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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 12, 1997
--------------
(February 26, 1997)
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Commission File No. 1-12984
CENTEX CONSTRUCTION PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State of incorporation)
75-2520779
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(I.R.S. Employer Identification No.)
3710 RAWLINS, SUITE 1600
DALLAS, TEXAS 75219
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(Address of principal executive offices)
(214) 559-6514
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(Registrant's telephone number)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 26, 1997, Centex Eagle Gypsum Company, a Delaware
corporation ("Buyer Sub 1"), and CEGC Holding Company, a Delaware corporation
("Buyer Sub 2"), both wholly owned subsidiaries of Centex Construction
Products, Inc., a Delaware corporation ("CXP"), completed the acquisition of
all of the Common Units of Centex Eagle Gypsum Company, L.L.C., a Delaware
limited liability company ("Newco"), owned by Eagle-Gypsum Products, a Colorado
joint venture ("EGP"), and National Energy Systems, Inc., a Delaware
corporation ("NES"). The acquisition was consummated pursuant to a Limited
Liability Company Unit Purchase Agreement (EGP), dated as of December 5, 1996,
among Centex American Gypsum Company, a New Mexico corporation and wholly owned
subsidiary of CXP ("CAGC"), Buyer Sub 1, and EGP, and a Limited Liability
Company Unit Purchase Agreement (NES), dated as of December 5, 1996, among
CAGC, Buyer Sub 2, and NES. Prior to the consummation of this transaction, EGP
and NES contributed to Newco (i) all of EGP's assets and business used or
utilizable in connection with EGP's gypsum wallboard plant located in Gypsum,
Eagle County, Colorado, including EGP's gypsum mines located in close proximity
to such plant, and (ii) NES's cogeneration power facility located at the EGP
plant, respectively. Through Newco, CXP expects to continue to operate the
gypsum plant and the cogeneration facility for the foreseeable future.
Buyer Sub 1 and Buyer Sub 2 acquired 1,000 Common Units of Newco
(representing all of Newco's equity interests) for a purchase price of $52
million, plus EGP's net working capital (amounting to approximately $4.1
million).
To fund payment of the purchase price of Newco's Common Units, CXP, on
behalf of Buyer Sub 1 and Buyer Sub 2, used (i) internally available cash
amounting to approximately $52.1 million and (ii) funds amounting to $4 million
provided by CXP's $10 million unsecured revolving credit facility with The
First National Bank of Chicago.
In arriving at the purchase price paid by Buyer Sub 1 and Buyer Sub 2
for the Common Units of Newco, Buyer Sub 1 and Buyer Sub 2 calculated a range
of values for the equity interests in Newco and the values of the underlying
assets after a substantial due diligence review of such equity interests and
assets by CXP and CAGC personnel. After extensive arm's-length negotiations,
CAGC, Buyer Sub 1, Buyer Sub 2, EGP, and NES entered into the applicable
definitive unit purchase agreements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
In accordance with Item 7(a)(4) of Form 8-K, because
it is impracticable for the registrant to provide the required
financial statements for the acquired business at the time of
filing of this Current Report on Form 8-K, the registrant will
file an
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amendment to this Report to supply such financial statements
as soon as practicable, but not later than May 12, 1997.
(b) Pro Forma Financial Information.
In accordance with Item 7(a)(4) of Form 8-K, because
it is impracticable for the registrant to provide the required
pro forma financial information at the time of filing of this
Current Report on Form 8-K, the registrant will file an
amendment to this Report to supply such financial information
as soon as practicable, but not later than May 12, 1997.
(c) Exhibits.
The Exhibits required to be filed with this Report
are identified on the Index to Exhibits found on page 5 of
this Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTEX CONSTRUCTION PRODUCTS, INC.
------------------------------------
Registrant
March 12, 1997 By: /s/ O.G. Dagnan
--------------------------------
O.G. (Greg) Dagnan
President and Chief Executive
Officer
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INDEX TO EXHIBITS
CENTEX CONSTRUCTION PRODUCTS, INC.
<TABLE>
<CAPTION>
Exhibit Exhibit
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Number
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<S> <C>
2.1* Limited Liability Company Unit Purchase Agreement (EGP), dated as
of December 5, 1996, among Eagle-Gypsum Products, Centex American
Gypsum Company, and Centex Eagle Gypsum Company**
2.2* Limited Liability Company Unit Purchase Agreement (NES), dated as
of December 5, 1996, among National Energy Systems, Inc., Centex
American Gypsum Company, and CEGC Holding Company**
</TABLE>
- ------------------------
* Filed Herewith
** The schedules to these agreements are described in the respective
agreements and have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The registrant agrees to furnish supplementally to
the Commission a copy of these omitted schedules upon request of the
Commission.
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EXHIBIT 2.1
LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT (EGP)
by and among
EAGLE-GYPSUM PRODUCTS
as "Seller,"
CENTEX AMERICAN GYPSUM COMPANY
as "Buyer"
and
CENTEX EAGLE GYPSUM COMPANY
as "Buyer Sub 1"
Dated as of: December 5, 1996
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LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II - CONTRIBUTION OF CONTRIBUTED ASSETS AND
SALE OF COMMON UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Contribution of Contributed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Transfer of Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Post-Closing Working Capital Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Closing Costs; Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III - CLOSING - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Contributions and Conveyances at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Contributed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7 Permits; Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.14 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.15 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.18 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<TABLE>
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4.19 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.20. Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.21 Mining Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.23 Water Supply and Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.24 Seller Common Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
AND BUYER SUB 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 No Conflict or Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI - COVENANTS OF SELLER, BUYER AND BUYER SUB 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.6 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Title Commitments and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Consents; Regulatory Compliance and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 Assumption Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Escrow Agreement and Indemnity Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.9 Simultaneous Purchase of NES Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.10 WARN Act Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII - CONDITIONS TO BUYER'S AND
BUYER SUB 1'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Consents; Regulatory Compliance and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Conveyancing Documents; Release of Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.8 Preliminary Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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8.9 Escrow Agreement and Indemnity Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.10 Section 1060 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.11 Simultaneous Purchase of NES Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.12 Resignations and Minute Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IX -RISK OF LOSS; CONSENTS TO ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Consents to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X - ACTIONS BY SELLER AND BUYER,
BUYER SUB 1 AND NEWCO AFTER THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Collection of Accounts Receivable and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Books and Records; Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Survival of Representations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.5 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 Indemnification as Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.4 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.6 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.8 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.9 Titles; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.12 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT (EGP)
This Limited Liability Company Unit Purchase Agreement (EGP),
dated as of December 5, 1996, is by and among Centex American Gypsum Company, a
New Mexico corporation ("Buyer"), Centex Eagle Gypsum Company, a Delaware
corporation and a wholly-owned subsidiary of Buyer ("Buyer Sub 1"), and
Eagle-Gypsum Products, a Colorado joint venture ("Seller").
RECITALS
A. Seller owns certain assets which it uses in the
conduct of the Business (as defined below).
B. At the Closing (as defined below), Seller desires to
contribute to Centex Eagle Gypsum Company, L.L.C., a Delaware limited liability
company to be jointly formed by Seller and NES (as defined below) immediately
prior to the Closing ("Newco"), such assets in exchange for certain Common
Units of Newco in an amount to be determined prior to the Closing (including
Common Units of Newco issued to Seller upon formation of Newco, the "Seller
Common Units"), upon the terms and subject to the conditions of this Agreement.
C. National Energy Systems, Inc., a Delaware corporation
("NES"), owns certain assets that are used or utilizable in connection with the
Business (which assets of NES are an integral part of the assets utilized or
utilizable in Seller's Business).
D. At the Closing, simultaneously with the contribution
described in recital B above, NES will contribute to Newco such assets in
exchange for certain Common Units of Newco in an amount to be determined prior
to the Closing (the "NES Common Units").
E. Immediately subsequent to the contributions described
above, Buyer Sub 1 desires to purchase from Seller, and Seller desires to sell
to Buyer Sub 1, the Seller Common Units upon the terms and subject to the
conditions of this Agreement.
F. CEGC Holding Company, a Delaware corporation and
another wholly-owned subsidiary of Buyer ("Buyer Sub 2"), desires to purchase
from NES the NES Common Units pursuant to an agreement of even date herewith
among Buyer, Buyer Sub 2 and NES.
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants
and promises contained herein and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Action" shall mean any action, claim, suit, litigation,
proceeding, labor dispute, arbitral action, governmental audit, inquiry,
criminal prosecution, investigation or unfair labor practice charge or
complaint.
"Affiliate" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Back-Up Contract" shall mean that certain Agreement for
Back-Up Process Water dated July 13, 1993, between the Town of Gypsum and
Seller.
"Books and Records" shall mean (a) all records and lists of
Seller pertaining to the Contributed Assets, (b) all records and lists
pertaining to the customers, suppliers or personnel of the Business, (c) all
product, business and marketing plans of or relating to the Business and (d)
all books, ledgers, files, reports, plans, drawings and operating records of
every kind maintained by Seller relating to the Contributed Assets, but
excluding Seller's minute books, organizational documents, income tax returns
and other partnership records.
"Business" shall mean the Seller's business of owning and
operating a gypsum mine and a gypsum wallboard plant in Eagle County, Colorado
and marketing and distributing the wallboard manufactured in such plant, but
excluding the Excluded Assets.
"Closing Date" shall mean 7 days after the conditions set
forth in Articles VII and VIII have been satisfied, but not later than the date
specified in Section 11.1(a)(ii).
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated August 1, 1996 by and between Seller and Buyer.
"Contract" shall mean any agreement, contract, note, loan,
evidence of indebtedness, purchase order, letter of credit, indenture, security
or pledge agreement, franchise agreement, undertaking, practice, covenant not
to compete, employment agreement, license, instrument, obligation or commitment
to which Seller is a party or is bound and which relates to the Business or the
Contributed Assets, whether oral or written, but excluding all Leases.
"Contract Rights" shall mean all of Seller's rights and
obligations under the Contracts listed on Schedule 4.6(a) and under any
Contracts relating to the Business not so listed which Buyer, in its sole
discretion, elects to accept and assume.
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"Contributed Assets" shall mean all of Seller's right, title
and interest in and to the following assets, which Seller uses in connection
with the conduct of the Business:
(a) all accounts and notes receivable (whether current or
noncurrent) of Seller relating to the Business and refunds, deposits,
prepayments or prepaid expenses of Seller relating to Contract Rights;
(b) all Contract Rights;
(c) all Leases;
(d) all Owned Real Property;
(e) all Leasehold Estates;
(f) all Leasehold Improvements;
(g) all Fixtures and Equipment;
(h) all Inventory;
(i) all Books and Records;
(j) all Proprietary Rights relating to the Business;
(k) to the extent transferable, all Permits;
(l) all Patented Mining Claims, Unpatented Mining Claims
and Water Rights;
(m) all available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the Business;
(n) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Contributed Assets or services furnished to Seller pertaining to the Business
or affecting the Contributed Assets, to the extent such warranties,
representations and guarantees are assignable;
(o) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind, against any person or
entity, including without limitation any liens, security interests, pledges or
other rights to payment or to enforce payment in connection with products
delivered by Seller relating to the Business on or prior to the Closing Date;
and
(p) all other assets, real, personal or mixed, tangible
or intangible, of Seller used or utilizable in the Business;
provided, that the Contributed Assets shall not include any of
Seller's right, title and interest in and to the Excluded Assets.
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<PAGE> 8
"Copyrights" shall mean registered copyrights, copyright
applications and unregistered copyrights, including common law rights thereto,
owned by Seller and used in the Business.
"Court Order" shall mean any judgment, decision, consent
decree, injunction, ruling or order of any federal, state or local court or
governmental agency, department or authority that is binding on any person or
its property under applicable law.
"Default" shall mean (1) a breach of or default under any
Contract or Lease, (2) the occurrence of an event that with the passage of time
or the giving of notice or both would constitute a breach of or default under
any Contract or Lease, or (3) the occurrence of an event that with or without
the passage of time or the giving of notice or both would give rise to a right
of termination, renegotiation or acceleration under any Contract or Lease.
"Encumbrance" shall mean any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Energy Contract" shall mean that certain Energy Services
Agreement, dated as of September 2, 1989, between Seller and National Energy
Systems, Inc., a Delaware corporation, as amended.
"Environmental Laws" shall mean all federal, state, district,
and local laws and ordinances, and all rules or regulations promulgated
thereunder, applicable to the Business relating to pollution or protection of
the environment or human health or safety (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws, statutes, codes, ordinances, rules and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Substances. Environmental Laws shall include without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Clean Water Act, as amended, the
Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Atomic
Energy Act of 1954, as amended, the Occupational Safety and Health Act, as
amended, the Mine Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other governmental authority.
"Escrow Agreement" shall mean the Escrow Agreement to be dated
as of the Closing Date by and among Buyer, Buyer Sub 1, Seller and an escrow
agent to be agreed upon by Buyer and Seller prior to Closing.
"Excluded Assets," notwithstanding any other provision of this
Agreement, shall mean the following assets of Seller:
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<PAGE> 9
(a) ownership interests of Seller in and rights of Seller
relating to other entities which are not related to
or reflected in the financial results of the
Business, whether currently or hereafter owned by
Seller;
(b) all cash and cash equivalents held by Seller,
including deposits or bonds securing any Permits and
any worker's compensation deposit;
(c) all Permits, to the extent not transferable;
(d) all rights, claims, causes of action, choses in
action, rights of recovery and rights of set-off of
any kind against any person or entity arising out of
or relating to the Contributed Assets solely to the
extent related to Liabilities that are not Assumed
Liabilities;
(e) all rights of Seller pursuant to this Agreement and
the documents contemplated hereby;
(f) all rights of Seller in the Contracts set forth in
Schedule 4.6(b);
(g) all Insurance Policies and any prepaid amounts
thereunder;
(h) all accounts receivable of Seller which have been
written off by Seller prior to Closing;
(i) any amounts to be paid or credited to Seller as set
forth in Section 2.6; and
(j) any other rights of Seller to the extent not
transferable.
"Facilities" shall mean all plants, offices, manufacturing
facilities, warehouses, improvements, administration buildings, and all real
property and related facilities located on the Owned Real Property.
"Facility Leases" shall mean all of the leases of Facilities
listed on Schedule 4.6(a).
"Financial Statements" shall mean the Year-End Financial
Statements and the Interim Financial Statements.
"Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery, automobiles, trucks, spare parts, supplies,
equipment, tooling, molds, patterns, dies and other tangible personal property
owned by Seller and used in connection with the Business, wherever located and
including any such Fixtures and Equipment in the possession of any of the
Business' suppliers, including all warranty rights with respect thereto.
"Green Mountain Contract" shall mean that certain contract no.
0-07-60-WO539 dated May 1, 1990, between the United States of America and
Seller for 270 acre feet of water annually from Green Mountain Reservoir.
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<PAGE> 10
"Hazardous Substances" shall mean: (i) any substance,
material or waste defined or characterized as hazardous, extremely hazardous,
toxic or dangerous within the meaning of any Environmental Law, (ii) any
substance, material or waste classified as a contaminant or pollutant under any
Environmental Law or (iii) any other substance (including, but not limited to,
petroleum) material or waste, the manufacture, processing, distribution, use,
treatment, storage, placement, disposal, removal or transportation of which is
subject to regulation or forms the basis of liability under any Environmental
Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow
Agreement to be dated as of the Closing Date by and among Newco, Seller, Buyer,
Buyer Sub 1 and an escrow agent to be agreed upon by Buyer and Seller prior to
the Closing Date, for the purpose set forth in Section 10.4(f) herein.
"Insurance Policies" shall mean the insurance policies related
to the Contributed Assets listed on Schedule 4.17.
"Interim Balance Sheet" shall mean the unaudited balance sheet
dated the Interim Balance Sheet Date.
"Interim Balance Sheet Date" shall mean September 30, 1996.
"Interim Financial Statements" shall mean the Interim Balance
Sheet and the unaudited income statement of the Business for the period ended
on the Interim Balance Sheet Date.
"Inventory" shall mean all of the Business' inventory held for
resale and all of Seller's raw materials, work in process, finished products,
wrapping, supply and packaging items and similar items and repair parts with
respect to the Business, in each case wherever the same may be located,
including materials in transit to be delivered to Seller under the Paper
Contract.
"Leased Real Property" shall mean all leased property
described in the Facility Leases.
"Leasehold Estates" shall mean all of Seller's rights and
obligations as lessee under the Leases.
"Leasehold Improvements" shall mean all leasehold improvements
situated in or on the Leased Real Property and owned by Seller.
"Leases" shall mean all of the existing leases with respect to
the personal or real property used in the Business listed on Schedule 4.6(a).
"Liabilities" shall mean any liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any person of any type, whether accrued, absolute, contingent, matured,
unmatured or other.
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<PAGE> 11
"material adverse effect" or "material adverse change" shall
mean with respect to the Business or the Contributed Assets any significant and
substantial adverse effect or change in the financial condition or results of
operations of the Business and/or the Contributed Assets.
"Mineral Patents" means those conveyances described on
Schedule 4.21 from the United States of America to Seller covering the Patented
Mining Claims.
"Mortgages" shall mean all deeds of trust, mortgages or other
debt encumbrances on Owned Real Property.
"NES" shall mean National Energy Systems, Inc., a Delaware
corporation.
"NES Ground Lease" shall mean that certain ground lease dated
as of September 2, 1989 between Seller and NES.
"Owned Real Property" shall mean the real property located in
Eagle County, Colorado, owned in fee by Seller, including without limitation
all rights, easements and privileges appertaining or relating thereto, all
buildings, fixtures, and improvements located thereon and all Facilities
thereon, if any, but excluding the Patented Mining Claims, the Unpatented
Mining Claims and the Water Rights.
"Paper Contract" shall mean that certain Paper Supply
Agreement, dated as of January 1, 1990, between Caraustar Industries, Inc., a
North Carolina corporation, and Eagle-Gypsum, Ltd., a Colorado limited
partnership, as and to the extent amended, as assigned to Seller by that
certain Assignment of Contract Rights dated as of February 23, 1989, by and
between Eagle-Gypsum, Ltd. and Seller and any outstanding purchase orders in
connection with such contract.
"Patented Mining Claims" means those patented mining claims
described on Schedule 4.21.
"Patents" shall mean all patents and patent applications and
registered design and registered design applications owned by Seller and used
in the Business.
"Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
governmental authority, whether federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to, the operation of the Business.
"Proprietary Rights" shall mean all of the Copyrights,
Patents, Trademarks, technology rights and licenses, computer software
(including without limitation, any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, designs, specifications, plans, drawings and intellectual property
rights owned by Seller and used or utilizable in the Business, but not
including Contract Rights.
"Real Property" shall mean the Owned Real Property and the
Leased Real Property.
"Regulations" shall mean any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign, federal,
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<PAGE> 12
state or local government and any other governmental department or agency,
including without limitation Environmental Laws, energy, motor vehicle safety,
public utility, zoning, building and health codes, occupational safety and
health laws and laws respecting employment practices, employee documentation,
terms and conditions of employment and wages and hours.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Seller's knowledge" shall mean the actual knowledge of the
following managers of Seller's Business: President and General Manager, Sales
Manager, Plant Manager, Mine Manager, Controller and all other salaried exempt
personnel of Seller.
"Tax" shall mean any federal, state, local, foreign or other
tax, levy, impost, fee, assessment or other government charge, including
without limitation income, estimated income, gross receipts, net receipts,
business, occupation, franchise, property, payroll, personal property, sales,
transfer, use, employment, commercial rent, occupancy, franchise or withholding
taxes, together with any interest, penalties and other additions thereto.
"Town Contract" shall mean that certain Water and Wastewater
Service Agreement dated August 24, 1990, between the Town of Gypsum and Seller,
together with the First Amendment thereto dated October 31, 1990, and Second
Amendment thereto dated July 13, 1993.
