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) March 1, 1997
ACX TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Colorado 0-20704 84-1208699
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
16000 Table Mountain Parkway 80403
(Address of principal executive offices) (Zip Code)
(303) 271-7000
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On March 1, 1997, pursuant to the previously announced plan to
dispose of Golden Aluminum Company (Golden Aluminum), ACX
Technologies, Inc. (the Company) sold the stock of Golden
Aluminum to Crown Cork & Seal, Inc. (Crown). Golden Aluminum
owns property, plant and equipment located at the Fort Lupton,
Colorado, and the San Antonio, Texas, aluminum mini-mill plants.
Crown, who in the past has been a customer of Golden Aluminum,
paid the Company $10 million at closing and agreed to pay an
additional $60 million within two years (deferred payment date).
In accordance with the purchase agreement, Crown has the right to
return Golden Aluminum to the Company during the two year period
rather than pay the $60 million obligation. The $10 million paid
at closing is non-refundable. The Company retained Golden
Aluminum's net working capital of approximately $53 million,
which the Company intends to sell during the next six months.
If Crown does not return Golden Aluminum to the Company, Crown
will pay the Company an additional deferred purchase price equal
to $210,000 for each month from March 1, 1997 to the deferred
payment date. The deferred purchase price will be received in
cash or equivalent Crown common stock, at Crown's discretion, and
will be no less than $2.52 million and no more than $5.04
million. In lieu of this deferred payment, the Company may elect
to maintain a minority interest in Golden Aluminum equal to 0.3%
of Golden Aluminum's total number of common shares outstanding
for each month from March 1, 1997 to the deferred payment date.
The minority interest in Golden Aluminum, if elected, will be no
less than 3.6% and no more than 7.2%.
The attached unaudited pro forma condensed consolidated financial
information reflects receipt by the Company of $10 million and a
discounted receivable from Crown for $53.5 million. Golden
Aluminum has been reported as a discontinued operation in the
historical consolidated financial statements of ACX Technologies,
Inc.
Item 7. Financial Statements and Exhibits
Page of this Report
(b) Pro Forma Condensed Consolidated
Financial Information
Pro Forma Condensed Consolidated
Balance Sheet at December 31, 1996 4
Pro Forma Condensed Consolidated
Statement of Income for the Years
Ended December 31, 1996, 1995 and 1994 5
Notes to Pro Forma Condensed
Consolidated Financial Information 6
ACX TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
INTRODUCTION
The following unaudited pro forma condensed consolidated balance
sheet and condensed consolidated statements of income
(collectively, the "Pro Forma Condensed Consolidated Financial
Information") illustrate the effect of the disposition of Golden
Aluminum. The Pro Forma Condensed Consolidated Statement of
Income presents the results of ACX Technologies, Inc. and its
subsidiaries (the Company) as if the disposition occurred at the
beginning of each of the three years in the period ended December
31, 1996. The Pro Forma Condensed Consolidated Balance Sheet at
December 31, 1996 presents the financial position of the Company
as if the disposition had occurred on December 31, 1996.
The Pro Forma Condensed Consolidated Financial Information is
presented for illustrative purposes only, and does not purport to
represent what the Company's financial position or results of
operations would have been had the transaction described in fact
occurred on the date or at the beginning of the periods indicated
or to represent the Company's financial position or results of
operations for any future date or period.
The following Pro Forma Condensed Consolidated Financial
Information should be read in conjunction with the audited
consolidated financial statements of ACX Technologies, Inc. and
its subsidiaries included in its most recently filed Annual
Report on Form 10-K.
ACX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(In thousands)
Historical Pro Forma
Balance Balance
Sheet Sheet
December 31, Pro Forma December 31,
1996 Adjustments 1996
ASSETS
Current assets
Cash and cash equivalents $ 15,671 $ 10,000 $ 25,671
Accounts receivable, less
allowance for doubtful
accounts of $2,085 68,840 68,840
Accounts receivable from 3,046 3,046
Coors Brewing
Inventories 101,520 101,520
Deferred income taxes 18,218 18,218
Other assets 11,571 11,571
Net current assets of
discontinued operations 53,052 53,052
Total current assets 271,918 10,000 281,918
Receivable from Crown Cork
& Seal --- 53,500 53,500
Properties, net 244,615 244,615
Goodwill, net 46,799 46,799
Other assets 49,860 49,860
Noncurrent assets of
discontinued operations 63,500 (63,500) ---
Total assets $676,692 $ --- $676,692
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 33,774 $ 33,774
Accrued salaries and
vacation 20,175 20,175
Taxes other than income 7,598 7,598
Accrued expenses and other
liabilities 55,745 55,745
Total current liabilities 117,292 --- 117,292
Long-term debt 100,000 100,000
Accrued postretirement
benefits 27,890 27,890
Other long-term liabilities 19,002 19,002
Total liabilities 264,184 --- 264,184
Minority interest 14,605 14,605
Shareholders' equity
Common stock 279 279
Paid-in capital 443,302 443,302
Retained earnings (deficit) (47,271) (47,271)
Cumulative translation
adjustment and other 1,593 1,593
Total shareholders' equity 397,903 --- 397,903
Total liabilities and
shareholders' equity $676,692 $ --- $676,692
See Notes to Pro Forma Condensed Consolidated Financial Information
ACX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
Years Ended December 31,
1996 1995 1994
Net sales $712,380 $660,853 $578,705
Costs and expenses:
Cost of goods sold 555,855 508,029 458,533
Marketing, general and
administrative 77,947 75,071 67,311
Research and development 15,300 16,312 14,410
Asset impairment and
restructuring charges 34,642 2,735 ---
Total operating expenses 683,744 602,147 540,254
Operating income 28,636 58,706 38,451
Other income (expense):
Interest expense (8,177) (9,306) (6,370)
Interest income 1,254 1,395 603
Miscellaneous--net 696 452 99
Total other expense (6,227) (7,459) (5,668)
Income before income taxes 22,409 51,247 32,783
Income tax expense 11,000 20,000 13,100
Net income $ 11,409 $ 31,247 $ 19,683
Net income per share $ 0.40 $ 1.13 $ 0.74
Weighted average shares
outstanding 28,651 27,655 26,587
See Notes to Pro Forma Condensed Consolidated Financial Information
ACX TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
Balance Sheet Pro Forma Adjustments:
Noncurrent assets of discontinued operations, which consist of
the net property, plant and equipment of Golden Aluminum, has
been eliminated to reflect the sale of these assets pursuant to
the stock purchase agreement in exchange for $10 million in cash
and a receivable of $60 million due within two years. The $60
million non-interest bearing receivable was discounted to $53.5
million. Working capital of Golden Aluminum was not included as
part of the stock purchase agreement, and thus, the current
assets of discontinued operations as shown on the Historical
Balance Sheet of the Company have not been adjusted.
Statement of Income Pro Forma Adjustments:
The results of Golden Aluminum have been reported in the
historical statements of income for ACX Technologies, Inc. as a
discontinued operation. The accompanying unaudited Pro Forma
Condensed Consolidated Statement of Income excludes all of the
operating results related to Golden Aluminum, which are
summarized below:
Years Ended December 31,
(In thousands,except per share data)
1996 1995 1994
Net sales $ 168,446 $ 250,001 $152,798
Income (loss) from operations
before income taxes $ (8,033) $ (10,076) $ 142
Income tax benefit 3,000 2,700 ---
Income (loss) from operations (5,033) (7,376) 142
Loss on disposal before income
taxes (124,700) --- ---
Loss on operations during
disposition period before
income taxes (30,300) --- ---
Income tax benefit 56,600 --- ---
Net income (loss) $(103,433) $ (7,376) $ 142
Per common share:
Income (loss) from operations $ (0.18) $ (0.27) $ 0.01
Estimated loss on disposal (3.43) --- ---
Net income (loss) $ (3.61) $ (0.27) $ 0.01
In addition, all other pro forma adjustments to reflect the sale
of Golden Aluminum are insignificant to the consolidated results
of operations for the Company. Consequently, no additional pro
forma adjustments have been made to the historical results of
operations for ACX Technologies, Inc.
(c) Exhibits.
Exhibit
Number
10.1 Stock Purchase Agreement Among Golden Aluminum Company,
Crown Cork & Seal Company, Inc. and ACX Technologies, Inc.
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.
ACX TECHNOLOGIES, INC.
Date: March 14, 1997 By /s/Gail A. Constancio
Gail A. Constancio
(Controller and Principal
Accounting Officer)
Exhibit 10.1
STOCK PURCHASE AGREEMENT
AMONG
GOLDEN ALUMINUM COMPANY,
CROWN CORK & SEAL COMPANY, INC.
AND
ACX TECHNOLOGIES, INC.
Dated as of March 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE TRANSACTION . . . . . . . . . . . . . . . . . . . 1
1.1 Sale and Purchase of Stock . . . . . . . . . . . 1
1.2 The Initial Payment . . . . . . . . . . . . . . 1
1.3 Deferred Payment . . . . . . . . . . . . . . . . 2
1.4 Included Assets . . . . . . . . . . . . . . . . 4
ARTICLE II
CLOSING AND CERTAIN MATTERS . . . . . . . . . . . . . . 4
2.1 Closing . . . . . . . . . . . . . . . . . . . . . 4
2.2 Items to be Delivered at Closing . . . . . . . . 4
ARTICLE III
STOCK PUT OPTION . . . . . . . . . . . . . . . . . . . 4
3.1 Stock Put Option . . . . . . . . . . . . . . . . 4
3.2 Exercise of the Stock Put Option . . . . . . . . 4
3.3 Expiration of the Stock Put Option . . . . . . 5
3.4 Included Assets . . . . . . . . . . . . . . . . 5
ARTICLE IV
SELLER STOCK RIGHT . . . . . . . . . . . . . . . . . . . 5
4.1 Exercise of the Seller Stock Right. . . . . . . 5
4.2 Expiration of the Seller Stock Purchase Right . 6
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . 6
5.1 Organization6
5.2 Capitalization and Ownership; Power and Authority 6
5.3 Subsidiaries. . . . . . . . . . . . . . . . . . . 7
5.4 Qualification; Location of Business . . . . . . 7
5.5 Corporate Power; Authorization; and Enforceability 7
5.6 Consents . . . . . . . . . . . . . . . . . . . 7
5.7 Financial Statements . . . . . . . . . . . . . . 8
5.8 No Liabilities . . . . . . . . . . . . . . . . 8
5.9 Tax and Other Returns and Reports . . . . . . 8
5.10 No Changes . . . . . . . . . . . . . . . . . . 10
5.11 Compliance with Law; Authorizations . . . . . . 10
5.12 Transactions With Related Parties . . . . . . 11
5.13 Litigation . . . . . . . . . . . . . . . . . . 11
5.14 Title; Condition of Included Assets . . . . . . 12
5.15 Insurance . . . . . . . . . . . . . . . . . . 12
5.16 Contracts; Compliance . . . . . . . . . . . . . 12
5.17 No Conflicts . . . . . . . . . . . . . . . . . . 13
5.18 Labor Matters . . . . . . . . . . . . . . . . 13
5.19 Employee Benefit Plans and Arrangements . . . 13
5.20 Patents and Intellectual Property Rights . . . 18
5.21 Environmental Matters . . . . . . . . . . . . . 20
5.22 Real Property . . . . . . . . . . . . . . . . 23
5.23 Compensation Arrangements; Bank Accounts; Officers
and Directors . . . . . . . . . . . . . . . . 25
5.24 Disclosure . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . 26
6.1 Corporate Existence 26
6.2 Corporate Power; Authorization; and Enforceability 26
6.3 No Conflicts . . . . . . . . . . . . . . . . . . 26
6.4 Consents . . . . . . . . . . . . . . . . . . 26
6.5 Investment Representation . . . . . . . . . . . 26
ARTICLE VII
CERTAIN OBLIGATIONS OF THE PARTIES . . . . . . . . . . . 27
7.1 Agreements of Seller and the Company Pending the
Closing . . . . . . . . . . . . . . . . . . . . .27
7.2 Agreements of Buyer Pending the Closing . . . .28
7.3 Hart-Scott-Rodino Act . . . . . . . . . . . . . 28
7.4 Assignment of Certain Intellectual Property . 29
7.5 Assumption and Discharge of Liabilities . . . 29
7.6 Conditions of the Stock Put Option . . . . . . 29
7.7 [Intentionally Omitted] . . . . . . . . . . . 30
7.8 Employee Benefits. . . . . . . . . . . . . . . . 30
7.9 338(h)(10) Elections . . . . . . . . . . . . . 34
7.10 Certain Tax Matters Incident to the Exercise of the
Stock Put Option . . . . . . . . . . . . . . . . 34
7.11 Certain Tax Matters . . . . . . . . . . . . . 35
7.12 Review Committee . . . . . . . . . . . . . . . . 35
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . 35
8.1 Indemnification By Seller . . . . . . . . . . . 35
8.2 Indemnification by Buyer . . . . . . . . . . . 37
8.3 Indemnification Procedures . . . . . . . . . . . 39
8.4 Claims Against the Company . . . . . . . . . . . 40
ARTICLE IX
TAX INDEMNIFICATION . . . . . . . . . . . . . . . . . . 40
9.1 Liability and Indemnity for Pre-Closing Taxes . 40
9.2 Preparation of Returns and Payment of Taxes . 41
9.3 Subsequent Adjustments . . . . . . . . . . . . . 42
ARTICLE X
CONDITIONS PRECEDENT TO THE CLOSING . . . . . . . . 42
10.1 Conditions Precedent to the Obligations of Buyer 42
10.2 Conditions Precedent to the Obligations of Seller 44
ARTICLE XI
POST CLOSING MATTERS . . . . . . . . . . . . . . . . 44
11.1 Maintenance of Books and Records . . . . . . . . 44
11.2 Payments Received. . . . . . . . . . . . . . . . 45
11.3 Cooperation . . . . . . . . . . . . . . . . . . 45
11.4 Certain Covenants of Seller. . . . . . . . . . . 45
11.5 Certain Covenants of Buyer . . . . . . . . . . . 46
11.6 Default on Certain Indebtedness . . . . . . . . 47
11.7 Board Appointment. . . . . . . . . . . . . . . . 48
ARTICLE XII
TERMINATION . . . . . . . . . . . . . . . . . . . . . 48
12.1 Termination . . . . . . . . . . . . . . . . . . 48
12.2 Effect of Termination . . . . . . . . . . . . . 49
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 49
13.1 Brokers' and Finders' Fees . . . . . . . . . . . 49
13.2 Expenses . . . . . . . . . . . . . . . . . . 49
13.3 Contents of Agreement; Parties in Interest; . 50
13.4 Assignment and Binding Effect . . . . . . . . 50
13.5 Waiver . . . . . . . . . . . . . . . . . . . . . 50
13.6 Notices. . . . . . . . . . . . . . . . . . . . . 50
13.7 Governing Law . . . . . . . . . . . . . . . . 51
13.8 No Benefit to Others . . . . . . . . . . . . . 51
13.9 Headings, Gender and "Person" . . . . . . . . 51
13.10 Schedules and Exhibits . . . . . . . . . . . 52
13.11 Survival . . . . . . . . . . . . . . . . . . 52
13.12 Severability . . . . . . . . . . . . . . . . 52
13.13 Counterparts . . . . . . . . . . . . . . . . 52
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 1, 1997, among
GOLDEN ALUMINUM COMPANY, a Colorado corporation ("GAC"), CROWN
CORK & SEAL COMPANY, INC., a Pennsylvania corporation ("Buyer"),
and ACX TECHNOLOGIES, INC., a Colorado corporation ("Seller").
BACKGROUND
A. GAC is in the business of manufacturing and selling
aluminum rigid container sheet and flat rolled aluminum products
produced through a continuous cast mini-mill process (the
"Business"). GAC operates the Business primarily at two aluminum
rolling mills located at Fort Lupton, Colorado (the "Colorado
Mill") and San Antonio, Texas (the "Texas Mill"). The Business
also includes the operations of an aluminum collection facility
located at Denver, Colorado (the "Recycling Facility"), and the
following wholly-owned subsidiaries of GAC: GAC Technology
Company, a Colorado corporation, and Golden Engineering AG, a
Swiss corporation (the "Subsidiaries"). (GAC and the
Subsidiaries are hereinafter collectively referred to as the
"Company".) The Business of the Company is carried on as an
autonomous and distinct business under the name of Golden
Aluminum Company. Seller is the sole owner of all of GAC's
issued and outstanding capital stock (the "Stock").
B. Upon and subject to the terms and conditions contained
in this Agreement, Seller desires to sell and Buyer desires to
purchase all of the Stock.
