UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTON 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 30, 1996
DARLING INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24620 36-2495346
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification
Number)
251 O'Connor Ridge Blvd.
Suite 300
Irving, Texas 75038
(Address of principal executive offices) (Zip Code)
(214) 717-0300
(Registrant's telephone number, including area code)
Page 1
Exhibit Index located at Page 5
<PAGE>
Items 1, 3, 4, 5, 6 and 8. Not applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 30, 1996, Darling International Inc. (the
"Registrant") acquired 100% of the outstanding capital stock
of International Processing Corporation ("IPC") and
International Transportation Service, Inc. ("ITS") in
accordance with a Stock Purchase Agreement dated as of August
30, 1996, among the Registrant, IPC, ITS and the stockholders
of IPC and ITS (the "Sellers"). The Sellers were comprised of
twenty-two individuals or trusts for the benefit of
individuals.
Pursuant to the Stock Purchase Agreement, the purchase price
for the capital stock of IPC was $29,835,000 and the purchase
price for the capital stock of ITS was $165,000. The purchase
price was paid in cash and was determined by agreement between
the Registrant and the Seller. The Registrant funded $29.6
million of the purchase price with funds financed under the
Acquisition Facility pursuant to the Credit Agreement among
the Registrant, The First National Bank of Boston, as agent,
and Harris Trust and Savings Bank, as co-agent. The remaining
$400,000 of the purchase price was funded out of cash on hand.
In connection with the Acquisition, the Registrant also paid
approximately $2.8 million in full payment and retirement of
certain indebtedness of IPC. The Registrant used cash on hand
to fund the repayment of such indebtedness.
IPC processes by-products collected from bakeries, pasta
manufacturers, confectioners and snack food producers for sale
to the animal feed industry. The Registrant intends to
continue operating the business and assets of IPC in a similar
manner as they were operated prior to the acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
For the acquisition reported in Item 2 above, it is not
practicable to include the financial statements of the
acquired business as required by Rule 3-05(b) of Regulation
S-X at this time. The Registrant intends to file such
information on or before November 13, 1996.
Page 2
<PAGE>
(b) Pro Forma Financial Information
For the acquisition reported in Item 2 above, it is not
practicable to include the pro forma financial information as
required by Article II of Regulation S-X. The Registrant
intends to file such information on or before November 13,
1996.
(c) Exhibits
2 Stock Purchase Agreement dated as of August 30, 1996,
among Darling International Inc., International
Processing Corporation, International Transportation
Service, Inc., and the stockholders of International
Processing Corporation and International Transportation
Service, Inc.
99.1 Press release dated September 3, 1996, regarding the
purchase of 100% of the stock of International
Processing Corporation for $30 million in cash.
Page 3
<PAGE>
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.
DARLING INTERNATIONAL INC.
Date: September 13, 1996 By: /s/ John R. Witt
------------------------------------
John R. Witt
Vice President and
Chief Financial Officer
Page 4
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
2 Stock Purchase Agreement dated as of
August 30, 1996, among Darling International Inc.,
International Processing Corporation, International
Transportation Service, Inc., and the stockholders
of International Processing Corporation and
International Transportation Service, Inc. ........ 9
99.1 Press release dated September 3, 1996, regarding
the purchase of 100% of the stock of International
Processing Corporation for $30 million in cash..... 7
Page 5
<PAGE>
EXHIBIT 99.1
Page 6
<PAGE>
PRESS RELEASE
September 3, 1996
Dr. Dennis B. Longmire, Chairman of Darling International Inc. ("Darling"),
and James B. Stevens, President of International Processing Corporation ("IPC"),
announced today that Darling has acquired 100% of the stock of IPC for $30
million in cash.
Darling, the largest food waste recycling company in the United States,
recycles restaurant grease and meat processing by-products into finished
products used primarily by oleo-chemical and animal feed manufacturers. Darling
had sales for the twelve months ended June 30, 1996 of $433.4 million. IPC is
the largest processor in the United States of by-products collected from
bakeries, pasta manufacturers, confectioners and snack food producers, and had
sales for the twelve months ended June 30, 1996 of $71.3 million. Although both
Darling and IPC presently sell to the animal feed industry, the products IPC
sells to that industry will be a new line of business for Darling.
Dr. Longmire stated that he believes the two businesses are complementary
and that the combined company should be able to more efficiently sell enhanced
products to the animal feed industry. Mr. Stevens will continue as President of
IPC, which will continue current operations as a wholly-owned subsidiary of
Darling.
Page 7
<PAGE>
EXHIBIT 2
Page 8
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (this "Agreement"), dated as of August 30,
1996, by and among: (i) Darling International Inc., a Delaware corporation
("Buyer"), (ii) International Processing Corporation, a Georgia corporation
("IPC"), (iii) International Transportation Service, Inc., a Delaware
corporation ("ITSI"), and (iv) all of the stockholders of IPC and ITSI, whose
names and number of shares of IPC and ITSI common stock owned are listed on
Exhibit A hereto (each individually a "Seller" and collectively the "Sellers").
R E C I T A L S
A. Each Seller owns the shares of Common Stock of IPC and ITSI
(the "Shares") set forth opposite
such Seller's name on Exhibit A hereto.
B. Each Seller wishes to sell the Shares owned by such Seller to the
Buyer and the Buyer wishes to purchase such Shares from each Seller, upon the
terms and conditions set forth herein.
C. IPC, together with ITSI and Food By-Product Recycling, Inc., an
Illinois corporation and a directly wholly owned subsidiary of ITSI ("FBR")
(collectively, the "Companies"), is engaged in the businesses of (i) processing
by-products collected from bakeries, pasta manufacturers, confectioners, snack
food producers and others into animal feed and (ii) processing grease (the
"Acquired Business").
Exhibit B contains a list of all defined words, including those not
otherwise defined in the text of this Agreement, the initial letter of which is
capitalized.
NOW, THEREFORE, in consideration of the mutual promises and agreements
of the parties herein contained, the parties hereby agree as follows:
<PAGE>
1. SALE AND PURCHASE OF SHARES.
Subject to the terms and conditions set forth in this Agreement, on the
"Closing Date" (as defined in Section 6.1), each Seller will sell, transfer and
convey the Shares set forth opposite such Seller's name on Exhibit A hereto to
the Buyer, free and clear of all Liens, and the Buyer will purchase such Shares
from each Seller.
2. PURCHASE PRICE AND PURCHASE PRICE ALLOCATIONS; IRC CODE ss.338(H)(10);
PAYMENT OF CERTAIN OBLIGATIONS; COMPANIES' INTERIM PRE-TAX EARNINGS
2.1 Purchase Price. The purchase price for the Shares (the "Purchase
Price") shall be $30,000,000. The Purchase Price shall be paid on the Closing
Date by transferring (i) $2,500,000 to the Escrow Account established pursuant
to the Escrow Agreement in the form of Exhibit C hereto (the "Escrow Agreement")
and (ii) the remaining $27,500,000 of the Purchase Price either to the Sellers
specified on Exhibit A in the amounts set forth thereon or to an account (the
"Sellers' Bank Account") designated by Harold Oelbaum (the "Class A
Representative") and James B. Stevens (the "Class B Representative" and,
together with the Class A Representative, the "Sellers' Representatives"), it
being understood that the Sellers' Representatives will make payments to the
Sellers specified on Exhibit A from the Sellers' Bank Account. All amounts shall
be payable by wire transfer of immediately available funds.
2.2 CODE SS.338(H)(10) ELECTION; ALLOCATION OF PURCHASE PRICE
2.2.1 (a) The Sellers shall join with the Buyer in making an election under
Section 338(h)(10) of the Code (and subject to the following sentence, under any
corresponding state and local Tax law) (collectively a "Section 338(h)(10)
Election") with respect to the purchase of the Shares of IPC.
(b) Not later than 90 days after the Closing Date, the Buyer and the
Sellers shall use their best efforts to agree in writing to an allocation of the
consideration paid for the Shares, first, between the Shares of IPC and the
Shares of ITSI, and then (together with other items allocable to assets under
applicable Treasury Regulations) among the assets of IPC in accordance with
Section 338(h)(10) and the Treasury Regulations thereunder, in each case based
upon the principles specified in Exhibit D. The Sellers, the Buyer and IPC shall
file all elections, statements, Tax returns and information reports and other
documents and take such other actions consistent with or necessary to effect and
preserve the Section 338(h)(10) Election.
2.3 Companies' Indebtedness
2.3.1 Attached as Exhibit E is a list of all existing indebtedness of the
Companies (the "Companies' Indebtedness").
2.3.2 At the Closing (i) the Companies will pay, with the Buyer supplying
the Companies with sufficient funds to enable the Companies to pay, the
Companies' Indebtedness, including without limitation the indebtedness owed by
the Companies to the Sellers, Stanley B. Kane, Daniel Kane and Kane-Miller Corp.
as listed on Part I of Exhibit E hereto, but excluding the Companies'
Indebtedness listed on Part II of Exhibit E, and (ii) will execute and deliver
to Kane-Miller Corp. an indemnification agreement pursuant to which the Buyer
will indemnify Kane-Miller Corp. with respect to Kane-Miller Corp.'s guaranties
of IPC's leases in Carteret, New Jersey and Kansas City, Kansas.
2.3.3 Without the Buyer's prior written consent, the Companies will not
incur indebtedness in addition to (i) the Companies' Indebtedness and (ii) trade
payables and other short term liabilities incurred in the ordinary course of
business.
2.4 Distributions of the Companies' Combined Interim Pre-Tax Earnings;
Closing Balance Sheet. (a) The Sellers shall be entitled to receive
distributions from IPC in an aggregate amount equal to 50% of the Companies'
Combined Interim Pre-Tax Earnings. Prior to Closing Sellers shall receive from
IPC a distribution equal to 50% of the combined net income of the Companies for
the seven month period ended July 31, 1996, as shown in the Financial Statements
referred to in Section 5.1.4. As soon as practicable after final determination,
in accordance with Section 2.4(b), of the Companies' Combined Interim Pre-Tax
Earnings, (i) the Sellers shall receive from the Companies a distribution equal
to 50% of the Companies' Combined Interim Pre-Tax Earnings minus any amounts
previously distributed to Sellers with respect thereto (it being understood that
$400,000 distributed by IPC to the Sellers in 1996 is attributable to fiscal
1995 earnings of IPC) or (ii) if the amounts previously distributed to Sellers
with respect thereto exceed 50% of the Companies' Combined Interim Pre-Tax
Earnings, the Sellers shall promptly pay the Companies an amount equal to such
excess.
(b) The Buyer shall cause to be prepared and delivered to the
Sellers' Representatives, within 45 days following the Closing, the unaudited
balance sheet of the Companies as of the Closing Date (the "Closing Balance
Sheet"), in conformity with generally accepted accounting principles applied on
a basis consistent with the 1995 Audited Financial Statements, and a calculation
of the Companies' Combined Interim Pre-Tax Earnings. In connection with the
calculation of the Closing Balance Sheet and the Companies' Combined Interim
Pre-Tax Earnings, the Sellers' Representatives and their accountants shall be
permitted to review all work papers, books and records associated with such
preparation and calculation and to discuss the foregoing with officers and the
accountants of the Buyer. The Sellers and the Sellers' Representatives shall
keep confidential any information relating to the post-closing operations of the
Buyer and the Companies to which the Sellers' Representatives may receive access
in connection with the foregoing. The Sellers' Representatives shall advise the
Buyer, within 30 days following the delivery by the Buyer to the Sellers'
Representatives of the Closing Balance Sheet and calculation of the Companies'
Combined Interim Pre-Tax Earnings, whether the Sellers dispute the Closing
Balance Sheet or calculation of the Companies' Combined Interim Pre-Tax
Earnings. In the event of any dispute under this Section 2.4(b), the parties
shall seek to resolve such dispute between themselves during the 30-day period
following the date on which the Sellers' Representatives shall have advised the
Buyer of such dispute. In the event the parties are unable to resolve such
dispute within such 30-day period, such dispute shall be referred to a "big six"
accounting firm mutually selected by the Sellers' Representatives and the Buyer
(or if the parties shall fail to agree on such selection, such accounting firm
shall be selected by lot (which lot shall exclude Deloitte & Touche LLP and KPMG
Peat Marwick)), which accounting firm shall be requested to seek to resolve such
dispute within 30 days after such dispute is referred to them. The determination
of such dispute by such accounting firm shall be final and binding on the
parties. The fees and expenses of such accounting firm in resolving such dispute
shall be borne 50% by the Sellers and 50% by the Buyer.
3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Companies and the Sellers. The
Companies and the Sellers represent and warrant to the Buyer as follows, and
acknowledge and confirm that the Buyer is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement.
3.1.1 Organization and Good Standing. Each of the Companies (i) is a
corporation duly organized, validly existing and in good standing under the laws
of their respective states of incorporation, (ii) is duly qualified to conduct
business as a foreign corporation in each jurisdiction where the nature of the
business conducted by it or the ownership of its property and assets requires
that it be so qualified where the failure to be so qualified might result in the
imposition upon it, of any material penalty, liability, payment or obligation or
might have a material adverse effect upon the business, financial condition,
results of operations or operations of the Companies, (iii) has the corporate
power and authority to own, lease or operate its properties and to carry on its
business as now conducted and (iv) has heretofore delivered to the Buyer or its
counsel complete and correct copies of its certificate or articles of
incorporation and by-laws, as amended and in effect on the date hereof.
3.1.2 Consents, Authorizations, Binding Effect, Etc. The Companies and the
Sellers may execute, deliver and perform this Agreement without the necessity of
the Companies or the Sellers obtaining any consent, approval, authorization or
waiver, giving any notice, making any filings or disclosures or otherwise,
except for notifications required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"). The Sellers and the Companies have obtained, or
shall have obtained prior to Closing, from the New Jersey Department of
Environmental Protection a "Letter of Non-Applicability" stating that the
Companies and the facilities owned or leased by the Companies in the State of
New Jersey, and the transactions under this Agreement, are not subject to the
New Jersey Industrial Site Recovery Act, as amended, and the rules and
regulations promulgated thereunder ("ISRA"). Except as described on Schedule
3.1.2 hereto, no consent, approval, authorization or waiver and no giving of any
notice, making of any filings or disclosures or otherwise in connection with the
execution, delivery or performance of this Agreement is necessary to assure to
the Acquired Business the continuance of its relationships with its present
customers or suppliers or the continued entitlement by the Buyer and the
Acquired Business to the benefits of the contracts (including without
limitation, leases, agreements, instruments, licenses, permits, commitments,
orders and quotations) of the Acquired Business. This Agreement has been duly
authorized, executed and delivered by the Companies and the Sellers, and this
Agreement constitutes the legal, valid and binding obligation of the Companies
and the Sellers, enforceable in accordance with its terms. The execution,
delivery and performance of this Agreement by the Companies and the Sellers will
not:
(1) constitute a violation of the certificate or
articles of incorporation or the by-laws, as amended, of any of the
Companies;
(2) except as described on Schedule 3.1.2 hereto,
conflict with, result in the breach of, constitute a default or result
in the acceleration of any liability or obligation under any contract,
lease, agreement, instrument, license, commitment, order or quotation
to which any of the Companies or the Sellers are parties or bound,
(3) constitute a violation of any statute, judgment,
order, decree or regulation or rule of any court, governmental
authority or arbitrator applicable or relating to any of the Companies
or the Sellers or their respective assets or businesses; or
(4) result in the creation of any Lien upon any of
the assets of the Companies or the Sellers or the Acquired Business.