"Trademarks" shall mean registered trademarks, registered
service marks, trademark and service mark applications and unregistered
trademarks and service marks and trade names, including common law rights to
any of such trademarks, service marks and trade names, owned by Seller and used
in the Business.
"Unpatented Mining Claims" means those unpatented claims
described on Schedule 4.21.
"Water Rights" shall mean the rights in and to the use of
water listed on Schedule 4.23.
"Year-End Financial Statements" shall mean the audited balance
sheets dated December 31, 1994 and December 31, 1995, and the related audited
income statement for the year ended December 31, 1995.
1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Adjustment Amount 2.5(b)
Assumed Liabilities 2.2
Assumption Document 3.2(b)
Benefit Plans 4.16(a)
Bulk Sales Act 10.5
Buyer's Health Plans 6.6(b)
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C>
Claim 10.4(d)
Claim Notice 10.4(d)
Closing 3.1
Closing Working Capital 2.5(a)
Damages 10.4(a)
ERISA 4.16(a)
Escrow Account 2.4(b)
Escrow Amount 2.4(b)
Escrowed Funds 10.4(f)
Estimated Working Capital Amount 2.4(a)
NES Common Units Recitals
New Employees 6.6(a)
Permitted Encumbrances 4.5(a)
Preliminary Closing Balance Sheet 2.5(a)
Purchase Price 2.4(a)
Seller Common Units Recitals
WARN Act 7.10
Working Capital 2.5(b)
401(k) Plan 4.16(b)
</TABLE>
ARTICLE II
CONTRIBUTION OF CONTRIBUTED ASSETS AND
SALE OF COMMON UNITS
2.1 CONTRIBUTION OF CONTRIBUTED ASSETS. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller will contribute,
convey, transfer, assign and deliver as a capital contribution to Newco, and
Newco will acquire from Seller, the Contributed Assets, free and clear of all
Encumbrances other than Permitted Encumbrances.
2.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, at the Closing, Newco shall assume the following
Liabilities of Seller (the "Assumed Liabilities") but not any other liability,
obligation or duty of Seller:
(a) All Liabilities accruing, arising out of, or relating to
events or occurrences happening after the Closing Date under the Contracts and
Leases listed on Schedule 4.6(a) or under Contracts or Leases relating to the
Business which are not listed on Schedule 4.6(a) but which Newco, in its sole
discretion, upon written notice to Seller, elects to accept and assume, but not
including any Liability for any Default under any such Contract occurring on or
prior to the Closing Date; and
(b) All of Seller's accounts payable (but not including amounts
owed by Seller pursuant to the Paper Contract) and accrued liabilities set
forth on the Interim Balance Sheet or incurred after the Interim Balance Sheet
Date in the ordinary course of business (but not including (i) prorated amounts
to be paid by or charged to Seller as set forth in Section 2.6; (ii) accrued
liabilities relating to employee matters and (iii) any indebtedness owed by
Seller to NES on the Closing Date).
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2.3 TRANSFER OF COMMON UNITS. Upon the terms and subject to the
conditions contained herein, at the Closing, immediately subsequent to the
contribution and assumption described in Sections 2.1 and 2.2 above, Seller
will sell, convey, transfer, assign and deliver to Buyer Sub 1, and Buyer Sub 1
will acquire from Seller, the Seller Common Units, free and clear of all
Encumbrances.
2.4 PURCHASE PRICE.
(a) Purchase Price. At the Closing, upon the terms and subject
to the conditions set forth herein, Buyer Sub 1 shall pay to Seller for the
sale, transfer, assignment, conveyance and delivery of the Seller Common Units
cash in an aggregate amount equal to the sum of (1) $52,000,000 less the amount
specified in Section 8.11 hereof as the purchase price for the NES Common Units
and (2) the Estimated Working Capital Amount (the "Purchase Price"), less the
Escrow Amount and less an amount equal to the Escrowed Funds, by wire transfer
of immediately available funds to the account number and place Seller may
designate by written notice as provided herein. The "Estimated Working Capital
Amount" means the Working Capital as of the Preliminary Closing Balance Sheet
date. The Purchase Price shall be subject to subsequent adjustment pursuant to
Section 2.5. Prior to the Closing, Seller and Buyer Sub 1 shall negotiate a
mutually acceptable allocation of the Purchase Price among the classes of
Contributed Assets for purposes of Section 1060 of the Code. Buyer Sub 1 and
Seller agree to each prepare and file on a timely basis with the Internal
Revenue Service substantially identical initial and supplemental Internal
Revenue Service Forms 8594 "Asset Acquisition Statements Under Section 1060"
which give effect to any Adjustment Amount determined in accordance with
Section 2.5 hereof.
(b) Escrow Amount. The "Escrow Amount" shall be an amount
equal to the sum of (i) fifty percent (50%) of the Estimated Working Capital
Amount which Buyer Sub 1 at the Closing shall deposit into an account (the
"Escrow Account") and (ii) accrued interest thereon, and the Escrow Amount
shall be paid to Seller and/or Buyer Sub 1 in the manner set forth in the
Escrow Agreement.
2.5 POST-CLOSING WORKING CAPITAL ADJUSTMENT.
(a) No later than five (5) days prior to Closing, Seller shall
prepare and deliver to Buyer Sub 1 an unaudited balance sheet for the Business
(the "Preliminary Closing Balance Sheet") prepared as of the last day of the
month prior to the Closing Date, or, if data for such date are unavailable, the
last day of the second month prior to the Closing Date. The Preliminary
Closing Balance Sheet shall be prepared in accordance with Seller's historical
accounting practices, but shall set forth only the Contributed Assets and
Assumed Liabilities. No later than forty-five (45) days after the Closing
Date, Seller shall prepare and deliver to Buyer Sub 1 (i) a calculation of
Working Capital as of the Closing Date (the "Closing Working Capital") prepared
consistently with the calculation of the Estimated Working Capital Amount, and
(ii) a reasonably detailed calculation of the Adjustment Amount. The Closing
Working Capital shall be accompanied by reasonably detailed schedules
indicating the calculation of the Closing Working Capital.
(b) Adjustment Amount. The "Adjustment Amount" shall be the
amount equal to the Closing Working Capital minus the Estimated Working Capital
Amount. "Working Capital" means an amount equal to (i) the aggregate unpaid
balance of all accounts receivable, plus (ii) Inventory, plus (iii) prepaid
expenses and other current assets, less (iv) accounts payable and accrued
liabilities; provided, however, that Working Capital shall not include (1) any
Excluded Assets, (2) amounts owed by Seller pursuant to the Paper Contract, (3)
prorated amounts to be paid by Seller
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<PAGE> 15
or to be charged to Seller as set forth in Section 2.6, (4) accrued liabilities
relating to employee matters or (5) any indebtedness owed by Seller to NES on
the Closing Date.
(i) If the Adjustment Amount is a positive number,
then Buyer Sub 1 and Seller shall cause Seller to be paid out of the Escrow
Account an amount equal to the Escrow Amount and Buyer Sub 1 shall pay to
Seller the Adjustment Amount.
(ii) If the Adjustment Amount is a negative number
which is less than or equal to the Escrow Amount, then Buyer Sub 1 and Seller
shall cause Seller to be paid out of the Escrow Account an amount equal to the
Escrow Amount less the absolute value of the Adjustment Amount. Buyer Sub 1
and Seller shall cause the balance of the Escrow Amount to be paid to Buyer Sub
1.
(iii) If the Adjustment Amount is a negative number
which is greater than the Escrow Amount, Buyer Sub 1 and Seller shall cause the
Escrow Amount to be paid to Buyer Sub 1, and Seller shall pay to Buyer Sub 1 an
amount equal to the absolute value of the Adjustment Amount less the Escrow
Amount.
(c) Disputed Adjustment Amount. If Buyer Sub 1 shall disagree
with the Adjustment Amount, it shall notify Seller of such disagreement in
writing specifying in detail the particulars of such disagreement within
fifteen (15) business days after Buyer Sub 1's receipt of the calculation of
the Closing Working Capital. To the extent that any portion of the Adjustment
Amount is not in dispute, within fifteen (15) business days after Buyer Sub 1's
receipt of the calculation of the Closing Working Capital, Buyer Sub 1 shall
pay Seller or Seller shall pay Buyer Sub 1, as the case may be, and/or Seller
and Buyer Sub 1 shall cause to be paid out of the Escrow Account to Buyer Sub 1
or Seller, as the case may be, that portion of the Adjustment Amount which is
not in dispute in the manner set forth in Section 2.5(b).
(d) Resolution of Disputed Adjustment Amount. Buyer Sub 1 and
Seller shall use their best efforts for a period of thirty (30) calendar days
after Buyer Sub 1's delivery of such notice (or such longer period as Buyer Sub
1 and Seller shall mutually agree upon) to resolve any disagreements raised by
Buyer Sub 1 with respect to the calculation of the Adjustment Amount. If, at
the end of such period, Buyer Sub 1 and Seller are unable to resolve such
disagreements, KPMG Peat Marwick shall resolve any remaining disagreements.
The determination by KPMG Peat Marwick shall be final, binding and conclusive
on the parties. Buyer Sub 1 and Seller shall use their best efforts to cause
KPMG Peat Marwick to make its determination within thirty (30) calendar days of
accepting its selection. Within ten (10) calendar days after the date of
determination of KPMG Peat Marwick, Buyer Sub 1 shall pay Seller, or Seller
shall pay Buyer Sub 1, as the case may be, and/or Seller and Buyer Sub 1 shall
cause to be paid out of the Escrow Account to Buyer Sub 1 or Seller, as the
case may be, the Adjustment Amount in the manner set forth in Section 2.5(b).
The fees and expenses of KPMG Peat Marwick shall be borne by Buyer Sub 1 and
Seller equally.
(e) Payment of Adjustment Amount. All payments made by Buyer
Sub 1 or Seller or out of the Escrow Account as part of the Adjustment Amount,
shall be made by wire transfer of immediately available funds to an account
designated by the payee.
2.6 PRORATIONS.
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<PAGE> 16
(a) Utilities; Taxes. On the Closing Date, or as promptly as
practicable following the Closing Date, but in no event later than sixty (60)
calendar days thereafter, the real and personal property taxes, water, gas,
electricity and other utilities, common area maintenance reimbursements to
lessors, local business or other license fees or taxes, merchants' association
dues and other similar periodic charges payable with respect to the Contributed
Assets or the Business shall be prorated between Buyer Sub 1 and Seller
effective as of the Closing Date and shall be adjusted when exact amounts are
determined. To the extent practicable, utility meter readings for the
Facilities shall be determined as of the Closing Date. If the real property
tax rate for the current tax year is not established by the Closing Date, the
prorations shall be made on the basis of the rate in effect for the preceding
tax year and shall be adjusted when the exact amounts are determined. All such
prorations shall be based upon the most recent available assessed value of any
Facility prior to the Closing Date.
(b) Rents. Seller shall pay all rent under the Leases through
the end of the calendar month in which the Closing Date occurs, and Buyer Sub 1
shall reimburse Seller for such rent accrued from the Closing Date through the
end of such month as part of the post-Closing proration.
(c) Water Charges. Amounts due or amounts pre-paid under the
Green Mountain Contract, the Town Contract and the Back-Up Town Contract shall
be prorated effective as of the Closing Date.
2.7 CLOSING COSTS; TRANSFER TAXES AND FEES. Buyer Sub 1 shall be
responsible for any documentary and transfer taxes and any sales, use or other
taxes imposed by reason of the contribution of the Contributed Assets or the
transfer of the Seller Common Units provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. Buyer Sub 1 shall pay the
fees and costs of recording or filing all applicable conveyancing instruments
described in Section 3.2(a). Buyer Sub 1 shall pay all costs of applying for
new Permits and obtaining the transfer of existing Permits which may be
lawfully transferred and shall as soon as practicable after the Closing cause
to be refunded to Seller any bonds or deposits securing Permits maintained by
Seller prior to Closing. In the event any fee or payment is owed to the United
States in connection with any Hart-Scott-Rodino filing or the approval by the
U.S. Department of Justice or the U.S. Federal Trade Commission of the
transactions contemplated by this Agreement Buyer Sub 1 shall be responsible
for such fee or payment.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. local time on the Closing Date at the
offices of Latham & Watkins in Chicago, Illinois unless the parties hereto
otherwise agree.
3.2 CONTRIBUTIONS AND CONVEYANCES AT CLOSING.
(a) Instruments and Possession. To effect the contribution
referred to in Section 2.1 hereof, Seller will, at the Closing, execute and
deliver to Newco:
(i) one or more deeds conveying good and marketable
fee simple title to all Owned Real Property included in the Contributed Assets
to Newco or its designee;
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<PAGE> 17
(ii) one or more bills of sale conveying to Newco in
the aggregate all of Seller's owned personal property included in the
Contributed Assets;
(iii) subject to Section 9.2, Assignments of Lease with
respect to the Leases;
(iv) subject to Section 9.2, Assignments of Contract
Rights with respect to the Contract Rights;
(v) Assignments of Patents and Trademarks and other
Proprietary Rights (including an assignment of all of Seller's rights, title
and interest to the name "Eagle-Gypsum", and all variations thereof) in
recordable form to the extent necessary to assign such rights to Newco;
(vi) a Mining Deed conveying to Newco good and
marketable title to the Patented Mining Claims subject to the reservations and
exceptions contained in the Mineral Patents;
(vii) a Special Warranty Deed conveying to Newco all of
the Unpatented Mining Claims;
(viii) a Special Warranty Deed conveying to Newco the
Water Rights; and
(ix) such other instruments and documents as are
contemplated by this Agreement.
(b) Assumption Document. Upon the terms and subject to the
conditions contained herein, at the Closing, Newco shall deliver to Seller an
instrument of assumption evidencing Newco's assumption, pursuant to Section
2.2, of the Assumed Liabilities (the "Assumption Document").
(c) Transfer of Common Units. Upon the terms and subject to
the conditions contained herein, at the Closing, immediately subsequent to
execution and delivery of the instruments and documents described in Sections
3.2(a) and (b) above, Seller shall execute and deliver to Buyer Sub 1 an
Assignment of Common Units and Seller shall deliver to Buyer Sub 1 one or more
Common Unit certificates evidencing the Seller Common Units to convey the
Seller Common Units to Buyer Sub 1.
(d) Form of Instruments. The documents referenced in Section
3.2(a), (b) and (c) shall be in form and substance, and shall be executed and
delivered in a manner, reasonably satisfactory to Buyer and Seller.
(e) Certificates; Opinions. Buyer and Seller shall deliver the
certificates, opinions of counsel and other matters described in Articles VII
and VIII.
(f) Consents. Subject to Section 9.2, Seller shall deliver all
Permits and any other third party consents required for the valid transfer of
the Contributed Assets as contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer Sub 1 as follows:
4.1 ORGANIZATION OF SELLER. Seller is a joint venture duly organized
and validly existing under the laws of the State of Colorado with all necessary
power and authority to conduct the Business as it is presently being conducted
and to own and lease its properties and assets.
4.2 AUTHORIZATION. Seller has all requisite power and authority, and
has taken all joint venture action necessary, to execute and deliver this
Agreement and the other documents to be executed by Seller pursuant to this
Agreement, to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder. This Agreement has been
duly executed and delivered by Seller and is, and upon execution and delivery
of the Escrow Agreement and the Indemnity Escrow Agreement, the Escrow
Agreement and the Indemnity Escrow Agreement will be, legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
terms, except as may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, and other similar laws affecting creditors' rights generally
and (ii) general principals of equity, regardless of whether asserted in a
proceeding in equity or at law.
4.3 NO MATERIAL ADVERSE CHANGE. Since the Interim Balance Sheet Date:
(a) there has been no material adverse change in the financial
condition or results of operation of the Business or the Contributed Assets
(other than fluctuations in Working Capital within the normal course of
business) or any event, occurrence, development, condition or state of facts,
in either case that is, or would result in a material adverse change in the
Business or the Contributed Assets; and
(b) there has not been:
(i) any material labor dispute, grievance, work
stoppage or work slowdown;
(ii) any change or revaluation by Seller of any of its
properties or assets (other than writing down of
accounts receivable), including, but not limited
to, writing down the value of any Real Property,
except in the ordinary course of business;
(iii) any increase in the current liabilities of Seller
relating to the Business except in the ordinary
course of business;
(iv) except as disclosed in Schedule 4.3 hereto, any
increase in salary, wages, bonus, commission, or
other compensation to any officers, employees,
agents or representatives of Seller contemplated
to be engaged by Newco subsequent to Closing;
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(v) any material theft, damage, destruction or
condemnation affecting any of the Contributed
Assets, whether or not covered by insurance;
(vi) any action or omission on the part of Seller that,
if taken or omitted to be taken at the date
hereof, would cause a breach or violation of the
covenants of Seller set forth in Article VI; or
(vii) any agreement or commitment to do any of the
foregoing; and
(c) Seller has operated the Business in the ordinary course so
as to preserve the Business intact, to keep available to the Business the
services of Seller's employees, and to preserve the Business and the goodwill
of Seller's suppliers, customers, distributors and others having business
relations with it.
4.4 CONTRIBUTED ASSETS. Excluding the Owned Real Property, the Leased
Real Property, the Patented Mining Claims, Unpatented Mining Claims and the
Water Rights, upon the consummation of the transactions contemplated hereby,
Seller will vest in Newco good and marketable title to the Contributed Assets
and Newco will acquire good and marketable title to all of the Contributed
Assets, free and clear of any Encumbrances, except for Permitted Encumbrances.
All tangible assets and properties which are part of the Contributed Assets are
in good operating condition and repair (except for ordinary wear and tear) and
are usable in the ordinary course of business. The Contributed Assets
constitute all of the assets necessary to operate the Business and the
Facilities in the manner in which they have been operated by Seller in the
ordinary course of the Business.
4.5 FACILITIES. Schedule 4.5 contains a complete and accurate list of
all Owned Real Property.
(a) Owned Real Property. Seller has good and marketable title
in fee simple or, with respect to the Leased Real Property, leasehold, to all
parcels of Real Property, free and clear of all Encumbrances except Permitted
Encumbrances, which Real Property constitutes all real property owned by
Seller. At the Closing, the execution by Seller of the deeds contemplated by
Section 3.2(a)(i) and the delivery of such deeds to Newco will vest in Newco
good and marketable fee simple title to all Owned Real Property free and clear
of all Encumbrances, except for Permitted Encumbrances (as hereinafter
defined). Seller enjoys peaceful and undisturbed possession of all Owned Real
Property. "Permitted Encumbrances" shall mean all Encumbrances on the
Contributed Assets that do not, individually or in the aggregate, decrease in
any material manner the value or transferability or marketability of the
property or assets subject thereto or interfere with or restrict the use of
such property or assets in any material manner.
(b) Leases or Other Agreements. Except for Facility Leases
listed on Schedule 4.6(a), there are no leases, subleases, licenses or other
agreements or arrangements granting to any person the right to purchase, use or
occupy any Facility or any real property in connection with the Business.
(c) Facility Leases and Leased Real Property. With respect to
each Facility Lease, the execution by Seller and the delivery to Newco of the
Assignment of Lease described in Section 3.2(a)(iii) herein will vest in Newco
at the Closing an unencumbered interest in the Leasehold
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Estate. Seller enjoys peaceful and undisturbed possession of all the Leased
Real Property, subject to the rights of the fee owners.
(d) Improvements, Fixtures and Equipment. The improvements
constructed on the Facilities, including without limitation, all Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by Seller at the Facilities are structurally sound with no known
material defects, subject to ordinary wear and tear.
4.6 CONTRACTS AND COMMITMENTS.
(a) Contracts. Schedule 4.6(a) sets forth a complete and
accurate list of all Contracts and Leases to be assumed hereunder, and
indicates whether third-party consents are required for the assignment thereof.