TERMS
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the
parties hereto agree as follows.
ARTICLE I.
THE TRANSACTION
1.1 Sale and Purchase of Stock. At the Closing, as defined
in Section 2.1 below, Seller shall sell and assign to Buyer and
Buyer will purchase from Seller, the Stock free and clear of all
liens and encumbrances for an aggregate purchase price of
$70,000,000 (as adjusted under Section 1.2(b) below), payable as
follows:
1.2 The Initial Payment.
(a) Initial Payment. The Initial Payment of the
purchase price for the Stock (the "Initial Payment") shall be
$10,000,000. The Initial Payment shall be non-refundable and
absolute in all events, notwithstanding anything in this
Agreement to the contrary or otherwise. Subject to the terms and
conditions of this Agreement, Seller shall pay the Initial
Payment on the Closing Date by wire transfer of immediately
available funds to an account designated in writing by Seller.
(b) Spare Parts. Within 30 days after the Closing,
Buyer shall pay Seller $1,970,000 as the purchase price of the
spare parts related to the Business which are included in the
Included Assets as defined in Section 1.4. Payment of such
amount shall be by wire transfer of immediately available funds,
and shall be net of the amount of accrued vacation pay to be paid
by Seller to Buyer under Section 7.8(f).
(c) Work In Process and Raw Materials. Seller shall
pay for the raw materials and work in process set forth on
Schedule 1.2 that exist on the Closing Date in accordance with
Schedule 1.2(c).
1.3 Deferred Payment.
(a) Primary Deferred Payment. Unless Buyer first
exercises the Stock Put Option (as defined in Section 3.1)
pursuant to Article III and in accordance with the other terms
and conditions of this Agreement, including Section 7.6 hereof,
Buyer shall at any time after the Closing but in no event later
than the earlier of (i) 10 business days after a Trigger Event
(defined below) and (ii) the second anniversary of the Closing
Date, pay to Seller $60,000,000 (the "Primary Deferred Payment")
plus the amount of cash or Buyer common stock constituting the
Secondary Deferred Payment, as defined below. The Primary
Deferred Payment and the Secondary Deferred Payment are
collectively referred to as the "Deferred Payment". All amounts
of Deferred Payment payable in cash shall be paid by wire
transfer of immediately available funds to an account designated
in writing by Seller. Buyer shall give Seller at least five (5)
days written notice (the "Deferred Payment Notice") prior to
payment of the Deferred Payment.
(b) Secondary Deferred Payment. The amount of the
Secondary Deferred Payment shall be calculated based on the
amount of time that elapses after the Closing during which the
Buyer does not exercise its Stock Put Option: for each month (or
part of a month) commencing with the Closing Date and until Buyer
pays the Deferred Payment, Seller shall accrue the right to
receive $210,000, provided that, in no event shall the Secondary
Deferred Payment be less than $2,520,000 or more than $5,040,000.
(c) Cash or Buyer Common Stock or Seller Stock
Percentage. The Secondary Deferred Payment shall be paid in cash
unless in the Deferred Payment Notice Buyer elects to pay the
Secondary Deferred Payment in common stock of Buyer. In such
case, such payment shall be made by delivery to Seller of
certificates for the total number of shares of Buyer common stock
having an aggregate Fair Market Value equal to the amount of the
Secondary Deferred Payment. Fair Market Value shall mean the
average for the ten (10) business days on which trading of Buyer
common stock occurred on the New York Stock Exchange (the "NYSE")
next preceding the date of the Deferred Payment Notice of the
closing price per share of Buyer common stock as reported by the
NYSE for composite transactions. Notwithstanding the foregoing
provisions of this Section 1.3(c), Seller shall have the right,
prior to the expiration of the 5-day Deferred Payment Notice
period, to elect, by giving written notice thereof to Buyer
within such 5-day period, to receive as the Secondary Deferred
Payment, in lieu of either cash or common stock of Buyer as
aforesaid, a percentage (the "Seller Stock Percentage") of the
total number of shares of GAC common stock outstanding at the
time of Buyer's payment of the Primary Deferred Payment to Seller
(the "Seller Stock Right"). The Seller Stock Percentage shall be
calculated based on the amount of time that elapses after Closing
during which the Buyer does not exercise its Stock Put Option:
for each month (or part of a month) commencing with the Closing
Date and until Buyer pays the Deferred Payment, Seller shall
accrue the right to receive 0.3% of the total number of shares of
GAC common stock outstanding at the time of payment of the
Primary Deferred Payment, provided that, in no event shall the
Seller Stock Right entitle the Seller to receive less than 3.6%
or more than 7.2% of the total number of shares of GAC common
stock outstanding at the time of such payment.
(d) Fully Paid, etc.. The shares of Buyer common
stock delivered as part of the Secondary Deferred Payment shall
be validly issued, fully paid and nonassessable, and free and
clear of all liens, claims, security interests, pledges, charges,
equities, options, restrictions and encumbrances of whatever
nature.
(e) Investment Representation. As a condition to the
receipt of Buyer common stock, Seller shall deliver to Buyer an
agreement to the effect that Seller is acquiring the Buyer common
stock solely 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 Securities Act of 1933, as
amended (the "Securities Act"); Seller does not have any present
intention of selling, offering to sell or otherwise disposing of
or distributing the Buyer common stock it is acquiring; Seller
will not transfer such Buyer common stock except in accordance
with the Securities Act; and that the certificates for such Buyer
common stock will contain the following legend: The shares
represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred except upon proof satisfactory to the
issuer of compliance with the registration provisions thereof or
the availability of an exemption therefrom.
(f) Sooner Trigger of Deferred Payment. A Trigger
Event, the occurrence of which shall obligate Buyer to pay the
Deferred Payment, shall mean (i) the sale, pledge, mortgage,
assignment, transfer or other disposition of any of the Stock or
any substantial portion of the Included Assets including any
substantial portion of the intellectual property included in the
Included Assets or a substantial portion of the assets comprising
either the Colorado Mill or the Texas Mill included in the
Included Assets having an aggregate value of at least $500,000,
and (ii) the abandonment or substantial discontinuation of the
operations of either the Colorado Mill or the Texas Mill for a
period of 90 continuous days.
1.4 Included Assets. As of Closing, the Company's assets
shall include all the property, plant and equipment, including
the Colorado Mill and the Texas Mill, all the spare parts, all
raw materials and work in process, and all the intellectual
property used or proposed to be used in connection with the
Business and the Recycling Facility, including the items set
forth on Schedule 1.4 (the "Included Assets").
ARTICLE II
CLOSING AND CERTAIN MATTERS
2.1 Closing. A pre-closing under this Agreement took place
on February 28, 1997 at 10:00 a.m. local time at the offices of
Holme Roberts & Owen LLP. The Closing and the effective time of
the Closing shall be at 12:01 a.m. on March 1, 1997, or on such
other date as may be mutually agreed upon in writing by the
parties. The effective time of the Closing is sometimes herein
referred to as the "Closing Date."
2.2 Items to be Delivered at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Seller shall deliver to Buyer certificates
evidencing the Stock, accompanied by stock powers duly executed
in blank or duly executed instruments of transfer, and any other
documents that are necessary to transfer to Buyer good title to
the Stock, free and clear of all liens, claims, security
interests, pledges, charges, equities, options, restrictions and
encumbrances of whatever nature.
(b) Buyer shall deliver to Seller by wire transfer the
Initial Payment.
(c) The parties hereto shall also deliver to each
other the agreements, certificates, opinions of counsel and other
documents and instruments required to be delivered pursuant to
Section 10.1 and Section 10.2 of this Agreement.
ARTICLE III
STOCK PUT OPTION
3.1 Stock Put Option. After the Closing, subject to the
terms and conditions of this Agreement, including Section 7.6
hereof, Buyer shall have the option (the "Stock Put Option"),
exercisable as set forth in Section 3.2 below, to reconvey the
Stock to Seller (or its designee) in exchange for cancellation
and satisfaction of Buyer's obligation to pay the Deferred
Payment.
3.2 Exercise of the Stock Put Option. Buyer may exercise
the Stock Put Option by providing written notice (the "Put
Notice") to Seller on or before the 90th day prior to the second
anniversary of the Closing. At any time prior to the 60th day
after the Put Notice is given, Buyer may revoke such Put Notice
by providing written notice of such revocation (a "Revocation
Notice") to Seller. Unless Buyer provides Seller a Revocation
Notice, Seller shall purchase the Stock at a closing which shall
take place at Buyer's principal corporate office no later than
ninety (90) days after the date the Put Notice is given or, if
such 90th day is not a business day, the next business day after
such 90th day (the "Stock Put Closing"). At the Stock Put
Closing, Buyer shall deliver the certificates evidencing the
Stock accompanied by stock powers duly executed in blank or duly
executed instruments of transfer, and any other documents that
are necessary to transfer to Seller good title to the Stock, free
and clear of all liens, claims, security interests, pledges,
charges, equities, options, restrictions and encumbrances of
whatever nature; and concurrently with such delivery, Seller
shall deliver to Buyer a release of Buyer's obligation to deliver
the Deferred Payment. Also at the Stock Put Closing, Buyer shall
deliver a waiver and release (substantially in the form of
Exhibit A) of any and all claims (other than claims arising
directly pursuant to this agreement) Buyer may have, now or in
the future against GAC and the Subsidiaries and their respective
directors, officers, employees or agents. At the request of
Seller at any time after the original exercise of the Put Notice,
Buyer will provide such notice to employees of the Company as
required by the Worker Adjustment and Retraining Notification
Act, in respect of termination of employees reasonably expected
by Buyer and Seller to occur after the Stock Put Closing.
3.3 Expiration of the Stock Put Option. The Stock Put
Option and all other rights granted to Buyer under this Article
III shall expire at 5:00 p.m., Mountain Time, on the earlier of
the second anniversary of the Closing and the date of payment of
the Deferred Payment by Buyer.
3.4 Included Assets. As of the Stock Put Closing, the
Company's assets shall include the Included Assets (or any
replacement assets of substantially equal value). The Included
Assets will include all improvements to the Included Assets,
provided that Buyer may remove, and not include among the
Included Assets transferred at the Stock Put Closing, any
improvements that may be removed without damage to the Included
Assets. The Included Assets will include all improvements to the
intellectual property comprising the Included Assets.
ARTICLE IV
SELLER STOCK RIGHT
4.1 Exercise of the Seller Stock Right. If the Secondary
Deferred Payment is to be made by exercise of the Seller Stock
Right, then Seller shall receive the Seller Stock Percentage of
GAC common stock as provided in Section 1.3(c) upon receipt from
Buyer of the Primary Deferred Payment. Closing thereunder shall
take place at Buyer's principal corporate office (the "Seller
Stock Right Closing"). At the Seller Stock Right Closing, Buyer
will deliver to Seller the Primary Deferred Payment by wire
transfer of immediately available funds and certificates
evidencing the ownership of a percentage of the total
outstanding common stock of GAC equal to the Seller Stock
Percentage, free and clear of all liens, claims, security
interests, pledges, charges, equities, options, restrictions and
encumbrances of whatever nature, except as provided in the
Shareholders Agreement attached hereto as Exhibit B (the
"Shareholders Agreement"). At the Seller Stock Right Closing,
Seller shall deliver to Buyer a copy of the Shareholders
Agreement executed by it and Buyer shall deliver and cause GAC to
deliver a copy of the Shareholders Agreement executed by it.
Seller and Buyer agree that the cash price payable by Buyer or
the Company, as the case may be, with respect to its exercise, if
any, of the right of first refusal contained in Sections 3.2 and
3.3 of Shareholders Agreement, as applicable shall be the amount
of the Secondary Deferred Payment calculated in accordance with
Section 1.3(b) of this Agreement.
4.2 Expiration of the Seller Stock Purchase Right. The
Seller Stock Right and all other rights granted to Seller under
this Article IV shall expire upon the prior exercise, effected in
accordance with the terms and conditions of this Agreement,
including Section 7.6, of the Stock Put Option by Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as set forth below.
For purposes of this Agreement, "Material Adverse Effect"
shall mean any event, change, occurrence or condition, singly or
together with any other event, change, occurrence or condition,
which would have a material adverse effect on the condition,
financial or otherwise, of the Business.
5.1 Organization. Each of Seller and GAC is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. GAC has all
requisite power and authority to own or lease its properties and
assets as now owned or leased and to carry on its business as and
where now being conducted. Copies of GAC's articles of
incorporation and bylaws, as amended to date, have been delivered
to Buyer and are correct, complete and in full force and effect.
5.2 Capitalization and Ownership; Power and Authority.
GAC's authorized capital stock consists solely of 100 shares of
common stock, par value $1.00 per share, 100 of which are
currently issued and outstanding and none of which are held in
its treasury. The authorized capital stock of each of the
Subsidiaries is set forth on Schedule 5.2. All of such
outstanding shares of GAC capital stock and the Subsidiaries
capital stock have been duly authorized, have been validly
issued, are fully paid and nonassessable, were not issued in
violation of the terms of any agreement or other understanding
binding upon GAC or the Subsidiaries, and were issued in
compliance with all applicable federal and state securities or
"blue-sky" laws and regulations. There are no outstanding
options, warrants, rights, agreements, calls, commitments or
demands of any character relating to the capital stock of the
Company and no securities convertible into or exchangeable for
any of such capital stock. Seller is the sole record and
beneficial owner of the shares of Stock, and GAC or a Subsidiary
is the sole record and beneficial owner of the outstanding shares
of the capital stock of each of the Subsidiaries with the
exception of three director qualifying shares of Golden
Engineering AG which are owned of record by directors but which
are beneficially owned by the Company, free and clear of any
lien, security interest, restriction, encumbrance or claim.
5.3 Subsidiaries. Except for the Subsidiaries, GAC does
not or as of the Closing Date will not, directly or indirectly,
own any stock of, or any other interest in, any other
corporation, joint venture, partnership, trust or other business
entity. The Subsidiaries are corporations duly organized,
validly existing and each Subsidiary is in good standing under
the laws of the jurisdiction of its incorporation and has full
corporate power and authority to carry on its business as it is
now being conducted and to own, operate and lease its properties
and assets; is duly qualified or licensed to do business as a
foreign corporation in good standing in jurisdictions listed on
Schedule 5.3, which are all the jurisdictions in which ownership
or leasing of property or the conduct of its business requires
such qualification. The copies of the governing instruments of
the Subsidiaries heretofore delivered to Buyer are complete and
correct copies of such instruments as presently in effect.
5.4 Qualification; Location of Business. GAC is duly
qualified and in good standing as a foreign corporation, and is
duly authorized to do business in the jurisdictions set forth on
Schedule 5.4, which jurisdictions are the only jurisdictions
wherein the character of the properties owned or leased or the
nature of activities conducted by it make such qualification
necessary.
5.5 Corporate Power; Authorization; and Enforceability.
Each of Seller and the Company has the corporate power, authority
and legal right to execute, deliver and perform this Agreement.
The execution, delivery and performance of this Agreement by
Seller and the Company have been duly authorized by all necessary
corporate and shareholder action. Upon delivery to Buyer at the
Closing of certificates representing the Stock in accordance
herewith, Buyer will acquire good and valid title to such Stock,
free and clear of all liens, claims, security interests, pledges,
charges, equities, options, restrictions and encumbrances of
whatsoever nature. This Agreement and all the other agreements
and instruments required to be executed and delivered by the
Seller or the Company in connection with or pursuant hereto have
been duly executed and delivered by Seller and the Company and
constitute the legal, valid and binding obligation of the Company
or the Seller, as applicable, enforceable in accordance with its
terms.
5.6 Consents. Except as required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and except for those that have been obtained, no consent,
approval or authorization of, or registration or filing with, any
person, including any governmental authority or other regulatory
agency, is required in connection with the execution, delivery
and performance of this Agreement or the consummation of the
transactions contemplated hereby or the conduct by the Company of
the Business after the Closing without interruption or delay.
5.7 Financial Statements. Seller has delivered to Buyer
copies of (a) the consolidated balance sheet of Seller at
December 31, 1995 and the related statements of income and cash
flow for the year then ended and (b) the unaudited consolidated
balance sheet of Seller at December 31, 1996 before giving effect
to write-downs associated with the decision to discontinue
operations and the related statements of income and cash flow for
such interim period (collectively, the "Financial Statements").
The Financial Statements (a) have been prepared in accordance
with generally accepted accounting principles consistently
applied, (b) are correct and complete and in accordance with the
books and records of the Company, and (c) fairly present the
consolidated results of operations, financial position, assets,
liabilities and cash flow of the Company as at their respective
dates or for the respective periods covered thereby. The
Financial Statements as at and for the period ending December 31,
1995 have been audited in accordance with generally accepted
accounting principles and certified by Price Waterhouse LLP,
independent accountants for the Company.
