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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): September 26, 1996
SCP POOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26640 36-3943363
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
128 Northpark Boulevard, Covington, Louisiana 70433-5070
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 892-5521
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This Instrument contains 5 pages.
The Exhibit Index is located on page 5.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 26, 1996, South Central Pool Supply, Inc. ("SCP"), a
Delaware corporation and the wholly owned subsidiary of SCP Pool
Corporation ("SCP Pool"), completed its acquisition of the business of
The B-L Network, Inc. ("BLN"), a Delaware corporation, pursuant to the
terms of the Asset Purchase Agreement, dated as of September 26, 1996
among BLN, Bio-Lab, Inc. ("Bio-Lab"), SCP and SCP Pool (the "BLN
Purchase Agreement"). The following discussion is only a summary and
is qualified in its entirety by reference to the Exhibit to this
Current Report on Form 8-K.
Pursuant to the BLN Purchase Agreement, SCP acquired substantially all
of the assets, and assumed certain of the liabilities, of BLN in
exchange for promissory notes in the aggregate principal amount of
approximately $32.7 million, subject to adjustment. The amount of
consideration was determined by reference to the book value of the
assets acquired and as a result of negotiations among BLN and SCP.
Prior to the acquisition, there was no relationship among Bio-Lab or
BLN and the registrant or any of its affiliates, any director or
officer of the registrant, or any associate of any such director or
officer. The promissory notes are expected to be repaid from cash
generated from operations, borrowings under SCP's bank credit
facility, and by the proceeds of the sale of certain assets by
Alliance Packaging, Inc. ("Alliance"), a subsidiary of SCP, to Bio-Lab
pursuant to the terms of the Alliance Purchase Agreement (as defined
below).
The assets acquired from BLN include swimming pool supplies inventory
and fixed assets used in the distribution of swimming pool supplies.
SCP intends to sell such inventory in the ordinary course of business
and to continue to use such fixed assets in the distribution of
swimming pool supplies.
ITEM 5. OTHER EVENTS
On September 26, 1996, Alliance, SCP and SCP Pool agreed to sell
certain assets of Alliance, including inventory and fixed assets used
in the conversion, blending, tableting and repackaging of swimming
pool and spa chemicals, to Bio-Lab pursuant to the Asset Purchase
Agreement, dated as of September 26, 1996 among Alliance, SCP, SCP
Pool and Bio-Lab (the "Alliance Purchase Agreement").
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
To be filed by amendment. Pursuant to Item 7(a)(4) of Form 8-K,
the registrant hereby indicates that the filing of the financial
statements required in response to this item within 15 calendar
days of the acquisition is
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impracticable, and undertakes to file such information on an
amendment to this Form 8-K no later than 60 days after October
11, 1996.
(b) Pro forma financial information.
To be filed by amendment. Pursuant to Item 7(b)(2) of Form 8-K,
the registrant hereby indicates that the filing of the financial
statements required in response to this item within 15 calendar
days of the acquisition is impracticable, and undertakes to file
such information on an amendment to this Form 8-K no later than
60 days after October 11, 1996.
(c) Exhibits
10.1 Asset Purchase Agreement, dated as of September 26, 1996,
among South Central Pool Supply, Inc., SCP Pool
Corporation, The B-L Network, Inc. and Bio-Lab, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCP POOL CORPORATION
Dated: October 8, 1996 By: /s/ Maurice D. Van Dyke
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Chief Financial Officer, Treasurer
and Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description Page No.
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<S> <C> <C>
10.1 Asset Purchase Agreement, dated as of September 26, 1996,
among South Central Pool Supply, Inc., SCP Pool
Corporation, The B-L Network, Inc. and Bio-Lab, Inc.
</TABLE>
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
SCP POOL CORPORATION,
SOUTH CENTRAL POOL SUPPLY, INC.,
THE B-L NETWORK, INC.
and
BIO-LAB, INC.
September 26, 1996
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF THE ASSETS............................................ 1
1.1 Asset Purchase..................................................... 1
1.2 Purchase Price..................................................... 4
1.3 Inventory.......................................................... 4
1.4 Closing Transactions............................................... 6
ARTICLE II
CONDITIONS TO CLOSING...................................................... 7
2.1 Conditions to Buyer's Obligations.................................. 7
2.2 Conditions to the Seller's Obligations at the Closing.............. 9
ARTICLE III
COVENANTS PRIOR TO CLOSING................................................. 11
3.1 Affirmative Covenants of Seller.................................... 11
3.2 Negative Covenants of Seller....................................... 12
3.3 Exclusivity........................................................ 13
3.4 Covenants of Buyer................................................. 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER................................... 14
4.1 Organization and Corporate Power................................... 14
4.2 Authorization of Transactions...................................... 14
4.3 Subsidiaries; Investments.......................................... 15
4.4 Absence of Conflicts............................................... 15
4.5 Financial Statements............................................... 15
4.6 Absence of Undisclosed Liabilities................................. 16
4.7 Absence of Certain Developments.................................... 16
4.8 Title to Properties................................................ 18
4.9 Environmental and Safety Matters................................... 19
4.10 Taxes.............................................................. 21
4.11 Contracts and Commitments.......................................... 21
4.12 Proprietary Rights................................................. 22
4.13 Litigation; Proceedings............................................ 23
4.14 Brokerage.......................................................... 23
4.15 Governmental Licenses, Permits and Consents........................ 23
4.16 Employees.......................................................... 23
4.17 Employee Benefit Plans............................................. 24
4.18 Affiliate Transactions............................................. 24
4.19 Compliance with Laws............................................... 25
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4.20 Inventory.......................................................... 25
4.21 Closing Date....................................................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER.................................... 25
5.1 Corporate Organization and Power................................... 25
5.2 Authorization...................................................... 26
5.3 No Violation....................................................... 26
5.4 Governmental Authorities and Consents.............................. 26
5.5 Brokerage.......................................................... 26
5.6 Closing Date....................................................... 26
ARTICLE VI
TERMINATION................................................................ 27
6.1 Termination........................................................ 27
6.2 Effect of Termination.............................................. 27
ARTICLE VII
SURVIVAL; INDEMNIFICATION.................................................. 28
7.1 Survival; Etc...................................................... 28
7.2 Indemnification.................................................... 28
7.3 General Qualifications on Indemnification.......................... 31
7.4 Arbitration Procedure.............................................. 31
7.5 Remedies........................................................... 32
ARTICLE VIII
ADDITIONAL AGREEMENTS...................................................... 32
8.1 Employees and Employee Benefit Plans............................... 32
8.2 Press Releases and Announcements................................... 34
8.3 Further Agreements and Transfers................................... 34
8.4 Change of Name..................................................... 34
8.5 Tax Matters........................................................ 34
8.6 Transition Assistance.............................................. 35
8.7 Investigation and Confidentiality.................................. 35
8.8 Expenses........................................................... 36
8.9 Waiver of Compliance with Bulk Sales Laws.......................... 36
8.10 Collection of Accounts Receivable.................................. 37
8.11 Prorations......................................................... 39
8.12 Financial Information.............................................. 40
8.13 Guarantees......................................................... 40
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8.14 Underground Storage Tanks.......................................... 41
8.15 Customer Rebates................................................... 42
8.16 Petty Cash......................................................... 42
8.17 Sta-Rite........................................................... 43
ARTICLE IX
MISCELLANEOUS.............................................................. 43
9.1 Amendment and Waiver............................................... 43
9.2 Notices............................................................ 43
9.3 Binding Agreement; Assignment...................................... 45
9.4 Severability....................................................... 45
9.5 No Strict Construction............................................. 45
9.6 Captions and Headings.............................................. 45
9.7 Entire Agreement................................................... 45
9.8 Counterparts....................................................... 46
9.9 Governing Law...................................................... 46
9.10 Parties in Interest................................................ 46
ARTICLE X
CERTAIN DEFINITIONS........................................................ 46
</TABLE>
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ASSET PURCHASE AGREEMENT
AGREEMENT made as of September 26, 1996 by and among South Central Pool
Supply, Inc., a Delaware corporation ("Buyer"), The B-L Network, Inc., a
Delaware corporation ("Seller"), and, for purposes of Sections 3.3 and 8.13(a)
only, Bio-Lab, Inc., a Delaware corporation ("Bio-Lab"), and, for purposes of
Section 8.13(b) only, SCP Pool Corporation, a Delaware corporation ("SCP Pool").
Certain capitalized terms used herein are defined in Article X hereof.
Subject to the terms and conditions set forth in this Agreement, Buyer
desires to acquire from Seller and Seller desire to sell to Buyer certain of its
assets used in or necessary to its business or operations and certain of
Seller's related liabilities as specifically provided herein, except for certain
excluded assets as specifically provided herein. The business of Seller as
presently conducted, which generally is the wholesale distribution of swimming
pool and spa chemicals and equipment, is hereinafter referred to as the
"Business."
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE ASSETS
1.1 ASSET PURCHASE.
(a) Purchased Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing (as defined in Section 1.4 below), Buyer
shall purchase from Seller, and Seller shall sell, convey, assign, transfer and
deliver to Buyer, all business, properties, assets, rights and interests of
every kind and nature, whether tangible or intangible, and wherever located and
by whomever possessed, owned by Seller as of the Closing Date (as defined in
Section 1.4 below), but excluding all Excluded Assets as defined in subsection
(b) below (the "Purchased Assets"), free and clear of all Liens, including,
without limitation, the following:
(i) all finished goods inventory (the, "Inventory");
(ii) all prepayments, prepaid expenses, deposits and other tangible
prepaid assets;
(iii) all real property and all fixed assets, including machinery,
equipment, trucks, tractors, trailers, tools, spare parts, supplies, pallet
racks, office furniture, copiers, fax machines, telephone systems, computer
equipment, fixtures and leasehold improvements and other tangible personal
property;
(iv) all cleaning, office and printing supplies, catalogs, and other trade
literature;
(v) all Proprietary Rights (as defined in Section 4.12 below);
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(vi) subject to the provisions of Section 1.1(b) below, all rights
existing under leases, contracts, licenses, supply and distribution agreements,
sales and purchase agreements and orders and other agreements;
(vii) to the extent transferable, all franchises, approvals, permits,
licenses, orders, registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, including without
limitation, those obtained pursuant to Environmental and Safety Requirements;
(viii) subject to the provisions of Section 8.10 below, all rights to
receive and retain mail and other communications;
(ix) all lists and records pertaining to customers, suppliers,
distributors, agents and, to the extent permitted by applicable law, personnel
and all other books, ledgers, files, documents, correspondence, drawings and
specifications, computer programs and business records of every kind and nature;
(x) all creative materials (including, without limitation, photographs,
films, art work, color separations and the like), advertising and promotional
materials and all other printed or written materials; and
(xi) all goodwill as a going concern of Seller, all goodwill associated
with the Purchased Assets and all other intangible property of the Seller.
(b) Excluded Assets. Notwithstanding the foregoing, the following assets
(the "Excluded Assets") are expressly excluded from the purchase and sale
contemplated hereby and, as such, are not Purchased Assets:
(i) all cash and cash equivalents, bank deposits and marketable and
other investment securities;
(ii) the properties and assets listed on Schedule 1.1(b)(ii) attached
hereto;
(iii) all rights under the contracts, leases and agreements listed on
Schedule 1.1(b)(iii) attached hereto ("Excluded Agreements");
(iv) all Pre-Closing Accounts Receivable (as defined in Section 8.10) and
actions or proceedings commenced in connection therewith in existence as of the
Closing Date;
(v) all monies to be received by Seller from Buyer and all other rights
of Seller under this Agreement; and
(vi) Seller's corporate charter and all qualifications of Seller to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer
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books and blank stock certificates and other documents relating to the
organization, maintenance and existence of Seller as a corporation.
(c) Assumed Liabilities. On the terms and subject to the conditions
specified in this Agreement, at the Closing, Buyer will assume and agree to pay,
perform and discharge when due, subject to Buyer's right to dispute the
obligations in good faith, (i) all of the Seller's obligations under the
agreements, leases, contracts and commitments indicated with a notation that
such obligation is to be assumed by Buyer on Schedule 4.8 and Schedule 4.11
attached hereto (the "Assumed Contracts"), and under sales and purchase orders
entered into in the ordinary course of business (other than obligations
resulting from, arising out of, relating to, in the nature of, or caused by,
breach of contract, breach of warranty, tort, infringement, or violation of law,
relating to facts or circumstances existing prior to the Closing Date), but in
each case only to the extent that such agreements, leases, contracts,
commitments and sales and purchase orders constitute Purchased Assets and have
been validly assigned to Buyer hereunder or Buyer is otherwise able to assume
the benefits thereof and (ii) Seller's rebate obligations entered into with its
customers prior to the Closing Date and earned prior to and after the Closing;
provided that with respect to each customer Buyer shall assume and be required
to pay only such amounts earned prior to the Closing to the extent Seller pays
to Buyer the Seller's Rebate Obligation with respect to such customer in
accordance with Section 8.15. The items in clauses (i) and (ii) above are
collectively referred to herein as the "Assumed Liabilities." Schedule 1.1(c)
attached hereto specifies Seller's customer rebate programs entered into with,
or extended to, customers on or prior to September 19, 1996 and the amount of
such customer rebates earned through such date. Within 45 business days after
the Closing Date, Seller will provide to Buyer a revised Schedule 1.1(c) to
reflect the earned customer rebates as of the Closing Date based on total sales
prior to the Closing Date by Seller to such customer (with respect to each such
customer, "Seller's Pre-Closing Sales") during the current program period set
forth opposite such customer's name on Schedule 1.1(c) (such customer's "Program
Period").