Except for the Contracts listed on Schedule 4.6(a) and 4.6(b), Seller has
entered into no other material Contracts necessary for the operation of the
Business or that relate to the Contributed Assets other than those being
terminated at or prior to Closing. Seller has delivered to Buyer true, correct
and complete copies of all of the Contracts listed on Schedule 4.6(a),
including all amendments and supplements thereto.
(b) Absence of Defaults. All of the Contracts and Leases set
forth on Schedule 4.6(a) are valid, binding and enforceable in accordance with
their terms, except as may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, and other similar laws affecting creditors' rights
generally and (ii) general principles of equity, regardless of whether asserted
in a proceeding in equity or at law. Seller does not know of any current or
past material Default under any of such Contracts or Leases. Seller has not
received any notice of a claim of Default under any of such Contracts or
Leases.
4.7 PERMITS; CONSENTS AND APPROVALS. (a) Schedule 4.7 sets forth a
complete list of all material Permits required for the operation of the
Business in the manner in which it has been operated by Seller in the ordinary
course of the Business or otherwise held by Seller. Seller has and, to the
knowledge of Seller at all times has had, all Permits required under applicable
Regulations for the operation of the Business or in the ownership of the
Contributed Assets, and owns or possesses such Permits free and clear of all
Encumbrances, except as set forth on Schedule 4.7.
(b) Other than in connection with or in compliance with the
provisions of the HSR Act, and except with respect to Permits listed on
Schedule 4.7 hereto, no notice to, declaration, filing or registration with, or
Permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or obtained by
Seller in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby.
4.8 NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions
hereof, will (a) violate or conflict with any provision of the organizational
documents of Seller, (b) violate, conflict with, or result in or constitute a
Default under, or result in the termination of any Contract, Lease or Permit,
(i) to which Seller is a party or (ii) by which the Contributed Assets are
bound, (c) violate any Regulation or Court Order, (d) impose any Encumbrance on
the Contributed Assets or the Business, except in the case of (d) above for
Permitted Encumbrances.
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4.9 FINANCIAL STATEMENTS. Seller has heretofore delivered to Buyer the
Financial Statements. The Financial Statements (a) are in accordance with the
books and records of Seller, (b) except as set forth on Schedule 4.9, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby and (c) fairly and
accurately present, in all material respects, the results of operations and
financial condition of Seller as of the respective dates thereof and periods
then ending.
4.10 BOOKS AND RECORDS. Seller has made and kept Books and Records,
which, in reasonable detail, accurately and fairly reflect, in all material
respects, the activities of Seller in the conduct of the Business.
4.11 LITIGATION. Except as set forth on Schedule 4.11, there is no
Action pending, or to the best of Seller's knowledge, threatened against Seller
(a) related to or affecting the Business or the Contributed Assets or (b)
seeking to delay, limit or enjoin the transactions contemplated by this
Agreement. Seller is not in Default with respect to or subject to any Court
Order, and there are no unsatisfied judgments against Seller, the Business or
the Contributed Assets.
4.12 LABOR MATTERS. Seller is not a party to any labor agreement with
respect to its employees with any labor organization, union, group or
association and there are no employee unions (nor any other similar labor or
employee organizations) under local statutes, custom or practice. Schedule
4.12 sets forth the names and current annual salary rates or current hourly
wages of all present employees of Seller and also sets forth the earnings for
each of such employees as reflected on Form W-2 for the 1995 calendar year.
4.13 COMPLIANCE WITH LAW. Except as disclosed in Schedule 4.13, to the
knowledge of Seller, Seller's conduct of the Business has not violated and is
in compliance with all Regulations, Court Orders and Permits relating to the
Contributed Assets or the Business or operations of Seller, except where the
violation or failure to comply, individually or in the aggregate, would not
have a material adverse effect on the Contributed Assets or the Business.
Seller has not received any notice to the effect that, or otherwise been
advised that, it is not in compliance with any such Regulations, Court Orders
or Permits, which failure or violation could, in any one case or in the
aggregate, have a material adverse effect on the Contributed Assets or the
Business.
4.14 NO BROKERS. Neither Seller nor any of its officers, employees,
partners or affiliates has employed or made any agreement with any broker,
finder or similar agent or any person or firm which will result in the
obligation of Buyer or any of its affiliates to pay any finder's fee, brokerage
fees or commission or similar payment in connection with the transactions
contemplated hereby or affect the Contributed Assets or result in the creation
or imposition of any Encumbrance on the Contributed Assets or any part thereof.
4.15 PROPRIETARY RIGHTS.
(a) Proprietary Rights. Schedule 4.15 lists all of Seller's
Copyrights, Patents and Trademarks. Schedule 4.15 also sets forth for each
Trademark, the application serial number or registration number, the class of
goods covered and the expiration date for each country in which a Trademark has
been registered.
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(b) Royalties and Licenses. Except as set forth on Schedule
4.15, Seller has not granted to any person any license, option or other rights
to use in any manner any of its Proprietary Rights, whether requiring the
payment of royalties or not.
4.16 EMPLOYEE BENEFIT PLANS.
(a) Disclosure of Relevant Documents. Schedule 4.16 contains a
complete list of each "pension benefit plan" and "welfare benefit plan", as
each is defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and each material plan, arrangement, program or
policy providing for insurance coverage, disability benefits, deferred
compensation, profit-sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation which covers any
employee or former employee of Seller employed in the Business (collectively,
the "Benefit Plans"). True and complete copies of each Benefit Plan and all
amendments thereto and written summary plan descriptions thereof have been made
available to Buyer.
(b) The Internal Revenue Service has issued letters determining
that Seller's 401(k) plan (the "401(k) Plan") is qualified and that its related
trust is tax-exempt under the provisions of Sections 401(a) and 501(a) of the
Internal Revenue Code of 1986, as amended, and to Seller's knowledge, nothing
has occurred that would adversely affect such qualified and tax-exempt status.
4.17 INSURANCE. Schedule 4.17 contains a complete and accurate list of
all policies or binders of fire, liability, title, worker's compensation,
product liability and other forms of insurance (showing as to each policy or
binder the carrier, policy number, coverage limits, expiration dates, annual
premiums, a general description of the type of coverage provided, loss
experience history by line of coverage for the periods shown) maintained by
Seller on the Business, the Contributed Assets or its employees. All insurance
coverage applicable to Seller, the Business and the Contributed Assets is in
full force and effect. There is no Default under any such coverage nor has
there been any failure to give notice or present any claim under any such
coverage in a due and timely fashion. There are no outstanding unpaid premiums
except in the ordinary course of business and no notice of cancellation or
nonrenewal of any such coverage has been received.
4.18 ACCOUNTS RECEIVABLE. The accounts receivable set forth on the
Interim Balance Sheet, and all accounts receivable arising since the Interim
Balance Sheet Date, represent bona fide claims of Seller against debtors for
sales, services performed or other charges arising on or before the date
hereof. To the knowledge of Seller, said accounts receivable are subject to no
defenses, counterclaims or rights of setoff and are collectible in the ordinary
course of business without cost in collection efforts therefor, except to the
extent of the reserves for accounts receivable as set forth on the Interim
Balance Sheet.
4.19 INVENTORY. The Inventory as set forth on the Interim Balance Sheet
or arising since the Interim Balance Sheet Date was acquired and has been
maintained in accordance with the regular business practices of Seller,
consists of unused items of a quality and quantity usable or saleable in the
ordinary course of business within the past six months, and is valued at
reasonable amounts based on the normal valuation policy of Seller at prices
equal to the lower of cost or market value on a first-in first-out basis.
4.20 ENVIRONMENTAL PROTECTION. Except as disclosed on Schedule 4.20:
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(a) the Business is in compliance with all Environmental Laws;
(b) there are no existing, or, to the knowledge of Seller,
threatened, notices of violation, administrative actions, or lawsuits against
Seller relating to the use, handling, storage, treatment, recycling,
generation, or release of Hazardous Substances by the Seller in connection with
the Business; nor has the Seller received any written notification of any
allegation of any responsibility for any disposal, release, or threatened
release at any location of any hazardous substance generated or transported by
the Seller in connection with the Business;
(c) to the knowledge of the Seller, there have been (1) no
releases of any Hazardous Substances from any underground tank or related
piping at any of the Facilities, and (2) no spills, releases or handling of
Hazardous Substances at any of the Facilities that constitutes a violation or
gives rise to liability under Environmental Laws; and
(d) there are no consent decrees, consent orders, judgments,
judicial or administrative orders, or liens by any governmental authority
relating to any Environmental Law which regulate, obligate, or bind the Seller
in a manner reasonably likely to have an adverse effect on the Business or the
Contributed Assets.
4.21 MINING RIGHTS. Schedule 4.21 contains a complete and accurate
description of the Patented Mining Claims and the Unpatented Mining Claims.
Except as set forth in Schedule 4.21:
(a) With respect to the Patented Mining Claims, at the Closing,
the execution by Seller and the delivery to Newco of the Mining Deed described
in Section 3.2(a)(vi) will vest in Newco good and marketable title thereto free
and clear of all Encumbrances other than Permitted Encumbrances but subject to
and limited by the exceptions and reservations contained in the Mineral
Patents.
(b) At Closing, the execution by Seller of the Special Warranty
Deed described in Section 3.2(a)(vii) and the delivery thereof to Newco will
vest in Newco the Unpatented Mining Claims free and clear of all Encumbrances,
other than Permitted Encumbrances, arising by, through or under Seller. Seller
is in exclusive possession of each Unpatented Mining Claim; each Unpatented
Mining Claim was located on public lands of the United States open for such
location; no third party claimants have located mining claims that overlap any
of the Unpatented Mining Claims; all location and maintenance filings,
recordings, assessment work or necessary payments required by applicable
Regulations have been timely performed or made for each Unpatented Mining Claim
in order to validly maintain each Unpatented Mining Claim; each Unpatented
Mining Claim has been properly staked, posted and monumented in compliance with
all applicable Regulations; provided, however, that nothing contained in this
Agreement shall be construed as a representation or warranty by Seller that it
has made a discovery of a valuable mineral on each of the Unpatented Mining
Claims for purposes of the United States mining laws.
4.22 TAXES. All income, unemployment, social security, franchise,
property and other Taxes, charges and assessments levied, assessed or imposed
upon Seller by the United States, or any state, or any political subdivision of
either, to the extent due and payable, have been duly paid to date or are being
contested through appropriate administrative or judicial procedures, and no
liability for deficiencies or respect thereto exist. There are no tax audits
pending nor any outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state or local income
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or other tax return for any period. Seller has filed all federal, state,
local, sales, franchise, withholding and property tax returns required to be
filed. The books and records of Seller are accurate and complete with respect
to ad valorem and other taxes and assessments payable with respect to Seller
and the Contributed Assets. There are no liens, charges or encumbrances for
any taxes upon any of the Owned Real Property or other Contributed Assets of
Seller, except for liens for taxes not yet due. Seller is not nor has it been
subject to any tax, charge or other assessment in any jurisdiction outside the
Untied States.
4.23 WATER SUPPLY AND WATER RIGHTS. The water supply for the Business,
including both process water and potable/sanitary water, has at all times
during Seller's operation of the Business been legally and physically available
for diversion or delivery in sufficient quantity for the operation of the
Business. The quality of the process water supply has at all times during
Seller's operation of the Business been sufficient, without treatment by
Seller, for the operation of the Business. At the Closing, the execution by
Seller and the delivery to Newco of the Special Warranty Deed described in
Section 3.2(a)(viii) will vest in Newco all of the Water Rights, free and clear
of all Encumbrances other than Permitted Encumbrances, arising by, through or
under Seller.
4.24 SELLER COMMON UNITS. At the Closing, the execution by Seller and
the delivery to Buyer Sub 1 of the Assignment of Common Units described in
Section 3.2(c) and the delivery to Buyer Sub 1 of the Common Unit certificates
evidencing the Seller Common Units will vest in Buyer Sub 1 good and
indefeasible title to the Seller Common Units, free and clear of all
Encumbrances.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUB 1
Buyer and Buyer Sub 1 hereby represent and warrant to Seller as
follows:
5.1 ORGANIZATION OF BUYER. Each of Buyer and Buyer Sub 1 is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation with all necessary power and authority
to conduct its business as it is presently being conducted and to own and lease
its properties and assets. Each of Buyer and Buyer Sub 1 is duly qualified to
do business and is in good standing in the State of Colorado.
5.2 AUTHORIZATION. Each of Buyer and Buyer Sub 1 has all requisite
corporate power and authority, and has taken all corporate action necessary, to
execute and deliver this Agreement and the Escrow Agreement, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by each of Buyer and Buyer Sub 1 and the consummation by each
of Buyer and Buyer Sub 1 of the transactions contemplated hereby and thereby
have been duly approved by the boards of directors of Buyer and Buyer Sub 1,
respectively. No other corporate proceedings on the part of Buyer or Buyer Sub
1 are necessary to authorize this Agreement and the Escrow Agreement and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Buyer and Buyer Sub 1 and is, and upon execution and
delivery of the Escrow Agreement, the Escrow Agreement will be, legal, valid
and binding obligations of each of Buyer and Buyer Sub 1, enforceable against
each of Buyer and Buyer Sub 1 in accordance with their terms, except as may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization, and other
similar laws affecting
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creditors' rights generally and (ii) general principles of equity, regardless
of whether asserted in a proceeding in equity or at law.
5.3 NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Buyer or Buyer Sub 1 with any of the
provisions hereof, will (a) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of Buyer or Buyer Sub 1, (b) violate,
conflict with, or result in or constitute a Default under, or result in the
termination of any contract, indebtedness, note, bond, indenture, security or
pledge agreement, commitment, license, lease, franchise, permit, agreement,
authorization, concession, or other instrument or obligation to which Buyer or
Buyer Sub 1 is a party, (c) violate any Regulation or Court Order, except, in
the case of each of clauses (a), (b) and (c) above, for such violations,
Defaults, terminations, accelerations or creations of Encumbrances which, in
the aggregate, would not have a material adverse effect on the business of
Buyer or Buyer Sub 1 or either of its ability to consummate the transactions
contemplated hereby.
5.4 CONSENTS AND APPROVALS. Other than in connection with or in
compliance with the provisions of the HSR Act, no notice to, declaration,
filing or registration with, or authorization, consent or approval of, or
permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or obtained by
Buyer or Buyer Sub 1 in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
5.5 NO BROKERS. Neither Buyer nor Buyer Sub 1 nor any of either of its
officers, directors, employees, shareholders or affiliates has employed or made
any agreement with any broker, finder or similar agent or any person or firm
which will result in the obligation of Seller or any of its respective
affiliates to pay any finder's fee, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby.
5.6 LITIGATION. There is no Action pending, or to the best of Buyer or
Buyer Sub 1's knowledge, threatened (a) against, related to or affecting Buyer
or Buyer Sub 1's ability to consummate the transactions contemplated hereby or
(b) seeking to delay, limit or enjoin the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS OF SELLER, BUYER AND BUYER SUB 1
Seller covenants with Buyer and Buyer Sub 1, and Buyer and Buyer
Sub 1 each covenant with the Seller, as follows:
6.1 FURTHER ASSURANCES. Upon the terms and subject to the conditions
contained herein, the parties agree, both before and after the Closing, (i) to
use all reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
(ii) to execute any documents, instruments or conveyances of any kind which may
be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder, and (iii) to cooperate with each other in
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connection with the foregoing. Without limiting the foregoing, the parties
agree to use their respective reasonable efforts (A) to obtain all necessary
waivers, consents and approvals from other parties to the Contracts and Leases
to be assumed by Newco, (B) to obtain all necessary Permits as are required to
be obtained under any Regulations, (C) to defend all Actions challenging this
Agreement or the consummation of the transactions contemplated hereby, (D) to
lift or rescind any injunction or restraining order or other Court Order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, (E) to give all notices to, and make all registrations and
filings with third parties, including without limitation submissions of
information requested by governmental authorities, and (F) to fulfill all
conditions to this Agreement. To the extent that any of Seller's rights that
would be included in the Contributed Assets are not so included as a result of
the inability to obtain a required third-party consent to assignment of such
rights, Seller shall not assign or transfer such rights to any other party
without Newco's prior consent, which Newco may withhold in its sole and
absolute discretion. To the extent any warranty, representation or guarantee
referenced in clause (n) of the term "Contributed Assets" in Section 1.1 herein
is not assignable, Seller agrees to permit Newco to enforce such warranty,
representation or guarantee (at Newco's expense) in the name of Seller upon
prior written notice to Seller provided that Buyer shall indemnify Seller for
any Damages (as defined in Section 10.4(a)) incurred by Seller resulting from
any such enforcement action.
6.2 HSR ACT FILINGS. As soon as reasonably practicable after the
execution and delivery of this Agreement, Buyer and Seller shall file the
required notifications and forms with the Bureau of Competition of the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "DOJ") pursuant to and in compliance with the HSR Act with respect
to the transactions contemplated by this Agreement and by the agreement
referenced in Section 7.9 herein. Thereafter, the parties hereto agree to (i)
use reasonable efforts to obtain early termination of the applicable waiting
period under the HSR Act, (ii) use reasonable efforts to respond as promptly as
practicable to all inquiries received from the FTC or the DOJ for additional
information or documentation, and (iii) cooperate with one another in
satisfying such requirements. Each party shall deliver to the other party a
copy of any information to be filed by such party prior to the filing thereof.
6.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing, each party shall give prompt notice to the other of the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of such party contained in this Agreement
or in any exhibit or schedule hereto to be untrue or inaccurate in any material
respect.
6.4 FULL ACCESS. Seller will permit Representatives of Buyer and Buyer
Sub 1 to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Seller, to all premises,
properties, personnel, books, records, contracts, and documents of or
pertaining to the Business. Any information Buyer or Buyer Sub 1 receives from
Seller or its affiliates or partners in the course of the reviews contemplated
by this Section 6.4 shall be subject to the provisions of Section 11.11 herein.
Such inspection rights shall include the right of Buyer and Buyer Sub 1, at
either of its option, to conduct or cause to be conducted such environmental
audits/investigations of the Real Property as either deems advisable (and as do
not interfere with the normal business operations of Seller), including Phase I
Environmental Site Assessments and, if deemed necessary by Buyer or Buyer Sub
1, Phase II Environmental Site Assessments; provided that Buyer shall indemnify
Seller for any damage to the Real Property caused by such environmental
audits/investigations. Any costs of such environmental audits/investigations
shall be borne by Buyer or Buyer Sub 1.
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6.5 CONDUCT OF BUSINESS. From the date hereof through the Closing,
Seller shall, except as contemplated by this Agreement, or as consented to by
Buyer or Buyer Sub 1 in writing, operate the Business in the ordinary course of
business and substantially in accordance with past practice and will not take
any action inconsistent with this Agreement or with the consummation of the
Closing. Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, Seller shall not:
(i) sell, lease, transfer or otherwise dispose of any Owned
Real Property or any other material Contributed Asset,
except for sales of inventory in the ordinary course of
business;
(ii) consolidate with, or merge with or into, any corporation,
partnership, association, trust or any other entity;
(iii) create or incur any lien, charge or other Encumbrance upon
the Contributed Assets or suffer to exist any such liens,
charges, or other Encumbrances (other than Permitted
Encumbrances) except in the ordinary course of business and
consistent with past practice;
(iv) enter into any Contracts (or amend any existing Contract)
or engage in any transaction not in the ordinary course of
business and consistent with past practice except for any
such Contracts or transactions that do not relate to or
affect the Business or Contributed Assets;
(v) increase the benefits payable by Seller under any bonus,
insurance, severance, deferred compensation, pension,
retirement, profit sharing, or other employee benefit plan,
program or arrangement made to, for or with any of the
employees, except for any such increases as do not relate
to employees contemplated to be offered employment by
Newco, or enter into any collective bargaining, union or
labor Contract;
(vi) fail to maintain the books and records of Seller in the
usual, regular and ordinary manner;
(vii) enter into any Contract (or amend any existing Contract) to
do any of the foregoing; or
(viii) take any action which would cause any representation or
warranty of Seller contained in this Agreement to be untrue
or incorrect as of the date when made.