5.8 No Liabilities. At the Closing, the Company will not
have any liability or obligation of any nature whatsoever,
secured or unsecured, known or unknown, whether due or to become
due, absolute, accrued, contingent or otherwise, including
liabilities for or in respect of federal, state and local taxes
and any interest or penalties relating thereto, except
liabilities assumed by Seller pursuant to Section 7.5 hereof and
except liabilities in respect of performance subsequent to the
Closing Date under (a) the contracts disclosed on Schedule 5.16,
and (b) the licenses, sublicenses, consents and other agreements
disclosed on Schedule 5.20 (the liabilities so disclosed on
Schedules 5.16 and 5.20 being called "Assumed Liabilities").
5.9 Tax and Other Returns and Reports.
(a) For purposes of this Agreement:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Returns" mean returns, report or other documents
related to Taxes, including all accompanying schedules.
"Taxes" means any Federal, state, local and
foreign income, payroll, withholding, excise, sales, use,
license, lease, personal and other property, use and occupancy,
business and occupation, mercantile, real estate, gross receipts,
employment, severance, stamp, premium, windfall profits, social
security (or similar unemployment), disability, transfer,
registration, value-added, alternative or add-on minimum,
estimated, capital stock and franchise, goods and services,
health, social services and education taxes; all customs, import
and export taxes or duties; and all unemployment insurance and
health insurance premiums, and other tax of any kind whatsoever,
including interest, penalties and fines on any of the foregoing,
whether or not disputed.
(b) The Company has, or Seller has with respect to the
Company, (i) timely filed all Returns required to be filed; (ii)
timely paid in full all Taxes due; and (iii) paid all other Taxes
for which a notice of assessment or demand for payment has been
received except for Taxes not yet due or Taxes being contested in
good faith by appropriate proceedings. All Returns have been
prepared in accordance with all applicable laws and requirements
and accurately reflect the taxable income (or other measure of
Tax base) of the Company. All Taxes that the Company is required
by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the appropriate Tax
authority.
(c) Except as disclosed on Schedule 5.9, there are no
proposed assessments of Taxes against the Company or proposed
adjustments to any Returns filed that are pending against the
Company. Except as disclosed on Schedule 5.9, the statute of
limitations (as extended by any waiver or consent) with respect
to each Return of the Company, or of the Seller group with
respect to the Company, has expired. Except as disclosed on
Schedule 5.9, no Return filed by or with respect to the Company
is being examined by, and no written notification of intention to
examine has been received from, any Tax authority. No currently
pending issues have been raised in writing by any Tax authority
in connection with any Return filed by or with respect to the
Company. There are no actions, suits, proceedings,
investigations, audits or claims now pending or threatened
against the Company in respect of any Taxes. Schedule 5.9 hereto
lists all jurisdictions in which the Company has filed Returns
since 1990. No claim has been made by a Tax authority of a
jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to Tax in that jurisdiction.
(d) The Company has timely filed all information
returns or reports, including forms 1099, which are required to
be filed and has accurately reported all information required to
be included on such returns or reports. True copies of Federal
and state income tax returns and other applicable Returns of the
Company for each of the fiscal years ended in 1990 through 1995
have been delivered to Buyer. Except as disclosed on Schedule
5.9, the Company has never been a member of an affiliated group
of corporations filing consolidated federal income tax returns or
a member of any other group of corporations filing consolidated,
combined or unitary state, local or foreign income tax returns.
(e) Except as disclosed on Schedule 5.9 hereto, the
Company has never: (i) filed any consent agreement under section
341(f) of the Code; (ii) applied for a ruling concerning Taxes
from any Tax authority; (iii) entered into a closing agreement
concerning Taxes with any Tax authority; (iv) filed or been the
subject of an election under section 338(g) or section 338(h)(10)
of the Code or caused or been the subject of a deemed election
under section 338(e) thereof; (v) executed a waiver or consent
extending any statute of limitation for any Tax liability that
remains outstanding; or (vi) granted a power of attorney with
respect to any Tax matter that has continuing effect. The
Company is not required to make any adjustments under Section 481
of the Code (or any comparable provision of state or local law)
by reason of a change of accounting method. The Company is not a
party to or bound by any tax indemnity, tax sharing or tax
allocation agreement that has continuing effect. The Company has
not made or is obligated to make any payment that is an "excess
parachute payment" as defined in Section 280G of the Code,
determined without regard to subsection (b)(4) thereof.
(f) Seller is a United States person within the
meaning of Section 7701(a)(30) of the Code.
5.10 No Changes. Since December 31, 1996, except
consistent with its past operating losses and the decision to
discontinue operations and except as disclosed in any of the
schedules to this Agreement, the Company with respect to the
Business has not:
(a) sold, encumbered, assigned or transferred the
Included Assets;
(b) suffered any damage, destruction or loss to the
Included Assets, whether or not covered by insurance, or suffered
any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility or other services required to
conduct the Business;
(c) suffered a Material Adverse Effect in light of the
fact that the Company is being held for sale and the operations
of the Company are accounted for as discontinued operations under
generally accepted accounting principles in the financial
statements of Seller;
(d) received notice of any actual or threatened labor
troubles, strike or other similar occurrence;
(e) made any material commitments or agreements for
capital expenditures or capital additions or betterments except
such as may be involved in ordinary repair, maintenance or
replacement of its assets;
(f) except in the ordinary course of business
consistent with past practice, increased the salaries or other
compensation of, or made any advance (excluding advances for
ordinary and customary business expenses and except for the Stay
Pay Agreements for certain employees at the Colorado Mill or the
Texas Mill previously disclosed in writing to Buyer) or loan to,
any of its employees or made any increase in, or any addition to,
other benefits to which any of its employees may be entitled;
(g) made any change or any threat of any change in any
of its relations with, or any loss or threat of loss of any of
the suppliers, clients, customers or employees of the Company; or
(h) made any disposition of or failure to keep in
effect any rights in, to or for the use of any of the
intellectual property used in the Business.
5.11 Compliance with Law; Authorizations. The Company
has complied and is in compliance in all material respects with
each law, ordinance, or governmental or regulatory rule or
regulation, whether federal, state, cantonal, local or foreign
("Regulation"), to which the Company's business, operations,
assets or properties is subject. The Company owns, holds,
possesses or lawfully uses in the operation of its business all
material franchises, licenses, permits, approvals, filings,
registrations and other authorizations from any governmental or
regulatory official body or authority ("Authorizations") that are
required to conduct the Business and such Authorizations are in
full force and effect. The Company is in compliance with the
terms of the Authorizations and Regulations. No notice,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or
review is pending or to Seller's or the Company's knowledge
threatened by any governmental entity (a) with respect to any
alleged violation by the Company of any Regulation or (b) with
respect to any alleged failure by the Company to have any
Authorization required in connection with the Business. All
Authorizations are listed in Schedule 5.11. All such
Authorizations are renewable by their terms or in the ordinary
course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine
filing fees.
5.12 Transactions With Related Parties. Except as
disclosed on Schedule 5.12 or as disclosed by Seller or Adolph
Coors Company in public filings with the Securities and Exchange
Commission, no Related Party:
(a) has borrowed money or loaned money to the Company
that has not been repaid;
(b) has any contractual or other claim, express or
implied, of any kind whatsoever against the Company;
(c) has had, since January 1, 1993, any interest in
any intellectual property used in the Business; or
(d) has been engaged, since January 1, 1993, in any
other transaction (or series of transactions) involving in excess
of $60,000 in any fiscal year with the Company (other than
employment relationships at the salaries disclosed on Schedule
5.23). For purposes of this Agreement, a "Related Party" means
Seller, any of the officers or directors of the Company or
Seller, any affiliate of Seller or the Company, or any business
or entity in which Seller, the Company, or any affiliate of any
such person has any direct or material indirect interest.
5.13 Litigation. Except as set forth on Schedule 5.13,
no litigation, including any arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority is pending or, to Seller's
or the Company's knowledge, threatened against the Company which
relates to the assets or the stock of the Company or the
transactions contemplated by this Agreement. The Company is not
a party to or subject to, and the assets and the stock of the
Company are not subject to, the provisions of any judgment,
order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority.
5.14 Title; Condition of Included Assets. The Company
has good and valid title to the Included Assets, free and clear
of all liens, claims, security interests, restrictions and
encumbrances of whatsoever nature except Permitted Liens (defined
below), and subject only to minor imperfections of title, none of
which, individually or in the aggregate, materially impairs the
use of the affected property or materially impairs any operations
of the Business. The Included Assets are in good working order
and operating condition and repair (ordinary wear and tear and
routine maintenance excepted), are suitable for the purposes for
which they are used in the Business, and are structurally sound
and free from material defects. There is no expenditure in
excess of $200,000 presently required in order to maintain such
condition and state of repair or replace any Included Asset. For
purposes of this Agreement, Permitted Liens means (I) liens for
current real or personal property taxes not yet due and payable,
(ii) liens disclosed in Schedule 5.22, (iii) statutory liens
arising by mandatory provisions of law securing obligations in
the ordinary course of business which are not yet due or which
are being contested in good faith; and (iv) liens, encumbrances
and restrictions such as easements, license and rights of way
that do not materially detract from the value of the properties
used in the Business or materially interfere with the present use
of the properties in the Business.
5.15 Insurance. All of the policies of general
liability and property insurance under which the Company is
listed as a named insured or a beneficiary are described in
Schedule 5.15. Schedule 5.15 indicates for each policy the risks
insured against, coverage limits, and deductible amounts. All
such policies are in full force and effect in accordance with
their terms, no notice of cancellation or non-renewal has been
received, and there is no existing default or event which, with
the giving of notice or lapse of time or both, would constitute a
default thereunder. All premiums to date have been paid in full.
The coverages provided by such policies are reasonable, in both
scope and amount, in light of the risks attendant to the business
in which the Company is, or has been, engaged and are comparable
to coverage customarily maintained by companies in similar lines
of business and such insurance is sufficient in the aggregate to
cover all reasonably foreseeable damage to and liabilities or
contingencies relating to the conduct by the Company of its
business and affairs. Schedule 5.15 contains an accurate and
complete description of each provision contained in such policies
which provides for retrospective or retroactive premium
adjustments. The Company has not been refused any insurance by
any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the past five years.
5.16 Contracts; Compliance. The Company is not a party
to or bound by any material lease, contract or commitment of any
kind, oral or written, formal or informal, except as described on
Schedule 5.16. All leases, contracts and other commitments to
which the Company is a party or by which it is bound are in full
force and effect; all parties to such leases, contracts and other
commitments have complied with the provisions thereof; no such
party is in default under any of the terms thereof; and no event
has occurred that with the passage of time or the giving of
notice or both would constitute a default by any party under any
provision thereof.
5.17 No Conflicts. The execution and delivery of this
Agreement by Seller and the Company do not, and the consummation
of the transactions contemplated by this Agreement and the
compliance with the terms, conditions and provisions of this
Agreement by Seller or the Company, will not (a) contravene any
provision of GAC's, the Seller's or any of the Subsidiaries'
articles of incorporation, bylaws or other governing instruments;
(b) conflict with or result in a breach of or constitute a
default (or an event which might, with the passage of time or the
giving of notice or both, constitute a default) under any of the
terms, conditions or provisions of any indenture, mortgage, loan
or credit agreement or any other material agreement or instrument
to which the Company or Seller is a party or by which any of them
or any of their assets may be bound or affected, or any judgment
or order of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign, or any
applicable Regulation; (c) result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon
any of the Included Assets or give to others any interests or
rights therein; (d) result in the maturation or acceleration of
any Assumed Liability (or give others the right to cause such a
maturation or acceleration); or (e) result in the termination of
or loss of any material right (or give others the right to cause
such a termination or loss) under any agreement or contract to
which the Company is a party or by which either may be bound.
5.18 Labor Matters. The relations of the Company with
its employees are good. Except as disclosed on Schedule 5.18,
(a) no employee of the Company is represented by any union or
other labor organization; (b) there is no unfair labor practice
complaint against the Company pending or threatened before the
National Labor Relations Board; (c) there is no labor strike,
dispute, slow down or stoppage actually pending or threatened
against the Company; (d) no grievance against the Company which
might have an adverse effect on the Company or the conduct of its
business is pending; (e) no private agreement restricts the
Company from relocating, closing or terminating any of its
operations or facilities; (f) the Company in the past three (3)
years has not experienced any work stoppage or other labor
difficulty or committed any unfair labor practice; and (g) there
are no efforts in progress by any union or other labor
organization to organize any employees of the Company.
5.19 Employee Benefit Plans and Arrangements.
(a) For purposes of this Agreement:
"Beneficiary" means the person(s) designated by a
GAC Employee or a GAC Former Employee, by operation of law or
otherwise, as the party entitled to compensation, benefits,
damages, insurance coverages, indemnification or any other goods
or services under any Seller Benefit Plan.
"Code" means the Internal Revenue Code of 1986, as
amended.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" means (i) any corporation
included with a person in a controlled group of corporations
within the meaning of Section 414(b) of the Code; (ii) any trade
or business (whether or not incorporated) which is under common
control with a person within the meaning of Section 414(c) of the
Code; (iii) any member of an affiliated service group of which a
person is a member within the meaning of Section 414(m) of the
Code; or (iv) any other person or entity treated as an affiliate
of a person under Section 414(o) of the Code.
"Foreign Plans" has the meaning set forth in this
Section 5.19.
"GAC Employees" shall mean all individuals with
whom the GAC maintains on the Closing Date an employee-employer
relationship, including any such individuals on short-term
disability or leave of absence.
"GAC Former Employees" means all individuals as to
whom an employer-employee relationship has existed in the past
with the GAC but does not exist on the Closing Date, including
any such individual on long-term disability.
"Seller Benefit Plans" has the meaning set forth
in this Section 5.19.
"Subsidiary Employees" shall mean all individuals
as to whom a Subsidiary maintains on the Closing Date an employee-
employer relationship, including any such individuals on short-
term disability or leave of absence.
"Seller Pension Plan" has the meaning set forth in
this Section 5.19.
(b) Set forth on Schedule 5.19(b) is a true and
complete list of each (i) "employee benefit plan," as defined in
Section 3(3) of ERISA (including any "multiemployer plan" as
defined in Section 3(37) of ERISA), (ii) all other pension,
retirement, supplemental retirement, deferred compensation,
excess benefit, profit sharing, bonus, incentive, stock purchase,
stock ownership, stock option, stock appreciation right,
employment, severance, salary continuation, termination, change-
of-control, health, life, disability, group insurance, vacation,
holiday and fringe benefit plan, program, contract, or
arrangement (whether written or unwritten, qualified or
nonqualified, funded or unfunded and including any that have been
frozen or terminated) maintained, contributed to, or required to
be contributed to, by GAC or any ERISA Affiliate of GAC for the
benefit of any GAC Employee, GAC Former Employee, director,
officer or independent contractor of GAC or under which GAC or
any ERISA Affiliate of GAC has any liability with respect to any
GAC Employee, GAC Former Employee, director, officer or
independent contractor of GAC (the "Seller Benefit Plans").
Except as set forth on Schedule 5.19(b)(i), each of the Seller
Benefit Plans is sponsored by the Seller.
(c) As applicable with respect to each Seller Benefit
Plan, the Seller has delivered to Buyer, true and complete copies
of (i) each Seller Benefit Plan, including all amendments
thereto, and in the case of an unwritten Seller Benefit Plan, a
written description thereof, (ii) all trust documents, investment
management contracts, custodial agreements and insurance
contracts relating thereto, (iii) the current summary plan
description and each summary of material modifications thereto,
(iv) the most recent annual report (Form 5500 and all schedules
thereto) filed with the Internal Revenue Service ("IRS"), (v) the
most recent IRS determination letter and each currently pending
application to the IRS for a determination letter, (vi) the most
recent summary annual report, actuarial report, financial
statement and trustee report, (vii) the most recent annual
premium payment form filed with the Pension Benefit Guaranty
Corporation ("PBGC") and (viii) all records, notices and filings
concerning IRS or Department of Labor audits or investigations,
"prohibited transactions" within the meaning of Section 406 of
ERISA or Section 4975 of the Code and "reportable events" within
the meaning of Section 4043 of ERISA.
(d) Except as otherwise disclosed with particularity
on Schedule 5.19 (d):
(i) GAC and each ERISA Affiliate of GAC are in
compliance in all material respects with the provisions of
ERISA and the Code applicable to the Seller Benefit Plans.