3.1.3 Minute Books. The Sellers have heretofore made available to the Buyer
all of the minute books of each of the Companies, and such minute books reflect
in all material respects the corporate actions of the Board of Directors and the
shareholders of the Companies since December 1993.
<PAGE>
3.1.4 Financial Statements and Financial Condition. (a) Each of the
Companies has maintained its books of account in accordance with generally
accepted accounting principles consistently applied, and such books and records
(i) are and, during the periods covered by the Financial Statements, were
correct and complete in all material respects, fairly and accurately reflect or
reflected the income, expenses, assets and liabilities of the Companies and the
Acquired Business, including the nature thereof and the transactions giving rise
thereto, and (ii) provide or provided a fair and accurate basis for the
preparation of the Financial Statements. Without limiting the generality of the
foregoing, the assets, liabilities, and financial condition of the Companies and
the Acquired Business are fairly described and properly recorded in all material
respects in the financial and accounting records of the Companies and the
Acquired Business underlying the Financial Statements.
The following audited and unaudited financial statements of the Companies
are attached as Schedule 3.1.4 hereto:
(1) the combined audited balance sheet (the "1995
Audited Balance Sheet") of the Companies as of December 31, 1995, and
the related combined audited statements of income and of cash flows for
the fiscal year ended on such date (together with related notes and
schedules) (the 1995 Audited Balance Sheet and related statements being
herein together referred to as the "1995 Audited Financial
Statements"); and
(2) the audited combined balance sheets of the
Companies as of December 25, 1994 and the related audited combined
statements of income and of cash flows for the fiscal year ended on
such date (together with related notes and schedules);
(3) the unaudited combined balance sheet (the
"Interim Balance Sheet") of the Companies as of June 30, 1996, and the
related unaudited combined statements of income and of cash flows for
the six months ended on such date (the Interim Balance Sheet and
related statements being herein together referred to as the "Interim
Financial Statements").
The financial statements described above, together with the financial statements
delivered pursuant to Section 5.1.4 hereof, are hereinafter together referred to
as the "Financial Statements".
<PAGE>
(b) The Financial Statements have been prepared in conformity
with generally accepted accounting principles consistently applied, are correct
and complete in all material respects and present fairly the consolidated
financial position of the Companies as of the dates of such statements and the
results of operations of the Companies for the periods covered by such
statements, subject in the case of the Interim Financial Statements and the
financial statements delivered pursuant to Section 5.1.4 hereof to normal
year-end recurring adjustments and the absence of notes and schedules thereto.
(c) Each of the Companies has, and on the Closing Date the
Companies will have, no liabilities or obligations (absolute, contingent or
otherwise) of a nature required by generally accepted accounting principles
applied on a basis consistent with the 1995 Audited Financial Statements to be
reflected in audited financial statements, other than
(i) those set forth or reserved against in the Interim Balance
Sheet or in the notes to the 1995 Audited Financial Statements, and
(ii) those incurred since the date of the Interim Balance Sheet in
the ordinary course of business in arms' length transactions, and which
do not have and cannot reasonably be expected to have, in the
aggregate, an adverse effect on the Companies.
The Financial Statements do not include or reflect any assets,
liabilities, equity, results of operations or cash flows of any person,
corporation, partnership or other business other than the Companies.
3.1.5 Title and Condition of Assets. This Section 3.1.5 does not apply to
environmental matters, including without limitation Environmental Conditions.
Each of the Companies has good and marketable title to the real property (in fee
simple), and have good and unencumbered title to interests (including without
limitation leasehold interests) in real property and tangible personal property,
of the Companies, free and clear of liens, encumbrances, leases, easements,
covenants, licenses, defects of title, claims of third parties, charges,
security interests, mortgages, pledges, equities, restrictions, agreements and
rights of others of every nature whatsoever (hereinafter collectively referred
to as "Liens"), other than Liens described on Schedule 3.1.5 hereto. To the best
knowledge of the Sellers (and, with respect to leased property, to Sellers'
actual knowledge, without investigation), no improvement or structure on any
real property owned or leased by the Companies encroaches on any adjacent
property or conflicts with the rights of any owner thereof, and no improvement
or structure on any property owned or leased by any other person encroaches on
any property owned or leased by the Companies.
The improvements, fixtures and appurtenances on or to the real
property owned or leased by the Companies, and the tangible assets of the
Companies, taken as a whole, are sufficient to operate the Companies and the
Acquired Business in the ordinary course, except as described on Schedule 3.1.5
hereto, subject to the need to effect ordinary course repairs which, until
effected, will not materially adversely affect the Companies or the Acquired
Business, or the financial condition, results of operations or operations
thereof, or require any material cost to effect.
Except as described on Schedule 3.1.5 hereto, all of the
properties and assets used by the Companies in the Acquired Business and the
operations thereof are owned or leased by the Companies and none of the Sellers
or any affiliates thereof, have any interest in such properties and assets. The
Acquired Business is not conducted under any specific restriction imposed upon
the Companies or the Acquired Business (but not imposed upon other persons
conducting similar businesses or operating similar assets for similar purposes
in the localities where its business and assets are located) by any zoning,
anti-pollution, health or other law, ordinance or regulation.
Except as described on Schedule 3.1.5 hereto, none of the
assets owned or leased by any of the Companies have been affected by any fire,
accident, act of God or any other casualty that materially adversely impairs the
Companies or the Acquired Business, or the financial condition, results of
operations or operations thereof.
Schedule 3.1.5 hereto includes a complete and correct list of all real
property and all interests in real property (including without limitation leases
of real property), showing also the present use of such real property. Schedule
3.1.5 hereto includes a complete and correct list of all material tangible
personal property in the nature of machinery and equipment owned, operated or
leased by the Companies and used in connection with the Acquired Business. Since
December 1993, the Companies have not owned, used, operated or leased any real
properties other than the properties listed on Schedule 3.1.5 hereto.
3.1.6 Inventories. The inventories of the Companies are merchantable and
have been valued at the lower of cost or market in accordance with generally
accepted accounting principles applied on a consistent basis. To the best
knowledge of the Sellers, none of the Companies is under any liability or
obligation with respect to the return of inventory shipped at any time prior to
the Closing Date.
3.1.7 Receivables. The trade accounts and other receivables of the
Companies, are bona fide receivables, arose out of arms-length transactions, are
recorded correctly on the applicable books and records of the Companies and,
except as set forth on Schedule 3.1.7 hereto, are collectible within 180 days
after the Closing Date in an amount equal to the aggregate face amount of such
receivables, less the amount of any reserves against such receivables which are
reflected in the Closing Balance Sheet; provided that, with respect to such
receivables taken into income for purposes of calculating the Companies'
Combined Interim Pre-Tax Earnings, only 50% of the amount of such receivables
not so collectible shall be reimbursed to the Buyer by the Sellers, and provided
further that, with respect to any receivables payments received by the Companies
from a given account debtor, and only to the extent that such debtor shall not
have designated a receivable to which such payments apply, such payments shall
be applied first to receivables from such account debtor existing at the Closing
before being applied to receivables from the same debtor arising after the
Closing (and the Sellers' Representatives shall be provided with such
documentation as they reasonably may request with respect to such application).
If the Sellers shall have paid to Buyer any amount with respect to a receivable
for breach of the representation as to collectibility set forth in the first
sentence of this Section 3.1.7 and the Companies thereafter shall have collected
any amount with respect to the same receivable prior to the first anniversary of
this Agreement such that the amount so paid by Sellers and collected by the
Company respecting such receivable exceed the face amount of such receivable,
the Buyer shall refund or cause the Companies to refund to Sellers the amount of
such excess. Except for those described on Schedule 3.1.7 hereto, to the best
knowledge of the Sellers, such trade accounts and other receivables are not
subject to any counterclaim or set-off, and no basis presently exists for the
assertion of any counterclaim or set-off (or the repayment of any receivables or
payments heretofore received by the Companies).
3.1.8 Insurance. Schedule 3.1.8 hereto contains a list of all policies of
insurance maintained by the Companies, including insurance providing benefits
for employees, in effect on the date hereof and generally describing the
coverage thereby and indicating policies maintained by Kane-Miller Corp. for the
benefit of the Companies. Except as described on Schedule 3.1.8 hereto, there
are no claims pending or, to the best knowledge of the Sellers, threatened under
said policies or disputes with underwriters, and all premiums due and payable
have been paid and all such policies are in full force and effect in accordance
with their respective terms; and the Sellers make no representation under this
sentence with respect to premiums becoming due and payable after the date hereof
under retrospective policies. Except for amounts deductible under policies of
insurance and/or as described on Schedule 3.1.8 hereto, none of the Companies
has at any time been subject to any liability as a self-insurer of the business
and assets of the Companies.
3.1.9 Litigation and Compliance; Environmental Matters.
(a) Except as described on Schedule 3.1.9 hereto, there are no
actions, suits, claims or proceedings, whether in equity or at law, pending or,
to the best knowledge of the Sellers, threatened, and there are no governmental
or administrative investigations pending or, to the best knowledge of the
Sellers, threatened, against the Companies or which question or challenge the
validity of this Agreement or any action taken or to be taken pursuant to this
Agreement, or, pending or, to the best knowledge of the Sellers, threatened
against any asset or property of others leased or used by the Companies.
(b) Except as described on Schedule 3.1.9 hereto, each of the
Companies is in, and has conducted its operations in compliance with, and is not
in default or violation in any respect under, and has not conducted its
operations in violation in any respect of, any law (excluding, however,
Environmental Laws), rule, regulation, decree or order applicable to it where
the failure to be in compliance or such default or violation might result in the
imposition upon the Companies, the Acquired Business or the Buyer of any
material penalty, liability, payment or obligation not reserved for on the
Interim Balance Sheet or might have a material adverse effect upon the
Companies, the Acquired Business or the Buyer (or their successors and assigns),
or the business, financial condition, results of operations or operations
thereof. With respect to Environmental Laws, to the best knowledge of Sellers,
except as described on Schedule 3.1.9 hereto, none of the Companies is in
violation of any Environmental Law, where such violation might result in the
imposition of any material penalty, liability, payment or obligation not
reserved for on the Interim Balance Sheet or might have a material adverse
effect upon the Companies, the Acquired Business or the Buyer (or their
successors and assigns), or the business, financial condition, results of
operations or operations thereof.
(c) Neither the Companies nor any of the assets of the
Companies is subject to any judgment, order, decree, settlement or consent
agreement entered in any lawsuit or proceeding specifically against any of the
Companies or to which any of the Companies is a party, which might continue to
affect any of the Companies, the Acquired Business or the Buyer, or the
business, financial condition, results of operations or operations thereof.
(d) Except as described on Schedule 3.1.9 hereto, each of the
Companies has duly filed all reports and returns required (other than by
Environmental Laws) to be filed by it with governmental authorities and has
obtained all governmental permits and licenses and other governmental consents
which are required (other than by Environmental Laws) in connection with the
Acquired Business and the operations thereof, where the failure to file such
reports and returns or the failure to obtain such permits, licenses or consents
(individually or in the aggregate) might result in the imposition upon any of
the Companies, the Acquired Business or the Buyer of any penalty, liability,
payment or obligation not reserved for on the Interim Balance Sheet or might
have a material adverse effect upon any of the Companies, the Acquired Business
or the Buyer, or the business, financial condition, results of operations or
operations thereof. Except as described on Schedule 3.1.9 hereto, to the best
knowledge of the Sellers, each of the Companies has duly filed all reports and
returns required by Environmental Laws to be filed by it with governmental
authorities and has obtained all governmental permits and licenses and other
governmental consents which are required by Environmental Laws in connection
with the Acquired Business and the operations thereof, where the failure to
obtain such permits, licenses or consents (individually or in the aggregate)
might result in the imposition upon any of the Companies, the Acquired Business
or the Buyer of any penalty, liability, payment or obligation not reserved for
on the Interim Balance Sheet or might have a material adverse effect upon any of
the Companies, the Acquired Business or the Buyer, or the business, financial
condition, results of operations or operations thereof. All permits, licenses
and consents held by the Companies are set forth on Schedule 3.1.9 hereof.
Except as described on Schedule 3.1.9 hereto, all of such permits, licenses and
consents are in full force and effect, and no proceedings for the suspension or
cancellation of any of them is pending or, to the best knowledge of the Sellers,
threatened.
(e) Except as described on Schedule 3.1.9 hereto, no notice,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and, to the best knowledge of the Sellers, no
investigation or review is pending or threatened by any governmental or other
entity (a) with respect to any alleged violation of any Environmental Laws by
the Companies, any subsidiaries or the Acquired Business or (b) with respect to
any alleged failure by the Companies to have any environmental permit,
certificate, license, approval, registration or authorization required in
connection with its business; or (c) with respect to any use, possession,
generation, handling, labeling, treatment, storage, recycling, transportation or
disposal (collectively "Management") of any Hazardous Substance by or on behalf
of the Companies or the Acquired Business.
(f) Except as described on Schedule 3.1.9 hereto, neither the
Sellers nor any of the Companies or any subsidiaries has received any request
for information, notice of claim, demand or notification that any of the
Companies or any subsidiaries is or may be potentially responsible with respect
to any investigation or clean-up of any threatened or actual release of any
Hazardous Substance.
(g) Except as described on Schedule 3.1.9 hereto, to the best
knowledge of the Sellers, none of the Companies has used, generated, treated,
stored for more than 90 days, recycled or disposed of any Hazardous Substances
on any Covered Property, nor, to the best knowledge of the Sellers, has anyone
else treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on any Covered Property.
(h) Except as described on Schedule 3.1.9 hereto, to the best
knowledge of the Sellers, no polychlorinated biphenyls ("PCBs") or friable
asbestos-containing materials are or, to the best knowledge of the Sellers, have
been present at any Covered Property, nor are there any underground storage
tanks, active or abandoned, at any Covered Property owned or operated by the
Companies or in connection with the Acquired Business.
(i) To the best knowledge of the Sellers, no Hazardous
Substance generated by any of the Companies or in connection with the Acquired
Business has been recycled, treated, stored, disposed of or transported by any
entity other than those listed on Schedule 3.1.9 hereto.
(j) Except as described on Schedule 3.1.9 hereto, to the best
knowledge of the Sellers, no Hazardous Substance managed by or on behalf of
either of the Companies or in connection with the Acquired Business has come to
be located at any site which is listed or proposed for listing under 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, or which
is the subject of federal, state or local enforcement actions or other
investigations which may lead to claims against the Companies, the Acquired
Business or the Buyer for clean-up costs, remedial work, damages to natural
resources or for personal injury or property damage claims, including, but not
limited to, claims under CERCLA.
(k) Except as described on Schedule 3.1.9 hereto, to the best
knowledge of the Sellers, no Hazardous Substance has been released, spilled,
leaked, discharged, disposed of, pumped, poured, emitted, emptied, injected,
leached, dumped or allowed to escape ("Released") originating at, on, about,
under or from any Covered Property.
(l) Except as described on Schedule 3.1.9 hereto, no oral or
written notification of a Release or threat of Release of a Hazardous Substance
has been filed by or on behalf of the Companies on any Covered Property. No such
Property is listed or, to the best knowledge of Sellers, proposed for listing on
the National Priority List promulgated pursuant to CERCLA, on CERCLIS or on any
similar state list of sites requiring investigation or clean-up.