6.6 EMPLOYEE MATTERS.
(a) Prior to Closing, Buyer, on behalf of Newco, shall extend
offers of at will employment, effective immediately following Closing, to all
active hourly and salaried personnel that Buyer determines are necessary to
operate the Business except for key management personnel of Seller on terms and
conditions which are substantially the same as those currently provided by
Buyer to its present gypsum business employees. All of such employees who
accept such offer of employment are
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hereinafter referred to as the "New Employees." "Active" hourly and salaried
employees shall mean those hourly and salaried employees of Seller who are at
work performing their respective job functions as of the date hereof and as of
the Closing Date. Buyer shall provide to Seller, at least seven days prior to
the Closing Date, written notice indicating to which of Seller's employees
Buyer, on behalf of Newco, will extend offers of employment; provided that
Buyer shall not be required to give such notice prior to 40 days following the
date of this Agreement.
(b) Effective immediately after Closing, Newco shall cause the
New Employees to be covered by one or more group health benefit plans ("Buyer's
Health Plans") which shall provide benefits to the New Employees and their
dependents which in the aggregate are substantially comparable to the benefits
which Buyer provides to its present gypsum business employees and their
dependents. Buyer's Health Plans shall provide coverage immediately upon
employment, and shall not contain any "pre-existing conditions" requirements
which would cause any of the New Employees or their dependents to be excluded
from Buyer's Health Plans immediately after Closing.
(c) Each of the New Employees, at his or her option, shall have
the right to "roll-over" his or her vested account balances in the 401(k) Plan
of Seller into Buyer's 401(k) Plan(s) and the New Employees shall have the
right after the Closing Date to participate in Buyer's 401(k) Plans in
accordance with the terms of such plans.
6.7 TITLE COMMITMENTS AND SURVEYS. Seller shall obtain, at its cost
and expense, from one or more title companies reasonably acceptable to Buyer,
and shall deliver to Newco at the Closing or as soon thereafter as reasonably
possible, with respect to each parcel or tract of land constituting the Owned
Real Property, and the Patented Mining Claims, an Owner's Policy of Title
Insurance on Form B, 1992 that provides substantially the same coverage as a
standard ALTA Owner's Policy (each, a "Title Policy") in an amount reasonably
acceptable to Buyer. At the Closing, Seller shall provide to such title
companies affidavits to permit the title companies to delete standard printed
exceptions in the Title Policies with respect to the Owned Real Property and,
to the extent possible (without additional expense to Seller), the Patented
Mining Claims and such other affidavits and other documents as are reasonably
requested by such title companies to enable them to provide to Newco at the
Closing an unconditional written undertaking by such title companies to provide
the Title Policies to Newco in the form and manner contemplated hereby. The
Title Policies shall insure to Newco fee simple title to the Owned Real
Property in marketable or indefeasible condition customary to the State of
Colorado, subject only to the Permitted Encumbrances. In connection with such
obligation, within 20 days of the date hereof, Seller, at its cost and expense,
shall cause to be prepared and delivered to Buyer, title commitments (including
all title exception documents) and ALTA surveys (which show the location of
improvements, easements of record and other evidence of adverse rights) of each
parcel or tract of land constituting the Owned Real Property and title
commitments (including all title exception documents) and, to the extent
available, BLM plat maps of the parcels or tracts of land covered by Patented
Mining Claims. Within ten days of receipt thereof, Buyer shall notify Seller
of Buyer's objections, if any, to matters reflected in such commitments and
surveys. Thereafter, Buyer and Seller shall diligently work to resolve such
objections.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
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The obligations of Seller to consummate the transactions provided
for hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by Seller:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Buyer and Buyer Sub 1 contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date and Buyer
and Buyer Sub 1 shall have performed and satisfied in all material respects all
agreements and covenants required hereby to be performed by each of them prior
to or on the Closing Date.
7.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All consents,
approvals and waivers from governmental authorities and other parties necessary
to permit Seller to contribute the Contributed Assets and transfer the Assumed
Liabilities to Newco and to transfer to Buyer Sub 1 the Seller Common Units as
contemplated hereby shall have been obtained, unless (a) the failure to obtain
any such consent, approval or waiver would not have a material adverse effect
upon Seller, (b) Buyer indemnifies Seller with respect thereto or (c) with
respect to any Contributed Asset, Seller and Buyer determine that such
Contributed Asset shall be excluded from the contribution consummated at the
Closing (in which case the consideration to be paid by Buyer Sub 1 shall be
reduced by the amount allocated to such Contributed Asset). Seller shall be
satisfied that all approvals required under any Regulations to carry out the
transactions contemplated by this Agreement shall have been obtained and that
the parties shall have complied with all Regulations applicable to the
acquisition contemplated hereby. The applicable waiting period, including any
extension thereof, under the HSR Act shall have expired or been terminated.
7.3 NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage Seller, the Contributed Assets or
the Business materially if the transactions contemplated hereby are
consummated, including without limitation any material adverse effect on the
right or ability of Newco to own, operate, possess or transfer the Contributed
Assets after the Closing. There shall not be any Regulation or Court Order
that makes the purchase and sale of the Seller Common Units or the contribution
of the Contributed Assets contemplated hereby illegal or otherwise prohibited.
7.4 OPINION OF COUNSEL. Buyer shall have delivered to Seller an
opinion of counsel to Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to Seller.
7.5 CERTIFICATES. Each of Buyer and Buyer Sub 1 shall furnish Seller
with such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article VII as may be reasonably requested by
Seller.
7.6 CORPORATE DOCUMENTS. Seller shall have received from each of Buyer
and Buyer Sub 1 resolutions adopted by the board of directors of Buyer
approving this Agreement and the transactions contemplated hereby, certified by
Buyer's corporate secretary.
7.7 ASSUMPTION DOCUMENT. Newco shall have executed and delivered the
Assumption Document.
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7.8 ESCROW AGREEMENT AND INDEMNITY ESCROW AGREEMENT. Buyer and Buyer
Sub 1 shall have executed and delivered the Escrow Agreement and Newco, Buyer
and Buyer Sub 1 shall have executed and delivered the Indemnity Escrow
Agreement, each in form and substance reasonably satisfactory to Seller.
7.9 SIMULTANEOUS PURCHASE OF NES COMMON UNITS. Buyer Sub 2 shall have
simultaneously completed the acquisition of the NES Common Units on terms and
conditions satisfactory to Buyer Sub 2 and NES pursuant to an agreement among
Buyer, Buyer Sub 2 and NES dated as of the date hereof, including the following
terms: the purchase price for the NES Common Units shall be $7,365,000 plus
the amount specified in Section 4.2 of the Energy Contract, and the indemnity
and survival provisions shall be similar to those set forth in Section 10.3 and
10.4 herein, except that the indemnity escrow amount shall be ten percent of
the purchase price therein and the threshold amount therein for recovery from
escrow shall be $85,000. The Energy Contract and the NES Ground Lease shall
have been simultaneously terminated by NES and Seller.
7.10 WARN ACT NOTICE. In the event that, within fourteen days of the
date hereof, Seller provides to its employees any notice or communication under
the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act"),
then at least sixty days from the date of such notice or communication shall
have elapsed.
7.11 INVESTMENT REPRESENTATION LETTER. Seller shall have received from
Buyer Sub 1 an investment representation letter in form and substance
reasonably satisfactory to Seller.
7.12 RATIFICATION AGREEMENT. Newco shall have executed and delivered to
Seller an agreement ratifying its obligations hereunder in form and substance
reasonably satisfactory to Seller.
ARTICLE VIII
CONDITIONS TO BUYER'S AND BUYER SUB 1'S OBLIGATIONS
The obligations of Buyer and Buyer Sub 1 to consummate the
transactions provided for hereby are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer and Buyer Sub 1:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, except where the failure
to be true and correct could not reasonably be expected to have a material
adverse effect on the Contributed Assets, the Business, or the ability of Newco
to operate the Business, and Seller shall have performed and satisfied in all
material respects all agreements and covenants required hereby to be performed
by it prior to or on the Closing Date.
8.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All Permits,
consents, approvals and waivers from governmental authorities and other parties
necessary to the consummation of the transactions contemplated hereby and for
the operation of the Business by Buyer (including, without limitation, all
required third party consents to the assignment of the Leases and Contracts to
be assumed by Newco) shall have been obtained, unless (a) the failure to obtain
any such Permit, consent, approval or waiver would not have a material adverse
effect upon Newco with respect to the
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Contributed Assets or the Business or (b) with respect to any Contributed
Asset, Seller and Buyer determine that such Contributed Asset shall be excluded
from the transfers consummated at the Closing (in which case the consideration
to be paid by Buyer Sub 1 shall be reduced by the amount allocated to such
Contributed Asset) or (c) Buyer shall have been reasonably satisfied that any
such Permits, consents, approvals or waivers will be obtained subsequent to the
Closing without undue difficulty or expense to Newco and will not include
requirements or conditions beyond the requirements and conditions included in
Seller's Permits that could reasonably be expected to have a material adverse
effect on Newco with respect to the Contributed Assets or the Business,
provided that (i) to the extent not prohibited under applicable Regulations,
Seller agrees to permit Newco to use Permits of Seller to operate the Business
until Newco has received all such Permits provided that Buyer shall indemnify
Seller for any Damages (as defined in Section 10.4(a)) incurred by Seller
arising out of such use and (ii) Seller shall take no action that will cause
any of such Permits to be revoked or terminated prior to Newco's receipt of
such Permits. Buyer shall be satisfied that all approvals required under any
Regulations to carry out the transactions contemplated by this Agreement shall
have been obtained and that the parties shall have complied with all
Regulations applicable to the acquisition contemplated hereby. The applicable
waiting period, including any extension thereof, under the HSR Act shall have
expired or been terminated.
8.3 NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage Buyer, Buyer Sub 1, Newco, the
Contributed Assets or the Business materially if the transactions contemplated
hereby are consummated, including without limitation any material adverse
effect on the right or ability of Newco to own, operate, possess or transfer
the Contributed Assets after the Closing. There shall not be any Regulation or
Court Order that makes the purchase and sale of the Seller Common Units or the
contribution of the Contributed Assets contemplated hereby illegal or otherwise
prohibited.
8.4 OPINION OF COUNSEL. Seller shall have delivered to Buyer and Buyer
Sub 1 an opinion of counsel to Seller, dated as of the Closing Date in form and
substance reasonably satisfactory to Buyer.
8.5 CERTIFICATES. Seller shall furnish Buyer and Buyer Sub 1 with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Buyer and Buyer Sub 1.
8.6 CORPORATE DOCUMENTS. Buyer and Buyer Sub 1 shall have received
from Seller resolutions adopted by the Executive Committee of Seller approving
this Agreement and the transactions contemplated hereby.
8.7 CONVEYANCING DOCUMENTS; RELEASE OF ENCUMBRANCES. Seller shall have
executed and delivered each of the documents described in Section 3.2 hereof
and such other documents as shall be sufficient to effect the contribution and
assignment to Newco of the Contributed Assets and the transfer to Buyer Sub 1
of the Seller Common Units in the manner contemplated by this Agreement and
Seller shall have filed (where necessary) and delivered to Newco all documents
necessary to release the Contributed Assets from all Encumbrances other than
Permitted Encumbrances (except as otherwise set forth herein), which documents
shall be in form and substance reasonably satisfactory to Buyer's counsel.
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8.8 PRELIMINARY CLOSING BALANCE SHEET. Seller shall have prepared and
delivered to Buyer and Buyer Sub 1 no later than five (5) days prior to Closing
the Preliminary Closing Balance Sheet.
8.9 ESCROW AGREEMENT AND INDEMNITY ESCROW AGREEMENT. Seller shall have
executed and delivered the Escrow Agreement and the Indemnity Escrow Agreement,
each in form and substance reasonably satisfactory to Buyer.
8.10 SECTION 1060 ALLOCATION. Seller shall have executed a document to
evidence its agreement as to the allocation of the Purchase Price among the
classes of Contributed Assets for purposes of Section 1060 of the Code and to
be bound by such agreement in connection with the filings by Buyer and Seller
of their respective Forms 8594.
8.11 SIMULTANEOUS PURCHASE OF NES COMMON UNITS. Buyer Sub 2 shall have
simultaneously completed the acquisition of the NES Common Units on terms and
conditions satisfactory to Buyer Sub 2 and NES pursuant to an agreement among
Buyer, Buyer Sub 2 and NES dated as of the date hereof, including the following
terms: the purchase price for the NES Common Units shall be $7,365,000 plus
the amount specified in Section 4.2 of the Energy Contract, and the indemnity
and survival provisions shall be similar to those set forth in Section 10.3 and
10.4 herein, except that the indemnity escrow amount shall be ten percent of
the purchase price therein and the threshold amount therein for recovery from
escrow shall be $85,000. The Energy Contract shall have been simultaneously
terminated by NES and Seller. The Seller Common Units and the NES Common Units
shall constitute all of the issued and outstanding Common Units of Newco.
8.12 RESIGNATIONS AND MINUTE BOOK. The managers and officers of Newco
shall have tendered their written resignations effective on the Closing Date
and Buyer shall have received the minute book of Newco.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
9.1 RISK OF LOSS. From the date hereof through the Closing on the
Closing Date, all risk of loss or damage to the property included in the
Contributed Assets shall be borne by Seller, and thereafter shall be borne by
Newco. If any material portion of the Contributed Assets is destroyed or
damaged by fire or any other cause on or prior to the Closing Date, other than
use, wear or loss in the ordinary course of business, Seller shall give written
notice to Buyer as soon as practicable after, but in any event within five (5)
calendar days of discovery of such damage or destruction, the amount of
insurance, if any, covering such Contributed Assets and the amount, if any,
which Seller is otherwise entitled to receive as a consequence. Prior to the
Closing, Buyer shall have the option, which shall be exercised by written
notice to Seller within ten (10) calendar days after receipt of Seller's notice
or if there is not ten (10) calendar days prior to the Closing Date, as soon as
practicable prior to the Closing Date, of (a) having Newco accept such
Contributed Assets in their destroyed or damaged condition in which event Newco
shall be entitled to the proceeds of any insurance or other proceeds payable
with respect to such loss, and the full Purchase Price shall be paid for the
Seller Common Units, (b) excluding such Contributed Assets from this Agreement,
in which event the Purchase Price shall be
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reduced by an amount allocated to such Contributed Assets as mutually agreed
between the parties or determined by appraisal of a third party mutually
acceptable to the parties, or (c) terminating this Agreement in accordance with
Section 11.1. If Newco accepts such Contributed Assets, then after the
Closing, any related insurance or other related proceeds shall belong, and
shall be assigned to, Newco without any reduction in the Purchase Price;
otherwise, such insurance proceeds shall belong to Seller.
9.2 CONSENTS TO ASSIGNMENT. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, Lease, Permit or any claim or right or any benefit arising thereunder
or resulting therefrom if an attempted assignment thereof, without the consent
of a third party thereto, would constitute a Default thereof or in any way
adversely affect the rights of Newco thereunder. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would
affect the rights thereunder so that Newco would not receive all such rights,
Seller will cooperate with Newco, in all reasonable respects, to provide to
Newco the benefits under any such Contract, Lease, Permit or any claim or
right, including without limitation enforcement (at the expense of Newco) for
the benefit of Newco of any and all rights of Seller against a third party
thereto arising out of the Default or cancellation by such third party or
otherwise, and to permit Newco to enforce such rights at Newco's expense;
provided, that Buyer shall indemnify Seller for any Damages (as defined in
Section 10.4(a)) incurred by Seller resulting from any such enforcement action.
Nothing in this Section 9.2 shall affect Buyer's right to terminate this
Agreement under Sections 8.2 and 11.1 in the event that any consent or approval
to the contribution to Newco of any Contributed Asset is not obtained.
ARTICLE X
ACTIONS BY SELLER AND BUYER, BUYER SUB 1 AND NEWCO
AFTER THE CLOSING
10.1 COLLECTION OF ACCOUNTS RECEIVABLE AND LETTERS OF CREDIT. (a) At
the Closing, Newco will acquire hereunder, and thereafter Newco or its designee
shall have the right and authority to collect for Newco's or its designee's
account, all receivables, letters of credit and other items which constitute a
part of the Contributed Assets, and Seller shall within five (5) business days
after receipt of any payment in respect of any of the foregoing, properly
endorse and deliver to Newco any letters of credit, documents, cash or checks
received on account of or otherwise relating to any such receivables, letters
of credit or other items. Seller shall promptly transfer or deliver to Newco
or its designee any cash or other property that Seller may receive in respect
of any deposit, prepaid expense, claim, contract, license, lease, commitment,
sales order, purchase order, letter of credit or receivable of any character,
or any other item, constituting a part of the Contributed Assets. Seller will
cooperate with Newco at its reasonable request, on and after the Closing Date,
at no material cost to Seller, in endeavoring to effect the collection of
accounts receivable owing to Seller which are to be contributed to Newco
hereunder, and agrees that Newco shall have the right and authority to collect,
for the account of Newco, all receivables and other items which are to be
contributed to Newco as provided herein. Seller will, upon request from Newco,
endorse any checks received on account of any such receivables or other items.
Seller agrees that it will transfer or deliver to Newco, from time to time, any
cash or other property that Seller may receive in respect of any claims,
rebates, contracts, licenses, leases, commitments, sales orders, purchase
orders, receivables of any other character or any of the other Contributed
Assets contributed to Newco hereunder.
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(b) Newco shall proceed diligently and in good faith to collect
payment on all accounts receivable included in the Contributed Assets in
accordance with Buyer's normal business practices, and apply all collections
thereon to customer accounts on a first in, first out basis, except with
respect to customer payments on disputed accounts where the customer otherwise
designates application of the payment. In the event that Newco shall be unable
to collect the aggregate amount of any of such accounts receivable by the one
hundred and twentieth (120th) day after the Closing Date, Seller shall, within
ten (10) days after receipt of notice from Newco specifying the accounts and
unpaid balances, purchase such uncollected accounts receivable from Newco at a
purchase price equal to their then unpaid balance, which purchase price, to the
extent it does not exceed $40,000, shall be paid out of the Escrowed Funds
referenced in Section 10.4(f) herein. Upon Seller's purchase of any such
accounts receivable pursuant to this Section 10.1(b), Newco shall thereupon
assign to Seller all remaining rights in and to said accounts receivable, free
and clear of all Encumbrances, and Seller may take any action which it deems
necessary or appropriate to collect the balance thereof, at Seller's cost and
expense.
10.2 BOOKS AND RECORDS; TAX MATTERS.
(a) Books and Records. Each party agrees that it will
cooperate with and make available to the other party, during normal business
hours, all Books and Records, information and employees (with, at most, minor
disruption of employment) retained and remaining in existence after the Closing
which are necessary or useful in connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party requesting any such Books and Records,
information or employees shall bear all of the out-of-pocket costs and expenses
reasonably incurred in connection with providing such Books and Records,
information or employees. On or prior to April 30, 1997, Seller will provide
Buyer Sub 1 with a complete listing of the tax basis of each of the Contributed
Assets as of the Closing Date with sufficient detail to enable Buyer Sub 1 and
Newco to prepare complete and accurate tax returns after the Closing. Seller
agrees to provide to Buyer, at Seller's cost and expense, audited financial
statements of Seller as of December 31, 1996, so as to enable Buyer and its
Affiliates to timely comply with applicable federal securities laws, including,
without limitation, the requirements of Item 7(b) of Form 8-K and Rule 3-05 of
Regulation S-X, both promulgated pursuant to the Securities Exchange Act of
1934, as amended. All information received pursuant to this Section 10.2(a)
shall be subject to the terms of Section 11.11 herein.
