated 4/4/97
/s/ KATHERINE C. LAHOWETZ
----------------------------------------
Katherine C. Lahowetz
/s/ KATHERINE C. LAHOWETZ
----------------------------------------
Katherine C. Lahowetz, as Custodian for the
Benefit of Emily Lahowetz, a Minor
PURCHASER:
GIANT INDUSTRIES ARIZONA, INC.
By /s/ GUY W. YATES
--------------------------------------
Name: Guy W. Yates
Title: Vice President
<PAGE>
<PAGE>
EXHIBIT A
"ACCOUNTS RECEIVABLE" means any and all contracts,
receivables, notes and other amounts receivable from customers
arising from the sale of Inventory before the Closing Date,
whether or not in the ordinary course and whether or not billed
to the customers before the Closing Date, together with any
unpaid financing charges accrued thereon.
"ACTION" means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any
Governmental Authority.
"AFFILIATE" means, with respect to any specified Person,
any other Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under
common control with, such specified Person.
"AGREEMENT" means this Stock Purchase Agreement, dated as
of April 30, 1997, by and among the Company, the Shareholders
and the Purchaser (including the Exhibits thereto and the
Disclosure Schedule), and all amendments thereto made in
accordance with the provisions of Section 9.10.
"BALANCE SHEET DATE" means March 31, 1997.
"BUSINESS" means the business of the Company specified in
the first recital to the Agreement.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the
date hereof.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System, as updated
through the date hereof.
"CLAIM BASKET" has the meaning specified in Section
8.04(b).
"CLOSING" has the meaning specified in Section 2.03.
"CLOSING DATE" means May 15, 1997 or as soon thereafter as
is practicable after satisfaction of the conditions of Closing
set forth in Article VII.
"CODE" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"COMPANY" has the meaning specified in the introductory
paragraph of the Agreement.
"CONSENTS" means those authorizations, consents, waivers,
orders, approvals and clearances of Governmental Authorities and
officials and other Persons which are necessary for the sale and
transfer to the Purchaser of the Shares or the consummation of
the transactions (including the continuation of Material
Contracts) contemplated by the Agreement where the approval of
any other Person may be required.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule which
shall be prepared by the Company and the Shareholders and
delivered to the Purchaser within ten days following the date of
the Agreement, attached to the Agreement, dated as of the date
of the Agreement, and forming a part of the Agreement. The
Disclosure Schedule shall be acceptable to the Purchaser in its
reasonable discretion.
"DUE DILIGENCE PERIOD" has the meaning specified in Section
5.10.
"EMPLOYMENT AGREEMENTS" has the meaning specified in
Section 5.12(c).
"ENCUMBRANCE" means any security interest, pledge,
mortgage, lien (including, without limitation, environmental and
tax liens), charge, judgment, encumbrance, adverse claim,
preferential arrangement, or restriction of any kind, including,
without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes
of ownership.
"ENVIRONMENTAL" means matters related to surface waters,
groundwaters, soil, subsurface strata and ambient air.
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial causes of actions, actions, suits,
demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations, proceedings, fines,
penalties, liens, judgments, consent orders, consent agreements
or settlement agreements relating in any way to any
Environmental Law or any Environmental Permit (hereinafter
"CLAIMS"), whether asserted before or after the date hereof,
including, without limitation: (a) any and all Claims by
Governmental Authorities for enforcement, investigation,
cleanup, removal, response, remedial or other actions or damages
(including, but not limited to natural resource damages)
pursuant to any applicable Environmental Law, and (b) any and
all Claims by any Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.
"ENVIRONMENTAL LAWS" means any Law now in effect and any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous
Materials, including, without limitation, CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. S.S. 6901 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. S.S. 6901 et
seq.; the Clean Water Act, 33 U.S.C. S.S. 1251 et seq.; the
Toxic Substances Control Act, 15 U.S.C. S.S. 2601 et seq.; the
Clean Air Act, 42 U.S.C. S.S. 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. S.S. 300f et seq.; the Atomic Energy Act,
42 U.S.C. S.S. 2011 et seq.; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. S.S. 136 et seq.; and the Federal
Food, Drug and Cosmetic Act, 21 U.S.C. S.S. 301 et seq. and the
state or local equivalents of these laws.
"ENVIRONMENTAL PERMITS" means all permits, approvals,
identification numbers, licenses and other authorizations
required under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended through the date hereof.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.06(a).
"GOVERNMENTAL AUTHORITY" means any United States federal,
state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered
by or with any Governmental Authority.
"HAZARDOUS MATERIALS" means (a) oil, petroleum and
petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas, (b) any other
chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import,
under any applicable Environmental Law, and (c) any other
chemical, material or substance exposure to which is regulated
by any Governmental Authority.
"INDEBTEDNESS" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for
borrowed money (excluding trade payables incurred in the
ordinary course of business), (b) all obligations of such Person
for the deferred purchase price of property or services, (c) all
obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of
such Person as lessee under leases that have been or should be
recorded as capital leases, (f) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or
similar facilities, (g) all indebtedness of others referred to
in clauses (a) through (f) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (1)
to pay or purchase such Indebtedness or to advance or supply
funds for the payment or purchase of such Indebtedness, (2) to
purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (3) to supply funds to
or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of
whether such property is received or such services are
rendered), or (4) otherwise to assure a creditor against loss,
and (h) all Indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured
by) any Encumbrance on property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness.