(m) Except as described on Schedule 3.1.9 hereto, to the best
knowledge of Sellers, there are no actions on any Covered Properties and no
government actions have been taken or are in process or pending specifically
against any of the Companies which could subject any of such Properties to such
Liens.
(n) Except as listed in Schedule 3.1.9 hereto and heretofore
provided to the Buyer, there have been no environmental inspections,
investigations, studies, audits, tests, reviews or other analyses conducted by
or on behalf of any of the Companies or in their possession or control on any
Covered Property or the Acquired Business, specifically excluding any
inspections, investigations, studies, audits, tests, reviews or other analyses
conducted by or on behalf of the Buyer on any Covered Property or the Acquired
Business.
(o) Without limiting the generality of the foregoing, except
as described on Schedule 3.1.9 hereto, to the best knowledge of the Sellers,
there exists no Environmental Condition affecting or with respect to any of the
Companies or the Acquired Business, or any Covered Property, including without
limitation any of the foregoing (individually or in the aggregate) which might
result in the imposition upon any of the Companies, the Acquired Business or the
Buyer (or their successors and assigns) of any Penalty, liability, payment or
obligation not reserved for on the Interim Balance Sheet or which might have a
material adverse effect upon any of the Companies, the Acquired Business or the
Buyer, or the business, financial condition, results of operations or operations
thereof.
(p) For all purposes of this Agreement as it relates to
knowledge of any environmental matter, including but not limited to any
Environmental Condition, any reference to "to the best knowledge of the Sellers"
when modifying any representation and warranty of the Sellers shall mean that
the Sellers have no actual knowledge that such representation or warranty is not
true and correct, after reasonable inquiry (which Sellers agree to make) of
officers of the Companies, the Companies' environmental engineers (including
without limitation Michael Desmelik), plant managers at each of the Companies'
facilities and counsel to the Sellers. Provided further that actual knowledge
shall not be deemed to include presumptive knowledge of laws.
3.1.10 Taxes. (a) The Sellers and the Companies have filed timely, or will
file timely, all Federal, state, local and foreign Tax returns and information
returns of or related to the income of the Companies that they are, or they will
be, required to file as of or prior to the Closing Date, and such returns as
filed are or will be true and correct in all material respects. The Sellers have
delivered or made available to the Buyer all Federal, state, local and foreign
income or franchise Tax returns of the Companies for all periods from and
including December 27, 1993.
(b) All Taxes that the Companies were, or will be, required by law to pay,
withhold, deposit or collect as of the Closing Date have been, or will be, duly
paid, withheld, deposited or collected and, to the extent required, have been,
or will be, paid to the relevant taxing authority, or accrued.
(c) The Companies have not received notice of any Tax deficiency
outstanding, proposed or assessed nor have they executed any waiver or extension
of any statute of limitations on the assessment or collection of any Taxes nor
are there any powers of attorney in force with respect to Taxes of the
Companies.
(d) There are no Tax Liens upon, pending against or, to the best knowledge
of the Sellers and the Companies, threatened against any asset of the Companies,
other than Liens for Taxes arising in the ordinary course and not yet due and
payable.
(e) The Federal income Tax returns of the Companies have been examined by
the Internal Revenue Service for all periods to and including the year ended
December 31, 1991, and all deficiencies asserted in connection with the
examination of such returns have been paid or finally settled and no issue has
been raised by the Internal Revenue Service in any such examination which could
be expected to result in a proposed deficiency for the current period or any
other past or future period nor, by application of similar principles, could be
expected to result in a proposed deficiency for state or local Taxes.
(f)The Companies have not filed a consent under Section 341(f) of the Code.
(g) There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by reason of Section 280G of the Code.
(h) None of the Companies is a party to, is bound by, nor has any
obligation under, any Tax sharing agreement or similar contract.
(i) IPC has satisfied, and will continue to satisfy, all of the
requirements to be treated as an "S Corporation" under Subchapter S of the Code
from the date of its incorporation through and including the Closing Date.
3.1.11 Intangible Assets. Schedule 3.1.11 hereto sets forth:
(1) all patents, patent applications, trademarks,
trademark registrations, pending applications for trademark
registrations, trade names and copyrights which the Companies own or in
which the Companies have any proprietary interest which the Companies
are presently using or operating under; and
(2) all license agreements with respect to any of the
foregoing as to which the Companies are licensor or licensee.
No patents, trademarks, trade names or copyrights not described on Schedule
3.1.11 are necessary in connection with the conduct of the Acquired Business.
Except as described on Schedule 3.1.11 hereto, there are no pending or, to the
best knowledge of the Sellers, threatened claims against the Companies by any
person with respect to any of the items, or their use, listed on Schedule 3.1.11
or claims of infringement by the Companies on the rights of any person, and, to
the best knowledge of the Sellers, no valid basis exists for any such claims.
3.1.12 Employee Benefits.
(a) All employee pension benefit plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), welfare
benefit plans (as defined in Section 3(1) of ERISA), bonus, stock purchase,
stock ownership, stock option, deferred compensation, incentive, severance,
termination or other compensation plan or arrangement, and other material
employee fringe benefit plans, other than multiemployer plans as defined in
Section 3(37) of ERISA, presently maintained by, or contributed to by any of the
Companies or for which any of the Companies could have any liability are listed
in Schedule 3.1.12 (the "Benefit Plans"), a true and complete copy of each of
which, and, where applicable, a copy of the most recent IRS Form 5500 filed with
respect to each such Benefit Plan, has been furnished to the Buyer. The
Companies have no obligation to create any additional Benefit Plan or to modify
any existing Benefit Plan.
(b) The Companies and each of the Benefit Plans are in compliance in all
material respects with the applicable provisions of ERISA, and those provisions
of the Code applicable to the Benefit Plans. With respect to all Benefit Plans
intended to satisfy the requirements of Section 401(k) of the Code, all
non-discrimination tests under Section 401(k) have been satisfied for all plan
years, or excess contributions have been distributioned prior to the date any of
the Companies would incur a penalty under the Code.
(c) Except as may be disclosed in Schedule 3.1.12, all contributions to,
and payments from, the Benefit Plans which may have been required to be made in
accordance with the Benefit Plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made. All such contributions to the
Benefit Plans for any period ending before the Closing Date that are not yet,
but will be, required to be made are properly accrued and reflected on the
Closing Balance Sheet.
(d) Except as indicated on Schedule 3.1.12, all material reports, returns
and similar documents with respect to the Benefit Plans required to be filed
with any government agency or distributed to any Benefit Plan participant have
been duly and timely filed or distributed.
(e) The Companies have complied in all material respects with the notice
and continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Benefit Plan that is, or was at any
time, a group health plan within the meaning of Section 5000(b)(1) of the Code.
(f) Except as disclosed in Schedule 3.1.12, all of the Benefit Plans which
are pension benefit plans have received determination letters from the Internal
Revenue Service ("IRS") to the effect that such plans are qualified and exempt
from federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code; and no determination letter with respect to any Benefit Plan has been
revoked nor, to the best knowledge of the Sellers, has revocation been
threatened, nor has any Benefit Plan been amended since the date of its most
recent determination letter or application therefor in any respect which would
adversely affect its qualification or materially increase its cost and no
Benefit Plan has been amended in a manner that would require security to be
provided in accordance with Section 401(a)(29) of the Code.
(g) Each of the Benefit Plans has been administered at all times, and in
all material respects, in accordance with its terms except that in any case in
which any Benefit Plan is currently required to comply with a provision of ERISA
or of the Code, but is not yet required to be amended to reflect such provision,
it has been administered in accordance with such provision.
(h) There are no pending investigations by any governmental agency
involving the Benefit Plans, no termination proceedings involving the Benefit
Plans, and no threatened or pending claims (except for claims for benefits
payable in the normal operation of the Benefit Plans), suits or proceedings
against any Benefit Plan or asserting any rights or claims to benefits under any
Benefit Plan which could give rise to any material liability, nor, to the best
knowledge of the Sellers, are there any facts which could give rise to any
material liability in the event of any such investigation, claim, suit or
proceeding.
(i) Neither the Benefit Plans, the Companies, nor any employee of the
foregoing, nor, to the best knowledge of the Sellers, any trusts created
thereunder, nor any trustee, administrator or other fiduciary thereof, has
engaged in a "prohibited transaction" (as such term is defined in Section 4975
of the Code or Section 406 of ERISA) which could subject any thereof to the tax
or penalty on prohibited transactions imposed by such Section 4975 or the
sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any such
trust has been terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereunder) with respect to
either thereof.
(j) The Companies have not incurred any liability to the Pension Benefit
Guaranty Corporation ("PBGC") with respect to any Benefit Plan subject to Title
IV of ERISA, other than for the payment of premiums, all of which have been paid
when due. No Benefit Plan has applied for or received a waiver of the minimum
funding standards imposed by section 412 of the Code. The Sellers have furnished
to the Buyer the most recent actuarial report with respect to each Benefit Plan
that is a defined benefit pension plan, as defined by Section 3(35) of ERISA. No
event has occurred since the date of any such actuarial report that had, or is
likely to have, a materially adverse effect on the ratio of plan assets to the
actuarial present value of plan obligations for accumulated benefits shown in
such report. Except to the extent disclosed on Schedule 3.1.12 hereto, with
respect to each Benefit Plan that is a defined benefit plan, in the event of the
termination of any such Benefit Plan as of July 31, 1996 and payment of the
benefit liabilities thereof, there would be no "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA in any of the Benefit
Plans subject to Title IV of ERISA, as determined in accordance with the
actuarial assumptions used by the PBGC to determine the level of funding
required in the event of such termination.
(k) For purposes of this Section 3.1.12, all references to the Companies
shall include any other employer (an "Affiliate") that is or was at any time,
together with any of the Companies, treated as a "single employer" under
Sections 414(b), 414(c) or 414(m) of the Code.
(l) Except as set forth on Schedule 3.1.12 hereto, at no time have the
Companies been required to contribute to, or incurred any withdrawal liability,
within the meaning of Section 4201 of ERISA to any multiemployer plan, within
the meaning of Section 3(37) of ERISA. All multiemployer plans, within the
meaning of Section 3(37) of ERISA, to which the any of the Companies is, or has
been at any time within the past five (5) years, required to contribute or with
respect to which any of the Companies could have any liability are disclosed in
Schedule 3.1.12.
(m) The Companies have not and will not incur any liability with respect to
any planor arrangement that would be included within the definition of "Benefit
Plan" hereunder but for the fact that such plan or arrangement was terminated
before the date of this Agreement.
(n) Except as indicated on Schedule 3.1.12 or as otherwise required by law,
there are no obligations to provide health or welfare benefits to retired or
terminated employees.
3.1.13 Labor Relations. (a) Except as described on Schedule 3.1.13 hereto,
no employees of the Companies are covered by any collective bargaining
agreement.
(b) To the best knowledge of the Sellers, each of the Companies has
complied in all respects with applicable laws, rules and regulations relating to
the employment of labor, including without limitation those relating to wages,
hours, unfair labor practices, discrimination, immigration, payment of social
security and similar taxes where the failure to be in compliance (individually
or in the aggregate) might result in the imposition upon any of the Companies,
the Acquired Business or the Buyer of any material penalty, liability, payment
or obligation not reserved for on the Interim Balance Sheet or might have a
material adverse effect upon any of the Companies, the Acquired Business or the
Buyer (or their successors and assigns), or the business, financial condition,
results of operations or operations thereof.
(c) To the best knowledge of the Sellers, none of the Companies has engaged
in any unfair labor practice, and there are no complaints against any of the
Companies pending before the National Labor Relations Board or any similar state
or local labor agency by or on behalf of any employee of any of the Companies.
There are no representation questions, arbitration proceedings, labor strikes,
slow-downs or stoppages, grievances or other labor troubles pending or, to the
best knowledge of the Companies and the Sellers, threatened with respect to the
employees of any of the Companies.
3.1.14 Contracts, Etc. (a) Except as described on Schedule 3.1.14 hereto,
all contracts, leases, agreements, instruments, licenses, commitments, orders
and quotations to which any of the Companies are a party or by which any of the
Companies are bound (and all guarantees by third parties and all bonds and
letters of credit securing, supporting or relating to the obligations of the
Companies under any such contracts, leases, agreements, instruments, licenses,
commitments, orders and quotations) are valid and in full force and effect and
constitute the legal, valid and binding obligations of the Companies (and, to
the best knowledge of the Sellers, such guarantors and issuers of such bonds and
letters of credit) and, to the best knowledge of the Sellers, the other parties
thereto, and there are no existing defaults by any of the Companies (or, to the
best knowledge of the Companies and the Sellers, such guarantors and issuers of
such bonds and letters of credit) or, to the best knowledge of the Sellers, by
any other party thereunder and no event, act or omission has occurred which
(with or without notice, lapse of time or the happening or occurrence of any
other event) would result in a default thereunder.
(b) Except as described on Schedule 3.1.14 hereto, no other party to any
such contract, lease, agreement, instrument, license, commitment, order or
quotation (or guarantee, bond or letter of credit) has asserted the right, and,
to the best knowledge of the Sellers, no basis exists for the assertion of any
right, to renegotiate the terms or conditions of any such contract, lease,
agreement, instrument, license, commitment, order or quotation (or such
guarantee, bond or letter of credit).
(c) Except as described on Schedule 3.1.14 hereto and based upon prices and
pricing referents in effect on the date hereof, the Companies' regularly
prepared supplier profit analyses indicate that no contract, agreement,
instrument, commitment, order or quotation of the Companies will result in any
loss on such contract, agreement, instrument, commitment, order or quotation in
excess of $25,000 individually or $250,000 in the aggregate, and none of the
Companies is subject to any penalty or charge based on any failure by any of the
Companies to duly and timely perform its obligations under any contract, lease,
agreement, license, instrument, commitment, order or quotation of any of the
Companies.
(d) All contracts, leases, agreements, instruments, licenses, commitments,
orders and quotations to which any of the Companies is a party or by which any
of the Companies is bound (and all guarantees by third parties and all bonds and
letters of credit securing, supporting or relating to the obligations of the
Companies under any such contracts, leases, agreements, instruments, licenses,
commitments, orders and quotations) are listed on Schedule 3.1.14 hereto except
the following:
(1) employment agreements terminable at will, and
contracts for miscellaneous services terminable at will, without the
payment of any penalty, bonus, severance payment or additional
compensation;
(2) purchase orders and contracts with suppliers; and
(3) miscellaneous contracts, leases, agreements,
instruments, licenses, commitments, orders and quotations involving
aggregate liabilities under all such contracts, leases, agreements,
instruments, licenses, commitments, orders and quotations of not more
than $20,000 individually or $200,000 in the aggregate.
The Companies have heretofore delivered to the Buyer or its counsel true,
correct and complete copies of all contracts, leases, agreements, instruments,
licenses, commitments, orders and quotations (and all guarantees, bonds and
letters of credit) listed on Schedule 3.1.14 hereto, other than those excluded
by subparagraphs (1), (2) and (3) of this subsection (d).