(d) Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement or otherwise, Buyer will not assume or in any way
become liable for Seller's debts, Taxes, liabilities or obligations of any
nature whatsoever, whether accrued, absolute or contingent, whether known or
unknown, whether disclosed or undisclosed, whether due or to become due and
whether related to the Purchased Assets or otherwise, and regardless of when or
by whom incurred, other than the Assumed Liabilities and any liabilities or
obligations of any nature whatsoever to the extent such liabilities or
obligations are caused by or arise out of Buyer's use of the Purchased Assets or
operation of the Business after the Closing (collectively, the "Excluded
Liabilities"). Without limiting the generality of the foregoing, Excluded
Liabilities shall include, without limitation, all liabilities and obligations
arising under Environmental and Safety Requirements relating to Seller, the
Purchased Assets, or the Business and relating to facts or circumstances
existing prior to the Closing Date. A non-exclusive list of such environmental
Excluded Liabilities that are known as of the Closing Date is set forth on
Schedule 1.1(d).
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1.2 PURCHASE PRICE.
(a) The total purchase price payable by Buyer to Seller for the
Purchased Assets (the "Purchase Price") shall be (i) the assumption by Buyer of
the Assumed Liabilities plus (ii) an amount equal to the Fixed Asset Purchase
Price and the Actual Inventory Purchase Price, and shall be payable in the
manner set forth in Section 1.2(b).
(b) At the Closing, Buyer shall assume the Assumed Liabilities and
shall deliver to Seller (i) a promissory note in the form attached hereto as
Exhibit A (the "Fixed Asset Note") in an aggregate principal amount equal to the
Fixed Asset Purchase Price, as calculated in accordance with subsection (c)
below and (ii) a promissory note in the form attached hereto as Exhibit B (the
"Inventory Note") in an aggregate principal amount equal to the Estimated
Inventory Purchase Price, as calculated in accordance with Section 1.3 below.
Buyer shall pay such promissory notes in accordance with their terms.
(c) The "Fixed Asset Purchase Price" shall equal the depreciated book
value of the Purchased Assets (excluding the Inventory) (the "Fixed Assets") as
of the Closing Date. Attached hereto as Schedule 1.2(c) is a schedule of the
Fixed Assets reflecting depreciated book values as of July 31, 1996. Within 2
business days prior to the Closing Date, Seller will provide to Buyer a revised
Schedule 1.2(c) which has been adjusted for depreciation as of the Closing Date
in a manner consistent with the Latest Balance Sheet. The sum of such adjusted
amounts will be the Fixed Asset Purchase Price.
1.3 INVENTORY.
(a) At least five business days prior to the Closing Date, Seller
shall deliver to Buyer a good faith estimate of the book value of the Inventory,
net of vendor rebates applicable thereto, as of the Closing determined in
accordance with Seller's Inventory Accounting Practices (as defined in Section
4.20 below) (the "Estimated Inventory Balance"). The "Estimated Inventory
Purchase Price" shall equal the Estimated Inventory Balance minus the aggregate
amount of interest that would be required to be paid under the Inventory Note
assuming an aggregate principal amount equal to the Estimated Inventory Balance
and that interest and principal payments were made as scheduled therein.
(b) On the business day prior to the Closing Date, Seller and its
representatives will conduct a physical count of the Inventory as of such date,
which Buyer and its representatives shall be entitled to observe. As a part of
such count, Seller shall mark for identification the Inventory in a manner to be
mutually agreed upon by Buyer and Seller. Within 30 days after the Closing
Date, Seller shall prepare and deliver to Buyer a schedule (the "Inventory
Statement") reflecting Seller's determination of the book value of the
Inventory, net of vendor rebates applicable thereto, as of the Closing Date
consistent with Seller's Inventory Accounting Practices (the "Actual Inventory
Balance"), which determination shall be based upon the physical count taken on
the business day prior to the Closing Date. Seller shall make available to
Buyer all information necessary in order for Buyer to review Seller's
determination of the Actual Inventory Balance.
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(c) If Buyer disagrees with Seller's determination of the Actual
Inventory Balance, Buyer shall notify Seller in writing of such disagreement
within 15 days from the date Buyer receives the Inventory Statement. Such
writing shall be accompanied by a written notice from Buyer's accountants
setting forth the basis for such disagreement in reasonable detail. Buyer and
Seller thereafter shall negotiate in good faith to resolve any such
disagreements. If Buyer and Seller are unable to resolve any such disagreements
within 15 days after delivery of Buyer's objection letter, Buyer and Seller
shall submit such dispute to an independent "Big Six" accounting firm mutually
agreeable to Buyer and Seller for resolution consistent with Seller's Inventory
Accounting Practices. If Buyer and Seller are unable to mutually agree on such
an accounting firm, a "Big Six" accounting firm will be selected by lot after
eliminating one firm designated as objectionable by each of Buyer and Seller
(any accounting firm so selected or agreed upon shall be referred to herein as
the ("Independent Auditor")).
(d) Buyer and Seller shall use their best efforts to cause the
Independent Auditor to resolve all disagreements over the Actual Inventory
Balance as soon as practicable, but in any event within 45 days after submission
of the disputes to the Independent Auditor. The resolution of such disagreements
and the determination of the Actual Inventory Balance shall be final and binding
on Buyer and Seller.
(e) The Independent Auditor shall determine the allocation of its
costs and expenses in determining the Actual Inventory Balance based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party. Buyer and Seller shall pay
the Independent Auditor's fees and expenses based on such allocation.
(f) Upon the final determination of the Actual Inventory Balance
pursuant to this Section 1.3, the Inventory Note shall be canceled and Buyer
shall deliver to Seller a substitute promissory note (the "Substitute Inventory
Note") in a principal amount equal to the Actual Inventory Purchase Price and
with other terms and conditions identical to those set forth in the Inventory
Note. The amortization of the principal amount of the Substitute Inventory Note
shall be at the same times and in the same proportion as that of the initial
principal amount of the Inventory Note. The "Actual Inventory Purchase Price"
shall equal the Actual Inventory Balance minus the aggregate amount of interest
that would be required to be paid under the Substitute Inventory Note assuming
an aggregate principal amount equal to the Actual Inventory Balance and that
interest and principal payments were made as scheduled therein.
(g) As soon as practicable (but in no event later than five business
days) after the Actual Inventory Balance is determined pursuant to this Section
1.3, Buyer shall pay to Seller or Seller shall pay to Buyer, as the case may be,
in immediately available funds the difference between the amount of principal
and interest actually paid by Buyer to Seller under the Inventory Note and the
amount of principal and interest that Buyer would have been required to pay to
Seller under the Inventory Note had the aggregate principal amount of the
Inventory Note initially been equal to the Actual Inventory Purchase Price.
1.4 CLOSING TRANSACTIONS.
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(a) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Kirkland & Ellis,
200 East Randolph Drive, Chicago, Illinois 60601, at 9:00 a.m. local time on the
third business day following satisfaction or waiver of all the closing
conditions set forth in Article II (other than those to be satisfied at the
Closing), or such other date, time or place as is mutually agreeable to Buyer
and Seller (the "Closing Date").
(b) Closing Deliveries. Subject to the conditions set forth in this
Agreement, the parties agree to consummate the following "Closing Transactions"
at the Closing:
(i) Seller will convey to Buyer good and marketable title to all of
the Purchased Assets, free and clear of all Liens, and deliver to Buyer
warranty or grant deeds, bills of sale, assignments of leases and
contracts, documents acceptable for recordation in the United States Patent
and Trademark Office, the United States Copyright Office and any other
similar domestic or foreign office, department or agency and all other
instruments of conveyance, all in form and substance reasonably
satisfactory to Buyer and its counsel (collectively, "Conveyance
Documents"), which are necessary or reasonably required by Buyer to effect
the transfer to Buyer of the Purchased Assets;
(ii) Buyer will deliver to Seller the Fixed Asset Note and the
Inventory Note;
(iii) Buyer will deliver to Seller such instruments of assumption in
form and substance reasonably satisfactory to Seller and its counsel as are
required in order for Buyer to assume the Assumed Liabilities; and
(iv) there shall be delivered to Buyer and Seller the certificates
and other documents and instruments provided to be delivered under Article II
hereof.
ARTICLE II
CONDITIONS TO CLOSING
2.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article IV hereof
and all other representations and warranties of Seller set forth in this
Agreement will be true and correct in all material respects at and as of the
Closing Date (except for representations and warranties which speak expressly as
of a different date, which representations and warranties will have been true
and correct in all material respects as of such date) as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties (without taking into account any
disclosures made by Seller to Buyer pursuant to Section 4.21 hereof);
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(b) Seller will have performed and complied in all material respects
with all of the covenants and agreements required to be performed by it under
this Agreement prior to the Closing;
(c) Seller will have obtained (i) all authorizations, consents and
approvals by governments and governmental agencies that are necessary for Seller
for the consummation of the transactions contemplated hereby and/or the other
agreements contemplated hereby (including, without limitation, (A) expiration or
termination of all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act and (B) all authorizations, consents and approvals by
governments and governmental agencies referred to in Section 4.4) and (ii) all
consents and waivers by third parties referred to in Schedule 4.4 which have
been designated on such Schedule (by denoting the same with a pound (#) symbol)
as those consents required to be obtained as a condition to the Closing;
(d) no suit, action or other proceeding, or injunction or final
judgment, order or decree relating thereto, will be pending or overtly
threatened before any court or any governmental or regulatory body or authority
in which it is sought to restrain or prohibit or to obtain material damages or
other material relief (including rescission) in connection with the transactions
contemplated hereby, or that is reasonably likely to have a material adverse
effect on the business, financial condition, operating results, assets or
operations of the Business (a "Material Adverse Effect") or is reasonably likely
to materially adversely affect the right of Buyer to own, operate or control the
Purchased Assets or the Business; no investigation that would be reasonably
likely to result in any such suit, action or proceeding shall be pending or
overtly threatened and no such judgment, order or decree shall have been entered
and not subsequently dismissed with prejudice or satisfied;
(e) Bio-Lab will have entered into Chemical Supply Agreements with
Buyer in the form of Exhibit C-1 and Exhibit C-2 attached hereto (the "Chemical
Supply Agreements"), and the Chemical Supply Agreements will be in full force
and effect;
(f) Seller, Bio-Lab and Great Lakes Chemical Corporation, a Delaware
corporation("Great Lakes"), will have entered into a Noncompetition Agreement
with Buyer in the form of Exhibit D attached hereto (the "Noncompetition
Agreement") and the Noncompetition Agreement will be in full force and effect;
(g) Bio-Lab or one of its Subsidiaries will have entered into a
purchase agreement with respect to the purchase by Bio-Lab or one of its
Subsidiaries of certain assets of Alliance Packaging, Inc. ("Alliance"), a
Subsidiary of Buyer, in the form attached hereto as Exhibit E(the "Alliance
Purchase Agreement"), and the Alliance Purchase Agreement will be in full force
and effect;
(h) Bio-Lab will have entered into a Transition Services Agreement
with Buyer in the form of Exhibit F attached hereto (the "Transition Services
Agreement"), and the Transition Services Agreement will be in full force and
effect;
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(i) Prior to Closing, Seller shall obtain an estoppel letter (the
"Estoppel Letter") and a landlord agreement (the "Landlord Agreement") with
respect to at least 32 of the parcels of Leased Real Property (including the
parcels described on Schedule 2.1(i) attached hereto) from the landlords,
lessors, sublessors or licensors for such property in the form of Exhibit G
attached hereto and Exhibit H attached hereto, respectively;
(j) Buyer will have obtained the proceeds of financing in an amount
sufficient to consummate the transactions contemplated hereby and to provide
Buyer with its ongoing working capital needs on terms satisfactory to Buyer;
(k) On or prior to the Closing Date, Seller will have delivered to
Buyer all of the following:
(i) a certificate from an officer of Seller in the form set forth in
Exhibit I attached hereto, dated the Closing Date, stating that the
preconditions specified in Sections 2.1(a)-(d), inclusive, have been
satisfied;
(ii) copies of all lien releases, third party and governmental
consents, approvals, licenses, permits and filings required to be obtained
by Seller in connection with the consummation of the transactions
contemplated herein;
(iii) certified copies of the resolutions of Seller's, Bio-Lab's and
Great Lakes' boards of directors approving the transactions contemplated by
this Agreement; and
(iv) a certification of Seller pursuant to Treasury Regulation
Section 1.1445-2(b)(2) that Seller is not a foreign person; and
(l) all corporate proceedings to be taken by Seller in connection
with the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, instruments and other documents
required to be delivered by Seller to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance to Buyer.
Any condition specified in this Section 2.1 may be waived by Buyer,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Buyer.