(b) Cooperation and Records Retention. Seller, Buyer, Buyer
Sub 1 and Newco shall (i) each provide the other with such assistance as may
reasonably be requested by any of them in connection with the preparation of
any return, audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to Liability for Taxes or necessary for the
calculation of the Closing Working Capital, (ii) each retain and provide the
other with any records or other information that may be relevant to such
return, audit or examination, proceeding or determination, and (iii) each
provide the other with any final determination of any such audit or
examination, proceeding, or determination that affects any amount required to
be shown on any tax return of the other for any period. Without limiting the
generality of the foregoing, Buyer, Buyer Sub 1, Newco and Seller shall each
retain, until the applicable statutes of limitations (including any extensions)
have expired, copies of all tax returns, supporting work schedules, and other
records or information that may be relevant to such returns for all tax periods
or portions thereof ending on or before the Closing Date and shall not destroy
or otherwise dispose of any such records without first providing the other
party with a reasonable opportunity to review and copy the same.
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10.3 SURVIVAL OF REPRESENTATIONS, ETC. Except as provided in the last
sentence of this Section 10.3, all of the representations, warranties,
covenants and agreements made by each party in this Agreement or in any
attachment, Schedule, certificate, document or list delivered by any such party
pursuant hereto shall survive the Closing for a period of (and claims based
upon or arising out of such representations, warranties, covenants and
agreements may be asserted at any time before the date which shall be) two
years following the Closing, except that Newco's assumption of Liabilities set
forth in Section 2.2 and the Assumption Document shall survive without
limitation as to time. Each party hereto shall be entitled to rely upon the
representations and warranties of the other party set forth in this Agreement.
The termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any Claim made by such party in a
writing received by the other party prior to the expiration of the applicable
survival period provided herein. Notwithstanding the foregoing, the
representations and warranties of Seller contained in Section 4.20 in this
Agreement and the representations and warranties as to title contained in
Sections 4.4, 4.5, 4.21, 4.23 and 4.24 in this Agreement shall survive the
Closing for a period of (and claims based upon or arising out of such
representations and warranties may be asserted at any time before the date
which shall be) five years following the Closing.
10.4 INDEMNIFICATIONS.
(a) By Seller. Seller shall defend, indemnify and hold
harmless Buyer, Buyer Sub 1 and Newco from and against any and all losses,
damages, lawsuits, claims, demands and expenses (including without limitation,
reasonable attorneys' fees incurred in the investigation, defense or settlement
of any of the foregoing and court costs and other reasonable costs and expenses
of litigation) (herein, "Damages") resulting from (i) any breach of any
representation or warranty made by Seller in or pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by Seller in this Agreement;
(iii) any lawsuit, claim, proceeding or other Action that has been brought
against Seller prior to the Closing existing at or prior to the Closing or any
lawsuit, claim, proceeding or other Action involving an injury or damage (or an
allegation of an injury or damage) to individual persons or to the property of
others brought against Buyer subsequent to the Closing caused by events, acts
or omissions relating to the Contributed Assets, the Excluded Assets or the
Business occurring prior to the Closing, (iv) any income Tax arising out of or
resulting from the contribution to Newco of the Contributed Assets, the
assumption by Newco of the Assumed Liabilities or the transfer to Buyer Sub 1
of the Seller Common Units pursuant to this Agreement, or arising out of or
resulting from the operation of the Business prior to the Closing; (v) any
failure to comply with the Bulk Sales Act or similar statute in any applicable
jurisdiction; (vi) product liability or product defect claims relating to
products sold by Seller and delivered prior to the Closing; and (vii) claims
arising under or relating to the Paper Contract (whether in contract or tort);
or (viii) Seller's failure to provide to its employees any notice or
communication required by the WARN Act or Seller's failure to provide such
notice or communication at least sixty days prior to the Closing. Any claim
for indemnification under this Section 10.4(a) shall be brought no later than
two years following the Closing, except that the limitation for a claim based
on a breach of the representations and warranties contained in Section 4.20 and
the representations and warranties as to title contained in Sections 4.4, 4.5,
4.21, 4.23 and 4.24 shall be five years.
(b) By Buyer. Buyer shall indemnify and hold harmless Seller
from and against any and all Damages resulting from (i) any breach of any
representation or warranty made by Buyer or Buyer Sub 1 in or pursuant to this
Agreement; (ii) any breach of any covenant or agreement made by Buyer, Buyer
Sub 1 or Newco in or pursuant to this Agreement; or (iii) from and after the
Closing, any
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Assumed Liability and any other Liability incurred by Buyer, Buyer Sub 1 or
Newco arising out of events occurring subsequent to the Closing relating to the
Business or the Contributed Assets. Any claim for indemnification under this
Section 10.4(b) shall be brought no later than two years following the Closing,
except that there shall be no limitation as to time for any claim under Section
10.4(b)(iii).
(c) Cooperation. With respect to any claims by any third party
that gives rise to or could give rise to indemnification hereunder, the
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and its attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; provided, however,
that the indemnified party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers.
(d) Defense of Claims. If a claim for Damages (a "Claim") is
to be made by a party entitled to indemnification hereunder against the
indemnifying party, the party claiming such indemnification shall, subject to
Section 10.3, give written notice (a "Claim Notice") to the indemnifying party
as soon as practicable after the party entitled to indemnification becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.4. With respect to any
claim by a third party that gives rise to or could give rise to indemnification
hereunder, if any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or
summons). After such notice, the indemnifying party shall be entitled, if it so
elects at its own cost, risk and expense (provided, that the indemnified party
agrees to repay such expenses if it is ultimately determined that such
indemnified party was not entitled to indemnification), (i) to take control of
the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys of its own choice to handle and defend the same unless the
named parties to such action or proceeding include both the indemnifying party
and the indemnified party and the indemnified party has been advised in writing
by counsel that there may be one or more legal defenses available to such
indemnified party that are different from or additional to those available to
the indemnifying party, in which event the indemnified party shall be entitled
to a single separate counsel of its own choosing, and (iii) to compromise or
settle such claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably
withheld. If the indemnifying party fails to assume the defense of such claim
within fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and
risk of the indemnifying party. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement, and the indemnifying party shall have the option to assume control
of such defense. The indemnifying party shall be liable for any settlement of
any action effected pursuant to and in accordance with this Section 10.4 and
for any final judgment (subject to any right of appeal), and the indemnifying
party agrees to indemnify and hold harmless the indemnified party from and
against any Damages by reason of such settlement or judgment.
(e) Brokers and Finders. Pursuant to the provisions of this
Section 10.4, each of Buyer and Seller shall indemnify, hold harmless and
defend the other party from the payment of any and all broker's and finder's
expenses, commissions, fees or other forms of compensation which may be due or
payable from or by the indemnifying party, or may have been earned by any third
party
32
<PAGE> 37
acting on behalf of the indemnifying party in connection with the negotiation
and execution hereof and the consummation of the transactions contemplated
hereby. Buyer and Seller acknowledge that Seller has engaged the firm of
Donaldson, Lufkin & Jenrette Securities Corporation in connection with the
transactions contemplated by this Agreement, and Seller shall be responsible
for any fees or expenses of such firm.
(f) Limitations. Except as provided in the next sentence of
this Section 10.4(f), neither Buyer nor Seller shall be liable to the other
under this Section 10.4 for any Damages until the aggregate amount otherwise
due the party being indemnified (and for such purpose, Buyer, Buyer Sub 1 and
Newco shall collectively be considered one party) exceeds an accumulated total
of Five-Hundred-Thousand Dollars ($500,000) and only for such Damages that
exceed such amount. The foregoing limitation shall not apply to any claim of
indemnification by Buyer under Sections 10.1, 10.2, 10.4(a)(v), 10.4(a)(vii),
10.4(a)(viii), 10.4(e), 10.6, 10.7 (but only as Section 10.7 applies to any
Damages associated with respect to seeking and obtaining specific performance),
or 11.7 of this Agreement or by Seller under Sections 2.7, 6.1, 6.4, 8.2, 9.2,
10.2, 10.4(e), 10.7 (but only as Section 10.7 applies to any Damages associated
with respect to seeking and obtaining specific performance), or 11.7 of this
Agreement, and any amounts recovered by Buyer or Seller thereunder shall not be
counted against such respective party's threshold amount. Buyer's, Buyer Sub
1's and Newco's sole recourse against Seller for indemnity under this Agreement
shall be to recover against the Escrowed Funds as defined in the Indemnity
Escrow Agreement (which Escrowed Funds shall be in an amount equal to ten
percent of the Purchase Price, and shall be paid on the Closing Date by Buyer
Sub 1 into the escrow account to be established pursuant to the Indemnity
Escrow Agreement), and Seller shall have no liability to Buyer, Buyer Sub 1 or
Newco in excess of such Escrowed Funds.
(g) Representatives. No individual Representative of any party
shall be personally liable for any Damages under the provisions contained in
this Section 10.4. Nothing herein shall relieve either party of any Liability
to make any payment expressly required to be made by such party pursuant to
this Agreement.
10.5 BULK SALES. It may not be practicable to comply or attempt to
comply with the procedures of the "Bulk Sales Act" or similar law of any or all
of the states in which the Contributed Assets are situated or of any other
state which may be asserted to be applicable to the transactions contemplated
hereby. Accordingly, each of Buyer, Buyer Sub 1 and Newco waives any
requirements for compliance with any or all of such laws.
10.6 TAXES. Subject to Section 2.7, Seller shall pay, or cause to be
paid, when due all Taxes, other than Taxes that are Assumed Liabilities, for
which Seller is or may be liable or that are or may become payable with respect
to all taxable periods ending on or prior to the Closing Date.
10.7 INDEMNIFICATION AS EXCLUSIVE REMEDY. With respect to any matter as
to which indemnification is provided pursuant to this Article X, such
indemnification shall be the sole remedy available to the indemnified party,
except that to the extent available under applicable law, each party hereto may
seek specific performance by the other party hereto of its obligations under
this Agreement and/or injunctive relief against the other party's activities,
actions, or inactions in breach of this Agreement.
33
<PAGE> 38
ARTICLE XI
MISCELLANEOUS
11.1 TERMINATION.
(a) Termination. This Agreement may be terminated at any time
prior to Closing:
(i) By mutual written consent of Buyer, Buyer Sub 1
and Seller;
(ii) By Buyer, Buyer Sub 1 or Seller if the Closing
shall not have occurred on or before February 27, 1997 (or such later date as
contemplated by Section 7.10); provided however, that this provision shall not
be available to Buyer or Buyer Sub 1 if Seller has the right to terminate this
Agreement under clause (iv) of this Section 11.1(a), and this provision shall
not be available to Seller if Buyer or Buyer Sub 1 has the right to terminate
this Agreement under clause (iii) of this Section 11.1(a);
(iii) By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Seller pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied (and such condition is not waived in writing by Buyer and Buyer Sub
1) on or prior to the Closing Date, or the occurrence of any event which
results or would result in the failure of a condition set forth in Article VIII
to be satisfied on or prior to the Closing Date, provided, however, that
neither Buyer nor Buyer Sub 1 may terminate this Agreement prior to the Closing
if Seller has not had an adequate opportunity to cure such failure; or
(iv) By Seller if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer or Buyer Sub 1 pursuant to
the terms of this Agreement or the failure of a condition set forth in Article
VII to be satisfied (and such condition is not waived in writing by Seller) on
or prior to the Closing Date, or the occurrence of any event which results or
would result in the failure of a condition set forth in Article VII to be
satisfied on or prior to the Closing Date; provided, however, that, Seller may
not terminate this Agreement prior to the Closing Date if Buyer and Buyer Sub 1
have not had an adequate opportunity to cure such failure.
(b) In the Event of Termination. In the event of termination
of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;
(ii) The provisions of Section 11.11 shall continue in
full force and effect; and
(iii) No party hereto shall have any Liability to any
other party to this Agreement, except as stated in subsections (i) and (ii) of
this Section 11.1(b), except for any willful breach of this Agreement occurring
prior to the proper termination of this Agreement. The foregoing provisions
shall not limit or restrict the availability of specific performance or other
injunctive relief to
34
<PAGE> 39
the extent that specific performance or such other relief would otherwise be
available to a party hereunder.
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned or delegated by any party without the
prior written consent of the other party, except that, subsequent to the
Closing, each of Buyer Sub 1 and Newco may assign (whether by operation of law
or otherwise) its rights and benefits hereunder (or any portion thereof) or
delegate its obligations hereunder (or any portion thereof) to one or more of
Buyer, Buyer Sub 1 and Newco. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person shall have any
right, benefit or obligation under this Agreement as a third party beneficiary
or otherwise, except that, upon its formation, Newco shall be intended
third-party beneficiary of this Agreement.
11.3 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
If to Seller, addressed to:
Eagle-Gypsum Products
740 Highway 6
Gypsum, CO 81637
Attention: President
Telephone: (970) 524-8110
Telecopier: (970) 524-8140
With a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: Stephen S. Bowen
Telephone: (312) 876-7652
Telecopier: (312) 993-9767
If to Buyer or Buyer Sub 1, addressed to:
Centex American Gypsum Company or
Centex Eagle Gypsum Company (as applicable)
c/o Centex Construction Products, Inc.
3710 Rawlins, Suite 1600
Dallas, Texas 75219
Attn: President
Telephone: (214) 559-6507
Telecopier: (214) 559-6554
35
<PAGE> 40
With a copy to:
Centex American Gypsum Company or
Centex Eagle Gypsum Company (as applicable)
c/o Centex Corporation
2728 N. Harwood St., 9th Floor
Dallas, Texas 75201-1516
Attn: CXP Corporate Counsel
Telephone: (214) 981-6742
Telecopier: (214) 981-6855
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 CHOICE OF LAW. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the internal laws of
the State of Delaware (without reference to the choice of law provisions of
Delaware law), except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all schedules hereto and other documents contemplated hereby, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings, negotiations and discussions, of the parties with
respect to the subject matter hereof, including, without limitation, the
Confidentiality Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
11.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 EXPENSES. Except as otherwise specified in this Agreement, each
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 TITLES; GENDER. The titles, captions or headings of the Articles
and Sections herein, and the use of a particular gender, are for convenience of
reference only and are not intended to be a part of or to affect or restrict
the meaning or interpretation of this Agreement.
36
<PAGE> 41
11.10 PUBLICITY. Neither Buyer, Buyer Sub 1 nor Seller shall issue any
press release or make any public statement regarding the transactions
contemplated hereby, without prior written approval of the other party.
11.11 CONFIDENTIALITY. The parties acknowledge that the transactions
contemplated hereby are of a confidential nature and the terms hereof shall not
be disclosed except to advisors and affiliates, or as required by law or the
rules of the New York Stock Exchange, Inc., and will not make a public
announcement regarding the transaction except as provided in Section 11.10. In
connection with the negotiation of this Agreement and the preparation for the
consummation of the transactions contemplated hereby, each party acknowledges
that it will have access to confidential information relating to the other
party. Each party shall treat such information as confidential, preserve the
confidentiality thereof and not duplicate or use such information, except to
lenders, advisors and affiliates in connection with the transactions
contemplated hereby. Seller, at a time and in a manner which it reasonably
determines, may make statements to employees, suppliers and customers regarding
the subject transaction. In the event of the termination of this Agreement,
each party will keep confidential and not use any such confidential information
relating to the other party, unless such information is now or is hereafter
disclosed, through no act or omission of such party, in any manner making it
available to the general public.
11.12 CUMULATIVE REMEDIES. Except as provided otherwise in Section 10.7,
all rights and remedies of either party hereto are cumulative of each other and
of every other right or remedy such party may otherwise have at law or in
equity, and the exercise of one or more rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of other rights or remedies.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BUYER:
CENTEX AMERICAN GYPSUM COMPANY
By: /s/ Arthur R. Zunker, Jr.
--------------------------------------------------
Name: Arthur R. Zunker, Jr.
------------------------------------------------
Its: Senior Vice President and Treasurer
-------------------------------------------------
BUYER SUB 1:
CENTEX EAGLE GYPSUM COMPANY
By: /s/ Arthur R. Zunker, Jr.
--------------------------------------------------
Name: Arthur R. Zunker, Jr.
------------------------------------------------
Its: Senior Vice President and Treasurer
-------------------------------------------------
SELLER:
EAGLE-GYPSUM PRODUCTS
By: Eagle Investment Group Limited
Partnership, an Illinois limited
partnership, one of its two joint
venturers
By: Rockwood & Co. (Delaware)
Its: managing general partner
By: /s/ Mark S. Hoplamazian
--------------------------------
Name: Mark S. Hoplamazian
------------------------------
Its: Vice President
-------------------------------
38
<PAGE> 1
EXHIBIT 2.2
LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT (NES)
by and among
NATIONAL ENERGY SYSTEMS, INC.
as "Seller,"
CENTEX AMERICAN GYPSUM COMPANY
as "Buyer"
and
CEGC HOLDING COMPANY
as "Buyer Sub 2"
Dated as of: December 5, 1996
<PAGE> 2
LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II - CONTRIBUTION OF CONTRIBUTED ASSETS AND
SALE OF COMMON UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Contribution of Contributed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Transfer of Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Closing Costs; Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Contributions and Conveyances at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Contributed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Permits; Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.10 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.11 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.15 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 NES Common Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUB 2 . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 No Conflict or Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - COVENANTS OF SELLER, BUYER AND BUYER SUB 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Consents; Regulatory Compliance and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Assumption Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.8 Indemnity Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.9 Simultaneous Purchase of EGP Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.10 Investment Representation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.11 Ratification Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII - CONDITIONS TO BUYER'S AND BUYER SUB 2'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Consents; Regulatory Compliance and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Conveyancing Documents; Release of Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.8 Indemnity Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.9 Section 1060 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.10 Simultaneous Purchase of EGP Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.11 Resignations and Minute Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IX - RISK OF LOSS; CONSENTS TO ASSIGNMENT . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Consents to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X - ACTIONS BY SELLER, BUYER, BUYER SUB 2 AND NEWCO AFTER THE CLOSING . . . . . . . . . . . . . . . . . . . . 21
10.1 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2 Books and Records; Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3 Survival of Representations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.4 Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.7 Indemnification as Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.4 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.6 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.8 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.9 Titles; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.12 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
iii
<PAGE> 5
LIMITED LIABILITY COMPANY UNIT PURCHASE AGREEMENT (NES)
This Limited Liability Company Unit Purchase Agreement (NES),
dated as of December 5, 1996, is by and among Centex American Gypsum Company, a
New Mexico corporation ("Buyer"), CEGC Holding Company, a Delaware corporation
and a wholly-owned subsidiary of Buyer ("Buyer Sub 2"), and National Energy
Systems, Inc., a Delaware corporation ("Seller").
RECITALS
A. Seller owns certain assets which it uses in the
conduct of the Business (as defined below).
B. At the Closing (as defined below), Seller desires to
contribute to Centex Eagle Gypsum Company, L.L.C., a Delaware limited liability
company to be jointly formed by Seller and EGP (as defined below) immediately
prior to the Closing ("Newco"), such assets in exchange for certain Common
Units of Newco in an amount to be determined prior to the Closing (including
Common Units of Newco issued to Seller upon formation of Newco, the "NES Common
Units"), upon the terms and subject to the conditions of this Agreement.
C. Eagle-Gypsum Products, a Colorado joint venture
("EGP"), owns certain assets that are used or utilizable in connection with its
business (which assets of EGP are an integral part of the assets utilized or
utilizable in Seller's Business).
D. At the Closing, simultaneously with the contribution
described in recital B above, EGP will contribute to Newco such assets in
exchange for certain Common Units of Newco in an amount to be determined prior
to the Closing (the "EGP Common Units").
E. Immediately subsequent to the contributions described
above, Buyer Sub 2 desires to purchase from Seller, and Seller desires to sell
to Buyer Sub 2, the NES Common Units upon the terms and subject to the
conditions of this Agreement.