3.1.15 Customers and Suppliers. Schedule 3.1.15 sets forth: (i) a list of
the five largest customers of the Companies at each Company location, and the
twenty largest customers of the Companies across all locations, in terms of
dollar sales for both the fiscal year ended December 31, 1995 and the interim
period from January 1, 1996 through June 30, 1996, showing the approximate total
sales by the Companies to each such customer at each such location or, in the
case of the twenty largest customers, in aggregate, during such fiscal year and
interim period; and (ii) a list of the five largest suppliers of the Companies
at each Company location, and the twenty largest suppliers of the Companies
across all locations, in terms of purchases by tonnage amounts (with
corresponding dollar amounts) for both the fiscal year ended December 31, 1995
and the interim period from January 1, 1996 through June 30, 1996, showing the
approximate total purchases by the Companies from each such supplier at each
such location or, in the case of the twenty largest suppliers, in aggregate,
during such fiscal year and interim period. Except as described on Schedule
3.1.15 hereto, since June 30, 1996, there has not been any termination,
cancellation or material limitation, modification or change in the business
relationship of the Companies with any such customer or supplier and the
Companies and the Sellers are unaware of any threatened loss of any such
customer or supplier. The Sellers have delivered, at least three days prior to
the date hereof, to the Buyer true and complete copies of all contracts,
commitments and other agreements between the Companies and each of the customers
and suppliers set forth on Schedule 3.1.15, other than purchases and sales
orders entered into in the ordinary course of business in arms-length
transactions and consistent in nature and scope with past practice, true copies
of which have been made available to the Buyer. Schedule 3.1.15 sets forth the
termination date of each such contract, commitment or other agreement with the
customers and suppliers set forth on Schedule 3.1.15 hereof.
3.1.16 Absence of Certain Changes, Etc. (a) Since the date of the 1995
Audited Financial Statements, except as described on Schedule 3.1.16 hereto,
there has been no material adverse change in the business, results of
operations, operations or financial condition of the Companies or the Acquired
Business, and there are no events with respect to any of the foregoing, that
threaten to disrupt, prevent or impair the conduct of the Acquired Business in a
material adverse manner.
(b) Since the date of the Interim Financial Statements, except as described
on Schedule 3.1.16 hereto, none of the Companies has:
(1) made or agreed to make any capital expenditure or
commitment for additions to property, plant or equipment, except for
expenditures and commitments not exceeding $50,000 per individual
expenditure and $250,000 in the aggregate;
(2) experienced any damage, destruction or loss to or of any
of their assets, whether or not covered by insurance, which might have
a material adverse effect upon any of the Companies, the Acquired
Business or the Buyer, or the business, financial condition, results of
operations or operations thereof;
(3) made or agreed to make any increase in the compensation
payable to any employee whose existing aggregate annual compensation
equals or exceeds $60,000 or any increase of greater than 4% in
aggregate annual compensation payable to all employees, except for
increases made in the ordinary course of business pursuant to presently
existing policies or agreements described on Schedule 3.1.16 hereto;
(4) conducted its operations otherwise than in the ordinary
due course;
(5) entered into any transaction or contract, or amended or
terminated any transaction or contract, except normal transactions or
contracts consistent in nature and scope with prior practices and
entered into in the ordinary course of business in arms' length
transactions, which transaction or contract, or amendment or
termination thereof, might have a material adverse effect upon the
Acquired Business or the Buyer, or the business, financial condition,
results of operations, operations or the prospects thereof;
(6) increased or experienced any material adverse change in
any assumption underlying any method of calculating bad debts,
contingencies or other reserves from that reflected in the Interim
Financial Statements;
(7) canceled or waived any claim or right of substantial
value, or sold, transferred, distributed (except to the extent
permitted by this Agreement or otherwise agreed to by the Buyer in
writing) or otherwise disposed of any of their assets, except for a
fair consideration in the ordinary course of business;
(8) except in accordance with generally accepted accounting
principles applied on a basis consistent with the 1995 Audited
Financial Statements, written down or written up the value of, or
changed the method of valuing, any inventory; changed the manner in
which cost allocations are made; written off as uncollectible any note,
trade account or other receivable (except pursuant to Section 3.1.7
hereof);
(9) disposed of, permitted to lapse or, in the case of any
trade secret, disclosed to any third person any proprietary right
(including without limitation any licensed right) listed or described
on Schedule 3.1.16 hereto;
(10) paid any management fee or made any distribution of its
property or assets to the Sellers in their capacity as such, or
declared, paid or set aside for payment any dividend (of any kind or
nature) or distribution with respect to shares of their capital stock;
or
(11) agreed to do any of the foregoing.
3.1.17 Subsidiaries, Etc. None of the Companies owns, directly or
indirectly, any equity securities of any entity or enterprise and does not
conduct any of their businesses through any subsidiary, entity or enterprise,
other than, in the case of ITSI, Food By-Product Recycling, Inc., an Illinois
corporation and a directly wholly owned subsidiary of ITSI.
3.1.18 Title to the Shares; Capitalization of the CompaniesTitle to the
Shares; Capitalization of the Companies. The Sellers are the sole owners of
record and beneficial owner of all of the outstanding shares of the capital
stock of IPC and ITSI, which in turn own 100% of the outstanding capital stock
of each other Company. The outstanding capital stock of the Companies and the
ownership thereof (beneficial and record) is as set forth on Exhibit A hereto.
All of such issued shares have been duly authorized and validly issued and are
fully paid and non-assessable, and none of them were issued in violation of any
preemptive or other similar right. Each Seller represents severally (and not
jointly) that such Seller has good and marketable title to the Shares set forth
opposite such Seller's name on Exhibit A hereto, free and clear of all Liens,
and has the right, title, power and authority to sell, assign, transfer and
deliver the Shares to the Buyer. There are no, and on the Closing Date there
will not be any, authorized, outstanding or existing:
(1) except under the Shareholder Agreements, proxies,
voting trusts or other agreements or understandings with respect to the
voting of any capital stock of or other equity interests in the
Companies;
(2) securities convertible into or exchangeable for
any capital stock of or other equity interest in any of the Companies;
(3) except under the Shareholder Agreements, options,
warrants or other rights to purchase or subscribe for any capital stock
of or other equity interests in the Companies or any securities
convertible into or exchangeable for any capital stock of or other
equity interests in the Companies;
(4) agreements of any kind relating to the issuance
of any capital stock of or other equity interests in the Companies, any
such convertible or exchangeable securities or any such options,
warrants or rights;
(5) agreements of any kind which may obligate the
Companies to issue, purchase, register for sale, redeem or otherwise
acquire any of their securities or interests; or
(6) Liens or restrictions (other than restrictions on
the distribution of the Shares that may be applicable under the
Securities Act of 1933, as amended) of any kind with respect to the
capital stock or other equity interest of the Companies.
3.1.19 Other Information; Buyer's Investigation. This Agreement and the
Exhibits and Schedules hereto are true, correct and complete in all material
respects and do not contain any statement which is false or misleading with
respect to a material fact, and do not omit to state a material fact necessary
in order to make the statements therein not false or misleading. The Sellers
acknowledge and agree that the Buyer's due diligence investigations with respect
to the Companies shall not affect, qualify or modify in any respect any of the
representations and warranties of the Sellers under this Agreement.
3.1.20. "To the Best Knowledge of the Sellers". For all purposes of this
Agreement (except with respect to the representations regarding environmental
matters set forth in Section 3.1.9 hereof), any reference to "to the best
knowledge of the Sellers" when modifying any representation and warranty of the
Sellers shall mean that the Sellers have no knowledge that such representation
and warranty is not true and correct in all respects (with respect to each
Seller, giving effect to the degree of such Seller's participation in the
management or operation of the Companies or their predecessors and to a standard
of diligence exercised by a reasonable person similarly situated) and, with
respect to Sellers who are officers or directors of any of the Companies, that:
(1) such Sellers have made such investigations, and
have made such inquiries of directors, officers and responsible
employees of the Companies and of legal counsel, independent auditors,
actuaries and other persons who have performed services for the
Companies, as shall be reasonably necessary to determine the accuracy
of such representation and warranty; and
(2) nothing has come to their attention in the course
of such investigation and review or otherwise, which would cause them,
in the exercise of due diligence (in accordance with the standards of
what a reasonable man in similar circumstances (giving effect to the
degree of such Seller's participation in the management or operations
of the Companies or their predecessors) would have done to satisfy
himself as to the accuracy of the representation and warranty), to
believe that such representation and warranty is not true and correct
in all respects.
3.2 Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers as follows, and acknowledges that the Sellers are
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement.
3.2.1 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2.2 Consents, Authorizations and Binding Effect. The Buyer may execute,
deliver and perform this Agreement without the necessity of the Buyer obtaining
any consent, approval, authorization or waiver or giving any notice or
otherwise, except for notifications required under the HSR Act. This Agreement
has been duly authorized, executed and delivered by the Buyer and constitutes
the legal, valid and binding obligation of the Buyer, enforceable in accordance
with its terms. The execution, delivery and performance of this Agreement will
not:
(1) constitute a violation of the Certificate of
Incorporation or the By-laws, as amended, of the Buyer;
(2) conflict with, result in the breach of,
constitute a default or result in the acceleration of any liability or
obligation under any contract, lease, agreement, instrument, license,
commitment or order to which the Buyer is a party, or
(3) constitute a violation of any statute, judgment,
order, decree or regulation or rule of any court, governmental
authority or arbitrator applicable or relating to the Buyer.
4. CERTAIN COVENANTS.
4.1. Access to Records and Properties of the Companies. Between the date of
this Agreement and the Closing Date, the Companies shall give to the Buyer such
access to the premises, books and records of the Companies and to cause the
officers and employees of the Companies to furnish such financial and operating
data and other information with respect to the Companies as the Buyer reasonably
shall request from time to time, including, without limitation, the right to
conduct environmental assessments, samplings or testings. Any investigation
pursuant to this Section 4.1 shall be conducted in such manner as not to
interfere unreasonably with the businesses and operations of the Companies. Any
investigation conducted on the premises of the Companies shall be conducted only
after oral or written notice to the Companies.
In the event the sale and purchase hereunder shall not be consummated, the
Companies, the Sellers and the Buyer shall treat in confidence (and not use to
the detriment of the other parties) all documents, materials and other
information which they shall have obtained regarding the Companies or the Buyer
during the course of the negotiations leading to the transactions contemplated
hereby, the investigation of the Companies or the Buyer and the preparation of
this Agreement, and shall return all copies of non-public documents and
materials which have been furnished in connection therewith.
4.2 Operation of the Companies, Etc.
4.2.1 Until the Closing, each of the Companies shall operate its business
as presently operated and only in the ordinary course, and, consistent with such
operation, shall use best efforts to preserve its present employees, reputation
and business organization of the Companies and its relationship with persons
having business dealings with it.
4.2.2 Each of the Companies shall use best efforts to continue in effect,
until immediately following the completion of the Closing, all present insurance
coverage with respect to its assets, businesses and employees.
4.2.3 Each of the Companies shall comply with and shall not to be in
default or violation in any material respect under any law, regulation, decree
or order applicable to its businesses, operations or assets of the Companies.
Each of the Companies shall promptly notify the Buyer of any Environmental
Condition arising or discovered by it after the date hereof. Each of the
Companies agrees, and the Sellers warrant, that, from the date hereof through
and including the Closing Date, it will not take any action that adversely
affects the environmental condition of any Covered Property. Nothing in this
Section 4.2.3 shall be interpreted to expand the scope or terms of the Sellers'
representations and warranties with respect to environmental matters, including
without limitation Environmental Conditions.
4.2.4 Each of the Companies and the Sellers shall refrain from taking any
action, and shall not suffer to exist any event or occurrence, which would
render any representation and warranty of the Companies and the Sellers
contained in Section 3.1 inaccurate at any time between the date hereof and the
Closing Date, including as of the Closing Date, and shall promptly advise the
Buyer of any breach of any representation and warranty, covenant, condition or
obligation of the Companies or the Sellers hereunder. Without limiting the
generality of the foregoing, the Companies and the Sellers shall not make or
permit any distribution of property or assets of any of the Companies to the
Sellers (other than distributions to Sellers permitted by Section 2.4, ordinary
course of compensation payments and expense reimbursements to Sellers actively
engaged in employment by the Companies or fees and payments pursuant to the
non-competition and management services agreements set forth on Schedule 4.2.4
hereto), or declare, pay or set aside for payment any dividend (of any kind or
nature) or distribution with respect to shares of the capital stock of the
Companies.
4.3 Consents and Notices. Promptly after the date hereof, the Sellers shall
use their best efforts to obtain all consents, waivers, approvals and
authorizations which may be necessary to effectuate this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof, or to continue in effect and to assure that the Acquired Business and
the Buyer shall continue to be entitled to all of the benefits of the contracts,
leases, agreements, instruments, licenses, commitments, orders and quotations of
the Acquired Business including without limitation those consents, waivers,
approvals and authorizations described on Schedule 3.1.2 hereto, and shall give
all notices to third parties required to be given by the Companies and the
Sellers in contemplation and as a result of the transactions contemplated by
this Agreement, including without limitation those notices described on Schedule
3.1.2.
4.4 Competing Transactions. The Sellers shall not take any action, directly
or indirectly, to cause, promote or authorize any transaction competing or
interfering with any of the transactions contemplated by this Agreement,
including without limitation any merger, consolidation or reorganization,
acquisition or disposition of assets, tender offer or exchange offer.
4.5 Best Efforts to Satisfy Conditions. The Companies and the Sellers shall
use their best efforts to cause the conditions to the obligations of the Buyer
contained in Sections 5.1 and 5.3 to be satisfied to the extent that the
satisfaction of such conditions is in the control of the Companies and the
Sellers, and the Buyer shall use best efforts to cause the conditions to the
obligations of the Companies and the Sellers contained in Sections 5.2 and 5.3
to be satisfied to the extent that the satisfaction of such conditions is in the
control of the Buyer; however, the foregoing shall not constitute a limitation
upon the respective covenants and obligations of the Companies and the Sellers
and the Buyer otherwise expressly set forth in this Agreement.
4.6 Antitrust Law Compliance. The Companies and the Sellers and the Buyer
shall prepare and file with the United States Department of Justice
("Department") and the Federal Trade Commission ("FTC") any notification to this
Agreement and the transactions contemplated hereby pursuant to the HSR Act, or
any other statute, rule or regulation administered by the Department or the FTC.
The Companies, the Sellers and the Buyer shall comply promptly with any request
by the Department or FTC for additional documents or information and shall use
their best efforts to obtain early termination of the waiting period under the
HSR Act.
4.7 Non-Competition; Confidentiality; Disclosure of Information, Etc.
4.7.1 The following covenants are entered into for the purpose, among other
things, of assuring to the Buyer the benefit of the businesses and assets of the
Acquired Business, including without limitation the customer lists and the
business relationships and arrangements with contractors, customers, designers,
distributors, wholesalers, retailers and suppliers of the Acquired Business,
together with the goodwill associated with such businesses, lists, relationships
and arrangements. The Sellers shall not, without the prior written consent of
the Buyer, for a period of five years after the Closing Date, directly or
indirectly,*
(1) render consulting or advisory services to or
financially support in any manner, or be a proprietor, a director, an
officer, an employee, an agent, a partner, a shareholder (other than
ownership of less than one percent of the outstanding voting securities
of any entity whose voting securities are traded on a national
securities exchange, provided that any of the other restrictions
contained in this sentence are not applicable, and other than the
operations of the entities as described and set forth on Schedule 4.7.1
hereto with respect to the Sellers listed thereon) or a lender to, or
otherwise promote, any business, enterprise, person, firm, corporation,
association or other entity that competes directly or indirectly with
the Acquired Business, or any transferee of the Acquired Business,
(2) interfere with, disrupt or attempt to disrupt
existing or any then existing relationship, contractual or otherwise,
between the Buyer or the Acquired Business and any of their customers,
suppliers, clients, executives, employees or other persons with whom
the Buyer or the Acquired Business or any of their affiliates or
subsidiaries deal, or
(3) employ, solicit for employment, attempt to employ
or assist any other entity in employing or soliciting for employment
any employee or executive who is at that time employed by the Buyer or
the Acquired Business.