2.2 CONDITIONS TO THE SELLER'S OBLIGATIONS AT THE CLOSING. The
obligation of Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing Date:
(a) the representations and warranties set forth in Article V hereof
and all other representations and warranties of Buyer set forth in this
Agreement will be true and correct in all material respects at and as of the
Closing Date (except for representations and warranties which speak expressly as
of a different date, which representations and warranties will have been true
and correct in all material respects as of such date) as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties
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(without taking into account any disclosures made by Buyer to Seller pursuant to
Section 5.6 hereof);
(b) Buyer will have entered into the Chemical Supply Agreements and
the Chemical Supply Agreements will be in full force and effect;
(c) Buyer will have entered into the Transition Services Agreement,
and the Transition Services Agreement will be in full force and effect;
(d) Alliance and SCP Pool Corporation, as guarantor, will have
entered into the Alliance Purchase Agreement, and the Alliance Purchase
Agreement will be in full force and effect;
(e) Buyer's senior lenders will have entered into an Intercreditor
agreement with Seller in the form of Exhibit J attached hereto (the
"Intercreditor Agreement"), and the Intercreditor Agreement will be in full
force and effect;
(f) Buyer will have obtained all consents and approvals by
governmental agencies that are necessary for Buyer for the consummation of the
transactions contemplated hereby and/or the other agreements contemplated hereby
(including, without limitation, expiration or termination of all applicable
waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act);
(g) no suit, action or other proceeding, or injunction or final
judgment, order or decree relating thereto, will be pending or overtly
threatened before any court or any governmental or regulatory body or authority
in which it is sought to restrain or prohibit or to obtain material damages or
other material relief (including rescission) in connection with the transactions
contemplated hereby; no investigation that would be reasonably likely to result
in any such suit, action or proceeding shall be pending or overtly threatened
and no such judgment, order or decree shall have been entered and not
subsequently dismissed with prejudice or satisfied;
(h) Buyer will have entered into Security Agreements with Seller in
the form of Exhibits K-1 and K-2 attached hereto (the "Security Agreements")
granting Seller a security interest in the Inventory to secure Buyer's
obligations under the Inventory Note and a security interest in the Fixed Assets
to secure Buyer's obligations under the Fixed Asset Note, and the Security
Agreements will be in full force and effect;
(i) [Intentionally Omitted];
(j) Buyer will have performed and complied in all material respects
with all of the covenants and agreements required to be performed by it under
this Agreement prior to the Closing;
(k) On or prior to the Closing Date, Buyer will have delivered to
Seller all of the following:
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(i) a certificate from Buyer in the form set forth in Exhibit L
attached hereto, dated the Closing Date, stating that the preconditions
specified in Sections 2.2(a), (f), (g) and (j) have been satisfied; and
(ii) copies of the proper financing statements (Form UCC-1) that have
been duly executed by Buyer and naming Buyer as the debtor and Seller as
the secured party covering the Purchased Assets specified in the Security
Agreements and the Intercreditor Agreement; and
(iii) certified copies of the resolutions of Buyer's and SCP Pool's
boards of directors approving the transactions contemplated by this
Agreement; and
(l) all corporate proceedings to be taken by Buyer in connection
with the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, instruments and other documents
required to be delivered by Buyer to Seller to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Seller.
Any condition specified in this Section 2.2 may be waived by Seller,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Seller.
ARTICLE III
COVENANTS PRIOR TO CLOSING
3.1 AFFIRMATIVE COVENANTS OF SELLER. Following the execution of this
Agreement and prior to the Closing, unless Buyer otherwise agrees in writing,
Seller will:
(a) use commercially reasonable efforts to conduct its business
(including, without limitation, its cash management practices, the collection of
receivables, payment of payables, incurrence of capital expenditures and
purchase of Inventory) only in the usual and ordinary course of business in
accordance with past custom and practice;
(b) use commercially reasonable efforts to carry on its business in
the same manner as presently conducted and keep its organization and properties
intact, including its present business operations, physical facilities, working
conditions and employees and its present relationships with lessors, licensors,
licensees, suppliers, distributors and customers and others having business
relations with it;
(c) use commercially reasonable efforts to maintain the Purchased
Assets and the Leased Real Property in good operating condition (reasonable wear
and tear excepted) and repair, maintain insurance reasonably comparable to that
in effect on the date hereof, maintain Inventory, supplies and spare parts at
customary operating levels consistent with past practices and, in the event of a
casualty, loss or damage to any of the Purchased Assets prior to the Closing
Date for which Seller is insured, either repair or replace such Purchased Assets
or, if Buyer agrees, transfer the
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proceeds of such insurance to Buyer at the Closing, but only to the extent that
the amount of such proceeds does not exceed the depreciated book value of such
assets;
(d) maintain its books, accounts (including working capital) and
records in accordance with GAAP or, in the case of Inventory, in accordance with
Seller's Inventory Accounting Practices;
(e) use commercially reasonable efforts to maintain in full force and
effect the existence of all material Proprietary Rights;
(f) encourage management and other key employees to accept employment
with Buyer after the Closing;
(g) comply in all material respects with all legal requirements and
contractual obligations applicable to the operations and business of Seller and
pay all applicable Taxes then due and payable and relating to the Purchased
Assets;
(h) cooperate with Buyer and use commercially reasonable efforts to
cause the conditions to Buyer's obligation to close specified in Section 2.1
above to be satisfied, and execute and deliver such further instruments of
conveyance and transfer and take such additional action as Buyer and Seller
agree is necessary to effect, consummate, confirm or evidence the transactions
contemplated by this Agreement, and use commercially reasonable efforts to cause
the conditions to Seller's obligation to close specified in Section 2.2 above to
be satisfied; and
(i) promptly inform Buyer in writing of any variances from the
representations and warranties of which Seller becomes aware contained in
Article IV or elsewhere in this Agreement or any breach of any covenants
hereunder by Seller.
3.2 NEGATIVE COVENANTS OF SELLER. Following the execution of this
Agreement and prior to the Closing, without Buyer's prior written consent, which
shall not be unreasonably withheld, Seller will not:
(a) take any action that would require disclosure under Section 4.7
below;
(b) enter into any transaction with respect to the Business with any
of its officers or directors;
(c) enter into any transactions with respect to the Business with any
of its Affiliates (other than its officers and directors) except in the ordinary
course of business consistent with past practice;
(d) sell, lease, license or otherwise dispose of any interest in any
of the Purchased Assets, other than Inventory in the ordinary course of
business, or permit, allow or suffer any of the Purchased Assets to be subjected
to any Lien;
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(e) terminate, modify or amend any existing material contracts,
leases or agreements to be assumed by Buyer or any material government license,
permit or other authorization;
(f) enter into any new material contracts, leases, agreements or
commitments, other than commitments for materials made in the ordinary course of
business; or
(g) institute any material change in the conduct of its business, or
any material change in its method of purchase, sale, lease, management,
marketing, operation or accounting.
3.3 EXCLUSIVITY. Neither Bio-Lab nor Seller will, directly or
indirectly, through any officer, director, employee, agent or otherwise
(including through any investment banker, attorney or accountant retained by any
of the foregoing), solicit, initiate any discussions or negotiations regarding,
or furnish to any other Person any information with respect to, or otherwise
cooperate in any way with, any proposal or offer from any Person (including any
of such Person's officers, directors, employees, agents or other
representatives) relating to any liquidation (other than as contemplated
hereby), dissolution, recapitalization or refinancing of Seller or any
acquisition of the capital stock or other securities of Seller or any
substantial portion of the assets of Seller or the Business (including any
acquisition structured as a merger, consolidation or share exchange) (an
"Acquisition Proposal"). Seller will immediately cease and cause to be
terminated any and all contacts, discussions and negotiations with third parties
regarding any Acquisition Proposal. Each of Seller and Bio-Lab hereby agrees to
notify Buyer immediately upon the receipt of any proposal, offer, inquiry or
contract with respect to any of the foregoing and will promptly provide Buyer
with copies of and disclose to Buyer the details concerning any such proposal,
inquiry or contract.
3.4 COVENANTS OF BUYER. Prior to the Closing, Buyer will cooperate
with Seller and use commercially reasonable efforts to cause the conditions to
Seller's obligation to close specified in Section 2.2 above to be satisfied; and
execute and deliver such further instruments of conveyance and transfer and take
such additional action as Buyer and Seller agree is necessary to effect,
consummate, confirm or evidence the transactions contemplated by this Agreement;
and use commercially reasonable efforts to cause the conditions to Buyer's
obligation to close specified in Section 2.1 above to be satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER
----------
As a material inducement to Buyer to enter into this Agreement Seller
hereby represents and warrants to Buyer, that:
4.1 ORGANIZATION AND CORPORATE POWER. Each of Seller and Bio-Lab is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware. Seller is qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be qualified, except where the failure to be so qualified
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would not have a Material Adverse Effect. (All such jurisdictions in which
Seller is qualified are set forth on Schedule 4.1 hereto.) Seller has full
corporate power and other necessary power and authority and all licenses,
permits and authorizations necessary to own and operate its properties,
necessary to own and operate its business and to conduct its business as
presently conducted, except where the failure to have such licenses, permits and
authorizations would not have a Material Adverse Effect.
4.2 AUTHORIZATION OF TRANSACTIONS. Each of Seller and Bio-Lab has
full power and authority to execute, deliver and perform this Agreement, the
Noncompetition Agreement and the other agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby. In the event the
transactions contemplated by this Agreement are consummated, the board of
directors of each of Seller and Bio-Lab and the shareholders of Seller will have
duly approved this Agreement and will have duly authorized the execution,
delivery and performance of this Agreement, the Noncompetition Agreement and the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby. No other corporate proceedings on the part of
Seller or Bio-Lab are necessary to approve and authorize the execution and
delivery of this Agreement, the Noncompetition Agreement and the other
agreements contemplated hereby. This Agreement has been duly executed and
delivered by Seller and Bio-Lab and constitutes the valid and binding agreement
of Seller and Bio-Lab, enforceable against Seller and Bio-Lab in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization or
other similar laws and to general principles of equity (whether considered in
proceedings at law or in equity). Great Lakes has full power and authority to
deliver the Noncompetition Agreement; in the event the transactions contemplated
hereby are consummated, the board of directors of Great Lakes will have duly
approved the Noncompetition Agreement and duly authorized the execution,
delivery and performance of the Noncompetition Agreement; and the Noncompetition
Agreement shall have been duly executed and delivered by each of Seller, Bio-Lab
and Great Lakes.
4.3 SUBSIDIARIES; INVESTMENTS. Except as set forth on Schedule 4.3
hereto, Seller does not own or control (directly or indirectly), hold or have
any rights or options to subscribe for, purchase or acquire any shares of stock,
partnership interest, joint venture interest, equity participation or any other
security or interest in any other Person and Seller has never had any
Subsidiary.
4.4 ABSENCE OF CONFLICTS. Except as set forth in Schedule 4.4 hereto
and except for required filings under the Hart-Scott-Rodino Act:
(a) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in any breach of any of the provisions of, (ii)
constitute a default under, (iii) result in a violation of, (iv) give any third
party the right to terminate or to accelerate any obligation under, (v) result
in the creation of any Lien upon the Purchased Assets under, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body under, the provisions of the certificate of
incorporation or by-laws of Seller or Bio-Lab or any indenture, mortgage, lease,
loan agreement or other agreement or instrument to which Seller or Bio-Lab is
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bound or affected, or any law, statute, rule or regulation or any judgment,
order or decree to which Seller or Bio-Lab is subject; and
(b) the execution, delivery and performance of the Non-Competition
Agreement and the consummation of the transactions contemplated thereby do not
and will not (i) conflict with or result in any breach of any of the provisions
of, (ii) constitute a default under, (iii) result in a violation of, (iv) give
any third party the right to terminate or to accelerate any obligation under,
(v) result in the creation of any Lien upon the Purchased Assets under, or (vi)
require any authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body under, the provisions of the
certificate of incorporation or by-laws of Seller, Bio-Lab or Great Lakes or any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which Seller, Bio-Lab or Great Lakes is bound or affected.
4.5 FINANCIAL STATEMENTS. Seller has furnished Buyer with copies of
an unaudited balance sheet as of June 30, 1996, for Seller (the "Latest Balance
Sheet") and the related unaudited statement of income for the six-month period
then ended and copies of the unaudited balance sheets of Seller as of December
31, 1993, 1994 and 1995 and the related unaudited statement of income for the
periods then ended. Each of the foregoing financial statements (including in all
cases the notes thereto, if any) (collectively, the "Financial Statements") and
Schedules 1.1(c) and 1.2(c) attached hereto were prepared from Seller's books
and records, and the Financial Statements present fairly Seller's financial
condition and results of operations as of the times and for the periods referred
to therein, and, except as set forth on Schedule 4.5 attached hereto, have been
prepared in accordance with GAAP, subject to normal year-end adjustments and the
absence of footnote disclosure. The amounts reflected on Schedule 1.2(c) have
been determined in accordance with GAAP. The amounts reflected on (or to be
reflected on) Schedule 1.1(c) have been (or will be) determined based on
Seller's books and records, which are true and correct in all material respects
with respect to such amounts.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. To Seller's knowledge,
Seller has no material obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known, whether due or to
become due and regardless of when or by whom asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing, except (a) obligations under contracts or commitments described in
Schedule 4.8(b) and Schedule 4.11 hereto or under contracts and commitments
entered into in the ordinary course of business which are not required to be
disclosed thereon (but not liabilities for breaches thereof), (b) liabilities
reflected on the liability side of the Latest Balance Sheet, (c) liabilities
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business or otherwise in accordance with the terms and conditions of
this Agreement (none of which is a liability for breach of contract, breach of
warranty, tort or infringement, or a claim or lawsuit, or an environmental
liability), and (d) liabilities otherwise expressly set forth in Schedule 4.6
hereto.