"INTELLECTUAL PROPERTY RIGHTS" means all trademarks, trade
names, service marks, copyrights, patents, inventions, designs,
industrial designs, trade secrets, royalties, secret processes,
formulae, and all applications, registrations, renewals and
other rights relating to the foregoing (whether or not any
registration or filing has been made with respect thereto),
including without limitation the name "Phoenix Fuel."
"INVENTORIES" means all inventory, merchandise, finished
goods, raw materials, packaging and supplies related to the
Business, maintained, held or stored by or for the Company on
the Closing Date and any prepaid deposits for any of the same.
"IRS" means the Internal Revenue Service of the United
States.
"LAW" means any federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, order, decree,
requirement or rule of common law, including, but not limited
to, any Environmental Law.
"LEASED REAL PROPERTY" means the real property leased by
the Company, as tenant, together with, to the extent leased by
the Company, all buildings and other structures, facilities or
improvements located thereon, all fixtures, systems, equipment
and items of personal property of the Company attached or
appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"LIABILITIES" means any all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including,
without limitation, those arising under any Law (including,
without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"LIABILITY CAP" has the meaning specified in Section
8.04(a).
"LOSS" has the meaning specified in Section 8.01.
"MATERIAL ADVERSE EFFECT" means any circumstance, change
in, or effect on, the Company, its assets or properties or the
Business that, individually or in the aggregate with any other
circumstances, changes in, or effects thereon: (a) is or could
reasonably be expected to be materially adverse to the business,
financial condition, assets or liabilities (including, without
limitation, contingent liabilities), customer or supplier
relationships, prospects, value, results of operations or the
condition (financial or otherwise) of the Business; or (b) could
reasonably be expected to materially adversely affect the
ability of the Company to use its assets or operate the Business
in the manner in which they are currently used or operated by
the Company.
"MATERIAL CONTRACTS" has the meaning specified in Section
3.13(a).
"1933 ACT" has the meaning specified in Section 4.04.
"NONCOMPETITION AGREEMENT" means the Noncompetition
Agreement to be executed and delivered by Bill Wilhoit at the
Closing substantially in the form of EXHIBIT B to the Agreement.
"OSHA" means the Occupational Safety and Health Act and
the regulations promulgated thereunder.
"OWNED REAL PROPERTY" means the real property owned by the
Company together with all buildings and other structures,
facilities or improvements located thereon, all fixtures,
systems, equipment and items of personal property of the Company
attached or appurtenant thereto, and all easements, licenses,
rights and appurtenances relating to the foregoing.
"PERMITS" has the meaning specified in Section 3.12(a).
"PERSON" means any individual, partnership, firm,
corporation, limited liability company, association, trust,
unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"PLAN" means: (i) any employee benefit plan (within the
meaning of Section 3(3) ERISA) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred
compensation, retiree medical, dental or life insurance,
supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination,
severance or other contracts or agreements, formal or informal,
legally binding or not, with respect to which the Company is a
party, with respect to which the Company has or could have any
obligation (whether primary or secondary) or which are
maintained, contributed to or sponsored by the Company or any
member of its controlled group of organizations within the
meaning of Section 414 of the Code for the benefit of any
current or former employee, officer or director of the Company;
and (ii) each employee benefit plan for which the Company could
incur liability under Section 4069 of ERISA in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company remains secondarily liable under
Section 4204 of ERISA.
"PURCHASE PRICE" has the meaning specified in Section 2.02.
"PURCHASER" has the meaning specified in the introductory
paragraph of the Agreement.
"PURCHASER INDEMNIFIED PARTY" has the meaning specified in
Section 8.01.
"RELEASE" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing and the like into or upon any land,
water or air or otherwise entering into the Environment.
"REMEDIATION" or "REMEDIATE" means actions to respond to,
investigate, clean-up, move, and otherwise remediate Hazardous
Materials.
"SHAREHOLDER INDEMNIFIED PARTY" has the meaning specified
in Section 8.02.
"SHAREHOLDERS" has the meaning specified in the
introductory paragraph of the Agreement.
"SHAREHOLDERS REPRESENTATIVE" has the meaning specified in
Section 9.15.
"SHARES" has the meaning specified in the second recital of
the Agreement.
"TANGIBLE PERSONAL PROPERTY" has the meaning specified in
Section 3.17(a).
"TAX" or "TAXES" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without
limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property,
minimum, alternative minimum, estimated, sales, use, capital
stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; taxes or
other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs' duties,
tariffs, and similar charges.
"TERMINATION PLAN" has the meaning specified in Section
5.12(b).<PAGE>
<PAGE>
LIST OF EXHIBITS
A -- Definitions
B -- Noncompetition Agreement
C -- Form of Opinion of Jennings, Strouss & Salmon, P.L.C.
D -- Form of Opinion of Fennemore Craig, P.C.
E -- Termination Allowance Plan No. 1