4.7.2 The Sellers shall not, directly or indirectly, without the specific
prior written consent of the Buyer, at any time after the date hereof, divulge
to any business, enterprise, person, firm, corporation, association or other
entity, or use for the Sellers's own benefit,
(1) any confidential information concerning the
businesses, affairs, customers, suppliers or clients of the Acquired
Business, or
(2) any data or statistical information of the
Acquired Business,
whether created or developed by the Companies or with respect to which the
Sellers may have knowledge or access, it being the intent of the parties hereto
to restrict the Sellers from disseminating or using any data or information
which is at the time of such use or dissemination unpublished and not readily
available or generally known to persons involved or engaged in any businesses of
the type engaged in by the Acquired Business.
4.7.3 Although the restrictions contained in Section 4.7.1 and 4.7.2 hereof
are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of the nature contained in
Sections 4.7.1 and 4.7.2 may fail for technical reasons, and accordingly if any
of such restrictions shall be adjudged to be void or unenforceable for whatever
reason, but would be valid if part of the wording thereof were deleted, or the
period thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 4.7.1 and 4.7.2 shall apply, at the election
of the Buyer, with such modifications as may be necessary to make them valid,
effective and enforceable in the particular jurisdiction in which such
restrictions are adjudged to be void or unenforceable.
4.7.4 The covenants contained in this Section 4.7 shall inure to the
benefit of the Buyer, any successor of the Buyer and each subsidiary of the
Buyer.
4.8 Covenants Regarding Taxation.
4.8.1 Returns and PaymentsReturns and Payments. (a) Sellers shall cause to
be prepared and filed all Tax returns and reports with respect to the Companies
for all Tax periods ending on or prior to the Closing Date. Sellers shall cause
to be timely paid all Taxes to which such returns relate for all periods covered
by such returns, except to the extent that an accrual for such Taxes is
reflected in the Closing Balance Sheet.
(b) The Buyer shall cause to be prepared and timely filed all Tax returns
of the Companies for taxable periods beginning before and ending after the
Closing Date ("Straddle Period Returns"). All such Straddle Period Returns shall
be prepared and all elections with respect to such returns shall be made, to the
extent permitted by law, in a manner consistent with prior practice with respect
to the Companies. The Buyer and the Sellers expect that all Straddle Period
Returns shall apply to Taxes other than Taxes imposed upon or measured by net
income, as to which Sellers have made the representations contained in Section
3.1.10(b).
(c) The Buyer shall cause to be paid timely all Taxes for the periods to
which the Straddle Period Returns relate. Sellers will pay to the Buyer an
amount equal to the Pre-Closing Taxes due with respect to any such Straddle
Period Returns filed by the Buyer, but only to the extent such Pre-Closing Taxes
exceed the amount accrued for Tax liabilities on the Financial Statements.
Pre-Closing Taxes shall be calculated on the basis of the taxable income of the
Companies as though the taxable year of the Companies terminated at the close of
business on the day immediately preceding the Closing Date, provided, however,
that in the case of a Tax not based on income, Pre-Closing Taxes shall be equal
to the amount of Tax for the taxable year multiplied by a fraction, the
numerator of which shall be the number of days from the beginning of the taxable
year through the day immediately preceding the Closing Date and the denominator
of which shall be the number of days in the taxable year. Any amounts owed by
the Sellers to the Buyer pursuant to this Section 4.8.1 shall be paid by the
Sellers within the later of five days of the Buyer's request therefor or five
days prior to the date on which Purchaser is required to cause to be paid the
related Tax liability.
4.8.2 Indemnification. The Sellers will indemnify and hold harmless the
Buyer and the Companies against any and all Tax liability in excess of the
amounts accrued therefor on the Closing Balance Sheet for (i) Taxes assessed
against the Companies with respect to all taxable periods ending on or prior to
the Closing Date, (ii) Pre-Closing Taxes that relate to a Straddle Period
Return, and (iii) federal, state and local income and franchise Taxes of any
member of any affiliated group of which any of the Companies is or were a member
for any taxable period by reason of its being severally liable for the entire
Tax of such affiliated group pursuant to Income Tax Regulations ss. 1.1502-6 or
any analogous state or local tax provision. The Buyer and the Sellers hereby
acknowledge and agree that the procedures set forth in Sections 7.1.3 and 7.1.7,
which hereby are incorporated by reference, shall apply with respect to the
Sellers' indemnification obligations under this Section 4.8.2.
4.8.3 Cooperation. After the Closing Date, the Buyer and the Sellers shall
make available to the other, as reasonably requested, and to any taxing
authority, all information, records or documents relating to Tax liabilities or
potential Tax liabilities of the Companies for all periods prior to or including
the Closing Date and shall preserve all such information, records and documents
until the expiration of any applicable statute of limitations or extensions
thereof. Notwithstanding any other provisions hereof, each party shall bear its
own expenses in complying with the foregoing provisions.
4.9 ISRA Compliance. The Sellers, at the Companies' cost and expense, shall
provide Buyer with sufficient evidence to demonstrate the non-applicability of
ISRA.
4.10 Certain Environmental Matters. (a) With respect to any Remedial Action
effected by the Buyer and relating to an Environmental Condition identified by
the Phase II investigations conducted by the Buyer's environmental consultant at
each of the Sites and Locations set forth on Schedule 4.10, the costs and
expenses of such Remedial Action shall be borne by the Buyer and the Sellers as
follows:
(i) The Buyer shall be responsible for the first
$25,000 for each Site;
(ii) The Buyer, on the one hand, and the Sellers, on
the other, shall share equally all costs and expenses in excess of
$25,000 for each Site, provided that the Sellers total share of costs
and expenses under this Section 4.10 with respect to each Location
shall be limited to $100,000 for such Location.
The Sellers' responsibilities for funding remedial actions under this Section
4.10 shall not be subject to the Basket (as defined in Section 7.1.2 hereof).
The Buyer may, but need not exclusively, seek recovery of Sellers' portion of
costs and expenses of the Remedial Actions taken pursuant to this Section 4.10
from the Escrow Amount.
4.11 Certain Insurance Matters. (a) With respect to any workmans'
compensation, automobile or general liability insurance premium increases with
respect to the Companies after the Closing based on retrospective policies or
occurrences or insurance audits for any period prior to Closing, the Sellers
shall be responsible for and shall reimburse to the Buyer such premium increases
(after giving effect to any anticipated federal and state tax benefit to the
Companies or the Buyer attributable to such premium increase and any anticipated
federal and state tax liability to the Companies or the Buyer attributable to
Sellers' payments hereunder) up to an aggregate amount equal to $500,000 less
any reserve for premium increases set forth on the Closing Balance Sheet, less
the anticipated federal and state tax benefit to the Companies or the Buyer
attributable to a $500,000 aggregate premium increase and plus any anticipated
federal and state tax liability to the Companies or the Buyer attributable to a
Sellers' payment hereunder with respect to a $500,000 aggregate premium increase
(such amount, as reduced in accordance with subsection (b) hereof by premium
increases paid, being referred to as the "Sellers' Premium Amount"). The parties
agree that the applicable combined federal and state tax rate for purposes of
this Section 4.11 shall be 38%.
(b) Any premium increases paid under this Section 4.11 shall be applied to
reduce the Sellers' Premium Amount. In addition, Sellers shall be entitled to
receive all premium refunds (after giving effect to any anticipated tax
liability to the Companies or Buyer attributable to such premium refunds) so
resulting from periods prior to Closing at the end of all applicable
retrospective periods in accordance with subsection (d) hereof.
(c) The Buyer may, but need not exclusively, seek recovery of any payments
from Sellers hereunder from the Escrow Amount. The parties agree that the then
existing Sellers' Premium Amount as of the Final Release Date (as such term is
defined in the Escrow Agreement) shall be, and may be submitted as, a Claim and
an Aggregate Amount in Dispute (as such terms are defined in the Escrow
Agreement) under the Escrow Agreement until any remaining applicable
retrospective insurance periods are finalized.
(d) At the end of all applicable retrospective periods and after payment of
all applicable premium increases (not to exceed in the aggregate the initial
Sellers' Premium Amount), any remaining Sellers' Premium Amount held under the
Escrow Agreement shall be released to the Sellers and all premium refunds (after
giving effect to any anticipated tax liability to the Companies or Buyer
attributable to such premium refunds) so resulting from periods prior to Closing
shall be refunded to the Sellers.
5. CONDITIONS OF CLOSING
5.1 Conditions of Obligations of the Buyer. The obligations of the Buyer to
consummate the purchase and sale under this Agreement are subject to the
satisfaction of the following express conditions, each of which may be waived by
the Buyer.
5.1.1 Representations and Warranties; Performance of Obligations. The
representations and warranties of the Companies and the Sellers set forth in
Section 3.1 hereof that are qualified as to materiality shall have been and be
true and correct in all respects and the representations and warranties of the
Companies and the Sellers set forth in Section 3.1 hereof that are not so
qualified shall have been made and be true and correct in all material respects,
in each case at all times commencing with the date of this Agreement and ending
with and on the Closing Date as though made on and as of the Closing Date,
except to the extent such representations and warranties speak as of an earlier
date. The Companies and the Sellers shall have performed the agreements and
obligations required to be performed by them under this Agreement prior to the
Closing Date. Without limiting the generality of the foregoing, the Companies
and the Sellers shall have obtained all consents, waivers, approvals and
authorizations, and shall have given all notices to third parties, listed on
Schedule 3.1.2 or Schedule 4.3 hereto or required to be obtained or given
pursuant to Section 4.3 hereof, or necessary to convey, sell, transfer, assign
and deliver the Acquired Business to the Buyer, and its successors and assigns
forever, free and clear of all Liens of every nature and description whatsoever.
5.1.2 Certificates and Instruments of Transfer. The Sellers shall have
delivered to the Buyer certificates representing the Shares, accompanied by duly
executed stock powers, with all required stock transfer tax stamps affixed.
5.1.3 Opinion of Counsel to the Sellers. The Buyer shall have received the
opinion of Kilpatrick & Cody, in the form of Exhibit F hereto.
5.1.4 Financial Statements. The Companies shall have delivered to the Buyer
the unaudited consolidated balance sheet of the Companies as of July 31, 1996,
and the related unaudited combined statements of income and of cash flows for
the month of July 1996 and the seven month period ended July 31, 1996. Such
unaudited financial statements shall:
(1) be prepared in a manner consistent with the
manner in which the 1995 Audited Financial Statements and the Interim
Financial Statements shall have been prepared; and
(2) be prepared in conformity with generally accepted
accounting principles consistently applied, be correct and complete in
all respects and present fairly the consolidated financial position of
the Companies as of the date of such statements and the results of
operations of the Companies for the period covered by such statements,
subject to normal year-end recurring adjustments;
and the Buyer shall have received a certificate of the Companies and the Sellers
to that effect.
5.1.5 No Adverse Change. Neither the business, operations, financial
condition, assets, liabilities nor results of operations of the Companies or the
Acquired Business as of the Closing Date shall have changed in a materially
adverse manner from that reflected in the Interim Financial Statements.
5.1.6 Escrow Agreement. The Sellers, the Companies and the Buyer shall have
entered into an escrow agreement with the Escrow Agent (as set forth therein),
substantially in the form of Exhibit C.
5.1.7 Employment Agreements. James B. Stevens and Michael S. Stevens shall
have entered into employment agreements, substantially in the form of Exhibits G
and H, respectively.
5.1.8 ISRA Non-Applicability. The Sellers and the Companies shall have
obtained from the New Jersey Department of Environmental Protection the "Letter
of Non-Applicability" referred to in Section 3.1.2 hereof.
5.1.9 Resignations. All of the directors and officers of each of the
Companies shall have tendered to the Companies his or her resignation as a
director and officer, as the case may be, such resignation to be effective as of
immediately following the Closing.
5.1.10 Other Matters. The Companies and the Sellers shall have furnished,
or caused to be furnished, to the Buyer, in form and substance satisfactory to
counsel to the Buyer, such certificates and other evidence as the Buyer may have
reasonably requested as to the satisfaction of the conditions contained in this
Section 5.1 and as to such other matters as the Buyer may reasonably request.
5.2 Conditions of Obligations of the Sellers. The obligations of the
Sellers to consummate the purchase and sale under this Agreement are subject to
the satisfaction of the following express conditions, each of which may be
waived by the Sellers.
5.2.1 Representations and Warranties; Performance of Obligations. The
representations and warranties of the Buyer set forth in Section 3.2 hereof that
are qualified as to materiality shall have been and be true and correct in all
respects and the representations and warranties of the Buyer set forth in
Section 3.2 hereof that are not so qualified shall have been and be true and
correct in all material respects, in each case at all times commencing with the
date of this Agreement and ending with and on the Closing Date as though made on
and as of the Closing Date, except to the extent such representations and
warranties speak as of an earlier date. The Buyer shall have performed the
agreements and obligations required to be performed by it under this Agreement
prior to the Closing Date.
5.2.2 Opinion of Counsel to the Buyer. The Sellers shall have received the
opinion of Dechert Price & Rhoads, in the form of Exhibit I hereto.
5.2.3 Closing Purchase Price. The Buyer shall have transferred the Purchase
Price as provided in Section 2.1.
5.2.4 Other Matters. The Buyer shall have furnished, or caused to be
furnished, to the Sellers, in form and substance reasonably satisfactory to
counsel to the Sellers, such certificates and other evidence as the Sellers may
have reasonably requested as to the satisfaction of the conditions contained in
this Section 5.2 and as to such other matters as the Sellers may reasonably
request.
5.3 Conditions of Obligations of the Buyer and the Sellers. The respective
obligations of the Sellers and the Buyer to consummate the purchase and sale
under this Agreement are subject to the satisfaction of the following express
conditions.
5.3.1 HSR Act. The waiting period, including any extensions, shall have
expired, or shall have been earlier terminated, under the HSR Act.
5.3.2 No Injunctions, Restraints or Litigation. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the purchase and sale hereunder shall be in effect; provided,
however, that the party or parties invoking this condition shall use reasonable
efforts to have any such order or injunction vacated. There shall not be
threatened, instituted or pending any action, proceeding, application or
counterclaim by any governmental entity before any court or governmental
regulatory or administrative agency, authority or tribunal (i) which if
adversely determined would have a material adverse effect on the Companies or
the ability of any party to this Agreement to perform its obligations hereunder
or (ii) which challenges or seeks to challenge, restrain or prohibit the
consummation of the purchase and sale hereunder.
6. CLOSING
6.1 Closing Date. The closing for the consummation of the purchase and sale
contemplated by this Agreement (the "Closing") shall, unless another date or
place is agreed to in writing by the Sellers and the Buyer, take place at the
offices of Dechert Price & Rhoads, 477 Madison Avenue, New York, New York, at
10:00 o'clock in the forenoon (New York City time), on the date (the "Closing
Date") which is the later of August 30, 1996 or a date, mutually satisfactory to
the Sellers and the Buyer, within 10 days after the expiration of any waiting
period under the HSR Act or the early termination thereof. The parties agree
that the effective time of Closing shall be 12:01 a.m. on the Closing Date.