4.7 ABSENCE OF CERTAIN DEVELOPMENTS. Seller has not, except as set
forth in Schedule 4.7 hereto, since December 31, 1995:
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(a) suffered a change or development in the business, financial
condition, operating results, earnings, assets, customer, supplier, employee and
sales representative relations or financing arrangements of the Business which
has had, or is likely to have, a Material Adverse Effect;
(b) borrowed any amount or issued or exchanged any notes or other
evidences of any indebtedness for borrowed money or incurred or become subject
to any obligations or liabilities (whether absolute or contingent), except
current liabilities incurred in the ordinary course of business consistent with
past practice and liabilities under contracts entered into in the ordinary
course of business consistent with past practices;
(c) discharged or satisfied any Lien involving indebtedness
exceeding $100,000 or paid any obligation or liability, other than liabilities
paid in the ordinary course of business, or prepaid any amount of indebtedness
for borrowed money;
(d) mortgaged, pledged or subjected to any Lien any portion of its
properties or assets with a value in excess of $100,000;
(e) sold, leased, assigned or transferred (including, without
limitation, transfers to any employees or Affiliates of Seller) any tangible
assets (other than Inventory in the ordinary course of business), Proprietary
Rights or other intangible assets, or canceled without fair consideration any
debts or claims owing to or held by it, or, to its knowledge, disclosed any
proprietary confidential information to any Person, other than disclosures of
such information to Buyer and its Affiliates and representatives or in the
ordinary course of business pursuant to appropriate confidentiality agreements;
(f) suffered any theft, damage, destruction or casualty loss to its
tangible assets exceeding $150,000, whether or not covered by insurance;
(g) entered into, amended or terminated any lease, contract,
agreement or commitment, or taken any other action or entered into any other
transaction other than in the ordinary course of business and in accordance with
past custom and practice, or entered into any transaction with any Insider (as
defined in Section 4.18 below) (other than with Affiliates of Great Lakes or
Bio-Lab in the ordinary course of business and in accordance with past custom
and practice), or changed any business practice or manner of dealing with any
customer, supplier, subcontractor, Insider, sales representative, or other
person or entity with whom Seller engages in any business activity, or entered
into any other material transaction, whether or not in the ordinary course of
business;
(h) entered into any employment contract or collective bargaining
agreement, written or oral, or changed the employment terms for any employee or
agent or made or granted any bonus or any wage, salary or compensation increase
to any director, officer, employee or sales representative, group of employees
or consultant or made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit plan or
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arrangement or adopted any new employee benefit plan or arrangement, except for
normal compensation increases or bonuses consistent with past practice;
(i) conducted its business (including the collection of
receivables, purchase of inventory, payment of payables, incurrence of capital
expenditures, and maintenance and repair of assets) other than in the usual and
ordinary course of business in accordance with past custom and practice;
(j) made any capital expenditures (or commitments therefor) that
aggregate in excess of $150,000;
(k) made any loans or advances to, or guarantees for the benefit
of, any persons;
(l) delayed or postponed in a material way the payment of accounts
payable and other liabilities;
(m) entered into any lease of capital equipment or real estate
involving rental in excess of $50,000 per annum;
(n) made any charitable contributions or pledges in excess of
$10,000 in the aggregate; or
(o) entered into any other transaction that is material to the
Business other than in the ordinary course of business.
4.8 TITLE TO PROPERTIES.
(a) Owned Properties. Schedule 4.8(a) sets forth a list of all real
property owned by the Seller (collectively, the "Owned Real Property"). Except
as set forth on Schedule 4.8(a), with respect to each such parcel of Owned Real
Property: (i) such parcel is free and clear of all Liens; (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or oral,
granting to any person the right of use or occupance of any portion of such
parcel; and (iii) there are no outstanding actions or rights of first refusal to
purchase such parcel (other than the right of the Buyer pursuant to this
Agreement), or any portion thereof or interest therein.
(b) Leased Properties. Schedule 4.8(b) sets forth a list of all of
the leases and subleases ("Leases") and each leased and subleased parcel of real
property in which Seller has a leasehold and subleasehold interest (the "Leased
Real Property"). Except as set forth on Schedule 4.8(b), each of the Leases are
in full force and effect and Seller holds a valid and existing leasehold or
subleasehold interest under each of the Leases. Seller has delivered to Buyer
true, correct, complete and accurate copies of each of the Leases described in
Schedule 4.8(b). With respect to each Lease listed on Schedule 4.8(b) and except
as disclosed on Schedule 4.8(b): (i) the Lease is legal, valid, binding,
enforceable and in full force and effect; (ii) the Lease will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the Closing; (iii) neither the Seller nor, to Seller's
knowledge, any other party to the Lease is in breach
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or default, and no event has occurred which, with notice or lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration under the Lease; (iv) no party to the Lease has repudiated any
provision thereof; (v) there are no disputes, oral agreements, or forbearance
programs in effect as to the Lease; (vi) the Lease has not been modified in any
respect, except to the extent that such modifications are disclosed by the
documents delivered to Buyer; (vii) Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease;
and (viii) the Lease is fully assignable to Buyer without the necessity of any
consent.
(c) Real Property Disclosure. Except as disclosed on Schedule 4.8(a)
and Schedule 4.8(b), there is no Real Property leased or owned by the Seller
used in the Seller's business. The Owned Real Property and Leased Real Property
is referred to collectively herein as the "Real Property".
(d) Current Use. The current use of the Owned Real Property does not
violate in any material respect any instrument of record or agreement affecting
such Owned Real Property. There is no violation of any covenant, condition,
restriction, easement, agreement or order of any governmental authority having
jurisdiction over any of the Owned Real Property that affects such real property
or the use or occupancy thereof.
(e) Condition and Operation of Improvements. Except as set forth on
Schedule 4.8(e), to Seller's knowledge, all buildings and all components of all
buildings, structures and other improvements included within the Real Property
(the "Improvements"), are in good condition and repair and adequate to operate
such facilities as currently used; to Seller's knowledge, there are no facts or
conditions affecting any of the Improvements which would, individually or in the
aggregate, interfere in any material respect with the use, occupancy or
operation thereof as currently used, occupied or operated. To Seller's
knowledge, there are no structural deficiencies or defects affecting any
Improvements located upon the Owned Real Property except as set forth on
Schedule 4.8(e).
(f) Except as set forth on Schedule 4.8, Seller owns good and
marketable title, free and clear of all Liens, to all of the Purchased Assets
which are personal property.
(g) Except as otherwise contemplated by the Transition Services
Agreement, the Purchased Assets together with the Leased Real Property will
include all assets reflected in the Latest Balance Sheet (except for changes in
Inventory in accordance with the ordinary course of business) and used by Seller
in conducting the Business as presently conducted other than the Excluded
Assets. Except to the extent set forth on Schedule 4.8(e), to Seller's
knowledge, all Purchased Assets are in good condition and repair in all
respects, except for ordinary wear and tear not caused by neglect, and are
useable in the ordinary course of the Business.
4.9 ENVIRONMENTAL AND SAFETY MATTERS.
(a) Except as set forth on Schedule 4.9, Seller has, to its
knowledge, complied and is in compliance with all Environmental and Safety
Requirements, except where the failure to comply would not have a Material
Adverse Effect.
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(b) Without limiting the generality of the foregoing, Seller has,
to its knowledge, obtained and complied with, and is in material compliance
with, all permits, licenses and other authorizations that may be required
pursuant to Environmental and Safety Requirements for the occupation of its
respective facilities and the operation of the Business and which are material
to the Business, a list of all such permits, licenses and other authorizations
is set forth on Schedule 4.9 hereto.
(c) Seller has not received any written notice, report or other
information regarding any actual or alleged violation of Environmental and
Safety Requirements, including any investigatory, remedial or corrective
obligations, relating to the Real Property or the Business and arising under
Environmental and Safety Requirements where such actual or alleged violation
is or may be material to the Real Property or the Business.
(d) Except as set forth on Schedule 4.9, to Seller's knowledge, none
of the following exists at any property or facility owned or operated by Seller:
1) underground storage tanks, landfills, surface impoundments or waste disposal
areas; 2) asbestos-containing material in any form or condition; or 3) materials
or equipment containing polychlorinated biphenyls.
(e) To the knowledge of Seller, Seller has not treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous substance or
owned or operated any property or facility (and no such property or facility is
contaminated by any such substance), in a manner that has given or could give
rise to liability, including any liability for corrective action costs, response
costs, personal injury, property damage, natural resources damages or attorney
fees pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or the Resource Conservation and
Recovery Act ("RCRA"), or any other Environmental and Safety Requirements where
such liability may have a Material Adverse Effect.
(f) "Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
insecticides, biocides, pollutants, contaminants, toxic chemicals, carcinogens,
reproductive toxins, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, in each case as in effect and as amended through
the Closing Date.
(g) This Section 4.9 constitutes Seller's sole and exclusive
representations and warranties as to matters covered by this Section.
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4.10 TAXES.
(a) All Tax Returns required to be filed by Seller have been
prepared in material compliance with all applicable laws and regulations, and
all such Tax Returns are true and accurate in all material respects. All Taxes
shown as due and payable by Seller on all such Tax Returns have been paid or
appropriate reserves have been established.
(b) No deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Tax has been proposed, asserted or
assessed by any taxing authority against Seller (or any Affiliated Group of
which Seller is or has been a member and for which Seller would be responsible
for payment) and there is no action, suit, taxing authority proceeding or audit
now in progress, pending or, to Seller's knowledge, threatened against or with
respect to Seller.
(c) To the knowledge of Seller, Seller has withheld and paid all
employment taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, or other third
party.
(d) No written claim has been made within the previous three years
by a taxing authority in a jurisdiction where Seller does not file Tax Returns
that Seller is or may be subject to Taxes assessed by such jurisdiction with
respect to the Purchased Assets.
4.11 CONTRACTS AND COMMITMENTS.
(a) Except as set forth in Schedule 4.11 hereto, Seller is not a
party to or bound by, whether written or oral, any: (i) collective bargaining
agreement or contract with any labor union, whether formal or informal; (ii)
contract for the employment of any officer, individual employee or other person
on a full-time, part-time or consulting basis or any severance agreements; (iii)
agreement or indenture relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a Lien on any of the Purchased Assets; (iv)
license or royalty agreements; (v) lease or agreement under which Seller is
lessee of, or holds or operates, any personal property owned by any other party
for which annual rental exceeds $50,000; (vi) lease or agreement under which
Seller is lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by it for which annual rental exceeds
$50,000; (vii) contract or group of related contracts with the same party for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services which either
calls for performance over a period of more than six months or involves a sum in
excess of $50,000 or which may not be terminable with less than six months'
notice; (viii) contract relating to the distribution, marketing or sales of its
products or services (including contracts to provide advertising allowances or
promotional services) involving more than $50,000; (ix) franchise agreements,
(x) agreements, contracts or understandings pursuant to which Seller
subcontracts work to third parties; (xi) contract or agreement prohibiting it
from freely engaging in any business or competing anywhere in the world; or
(xii) any other agreement which Seller deems material to the Business taken as a
whole whether or not entered into in the ordinary course of business.
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(b) Except as disclosed in Schedule 4.11, (i) all of the Assumed
Contracts are in full force and effect, have not been amended or modified as of
the Closing, and are valid, binding and enforceable in accordance with their
respective terms, (ii) to the knowledge of Seller, no Assumed Contract has been
breached or canceled by the other party since December 31, 1995, and (iii)
Seller has, to its knowledge, performed all of the obligations required to be
performed by Seller in connection with the Assumed Contracts and is not in
receipt of any claim of default under any such contract or commitment.
(c) Seller has provided Buyer with a true and correct copy of all
Assumed Contracts, and has made available to Buyer those written contracts
referred to on Schedule 4.11 which are not Assumed Contracts, in each case
together with all amendments, waivers or other changes thereto. To Seller's
knowledge, Schedule 4.11 contains an accurate and complete description of all
material terms of all oral contracts referred to therein.
4.12 PROPRIETARY RIGHTS.
(a) Schedule 4.12 hereto sets forth a complete and correct list of:
(i) all patented or registered Proprietary Rights and pending patent
applications or other applications for registrations of any Proprietary Rights
owned or filed by Seller; (ii) all trade names and unregistered trademarks owned
by or licensed to Seller in connection with the Business; (iii) computer
software owned by and/or licensed to Seller (other than commercially available
software with a license fee of less than $1,000); and (iv) all license or
coexistence agreements, permissions or agreements to which Seller is a party (or
which is currently under negotiation) for the Proprietary Rights. Seller has
delivered to Buyer complete copies of all items required to be identified
pursuant to this Section 4.12(a).
(b) Except as set forth in Schedule 4.12, with respect to the
Proprietary Rights (including without limitation each of the Proprietary Rights
or agreements required to be identified pursuant to Section 4.12(a)): (i) Seller
owns and possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Proprietary Rights necessary for the operation
of the Business as currently conducted, (ii) no claim by any third party
contesting the validity, enforceability, use or ownership of any of the
Proprietary Rights, has been made or, to the knowledge of Seller, is threatened;
(iii) Seller has not received any notices of any infringement or
misappropriation by any third party with respect to the Proprietary Rights; and
(iv) to the knowledge of Seller, Seller has not infringed, misappropriated or
otherwise conflicted with any proprietary rights of any third parties.
(c) Except as set forth in Schedule 4.12, the Proprietary Rights
comprise all of the intellectual property necessary for the operation of the
Business as currently conducted by Seller. All of the Proprietary Rights owned
by or licensed to Seller immediately prior to the Closing will be owned or
available for use by Buyer immediately after the Closing.
(d) "Proprietary Rights" means all of the following which are owned
by or licensed to Seller, together with all income, royalties, damages and
payments due or payable as of the Closing or thereafter: patents, patent
applications and inventions and any reissue, continuation,
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continuation-in-part, division, extension or reexamination thereof; trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all goodwill associated therewith and adaptions and deviations thereof
(including, without limitation, the trademark and trade name "The B-L Network,
Inc."; copyrights; and all registrations, applications and renewals for any of
the foregoing; trade secrets and confidential and proprietary information
(including, ideas, know-how, drawings, sketches, patterns, specifications and
designs); customer lists and related information; and computer software
(including, without limitation, data and related documentation).