F. Centex Eagle Gypsum Company, a Delaware corporation
and another wholly-owned subsidiary of Buyer ("Buyer Sub 1"), desires to
purchase from EGP the EGP Common Units pursuant to an agreement of even date
herewith among Buyer, Buyer Sub 1 and EGP.
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants
and promises contained herein and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
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<PAGE> 6
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Action" shall mean any action, claim, suit, litigation,
proceeding, labor dispute, arbitral action, governmental audit, inquiry,
criminal prosecution, investigation or unfair labor practice charge or
complaint.
"Affiliate" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Books and Records" shall mean (a) all records and lists of
Seller pertaining to the Contributed Assets, (b) all records and lists
pertaining to the customers, suppliers or personnel of the Business, (c) all
product, business and marketing plans of or relating to the Business and (d)
all books, ledgers, files, reports, plans, drawings and operating records of
every kind maintained by Seller relating to the Contributed Assets, but
excluding Seller's minute books, organizational documents, income tax returns
and other corporate records.
"Business" shall mean the Seller's business of generating and
providing thermal energy and electricity for the operation of the gypsum
wallboard plant owned and operated by EGP.
"Closing Date" shall mean 7 days after the conditions set
forth in Articles VII and VIII have been satisfied, but not later than the date
specified in Section 11.1(a)(ii).
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"Contract" shall mean any agreement, contract, note, loan,
evidence of indebtedness, purchase order, letter of credit, indenture, security
or pledge agreement, franchise agreement, undertaking, practice, covenant not
to compete, employment agreement, license, instrument, obligation or commitment
to which Seller is a party or is bound and which relates to the Business or the
Contributed Assets, whether oral or written, but excluding all Leases.
"Contract Rights" shall mean all of Seller's rights and
obligations under the Contracts listed on Schedule 4.5(a).
"Contributed Assets" shall mean all of Seller's right, title
and interest in and to the following assets, which Seller uses in connection
with the conduct of the Business:
(a) all refunds, deposits, prepayments or prepaid
expenses of Seller relating to Contract Rights;
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<PAGE> 7
(b) all Contract Rights;
(c) all Leasehold Improvements;
(d) all Fixtures and Equipment;
(e) all Books and Records;
(f) all Proprietary Rights relating to the Business;
(g) to the extent transferable, all Permits;
(h) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Contributed Assets or services furnished to Seller pertaining to the Business
or affecting the Contributed Assets, to the extent such warranties,
representations and guarantees are assignable;
(i) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind, against any person or
entity; and
(j) all other assets, real, personal or mixed, tangible
or intangible, of Seller used or utilizable in the Business;
provided, that the Contributed Assets shall not include any of
Seller's right, title and interest in and to the Excluded Assets.
"Copyrights" shall mean registered copyrights, copyright
applications and unregistered copyrights, including common law rights thereto,
owned by Seller and used in the Business.
"Court Order" shall mean any judgment, decision, consent
decree, injunction, ruling or order of any federal, state or local court or
governmental agency, department or authority that is binding on any person or
its property under applicable law.
"Default" shall mean (1) a breach of or default under any
Contract or Lease, (2) the occurrence of an event that with the passage of time
or the giving of notice or both would constitute a breach of or default under
any Contract or Lease, or (3) the occurrence of an event that with or without
the passage of time or the giving of notice or both would give rise to a right
of termination, renegotiation or acceleration under any Contract or Lease.
"Encumbrance" shall mean any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Energy Contract" shall mean that certain Energy Services
Agreement, dated as of September 2, 1989, between Seller and EGP, as amended.
3
<PAGE> 8
"Environmental Laws" shall mean all federal, state, district,
and local laws and ordinances, and all rules or regulations promulgated
thereunder, applicable to the Business relating to pollution or protection of
the environment or human health or safety (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws, statutes, codes, ordinances, rules and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Substances. Environmental Laws shall include without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Clean Water Act, as amended, the
Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Atomic
Energy Act of 1954, as amended, the Occupational Safety and Health Act, as
amended, the Mine Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other governmental authority.
"Excluded Assets," notwithstanding any other provision of this
Agreement, shall mean the following assets of Seller:
(a) ownership interests of Seller in and rights of Seller
relating to other assets or entities which are not
related to, or reflected in the financial results of,
the Business, whether currently or hereafter owned by
Seller;
(b) all cash and cash equivalents held by Seller;
(c) all Permits, to the extent not transferable;
(d) all rights, claims, causes of action, choses in
action, rights of recovery and rights of set-off of
any kind against any person or entity arising out of
or relating to the Contributed Assets solely to the
extent related to Liabilities that are not Assumed
Liabilities;
(e) all rights of Seller pursuant to this Agreement and
the documents contemplated hereby;
(f) all rights of Seller in the Contracts set forth in
Schedule 4.5(b);
(g) all Insurance Policies and any prepaid amounts
thereunder;
(h) all accounts receivable of Seller;
(i) any amounts to be paid or credited to Seller as set
forth in Section 2.5;
(j) any indebtedness owed to Seller from EGP; and
(k) any other rights of Seller to the extent not
transferable.
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<PAGE> 9
"Facilities" shall mean the buildings that house the Fixtures
and Equipment, together with all improvements thereon.
"Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery, spare parts, repair parts, supplies,
equipment, tooling, molds, patterns, dies and other tangible personal property
owned by Seller and used in connection with the Business, wherever located and
including any such Fixtures and Equipment in the possession of any of the
Business' suppliers, including all warranty rights with respect thereto.
"Hazardous Substances" shall mean: (i) any substance,
material or waste defined or characterized as hazardous, extremely hazardous,
toxic or dangerous within the meaning of any Environmental Law, (ii) any
substance, material or waste classified as a contaminant or pollutant under any
Environmental Law or (iii) any other substance (including, but not limited to,
petroleum) material or waste, the manufacture, processing, distribution, use,
treatment, storage, placement, disposal, removal or transportation of which is
subject to regulation or forms the basis of liability under any Environmental
Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow
Agreement to be dated as of the Closing Date by and among Newco, Seller, Buyer,
Buyer Sub 2 and an escrow agent to be agreed upon by Buyer and Seller prior to
the Closing Date, for the purpose set forth in Section 10.4(f) herein.
"Insurance Policies" shall mean the insurance policies related
to the Contributed Assets listed on Schedule 4.14.
"Leased Real Property" shall mean all real property underlying
the Facilities and leased by Seller from EGP pursuant to the NES Ground Lease.
"Leasehold Improvements" shall mean all leasehold improvements
situated in or on the Leased Real Property and owned by Seller.
"Liabilities" shall mean any liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any person of any type, whether accrued, absolute, contingent, matured,
unmatured or other.
"NES Ground Lease" shall mean that certain ground lease dated
as of September 2, 1989 between Seller and EGP.
"Patents" shall mean all patents and patent applications and
registered design and registered design applications owned by Seller and used
in the Business.
"Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
governmental authority, whether federal, state or local, or any other
5
<PAGE> 10
person, necessary or desirable for the past, present or anticipated conduct of,
or relating to, the operation of the Business.
"Proprietary Rights" shall mean all of the Copyrights,
Patents, Trademarks, technology rights and licenses, computer software
(including without limitation, any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, designs, specifications, plans, drawings and intellectual property
rights owned by Seller and used or utilizable in the Business, but not
including Contract Rights.
"Regulations" shall mean any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign, federal, state or local government
and any other governmental department or agency, including without limitation
Environmental Laws, energy, motor vehicle safety, public utility, zoning,
building and health codes, occupational safety and health laws and laws
respecting employment practices, employee documentation, terms and conditions
of employment and wages and hours.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Tax" shall mean any federal, state, local, foreign or other
tax, levy, impost, fee, assessment or other government charge, including
without limitation income, estimated income, gross receipts, net receipts,
business, occupation, franchise, property, payroll, personal property, sales,
transfer, use, employment, commercial rent, occupancy, franchise or withholding
taxes, together with any interest, penalties and other additions thereto.
"Trademarks" shall mean registered trademarks, registered
service marks, trademark and service mark applications and unregistered
trademarks and service marks and trade names, including common law rights to
any of such trademarks, service marks and trade names, owned by Seller and used
in the Business.
1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Assumed Liabilities 2.2
Assumption Document 3.2(b)
Bulk Sales Act 10.5
Claim 10.4(d)
Claim Notice 10.4(d)
Closing 3.1
Damages 10.4(a)
EGP Common Units Recitals
Escrowed Funds 10.4(f)
NES Common Units Recitals
Permitted Encumbrances 4.3
Purchase Price 2.4
</TABLE>
6
<PAGE> 11
ARTICLE II
CONTRIBUTION OF CONTRIBUTED ASSETS AND
SALE OF COMMON UNITS
2.1 CONTRIBUTION OF CONTRIBUTED ASSETS. Upon the terms and
subject to the conditions contained herein, at the Closing, Seller will
contribute, convey, transfer, assign and deliver as a capital contribution to
Newco, and Newco will acquire from Seller, the Contributed Assets, free and
clear of all Encumbrances other than Permitted Encumbrances.
2.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, at the Closing, Newco shall assume the following
Liabilities of Seller (the "Assumed Liabilities") but not any other liability,
obligation or duty of Seller:
All Liabilities accruing, arising out of, or relating to
events or occurrences happening after the Closing Date under the Contracts
listed on Schedule 4.5(a) or under Contracts relating to the Business which are
not listed on Schedule 4.5(a) but which Newco, in its sole discretion, upon
written notice to Seller, elects to accept and assume, but not including any
Liability for any Default under any such Contract occurring on or prior to the
Closing Date.
2.3 TRANSFER OF COMMON UNITS. Upon the terms and subject to the
conditions contained herein, at the Closing, immediately subsequent to the
contribution and assumption described in Sections 2.1 and 2.2 above, Seller
will sell, convey, transfer, assign and deliver to Buyer Sub 2, and Buyer Sub 2
will acquire from Seller, the NES Common Units, free and clear of all
Encumbrances.
2.4 PURCHASE PRICE. At the Closing, upon the terms and subject to
the conditions set forth herein, Buyer Sub 2 shall pay to Seller for the sale,
transfer, assignment, conveyance and delivery of the NES Common Units cash in
an aggregate amount equal to the sum of (1) $7,365,000 and (2) amount specified
in Section 4.2 of the Energy Contract (the "Purchase Price"), less an amount
equal to the Escrowed Funds, by wire transfer of immediately available funds to
the account number and place Seller may designate by written notice as provided
herein. Prior to the Closing, Seller and Buyer Sub 2 shall negotiate a
mutually acceptable allocation of the Purchase Price among the classes of
Contributed Assets for purposes of Section 1060 of the Code. Buyer Sub 2 and
Seller agree to each prepare and file on a timely basis with the Internal
Revenue Service substantially identical initial and supplemental Internal
Revenue Service Forms 8594 "Asset Acquisition Statements Under Section 1060".
2.5 PRORATIONS.
(a) Taxes. On the Closing Date, or as promptly as
practicable following the Closing Date, but in no event later than sixty (60)
calendar days thereafter, the real and personal property taxes, local business
or other license fees or taxes, merchants' association dues and other similar
periodic charges payable with respect to the Contributed Assets or the Business
shall be prorated between Buyer Sub 2 and Seller effective as of the Closing
Date. If the real property tax rate for the current tax year is not
established by the Closing Date, the prorations shall be made on the basis of
the rate in effect for the preceding tax year and shall be adjusted when the
exact amounts are determined. All such prorations shall be based upon the most
recent available assessed value of any Facility prior to the Closing Date.
7
<PAGE> 12
(b) Rents. Seller shall pay all rent under the NES
Ground Lease through the end of the calendar month in which the Closing Date
occurs, and Buyer Sub 2 shall reimburse Seller for such rent accrued from the
Closing Date through the end of such month as part of the post-Closing
proration.
2.6 CLOSING COSTS; TRANSFER TAXES AND FEES. Buyer Sub 2 shall be
responsible for any documentary and transfer taxes and any sales, use or other
taxes imposed by reason of the contribution of the Contributed Assets or the
transfer of the NES Common Units provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. Buyer Sub 2 shall pay the
fees and costs of recording or filing all applicable conveyancing instruments
described in Section 3.2(a). Buyer Sub 2 shall pay all costs of applying for
new Permits and obtaining the transfer of existing Permits which may be
lawfully transferred. In the event any fee or payment is owed to the United
States in connection with any Hart-Scott-Rodino filing or the approval by the
U.S. Department of Justice or the U.S. Federal Trade Commission of the
transactions contemplated by this Agreement Buyer Sub 2 shall be responsible
for such fee or payment.
ARTICLE III
CLOSING
3.1 CLOSING. The Closing of the transactions contemplated herein
(the "Closing") shall be held at 10:00 a.m. local time on the Closing Date at
the offices of Latham & Watkins in Chicago, Illinois unless the parties hereto
otherwise agree.
3.2 CONTRIBUTIONS AND CONVEYANCES AT CLOSING.
(a) Instruments and Possession. To effect the
contribution referred to in Section 2.1 hereof, Seller will, at the Closing,
execute and deliver to Newco:
(i) one or more bills of sale conveying to Newco
in the aggregate all of Seller's owned personal property included in the
Contributed Assets;
(ii) subject to Section 9.2, Assignments of
Contract Rights with respect to the Contract Rights;
(iii) Assignments of Patents and Trademarks and
other Proprietary Rights in recordable form to the extent necessary to assign
such rights to Newco; and
(iv) such other instruments and documents as are
contemplated by this Agreement.
(b) Assumption Document. Upon the terms and subject to
the conditions contained herein, at the Closing, Newco shall deliver to Seller
an instrument of assumption evidencing Newco's assumption, pursuant to Section
2.2, of the Assumed Liabilities (the "Assumption Document").
8
<PAGE> 13
(c) Transfer of Common Units. Upon the terms and subject
to the conditions contained herein, at the Closing, immediately subsequent to
execution and delivery of the instruments and documents described in Sections
3.2(a) and (b) above, Seller shall execute and deliver to Buyer Sub 2 an
Assignment of Common Units and Seller shall deliver to Buyer Sub 2 one or more
Common Unit certificates evidencing the NES Common Units to convey the NES
Common Units to Buyer Sub 2.
(d) Form of Instruments. The documents referenced in
Section 3.2(a), (b) and (c) shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to Buyer and
Seller.
(e) Certificates. Buyer and Seller shall deliver the
certificates and other matters described in Articles VII and VIII.
(f) Consents. Subject to Section 9.2, Seller shall
deliver all Permits and any other third party consents required for the valid
transfer of the Contributed Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer Sub 2 as
follows:
4.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized and validly existing under the laws of the State of Delaware with all
necessary power and authority to conduct the Business as it is presently being
conducted and to own and lease its properties and assets.
4.2 AUTHORIZATION. Seller has all requisite power and authority,
and has taken all corporate action necessary, to execute and deliver this
Agreement and the other documents to be executed by Seller pursuant to this
Agreement, to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder. This Agreement has been
duly executed and delivered by Seller and is, and upon execution and delivery
of the Indemnity Escrow Agreement, the Indemnity Escrow Agreement will be,
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms, except as may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, and other similar laws affecting
creditors' rights generally and (ii) general principals of equity, regardless
of whether asserted in a proceeding in equity or at law.
4.3 CONTRIBUTED ASSETS. Upon the consummation of the transactions
contemplated hereby, Seller will vest in Newco good and marketable title to the
Contributed Assets and Newco will acquire good and marketable title to all of
the Contributed Assets, free and clear of any Encumbrances, except for
Permitted Encumbrances. All tangible assets and properties which are part of
the Contributed Assets are in good operating condition and repair (except for
ordinary wear and tear) and are usable in the ordinary course of business. The
Contributed Assets constitute all of the assets necessary to operate the
Business and the Facilities in the manner in which they have been operated by
Seller in the ordinary course of the Business. "Permitted Encumbrances" shall
mean all Encumbrances
9
<PAGE> 14
on the Contributed Assets that do not, individually or in the aggregate,
decrease in any material manner the value or transferability or marketability
of the property or assets subject thereto or interfere with or restrict the use
of such property or assets in any material manner.
4.4 FACILITIES.
(a) Leases or Other Agreements. Except for the NES
Ground Lease, there are no leases, subleases, licenses or other agreements or
arrangements granting to any person the right to purchase, use or occupy any
Facility or any real property in connection with the Business. Seller enjoys
peaceful and undisturbed possession of all the Leased Real Property, subject to
the rights of the fee owners.
(b) Improvements, Fixtures and Equipment. The
improvements constructed on the Facilities, including without limitation, all
Leasehold Improvements, and all Fixtures and Equipment and other tangible
assets owned, leased or used by Seller at the Facilities are structurally sound
with no known material defects, subject to ordinary wear and tear.
4.5 CONTRACTS AND COMMITMENTS.
(a) Contracts. Schedule 4.5(a) sets forth a complete and
accurate list of all Contracts to be assumed hereunder, and indicates whether
third-party consents are required for the assignment thereof. Except for the
Contracts listed on Schedule 4.5(a) and 4.5(b), Seller has entered into no
other material Contracts necessary for the operation of the Business or that
relate to the Contributed Assets other than those being terminated at or prior
to Closing. Seller has delivered to Buyer true, correct and complete copies of
all of the Contracts listed on Schedule 4.5(a), including all amendments and
supplements thereto.
(b) Absence of Defaults. All of the Contracts and Leases
set forth on Schedule 4.5(a) are valid, binding and enforceable in accordance
with their terms, except as may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, and other similar laws affecting creditors' rights
generally and (ii) general principles of equity, regardless of whether asserted
in a proceeding in equity or at law. Seller does not know of any current or
past material Default under any of such Contracts or Leases. Seller has not
received any notice of a claim of Default under any of such Contracts or
Leases.
4.6 PERMITS; CONSENTS AND APPROVALS. (a) Schedule 4.6 sets forth
a complete list of all material Permits required for the operation of the
Business in the manner in which it has been operated by Seller in the ordinary
course of the Business or otherwise held by Seller. Seller has and, to the
knowledge of Seller at all times has had, all Permits required under applicable
Regulations for the operation of the Business or in the ownership of the
Contributed Assets, and owns or possesses such Permits free and clear of all
Encumbrances, except as set forth on Schedule 4.6.
(b) Other than in connection with or in compliance with
the provisions of the HSR Act, and except with respect to Permits listed on
Schedule 4.6 hereto, no notice to, declaration, filing or registration with, or
Permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or obtained by
Seller in connection with
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the execution, delivery or performance of this Agreement and the consummation
of the transactions contemplated hereby.
4.7 NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions
hereof, will (a) violate or conflict with any provision of the organizational
documents of Seller, (b) violate, conflict with, or result in or constitute a
Default under, or result in the termination of any Contract or Permit, (i) to
which Seller is a party or (ii) by which the Contributed Assets are bound, (c)
violate any Regulation or Court Order, or (d) impose any Encumbrance on the
Contributed Assets or the Business, except in the case of (d) above for
Permitted Encumbrances.
4.8 BOOKS AND RECORDS. Seller has made and kept Books and
Records, which, in reasonable detail, accurately and fairly reflect, in all
material respects, the activities of Seller in the conduct of the Business.
4.9 LITIGATION. Except as set forth on Schedule 4.9, there is no
Action pending, or to the best of Seller's knowledge, threatened against Seller
(a) related to or affecting the Business or the Contributed Assets or (b)
seeking to delay, limit or enjoin the transactions contemplated by this
Agreement. Seller is not in Default with respect to or subject to any Court
Order, and there are no unsatisfied judgments against Seller, the Business or
the Contributed Assets.
4.10 LABOR MATTERS. Seller has no employees. All personnel
required for Seller's operation of the Business are provided pursuant to the
Management Agreement between Seller and KMS Services, Inc., as amended.