6.2 Cut-Off Date. In the event that the Closing shall not have occurred on
or before September 30, 1996, then the Buyer or the Sellers shall have the right
(provided in each case that such person or persons is not in breach of its or
their obligations under this Agreement), exercisable at any time after such date
by notice in writing, to terminate this Agreement and its or their obligations
hereunder. In the event that, prior to September 30, 1996, any party (the
"Breaching Party") is in material breach of its or their obligations under this
Agreement (and such breach cannot be reasonably cured, or the Breaching Party is
not taking reasonable efforts to cure such breach, and, in either event, such
breach is not waived), then, so long as any other party (the "Non-Breaching
Party") entitled to the benefit of such obligations is not in default of its or
their obligations under this Agreement, the Non-Breaching Party shall have the
right to terminate this Agreement (unless such breach is or has been cured prior
to the giving of such notice of termination).
6.3 Effect of Termination. No termination of this Agreement, whether
pursuant to this Section 6 or otherwise, shall terminate or impair any claim by
the Buyer against the Sellers, or by the Sellers against the Buyer, based upon
any breach by the other of its or their obligations if such breach serves as one
or more reasons for the failure of the conditions contained in Section 5 hereof
to have been satisfied.
7. MISCELLANEOUS
7.1 Indemnification Generally.
7.1.1 The Sellers, jointly and severally, shall indemnify the Buyer
against, and hold the Buyer harmless from, at all times after the date hereof,
any and all loss, damage (including without limitation punitive and
consequential damages), claim, liability, penalty, payment or obligation and all
costs and expenses (including without limitation reasonable legal fees and
including without limitation all costs and expenses incurred to effect, or
relating to, any investigation or Remedied Action) ("Claims"), incurred,
suffered, sustained or required to be paid by the Buyer, resulting from, arising
out of, based upon or in respect of:
(1) any breach of a representation or warranty that
is qualified as to materiality, or any material breach of a
representation or warranty that is not so qualified, made by the
Companies and the Sellers in this Agreement or in any agreement,
document or instrument executed and delivered pursuant hereto or in
connection with the closing of the transactions hereunder; or
(2) any material breach of any of the agreements or
covenants made by the Sellers in this Agreement or the Companies in
Section 4 hereof.
The Sellers' indemnification obligation under this Section 7.1.1 for Claims
shall be after giving effect to any anticipated federal and state tax benefit to
the Buyer attributable to such Claim and any anticipated federal and state tax
liability to the Buyer attributable to the indemnification proceeds of such
Claim; and the parties agree that the applicable combined federal and state tax
rate for such purpose shall be 38%. To the extent that a liability or lack of an
asset is recorded on the Closing Balance Sheet, the Buyer shall not be entitled
to assert a Claim under this Section 7.1.1 for such liability or lack of an
asset.
7.1.2 The Buyer shall not be entitled to assert any claim for
indemnification against the Sellers in respect of a breach of any representation
and warranty or covenant under Section 7.1.1 or the costs and expenses of
remediation (other than the Sellers' obligations under Section 4.10 hereof, to
which the Basket shall not apply) until such time as all claims of the Buyer for
indemnification as aforesaid against the Sellers shall exceed $175,000 (the
"Basket"), at which time all claims for indemnification against the Sellers may
be asserted. Further, the dollar amount of the indemnification obligations of
the Sellers in respect of claims under said clause (1) (other than claims which
are also asserted under clause (2) of Section 7.1.1, which shall not be subject
to the limitation described in this sentence) for breaches of representations
and warranties as aforesaid may not exceed the sum of the Purchase Price.
7.1.3 The Sellers shall have the right, but not the obligation, at their
own expense, to contest, defend or litigate, and to retain counsel of its choice
in connection therewith, any claim, action, suit or proceeding by any third
party alleged or asserted against the Buyer in respect of, resulting from,
related to or arising out of any Claim for monetary damages only under Section
7.1.1. hereof, if the Sellers give prompt notice of their intention to do so to
the Buyer. If the Sellers give such prompt notice and promptly assume such
defense, the Sellers shall not be required to reimburse the Buyer for its costs
and expenses incurred prior to the assumption by the Sellers of such defense. In
the event that the Sellers shall assume the defense of any such claim, action,
suit or proceeding as aforesaid, the Buyer shall nevertheless be permitted to
continue to participate in any such claim, action, suit or proceeding with
counsel of its choice at its expense. The Sellers shall not be entitled to
settle or compromise any such claim, action, suit or proceeding without the
prior written consent of the Buyer, which consent shall not be unreasonably
withheld; except that the consent of the Buyer shall not be required if such
settlement would entail solely the payment of cash damages payable in full (and
not by installment or on any deferred basis) for which the Sellers shall be
responsible and shall effect payment simultaneously with the execution of any
settlement agreement and releases and provided that such settlement does not
entail any admission or stipulation which might materially adversely affect the
Buyer or the Acquired Business (or their successors and assigns), or the
business, financial condition, results of operations, operations or prospects
thereof, subsequent to the Closing Date.
7.1.4 The Sellers acknowledge and agree that the Buyer may continue to (but
shall not be obligated to) operate the Acquired Business in the same manner
conducted by the Companies prior to the date hereof, and such continuation shall
not be construed to release, discharge or constitute a defense of the Sellers of
or to their obligations under this Section 7.1.
7.1.5 The Buyer shall indemnify the Sellers against, and hold the Sellers
harmless from, at all times after the Closing Date, any and all Claims incurred,
suffered, sustained or required to be paid by the Sellers, resulting from,
arising out, based upon or in respect of:
(1) any breach of a representation or warranty that
is qualified as to materiality, or any material breach of a
representation or warranty that is not so qualified, made by the Buyer
in this Agreement or in any agreement, document or instrument executed
and delivered pursuant hereto or in connection with the closing of the
transactions contemplated hereunder; or
(2) any material breach of any covenant made by the
Buyer in or pursuant to this Agreement.
The Buyer's indemnification obligation under this Section 7.1.5 for Claims shall
be after giving effect to any anticipated federal tax benefit to the Sellers
attributable to such Claim and any anticipated federal tax liability to the
Sellers attributable to the indemnification proceeds of such Claim; and the
parties agree that the applicable federal tax rate for such purpose shall be
35%.
7.1.6 The Buyer shall have the right, but not the obligation, at its own
expense, to contest, defend or litigate, and to retain counsel of its choice in
connection therewith, any claim, action, suit or proceeding by any third party
alleged or asserted against the Sellers in respect of, resulting from, related
to or arising out of any Claim under Section 7.1.5 hereof, if the Buyer gives
prompt notice of its intention to do so to the Sellers. If the Buyer gives such
prompt notice and promptly assumes such defense, the Buyer shall not be required
to reimburse the Sellers for their costs and expenses incurred prior to the
assumption by the Buyer of such defense. In the event that the Buyer shall
assume the defense of any such claim, action, suit or proceeding as aforesaid,
the Sellers shall nevertheless be permitted to continue to participate in any
such claim, action, suit or proceeding with counsel of their choice at their
expense. The Buyer shall not be entitled to settle or compromise any such claim,
action, suit or proceeding without the prior written consent of the Sellers,
which consent shall not be unreasonably withheld.
7.1.7 The Buyer, the Companies or the Sellers shall give to each other
prompt notice of the assertion by any third party of any claim against the
Buyer, the Companies or the Sellers with respect to which any of them intend to
make a claim for indemnification under this Section 7.1, including without
limitation claims comprising the Basket. Any notice of any claim pursuant to
this Section 7.1 shall set forth the dollar amount thereof sought by the party
seeking indemnification, unless the amount of such claim is not yet determinable
(and such notice shall so state), and a statement of the facts underlying such
claim in reasonably sufficient detail (to the extent such facts are readily
available to the party claiming indemnification) so as to inform the party
against which indemnification is sought as to the basis of such claim and the
manner in which the amount of such claim was computed. The Buyer, the Companies
and the Sellers shall cooperate with each other in any investigation by the
others of any such claim.
7.1.8 All representations and warranties contained in this Agreement or
made pursuant hereto shall survive the closing of the transactions hereunder
until the second anniversary of the Closing Date, except that the
representations and warranties of the Sellers contained in Sections 3.1.10,
3.1.12 and 3.1.18 [tax, ERISA and title to Shares] hereof shall survive without
limitation as to time. The expiration of any representation and warranty shall
not affect any claim made prior to the date of such expiration, and no claim
shall be made with respect to a representation and warranty after its
expiration. All covenants contained in Articles 1, 2, 4, 6 and 7 of this
Agreement shall survive the closing of the transactions hereunder without
limitation as to time, except to the extent any such covenant is expressly
limited as to time.
7.1.9 Exclusive Remedy. The indemnification remedies under this Section 7.1
shall be the exclusive remedy to the Buyer and the Sellers with respect to
Claims under this Agreement for breaches of representations and warranties and
breaches of covenants made under this Agreement.
7.2 Environmental Remedial Action Procedures. In the event that (i) the
Sellers breach a representation or warranty with regard to an environmental
matter, (ii) the Buyer asserts a claim against the Sellers under Section 7.1.1
hereof for such breach and (iii) Remedial Action is required by a governmental
agency with jurisdiction, by a third party claim or by applicable law with
respect to an environmental matter at a Covered Property, then the Buyer will
permit the Sellers to manage and/or implement the Remedial Action (the "On-Site
Activities"), subject to the following conditions:
(a) Sellers agree that in exercising their responsibilities
under these provisions, they shall use their best efforts to avoid and minimize
any damage to real or personal property or harm to any persons, and to minimize
any interference with or disruption of the Buyer's operations and business and
will indemnify and hold the Buyer harmless from any negligence or willful
misconduct in performing Remedial Actions. To this end, Sellers and their
respective environmental consultants shall consult fully with Buyer in the
planning and execution of all On-Site Activities. The Buyer, on the one hand,
and the Sellers' Representatives, on the other hand, shall each designate from
time to time an individual responsible for communication with each party and
their environmental consultants with respect to On-Site Activities and notify
each other of the identity of such individual.
(b) The Sellers shall select an environmental consultant(s)
who is reasonably satisfactory to the Buyer for the purpose of performing the
Remedial Action ("Environmental Consultant").
(c) All Remedial Action shall meet the "Appropriate
Remediation Standard" (as defined below).
(d) The Sellers shall provide the Buyer with copies of written
proposals with respect to any proposed On-Site Activities and the results of any
sampling and analysis (including any status reports of work in progress) or
reports required to be submitted to any governmental authority or person in
connection with conducting the On-Site Activities. The Buyer shall be provided
with a reasonable opportunity to review and comment on any of the foregoing
prior to submission to any governmental authority and/or implementation by the
Sellers. The Sellers shall incorporate all reasonable suggestions by the Buyer.
The Sellers shall provide the Buyer with reasonable advance notice of any
meeting to be held with any governmental authority having jurisdiction regarding
such On-Site Activities. Unless such governmental authority objects, the Buyer
shall have the right to attend and participate in any such meeting.
(e) The Sellers agree to diligently and expeditiously perform
or cause to be performed all On-Site Activities to completion and in compliance
with all applicable Environmental Laws and the Buyer's reasonable health and
safety and access requirements.
(f) Nothing contained herein shall prohibit or prevent the
Buyer from effecting at Sellers' cost any Remedial Action which is required to
be taken or to be made by Sellers under this Agreement but which the Sellers
fail to take (or to make) in a reasonably timely fashion after reasonable
notice, under the circumstances, has been given by the Buyer to Sellers and
which Remedial Action is required by a governmental authority with jurisdiction,
as required by applicable Environmental Laws, or is necessary to abate an
imminent threat to public or employee health or safety or a threat of injury to
property.
(g) The Remedial Action shall be deemed completed upon receipt
by the Buyer or Sellers from the appropriate governmental authority with
jurisdiction of a "no further action," "clean closure" or other similar letter
or written statement providing that such governmental authority will not require
further Remedial Action or, in the event that the Remedial Action was not
required to be performed under the supervision of a governmental authority or
for whatever reason the applicable governmental authority does not issue or
ceases as a practice to issue such a letter or written statement, then the
Remedial Action shall be deemed completed upon receipt by the Buyer of a
certification from the Environmental Consultant that implemented the Remedial
Action stating that (i) the Remedial Action has been fully implemented; and (ii)
the "Appropriate Remediation Standard" (as defined below) has been achieved.
(h) The Sellers, as soon as practicable upon completion of any
On-Site Activities, shall restore any adversely affected portions of the
property to its pre-disturbed condition such that the Buyer can continue its
operations in the manner in which they were conducted immediately prior to the
commencement of the On-Site Activities.
(i) The provisions of this Section 7.2 in no way limit the
Sellers' obligations to indemnify the Buyer pursuant to the terms of this
Agreement except that out of pocket costs reasonably and properly incurred by
the Sellers in satisfying its obligations under this Section shall be applied in
the calculation of the aggregate monetary indemnity limitation in Section 7.1.2
hereof.
(j) For purposes of this Section 7.2, "Appropriate Remediation
Standard" shall mean: publicly available or routinely applied remediation
standards, guidelines or policies, regulations, ordinances or other requirements
of Environmental Laws imposed by any applicable governmental agency with
jurisdiction. In the event that a governmental authority does not impose such a
standard, then an applicable remediation standard which has been published or
promulgated by the governmental authority with jurisdiction as of the date of
the Remedial Action shall be presumed to apply. The Sellers will make best
efforts to avoid the selection of any standard that will unreasonably interfere
with the Buyer's operation of the Acquired Businesses. Provided, however, that
in no event will the Appropriate Remediation Standard be at a level for which
the Buyer, or, for any leased Covered Property, the applicable lessor, would be
required to impose or implement institutional or structural controls or access
restrictions, unless the only reasonable Appropriate Remediation Standard
applicable to the Sellers Remedial Action performed in accordance with this
Section 7.2 specifically requires such controls or restrictions. In such event,
the Sellers shall be responsible for all costs and expenses associated with such
controls or restrictions and for obtaining any required third party consents.
7.3 Further Actions. From time to time, as and when requested by the Buyer,
the Sellers shall execute and deliver, or cause to be executed and delivered,
such documents and instruments and shall take, or cause to be taken, such
further or other actions as may be deemed necessary or desirable to carry out
the intent and purposes of this Agreement, to transfer, assign and deliver to
the Buyer, and its successors and assigns, the Acquired Business (or to evidence
any of the foregoing) and to consummate and give effect to the other
transactions, covenants and agreements contemplated hereby.
7.4 Broker's Fees. The Sellers (on behalf of themselves and the Companies)
and the Buyer represent and warrant to the other that they have and it has no
obligation or liability to any broker or finder by reason of the transactions
which are the subject of this Agreement.
7.5 Expenses. Except as otherwise specifically provided herein, the Sellers
and the Buyer shall each bear their own legal fees and other costs and expenses
with respect to the negotiation, execution and the delivery of this Agreement
and the consummation of the transactions hereunder, and the assets of the
Acquired Business shall not be reduced or impaired by the payment or accrual of
any costs and expenses incurred in connection with the negotiation, execution
and the delivery of this Agreement and the consummation of the transactions
hereunder; provided, however, that the Companies shall pay the fees,
out-of-pocket costs and expenses of Kilpatrick & Cody, counsel to the Companies
and the Sellers, incurred in connection with the negotiation, execution and the
delivery of this Agreement and the consummation of the transactions hereunder.