4.13 LITIGATION; PROCEEDINGS. Except as set forth in Schedule 4.13
hereto, there are no material actions, suits, proceedings (including eminent
domain proceedings), orders, claims or investigations pending or, to the
knowledge of Seller, overtly threatened against or affecting Seller at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there is no basis known to Seller for any of the foregoing.
4.14 BROKERAGE. There are no claims for brokerage commissions,
finders fees or similar compensation in connection with the transactions
contemplated by this Agreement, based on any arrangement or agreement made
by or on behalf of Seller.
4.15 GOVERNMENTAL LICENSES, PERMITS AND CONSENTS. To the knowledge
of Seller, Schedule 4.15 hereto contains a complete listing and summary
description of all material permits, licenses, franchises, certificates,
approvals and other authorizations of foreign, federal, state and local
governments owned, possessed or used by Seller in the conduct of the Business
(collectively, the "Licenses"). Except as indicated on Schedule 4.15, Seller
is the licensee, permittee, or beneficiary of the Licenses. To the knowledge of
Seller, no loss or expiration of any License is pending or threatened in writing
other than expiration in accordance with the terms thereof.
4.16 EMPLOYEES. To the knowledge of Seller, no executive and no
group of employees of Seller has any plans to terminate his, her or its
employment with Seller. There is no unfair labor practice charge or complaint
pending or, to the knowledge of Seller, threatened against Seller before the
National Labor Relations Board or any similar state or local body. Seller has
not, within the two-year period preceding the date of the Agreement, experienced
any union organization attempts, labor disputes or work stoppage or slowdowns
due to labor disagreements or any strikes, grievances, unfair labor practice
claims or other material employee disputes. There is no labor strike, dispute,
work stoppage or slowdown pending or, to the knowledge of Seller, threatened.
There is no request for representation pending and, to the knowledge of Seller,
no question concerning representation has been raised. There is no grievance or
arbitration proceeding pending against Seller which might have a Material
Adverse Effect.
4.17 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.17 attached hereto contains a list of each
significant employee benefit plan and policy maintained or contributed to by
Seller or any of its Affiliates on behalf of the employees of the Business,
including each (i) employee pension benefit plan (as defined in
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Section 3(2) of ERISA) (the "Employee Pension Plans") and (ii) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) ("Employee Welfare Plans"),
and lists each compensation, incentive, bonus, severance or other termination
plan, program or arrangement (all items listed on Schedule 4.17 are referred to
as "Plans"). All Plans (and related trusts and insurance contracts) comply in
form and in operation in all material respects with all applicable laws,
including the requirements of ERISA and the Code. Seller has furnished or made
available to Buyer with respect to each Plan, true and complete copies of the
plan documents, summary plan descriptions and all related trust agreements,
insurance contracts or other funding agreements which implement the Plans.
(b) Neither Seller nor any member of Seller's controlled group (as
defined in Section 414 of the Code) have incurred any material liability to the
PBGC, the Internal Revenue Service, the Department of Labor, any other
governmental agency, or any Multiemployer Plan with respect to any Plan
currently or previously maintained by Seller or Controlled Group member that has
not been satisfied in full, and, to Seller's knowledge, no condition exists that
presents a material risk to Seller of incurring such a liability, other than
liability for premiums due the PBGC.
4.18 AFFILIATE TRANSACTIONS. To the knowledge of Seller and except
as set forth on Schedule 4.18, no officer, director or employee of Seller or any
person related by blood or marriage to any such Person or any entity in which
any such Person owns any beneficial interest (collectively, the "Insiders"), is
a party to any agreement, contract, commitment or transaction with Seller or
which is pertaining to the Business or has any interest in any property, real or
personal or mixed, tangible or intangible, relating to the Business. Schedule
4.18 hereto describes all material intercompany services provided to or on
behalf of Seller by its Affiliates and to or on behalf of such Affiliates by
Seller.
4.19 COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.19
hereto, Seller and its officers, directors, agents and employees have complied
with all applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof where the failure to comply would have a
Material Adverse Effect, and no claims have been filed against Seller alleging
a material violation of any such laws or regulations. Seller has not given or
agreed to give any money, gift or similar benefit (other than incidental gifts
of articles of nominal value or entertainment of customers in the normal course
of business) to any actual or potential customer, supplier, governmental
employee, Insider or any other person in a position to assist or hinder Seller
in connection with any actual or proposed transaction concerning the Business.
4.20 INVENTORY. The Inventory of Seller shown on the Latest Balance
Sheet and the Inventory of Seller shown on the Inventory Statement or otherwise
included in the Purchased Assets, net of the reserves applicable thereto
determined in accordance with the accounting procedures and methods currently
used by Seller and described on Schedule 4.20 attached hereto, consistent with
Seller's accounting procedures for the periods shown in the Financial Statements
("Seller's Inventory Accounting Practices"), is owned by Seller, and is salable
in the ordinary course of business, consistent with past practice. The
Inventory shown on the Inventory Statement is net of an allowance for Inventory
which is damaged and unsaleable, as set forth in the Inventory
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Statement. The book value of such Inventory has been calculated based upon
Seller's Inventory Accounting Practices.
4.21 CLOSING DATE. All of the representations and warranties
contained in this Article IV and elsewhere in this Agreement and all information
delivered in any Schedule, attachment or Exhibit hereto are true and correct on
the date of this Agreement and will be true and correct on the Closing Date
(except for representations and warranties which speak expressly as of a
different date, which representations and warranties will have been true and
correct as of such date), except to the extent that Seller has advised Buyer
otherwise in writing prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------
As a material inducement to Seller and Bio-Lab to enter into this
Agreement, Buyer hereby represents and warrants to Seller that:
5.1 CORPORATE ORGANIZATION AND POWER. Each of Buyer and SCP Pool is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer is qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be qualified, except where the failure to be so qualified would
not have a material adverse effect on the business, financial condition,
operating results, assets or operations of Buyer. Buyer has full corporate power
and authority to enter into this Agreement and the other agreements contemplated
hereby and perform its obligations hereunder and thereunder.
5.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Noncompete Agreement and the other agreements contemplated hereby
by each of Buyer and SCP Pool and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite corporate action on the part of Buyer and SCP Pool, and no other
corporate proceedings on their part are necessary to approve and authorize the
execution, delivery or performance of this Agreement, the Noncompete Agreement
or the other agreements contemplated hereby. Each of this Agreement, the
Noncompete Agreement and the other agreements contemplated hereby have been duly
executed and delivered by Buyer and, to the extent it is a party thereto, SCP
Pool and constitutes a valid and binding obligation of Buyer and, to the extent
it is a party thereto, SCP Pool, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization or other similar
laws and to general principles of equity (whether considered in proceedings at
law or in equity).
5.3 NO VIOLATION. Except for required filings under the Hart-Scott-
Rodino Act, the execution, delivery or performance of this Agreement and the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby will not breach or violate Buyer's certificate
of incorporation or its bylaws, any applicable law, rule or regulation of any
governmental authority, or any agreement or instrument, or any license,
franchise or permit,
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or subject Buyer to any order, writ, injunction or decree or result in the
creation or imposition of any Lien upon the Purchased Assets, other than any
Liens granted to Seller or Buyer's lenders providing financing for the
transactions contemplated hereby.
5.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. No permit, consent,
approval or authorization of, or declaration to or filing with, any governmental
or regulatory authority or any other party or Person is required in connection
with the execution, delivery or performance of this Agreement and the other
agreements contemplated hereby by Buyer, or the consummation by Buyer of the
transactions contemplated hereby and thereby other than filings required under
the Hart-Scott-Rodino Act.
5.5 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made
by or on behalf of Buyer.
5.6 CLOSING DATE. All of the representations and warranties
contained in this Article V and elsewhere in this Agreement and all information
delivered in any Schedule, attachment or Exhibit hereto are true and correct
on the date of this Agreement and will be true and correct on the Closing Date,
except to the extent that Buyer has advised Seller otherwise in writing prior
to the Closing.
ARTICLE VI
TERMINATION
-----------
6.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation in or material breach on the part of the other party of (i)
the representations and warranties set forth in this Agreement or (ii) the
covenants set forth in this Agreement which breach of covenant is not cured
within 10 days of the breaching party becoming aware of the breach (to the
extent it is capable of being cured); and
(c) by either Buyer or Seller if the sale contemplated by this
Agreement has not been consummated by November 1, 1996; provided that the party
seeking termination pursuant to clause (c) of this Section 6.1 is not in
material breach of any of its representations, warranties or covenants contained
in this Agreement; and provided, further, that neither Buyer nor Seller will be
entitled to terminate this Agreement pursuant to this Section 6.1 if such
party's wilful or knowing breach of this Agreement has prevented the
consummation of the transactions contemplated hereby or thereby.
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In the event of termination by Seller or Buyer pursuant to this Section 6.1,
written notice thereof (describing in reasonable detail the basis therefor)
shall promptly be delivered to the other party.
6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Buyer or Seller as provided above, this Agreement will
forthwith become void and there will be no liability on the part of any party
hereto to any other party hereto or its shareholders or directors or officers
in respect thereof, except for the obligations of the parties hereto in Sections
8.2, 8.7 and 8.8 and except that nothing herein will relieve any party from any
breach of this Agreement prior to such termination.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
--------------------------
7.1 SURVIVAL; ETC. All representations, warranties, covenants and
agreements set forth in this Agreement or in any writing delivered in connection
with this Agreement will survive the Closing Date and the consummation of the
transactions contemplated hereby and will not be affected by any examination
made for or on behalf of Buyer or Seller, the knowledge of any of their
respective officers, directors, stockholders, employees or agents, or the
acceptance of any certificate or opinion from Buyer or Seller, their respective
officers, directors, stockholders, employees or agents.
7.2 INDEMNIFICATION.
(a) Subject to the limitations set forth in this Section 7.2, Seller
agrees to indemnify Buyer, its Affiliates, officers, directors, stockholders,
employees, agents, representatives, successors and permitted assigns
(collectively, the "Buyer Parties") and hold each of them harmless against and
pay on behalf of or reimburse such Buyer Parties in respect of any loss,
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense, whether or not arising out of third party claims
(including, without limitation, interest, penalties, reasonable attorneys' fees
and expenses, all amounts paid in settlement of any of the foregoing and all
reasonable amounts paid in investigation or defense of any of the foregoing)
(collectively, "Losses") which any such Buyer Party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental
to or by virtue of: (i) the breach of any representation or warranty of Seller
contained in this Agreement; (ii) the breach of any covenant or agreement of
Seller contained in this Agreement; (iii) any claims of any brokers or finders
claiming by, through or under Seller or Bio-Lab; (iv) the assertion or recovery
against Buyer of any liability or obligation of any of the Seller Parties not to
be assumed or performed by Buyer hereunder (including, without limitation, the
Excluded Liabilities); and (v) the performance by Buyer of its obligations
pursuant to Section 8.10.
(b) The indemnification provided for in Section 7.2(a)(i) and (ii)
above is subject to the following limitations:
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(i) Seller will be liable to Buyer with respect to claims arising
from breaches of (x) the representations and warranties set forth in
Section 4.9 only if Buyer gives to Seller written notice thereof within
three years after the Closing Date; (y) the representations and warranties
set forth in Sections 4.10 and 4.17 only if Buyer gives to Seller written
notice thereof prior to the expiration of the applicable statute of
limitation with respect thereto plus 60 days; and (z) the covenants
contained in Sections 3.1 and 3.2 and all other representations and
warranties contained in this Agreement only if Buyer gives Seller written
notice thereof within two years after the Closing Date;
(ii) Except with respect to Losses incurred in connection with a
violation of Section 8.17, Seller will not be liable to Buyer for any Loss
arising with respect to claims arising from breaches of the representations
and warranties set forth in this Agreement unless the aggregate amount of
all such Losses relating to all such breaches exceeds $150,000 in the
aggregate (the "Buyer's Threshold"), in which case Seller and Bio-Lab shall
be liable for the amount of such Losses in excess of Buyer's Threshold; and
(iii) Except with respect to Losses incurred in connection with a
violation of Section 8.17, the aggregate amount required to be paid by
Seller with respect to claims arising from breaches of the representations
and warranties set forth in this Agreement shall not exceed the Purchase
Price.
Notwithstanding any implication to the contrary contained in this Agreement, so
long as Buyer delivers written notice of a claim to Seller within the foregoing
respective survival period, Seller shall be required to indemnify Buyer for all
damages with respect to such matter that Buyer may suffer though the date of the
claim, the end of the survival period, and beyond, subject to the limitations
set forth in Section 7.2(b)(ii) and (iii).
(c) Buyer agrees to indemnify Seller, its Affiliates, officers,
directors, stockholders, employees, agents, representatives, successors and
permitted assigns (collectively, the "Seller Parties") and hold each of them
harmless against and pay on behalf of and or reimburse such Seller Parties in
respect of any Losses which any Seller Party may suffer, sustain or become
subject to, as a result of, in connection with, relating or incidental to or by
virtue of (i) a breach of any representation, warranty, covenant, or agreement
by Buyer contained in this Agreement; provided, however, that Buyer will not be
liable for any Loss relating to breaches of Buyer's representations and
warranties contained in Article V (except Sections 5.1, 5.2 and 5.3) hereof
unless written notice of such breach is given by Seller to Buyer within two
years of the Closing Date, (ii) the assertion or recovery against any of the
Seller Parties of any of the Assumed Liabilities, (iii) the assertion or
recovery against any of the Seller Parties of any liability or obligation
arising out of, in connection with, relating or incidental to or by virtue of
Buyer's use of the Purchased Assets or operation of its business (including the
Business) after the Closing, except to the extent such liability constitutes an
Excluded Liability, (iv) any claims of any brokers or finders claiming by,
through or under Buyer or SCP Pool, (v) any severance claims by persons who were
Seller's employees as of the Closing Date and who do not accept an offer of
employment from Buyer, provided that Buyer's liability for each such severance
claim shall not exceed the amount of severance pay which would be available to
such person pursuant to Buyer's severance policy as of the Closing Date, a copy
of which has been
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provided to Seller, and (vi) the performance by Buyer of its obligations
pursuant to Section 8.10. Nothing contained in this Section 7.2(c) shall
abrogate or nullify the indemnification given by Seller to the Buyer Parties
under Section 7.2(a).