Each Seller Benefit Plan has been maintained, operated and
administered in compliance in all material respects with its
terms and any related documents or agreements and the
applicable provisions of ERISA and the Code.
(ii) Any noncompliance or failure properly to
administer a Seller Benefit Plan or related trust has not
exposed such Seller Benefit Plan or related trust, Company,
any ERISA Affiliate of GAC or the Buyer to any taxes,
penalties or liabilities to any person, the Seller Benefit
Plan to disqualification or any related trust to a loss of
tax-exempt status.
(iii) The Seller Benefit Plans which are
"employee pension benefit plans" within the meaning of
Section 3(2) of ERISA and which are intended to meet the
qualification requirements of Section 401(a) of the Code
(each a "Seller Pension Plan") now meet, and at all times
since their inception have met the requirements for such
qualification, and the related trusts are now, and at all
times since their inception have been, exempt from taxation
under Section 501(a) of the Code.
(iv) All Seller Pension Plans have received
determination letters from the IRS to the effect that such
Seller Pension Plans are qualified and the related trusts
are exempt from federal income taxes and no determination
letter with respect to any Seller Pension Plan has been
revoked nor is there any reason for such revocation, nor has
any Seller Pension Plan been amended since the date of its
most recent determination letter in any respect which would
adversely affect its qualification.
(v) All contributions to, and payments from, any
Seller Benefit Plan which may have been required in
accordance with the terms of such Seller Benefit Plan or any
related document and, when applicable, Section 302 of ERISA
or Section 412 of the Code, have been timely made. All such
contributions to, and payments from, any Seller Benefit
Plan, except those to be made from a trust, qualified under
Section 401(a) of the Code, for any period ending before the
Closing Date that are not yet, but will be, required, are
properly accrued and reflected on the most recent Financial
Statement. No Seller Benefit Plan has incurred an
"accumulated funding deficiency" within the meaning of
Section 302 of ERISA or Section 412 of the Code, nor has any
waiver of the minimum funding standards of Section 302 of
ERISA or Section 412 of the Code been requested, or granted,
with respect to any Seller Benefit Plan. The funding method
used in connection with each Seller Benefit Plan which is
subject to the minimum funding requirements of ERISA and the
Code is acceptable under current IRS guidelines, and the
actuarial assumptions used in connection with funding each
such Seller Benefit Plan are reasonable. All unfunded
liabilities of each Benefit Plan have been properly accrued
in accordance with GAAP.
(vi) Each Seller Benefit Plan subject to Title IV
of ERISA has assets sufficient on a plan termination basis
to be eligible on the Closing Date for standard termination
pursuant to Section 4041 of ERISA without GAC or an ERISA
Affiliate of GAC being required to make any additional
contributions. The PBGC has not instituted proceedings to
terminate any Seller Benefit Plan or to appoint a trustee or
administrator of any such Seller Benefit Plan, and no
circumstances exist that constitute grounds under Title IV
of ERISA for any such proceeding. There has been no
"reportable event" within the meaning of Section 4043 of
ERISA that has not been fully and accurately reported in a
timely fashion, as required, or which, whether or nor
reported, would authorize the PBGC to institute termination
proceedings with respect to any Seller Benefit Plan. No
liability under Title IV of ERISA has been incurred or is
expected to be incurred that could result in liability to
any Seller Benefit Plan, GAC, any ERISA Affiliate of GAC or
the Buyer, other than for premiums pursuant to Section 4007
of ERISA that are not yet due.
(vii) Neither GAC nor any ERISA Affiliate of
GAC has ever contributed to, or been required to contribute
to any "multiemployer plan" (within the meaning of Section
3(37) of ERISA) and neither GAC nor any ERISA Affiliate of
GAC has any liability (contingent or otherwise) relating to
the withdrawal or partial withdrawal from a multiemployer
plan.
(viii) There are no pending audits or
investigations by any governmental agency involving the
Seller Benefit Plans, and no threatened or pending claims
(except for individual claims for benefits payable in the
normal operation of the Seller Benefit Plans), suits or
proceedings involving any Seller Benefit Plan, any fiduciary
thereof or service provider thereto, nor is there any
reasonable basis for any such claim, suit or proceeding.
(ix) Neither GAC, any ERISA Affiliate of GAC, any
fiduciary, trustee or administrator of any Seller Benefit
Plan, has engaged in or, in connection with the transactions
contemplated by this Agreement, will engage in any
transaction with respect to any Seller Benefit Plan which
would subject any such Seller Benefit Plan, GAC, any ERISA
Affiliate of GAC or Buyer to a tax, penalty or liability for
a "prohibited transaction" under Section 406 of ERISA or
Section 4975 of the Code. None of the assets of any Seller
Benefit Plan is invested in any property constituting
"employer real property" or an "employer security," within
the meaning of Section 407 of ERISA.
(x) All insurance premiums with respect to any
insurance policy related to a Seller Benefit Plan for any
period up to and including the Closing Date shall have been
paid, or accrued and booked on or before the Closing Date,
and, with respect to any such insurance policy or premium
payment obligation, neither GAC, any ERISA Affiliate of GAC
nor the Buyer shall be subject to a retroactive rate
adjustment, loss sharing arrangement or other actual or
contingent liability.
(xi) With respect to each Seller Benefit Plan that
is a "group health plan" within the meaning of Section 607
of ERISA and that is subject to Section 4980B of the Code,
GAC and each ERISA Affiliate of GAC comply in all material
respects with the continuation coverage requirements of the
Code and ERISA.
(xii) No Seller Benefit Plan provides
benefits, including, without limitation, death or medical
benefits, beyond termination of service or retirement other
than (A) coverage mandated by law or (B) death or retirement
benefits under a Seller Benefit Plan qualified under Section
401(a) of the Code. Neither GAC nor any ERISA Affiliate of
GAC has made a written or oral representation to any current
or former employee promising or guaranteeing any employer
paid continuation of medical, dental, life or disability
coverage for any period of time beyond retirement or
termination of employment.
(xiii) The Seller's execution of, and
performance of the transactions contemplated by this
Agreement will not constitute an event under any Seller
Benefit Plan that will result in any payment (whether as
severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee. No
Seller Benefit Plan provides for "parachute payments" within
the meaning of Section 280G of the Code.
(xiv) All trusts related to Seller Benefit
Plans that are intended to comply with the provisions of
Section 501(c)(9) or Section 501(c)(17) of the Code are
exempt from federal income taxation.
(xv) All of the individuals whose primary
responsibility relates to, and who are necessary for the
operation of, the Business are employed by GAC or a
Subsidiary.
(e) Set forth on Schedule 5.19(e) is a true and
complete list of each pension, profit sharing, retirement,
supplemental retirement, deferred compensation, excess benefit,
bonus, incentive, stock purchase, stock ownership, stock option,
stock appreciation right, employment, severance, salary
continuation, termination, change-of-control, health, life,
disability, group insurance, vacation, holiday and fringe benefit
plan, program, contract or arrangement (whether written or
unwritten, qualified or nonqualified, funded or unfunded and
including any that have been frozen or terminated) maintained,
contributed to, or required to be contributed to by Seller or any
Affiliate for the benefit of any Subsidiary Employee, former
Subsidiary Employee, director, officer or independent contractor
of the Subsidiary or under which Seller or any Affiliate has any
liability with respect to any Subsidiary Employee, former
Subsidiary Employee, director, officer or independent contractor
of Subsidiary (the "Foreign Plans").
(f) A true and complete copy of each Foreign Plan
including all amendments and modifications thereof together with
all related trust agreements and insurance contracts have been
delivered to Buyer.
(g) Each Foreign Plan has been maintained, operated
and administered in compliance in all material respect with its
terms and with all applicable laws.
(h) There are no unfunded liabilities with respect to
any Foreign Plan and all contributions and other payments
required to be made by Seller or any Affiliate to any Foreign
Plan with respect to any period up to and including the Closing
Date shall have been made or accrued and booked on or before the
Closing Date.
(i) There are no pending audits or investigations by
any governmental or quasi-governmental agency involving the
Foreign Plans and no threatened or pending claims (except for
individual claims for benefits payable in the normal operation of
the Foreign Plan), suits or proceedings involving any Foreign
Plan.
5.20 Patents and Intellectual Property Rights.
(a) Schedule 5.20 contains a complete and
accurate list of all patents and patent applications, industrial
design registrations, copyright registrations, industrial design
marks, trade names and registrations, trademarks, service
registration of trademarks, service marks and trade names used in
the conduct of the Business specifying as to each such item, as
applicable: (i) the owner of the item; (ii) the jurisdictions in
which the item is issued or registered or in which any
application for issuance or registration has been filed,
including the respective issuance, registration, or application
number; (iii) the date of application and issuance or
registration of the item; and (iv) with respect to any
registrations and applications for registration of trademarks or
service marks, the class or classes of goods or services on which
each such trademark or service mark is or is intended to be used.
(b) Schedule 5.20 contains a complete and accurate
list of all material licenses, sublicenses, consents and other
agreements (whether written or otherwise) (i) pertaining to any
patents, industrial design rights, trademarks, service marks,
trade names, trade dress, copyrights, trade secrets, computer
software program (other than standard, commercially available
programs), or other intellectual property used in the conduct of
the Business, and (ii) by which the Company licenses or otherwise
authorizes a third party to use such intellectual property.
Neither the Company nor any other party is in breach of or
default under any such license or other agreement and each such
license or other agreement is now and immediately following the
Closing will be valid and in full force and effect.
(c) Except as set forth on Schedule 5.20, the Company
owns or is licensed or otherwise has the right to use all
patents, industrial design rights, trademarks, service marks,
trade names, trade dress, copyrights, inventions, technology,
know-how, designs, formulae, trade secrets, confidential and
proprietary information, computer software programs (other than
standard, commercially available programs), and other
intellectual property necessary for the operations of the
Business as it is currently conducted. Except as indicated on
Schedule 5.20, the Company has the right to bring actions for the
infringement of all patents listed on Schedule 5.20.
(d) The operation of the Business as currently
conducted or conducted in the past does not infringe in the
United States on the patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights,
trade secrets or other intellectual property rights of any third
party, and no claim has been made, notice given, or dispute
arisen to the effect that such operation of the Business so
infringes in the United States. The operation of the Business as
currently conducted or conducted in the past does not infringe
outside the United States on the patents, industrial design
rights, trademarks, service marks, trade names, trade dress,
copyrights, trade secrets or other intellectual property rights
of any third party such that any liability for infringement
exists as of Closing, and no claim has been made, notice given,
or dispute arisen to the effect that such operation of the
Business so infringes outside the United States.
(e) The Company has no pending claims that a third
party has violated or infringed any of the Company's patents,
industrial design rights, trademarks, service marks, trade names,
trade dress, copyrights, trade secrets or other proprietary
rights and the Company has not given any indemnification to any
third party against infringement of such intellectual property
rights.
(f) Except as set forth on Schedule 5.20, all of the
patents, industrial design registrations, trademark and service
mark registrations, and copyright registrations set forth in
Schedule 5.20 are valid and in full force, are held or, as of
Closing will be held, of record in the Company's name free and
clear of all liens, encumbrances and other claims, and are not
the subject of any opposition, cancellation, reissue or
reexamination proceeding or any other proceeding challenging
their extent or validity. Except as set forth on Schedule 5.20,
the Company is the applicant of record in all patent
applications, and applications for trademark, service mark,
industrial design, and copyright registration set forth in
Schedule 5.20, and no opposition, extension of time to oppose,
interference, rejection, or refusal to register has been received
in connection with any such application.
(g) No order, holding, decision or judgment has been
rendered by any governmental authority, and no agreement, consent
or stipulation exists, which would limit the Company's use of any
intellectual property or any advertising or promotional claim or
campaign.
(h) Patents have been issued for, or applications are
pending to obtain patents for, all inventions used in connection
with the Business in all jurisdictions where the failure to
obtain such a patent could have a Material Adverse Effect in
light of the fact that the Company is being held for sale and the
operations of the Company are accounted for as discontinued
operations under generally accepted accounting principles in the
financial statements of Seller. Registrations have been issued
for, or applications are pending to register, all trademarks,
service marks, industrial designs, and copyrights in all
jurisdictions where the failure to obtain such a registration
could have a Material Adverse Effect in light of the fact that
the Company is being held for sale and the operations of the
Company are accounted for as discontinued operations under
generally accepted accounting principles in the financial
statements of Seller.
5.21 Environmental Matters.
Except as set forth on Schedule 5.21 and except in each case
where any failure under this Section 5.21 would not reasonably be
expected to have a Material Adverse Effect in light of the fact
that the Company is being held for sale and the operations of the
Company are accounted for as discontinued operations under
generally accepted accounting principles in the financial
statements of Seller:
(a) The Company holds and is in compliance with all
permits, certificates, licenses, approvals, registrations and
authorizations ("Permits") required under all applicable
environmental statutes, rules, regulations, ordinances and orders
of any governmental entity, including those relating to Hazardous
Substances (as defined below) ("Environmental Laws") in
connection with the Business, and all of such Permits are in full
force and effect. All such Permits are listed on Schedule 5.21
and any that are not transferable are so designated. The Company
has complied with and is not in violation of Environmental Laws.
The Company has made timely application for renewals of all such
Permits for which Environmental Laws require that applications
must be filed on or before the Closing to maintain such Permits
in full force and effect.
(b) No notice, citation, summons or order has been
issued, no complaint has been filed, no penalty has been assessed
and, to the knowledge of Seller or the Company, no investigation
or review is pending or threatened by any governmental or other
third party entity: (a) with respect to any alleged violation by
the Company of any Environmental Laws; or (b) with respect to any
alleged failure by the Company to have any Permit required by
Environmental Laws in connection with the Business; or (c) with
respect to any use, possession, generation, treatment, storage,
recycling, transportation or disposal (collectively,
"Management") of any hazardous or toxic substance or waste or
pollutant or contaminant, regulated by Environmental Laws,
including petroleum products or wastes and radioactive materials
("Hazardous Substances") by or on behalf of the Company.
(c) The Company has not received any written request
for information, notice of claim, demand or notification as a
result of the operations of the Business prior to Closing that it
is or may be potentially responsible with respect to any
investigation or cleanup of any threatened or actual release of
any Hazardous Substance.
(d) The Company has not used, generated, treated,
stored for more than 90 days, recycled or disposed of any
Hazardous Substances on any property now or previously owned,
operated or leased by the Company, except for such activities
conducted in the ordinary course of its business in compliance
with Environmental Laws and in a manner which does not require
investigation, remediation or other response action under
applicable Environmental Laws nor to the Seller's or the
Company's knowledge has anyone else treated, stored for more than
90 days, recycled or disposed of any Hazardous Substances on any
property now or previously owned, operated or leased by the
Company at the time such property was previously owned, leased or
operated by the Company, except for the presence of which would
not be a violation of Environmental Laws. No polychlorinated
biphenyls ("PCBs") or asbestos-containing materials are or have
been present at any property now or previously owned, operated or
leased by the Company, nor are there any underground storage
tanks, active or abandoned, owned or operated by the Company at
any property now or previously owned, operated or leased by the
Company, at the time such property was previously owned, leased
or operated by the Company, except for the presence of which
would not be a violation of Environmental Laws or which would not
require the Company to investigate, remediate or otherwise
respond.
(e) No Hazardous Substance managed by the Company has
been recycled, treated, stored, disposed of or transported by any
entity off-site other than those identified on documents made
available to Buyer. The Company has not received notice and
neither the Seller nor the Company has knowledge that any
Hazardous Substance managed by the Company has come to be located
at any site at the time such property was previously owned,
leased or operated by the Company, except for the presence of
which would not be material violation of Environmental Laws which
is listed or proposed for listing under the National Priority
List promulgated pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS"), or on
any similar state list of sites requiring investigation or
cleanup or which is the subject of federal, state or local
enforcement actions or other investigations, which could
reasonably lead to claims against the Company or Buyer for
clean-up costs, remedial work, damages to natural resources or
for personal injury claims, including, but not limited to, claims
under CERCLA.
(f) No Hazardous Substance generated by the Company
has been released, spilled, leaked, discharged, or disposed of,
pumped, poured, emitted, emptied, injected, leached, dumped or
allowed to escape ("Released") at, on, about or under any
property now or previously owned, operated or leased by the
Company at the time such property was previously owned, leased or
operated by the Company that are required to be remediated under
Environmental Laws.