7.6 Entire Agreement. This Agreement, which includes the Exhibits and
Schedules hereto and the other documents, agreements and instruments executed
and delivered pursuant to or in connection with this Agreement, contains the
entire agreement between the Buyer, the Companies and the Sellers with respect
to the transactions contemplated by this Agreement and supersedes all prior
arrangements or understandings with respect thereto.
7.7 Descriptive Headings. The descriptive headings of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
7.8 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand; (ii) four days subsequent to mailing if
mailed by certified or registered mail, with postage prepaid, in the continental
United States; (iii) two days subsequent to pick up by such courier if sent by a
nationally- or internationally-recognized overnight courier service that
regularly maintains records of items picked up and delivered or; (iv) when
transmitted if sent by telecopier, provided that a written acknowledgment of
receipt signed by or on behalf of the recipient of the telecopy is transmitted
back to the sender by the recipient as follows:
If to the Buyer or the Sellers after the Closing:
Darling International Inc.
251 O'Connor Ridge Boulevard
Suite 300
Irving, Texas 75038
Attention: President
Telecopy: 214-281-4449
with a copy to:
Dechert Price & Rhoads
477 Madison Avenue
New York, New York 10022
Attention: Fredric J. Klink, Esq.
Telecopy: 212-308-2041
If to the Sellers:
Harold Oelbaum
Kane-Miller Corp.
555 White Plains Road
Tarrytown, New York 10591
Telecopy: 914-631-4707
and
James B. Stevens
2191 Northlake Parkway
Suite 116
Tucker, Georgia 30084
Telecopy: 770-939-8410
with a copy to:
Kilpatrick & Cody
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530
Attention: Harold E. Abrams, Esq.
Telecopy: 404-815-6555
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
7.9 Governing Law7.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Georgia
(other than the choice of law principles thereof). Any action, suit or other
proceeding initiated by the Buyer or the Sellers against the other under or in
connection with this Agreement may be brought in the Federal courts for the
Northern District of Georgia or any state court in Fulton County, Georgia, as
the party bringing such action, suit or proceeding shall elect, having
jurisdiction over the subject matter thereof. The Buyer and the Sellers hereby
submit themselves to the jurisdiction of any such court.
7.10 Remedies7.10 Remedies. The parties hereto acknowledge
that the remedy at law for any breach of the obligations undertaken by the
parties hereto is and will be insufficient and inadequate and that the parties
hereto shall be entitled to equitable relief, in addition to remedies at law. In
the event of any action to enforce the provisions of this Agreement, the Sellers
shall waive the defense that there is an adequate remedy at law. The Sellers
acknowledge that the Acquired Business constitutes unique assets which cannot be
readily obtained on the open market. Without limiting any remedies the Buyer may
otherwise have, in the event the Sellers refuse to perform their obligations
under this Agreement, the Buyer shall have, in addition to any other remedy at
law or in equity, the right to specific performance.
7.11 Appointment of the Sellers' Representatives; Enforcement of Rights,
Benefits and Remedies. (a) Each Seller hereby irrevocably constitutes and
appoints Harold Oelbaum and James B. Stevens, and each of them individually, as
the Sellers' Representatives for the purpose of performing and consummating the
transactions contemplated by this Agreement. The appointment of the Sellers'
Representatives is coupled with an interest and all authority hereby conferred
shall be irrevocable and shall not be terminated by any or all of the Sellers
without the consent of the Buyer, which consent may be withheld for any reason,
and each of the Sellers' Representatives is hereby authorized and directed to
perform and consummate all of the transactions contemplated by this Agreement.
Not by way of limiting the authority of the Sellers' Representatives, each and
all of the Sellers, for themselves and their respective heirs, executors,
administrators, successors and assigns, hereby authorize the Sellers'
Representatives, acting together, to:
(1) waive any provision of this Agreement which the
Sellers' Representative deems necessary or desirable;
(2) execute and deliver on their behalf all documents
and instruments which may be executed and delivered pursuant to this
Agreement, including without limitation the Shares and the stock powers
with respect thereto;
(3) make and receive notices and other communications
pursuant to this Agreement or the Escrow Agreement and service of
process in any legal action or other proceeding arising out of or
related to this Agreement or any of the transactions hereunder;
(4) settle any dispute, claim, action, suit or
proceeding arising out of or related to this Agreement or any of the
transactions hereunder;
(5) receive and distribute the Purchase Price;
(6) appoint or provide for successor agents; and
(7) pay expenses incurred or which may be incurred by
or on behalf of the Sellers in connection with this Agreement or the
Escrow Agreement.
(b) In the event of a deadlock between the Sellers'
Representatives, Roy Abrahamson, or, if Roy Abrahamson shall fail or refuse so
to act, Harold E. Abrams, shall act as a third Sellers' Representative for the
sole purpose of resolving such a deadlock. In the event that both Roy Abrahamson
and Harold E. Abrams shall fail or refuse to act as such third Sellers'
Representative, the Sellers shall elect such third Sellers' Representative by
the vote of Sellers who held, as shown on Exhibit A hereto, a simple majority in
interest of all of the Shares of IPC. If the Sellers fail to elect a third
Sellers Representative within a reasonable period of time, not to exceed 30
days, the Buyer may select the third Sellers Representative from among the
remaining Sellers. The determination of the third Sellers' Representative with
respect to the matter in deadlock shall be final and binding upon the Sellers
and the existing Sellers' Representatives.
(c) In the event of the failure or refusal of Harold Oelbaum
to act as the Class A Representative, or upon the death of Harold Oelbaum, the
Sellers hereby appoint Stanley B. Kane to act as the Class A Representative with
the same force and effect as the appointment of Harold Oelbaum as the Class A
Representative. In the event of the inability, failure or refusal of Harold
Oelbaum or Stanley B. Kane to act as the Class A Representative, or in the event
of the death of Harold Oelbaum and Stanley B. Kane or any successor, the Sellers
promptly shall appoint one of the Sellers as the Class A Representative for
purposes of this Section 7.12 by action of Sellers who held a majority in
interest of the Shares of Class A Common Stock of IPC and ITSI, as set forth on
Exhibit A hereto. Failing such an appointment within 30 days of such inability,
failure, refusal or death, the Buyer may, by written notice to the Sellers at
the last address of the Sellers applicable for purposes of Section 7.10 hereof,
designate one of the Sellers formerly holding Shares of Class A Common Stock of
IPC and ITSI as the Class A Representative.
(d) In the event of the failure or refusal of James B. Stevens
to act as the Class B Representative, or upon the death of James B. Stevens, the
Sellers hereby appoint Michael S. Stevens to act as the Class B Representative
with the same force and effect as the appointment of James B. Stevens as the
Class B Representative. In the event of the inability, failure or refusal of
James B. Stevens or Michael S. Stevens to act as the Class B Representative, or
in the event of the death of James B. Stevens and Michael S. Stevens or any
successor, the Sellers promptly shall appoint one of the Sellers as the Class B
Representative for purposes of this Section 7.12 by action of Sellers who held a
majority in interest of the Shares of Class B Common Stock of IPC and ITSI, as
set forth on Exhibit A hereto. Failing such an appointment within 30 days of
such inability, failure, refusal or death, the Buyer may, by written notice to
the Sellers at the last address of the Sellers applicable for purposes of
Section 7.10 hereof, designate one of the Sellers formerly holding Shares of
Class B Common Stock of IPC and ITSI as the Class B Representative.
(e) Any claim, action, suit, or other proceeding, whether in
law or equity, to enforce any right, benefit or remedy granted to the Sellers
under this Agreement may be asserted, brought, prosecuted or maintained only by
the Sellers' Representatives, acting together. Any claim, action, suit or other
proceeding, whether in law or equity, to enforce any right, benefit or remedy
granted under this Agreement, including without limitation any right of
indemnification provided in Section 7 hereof, may be asserted, brought,
prosecuted or maintained by the Buyer against the Sellers or the Sellers'
Representatives by service of process on the Sellers' Representatives and
without the necessity of serving process on, or otherwise joining or naming as a
defendant in such claim, action, suit or other proceeding, any Seller. With
respect to any matter contemplated by this Section 7.12, the Sellers shall be
bound by any determination in favor of or against the Sellers' Representatives
or the terms of any settlement or release to which the Sellers' Representatives
shall become a party.
7.12 Termination of Shareholders Agreements and Rights to Purchase the
Shares. Each of the Sellers and the Companies hereby terminates, effective and
contingent upon the Closing, the Shareholders Agreements to which such Seller or
Company is party and any other shareholders' agreements and option or warrant
agreements existing between and among the Sellers with respect to any of the
Companies, and each Seller waives any right of purchase with respect to the
Shares owned by any other Seller.
7.13 Waivers and Amendments. Any waiver of any term or condition of this
Agreement, or any amendment or supplementation of this Agreement, shall be
effective only if in writing. A waiver of any breach or failure to enforce any
of the terms or conditions of this Agreement shall not in any way affect, limit
or waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of this Agreement.
7.14 Third Party Rights. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any employee of
the Companies, third party or other person, and this Agreement shall be
effective only as between the parties hereto, their successors and permitted
assigns.
7.15 Illegalities. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions of this Agreement
shall not, at the election of the party for whose benefit the provision exists,
be in any way impaired.
<PAGE>
7.16 Exhibits. Reference in any Exhibit or Schedule hereto to documents
having been delivered to the Buyer or its counsel shall not be deemed to be an
acknowledgement by the Buyer or its counsel that true, correct and complete
copies of such documents have been received by the Buyer or its counsel. All
Exhibits or Schedules attached hereto are hereby expressly made a part of this
Agreement as though fully set forth herein and, disclosures on any Exhibit or
Schedule shall be deemed a disclosure on other Exhibits or Schedules, where
applicable, as though fully set forth therein. All references herein to the
terms of "this Agreement", "hereunder", "herein", "hereby" or "hereto" shall be
deemed to refer to this Agreement and to all such Exhibits and Schedules.
[SIGNATURE PAGE IS THE NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement on and as of the date first above written.
DARLING INTERNATIONAL INC.
By:
--------------------------
INTERNATIONAL PROCESSING
CORPORATION
By:
--------------------------
INTERNATIONAL TRANSPORTATION
SERVICE, INC.
By:
--------------------------
<PAGE>
SELLING SHAREHOLDERS
- --------------------------- -------------------------------
Joan Abrahamson Katherine Kane
- --------------------------- -------------------------------
Priscilla Kane Hellweg Betsy Kane-Harnett, as
Trustee U/A dated 4/19/91
F/B/O Betsy Kane-Harnett
- --------------------------- -------------------------------
Ticia Kane Paul Kane
- --------------------------- -------------------------------
Wendy Robbins Harold Oelbaum
- --------------------------- -------------------------------
Nancy Oelbaum Louise Oelbaum Rubenfeld
- --------------------------- -------------------------------
Andrew Oelbaum Jennifer Oelbaum
- --------------------------- -------------------------------
James B. Stevens Michael S. Stevens
- --------------------------- -------------------------------
Judith A. Stevens James B. Stevens, as
Trustee of the Max Stevens
Accumulation Trust
- --------------------------- -------------------------------
James B. Stevens, as Trustee Deborah Brown
of the Abigail Stevens
Accumulation Trust
- --------------------------- -------------------------------
Michael Stevens, as Michael Stevens, as
Custodian for Amanda Custodian for Corey
Brown-Stevens Brown-Stevens
- --------------------------- -------------------------------
Mark Cowan Barry Cowan
<PAGE>
A-3
Exhibit A
INTERNATIONAL PROCESSING CORPORATION
Class A Common Stock
Shareholders Number of Shares
- ------------ ----------------
Joan Abrahamson 75,000
Katherine Kane 120,250
Priscilla Kane Hellweg 120,250
Betsy Kane-Harnett, as 120,250
Trustee U/A dated 4/19/91 F/B/O Betsy Kane-Harnett
Ticia Kane 82,225
Paul Kane 82,225
Wendy Robbins 82,225
Harold Oelbaum 17,575
Nancy Oelbaum 20,000
Louise Oelbaum Rubenfeld 10,000
Andrew Oelbaum 10,000
Jennifer Oelbaum 10,000
-----------
Total: 750,000
Class B Common Stock
Shareholder Number of Shares
- ----------- ----------------
James B. Stevens 277,500
Michael S. Stevens 251,250
Judith A. Stevens 30,625
James B. Stevens, as Trustee 30,625
of the Max Stevens Accumulation Trust
James B. Stevens, as Trustee 30,625
of the Abigail Stevens Accumulation Trust
Deborah Brown 39,375
Michael Stevens, as 39,375
Custodian for Amanda Brown-Stevens
Michael Stevens, as 39,375
Custodian for Corey
Brown-Stevens
Mark Cowan 5,625
Barry Cowan 5,625
------------
Total: 750,000
INTERNATIONAL TRANSPORTATION SERVICE, INC.
Class A Common Stock
Shareholder Number of Shares
- ----------- ----------------
Katherine Kane 1.20257
Priscilla Kane Hellweg 1.20257
Ticia Kane .82218
Paul Kane .82218
Wendy Robbins .82218
Nancy Oelbaum .20022
Louise Oelbaum .10011
Andrew Oelbaum .10011
Joan Abrahamson .75
Betsy Kane-Harnett, as Trustee u/a dated 4/19/91 1.20257
f/b/o Betsy Kane-Harnett
Harold Oelbaum .1752
Jennifer Oelbaum .10011
------------
Total: 7.5
<PAGE>
Class B Common Stock
Shareholder Number of Shares
- ----------- ----------------
Michael S. Stevens 3.75
James B. Stevens 3.75
-------
Total: 7.5
FOOD BY-PRODUCT RECYCLING, INC.
Shareholder Number of Shares
- ------------ ----------------
International Transportation
Service, Inc. 13,500
--------
Total: 13,500
<PAGE>
B-5
Exhibit B
Certain Defined Terms
"Affiliate," for purposes of Section 3.1.12 hereof, shall have
the meaning assigned to such term in Section 3.1.12(k) hereof.
"Appropriate Remediation Standard" shall have the meaning
assigned to such term in Section 7.2(j) hereof.
"Benefit Plans" shall have the meaning assigned to such term
in Section 3.1.12(a) hereof.
"CERCLA" shall have the meaning assigned to such term in
Section 3.1.9(j) hereof.
"CERCLIS" shall have the meaning assigned to such term in
Section 3.1.9(j) hereof.
"Claims" shall have the meaning assigned to such term in
Section 7.1.1 hereof.
"Closing" shall have the meaning assigned to such term in
Section 6.1 hereof.
"Closing Balance Sheet" shall have the meaning assigned to
such term in Section 2.4(b) hereof.
"Closing Date" shall have the meaning assigned to such term in
Section 6.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Companies' Combined Interim Pre-Tax Earnings" shall mean the
Companies' combined earnings prior to income taxes for the period from the
beginning of the Companies' 1996 fiscal year to the Closing Date and after
deducting any expenses incurred by the Companies or the Sellers (in accordance
with Section 7.5) in connection with the transactions contemplated by this
Agreement.