4.11 COMPLIANCE WITH LAW. Except as disclosed in Schedule 4.11, to
the knowledge of Seller, Seller's conduct of the Business has not violated and
is in compliance with all Regulations, Court Orders and Permits relating to the
Contributed Assets or the Business or operations of Seller, except where the
violation or failure to comply, individually or in the aggregate, would not
have a material adverse effect on the Contributed Assets or the Business.
Seller has not received any notice to the effect that, or otherwise been
advised that, it is not in compliance with any such Regulations, Court Orders
or Permits, which failure or violation could, in any one case or in the
aggregate, have a material adverse effect on the Contributed Assets or the
Business.
4.12 NO BROKERS. Neither Seller nor any of its officers,
employees, partners or affiliates has employed or made any agreement with any
broker, finder or similar agent or any person or firm which will result in the
obligation of Buyer or any of its affiliates to pay any finder's fee, brokerage
fees or commission or similar payment in connection with the transactions
contemplated hereby or affect the Contributed Assets or result in the creation
or imposition of any Encumbrance on the Contributed Assets or any part thereof.
4.13 PROPRIETARY RIGHTS.
(a) Proprietary Rights. Schedule 4.13 lists all of
Seller's Copyrights, Patents and Trademarks. Schedule 4.13 also sets forth for
each Trademark, the application serial number or
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registration number, the class of goods covered and the expiration date for
each country in which a Trademark has been registered.
(b) Royalties and Licenses. Except as set forth on
Schedule 4.13, Seller has not granted to any person any license, option or
other rights to use in any manner any of its Proprietary Rights, whether
requiring the payment of royalties or not.
4.14 INSURANCE. Schedule 4.14 contains a complete and accurate
list of all policies or binders of fire, liability, title, worker's
compensation, product liability and other forms of insurance (showing as to
each policy or binder the carrier, policy number, coverage limits, expiration
dates, annual premiums, a general description of the type of coverage provided,
loss experience history by line of coverage for the periods shown) maintained
by Seller on the Business or the Contributed Assets. All insurance coverage
applicable to Seller, the Business and the Contributed Assets is in full force
and effect. There is no Default under any such coverage nor has there been any
failure to give notice or present any claim under any such coverage in a due
and timely fashion. There are no outstanding unpaid premiums except in the
ordinary course of business and no notice of cancellation or nonrenewal of any
such coverage has been received.
4.15 ENVIRONMENTAL PROTECTION. Except as disclosed on Schedule
4.15:
(a) the Business is in compliance with all Environmental
Laws;
(b) there are no existing, or, to the knowledge of
Seller, threatened, notices of violation, administrative actions, or lawsuits
against Seller relating to the use, handling, storage, treatment, recycling,
generation, or release of Hazardous Substances by the Seller in connection with
the Business; nor has the Seller received any written notification of any
allegation of any responsibility for any disposal, release, or threatened
release at any location of any hazardous substance generated or transported by
the Seller in connection with the Business;
(c) to the knowledge of the Seller, there have been (1)
no releases of any Hazardous Substances from any underground tank or related
piping at any of the Facilities, and (2) no spills, releases or handling of
Hazardous Substances at any of the Facilities that constitutes a violation or
gives rise to liability under Environmental Laws; and
(d) there are no consent decrees, consent orders,
judgments, judicial or administrative orders, or liens by any governmental
authority relating to any Environmental Law which regulate, obligate, or bind
the Seller in a manner reasonably likely to have an adverse effect on the
Business or the Contributed Assets.
4.16 TAXES. All income, unemployment, social security, franchise,
property and other Taxes, charges and assessments levied, assessed or imposed
upon Seller by the United States, or any state, or any political subdivision of
either, to the extent due and payable, have been duly paid to date or are being
contested through appropriate administrative or judicial procedures, and no
liability for deficiencies or respect thereto exist. There are no tax audits
pending nor any outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state or local income or other
tax return for any period. Seller has filed all federal, state, local, sales,
franchise, withholding and property tax returns required to be filed. The
books and records of Seller are accurate and
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complete with respect to ad valorem and other taxes and assessments payable
with respect to Seller and the Contributed Assets. There are no liens, charges
or encumbrances for any taxes upon any of the Contributed Assets, except for
liens for taxes not yet due. Seller is not nor has it been subject to any tax,
charge or other assessment in any jurisdiction outside the United States.
4.17 NES COMMON UNITS. At the Closing, the execution by Seller and
the delivery to Buyer Sub 2 of the Assignment of Common Units described in
Section 3.2(c) and the delivery to Buyer Sub 2 of the Common Unit certificates
evidencing the NES Common Units will vest in Buyer Sub 2 good and indefeasible
title to the NES Common Units, free and clear of all Encumbrances.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUB 2
Buyer and Buyer Sub 2 hereby represent and warrant to Seller
as follows:
5.1 ORGANIZATION OF BUYER. Each of Buyer and Buyer Sub 2 is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation with all necessary power and authority
to conduct its business as it is presently being conducted and to own and lease
its properties and assets. Each of Buyer and Buyer Sub 2 is duly qualified to
do business and is in good standing in the State of Colorado.
5.2 AUTHORIZATION. Each of Buyer and Buyer Sub 2 has all
requisite corporate power and authority, and has taken all corporate action
necessary, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement by each of Buyer and Buyer Sub 2 and
the consummation by each of Buyer and Buyer Sub 2 of the transactions
contemplated hereby have been duly approved by the boards of directors of Buyer
and Buyer Sub 2, respectively. No other corporate proceedings on the part of
Buyer or Buyer Sub 2 are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and Buyer Sub 2 and is the legal, valid and binding
obligation of each of Buyer and Buyer Sub 2, enforceable against each of Buyer
and Buyer Sub 2 in accordance with its terms, except as may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization, and other similar laws
affecting creditors' rights generally and (ii) general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
5.3 NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Buyer or Buyer Sub 2 with any of the
provisions hereof, will (a) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of Buyer or Buyer Sub 2, (b) violate,
conflict with, or result in or constitute a Default under, or result in the
termination of any contract, indebtedness, note, bond, indenture, security or
pledge agreement, commitment, license, lease, franchise, permit, agreement,
authorization, concession, or other instrument or obligation to which Buyer or
Buyer Sub 2 is a party, or (c) violate any Regulation or Court Order, except,
in the case of each of clauses (a), (b) and (c) above, for such violations,
Defaults, terminations, accelerations or creations of Encumbrances which,
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in the aggregate, would not have a material adverse effect on the business of
Buyer or Buyer Sub 2 or either of its ability to consummate the transactions
contemplated hereby.
5.4 CONSENTS AND APPROVALS. Other than in connection with or in
compliance with the provisions of the HSR Act, no notice to, declaration,
filing or registration with, or authorization, consent or approval of, or
permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or obtained by
Buyer or Buyer Sub 2 in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
5.5 NO BROKERS. Neither Buyer nor Buyer Sub 2 nor any of either
of its officers, directors, employees, shareholders or affiliates has employed
or made any agreement with any broker, finder or similar agent or any person or
firm which will result in the obligation of Seller or any of its respective
affiliates to pay any finder's fee, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby.
5.6 LITIGATION. There is no Action pending, or to the best of
Buyer or Buyer Sub 2's knowledge, threatened against Buyer or Buyer Sub 2 (a)
related to or affecting Buyer or Buyer Sub 2's ability to consummate the
transactions contemplated hereby or (b) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF SELLER, BUYER AND BUYER SUB 2
Seller covenants with Buyer and Buyer Sub 2, and Buyer and
Buyer Sub 2 each covenant with the Seller, as follows:
6.1 FURTHER ASSURANCES. Upon the terms and subject to the
conditions contained herein, the parties agree, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing. Without limiting the foregoing, the parties
agree to use their respective reasonable efforts (A) to obtain all necessary
waivers, consents and approvals from other parties to the Contracts and Leases
to be assumed by Newco, (B) to obtain all necessary Permits as are required to
be obtained under any Regulations, (C) to defend all Actions challenging this
Agreement or the consummation of the transactions contemplated hereby, (D) to
lift or rescind any injunction or restraining order or other Court Order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, (E) to give all notices to, and make all registrations and
filings with third parties, including without limitation submissions of
information requested by governmental authorities, and (F) to fulfill all
conditions to this Agreement. To the extent that any of Seller's rights that
would be included in the Contributed Assets are not so included as a result of
the inability to obtain a required third-party consent to assignment of such
rights, Seller shall not assign or transfer such rights to any other party
without Newco's prior consent, which Newco may withhold in its sole
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and absolute discretion. To the extent any warranty, representation or
guarantee referenced in clause (h) of the term "Contributed Assets" in Section
1.1 herein is not assignable, Seller agrees to permit Newco to enforce such
warranty, representation or guarantee (at Newco's expense) in the name of
Seller upon prior written notice to Seller provided that Buyer shall indemnify
Seller for any Damages (as defined in Section 10.4(a)) incurred by Seller
resulting from any such enforcement action.
6.2 HSR ACT FILINGS. As soon as reasonably practicable after the
execution and delivery of this Agreement, Buyer and Seller shall file the
required notifications and forms with the Bureau of Competition of the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "DOJ") pursuant to and in compliance with the HSR Act with respect
to the transactions contemplated by this Agreement and by the agreement
referenced in Section 7.9 herein. Thereafter, the parties hereto agree to (i)
use reasonable efforts to obtain early termination of the applicable waiting
period under the HSR Act, (ii) use reasonable efforts to respond as promptly as
practicable to all inquiries received from the FTC or the DOJ for additional
information or documentation, and (iii) cooperate with one another in
satisfying such requirements. Each party shall deliver to the other party a
copy of any information to be filed by such party prior to the filing thereof.
6.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through
the Closing, each party shall give prompt notice to the other of the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty of such party contained in
this Agreement or in any exhibit or schedule hereto to be untrue or inaccurate
in any material respect.
6.4 FULL ACCESS. Seller will permit Representatives of Buyer and
Buyer Sub 2 to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller, to all
premises, properties, personnel, books, records, contracts, and documents of or
pertaining to the Business. Any information Buyer or Buyer Sub 2 receives from
Seller or its affiliates or partners in the course of the reviews contemplated
by this Section 6.4 shall be subject to the provisions of Section 11.11 herein.
Such inspection rights shall include the right of Buyer and Buyer Sub 2, at
either of its option, to conduct or cause to be conducted such environmental
audits/investigations of the Leased Real Property as either deems advisable
(and as do not interfere with the normal business operations of Seller),
including Phase I Environmental Site Assessments and, if deemed necessary by
Buyer or Buyer Sub 2, Phase II Environmental Site Assessments; provided that
Buyer shall indemnify Seller for any damage to the Real Property caused by such
environmental audits/investigations. Any costs of such environmental
audits/investigations shall be borne by Buyer or Buyer Sub 2.
6.5 CONDUCT OF BUSINESS. From the date hereof through the
Closing, Seller shall, except as contemplated by this Agreement, or as
consented to by Buyer or Buyer Sub 2 in writing, operate the Business in the
ordinary course of business and substantially in accordance with past practice
and will not take any action inconsistent with this Agreement or with the
consummation of the Closing. Without limiting the generality of the foregoing,
from the date hereof until the Closing Date, Seller shall not:
(i) sell, lease, transfer or otherwise dispose of any
material Contributed Asset;
(ii) consolidate with, or merge with or into, any
corporation, partnership, association, trust or any
other entity;
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(iii) create or incur any lien, charge or other Encumbrance
upon the Contributed Assets or suffer to exist any
such liens, charges, or other Encumbrances (other
than Permitted Encumbrances) except in the ordinary
course of business and consistent with past practice;
(iv) enter into any Contracts (or amend any existing
Contract) or engage in any transaction not in the
ordinary course of business and consistent with past
practice except for any such Contracts or
transactions that do not relate to or affect the
Business or Contributed Assets;
(v) fail to maintain the books and records of Seller in
the usual, regular and ordinary manner;
(vi) enter into any Contract (or amend any existing
Contract) to do any of the foregoing; or
(vii) take any action which would cause any representation
or warranty of Seller contained in this Agreement to
be untrue or incorrect as of the date when made.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
provided for hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by
Seller:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Buyer and Buyer Sub 2 contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date and Buyer and Buyer Sub 2 shall have performed and satisfied in
all material respects all agreements and covenants required hereby to be
performed by each of them prior to or on the Closing Date.
7.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All consents,
approvals and waivers from governmental authorities and other parties necessary
to permit Seller to contribute the Contributed Assets and transfer the Assumed
Liabilities to Newco and to transfer to Buyer Sub 2 the NES Common Units as
contemplated hereby shall have been obtained, unless (a) the failure to obtain
any such consent, approval or waiver would not have a material adverse effect
upon Seller, (b) Buyer indemnifies Seller with respect thereto or (c) with
respect to any Contributed Asset, Seller and Buyer determine that such
Contributed Asset shall be excluded from the contribution consummated at the
Closing (in which case the consideration to be paid by Buyer Sub 2 shall be
reduced by the amount allocated to such Contributed Asset). Seller shall be
satisfied that all approvals required under any Regulations to carry out the
transactions contemplated by this Agreement shall have been obtained and that
the parties shall have complied with all Regulations applicable to the
acquisition contemplated
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hereby. The applicable waiting period, including any extension thereof, under
the HSR Act shall have expired or been terminated.
7.3 NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage Seller, the Contributed Assets or
the Business materially if the transactions contemplated hereby are
consummated, including without limitation any material adverse effect on the
right or ability of Newco to own, operate, possess or transfer the Contributed
Assets after the Closing. There shall not be any Regulation or Court Order
that makes the purchase and sale of the NES Common Units or the contribution of
the Contributed Assets contemplated hereby illegal or otherwise prohibited.
7.4 INTENTIONALLY OMITTED
7.5 CERTIFICATES. Each of Buyer and Buyer Sub 2 shall furnish
Seller with such certificates of its officers and others to evidence compliance
with the conditions set forth in this Article VII as may be reasonably
requested by Seller.
7.6 CORPORATE DOCUMENTS. Seller shall have received from each of
Buyer and Buyer Sub 2 resolutions adopted by the board of directors of Buyer
approving this Agreement and the transactions contemplated hereby, certified by
Buyer's corporate secretary.
7.7 ASSUMPTION DOCUMENT. Newco shall have executed and delivered
the Assumption Document.
7.8 INDEMNITY ESCROW AGREEMENT. Newco, Buyer and Buyer Sub 2
shall have executed and delivered the Indemnity Escrow Agreement in form and
substance reasonably satisfactory to Seller.
7.9 SIMULTANEOUS PURCHASE OF EGP COMMON UNITS. Buyer Sub 1 shall
have simultaneously completed the acquisition of the EGP Common Units pursuant
to an agreement among Buyer, Buyer Sub 1 and EGP dated as of the date hereof.
The Energy Contract and NES Ground Lease shall have been simultaneously
terminated by Seller and EGP.
7.10 INVESTMENT REPRESENTATION LETTER. Seller shall have received
from Buyer Sub 2 an investment representation letter in form and substance
reasonably satisfactory to Seller.
7.11 RATIFICATION AGREEMENT. Newco shall have executed and
delivered to Seller an agreement ratifying its obligations hereunder in form
and substance reasonably satisfactory to Seller.
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ARTICLE VIII
CONDITIONS TO BUYER'S AND BUYER SUB 2'S OBLIGATIONS
The obligations of Buyer and Buyer Sub 2 to consummate the
transactions provided for hereby are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer and Buyer Sub 2:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, except
where the failure to be true and correct could not reasonably be expected to
have a material adverse effect on the Contributed Assets, the Business, or the
ability of Newco to operate the Business, and Seller shall have performed and
satisfied in all material respects all agreements and covenants required hereby
to be performed by it prior to or on the Closing Date.
8.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All Permits,
consents, approvals and waivers from governmental authorities and other parties
necessary to the consummation of the transactions contemplated hereby and for
the operation of the Business by Buyer (including, without limitation, all
required third party consents to the assignment of the Leases and Contracts to
be assumed by Newco) shall have been obtained, unless (a) the failure to obtain
any such Permit, consent, approval or waiver would not have a material adverse
effect upon Newco with respect to the Contributed Assets or the Business or (b)
with respect to any Contributed Asset, Seller and Buyer determine that such
Contributed Asset shall be excluded from the transfers consummated at the
Closing (in which case the consideration to be paid by Buyer Sub 2 shall be
reduced by the amount allocated to such Contributed Asset) or (c) Buyer shall
have been reasonably satisfied that any such Permits, consents, approvals or
waivers will be obtained subsequent to the Closing without undue difficulty or
expense to Newco and will not include requirements or conditions beyond the
requirements and conditions included in Seller's Permits that could reasonably
be expected to have a material adverse effect on Newco with respect to the
Contributed Assets or the Business, provided that (i) to the extent not
prohibited under applicable Regulations, Seller agrees to permit Newco to use
Permits of Seller to operate the Business until Newco has received all such
Permits provided that Buyer shall indemnify Seller for any Damages (as defined
in Section 10.4(a)) incurred by Seller arising out of such use and (ii) Seller
shall take no action that will cause any of such Permits to be revoked or
terminated prior to Newco's receipt of such Permits. Buyer shall be satisfied
that all approvals required under any Regulations to carry out the transactions
contemplated by this Agreement shall have been obtained and that the parties
shall have complied with all Regulations applicable to the acquisition
contemplated hereby. The applicable waiting period, including any extension
thereof, under the HSR Act shall have expired or been terminated.
8.3 NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage Buyer, Buyer Sub 2, Newco, the
Contributed Assets or the Business materially if the transactions contemplated
hereby are consummated, including without limitation any material adverse
effect on the right or ability of Newco to own, operate, possess or transfer
the Contributed Assets after the Closing. There shall not be any Regulation or
Court Order that makes the purchase and sale of the NES Common Units or the
contribution of the Contributed Assets contemplated hereby illegal or otherwise
prohibited.
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8.4 INTENTIONALLY OMITTED
8.5 CERTIFICATES. Seller shall furnish Buyer and Buyer Sub 2 with
such certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Buyer and Buyer Sub 2.
8.6 CORPORATE DOCUMENTS. Buyer and Buyer Sub 2 shall have
received from Seller resolutions adopted by the board of directors of Seller
approving this Agreement and the transactions contemplated hereby.
8.7 CONVEYANCING DOCUMENTS; RELEASE OF ENCUMBRANCES. Seller shall
have executed and delivered each of the documents described in Section 3.2
hereof and such other documents as shall be sufficient to effect the
contribution and assignment to Newco of the Contributed Assets and the transfer
to Buyer Sub 2 of the NES Common Units in the manner contemplated by this
Agreement and Seller shall have filed (where necessary) and delivered to Newco
all documents necessary to release the Contributed Assets from all Encumbrances
other than Permitted Encumbrances (except as otherwise set forth herein), which
documents shall be in form and substance reasonably satisfactory to Buyer's
counsel.
8.8 INDEMNITY ESCROW AGREEMENT. Seller shall have executed and
delivered the Indemnity Escrow Agreement in form and substance reasonably
satisfactory to Buyer.
8.9 SECTION 1060 ALLOCATION. Seller shall have executed a
document to evidence its agreement as to the allocation of the Purchase Price
among the classes of Contributed Assets for purposes of Section 1060 of the
Code and to be bound by such agreement in connection with the filings by Buyer
and Seller of their respective Forms 8594.
8.10 SIMULTANEOUS PURCHASE OF EGP COMMON UNITS. Buyer Sub 1 shall
have simultaneously completed the acquisition of the EGP Common Units pursuant
to an agreement among Buyer, Buyer Sub 1 and EGP dated as of the date hereof.
The Energy Contract and NES Ground Lease shall have been simultaneously
terminated by Seller and EGP.