(g) No written notification of a Release or threat of
Release of a Hazardous Substance has been filed with a government
agency by or on behalf of the Company in relation to any property
now or previously owned, operated or leased by the Company at the
time such property was previously owned, leased or operated by
the Company. No such property is listed or proposed for listing
on the National Priority List promulgated pursuant to CERCLA or
CERCLIS or on any similar state list of sites requiring
investigation or clean-up.
(h) To the knowledge of Seller or the Company, there
are no environmental liens on any properties owned or leased by
the Company and no government actions have been taken or are
pending which could subject any of such properties to such liens.
(i) The Company would not be required to place any
notice or restriction relating to the presence of Hazardous
Substances first occurring in the deed to any property owned by
it, and no property owned by the Company at the time such
property was previously owned by the Company has or had such
notice or restriction in its deed.
(j) No consent, approval or authorization of, or
registration or filing with any person, including any
environmental governmental authority or regulatory agency, is
required in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby except for Permits that are required to be transferred by
Environmental Laws which are listed on Schedule 5.21.
(k) Except as listed on Schedule 5.21 or heretofore
provided or made available to Buyer, no written reports of
environmental inspections, investigations, studies, audits,
tests, reviews or other analyses, including manifests, have been
prepared by or on behalf of the Company and are in its possession
or control, and to the Seller's or the Company's knowledge, no
such reports have been prepared by or on behalf of any third
party in relation to any property or business previously owned,
operated or leased by the Company.
5.22 Real Property.
(a) For purposes of this Agreement, "Real Property"
shall mean all interests in and rights to the real property and
the improvements located thereon which are owned, leased or
otherwise subject to a right of use, occupancy or license by the
Company and are used in connection with the Business. All such
Real Property is listed on Schedule 5.22. Except for the Real
Property, the Company has never owned, operated or leased any
other real property.
(b) The Company has good, marketable and insurable fee
simple title, including all legal, equitable and beneficial
interests, to the lots and parcels of land listed on Schedule
5.22 together with the buildings, structures and other
improvements erected thereon, with all easements rights and other
privileges appurtenant thereto, free and clear of all mortgages,
liens, encumbrances, ground rents, leases, tenancies, licenses,
reservations or other rights of occupancy or use for all or any
portion of the Real Property, options, security interests,
covenants, conditions, restrictions, rights of way, easements,
encroachments and any other matters affecting title except
Permitted Liens and except for the oil and gas lease dated
June 17, 1970, referred to in the January 7, 1977 title insurance
policy referred to in Schedule 5.22.
(c) All certificates of occupancy, if any, required
for the occupancy and use of the Real Property for its intended
purpose have been obtained, are in final and unappealable form,
based on duly-issued building permits, are in full force and
effect, and shall remain effective without the need of further
acts or payments by Buyer at the Closing and no other licenses,
permits, authorizations, consents, and approvals by any
governmental or quasi-governmental authorities having
jurisdiction (whether federal, state or local) are required for
the use and occupancy thereof, and no certificates of the local
board of fire underwriters (or other body exercising similar
functions) have been issued or are required for any buildings or
structures comprising the improvements with respect to the Real
Property (the "Improvements").
(d) The use and operation of the Real Property
substantially conform by right and not by variance, special
exception, conditional use or nonconforming use, to all
applicable building, zoning, subdivision, safety, environmental
and other laws, ordinances, regulations, codes, permits, licenses
and certificates and all restrictions and conditions affecting
title. The Company has received no written or oral notice from
any local, state or federal governmental agency that the
continued maintenance, operation or use of any and all buildings
(for the current purpose), structures or other improvements
comprising the Improvements violates any building, zoning,
subdivision, safety, environmental or other law, ordinance, code,
order, or regulation, and neither Seller nor the Company has
knowledge of any such violation. Neither the Seller nor the
Company has received any written or oral notice from any local,
state or federal governmental agency that there are existing
violations of any federal, state, county, or municipal laws,
ordinances, orders, codes, regulations or requirements affecting
all or any portion of the Real Property, including without
limitation violations of the building, subdivision, safety,
health, fire, or zoning ordinances, codes and regulations of the
municipality or county within which the Improvements are located,
and neither Seller nor the Company has knowledge of any such
violations.
(e) No portion of the Real Property is subject to or
is affected by any special assessment, whether or not presently a
lien thereon, and no such assessment has been made or is pending
or threatened.
(f) No default or breach by the Company exists under
any of the covenants, conditions, restrictions, rights-of-way, or
easements, if any, that would materially affect all or any
portion of the Real Property.
(g) There is no planned or, to the best knowledge of
Seller or the Company, threatened taking or condemnation for any
public or quasi-public purpose or use by a competent authority in
appropriate proceedings or by any right of eminent domain, of all
or any part of the Real Property or any access road thereto.
(h) With respect to the Real Property leased by the
Company:
(i) the Company has delivered to Buyer a true and
complete copy of every lease and sublease to which the
Company is a tenant or subtenant (the "Leases") and such
Leases are described in Schedule 5.22; and
(ii) each Lease is in full force and effect and
has not been assigned, modified, supplemented or amended
except as listed on Schedule 5.22, and neither the Company
nor, to the Company's knowledge, the landlord or sublandlord
under any Lease is in default under any of the Leases, and
no circumstance presently exists which, with the giving of
notice or passage of time, or both, would permit the
landlord or sublandlord under any Lease to terminate any
Lease.
(i) Utilities. All water, sewer, gas, electric,
telephone, and other public utilities required by law or
necessary for the operation of the Real Property (1) either enter
the Real Property through open public streets adjoining the Real
Property, or, if they pass through adjoining private land, do so
in accordance with valid public or private easements or rights of
way which will inure to the benefit of Buyer and which are not
subject to divestiture whether from foreclosure or otherwise,
other than real estate taxes, (2) are installed, connected and
operating, in good condition, with all installation and
connection charges paid in full, including, without limitation,
connection and the permanent right to discharge sanitary waste
into the collector system of the appropriate sewer authority, and
(3) are adequate to service the Real Property for its current
use. No moratorium, proceeding or other fact or condition exists
which threatens to impair continued furnishing of such services
to the Real Property at regular rates and fees. Water and
sanitary sewer are public.
(j) Public Streets. The Real Property is located
along one or more dedicated public streets. All permits or
licenses required for vehicular access to and from the Real
Property to any adjoining public street or to any parking spaces
utilized in connection with the Real Property have been obtained
and paid for by Seller, are in full force and effect and shall
inure to the benefit of Buyer.
(k) Leases. All parties in interest holding paramount
or senior interests in the Real Property have provided agreements
not to disturb the Company's quiet enjoyment of its interest in
such Real Property, provided the Company is not in default after
the expiration of applicable grace periods of its contractual
obligations under the contracts entitling the Company to such
interests in the Real Property.
5.23 Compensation Arrangements; Bank Accounts; Officers
and Directors. Schedule 5.23 sets forth the following
information:
(a) the names, titles and current annual salary from
the Company, including any bonus, if applicable, of all present
directors, officers, employees and agents of the Company whose
rate of compensation, including any promised, expected or
customary bonus, equals or exceeds $50,000, together with a
statement of the full amount of all remuneration paid by the
Company to each such person and to any director of the Company,
during the twelve-month period preceding the date hereof;
(b) the name of each bank in which the Company has an
account or safe deposit box, the identifying numbers or symbols
thereof and the names of all persons authorized to draw thereon
or to have access thereto, and each credit card issued to the
Company or any other person for which the Company is responsible
for charges made thereon, the issuer of such credit cards, the
identifying numbers or symbols thereof and the names of all
persons to which such cards have been issued or to whom access to
such cards has been given; and
(c) the names and titles of all directors and officers
of the Company and of each trustee, fiduciary or plan
administrator of each employee benefit plan of the Company.
5.24 Disclosure. No representation or warranty by
Seller or the Company in this Agreement, and no exhibit,
document, statement, certificate or schedule furnished or to be
furnished to Buyer pursuant hereto, or in connection with the
transactions contemplated hereby, 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 or facts
contained herein or therein not misleading, taken as a whole, and
in light of the circumstances under which they were made.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Corporate Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Pennsylvania.
6.2 Corporate Power; Authorization; and Enforceability.
Buyer has the corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by Buyer have been
duly authorized by all necessary corporate and shareholder
action. This Agreement and all the other agreements and
instruments required to be executed and delivered by the Buyer in
connection with or pursuant hereto have been duly executed and
delivered by Buyer and constitute the legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms.
6.3 No Conflicts. The execution and delivery of this
Agreement by Buyer do not, and the consummation of the
transactions contemplated by this Agreement and the compliance
with the terms, conditions and provisions of this Agreement by
Buyer will not (a) contravene any provision of Buyer's articles
of incorporation or bylaws; or (b) conflict with or result in a
breach of or constitute a default (or an event which might, with
the passage of time or the giving of notice or both, constitute a
default) under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other
agreement or instrument to which Buyer is a party or by which it
or any of its assets may be bound or affected, or any judgment or
order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable
Regulation, or result in the creation or imposition of any lien,
charge, encumbrance of upon any of the Included Assets or give to
others any interests or rights therein.
6.4 Consents. Except as required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval or authorization of, or registration
or filing with, any person, including any governmental authority
or other regulatory agency, is required in connection with the
execution, delivery and performance of this Agreement by Buyer.
6.5 Investment Representation. Buyer is acquiring the
Stock solely 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 Securities Act. Buyer further
represents that it does not have any present intention of
selling, offering to sell or otherwise disposing of or
distributing the Stock it is acquiring and Buyer agrees not to
transfer the Stock except in accordance with the Securities Act.
ARTICLE VII
CERTAIN OBLIGATIONS OF THE PARTIES
7.1 Agreements of Seller and the Company Pending the
Closing. Seller and the Company jointly and severally covenant
and agree that, pending the Closing and except consistent with
its decision to discontinue operations of the Company and except
as otherwise agreed to in writing by Buyer:
(a) Business in the Ordinary Course. The Business
shall be conducted solely in the ordinary course consistent with
past practice given the discontinued operations of the Company.
(b) Maintenance of the Included Assets. The Company
shall, and Seller shall cause the Company to, maintain and
service the Included Assets in the same manner as has been its
consistent past practice given the discontinued operations of the
Company.
(c) Employees and Business Relations. The Company
shall, and Seller shall cause the Company to, use its best
efforts to keep available the services of the present employees
and agents of the Business and to maintain the relations and
goodwill with the suppliers, customers, distributors and any
others having business relations with the Business given the
discontinued operations of the Company.
(d) Maintenance of Insurance. The Company shall, and
Seller shall cause the Company to, maintain in full force and
effect the policies of insurance listed on Schedule 5.15. The
Company shall, and Seller shall cause the Company to notify Buyer
of any changes in the terms of the insurance policies listed on
Schedule 5.15.
(e) Maintenance of Authorizations and Permits. The
Company shall, and Seller shall cause the Company to, maintain in
full force and effect all Authorizations and Permits currently in
effect used in the conduct of the Business.
(f) Compliance with Laws. The Company shall, and
Seller shall cause the Company to, comply in all material
respects with all laws, ordinances, rules, regulations and orders
applicable to the Business.
(g) Fulfillment of Agreements. Each of Seller and the
Company shall use its respective best efforts to cause all of the
conditions to the obligations of the Buyer under Section 10.1 of
this Agreement to be satisfied on or prior to the Closing. The
Company shall use its best efforts, and Seller shall use its best
efforts and shall cause the Company to use its best efforts, to
conduct the Business in such a manner that at the Closing the
representations and warranties of Seller and the Company
contained in this Agreement shall be true and correct as though
such representations and warranties were made on, as of, and with
reference to such date. Seller and the Company will promptly
notify Buyer in writing of any event or fact which represents or
is likely to cause a breach of any of their or its
representations, warranties, covenants or agreements. The
Company and Seller shall promptly advise Buyer in writing of the
occurrence of any condition or development (exclusive of general
economic factors affecting business in general) of a nature that
is or may be materially adverse to the business, operations,
properties, assets, prospects or conditions (financial or
otherwise) of the Company.
(h) Access. Seller and the Company shall give to
Buyer's officers, employees, counsel, accountants and other
representatives access to and the right to inspect, upon
reasonable notice and during normal business hours, all of the
premises, properties, assets, records, contracts and other
documents relating to the Business and shall permit them to
consult with the officers of the Company, Seller and accountants,
counsel and agents of the Company for the purpose of making such
investigation of the Business as Buyer shall reasonably desire to
make, provided that such investigation shall not unreasonably
interfere with the operation of the Business. Seller and the
Company shall furnish to Buyer all such documents and copies of
documents and records and information with respect to the affairs
of the Business as Buyer shall from time to time reasonably
request.
7.2 Agreements of Buyer Pending the Closing. Buyer
covenants and agrees that pending the Closing and except as
otherwise agreed to in writing by Seller and the Company:
(a) Actions of Buyer. Buyer shall use its best
efforts to cause all of the conditions to the obligations of the
Seller under Section 10.2 of this Agreement to be satisfied on or
prior to the Closing.
(b) Confidentiality. If the transactions contemplated
by this Agreement are not consummated, Buyer agrees that it shall
return or cause to be returned to Seller all written materials
and all copies thereof that were supplied to Buyer by Seller and
that contain any confidential data or information and Buyer will
and will cause its agents to hold in confidence any confidential
data or information made available to Buyer in connection with
this Agreement with respect to the Business.
7.3 Hart-Scott-Rodino Act. Seller and Buyer, in
cooperation with the other, have filed, in connection with the
transactions contemplated by this Agreement, and agree that in
connection with the exercise and closing of the Stock Put Option
will file, any reports or notifications that may be required to
be filed by them under the HSR Act with each of the Department of
Justice and the Federal Trade Commission and each of the Seller
and Buyer shall comply promptly will all requests for further
documents and information made by the Department of Justice and
the Federal Trade Commission, and shall furnish to the other all
such information in its possession as may be necessary for the
completion of the reports or notifications to be filed by the
other and shall use reasonable efforts to take or cooperate in
the taking of all steps as may be necessary to expedite the
termination of the waiting period under the HSR Act. Each party
shall bear its own costs and expenses (including fees and
disbursements of counsel) in connection with such filings,
provided that Buyer will pay the filing fee required with the
filing made in connection with the Stock Put Closing. In the
event a suit is threatened or instituted challenging the purchase
of the Business as violative of any antitrust laws, each party
shall use reasonable efforts to avoid the filing of, resist or
resolve such suit.
7.4 Assignment of Certain Intellectual Property. At or
prior to the Closing, Seller shall, at its expense, (a) assign,
or shall cause its affiliates to assign, to GAC or one of the
Subsidiaries, title to all intellectual property used in the
conduct of the Business that is held by an entity other than GAC
or a Subsidiary, including but not limited to the intellectual
property set forth on Schedule 7.4, and (b) at Closing (if not
done before Closing) deliver to Buyer documentation in
appropriate form for customary recordations and filings of such
assignments and the registration of all patents in the name of
GAC or one of the Subsidiaries in the relevant governmental or
administrative offices.
7.5 Assumption and Discharge of Liabilities. From and
after the Closing, Seller or a subsidiary of Seller whose
performance Seller guarantees for the benefit of Buyer will
assume and will pay, perform and discharge, when due, all debts,
liabilities and obligations of the Company of any nature
whatsoever, secured or unsecured, known or unknown, whether due
or to become due, absolute, contingent or otherwise, including
liabilities for or in respect of federal, state, cantonal and
local taxes and any interest or penalties relating thereto,
existing as of the Closing Date to the extent attributable to the
period prior to Closing (including any liabilities which may
arise in the future, including under CERCLA or any other
Environmental Laws now or hereafter in effect) except for the
Assumed Liabilities. Notwithstanding anything to the contrary
contained in this Agreement or otherwise but except as set forth
in Section 7.6, Seller shall have no liability whatsoever for any
debt, liability or obligation of the Company or related to the
Business arising on or after Closing to the extent such debt,
liability or obligation is attributable to the operation of the
Business after the Closing, except to the extent the same is
attributable to a state, condition, event or occurrence existing
at the Closing and unknown to Buyer, provided that if Buyer
exercises the Stock Put Option, Seller shall assume all liability
whatsoever for any debt, liability or obligation of the Company
or related to the Business arising on or after the Stock Put
Closing to the extent such debt, liability or obligation is
attributable to the operation of the Business after the Stock Put
Closing (except to the extent the same is attributable to a
state, condition, event or occurrence existing at the Stock Put
Closing (and not at the Closing Date) and unknown to Seller.)
7.6 Conditions of the Stock Put Option. At and as of the
Stock Put Closing, Buyer shall make to Seller the representations
and warranties set forth on Schedule 7.6, subject to the
exception that no breach of any such representation or warranty
shall be found to the extent such breach results from any event,
occurrence or condition in existence at the time of the Closing.