"Companies' Indebtedness" shall have the meaning assigned to
such term in Section 2.3.1 hereof.
"Covered Property" shall mean all real property, facilities
and improvements which the Companies or any of its subsidiaries, or any
predecessor to the Companies, or the Acquired Business presently, or at any time
on or prior to the Closing Date have, owned, leased or operated.
"Department" shall have the meaning assigned to such term in
Section 4.6 hereof.
"Environmental Condition" shall mean: (a) the presence,
Management, Release or threat of Release of Hazardous Substances (i) at, on, in,
under or from any Covered Property or (ii) in connection with the Acquired
Business or any business now or heretofore conducted by any of the Companies
(whether or not any such Release or threat of Release is into the air, soil,
ground or surface waters on or off-site) or (iii) arising from the off-site
transportation, storage, treatment, recycling or disposal of Hazardous
Substances; or (b) the violation of any Environmental Law by any of the
Companies or in connection with the Acquired Business or business now or
heretofore conducted by any of the Companies or any Covered Property.
"Environmental Consultant" shall have the meaning assigned to
such form in Section 7.2(b)hereof.
"Environmental Laws" shall mean the Federal, state or local
statutes, laws (common or statutory), ordinances, codes, rules, regulations,
orders, decrees, licenses, permits, consents or settlement agreements of, or
issued by, any governmental authority or court, in effect as of the Closing
Date, relating to the presence, Management, Release or threat of Release of any
Hazardous Substance, including without limitation CERCLA, the Clean Water Act,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act and
the Spill Compensation and Control Act, together with any amendments,
modifications or extensions thereof prior to or subsequent to the date hereof
and any rules, regulations, orders, decrees, licenses or permits thereunder of,
or issued by, any governmental authority or court.
"ERISA" shall have the meaning assigned to such term in
Section 3.1.12(a) hereof.
"Escrow Agreement" shall have the meaning assigned to such
term in Section 2.1 hereof.
"Financial Statements" shall have the meaning assigned to such
term in Section 3.1.4(a) hereof.
"FTC" shall have the meaning assigned to such term in Section
4.6 hereof.
"Hazardous Substance" shall mean (A) any substance designated
pursuant to Section 1321(b)(2)(A) of Title 33 (the Clean Water Act), (B) any
element, compound, mixture, solution, or substance designated pursuant to
Section 9602 of Title 42 (CERCLA), (C) any hazardous waste having the
characteristics identified under or listed pursuant to Section 3001 of the Solid
Waste Disposal Act (42 U.S.C.A. ss. 6921) (but not including any waste the
regulation of which under the Solid Waste Disposal Act (42 U.S.C.A. ss. 6901 et
seq.) has been suspended by act of Congress); (D) any toxic pollutant listed
under section 1317(a) of Title 33 (The Clean Water Act); (E) any hazardous air
pollutant listed under Section 112 of the Clean Air Act (42 U.S.C.A. ss. 7412),
and (F) any imminently hazardous chemical substance or mixture with respect to
which the Administrator has taken action pursuant to Section 2606 of Title 15;
(G) petroleum products and radioactive materials; and (H) any hazardous or toxic
substance, waste or material, pollutant or contaminant regulated by applicable
state Environmental Laws.
"HSR Act" shall have the meaning assigned to such term in
Section 3.1.2 hereof.
"Interim Balance Sheet" shall have the meaning assigned to
such term in Section 3.1.4(a) hereof.
"Interim Financial Statements" shall have the meaning assigned
to such term in Section 3.1.4(a) hereof.
"IRS" shall have the meaning assigned to such term in Section
3.1.12(f) hereof.
"ISRA" shall have the meaning assigned to such term in Section
3.1.2 hereof.
"Liens" shall have the meaning assigned to such term in
Section 3.1.5 hereof.
"Management" or "Manage" shall have the meaning assigned to
such term in Section 3.1.9(e) hereof.
"1995 Audited Balance Sheet" shall have the meaning assigned
to such term in Section 3.1.4(a) hereof.
"1995 Audited Financial Statements" shall have the meaning
assigned to such term in Section 3.1.4(a) hereof.
"On-Site Activities" shall have the meaning assigned to such
term in Section 7.2 hereof.
"PBGC" shall have the meaning assigned to such term in Section
3.1.12(j) hereof.
"PCBs" shall have the meaning assigned to such term in Section
3.1.9(h) hereof.
"Penalties" shall mean any civil or criminal penalties
(including any interest thereon), fines, levies, liens, assessments, charges,
monetary sanctions or payments of any kind required to be made to any
governmental authority under any Environmental Law.
"Purchase Price" shall have the meaning assigned to such term
in Section 2.1 hereof.
"Release" shall have the meaning assigned to such term in
Section 3.1.9(k) hereof.
"Remedial Action" shall mean the investigation, monitoring,
sampling, removal, restoration, clean-up, remediation, remedial design, response
or remedial work or other response action, negotiation with any governmental
authorities or permit acquisition necessary to effect the foregoing, and the
acquisition or installation of any property, plant, improvement, building or
other structure, equipment or facility in furtherance of and necessary to effect
any such activities, in connection with or relating to any Environmental
Condition. Remedial action required to be undertaken by this Agreement shall be
limited to action required by any third party claim, by a government authority
with jurisdiction or by Environmental Law.
"Section 338(h)(10) Election" shall have the meaning assigned
to such term in Section 2.2.1 hereof.
"Sellers' Bank Account" shall have the meaning assigned to
such term in Section 2.1 hereof.
"Sellers' Representative" shall have the meaning assigned to
such term in Section 2.1 hereof.
"Shareholders Agreements" shall mean (i) the Shareholders'
Agreement dated as of December 27, 1993 among IPC and the Class A Shareholders
and Class B Shareholders thereof, as amended, (ii) the Shareholders' Agreement
dated as of December 27, 1993 among IPC and the Class A Shareholders thereof, as
amended, (iii) the Shareholders' Agreement dated as of December 27, 1993 among
IPC and the Class B Shareholders thereof, as amended, (iv) the Shareholders'
Agreement dated as of December 27, 1993 among ITSI and the Class A Shareholders
and the Class B Shareholders thereof, as amended, (v) the Shareholders'
Agreement dated as of December 27, 1993 among ITSI and the Class A Shareholders
thereof, as amended, (vi) the Shareholders' Agreement dated as of December 27,
1993 among ITSI and the Class B Shareholders thereof, as amended (vii) the
Agreement dated as of August 18, 1993 by and between Midwest Bakery Recyclers,
Inc. and Barry Cowan, as amended, and (viii) the Agreement dated as of August
18, 1993 by and between Midwest Bakery Recyclers, Inc. and Mark Cowan, as
amended.
"Straddle Period Returns" shall have the meaning assigned to
such term in Section 4.8.1 hereof.
"Tax" or "Taxes" shall mean all taxes, charges, levies or
other like assessments, including without limitation all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
capital, payroll, employment, excise, stamp, property or other taxes, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority.
"Treasury Regulations" shall have the meaning assigned to such
term in Section 2.2.1 hereof.
<PAGE>
STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 30, 1996,
AMONG
DARLING INTERNATIONAL INC.,
INTERNATIONAL PROCESSING CORPORATION,
INTERNATIONAL TRANSPORTATION SERVICE, INC.
AND
THE STOCKHOLDERS OF
INTERNATIONAL PROCESSING CORPORATION
AND
INTERNATIONAL TRANSPORTATION SERVICE, INC.
<PAGE>
Page
TABLE OF CONTENTS
Page
1. Sale and Purchase of Shares............................................... 1
2. Purchase Price and Purchase Price Allocations; IRC Codess.338(h)(10);
Payment of Certain Obligations; Companies' Interim Pre-Tax Earnings....... 2
2.1 Purchase Price..................................................... 2
2.2 Codess.338(h)(10) Election; Allocation of Purchase Price.............2
2.3 Companies' Indebtedness............................................ 2
2.4 Distributions of the Companies' Combined Interim Pre-Tax Earnings;
Closing Balance Sheet............................................ 3
3. Representations and Warranties............................................ 4
3.1 Representations and Warranties of the Companies and the Sellers..... 4
3.1.1 Organization and Good Standing............................. 4
3.1.2 Consents, Authorizations, Binding Effect, Etc............. 5
3.1.3 Minute Books................................................ 6
3.1.4 Financial Statements and Financial
Condition............................................... 6
3.1.5 Title and Condition of Assets............................... 7
3.1.6 Inventories................................................. 9
3.1.7 Receivables............................................... 9
3.1.8 Insurance................................................... 9
3.1.9 Litigation and Compliance; Environmental
Matters................................................ 10
3.1.10 Taxes................................................... . 14
3.1.11 Intangible Assets........................................ 15
3.1.12 Employee Benefits......................................... 16
3.1.13 Labor Relations........................................... 18
3.1.14 Contracts, Etc............................................ 19
3.1.15 Customers and Suppliers................................... 21
3.1.16 Absence of Certain Changes, Etc.......................... 21
3.1.17 Subsidiaries, Etc......................................... 23
3.1.18 Title to the Shares; Capitalization
of the Companies...................................... 23
3.1.19 Other Information; Buyer's Investigation.................. 24
3.1.20. "To the Best Knowledge of the Sellers".................... 24
3.2 Representations and Warranties of the Buyer........................ 25
3.2.1 Organization and Good Standing............................. 25
3.2.2 Consents, Authorizations and Binding
Effect...............................................25
4. Certain Covenants........................................................ 26
4.1. Access to Records and Properties of the
Companies....................................................... 26
4.2 Operation of the Companies, Etc...................................... 26
4.3 Consents and Notices................................................. 27
4.4 Competing Transactions............................................... 27
4.5 Best Efforts to Satisfy Conditions.................................. 27
4.6 Antitrust Law Compliance............................................. 28
4.7 Non-Competition; Confidentiality; Disclosure of Information, Etc..... 28
4.8 Covenants Regarding Taxation......................................... 30
4.8.1 Returns and Payments......................................... 30
4.8.2 Indemnification.............................................. 31
4.8.3 Cooperation................................................. 31
4.9 ISRA Compliance...................................................... 31
4.10 Certain Environmental Matters....................................... 31
4.11 Certain Insurance Matters.......................................... 32
5. Conditions of Closing..................................................... 33
5.1 Conditions of Obligations of the Buyer............................. 33
5.1.1 Representations and Warranties;
Performance of Obligations.............................. 33
5.1.3 Opinion of Counsel to the Sellers ........................... 34
5.1.4 Financial Statements......................................... 34
5.1.5 No Adverse Change............................................ 34
5.1.6 Escrow Agreement............................................. 34
5.1.7 Employment Agreements........................................ 34
5.1.8 ISRA Non-Applicability...................................... 34
5.1.9 Resignations................................................. 35
5.1.10 Other Matters............................................... 35
5.2 Conditions of Obligations of the Sellers............................. 35
5.2.1 Representations and Warranties;
Performance of Obligations............................. 35
5.2.2 Opinion of Counsel to the Buyer............................ 35
5.2.3 Closing Purchase Price..................................... 35
5.2.4 Other Matters.............................................. 35
5.3 Conditions of Obligations of the Buyer and the Sellers.............. 36
5.3.1 HSR Act.................................................... 36
5.3.2 No Injunctions, Restraints or Litigation.................... 36
6. Closing....................................................................36
6.1 Closing Date..........................................................36
6.2 Cut-Off Date..........................................................36
6.3 Effect of Termination.................................................37
7. Miscellaneous............................................................. 37
7.1 Indemnification Generally............................................ 37
7.2 Environmental Remedial Action Procedures............................. 40
7.3 Further Actions...................................................... 43
7.4 Broker's Fees.........................................................43
7.5 Expenses..............................................................43
7.6 Entire Agreement..................................................... 43
7.7 Descriptive Headings..................................................44
7.8 Notices.............................................................. 44
7.9 Governing Law........................................................ 45
7.10 Remedies............................................................ 45
7.11 Appointment of the Sellers' Representatives;
Enforcement of Rights, Benefits and Remedies..................... 45
7.12 Termination of Shareholders Agreements
and Rights to Purchase the Shares................................ 48
7.13 Waivers and Amendments.............................................. 48
7.14 Third Party Rights.................................................. 48
7.15 Illegalities........................................................ 48
7.16 Exhibits............................................................ 49
EXHIBIT A List of Shareholders and Shares Owned
EXHIBIT B Defined Terms
EXHIBIT C Form of Escrow Agreement
EXHIBIT D Allocation of Purchase Price
EXHIBIT E Companies' Indebtedness
EXHIBIT F Form of Opinion of Counsel to the Sellers
EXHIBIT G Employment Agreement of James B. Stevens
EXHIBIT H Employment Agreement of Michael S. Stevens
EXHIBIT I Form of Opinion of Counsel to the Buyer
SCHEDULE 3.1.2 Consents, Authorizations, Binding Effect, Etc.
SCHEDULE 3.1.4 Financial Statements and Financial Condition
SCHEDULE 3.1.5 Title and Condition of Assets
SCHEDULE 3.1.7 Receivables
SCHEDULE 3.1.8 Insurance
SCHEDULE 3.1.9 Litigation and Compliance, Environmental Matters
SCHEDULE 3.1.11 Intellectual Property
SCHEDULE 3.1.12 Benefits
SCHEDULE 3.1.13 Labor Relations
SCHEDULE 3.1.14 Contracts
SCHEDULE 3.1.15 Customers and Suppliers
SCHEDULE 3.1.16 Absence of Certain Changes
SCHEDULE 4.2.4 Non-competition, Consulting and Services Agreements
SCHEDULE 4.7.1 Certain Entities
SCHEDULE 4.10 Certain Environmental Matters
<PAGE>
All of the Exhibits and Schedules to the Stock Purchase Agreement, identified
below, have been omitted. The Registrant will furnish supplementally a copy of
any such Exhibit or Schedule to the Securities and Exchange Commission upon
request.
EXHIBIT A List of Shareholders and Shares Owned
EXHIBIT B Defined Terms
EXHIBIT C Form of Escrow Agreement
EXHIBIT D Allocation of Purchase Price
EXHIBIT E Companies' Indebtedness
EXHIBIT F Form of Opinion of Counsel to the Sellers
EXHIBIT G Employment Agreement of James B. Stevens
EXHIBIT H Employment Agreement of Michael S. Stevens
EXHIBIT I Form of Opinion of Counsel to the Buyer
SCHEDULE 3.1.2 Consents, Authorizations, Binding Effect, Etc.
SCHEDULE 3.1.4 Financial Statements and Financial Condition
SCHEDULE 3.1.5 Title and Condition of Assets
SCHEDULE 3.1.7 Receivables
SCHEDULE 3.1.8 Insurance
SCHEDULE 3.1.9 Litigation and Compliance, Environmental Matters
SCHEDULE 3.1.11 Intellectual Property
SCHEDULE 3.1.12 Benefits
SCHEDULE 3.1.13 Labor Relations
SCHEDULE 3.1.14 Contracts
SCHEDULE 3.1.15 Customers and Suppliers
SCHEDULE 3.1.16 Absence of Certain Changes
SCHEDULE 4.2.4 Non-competition, Consulting and Services Agreements
SCHEDULE 4.7.1 Certain Entities
SCHEDULE 4.10 Certain Environmental Matters
* The non-competition covenants contained in this Agreement are
independent of any non-competition covenants that are included in
employment or consulting agreements with any of the Sellers.