8.11 RESIGNATIONS AND MINUTE BOOK. The managers and officers of
Newco shall have tendered their written resignations effective on the Closing
Date and Buyer shall have received the minute book of Newco.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
9.1 RISK OF LOSS. From the date hereof through the Closing on the
Closing Date, all risk of loss or damage to the property included in the
Contributed Assets shall be borne by Seller, and thereafter shall be borne by
Newco. If any material portion of the Contributed Assets is destroyed or
damaged by fire or any other cause on or prior to the Closing Date, other than
use, wear or loss in the ordinary course of business, Seller shall give written
notice to Buyer as soon as practicable after, but in
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any event within five (5) calendar days of discovery of such damage or
destruction, the amount of insurance, if any, covering such Contributed Assets
and the amount, if any, which Seller is otherwise entitled to receive as a
consequence. Prior to the Closing, Buyer shall have the option, which shall be
exercised by written notice to Seller within ten (10) calendar days after
receipt of Seller's notice or if there is not ten (10) calendar days prior to
the Closing Date, as soon as practicable prior to the Closing Date, of (a)
having Newco accept such Contributed Assets in their destroyed or damaged
condition in which event Newco shall be entitled to the proceeds of any
insurance or other proceeds payable with respect to such loss, and the full
Purchase Price shall be paid for the NES Common Units, (b) excluding such
Contributed Assets from this Agreement, in which event the Purchase Price shall
be reduced by an amount allocated to such Contributed Assets as mutually agreed
between the parties or determined by appraisal of a third party mutually
acceptable to the parties, or (c) terminating this Agreement in accordance with
Section 11.1. If Newco accepts such Contributed Assets, then after the
Closing, any related insurance or other related proceeds shall belong, and
shall be assigned to, Newco without any reduction in the Purchase Price;
otherwise, such insurance proceeds shall belong to Seller.
9.2 CONSENTS TO ASSIGNMENT. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Contract, Lease, Permit or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a Default thereof or in
any way adversely affect the rights of Newco thereunder. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights thereunder so that Newco would not receive all such
rights, Seller will cooperate with Newco, in all reasonable respects, to
provide to Newco the benefits under any such Contract, Lease, Permit or any
claim or right, including without limitation enforcement (at the expense of
Newco) for the benefit of Newco of any and all rights of Seller against a third
party thereto arising out of the Default or cancellation by such third party or
otherwise, and to permit Newco to enforce such rights at Newco's expense;
provided, that Buyer shall indemnify Seller for any Damages (as defined in
Section 10.4(a)) incurred by Seller resulting from any such enforcement action.
Nothing in this Section 9.2 shall affect Buyer's right to terminate this
Agreement under Sections 8.2 and 11.1 in the event that any consent or approval
to the contribution to Newco of any Contributed Asset is not obtained.
ARTICLE X
ACTIONS BY SELLER, BUYER, BUYER SUB 2 AND NEWCO
AFTER THE CLOSING
10.1 INTENTIONALLY OMITTED
10.2 BOOKS AND RECORDS; TAX MATTERS.
(a) Books and Records. Each party agrees that it will
cooperate with and make available to the other party, during normal business
hours, all Books and Records, information and employees (with, at most, minor
disruption of employment) retained and remaining in existence after the Closing
which are necessary or useful in connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party requesting any such Books
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and Records, information or employees shall bear all of the out-of-pocket costs
and expenses reasonably incurred in connection with providing such Books and
Records, information or employees. On or prior to April 30, 1997, Seller will
provide Buyer Sub 2 with a complete listing of the tax basis of each of the
Contributed Assets as of the Closing Date with sufficient detail to enable
Buyer Sub 2 and Newco to prepare complete and accurate tax returns after the
Closing. All information received pursuant to this Section 10.2(a) shall be
subject to the terms of Section 11.11 herein.
(b) Cooperation and Records Retention. Seller, Buyer,
Buyer Sub 2 and Newco shall (i) each provide the other with such assistance as
may reasonably be requested by any of them in connection with the preparation
of any return, audit, or other examination by any taxing authority or judicial
or administrative proceedings relating to Liability for Taxes, (ii) each retain
and provide the other with any records or other information that may be
relevant to such return, audit or examination, proceeding or determination, and
(iii) each provide the other with any final determination of any such audit or
examination, proceeding, or determination that affects any amount required to
be shown on any tax return of the other for any period. Without limiting the
generality of the foregoing, Buyer, Buyer Sub 2, Newco and Seller shall each
retain, until the applicable statutes of limitations (including any extensions)
have expired, copies of all tax returns, supporting work schedules, and other
records or information that may be relevant to such returns for all tax periods
or portions thereof ending on or before the Closing Date and shall not destroy
or otherwise dispose of any such records without first providing the other
party with a reasonable opportunity to review and copy the same.
10.3 SURVIVAL OF REPRESENTATIONS, ETC. Except as provided in the
last sentence of this Section 10.3, all of the representations, warranties,
covenants and agreements made by each party in this Agreement or in any
attachment, Schedule, certificate, document or list delivered by any such party
pursuant hereto shall survive the Closing for a period of (and claims based
upon or arising out of such representations, warranties, covenants and
agreements may be asserted at any time before the date which shall be) two
years following the Closing, except that Newco's assumption of Liabilities set
forth in Section 2.2 and the Assumption Document shall survive without
limitation as to time. Each party hereto shall be entitled to rely upon the
representations and warranties of the other party set forth in this Agreement.
The termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any Claim made by such party in a
writing received by the other party prior to the expiration of the applicable
survival period provided herein. Notwithstanding the foregoing, the
representations and warranties of Seller contained in Section 4.15 in this
Agreement and the representations and warranties as to title contained in
Section 4.3 in this Agreement shall survive the Closing for a period of (and
claims based upon or arising out of such representations and warranties may be
asserted at any time before the date which shall be) five years following the
Closing.
10.4 INDEMNIFICATIONS.
(a) By Seller. Seller shall defend, indemnify and hold
harmless Buyer, Buyer Sub 2 and Newco from and against any and all losses,
damages, lawsuits, claims, demands and expenses (including without limitation,
reasonable attorneys' fees incurred in the investigation, defense or settlement
of any of the foregoing and court costs and other reasonable costs and expenses
of litigation) (herein, "Damages") resulting from (i) any breach of any
representation or warranty made by Seller in or pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by Seller in this Agreement;
(iii) any lawsuit, claim, proceeding or other Action that has been brought
against Seller prior to the Closing existing at or prior to the Closing or any
lawsuit, claim, proceeding or other
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Action involving an injury or damage (or an allegation of an injury or damage)
to individual persons or to the property of others brought against Buyer
subsequent to the Closing caused by events, acts or omissions relating to the
Contributed Assets, the Excluded Assets or the Business occurring prior to the
Closing, (iv) any income Tax arising out of or resulting from the contribution
to Newco of the Contributed Assets, the assumption by Newco of the Assumed
Liabilities or the transfer to Buyer Sub 2 of the NES Common Units pursuant to
this Agreement, or arising out of or resulting from the operation of the
Business prior to the Closing; or (v) any failure to comply with the Bulk Sales
Act or similar statute in any applicable jurisdiction. Any claim for
indemnification under this Section 10.4(a) shall be brought no later than two
years following the Closing, except that the limitation for a claim based on a
breach of the representations and warranties contained in Section 4.15 and the
representations and warranties as to title contained in Section 4.3 shall be
five years.
(b) By Buyer. Buyer shall indemnify and hold harmless
Seller from and against any and all Damages resulting from (i) any breach of
any representation or warranty made by Buyer or Buyer Sub 2 in or pursuant to
this Agreement; (ii) any breach of any covenant or agreement made by Buyer,
Buyer Sub 2 or Newco in or pursuant to this Agreement; or (iii) from and after
the Closing, any Assumed Liability and any other Liability incurred by Buyer,
Buyer Sub 2 or Newco arising out of events occurring subsequent to the Closing
relating to the Business or the Contributed Assets. Any claim for
indemnification under this Section 10.4(b) shall be brought no later than two
years following the Closing, except that there shall be no limitation as to
time for any claim under Section 10.4(b)(iii).
(c) Cooperation. With respect to any claims by any third
party that gives rise to or could give rise to indemnification hereunder, the
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and its attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; provided, however,
that the indemnified party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers.
(d) Defense of Claims. If a claim for Damages (a
"Claim") is to be made by a party entitled to indemnification hereunder against
the indemnifying party, the party claiming such indemnification shall, subject
to Section 10.3, give written notice (a "Claim Notice") to the indemnifying
party as soon as practicable after the party entitled to indemnification
becomes aware of any fact, condition or event which may give rise to Damages
for which indemnification may be sought under this Section 10.4. With respect
to any claim by a third party that gives rise to or could give rise to
indemnification hereunder, if any lawsuit or enforcement action is filed
against any party entitled to the benefit of indemnity hereunder, written
notice thereof shall be given to the indemnifying party as promptly as
practicable (and in any event within fifteen (15) calendar days after the
service of the citation or summons). After such notice, the indemnifying party
shall be entitled, if it so elects at its own cost, risk and expense (provided,
that the indemnified party agrees to repay such expenses if it is ultimately
determined that such indemnified party was not entitled to indemnification),
(i) to take control of the defense and investigation of such lawsuit or action,
(ii) to employ and engage attorneys of its own choice to handle and defend the
same unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, in which event the indemnified party
shall be entitled to a single separate counsel of its own choosing, and (iii)
to compromise or settle such claim, which compromise or settlement shall be
made only with
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the written consent of the indemnified party, such consent not to be
unreasonably withheld. If the indemnifying party fails to assume the defense
of such claim within fifteen (15) calendar days after receipt of the Claim
Notice, the indemnified party against which such claim has been asserted will
(upon delivering notice to such effect to the indemnifying party) have the
right to undertake, at the indemnifying party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and
risk of the indemnifying party. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement, and the indemnifying party shall have the option to assume control
of such defense. The indemnifying party shall be liable for any settlement of
any action effected pursuant to and in accordance with this Section 10.4 and
for any final judgment (subject to any right of appeal), and the indemnifying
party agrees to indemnify and hold harmless the indemnified party from and
against any Damages by reason of such settlement or judgment.
(e) Brokers and Finders. Pursuant to the provisions of
this Section 10.4, each of Buyer and Seller shall indemnify, hold harmless and
defend the other party from the payment of any and all broker's and finder's
expenses, commissions, fees or other forms of compensation which may be due or
payable from or by the indemnifying party, or may have been earned by any third
party acting on behalf of the indemnifying party in connection with the
negotiation and execution hereof and the consummation of the transactions
contemplated hereby. Buyer and Seller acknowledge that Seller has engaged the
firm of Donaldson, Lufkin & Jenrette Securities Corporation in connection with
the transactions contemplated by this Agreement, and Seller shall be
responsible for any fees or expenses of such firm.
(f) Limitations. Except as provided in the next sentence
of this Section 10.4(f), neither Buyer nor Seller shall be liable to the other
under this Section 10.4 for any Damages until the aggregate amount otherwise
due the party being indemnified (and for such purpose, Buyer, Buyer Sub 2 and
Newco shall collectively be considered one party) exceeds an accumulated total
of Eighty-Five-Thousand Dollars ($85,000) and only for such Damages that exceed
such amount. The foregoing limitation shall not apply to any claim of
indemnification by Buyer under Sections 10.2, 10.4(a)(v), 10.4(e), 10.6, 10.7
(but only as Section 10.7 applies to any Damages associated with respect to
seeking and obtaining specific performance), or 11.7 of this Agreement or by
Seller under Sections 2.6, 6.1, 6.4, 8.2, 9.2, 10.2, 10.4(e), 10.7 (but only as
Section 10.7 applies to any Damages associated with respect to seeking and
obtaining specific performance), or 11.7 of this Agreement, and any amounts
recovered by Buyer or Seller thereunder shall not be counted against such
respective party's threshold amount. Buyer, Buyer Sub 2, and Newco's sole
recourse against Seller for indemnity under this Agreement shall be to recover
against the Escrowed Funds as defined in the Indemnity Escrow Agreement (which
Escrowed Funds shall be in an amount equal to ten percent of the Purchase
Price, and shall be paid on the Closing Date by Buyer Sub 2 into the escrow
account to be established pursuant to the Indemnity Escrow Agreement), and
Seller shall have no liability to Buyer, Buyer Sub 2 or Newco in excess of such
Escrowed Funds.
(g) Representatives. No individual Representative of any
party shall be personally liable for any Damages under the provisions contained
in this Section 10.4. Nothing herein shall relieve either party of any
Liability to make any payment expressly required to be made by such party
pursuant to this Agreement.
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10.5 BULK SALES. It may not be practicable to comply or attempt to
comply with the procedures of the "Bulk Sales Act" or similar law of any or all
of the states in which the Contributed Assets are situated or of any other
state which may be asserted to be applicable to the transactions contemplated
hereby. Accordingly, each of Buyer, Buyer Sub 2 and Newco waives any
requirements for compliance with any or all of such laws.
10.6 TAXES. Subject to Section 2.6, Seller shall pay, or cause to
be paid, when due all Taxes, other than Taxes that are Assumed Liabilities, for
which Seller is or may be liable or that are or may become payable with respect
to all taxable periods ending on or prior to the Closing Date.
10.7 INDEMNIFICATION AS EXCLUSIVE REMEDY. With respect to any
matter as to which indemnification is provided pursuant to this Article X, such
indemnification shall be the sole remedy available to the indemnified party,
except that to the extent available under applicable law, each party hereto may
seek specific performance by the other party hereto of its obligations under
this Agreement and/or injunctive relief against the other party's activities,
actions, or inactions in breach of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 TERMINATION.
(a) Termination. This Agreement may be terminated at any
time prior to Closing:
(i) By mutual written consent of Buyer, Buyer Sub
2 and Seller;
(ii) By Buyer, Buyer Sub 2 or Seller if the
Closing shall not have occurred on or before February 27, 1997 (or such later
date as contemplated by the agreement among Buyer, Buyer Sub 1 and EGP dated as
of the date hereof); provided however, that this provision shall not be
available to Buyer or Buyer Sub 2 if Seller has the right to terminate this
Agreement under clause (iv) of this Section 11.1(a), and this provision shall
not be available to Seller if Buyer or Buyer Sub 2 has the right to terminate
this Agreement under clause (iii) of this Section 11.1(a);
(iii) By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Seller pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied (and such condition is not waived in writing by Buyer and Buyer Sub
2) on or prior to the Closing Date, or the occurrence of any event which
results or would result in the failure of a condition set forth in Article VIII
to be satisfied on or prior to the Closing Date, provided, however, that
neither Buyer nor Buyer Sub 2 may terminate this Agreement prior to the Closing
if Seller has not had an adequate opportunity to cure such failure; or
(iv) By Seller if there is a material breach of
any representation or warranty set forth in Article V hereof or of any covenant
or agreement to be complied with or performed by Buyer or Buyer Sub 2 pursuant
to the terms of this Agreement or the failure of a
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condition set forth in Article VII to be satisfied (and such condition is not
waived in writing by Seller) on or prior to the Closing Date, or the occurrence
of any event which results or would result in the failure of a condition set
forth in Article VII to be satisfied on or prior to the Closing Date; provided,
however, that, Seller may not terminate this Agreement prior to the Closing
Date if Buyer and Buyer Sub 2 have not had an adequate opportunity to cure such
failure.
(b) In the Event of Termination. In the event of
termination of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;
(ii) The provisions of Section 11.11 shall
continue in full force and effect; and
(iii) No party hereto shall have any Liability to
any other party to this Agreement, except as stated in subsections (i) and (ii)
of this Section 11.1(b), except for any willful breach of this Agreement
occurring prior to the proper termination of this Agreement. The foregoing
provisions shall not limit or restrict the availability of specific performance
or other injunctive relief to the extent that specific performance or such
other relief would otherwise be available to a party hereunder.
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned or delegated by any party without the
prior written consent of the other party, except that, subsequent to the
Closing, each of Buyer Sub 2 and Newco may assign (whether by operation of law
or otherwise) its rights and benefits hereunder (or any portion thereof) or
delegate its obligations hereunder (or any portion thereof) to one or more of
Buyer, Buyer Sub 2 and Newco. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and no other person shall have any
right, benefit or obligation under this Agreement as a third party beneficiary
or otherwise, except that, upon its formation, Newco shall be intended
third-party beneficiary of this Agreement.
11.3 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
or digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Seller, addressed to:
National Energy Systems, Inc.
225 West Washington Street
Chicago, Illinois 60606
Attention: Robert Conroy, Vice President
Telephone: (312) 431-5036
Telecopier: (312) 431-5052
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With a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: Stephen S. Bowen
Telephone: (312) 876-7652
Telecopier: (312) 993-9767
If to Buyer or Buyer Sub 2, addressed to:
Centex American Gypsum Company or
CEGC Holding Company (as applicable)
c/o Centex Construction Products, Inc.
3710 Rawlins, Suite 1600
Dallas, Texas 75219
Attn: President
Telephone: (214) 559-6507
Telecopier: (214) 559-6554
With a copy to:
Centex American Gypsum Company or
CEGC Holding Company (as applicable)
c/o Centex Corporation
2728 N. Harwood St., 9th Floor
Dallas, Texas 75201-1516
Attn: CXP Corporate Counsel
Telephone: (214) 981-6742
Telecopier: (214) 981-6855
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 CHOICE OF LAW. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the internal laws
of the State of Delaware (without reference to the choice of law provisions of
Delaware law), except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all schedules hereto and other documents contemplated hereby,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings, negotiations and discussions, of the parties
with respect to the subject matter hereof, including, without limitation, the
Confidentiality Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the
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parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
11.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.7 EXPENSES. Except as otherwise specified in this Agreement,
each party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.8 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 TITLES; GENDER. The titles, captions or headings of the
Articles and Sections herein, and the use of a particular gender, are for
convenience of reference only and are not intended to be a part of or to affect
or restrict the meaning or interpretation of this Agreement.
11.10 PUBLICITY. Neither Buyer, Buyer Sub 2 nor Seller shall issue
any press release or make any public statement regarding the transactions
contemplated hereby, without prior written approval of the other party.
11.11 CONFIDENTIALITY. The parties acknowledge that the
transactions contemplated hereby are of a confidential nature and the terms
hereof shall not be disclosed except to advisors and affiliates, or as required
by law or the rules of the New York Stock Exchange, Inc., and will not make a
public announcement regarding the transaction except as provided in Section
11.10. In connection with the negotiation of this Agreement and the
preparation for the consummation of the transactions contemplated hereby, each
party acknowledges that it will have access to confidential information
relating to the other party. Each party shall treat such information as
confidential, preserve the confidentiality thereof and not duplicate or use
such information, except to lenders, advisors and affiliates in connection with
the transactions contemplated hereby. Seller, at a time and in a manner which
it reasonably determines, may make statements to employees, suppliers and
customers regarding the subject transaction. In the event of the termination
of this Agreement, each party will keep confidential and not use any such
confidential information relating to the other party, unless such information
is now or is hereafter disclosed, through no act or omission of such party, in
any manner making it available to the general public.
11.12 CUMULATIVE REMEDIES. Except as provided otherwise in Section
10.7, all rights and remedies of either party hereto are cumulative of each
other and of every other right or remedy such party may otherwise have at law
or in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
BUYER:
CENTEX AMERICAN GYPSUM COMPANY
By: /s/ Arthur R. Zunker, Jr.
----------------------------------------
Name: Arthur R. Zunker, Jr.
--------------------------------------
Its: Senior Vice President and Treasurer
---------------------------------------
BUYER SUB 2:
CEGC HOLDING COMPANY
By: /s/ Arthur R. Zunker, Jr.
----------------------------------------
Name: Arthur R. Zunker, Jr.
--------------------------------------
Its: Senior Vice President and Treasurer
---------------------------------------
SELLER:
NATIONAL ENERGY SYSTEMS, INC.
By: /s/ Robert C. Gluth
----------------------------------------
Name: Robert C. Gluth
--------------------------------------
Its: Vice President
---------------------------------------
28