From and after the Stock Put Closing, Buyer will assume, and will
pay, perform and discharge, when due, all debts, liabilities and
obligations of the Company of any nature whatsoever, secured or
unsecured, known or unknown, whether due or to become due,
absolute, contingent or otherwise, including liabilities for or
in respect of federal, state, cantonal and local taxes and any
interest or penalties relating thereto, existing on the Stock Put
Closing Date to the extent any such debt, liability or obligation
is attributable to the operation of the Business during the
period between Closing, except to the extent the same is
attributable to a state, condition, event or occurrence existing
at the Closing and unknown to Buyer, and the Stock Put Closing
(including any liabilities which may arise in the future,
including under CERCLA or any other Environmental Laws now or
hereafter in effect) except for the Assumed Liabilities (as
modified as permitted in Section 7 of Schedule 7.6).
Notwithstanding anything to the contrary contained in this
Agreement or otherwise, Buyer shall have no liability whatsoever
for any debt, liability or obligation of the Company or related
to the Business on or arising after the Stock Put Closing to the
extent such debt, liability or obligation is attributable to the
operations of the Business prior to Closing or after the Stock
Put Closing.
7.7 [Intentionally Omitted]
7.8 Employee Benefits.
(a) Seller shall retain liability for all compensation
and employee benefits (including, but not limited to, the
benefits to be provided under Seller's Benefit Plans) owed to any
GAC Employee, Former GAC Employee, director, officer or
independent contractor of GAC (or the dependent or beneficiary of
any such individual) and arising out of their employment or
consulting relationship with GAC, Seller or any Affiliate prior
to the Closing including any severance, bonuses or other benefits
that may become payable as a result of the transactions
contemplated by this Agreement. In addition, notwithstanding any
provision of this Agreement to the contrary, the compensation and
employee benefits (including, but not limited to, the benefits to
be provided under Seller's Benefit Plans) owed to any GAC
Employee who is absent from active employment on the Closing Date
due to short-term disability shall remain the liability of Seller
until such GAC Employee is ready and able to return to active
employment.
(b) Defined Benefit Plan.
(i) Effective as of the Closing Date, Seller
shall amend the ACX Technologies, Inc. Retirement Plan
("Seller's Pension Plan") to recognize for all purposes
service performed by GAC Employees for GAC or the Buyer and
compensation received by GAC Employees from GAC or the Buyer
from the Closing Date to the earlier of the date on which
the Buyer pays the Deferred Payment or exercises its Stock
Put Option. In addition, Seller shall amend, effective as
of the date the Buyer pays the Deferred Payment, Seller's
Pension Plan to provide immediate and full vesting for all
GAC Employees. Seller shall not amend the benefit formula
under Seller's Pension Plan, in a manner that affects only
GAC Employees unless such amendment is required by law.
Buyer will pay to Seller an amount equal to the annual
service cost with respect to GAC Employees accruing benefits
pursuant to this Section 7.8(b)(i) under the Seller's
Pension Plan on and after the Closing Date. The annual
service cost for the calendar year in which the Closing Date
occurs shall be prorated by multiplying the annual service
cost for such calendar year by a fraction, the numerator of
which is the number of days after the Closing Date and the
denominator of which is 365. The annual service cost for
the calendar year in which the Buyer either pays the
Deferred Amount or exercises its Stock Put Option shall be
prorated by multiplying the annual service cost for such
calendar year by a fraction, the numerator of which is the
number of days prior to the date on which Buyer pays the
Deferred Amount or exercises its Stock Put Option,
respectively, and the denominator of which is 365. Such
annual service costs shall be determined by an independent
actuary appointed by Seller in accordance with Statement of
Financial Accounting Standards No. 87 (SFAS 87) using the
same assumptions as those required to be disclosed in the
Seller's annual financial statements under SFAS 87 and all
other assumptions consistent with those used in Seller's
Pension Plan's actuarial report for the year ended
December 31, 1996 (the "Stated Assumptions"). Such amount
shall be increased with interest, at the assumed interest
rate used in determining the annual service cost, for the
period from the measurement date to the last day of the
calendar year for which the determination is made. Seller
shall submit an invoice to Buyer for this amount within 90
days of the end of each calendar year and subject to sub-
paragraph (ii) below Buyer will pay such invoice within 30
days thereafter.
(ii) Any determination required of Seller's
Actuary pursuant to sub-paragraph (i) above shall be
submitted to an independent actuary appointed by Buyer
("Buyer's Actuary") for approval, but such approval shall
relate only to the actual calculation and not to the Stated
Assumptions. If Buyer's Actuary shall disapprove any such
determination and Seller's Actuary and Buyer's Actuary are
unable to agree on a determination, they shall jointly
designate a third independent actuary whose determination
shall be final and binding, provided that such third
actuary's determination shall relate only to the actual
calculation and not to the Stated Assumptions. Seller and
Buyer shall each pay one-half of the cost of such third
actuary.
(iii) For the period from the Closing Date to
the earlier of the date on which Buyer pays the Deferred
Payment or exercises its Stock Put Option, Buyer shall
reimburse Seller for the premiums payable to the Pension
Benefit Guaranty Corporation ("PBGC") attributable to GAC
Employees plus the administrative cost to the Seller and
Seller's Pension Plan attributable to the participation of
GAC Employees in the Seller's Pension Plan. The
administrative cost shall be determined by multiplying the
total administrative costs for each Plan Year in which GAC
Employees accrue benefits in Seller's Pension Plan by a
fraction, the numerator of which is the number of GAC
Employees accruing benefits and the denominator of which is
the total number of participants in the Plan on the last day
of the Plan Year. The administrative cost assessed to Buyer
for a Plan Year shall not exceed $90,000. Within 30 days
after the end of the Plan Year, Seller shall send Buyer a
statement of Buyer's share of the administrative costs
together with a schedule listing the administrative
expenses. Buyer shall pay its share of the administrative
costs within 30 days of receipt of the statement. The PBGC
premium reimbursed by Buyer shall be determined by
multiplying the premium rate applicable to Seller's Plan for
the Plan Year by the number of GAC Employees (including GAC
Employees who have terminated employment with GAC after the
Closing Date) on the date that the PBGC premium is
calculated. Seller shall send Buyer a statement of the
amount of the PBGC premium attributable to GAC Employees
within 30 days after the first day of the Plan Year. Seller
shall pay the Buyer within 30 days after receipt of the
statement. The administrative cost and PBGC premiums
payable by Buyer shall be prorated by multiplying the
applicable amount for a Plan Year by a fraction, the
numerator of which is the number of days during such year
GAC is owned by Buyer and the denominator of which is 365.
(iv) Effective as of the date on which Buyer pays
the Deferred Payment (the "Deferred Payment Date") GAC
Employees shall cease to accrue benefits under the Seller's
Pension Plan. Thereafter, Seller shall cause all benefits
accrued by GAC Employees under the Seller's Pension Plan to
be paid when the same shall be payable pursuant to the terms
thereof.
(c) Defined Contribution Plan.
(i) Effective as of the Closing Date, active
participation of GAC Employees in the ACX Technologies, Inc.
Savings and Investment Plan (the "Seller's 401(k) Plan")
shall cease and the account balances of GAC Employees shall
become fully vested. Notwithstanding the preceding
sentence, Seller shall be responsible for making all
matching contributions applicable to all employee
contributions made to Seller's 401(k) Plan by GAC Employees
prior to Closing. On and after the Closing Date, the Buyer
shall withhold from the paycheck of each GAC Employee who
has a loan outstanding under the Seller's 401(k) Plan the
required loan payment and shall send such amounts together
with a schedule listing each such GAC Employee and the loan
payment applicable to each such GAC Employee to Seller
within 30 days after the date such amounts are withheld. At
the Closing, Seller shall furnish to Buyer a schedule of GAC
Employees with outstanding loans and the amount of each such
GAC Employee's scheduled loan payment. On and after the
Closing Date and until the earlier of the date Buyer
exercises the Stock Put Right or all of the Seller's 401(k)
Plan loans outstanding on the Closing Date cease to be
outstanding, Buyer shall notify Seller of the termination of
employment of each GAC Employee who has a loan outstanding
on the Closing Date unless such individual's loan has
previously been satisfied.
(ii) Buyer shall reimburse Seller on a quarterly
basis for the administrative costs of Seller's 401(k) Plan
attributable to the account balances of GAC Employees from
the Closing Date through the earlier of date Buyer pays the
Deferred Payment or Buyer exercises its Stock Put Right.
The Seller shall, within 30 days after the last day of each
calendar quarter, send Buyer a statement of the
administrative costs attributable to the account balances of
GAC Employees for that calendar quarter. The Buyer shall
pay the amount to Buyer within 30 days after the date of the
statement. The annual administrative cost assessed to Buyer
with respect to Seller's 401(k) Plan for a Plan Year shall
not exceed $40,000.
(iii) Effective as of the Closing Date, Buyer
shall establish or designate a pre-existing defined
contribution retirement plan qualified under Section 401(a)
of the Code for the benefit of all GAC Employees.
(d) Welfare Benefit Plans.
(i) GAC Employee's active participation in Seller
Benefit Plans that are designated as "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) on
Schedule 5.19(b) (the "Seller's Welfare Plans") shall cease
as of the Closing Date or as otherwise provided under the
terms of such Seller Benefit Plan. Notwithstanding the
preceding sentence, Seller's Welfare Plans shall retain
liability for all claims incurred by GAC Employees, Former
GAC Employees and their dependents prior to the Closing Date
including claims which are not submitted until after the
Closing Date. Buyer's Welfare Plan (as defined below) shall
be responsible for all claims incurred on or after the
Closing Date. A claim shall be deemed incurred (I) on the
date of the occurrence of death or dismemberment in the case
of claims under life insurance and accidental death and
dismemberment plans, (II) in the case of a claim for
disability benefits on the date the disability is deemed to
have commenced after all applicable waiting periods are
satisfied, and (III) on the date on which the service or
treatment is provided in the case of claims under medical,
hospital, dental and similar plans. On and after the
Closing Date, Buyer shall be responsible for providing
continuation coverage under Code section 4980B ("COBRA") for
all qualifying events (as such term is defined in Code
section 4980B) that occur on and after the Closing Date.
The Seller shall be responsible for providing continuation
coverage under COBRA for all qualifying events (as such term
is defined in Code section 4980B) that occur before the
Closing Date. Buyer shall be responsible for all paid
vacation accrued by GAC Employees for the calendar year in
which the Closing occurs.
(ii) Buyer shall assume GAC's Code Section 125
flexible benefits plan on and after the Closing. Seller
shall transfer to Buyer, at the Closing, an amount of cash
equal to the flexible spending account balances for GAC
Employees, determined as of February 28, 1997.
(iii) Effective as of the Closing Date, Buyer
shall establish or designate a pre-existing group health
plan or plans (the "Buyer's Welfare Plan") that will provide
medical, dental and life insurance benefits for GAC
Employees and their dependents. Buyer's Welfare Plan shall
not contain any exclusion or limitation with respect to any
pre-existing condition of any GAC Employees or their
dependents.
(e) Service Credit. For purposes of eligibility and
vesting but not benefit accrual under any employee benefit plan,
program or arrangement of Buyer for which a GAC Employee
otherwise becomes eligible, such GAC Employee shall be given
credit under such plan for all service prior to the Closing with
GAC or Seller.
(f) Vacation Pay. Seller shall pay Buyer within
30 days of Closing the amount of $115,046, representing accrued
vacation pay of GAC's employees at the time of Closing.
(g) Workers' Compensation Claims. Seller shall be
responsible for any workers' compensation claims incurred by any
GAC Employee on or prior to the Closing Date whether reported
before or after the Closing Date. Buyer shall be responsible for
any workers' compensation claims incurred by any GAC Employee
after the Closing Date.
7.9 338(h)(10) Elections. Seller and Buyer shall jointly
make or cause to be made the election under Section 338(h)(10) of
the Code and Treasury Regulation Section 1.338(h)(10)-1(d) (and
any corresponding election under state, local or foreign tax law)
with respect to the purchase and sale of the capital stock of
each of GAC and GAC Technology Company collectively, the "338
Targets") (the "Elections"). If Seller is not the common parent
of a "selling consolidated group" of which each of the 338
Targets is a member, as that term is defined under Treasury
Regulation Section 1.338(h)(10)-1, Seller shall cause the person
that is the common parent with respect to the Company to join in
making the Elections with Buyer. (The person authorized to make
the Elections with respect to the 338 Targets is referred to as
the "Authorized Person" herein.) Seller and Buyer shall agree to
a final allocation of the MADSP (as defined in Treasury
Regulation section 1.338(h)(10)-(f)) among the assets of each of
the 338 Targets as soon as possible following the Closing Date.
Buyer shall prepare IRS Form 8023-A and any similar state, local
or foreign tax forms required to make the Elections
(collectively, the "Election Forms") and submit the Election
Forms to Seller no later than 45 days prior to the date the
Election Forms are required to be filed. Seller then shall
deliver to Buyer the Election Forms, which shall have been
executed by the Authorized Person, no later than 15 days prior to
the date the Election Forms are required to be filed. Buyer
shall thereafter complete any required attachments to the
Election Forms, execute and timely file the Election Forms, and
provide Seller with a copy of the Election Forms as filed.
Seller and Buyer shall each take or cause to be taken any other
actions that are necessary for making or perfecting the
Elections. Seller and Buyer shall each report all transactions
pursuant to this Agreement in a manner that is consistent with
the Elections and shall take no position contrary thereto unless
required to do so pursuant to a "determination" within the
meaning of Section 1313 of the Code. The parties agree that a
violation of the provisions of this Section 7.9 is a proper
subject of injunctive relief.
7.10 Certain Tax Matters Incident to the Exercise of
the Stock Put Option. In the event the Buyer exercises the Stock
Put Option pursuant to Article III, the parties will (i) make the
Elections specified in Section 7.9, in accordance with the
procedures specified therein, with respect to the purchase and
sale of the Stock pursuant to the Stock Put Option and (ii)
allocate responsibility for Tax matters related to such purchase
and sale in accordance with the provisions of Article IX as if
the "Closing Date" were the date on which the Stock Put Closing
takes place, in each case as if the term "Buyer" were replaced by
"Seller" and as if the term "Seller" were replaced by "Buyer" in
such Sections of the Agreement, provided that such references
shall in no way impact the parties' responsibilities under those
Sections with respect to Tax matters related to the Closing.
7.11 Certain Tax Matters. The parties shall determine
the purchase price paid for the shares of the Company for income
tax purposes and certain other tax matters incident to the
transactions herein in accordance with the principles set forth
in Schedule 7.11.
7.12 Review Committee. On the Closing Date, Buyer and
Seller shall form a committee consisting of two members (the
"Review Committee") to review and attempt to resolve any disputes
or outstanding issues or questions regarding the Company and its
business, operations and financial conditions, that Buyer or
Seller may have. The Review Committee will continue to exist
until the earlier of (i) the payment of the Deferred Payment and
(ii) the Stock Put Closing. Each of Buyer and Seller shall
designate one person to be a member of the Review Committee.
Buyer's initial designee will be Ronald R. Thoma. Seller's
initial designee will be Jed Burnham.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification By Seller.
(a) Extent of Indemnity. Seller shall indemnify,
defend and hold harmless Buyer, the Company from and against:
(i) any loss, liability, claim, obligation,
damage or deficiency of or to Buyer or the Company arising
out of or resulting from any misrepresentation or breach of
representation or warranty of Seller or the Company
contained in this Agreement or in any agreement or statement
or certificate furnished or to be furnished to Buyer
pursuant hereto or in connection with the transactions
contemplated hereby (it being understood and agreed that for
purposes of determining whether there has been any such
misrepresentation or breach of a representation or warranty
and for purposes of calculating the amount of Damages
arising therefrom, the representations and warranties of
Seller and the Company shall be deemed not to be qualified
by any concept of "material," "materiality" or similar
qualification);
(ii) any loss, liability, claim, obligation,
damage or deficiency of or to Buyer or the Company arising
out of or resulting from any breach or nonfulfillment of any
covenant or agreement of Seller or the Company contained in
this Agreement or in any agreement or statement or
certificate furnished or to be furnished to Buyer pursuant
hereto or in connection with the transactions contemplated
hereby;
(iii) any loss, liability, claim, obligation,
damage or deficiency (including, without limitation, costs
of investigation, remediation or other response action) of
or to Buyer or the Company arising out of or related to (1)
environmental conditions, including without limitation, the
presence, Release or threat of Release of Hazardous
Materials, in violation of Environmental Laws or which
require investigation, remediation or other response action,
first occurring prior to the Closing Date at, on, in, under
or from any property now or previously owned, operated or
leased by the Company or any predecessor in interest,
whether into the air, soil, ground or surface waters on-site
or off-site; or (2) the off-site transportation, storage,
treatment, recycling or disposal of Hazardous Materials
Managed or Released by or on behalf of the Company, or any
predecessor in interest, or at or from any property now or
previously owned, operated or leased by the Company or any
predecessor in interest occurring prior to the Closing; or
(3) any violation of any Environmental Law first occurring
prior to the Closing Date (including, without limitation,
costs and expenses required to bring the Company into
compliance with the Environmental Laws violated);
(At the Buyer's election, Seller agrees to respond on
Buyer's or the Company's behalf and defend such environmental
claims or pay the costs of Buyer's or the Company's response and
defense.)