(d) If a party hereto seeks indemnification under this Section 7.2,
such party (the "Indemnified Party") shall give written notice to the other
party (the "Indemnifying Party") of the facts and circumstances giving rise to
the claim. In that regard, if any suit, action, claim, liability or obligation
shall be brought or asserted by any third party which, if adversely determined,
would entitle the Indemnified Party to indemnity pursuant to this Section 7.2,
the Indemnified Party shall promptly notify the Indemnifying Party of the same
in writing, specifying in detail the basis of such claim and the facts
pertaining thereto and the Indemnifying Party, if it so elects, shall assume and
control the defense thereof (and shall consult with the Indemnified Party with
respect thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all necessary expenses. If the
Indemnifying Party elects to assume and control the defense, the Indemnified
Party shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel employed by the Indemnified
Party shall be at the expense of the Indemnified Party unless (i) the employment
thereof has been specifically authorized by the Indemnifying Party in writing or
(ii) the Indemnifying Party has failed to assume the defense and employ counsel,
in which case the fees and expenses of the Indemnified Party's counsel shall be
paid by the Indemnifying Party. If the Indemnifying Party elects to assume and
control the defense, the Indemnifying Party shall be entitled to settle or
compromise any such action or proceeding, provided, however, such settlement or
compromise shall be effected only with the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld; provided, further
however, that if the Indemnified Party rejects a settlement that would have
included a complete release of the Indemnified Party from any further liability
without any admission on the part of the Indemnified Party of any wrongdoing,
negligence, or liability whatsoever and would not have required the Indemnified
Party to perform or refrain from any action in the future, its right to
indemnification from the Indemnifying Party shall be limited to the amount that
would have been payable by the Indemnifying Party under such settlement or
compromise.
(e) If the Indemnified Party controls the defense, the Indemnified
Party shall be entitled to settle or compromise any such action or proceeding;
provided, however, that such a settlement or compromise which involves the
payment of money damages shall be effected only with the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld and
provided, further, however that if the Indemnifying Party rejects a settlement
and such action or proceeding is subsequently settled or a judgment is rendered
with respect thereto for an amount which exceeds the amount of the settlement
rejected by the Indemnifying Party, then the Indemnifying Party shall be
obligated to pay the full amount of such excess, in addition to its other
obligations under this Agreement.
(f) The Indemnifying Party shall pay the Indemnified Party in
immediately available funds promptly after the Indemnified Party provides the
Indemnifying Party with written notice of a claim hereunder and the parties
reasonably agree that there is a reasonable basis for such
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claim or a final result, determination, finding and/or award is made pursuant to
the terms of Section 7.4 below.
(g) Any indemnification payments paid under this Section 7.2 will be
considered an adjustment to the Purchase Price.
(h) Subject to the terms and conditions set forth in this Section
7.2, in the event of a breach of any representation, warranty, covenant or
agreement contained in this Agreement, Buyer or Seller, as the case may be, may,
following final determination of the amount of the Losses sustained as a result
thereof pursuant to Section 7.4(e) or upon mutual agreement between Buyer and
Seller as to the appropriate amount of the Losses sustained as a result thereof,
setoff all or any portion of the Losses which such party suffers, sustains or
becomes subject to as a result of such breach against any amounts due or to
become due to Seller or Buyer (or their respective successors), as the case may
be, whether pursuant to this Agreement or otherwise.
7.3 GENERAL QUALIFICATIONS ON INDEMNIFICATION. Notwithstanding any
provision of this Article VII to the contrary, the right of any Indemnified
Party to indemnification from the Indemnifying Party shall be subject to the
following:
(a) The liability of an Indemnifying Party with respect to any
indemnification claim shall be reduced by the amount of any tax benefit actually
realized or received by the Indemnified Party as a result of any Loss upon which
such claim is based, and shall include any tax detriment actually suffered by
the Indemnified Party as a result of such Loss. The amount of such tax benefit
or detriment shall be determined by taking into account the effect, if any, and
to the extent determinable, of timing differences resulting from the
acceleration or deferral of items of gain or loss resulting from such Loss.
(b) A Loss shall include actual damages only and shall not include
any special, punitive, consequential or multiplied damages, or lost profits,
except to the extent the same are included in a third party judgment against or
settlement with the Indemnified Party.
(c) Upon payment in full of any indemnification claim, the
Indemnifying Party shall be subrogated to the extent of such payment to the
rights of the Indemnified Party against any person or entity with respect to the
subject matter of such indemnification claim.
7.4 ARBITRATION PROCEDURE.
(a) Except as otherwise expressly provided herein, any dispute or
controversy arising under or in connection with Section 7.2 or 7.3 will be
settled by arbitration in Atlanta, Georgia.
(b) Whenever an arbitrable dispute arises, Buyer and Seller will use
their best efforts to agree upon an independent third-party arbitrator within 14
days with due regard in the selection process for the nature of the dispute and
the circumstances surrounding same. In the event the parties are unable to agree
on the selection of such an arbitrator, either party may then proceed
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in accordance with the rules and procedures of the American Arbitration
Association ("AAA") then in effect.
(c) Buyer and Seller agree that any dispute or controversy that is to
be arbitrated shall be arbitrated in accordance with AAA rules and procedures
then in effect, and discovery in the nature of that allowed under the rules and
procedures of the AAA then in effect will be afforded each party, and any
dispute with respect to such discovery shall also be settled by the arbitrator.
(d) The costs of arbitration shall be allocated by the arbitrator,
having due regard for the nature of the dispute, the contentions of the parties
and his or her decision on the merits of the dispute.
(e) Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
7.5 REMEDIES. Notwithstanding the provisions of Section 7.4 hereof
regarding the requirements of using the arbitration procedure set forth therein
for resolving and remedying claims for money damages arising out of the
provisions of Section 7.2, Buyer and Seller each have and retain all equitable
rights and remedies existing in their favor including, without limitation, any
actions for specific performance and/or injunctive or other equitable relief.
Except for equitable remedies, and except in the case of common law fraud, the
indemnification set forth in this Article VII shall be the exclusive remedies of
the Buyer Parties and Seller Parties for any misrepresentations, breaches of any
representations or warranties or the non-fulfillment or failure to perform any
covenant or agreement contained in this Agreement; provided, that recision shall
be available only in the case of common law fraud.
ARTICLE VII
ADDITIONAL AGREEMENTS
----------------------
8.1 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) Employees. As of the Closing Date, Buyer shall offer employment
to all of the employees of Seller assigned to the Business as of the Closing
Date other than any person on long term disability as of such date.
Notwithstanding the preceding sentence, Buyer and Seller agree and acknowledge
that Buyer has no obligation to offer employment to any of the employees of Bio-
Lab which have been performing services for Seller, including those listed on
Schedule 8.1 attached hereto. Such offers of employment shall be for
compensation and benefits which are substantially comparable in the aggregate to
that provided by Seller immediately prior to the Closing Date. Those employees
who accept such offers of employment effective as of the Closing Date shall be
referred to herein as "Transferred Employees." Buyer has advised Seller that the
Transferred Employees will not participate in any profit sharing program of
Buyer for 1996, but shall be eligible to participate in such programs
thereafter, and, for purposes of determining length of service, shall receive
credit for the term of their employment with Seller. The inability of the
Transferred Employees to participate in any profit sharing program of Buyer for
1996 shall not be considered in determining
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whether Buyer's offers of employment are for compensation and benefits which are
"substantially comparable in the aggregate" to that provided by Seller
immediately prior to the Closing Date.
(b) Benefit Liabilities. Unless otherwise specifically set forth
herein to the contrary, Seller shall retain and be fully responsible for (i) all
liabilities, obligations and commitments relating to all wages, salaries,
bonuses and other forms of compensation and related expenses incurred or accrued
before the Closing Date and (ii) all employee benefits incurred or accrued under
any and all plans, programs or arrangements maintained or contributed to by
Seller or any Affiliate before the Closing Date. Buyer shall be fully
responsible for all such liabilities, obligations and commitments and employee
benefits with respect to the Transferred Employees under Buyer's plans, programs
and arrangements for the period on or after the Closing Date.
(b) Benefit Plans. Effective as of the Closing Date, the
Transferred Employees shall cease to be covered under the employee benefit plans
of Seller, and shall participate under the employee benefit plans maintained or
established by Buyer. Buyer shall not be liable for any acts of Seller or its
employees or agents with respect to any employee benefit plan maintained by
Seller. Seller shall not be responsible for any acts of Buyer or its employees
or agents with respect to any employee benefit plan maintained by Buyer after
the Closing.
(c) 401(k) Plan. With respect to The B-L Network, Inc. 401(k) Savings
Plan (the "Savings Plan"), Seller agrees that it shall be solely responsible to
the Transferred Employees with respect to benefits accrued thereunder as of the
Closing Date. To the extent required under the Savings Plan, Seller shall
contribute to the Savings Plan, in accordance with the terms of said plan, all
amounts attributable to the Transferred Employees which are owed to or under the
Savings Plan as of the Closing Date. Seller shall permit the Transferred
Employees to elect a distribution of their account balance from the Savings Plan
in accordance with the requirements of Section 401(k)(10) of the Code and the
terms of such plan, and shall permit the Transferred Employees to rollover any
loan balance outstanding as of the Closing Date under the Savings Plan to the
savings plan maintained by Buyer.
(d) Compensation. Seller shall pay to its employees promptly
following the Closing all wages, salaries and accrued vacation pay, for all
periods up to the Closing Date, shall pay all payroll taxes with respect to all
amounts due to Seller's employees for all periods up to the Closing Date and
shall provide fringe benefits to Seller's employees up to the Closing Date in
accordance with Seller's established policies and procedures.
8.2 PRESS RELEASES AND ANNOUNCEMENTS. Buyer, Seller and Bio-Lab
shall consult with each other prior to issuing any press release or otherwise
making any public statement with respect to the contents of this Agreement or
the transactions contemplated hereby, and none of the parties hereto shall issue
any such press release or make any such public statement prior to such
consultation except which any party hereto in good faith believes is required by
law or applicable regulations or requirements of the New York Stock Exchange or
the NASDAQ Stock Market (in which case the disclosing party will use its
reasonable best efforts to advise the other party prior to making the
disclosure). Prior to the Closing, all other announcements to the employees,
customers or suppliers of Seller will be prepared by Seller in consultation with
Buyer
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and will be issued by Seller in accordance with past custom and practice, except
any public disclosure which any party hereto in good faith believes is required
by law or regulation (in which case the disclosing party will use its best
efforts to advise the other party prior to making the disclosure). After the
Closing Date, no other announcements to the employees, customers or suppliers of
the Business will be issued without Buyer's consent.
8.3 FURTHER AGREEMENTS AND TRANSFERS. Seller will execute and deliver
such further instruments of conveyance and transfer and take such additional
action as may be necessary to effect, consummate, confirm or evidence the
transfer to Buyer of the Purchased Assets and any other transactions
contemplated hereby. Seller will execute such documents as may be necessary to
assist Buyer in preserving or perfecting its rights in the Purchased Assets.
8.4 CHANGE OF NAME. As of the Closing and at all times thereafter,
neither Seller nor Bio-Lab shall use or permit any other business to use the
name "The B-L Network" or any names or titles confusingly similar to such names.
As of the Closing, Seller will amend its certificate of incorporation to change
its name to a name substantially dissimilar to "The B-L Network, Inc." and
thereafter shall not use any names or titles similar to such name. Buyer and
Seller agree that "Bio-Lab" is not confusingly similar to the name "The B-L
Network."
8.5 TAX MATTERS. The following provisions will govern the allocation
of responsibility as between Buyer and Seller for certain Tax matters following
the Closing Date:
(a) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (i) shall be borne by Buyer
or Seller in accordance with local law; and (ii) shall be paid by Buyer or
Seller, as applicable, when due. Buyer or Seller, as applicable, will, at its
own expense, file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, and, if required by applicable law, the non-paying party will,
and will cause its affiliates to, join in the execution of any such Tax Returns
and other documentation.
(b) Allocation of Purchase Price. Each of Buyer and Seller shall
allocate the Purchase Price among the Purchased Assets pursuant to Section 1060
of the Code in accordance with the fair market values of the assets. Each of
Buyer and Seller shall file Internal Revenue Service Form 8594 in a timely
manner.
(c) Cooperation on Tax Matters. Buyer and Seller shall, and shall
cause their respective Affiliates to, cooperate fully, as and to the extent
reasonably requested by the other party, in connection with any audit,
litigation, preparation and filing of Tax Returns or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Buyer and Seller
agree (A) to retain all books and records with respect to Tax matters pertinent
to the Seller relating to any taxable period beginning before the Closing Date
until the expiration of the statute
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of limitations (and, to the extent notified by Buyer or Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, Buyer or Seller,
as the case may be, shall allow the other party to take possession of such books
and records.
8.6 TRANSITION ASSISTANCE. Subject to Seller's rights to collect
Accounts Receivable as set forth in Section 8.10, neither Seller nor Buyer will
in any manner take any action which is designed, intended, or might be
reasonably anticipated to have the effect of discouraging customers, suppliers,
lessors, licensors and other business associates from maintaining the same
business relationships with Seller prior to the Closing Date or with Buyer after
the Closing Date as were maintained with Seller prior to and at the date of this
Agreement.
8.7 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Closing Date, Buyer may make or cause to be made
such investigation of Seller and the Purchased Assets as it deems necessary or
advisable to familiarize itself therewith. Seller will, and will cause its
officers, directors, employees and agents (including attorneys and accountants)
("Seller's Agents") to permit Buyer and its employees, agents, environmental
consultants, accounting and legal representatives and other representatives, and
potential lenders (and such lenders' audit staff) and their representatives to
have full and complete access (in a manner which does not materially disrupt the
Business) at all reasonable times, to the Business' facilities and to such
Seller's books, records, invoices, contracts, leases, personnel, independent
accountants, property, facilities, equipment and other data and information that
Seller may legally provide. Seller will, and will cause the Seller's Agents to
permit Buyer to inspect any of the Purchased Assets and to discuss the affairs,
finances and accounts of Seller with the directors, officers, independent
accountants, key employees, key customers, key sales representatives and key
suppliers of Seller.
(b) (i) If the transactions contemplated by this Agreement are
consummated, Seller agrees to use its best efforts to maintain the
confidentiality of all proprietary and other non-public information
regarding the Business for a period of 5 years from the Closing Date,
except as required to file tax returns and as required by law, and to turn
over to Buyer at the Closing copies of all such materials they have in its
possession which constitute Purchased Assets. In the event of the breach of
any of the provisions of this Section 8.7, the non-breaching party, in
addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive or other relief (without the
posting of bond or other security) in order to enforce or prevent any
violations of the provisions hereof.
(ii) In the event that Seller reasonably believes after consultation
with counsel that it is required by law to disclose any confidential
information described in this Section 8.7(b), Seller will (A) provide Buyer
with prompt notice before such disclosure in order that Buyer may attempt
to obtain a protective order or other assurance that confidential treatment
will be accorded such confidential information and (B) cooperate with Buyer
in attempting
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to obtain such order or assurance. The provisions of this Section 8.7 shall
not apply to any information, documents or materials which are, as shown by
appropriate written evidence, in the public domain or, as shown by
appropriate written evidence, shall come into the public domain, other than
by reason of default by the applicable party bound hereunder or its
Affiliates.
8.8 EXPENSES. Buyer and Seller will each pay all of their own
expenses (including fees and expenses of legal counsel, investment bankers,
brokers or other representatives and consultants and appraisal fees and
expenses) incurred in connection with the negotiation of this Agreement and the
other agreements contemplated hereby and the performance of its or their
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby (whether consummated or not).
8.9 WAIVER OF COMPLIANCE WITH BULK SALES LAWS. Buyer hereby waives
compliance by Seller with the requirements of any bulk sales or transfers laws
of any jurisdiction in connection with the sale of the Purchased Assets to Buyer
(if and to the extent such laws are applicable to such sale); provided that such
waiver shall not affect the obligation of Seller under Section 7.2 to indemnify
Buyer and hold Buyer harmless from and against any Losses which Buyer may
suffer, sustain or become subject to as a result of the assertion or recovery
against Buyer of the Excluded Liabilities set forth in Section 1.1(d) hereof.
8.10 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) Beginning on the Closing Date and ending 60 days thereafter (the
"Seller Collection Period"), Seller agrees to use commercially reasonable
efforts to collect the accounts and notes receivable and other evidence of
indebtedness and rights to receive payments arising out of sales occurring in
the conduct of the Business on and after the Closing Date ("Post-Closing
Accounts Receivable") on behalf of Buyer. In addition, during the Seller
Collection Period, Seller shall be responsible for collecting all accounts and
notes receivable and other evidence of indebtedness and rights to receive
payments arising out of sales occurring in the conduct of the Business prior to
the Closing Date ("Pre-Closing Accounts Receivable" and, together with the Post-
Closing Accounts Receivable, "Accounts Receivable"). During the Seller
Collection Period, Seller shall maintain ownership of and control over the
various lockboxes used by Seller for the Business (the "Lockboxes"). With
respect to each week of the Seller Collection Period, Seller shall, by Wednesday
of the following week, (i) deliver to Buyer a detailed schedule setting forth
the outstanding Accounts Receivable, including those outstanding for more than
60 days after their invoice date, and the amounts collected during such week
with respect to such Accounts Receivable, and (ii) remit to Buyer any funds
collected by Seller on behalf of Buyer with respect to Post-Closing Accounts
Receivable. During the Seller Collection Period, Seller shall provide Buyer with
written notice of any disputes relating to Accounts Receivable. Buyer shall have
sole responsibility to resolve any such disputes involving Post-Closing Accounts
Receivable. Seller shall not be required to retain a collection agency, bring
any suit, employ any other third party collection methods or take any other
action out of the ordinary course of business to collect any of the Post-Closing
Accounts Receivable. After the termination of the Seller Collection Period,
Seller shall have no responsibility for the collection of Post-Closing Accounts
Receivable on behalf of Buyer or otherwise. In the
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event that after the termination of the Seller Collection Period Seller shall
receive any remittance from or on behalf of any account debtor with respect to
any Post-Closing Account Receivable, Seller shall endorse such remittance to the
order of Buyer and forward same to Buyer promptly upon receipt thereof.
(b) The "Buyer Collection Period" shall begin upon the termination of
the Seller Collection Period and terminate on March 31, 1997; provided that
Seller may terminate the Buyer Collection Period upon written notice (i) at any
time after December 31, 1996 or (ii) at any time that it has determined (based
upon data provided to Buyer) that for a period of 30 consecutive days the rate
at which Buyer has received payment on outstanding Pre-Closing Accounts
Receivable is materially less than the collection rate historically achieved by
Seller for similar time periods. Seller shall take all actions necessary or
desirable to transfer the ownership and control of the Lockboxes to Buyer
effective as of the first day of the Buyer Collection Period. During the Buyer
Collection Period, Buyer agrees to use commercially reasonable efforts to
collect the Pre-Closing Accounts Receivable on behalf of Seller. With respect to
each week of the Buyer Collection Period, Buyer shall, by Wednesday of the
following week, (i) deliver to Seller a detailed schedule setting forth the
outstanding Pre-Closing Accounts Receivable, including those outstanding for
more than 60 days after their invoice date, and the amounts collected during
such week with respect to such Pre-Closing Accounts Receivable, and (ii) remit
to Seller any funds collected by Buyer on behalf of Seller with respect to Pre-
Closing Accounts Receivable. Buyer shall provide Seller with written notice of
any bona fide dispute involving an amount in excess of $1,000. Buyer shall use
reasonable efforts to resolve any bona fide disputes between an account debtor
and Seller regarding Pre-Closing Accounts Receivable of such account debtor;
provided that Buyer shall not be required to incur any costs in resolving such
disputes relating to Pre-Closing Accounts Receivables. Buyer shall not be
required to retain a collection agency, bring any suit, employ any other third
party collection methods or take any other action out of the ordinary course of
business to collect any of the Pre-Closing Accounts Receivable. Notwithstanding
anything in Section 8.10(c) to the contrary, if Buyer is unable to resolve any
such bona fide dispute to Seller's reasonable satisfaction within 60 days of the
date such dispute arose, Seller shall have the right to resolve such dispute.
After the termination of the Buyer Collection Period, Buyer shall have no
responsibility for the collection of Pre-Closing Accounts Receivable on behalf
of Seller or otherwise. In the event that after the termination of the Buyer
Collection Period Buyer shall receive any remittance from or on behalf of any
account debtor with respect to any Pre-Closing Account Receivable, Buyer shall
endorse such remittance to the order of Seller and forward same to Seller
promptly upon receipt thereof.
(c) During the Seller Collection Period and for six months
thereafter, Seller will provide Buyer with reasonable access to its books and
records relating to the collection of Accounts Receivable in a manner not
disruptive to Seller's business. During the Buyer Collection Period and for six
months thereafter, Buyer will provide Seller with reasonable access to its books
and records relating to the collection of Accounts Receivable in a manner not
disruptive to Buyer's business. During the Buyer Collection Period and the
Seller Collection Period, Buyer and Seller will cooperate and consult with each
other regarding credit limits for slow-paying accounts or collection strategies.
For the purpose of determining amounts collected by Buyer or Seller, as the case
may be, with respect to the Accounts Receivable, (i) if by the amount of a
payment, by specification of an account debtor or otherwise, it is clear that
such payment relates to a specific invoice of Buyer
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or Seller, as the case may be, the payment shall be applied to that invoice and
(ii) in the absence of a bona fide dispute between an account debtor and Buyer
or Seller, as the case may be, regarding receivables of such account debtor, all
other payments by an account debtor shall first be applied to the oldest
outstanding invoice due from that account debtor. Neither Buyer nor Seller shall
take any action which could reasonably be expected to impair the other's ability
to collect the Pre-Closing Accounts Receivable or Post-Closing Accounts
Receivable, as the case may be, without the written consent of other.
(d) As compensation for Seller's collection services described in
paragraph (a) above, Seller shall be entitled to a fee with respect to each week
during the Seller Collection Period equal to its costs of collecting the
Accounts Receivable during such week (including its actual costs for personnel
(including allocated payroll taxes and fringe benefits), out-of-pocket expenses
and reasonably allocable overhead cost) multiplied by a fraction, the numerator
of which shall equal the amount of Post-Closing Accounts Receivable collected by
Seller during such week and the denominator of which shall equal the amount of
Accounts Receivable collected by Seller during such week. Seller shall be
entitled to withhold such fee from any remittance paid to Seller pursuant to
paragraph (a) above. As compensation for Buyer's collection services described
in paragraph (b) above, Buyer will be entitled to a fee equal to 0.25% of the
Pre-Closing Accounts Receivable actually collected by Buyer. Buyer shall be
entitled to withhold such fee from any remittance paid to Seller pursuant to
paragraph (b) above.
8.11 PRORATIONS.
(a) The expenses and obligations set forth below shall be prorated as
of 11:59 p.m. on the business day immediately preceding the Closing Date, with
Seller being responsible for that portion arising prior thereto and Buyer being
responsible for that portion arising subsequent thereto:
(i) all governmental license, permit or franchise fees and all other
fees, royalties, rentals or charges, not delinquent, paid or payable under any
contracts shall be prorated on the basis of the number of days of the relevant
fiscal or other time period which have elapsed through the Closing Date;
(ii) all real property taxes, personal property taxes, ad valorem
obligations and similar taxes imposed on a periodic basis, in each case levied
with respect to the Purchased Assets (if any) shall be prorated on the basis of
the number of days of the relevant Tax year or period which have elapsed through
the Closing Date; and
(iii) all charges and rents for utilities (including without
limitation, electricity, fuel, water, sanitation and garbage disposal) and
other services and goods furnished to, or in connection with, the operation
of the Business shall be prorated on the basis of the number of days of the
relevant time period which have elapsed through the Closing Date; provided
that no deposits or prepaid amounts shall be prorated, but shall be
included in the Purchased Assets.
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(b) Seller shall use commercially reasonable efforts to cause all
utility billings of Seller to be closed and billed by the respective utility
companies as of the Closing Date in order that utility charges may be separately
billed for the period prior to the Closing Date and the period after the Closing
Date. In the event any such utility charges are not separately billed, they
shall be prorated, presuming that such charges were uniformly incurred during
the billing period in question.
(c) If any item described in this Section 8.11 cannot be prorated,
adjusted or determined as of the Closing Date, then it shall be separately
prorated, adjusted and determined as soon as possible thereafter with payment of
an amount equal to the amount charged against any party being paid by such party
to any other party by check within five (5) days after determination of the
charge.
8.12 FINANCIAL INFORMATION. Seller understands that as a reporting
company under the Securities Exchange Act of 1934, as amended (the "Securities
Act"), Buyer will be required to file an 8-K (the "8-K") with the Securities and
Exchange Commission ("SEC") following the Closing in connection with
consummation of the transactions contemplated hereunder, which 8-K will be
required to include financial statements of Seller prepared in accordance with
Regulation S-X of the Securities Act ("Regulation S-X"), for the periods
required by Regulation S-X (the "S-X Financial Statements"). Accordingly, Seller
shall make available to Buyer and Buyer's auditors Seller's books and records
and auditors (and their work papers) at Buyer's expense to assist Buyer in
preparation of the S-X Financial Statements.
8.13 GUARANTEES.
(a) Bio-Lab hereby guaranties the payment and performance of the
obligations of Seller under this Agreement and each of the other agreements and
instruments referred to herein. The obligations of Bio-Lab under this Section
8.13(a) are absolute and unconditional, irrespective of any substitution,
release or exchange of any other guarantee of or security for any of the
obligations of Seller under this Agreement or any other agreement or instrument
referred to herein, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Bio-Lab hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that Buyer exhaust any
right, power or remedy or proceed against Seller under this Agreement or any
other agreement or instrument referred to herein, or against any other Person
under any other guarantee of, or security for, any of the obligations of Seller
under this Agreement or any other agreement or instrument referred to herein.
(b) SCP Pool hereby guaranties the payment and performance of the
obligations of Buyer under this Agreement and each of the other agreements and
instruments referred to herein. The obligations of SCP Pool under this Section
8.13(b) are absolute and unconditional, irrespective of any substitution,
release or exchange of any other guarantee of or security for any of the
obligations of Buyer under this Agreement or any other agreement or instrument
referred to herein, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
SCP Pool hereby expressly waives diligence, presentment, demand of payment,
protest
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and all notices whatsoever, and any requirement that Seller exhaust any right,
power or remedy or proceed against Buyer under this Agreement or any other
agreement or instrument referred to herein, or against any other Person under
any other guarantee of, or security for, any of the obligations of Buyer under
this Agreement or any other agreement or instrument referred to herein.