(iv) any loss, liability, claim, obligation,
damage or deficiency of or to Buyer or the Company to the
extent the same is attributable to employment practices
occurring prior to Closing; and
(v) any actions, judgments, costs and expenses
(including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any
litigation or proceeding, commenced or threatened) incident
to any of the foregoing or the enforcement of this Section.
For purposes for this Agreement, the aggregate amount of such
losses, liabilities, claims, obligations, damages, deficiencies,
costs, expenses and fees shall be hereinafter referred to as
"Damage" or "Damages." None of the foregoing Section 8.1(a)(i)
to (v) shall limit the operation of any other such Section of
this 8.1(a).
(b) Time Limit on Certain Indemnification Claims. No
action or claim for Damages resulting from breaches of the
representations and warranties of Seller shall be brought or made
after the expiration of a two-year period from the Closing Date,
except that such time limitation shall not apply to (i) claims
for misrepresentations or breaches of warranty relating to
Sections 5.2 and 5.5, (ii) claims for misrepresentations or
breaches of warranty relating to Sections 5.8, 5.9, 5.12, 5.20,
5.21 which may be asserted until 60 days after the expiration of
the applicable limitations period, or (iii) any claims which have
been the subject of a written notice from Buyer to Seller prior
to the expiration of any of the foregoing periods, which notice
specifies in reasonable detail the nature of the claim.
(c) Liability Threshold. Subject to the terms of this
Agreement: (i) Seller shall not be liable to Buyer under Section
8.1(a)(i), (iii), (iv) or (v) or under Section 8.1(a)(ii) with
respect to a breach of the covenant to assume liabilities set
forth in Section 7.5 hereof, for Damages unless the cumulative
total of Damages under any such section exceeds $100,000, and
then only to the extent of such excess.
(d) Certain Matters Excluded. Notwithstanding
anything to the contrary in this Section 8.1, no condition of
liability provided in this Section shall apply to the intentional
or willful breach of any of the representations and warranties
contained herein if such representation or warranty was made with
actual knowledge that it contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements or facts contained therein not misleading.
8.2 Indemnification by Buyer.
(a) Extent of Indemnity. Buyer hereby agrees to
indemnify and hold harmless Seller from and against:
(i) any loss, liability, claim, obligation,
damage or deficiency of or to Seller arising out of or
resulting from any misrepresentation or breach of
representation or warranty of Buyer contained in this
Agreement or in any agreement or statement or certificate
furnished or to be furnished to Seller pursuant hereto or in
connection with the transactions contemplated hereby (it
being understood and agreed that for purposes of determining
whether there has been any such misrepresentation or breach
of a representation or warranty and for purposes of
calculating the amount of Damages arising therefrom, the
representations and warranties of Buyer shall be deemed not
to be qualified by any concept of "material," "materiality"
or similar qualification), provided, however, that any
breach of a representation or warranty of Buyer that results
from a state, condition, event or occurrence that
constituted a breach by Seller of a representation or
warranty of Seller shall not be deemed a breach on the part
of Buyer;
(ii) any loss, liability, claim, obligation,
damage or deficiency of or to Seller arising out of or
resulting from any breach or nonfulfillment of any covenant
or agreement of Buyer contained in this Agreement or in any
agreement or statement or certificate furnished or to be
furnished to Seller pursuant hereto or in connection with
the transactions contemplated hereby;
(iii) any loss, liability, claim, obligation,
damage or deficiency (including, without limitation, cost of
investigation, remediation or other response action) of or
to Seller or the Company arising out of or related to (1)
environmental conditions, including without limitation, the
presence, Release or threat Release of Hazardous Materials,
in violation of Environmental Laws or which require
investigation, remediation or other response action, first
occurring after the Closing Date at, on, in, under or from
any property owned, operated or leased by the Company after
Closing, whether into the air, soil, ground or surface
waters on-site or off-site; or (2) the off-site
transportation, storage, treatment, recycling or disposal of
Hazardous Materials Managed or Released by or on behalf of
the Company occurring after Closing; or (3) any violation by
the Company of any Environmental Law first occurring after
the Closing Date (including, without limitation, costs and
expenses required to bring the Company into compliance with
the Environmental Laws violated);
(At the Buyer's election, Buyer agrees to respond on
Seller's or the Company's behalf and defend such environmental
claims or pay the costs of Seller's or the Company's response and
defense.)
(iv) any loss, liability, claim, obligation,
damage or deficiency of or to Seller to the extent the same
is attributable to employment practices occurring after
Closing and prior to the Stock Put Closing; and
(v) any actions, judgments, costs and expenses
(including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any
litigation or proceeding, commenced or threatened) incident
to any of the foregoing or the enforcement of this Section.
For purposes for this Agreement, the aggregate amount of such
losses, liabilities, claims, obligations, damages, deficiencies,
costs, expenses and fees shall be hereinafter referred to as
"Damage" or "Damages." None of the foregoing Sections 8.2(a)(i)
to (v) shall limit the operation of any other such section of
this 8.2(a).
(b) Time Limit on Certain Indemnification Claims. No
action or claim for Damages resulting from breaches of
representations and warranties of Buyer shall be brought or made
after the expiration of a two year period from the Stock Put
Closing date, except that such time limitation shall not apply to
(i) claims for misrepresentation or breaches of warranty relating
to Sections 2 (capitalization) and 5 (corporate power) of
Schedule 7.6, (ii) claims for misrepresentations or breaches of
warranty relating to Sections 7 (no liabilities), 9 (transaction
with related parties), 17 (patents and intellectual property) and
14 (environmental matters) of Schedule 7.6, which may be asserted
until 60 days after the expiration of the applicable limitations
period, or (iii) any claims which have been the subject of
written notice from Seller to Buyer prior to the expiration of
any of the foregoing periods, which notice specifies in
reasonable detail the nature of the claim.
(c) Liability Threshold. Subject to the terms of this
Agreement: (i) Buyer will not be liable to Seller under Section
8.2(a)(i), (iii), (iv) or (v) or under Section 8.2(a)(ii) with
respect to a breach of the covenant to assume liabilities set
forth in Section 7.6 hereof for Damages unless the cumulative
total of Damages under any such section exceeds $100,000 and then
only to the extent of such excess.
(d) Certain Matters Excluded. Notwithstanding
anything to the contrary in this Section 8.2, no condition of
liability provided in this Section shall apply to the intentional
or willful breach of any of the representations and warranties
contained herein if such representation or warranty was made with
actual knowledge that it contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements or facts contained therein not misleading.
8.3 Indemnification Procedures.
(a) A party seeking indemnification pursuant to this
Agreement (an "Indemnified Party") shall give prompt notice to
the party from whom such indemnification is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any action, suit or proceeding by a third party
which is not an affiliate of any party hereto in respect of which
indemnity may be sought hereunder (a "Third Party Claim"), and
will give the Indemnifying Party such information with respect
thereto as the Indemnifying Party may reasonably request, but
failure to give such notice shall not relieve the Indemnifying
Party of any liability hereunder except to the extent that the
Indemnifying Party is actually prejudiced thereby.
(b) The Indemnifying Party shall have the right,
exercisable by written notice to the Indemnified Party within 30
days of receipt of notice from the Indemnified Party of the
commencement or assertion of any Third Party Claim in respect of
which indemnity may be sought hereunder, to assume and conduct
the defense of such Third Party Claim with counsel selected by
the Indemnifying Party and reasonably acceptable to the
Indemnified Party; provided that (i) the defense of such Third
Party Claim by the Indemnifying Party will not, in the judgment
of the Indemnified Party, have a material adverse effect on the
Indemnified Party; and (ii) the Indemnifying Party has sufficient
financial resources, in the judgment of the Indemnified Party, to
satisfy the amount of any adverse monetary judgment that is
reasonably likely to result; and (iii) the Third Party Claim
solely seeks (and continues to seek) monetary damages (the
conditions set forth in clauses (i) through (iii) are
collectively referred to as the "Litigation Conditions"). If the
Indemnifying Party does not assume the defense of such Third
Party Claim in accordance with this Section 8.1, the Indemnified
Party may continue to defend the Third Party Claim. If the
Indemnifying Party has assumed the defense of a Third Party Claim
as provided in this Section 8.1, the Indemnifying Party will not
be liable for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof;
provided, however, that if (i) the Litigation Conditions cease to
be met, or (ii) the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim, the
Indemnified Party may assume its own defense, and the
Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith.
(c) The Indemnifying Party or the Indemnified Party,
as the case may be, shall have the right to participate in (but
not control), at its own expense, the defense of any Third Party
Claim which the other is defending as provided in this Agreement.
(d) The Indemnifying Party, if it shall have assumed
the defense of any Third Party Claim as provided in this
Agreement, shall not, without the prior written consent of the
Indemnified Party, consent to a settlement of, or the entry of
any judgment arising from, any such Third Party Claim (i) which
does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a complete
release from all liability in respect of such Third Party Claim,
or (ii) which grants any injunctive or equitable relief, or (iii)
which may reasonably be expected to have a material adverse
effect on the affected business of the Indemnified Party. The
Indemnified Party shall have the right to settle any Third Party
Claim, the defense of which has not been assumed by the
Indemnifying Party, with the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or
delayed.
(e) Amounts payable in respect of indemnification
obligations of the parties shall be treated as an adjustment to
the purchase price paid in respect of the Stock pursuant to this
Agreement. Whether or not the Indemnifying Party chooses to
defend or prosecute any Third Party Claim, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals,
as may be reasonably requested in connection therewith.
8.4 Claims Against the Company. Notwithstanding any
provision in this Agreement to the contrary, on and after the
Closing, Seller shall not be entitled to any indemnification
from, or to make or receive any amount for any claim against, the
Company in respect of any Damage or Damages arising out of or
resulting from this Agreement or the transactions contemplated by
this Agreement; and on and after the Stock Put Closing, Buyer
shall not be entitled to any indemnification from, or to make or
receive any amount for any claim against, the Company in respect
of any Damage or Damages arising out of or resulting from this
Agreement or the transactions contemplated by this Agreement.
ARTICLE IX
TAX INDEMNIFICATION
9.1 Liability and Indemnity for Pre-Closing Taxes.
Seller shall assume and shall promptly cause to be paid
when due and shall indemnify the Buyer and the Company for, in
accordance with this Article IX, all Taxes imposed for or with
respect to all taxable periods, or portions thereof, of the
Company, whether or not a regular or short tax year, ending on or
prior to the Closing Date ("Pre-Closing Periods"), and shall
receive the benefit of all refunds for such Pre-Closing Periods.
9.2 Preparation of Returns and Payment of Taxes.
(a) Returns for which the Closing Date or a Date Prior
to the Closing Date is the End of a Taxable Period. Seller shall
prepare and file any Federal, state or local Tax Return for any
Pre-Closing Period of the Company (including any consolidated,
combined or unitary Return that includes the Company) that ends
prior to or on the Closing Date, and shall pay all Taxes shown to
be due thereon, and shall receive the benefit of any refund shown
to be due thereon.
(b) Returns for which the Closing Date is not the End
of a Taxable Period.
(i) The Company shall prepare and file any state,
local or foreign Tax Return for any Pre-Closing Period of
the Company that begins before, but ends after, the Closing
Date ("Shared Period Returns"), and shall pay all Taxes
shown to be due thereon and shall receive the benefit of any
refund shown to be due thereon. Seller shall pay the
Company for, and indemnify the Company against, the Pre-
Closing Portion (as defined below) of the Taxes paid by the
Company with respect to any Shared Period Return, and shall
receive the benefit of any refund for such Pre-Closing
Portion (as defined below).
(ii) As used herein with respect to any Shared
Period Return, "Pre-Closing Portion" means (a) with respect
to Taxes other than property taxes, the portion of the Tax
shown to be due on such Return calculated on the basis of
the taxable income (or other measure of Tax) of the Company
and the tax rates applicable thereto as though the taxable
period of the Company ended at the close of business on the
Closing Date; and (b) with respect to property taxes, an
apportionment of such Tax to the Pre-Closing Period on a per-
diem basis.
(iii) The Company shall compute the Pre-
Closing Portion with respect to any Shared Period Return and
shall submit such computation to Seller no later than 20
business days prior to the due date of such Return. Seller
shall review and approve such computation within 10 business
days after receipt, or shall give notice to the Company of
its disagreement, stating in detail its reasons therefor.
In case of such disagreement, the dispute shall be submitted
to an independent accounting firm agreed upon by the parties
(the "Independent Accountants") for resolution. The
decision of the Independent Accountants resolving the
dispute shall be final.
9.3 Subsequent Adjustments.
(a) In the case of any audit, examination or other
proceeding ("Proceeding") with respect to Taxes for which Seller
is or may be liable pursuant to this Agreement, Buyer or the
Company shall promptly inform Seller, within 20 business days
after receipt of notice of such Proceeding is received from any
taxing authority. Seller shall have the right to control any
such Proceeding but shall not be obligated to do so, and the
Buyer and the Company shall cooperate fully with Seller
respecting the conduct of such Proceedings. If there is a
reasonable basis therefor, Seller may contest and settle such
Proceeding; provided, however, that no such settlement shall,
without the consent of the Company or the Buyer, adversely affect
the Company or Buyer with respect to any Taxes due for any period
after the period that is the subject of the Proceeding.
Any Proceeding with respect to Taxes for any period for
which a Shared Period Return was filed shall be controlled by
Buyer. Seller shall cooperate fully with the Buyer respecting
such Proceedings. If there is a reasonable basis therefor, Buyer
or the Company may contest and settle such Proceeding; provided,
however, that no such settlement shall, without the consent of
Seller (which consent shall not be unreasonably withheld),
increase any Pre-Closing Portion with respect to such Shared
Period Return.
(b) Any adjustments to Tax made as the result of the
resolution of any Proceeding relating to a Return for any Pre-
Closing Period or the Pre-Closing Portion of a Shared Period
Return shall be paid by Seller.
(c) Any adjustments to Tax made as a result of the
resolution of any Proceeding relating to a Return for any Post-
Closing Period or the Post-Closing Portion of a Shared Period
Return shall be paid by Buyer.
ARTICLE X
CONDITIONS PRECEDENT TO THE CLOSING
10.1 Conditions Precedent to the Obligations of Buyer.
All obligations of Buyer under this Agreement are, at its sole
option, subject to the fulfillment or satisfaction, prior to or
at the Closing, of each of the following conditions precedent:
(a) Bringdown of Representations and Warranties. The
representations and warranties of Seller and the Company
contained in this Agreement shall be true and correct on and as
of the time of Closing, with the same force and effect as though
such representations and warranties had been made on, as of and
with reference to such time and Buyer shall have received two
certificates to such effect, one signed by the chief executive
officer and chief financial officer of Seller and one signed by
the chief executive officer and chief financial officer of the
Company.
(b) Compliance with this Agreement. Seller and the
Company shall have performed and complied in all respects with
all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) No Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be pending before any court or
governmental or regulatory official, body or authority in which
it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
(d) Consents and Approvals. Seller and the Company
shall have obtained all approvals, authorizations and consents of
any governmental or regulatory official, body or authority and
parties to contracts as are required to consummate the
transactions contemplated herein and to permit Buyer to own the
Stock of the Company following the Closing.
(e) Material Adverse Changes. No Material Adverse
Effect in light of the fact that the Company is being held for
sale and the operations of the Company are accounted for as
discontinued operations under generally accepted accounting
principles in the financial statements of Seller shall have
occurred.
(f) HSR Act. The waiting period under the HSR Act
shall have expired or been terminated.
(g) Opinion of Counsel. Buyer shall have received
from Jill B. W. Sisson, General Counsel of Seller, or Holme
Roberts & Owen LLP, counsel for Seller, an opinion dated the date
of the Closing in form and substance satisfactory to Buyer, to
the effects set forth in Exhibit C.