8.14 UNDERGROUND STORAGE TANKS. Seller shall be responsible for and
indemnify Buyer from and against, all liabilities and obligations related to any
underground storage tanks located at 1916 E. McDowell Road, Phoenix, Arizona
("Phoenix Facility"), including without limitation, removal of any such tanks,
and any associated release reporting, release response, and remedial actions.
Seller shall, at Seller's sole cost and expense, conduct the following actions
through a nationally recognized environmental consulting firm reasonably
satisfactory to Buyer:
(a) Within 30 days after the Closing Date, use diligent efforts to
determine if any such tanks are present.
(b) Within 30 days after locating any tanks, submit all notifications
to governmental agencies in order to obtain the required approvals to remove
such tanks.
(c) Within 60 days after receiving all approvals requested pursuant
to subsection (b), remove and properly dispose of any such tank, sample for the
presence of a release where contamination is most likely to be present, fill and
regrade any affected areas.
(d) Promptly conduct such remedial actions and other actions required
by the Arizona Department of Environmental Quality ("DEQ") or any other
governmental agency.
(e) Promptly upon the completion of all field work, prepare a closure
report documenting in reasonable detail the actions taken to address any tanks
and remediate releases, if any. Seller shall provide Buyer with a copy of such
report.
(f) Promptly upon the completion of all field work, submit all
relevant data to DEQ and use commercially reasonable efforts to obtain from DEQ
a final closure letter indicating that no further action is required in
connection with any tanks. Seller shall provide Buyer with a copy of such
letter.
Upon reasonable advance notice by Seller, Buyer shall grant Seller reasonable
access to the Phoenix Facility for the purpose of addressing any such tanks. In
addressing any such tanks, Seller shall ensure that all actions are conducted in
compliance with all applicable Environmental and Safety Requirements and do not
unreasonably interfere with Buyer's operations at the Phoenix Facility. All
actions by Seller to address any such tanks shall be subject to Buyer's
approval, provided that such approval shall not be unreasonably withheld. Seller
shall, at its expense, promptly restore any property that is altered or damaged
as a result of addressing any such tanks. Seller shall, at its expense, promptly
and properly dispose of any and all soil, groundwater, decontamination water,
samples, waste or other material generated in connection with addressing any
such tanks. Seller shall keep Buyer reasonably apprised of material facts and
events related to the tank. In particular, Seller shall: (i) provide Buyer with
reasonable advance notice regarding any meetings between
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Seller and DEQ or any other governmental agency regarding this matter; (ii)
provide Buyer with copies of letters and notices it receives from DEQ or any
other governmental agency regarding this matter; and (iii) provide Buyer with
drafts of any material submittals to DEQ or any other governmental agency
regarding this matter, including reports, analytical data, letters, or other
documents, allow Buyer to comment on such draft submittals, reasonably address
such comments, and provide Buyer with copies of the final submittals.
8.15 CUSTOMER REBATES. Within 45 days after the end of each customer's
Program Period, Buyer shall deliver to Seller a statement (the "Buyer's Rebate
Statement") setting forth (a) the amount of sales on and after the Closing Date
by the Business to such customer during such customer's Program Period (together
with Seller's Pre-Closing Sales, such customer's "Annual Customer Sales"), (b)
the total amount of rebates owed to such customer with respect to its Annual
Customer Sales (such customer's "Annual Customer Rebate"), and (c) Seller's pro
rata portion of such customer's Annual Customer Rebate (with respect to each
such customer, "Seller's Rebate Obligation"), which shall equal the product of
(i) such customer's Annual Customer Rebate and (ii) a fraction, the numerator of
which shall equal such customer's Seller's Pre-Closing Sales and the denominator
of which shall equal such customer's Annual Customer Sales. Any disputes
regarding the determination of any Seller's Pre-Closing Sales or the
determinations set forth in any Buyer's Rebate Statement shall be settled in
accordance with the procedures set forth in Section 1.3(c), (d), (e) and (g).
Within 3 days after Buyer's delivery of each Buyer's Rebate Statement for which
there is no dispute, or, if Seller disputes such Buyer's Rebate Statement,
within 3 days of the final resolution of such dispute pursuant to the preceding
sentence, Seller shall pay to Buyer an amount equal to the Seller's Rebate
Obligation by wire transfer of immediately available funds to an account
designated by Buyer.
8.16 PETTY CASH. Within 30 days after the Closing Date, Buyer shall
deliver to Seller (i) a certified statement setting forth the aggregate amount
of petty cash and cash-on-hand located at each of the Real Property sites as of
the close of business on the business day immediately preceding the Closing Date
(the "Petty Cash Amount") and (ii) Buyer shall pay to Seller the Petty Cash
Amount. Seller covenants and agrees that on the Closing Date there shall be
petty cash and cash-on-hand at each of the Real Property sites in an amount
sufficient to operate the Business at each of such sites in accordance with past
practice.
8.17 STA-RITE. During the period beginning on January 1, 1996 and
ending on the Closing Date, Seller has purchased and/or ordered from Sta-Rite
Industries, Inc. ("Sta-Rite") $9,100,564 of inventory. Seller has paid all
amounts owed in connection with such purchases or orders in accordance with Sta-
Rite's applicable terms and will pay any remaining amounts due in connection
with such purchases or orders in accordance with Sta-Rite's applicable terms..
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ARTICLE IX
MISCELLANEOUS
--------------
9.1 AMENDMENT AND WAIVER. This Agreement may be amended and any
provision of this Agreement may be waived, provided that any such amendment or
waiver will be binding upon a party only if such amendment or waiver is set
forth in a writing executed by Buyer and Seller. No course of dealing between or
among any persons having any interest in this Agreement will be deemed effective
to modify, amend or discharge any part of this Agreement or any rights or
obligations of any party under or by reason of this Agreement.
9.2 NOTICES. All notices, demands and other communications given or
delivered under this Agreement will be in writing and will be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, delivered by express courier service or telecopied. Notices, demands
and communications to Seller and Buyer will, unless another address is specified
in writing, be sent to the address indicated below:
Notices to Seller and Bio-Lab:
-----------------------------
The B-L Network, Inc.
Bio-Lab, Inc.
627 E. College Avenue
Decatur, Georgia 30030
Attention: Larry Bloom, President
Telecopy: (404) 370-7499
with a copy to:
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Great Lakes Chemical Corporation
Post Office Box 2200
One Great Lakes Boulevard
West Lafayette, Indiana 47906
Attention: Louis T. Bolognini
Telecopy: (317) 497-6123
and to
Smith, Gambrell & Russell
3343 Peachtree Road, N.E.
Suite 1800
Atlanta, Georgia 30326
Attention: Robert I. Paller
Telecopy: (404) 264-2652
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Notices to Buyer and SCP Pool:
-----------------------------
South Central Pool Supply, Inc.
128 Northpark Boulevard
Covington, Louisiana 70433-5077
Attention: W.B. Sexton
Telecopy: (504) 892-1657
with a copy to:
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Code, Hennessy & Simmons, Inc.
Suite 3175
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Peter M. Gotsch
Telecopy: (312) 876-3884
and to
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Stephen L. Ritchie
Telecopy: (312) 861-2200
9.9 BINDING AGREEMENT; ASSIGNMENT.
(a) This Agreement and all of the provisions hereof will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns (including all successors and assigns in the
event of a liquidation or dissolution of Buyer or Seller), except that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
signed or delegated by Buyer or Seller without the prior written consent of
the other party, which shall not be unreasonably withheld.
(b) Buyer may assign its rights under this Agreement (including its
right to indemnification) for collateral security purposes to any of its lenders
providing financing for the transactions contemplated hereby and all extensions,
renewals, replacements, refinancings and refundings thereof in whole or in part;
provided, however, that in the absence of any default under any agreement
relating to such financing, such lenders shall not be entitled to exercise any
of Buyer's rights or remedies hereunder.
9.4 SEVERABILITY. Whenever possible, each provision of this Agreement
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
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9.5 NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
collective mutual intent, and no rule of strict construction shall be applied
against any person. The term "including" as used herein shall be by way of
example and shall not be deemed to constitute a limitation of any term of
provision contained herein.
9.6 CAPTIONS AND HEADINGS. The captions and headings used in this
Agreement are for convenience of reference only and do not constitute a part of
this Agreement and will not be deemed to limit, characterize or in any way
affect any provision of this Agreement, and all provisions of this Agreement
will be enforced and construed as if no caption had been used in this Agreement.
9.7 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules hereto, and the agreements and instruments referred to herein and
therein and the other written agreements entered into contemporaneously herewith
contain the entire agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
9.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together will constitute one and the same instrument.
9.9 GOVERNING LAW. THE LAW OF THE STATE OF GEORGIA SHALL GOVERN ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO, AND THE
PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE
STATE OF GEORGIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF GEORGIA.
9.10 PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
ARTICLE X
CERTAIN DEFINITIONS
--------------------
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Agreement" means this Agreement and the schedules attached hereto.
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"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Affiliated Group" means an affiliated group as defined in Section
1504 of the Code (or any analogous combined, consolidated or unitary group
defined under state, local or foreign income Tax law).
"Code" means the Internal Revenue Code of 1986, as amended.
----
"GAAP" means generally accepted accounting principles, consistently
applied.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"knowledge" means, with respect to Seller, the actual knowledge of any
officer of Seller or any of Seller's branch managers.
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables of Seller with recourse against Seller, any filing or agreement to
file a financing statement as debtor under the Uniform Commercial Code or any
similar statute other than to reflect ownership by a third party of property
leased to Seller under a lease which is not in the nature of a conditional sale
or title retention agreement, or any subordination arrangement in favor of
another Person (other than any subordination arising in the ordinary course of
business); provided that Liens shall not include any Permitted Encumbrance.
"Permitted Encumbrances" means (a) statutory liens for current taxes
or other governmental charges with respect to the Real Property not yet due and
payable or the amount or validity of which is being contested in good faith by
appropriate proceedings by Seller and for which appropriate reserves have been
established in accordance with GAAP; (b) mechanics, carriers, workers, repairers
and similar statutory liens arising or incurred in the ordinary course of
business for amounts which are not delinquent and which are not, individually or
in the aggregate, material to the Business; (c) zoning, entitlement, building
and other land use regulations imposed by governmental agencies having
jurisdiction over the Owned Real Property which are not violated by the current
use and operation of the Owned Real Property; and (d) covenants, conditions,
restrictions, easements and other similar matters of record affecting title to
the Owned Real Property which do not materially impair the occupancy or use of
the Owned Real Property for the purposes for which it is currently used in
connection with the Business.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
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"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, association or other business
entity.
"Tax" means any (A) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; (B) liability of Seller for the
payment of any amounts of the type described in clause (A) arising as a result
of being (or ceasing to be) a member of any Affiliated Group (or being included
(or required to be included) in any Tax Return relating thereto); and (C)
liability of Seller for the payment of any amounts of the type described in
clause (A) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other person;
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SOUTH CENTRAL POOL SUPPLY, INC.
/s/ Wilson B. Sexton
-------------------------------
By: Wilson B. Sexton
Its: Chairman
SCP POOL CORPORATION
/s/ Wilson B. Sexton
-------------------------------
By: Wilson B. Sexton
Its: Chairman
THE B-L NETWORK, INC.
/s/ Larry J. Bloom
-------------------------------
By: Larry J. Bloom
Its: President
BIO-LAB, INC.
/s/ Larry J. Bloom
-------------------------------
By: Larry J. Bloom
Its: President
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LIST OF SCHEDULES
-----------------
Schedule 1.1(b)(ii) - Excluded Assets
Schedule 1.1(b)(iii) - Excluded Contracts
Schedule 1.1(c) - Customer Rebates
Schedule 1.1(d) - Environmental Liabilities
Schedule 1.2(c) - Fixed Assets
Schedule 2.1(i) - Designated Leased Property
Schedule 4.1 - Qualification/Incorporation
Schedule 4.3 - Investments
Schedule 4.4 - Conflicts
Schedule 4.5 - Financial Statements
Schedule 4.6 - Undisclosed Liabilities
Schedule 4.7 - Developments
Schedule 4.8 - Title to Properties
Schedule 4.8(a) - Owned Real Property
Schedule 4.8(b) - Leased Real Property
Schedule 4.8(e) - Condition of Purchased Assets
Schedule 4.9 - Environmental and Safety Matters
Schedule 4.11 - Contracts
Schedule 4.12 - Proprietary Rights
Schedule 4.13 - Litigation
Schedule 4.15 - Governmental Licenses, Permits and Consents
Schedule 4.17 - Employee Benefit Matters
Schedule 4.18 - Affiliate Transactions
Schedule 4.19 - Compliance with Law
Schedule 4.20 - Seller's Inventory Accounting Practices
Schedule 8.1 - Bio-Lab Employees
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LIST OF EXHIBITS
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Exhibit A - Fixed Asset Notes
Exhibit B - Inventory Notes
Exhibit C-1 and C-2 - Chemical Supply Agreements
Exhibit D - Noncompete Agreements
Exhibit E - Alliance Purchase Agreement
Exhibit F - Transition Services Agreement
Exhibit G - Estoppel Letters
Exhibit H - Landlord Agreement
Exhibit I - Seller's Certificate
Exhibit J - Intercreditor Agreement
Exhibit K-1 and K-2 - Security Agreements
Exhibit L - Buyer's Certificate