(h) Satisfactory Instruments. All instruments and
documents required on Seller's and the Company's part to
effectuate and consummate the transactions contemplated hereby
shall be delivered to Buyer and shall be in form and substance
reasonably satisfactory to Buyer and its counsel.
(i) Release. Buyer shall have received from Seller a
waiver and release of any and all claims (other than claims
arising directly pursuant to this Agreement) Seller may have, now
or in the future, against GAC and the Subsidiaries, and their
respective directors, officers, employees or agents, which
release shall be in form of Exhibit D hereto.
(j) Resignations. Seller shall have delivered to
Buyer at Closing, which shall be effective as of the Closing,
resignations of all officers and directors of the Company except
as specifically requested by Buyer in a form and substance
satisfactory to Buyer in its sole discretion.
10.2 Conditions Precedent to the Obligations of Seller.
All obligations of Seller under this Agreement are, at its sole
option, subject to the fulfillment or satisfaction, prior to or
at the Closing, of each of the following conditions precedent:
(a) Bringdown of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects on
and as of the time of Closing, with the same force and effect as
though such representations and warranties had been made on, as
of and with reference to such time and Buyer shall have delivered
to Seller a certificate, signed by its President or a Vice
President, to such effect.
(b) Compliance with this Agreement. Buyer shall have
performed and complied in all material respects with all
agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
(c) No Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be pending before any court or
governmental or regulatory official, body or authority in which
it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
(d) Opinion of Counsel for Buyer. Seller shall have
received from Richard L. Krzyzanowski, General Counsel of Buyer,
or Dechert Price & Rhoads, counsel for Buyer, an opinion dated
the date of the Closing in form and substance satisfactory to
Seller, to the effect set forth in Exhibit E.
(e) Satisfactory Instruments. All instruments and
documents required on the part of Buyer to effectuate and
consummate the transactions contemplated hereby shall be
delivered to Seller and shall be in form and substance reasonably
satisfactory to Seller and their counsel.
(f) Bank Accounts. Buyer has established separate
bank accounts for the Company to be maintained until either the
payment of the Deferred Payment or the exercise of the Stock Put.
ARTICLE XI
POST CLOSING MATTERS
11.1 Maintenance of Books and Records. Each of Seller, the
Company and Buyer shall preserve until the seventh anniversary of
the Closing Date all books and records possessed or to be
possessed by such party relating to any of the assets,
liabilities or business of the Business prior to the Closing Date
and any Post-Closing Period. Such books and records shall
include periods after the Closing Date, and, where there is a
legitimate purpose, such party shall provide the other parties
with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers
and employees of such party then employed and (ii) the books and
records of such party but, in each case, only to the extent
relating to the assets, liabilities or business of the Business
prior to the Closing Date or for the two year period following
closing, and the other parties and their representatives shall
have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not
be exercisable in such a manner as to interfere unreasonably with
the normal operations and business of such party; and further,
provided, that, as to so much of such information as constitutes
trade secrets or confidential business information of such party,
the requesting party and its officers, directors and
representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be
unreasonably withheld, or (iii) where such information becomes
available to the public generally, or becomes generally known to
competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other parties written notice of
its intent to destroy records, specifying with particularity the
contents of the records to be destroyed. Such records may then
be destroyed after the 60th day after such notice is given unless
another party objects to the destruction in which case the party
seeking to destroy the records shall deliver such records to the
objecting party. Buyer acknowledges and agrees that it shall
constitute a legitimate purpose under this Section of any request
by the Company or Seller hereunder in connection with the tax
returns or any audit, any litigation or investigation against the
Company, Seller or an affiliate thereof involving the Business.
11.2 Payments Received. Seller and Buyer each agree that
after the Closing they will hold and will promptly transfer and
deliver to the other, from time to time as and when received by
them, any cash, checks with appropriate endorsements (using their
reasonable efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing that
belongs to the other party, including, without limitation, any
insurance proceeds, and each will account to the other for all
such receipts. From and after the Closing, Buyer shall have the
right and authority to endorse without recourse the name of the
Company on any check or any other evidences of indebtedness
received by Buyer on account of the Business transferred to Buyer
hereunder.
11.3 Cooperation. Seller and Buyer agree that after Closing
they will cooperate with each other, and use their best efforts
to cause the employees of the Company to be available and to
cooperate with the other party, with respect to claims and
litigation, including proceedings regarding disputed taxes,
relating to the assets, liabilities of or the business of the
Business.
11.4 Certain Covenants of Seller. Seller covenants and
agrees that:
(a) Discharge of Business Obligations. From and after
the Closing Date, Seller shall pay and discharge, in accordance
with past practice but not less than on a timely basis, all
obligations and liabilities incurred prior to the Closing Date in
respect of the Business, its operations or the assets and
properties used therein (except for the Assumed Liabilities),
including, without limitation, any liabilities or obligations to
employees, trade creditors and clients of the Business.
(b) Non-Compete. On and after the Closing, Seller
agrees not to compete (directly or indirectly through an
ownership interest in or other arrangement with any other entity
other than a minority interest in a publicly held company) with
the continuous cast rolled aluminum can sheet business of the
Company, including the development of intellectual property used
in such business, for a period of two years.
(c) Press Releases. Until the earlier of either (i)
the payment of the Deferred payment or (ii) the Stock Put
Closing, Seller shall consult with Buyer to the extent
practicable with regard to all press releases and other
announcements concerning this Agreement or the Business or the
transactions contemplated hereby].
(d) Testing Results. After Closing, when received,
Seller shall deliver to Buyer for its information the report
results of equipment testing performed by Factory Mutual
Engineering Association prior to Closing on certain equipment
located at the Colorado and Texas Mills or discussed in such
report.
(e) Confidentiality. After Closing, Seller will hold,
and shall cause their employees, officers and directors, counsel,
independent certified public accountants, appraisers and
investment bankers to hold, in confidence any confidential data
or information made available to Seller in connection with this
Agreement with respect to the Business or created or learned
after Closing with respect to the Business using the same
standard of care to protect such confidential data or information
as is used to protect Seller's confidential information, provided
that Seller shall have no further obligation under this
Section 11.4(e) upon the exercise by Buyer of the Stock Put
Option.
11.5 Certain Covenants of Buyer. Buyer covenants and agrees
that:
(a) Actions of Buyer. After Closing, Buyer shall use
its best efforts and Buyer shall cause the Company to use its
best efforts after the Closing to conduct the Business in such a
manner that at the Stock Put Closing, the representations and
warranties of Buyer and Company contained in Schedule 7.6 shall
be true and correct when given at the Stock Put Closing. Buyer
and Company will promptly notify Seller in writing of any event
or fact which is likely to cause a material breach of its
representations, warranties, covenants and agreements when such
representations and warranties are given at the Stock Put
Closing. The Buyer and Company shall promptly advise Seller in
writing of the occurrence or development (exclusive of general
economic factors affecting business in general) of a nature that
is or may be materially adverse to the business, operations,
properties, assets, prospects or conditions (financial or
otherwise) of the Company.
(b) Access. After Closing and until the earlier of
(1) payment of the Deferred Payment or (ii) the Stock Put
Closing, Buyer and Seller shall give Seller's officers,
employees, counsel, accountants and other representatives access
to and the right to inspect, upon reasonable notice and during
normal business hours, all of the premises, properties, assets,
records, contracts and other documents relating to the Business
and shall permit them to consult with the officers of the Company
and Buyer for the purpose of making such investigation of the
Business as Seller shall reasonably desire to make, provided that
such investigation shall not unreasonably interfere with the
operation of the Business.
(c) Financial and Other Reports. After Closing and
until the earlier of (i) payment of the Deferred Payment or (ii)
the Stock Put Closing, Buyer and the Company shall furnish to
Seller all quarterly and annual financial statements and reports
of the Company and of the Business as are prepared by Buyer or
the Company as soon as practicable after such statements and
reports are completed.
(d) Insurance. At Closing and until the earlier of
(i) payment of the Deferred Payment or (ii) the Stock Put
Closing, Buyer will maintain property and casualty insurance
policies with respect to the Company and its assets substantially
similar in coverage to the property and casualty policies
described in Section 5.15.
(e) Confidentiality. Until such time as the Deferred
Payment is paid, Buyer will hold, and shall cause its employees,
officers and directors, counsel, independent certified public
accountants, appraisers and investment bankers to hold in
confidence any confidential data or information made available to
Buyer in connection with this Agreement with respect to the
Business or created or learned after Closing with respect to the
Business using the same standard of care to protect such
confidential data or information as is used to protect Buyer's
confidential information.
(f) Non-Compete. On and after the Stock Put Closing,
if it occurs, Buyer agrees not to compete (directly or indirectly
through an ownership interest in or other arrangement with any
other entity other than a minority interest in a publicly held
company) in the continuous cast rolled aluminum can sheet
business, including the development of intellectual property used
in such business of the Company, for a period of two years.
(g) Press Releases. Until the earlier of either (i)
the payment of the Deferred payment or (ii) the Stock Put
Closing, Buyer shall consult with Seller and the Company with
regard to all press releases and other announcements concerning
this Agreement or the Business or the transactions contemplated
hereby.
11.6 Default on Certain Indebtedness. If, after the
Closing, Buyer or any Subsidiary of Buyer defaults on the payment
when due at maturity or by acceleration of any indebtedness in
excess of $100,000,000, Buyer shall promptly thereupon either pay
the Deferred Payment or exercise the Stock Put Option (without
regard to any notice period for such exercise otherwise provided
by Section 3.2).
11.7 Board Appointment. From and after Closing and
until the earlier of (i) the payment of the Deferred Payment or
(ii) the Stock Put Closing, Seller shall have the right to
designate and appoint one member of GAC's Board of Directors and
that initial designee shall be William K. Coors.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated by
either Seller or Buyer, as applicable, and the transactions
contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by either Seller or Buyer (by written notice to
the other) if the Closing shall not have occurred within 90 days
of the date of this Agreement, provided that no termination right
under this Section shall be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or prior
to such date and provided further that Seller cannot terminate
this Agreement if the Company fails to fulfill any obligation
under this Agreement that caused or resulted in the failure of
the Closing to occur on or prior to such date;
(c) by either Seller or Buyer (by written notice to
the other) if any court of competent jurisdiction in the United
States or federal or state governmental or regulatory body in the
United States shall have issued an order, decree or ruling or
taken such other action that permanently restrains, enjoins or
otherwise prohibits the transactions contemplated hereby and such
order, decree, ruling or other action shall have become final and
non-appealable;
(d) by Seller (by written notice to Buyer), if there
has been a material breach of any representation, warranty or
covenant on the part of Buyer such that the conditions set forth
in Section 10.2 would not be satisfied, provided that termination
pursuant to this section shall not be effective unless Seller
shall have given to Buyer at least 30 days prior notice of its
claim of default so as to afford Buyer the opportunity to cure;
and
(e) by Buyer (by written notice to Seller), if there
has been a material breach of any representation, warranty or
covenant of Seller or the Company such that the conditions set
forth in Section 10.1 would not be satisfied, provided that
termination pursuant to this Section shall not be effective
unless Buyer shall have given to Seller at least 30 days prior
notice of its claim of default so as to afford Seller or the
Company the opportunity to cure.
12.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with the provisions
of Section of 12.1 hereof, this Agreement shall become null and
void and have no further effect without any liability on the part
of any of the parties except as follows:
(a) if the termination results from the willful
failure to perform its obligations, hereunder, such nonperforming
party shall be fully liable for any and all damages, cost and
expenses (including, without limitation, reasonable attorney's
fees) sustained or incurred by such other party; or
(b) if the termination results and not as a result of
willful failure of any party to perform its obligations
hereunder, but as the result of the material breach by such party
of a representation, warranty, or covenant hereunder, such
breaching party shall be liable to the other party for all costs
and expenses of the other party in connection with the
preparation, negotiation, execution and performance of this
Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Brokers' and Finders' Fees.
(a) Seller represents and warrants to Buyer that all
negotiations relative to this Agreement have been carried on by
it directly without the intervention of any person who may be
entitled to any brokerage or finder's fee or other commission in
respect of this Agreement or the consummation of the transactions
contemplated hereby except Dillon, Read & Co. Inc., and Seller
agrees to indemnify and hold harmless Buyer and the Company
against any and all claims, losses, liabilities and expenses
which may be asserted against or incurred by it or them as a
result of Seller's dealings, arrangements or agreements with
Dillon, Read & Co. Inc., or any other person.
(b) Buyer represents and warrants that all
negotiations relative to this Agreement have been carried on by
it directly without the intervention of any person who may be
entitled to any brokerage or finder's fee or other commission in
respect of this Agreement or the consummation of the transactions
contemplated hereby, and Buyer agrees to indemnify and hold
harmless Seller against any and all claims, losses, liabilities
and expenses which may be asserted against or incurred by it as a
result of Buyer's dealings, arrangements or Agreements with any
person.
13.2 Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out
of the provisions of this Agreement, and the consummation of the
transactions contemplated hereby.
13.3 Contents of Agreement; Parties in Interest;. This
Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by written instrument
duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or
oral, are superseded by this Agreement.
13.4 Assignment and Binding Effect. This Agreement may
not be assigned prior to the Closing by any party hereto without
the prior written consent of the other parties, provided that the
Stock Percentage Right may be assigned by Seller to Adolph Coors
Company or a subsidiary of Adolph Coors Company. Subject to the
foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller, the Company
and Buyer.
13.5 Waiver. Any term or provision of this Agreement may
be waived at any time by Seller with respect to any term that
entitles Seller or the Company to the benefit thereof by a
written instrument duly executed by such party.
13.6 Notices. Any notice, request, demand, waiver,
consent, approval or other communication which is required or
permitted hereunder shall be in writing and shall be deemed given
only if delivered personally or sent by facsimile or by
registered or certified mail, postage prepaid, as follows:
If to Buyer, to:
Crown Cork & Seal Company, Inc.
One Crown Way
Philadelphia, PA 19154-4599
Attention: Ronald R. Thoma, Executive Vice President
Facsimile: (215) 698-5201
With a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Thomas A. Ralph, Esq.
Facsimile: (215) 994-2222
If to Seller or the Company, to:
ACX Technologies, Inc.
16000 Table Mountain Parkway
Golden, CO 80403
Attention: Joseph Coors, Jr., President
Facsimile: (303) 271-7055
With a required copy to:
ACX Technologies, Inc.
16000 Table Mountain Parkway
Golden, CO 80403
Attention: Jill B. W. Sisson, Esq., General Counsel
Facsimile: (303) 271-7055
With an additional required copy to:
Holme Roberts & Owen, LLP
Suite 4100
1700 Lincoln Street
Denver, CO 80203
Attention: Martha D. Rehm, Esq.
Facsimile: (303) 866-0200
or to such other address as the addressee may have specified in a
notice duly given to the sender as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication
will be deemed to have been given as of the date so delivered,
sent by facsimile (with confirmation of receipt) or three days
after deposited with the United States Post Office.
13.7 Governing Law. This Agreement shall be governed
by and interpreted and enforced in accordance with the laws of
the State of Colorado without regard to conflicts of law
principles.
13.8 No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Agreement
(including, without limitation, of Sections 7.5 and 7.6 hereof)
are for the sole benefit of the parties hereto and their
successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
13.9 Headings, Gender and "Person". All section
headings contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other
gender, masculine, feminine, or neuter, as the context requires.
Any reference to a "person" herein shall include an individual,
firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other
entity.
13.10 Schedules and Exhibits. All Exhibits and
Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement.
13.11 Survival. The representations, warranties and
covenants contained in this Agreement shall survive the Closing
as set forth in Article VIII. Seller and the Company acknowledge
that their representations and warranties in this Agreement shall
not be affected or mitigated by any investigation conducted by
Buyer or its representatives prior to Closing or any knowledge of
Buyer.
13.12 Severability. Any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
13.13 Counterparts. This Agreement may be executed in
any number of counterparts and any party hereto may execute any
such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This
Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the
parties. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement on the date first written.
BUYER:
CROWN CORK & SEAL COMPANY,
INC.
By_/s/Ronald R. Thoma
Ronald R. Thoma,
Executive Vice President
By_/s/William T. Gallagher
William T. Gallagher,
Assistant Secretary
THE COMPANY:
GOLDEN ALUMINUM COMPANY
By_/s/Joseph Coors, Jr.
Joseph Coors, Jr.,
Chairman of the Board of
Directors
SELLER:
ACX TECHNOLOGIES, INC.
By_/s/Joseph Coors, Jr.
Joseph Coors, Jr.,
President and Chief
Executive Officer
