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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 AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 15, 1998
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TEXAS INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-4887 75-0832210
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(Commission File Number) (IRS Employer Identification Number)
1341 W. Mockingbird Lane, Suite 700W, Dallas, Texas 75247
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(Address of Principal Executive Offices) (Zip Code)
(972) 647-6700
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On January 15, 1998, pursuant to a Partnership Interests
Purchase Agreement, effective December 31, 1998 (the "Agreement") entered into
as a result of an arms-length negotiations, TXI Riverside Inc., a Delaware
corporation ("TXIR") and TXI California Inc., a Delaware corporation ("TXIC"),
each a wholly-owned subsidiary of Registrant, purchased an aggregate of 100% of
the partnership interests of Riverside Cement Company, a California general
partnership ("Riverside Cement") for a purchase price of approximately
US$114,981,815. In accordance with the terms of the Agreement, TXIR purchased
a 51% partnership interest in Riverside Cement from RVC Venture Corp., a
Delaware corporation, and TXIC purchased the remaining 49% partnership interest
in Riverside Cement from Ssangyong/Riverside Venture Corp., a California
corporation. See Section 2 of the Partnership Interests Purchase Agreement in
Exhibit 7(c).1 for a explanation of the method followed in determining the cash
purchase price. Funds for the cash payment came from Registrant's general
corporate funds.
(b) Riverside Cement owns and will continue to operate cement
manufacturing and bagging facilities in California. The Oro Grande facility,
located just north of Victorville, California, is the company's gray portland
cement clinker production facility and operates its own limestone quarry. The
Crestmore facilities, located near Riverside, California, include additional
grinding capacity for gray portland cement, and specialty cements and white
portland cement production plants/kilns. Riverside Cement's bagging
operations, which include a rotary packaging, conveying and palletizing system
are located at the Crestmore facilities.
ITEM 7. EXHIBITS.
Exhibit 7(c).1 Partnership Interests Purchase Agreement
Exhibit 7(c).2 "TXI Acquires Riverside Cement in $120
million Transaction" Press Release (Dallas,
Texas - January 16, 1998)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXAS INDUSTRIES, INC.
Date: January 26, 1998 By: /s/ ROBERT C. MOORE
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Robert C. Moore
Vice President & Secretary
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
7(c).1 Partnership Interests Purchase Agreement
7(c).2 "TXI Acquires Riverside Cement in $120 million Transaction"
Press Release (Dallas, Texas - January 16, 1998)
</TABLE>
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EXHIBIT 7(c).1
PARTNERSHIP INTERESTS
PURCHASE AGREEMENT
THIS PARTNERSHIP INTERESTS PURCHASE AGREEMENT (the "Agreement") is
made and entered into with an effective date of December 31, 1997 by and among
TXI California Inc., a Delaware corporation ("TXIC"), TXI Riverside Inc., a
Delaware corporation ("TXIR") (TXIC and TXIR being sometimes hereinafter
individually referred to as the "Buyer" and collectively as the "Buyers"), RVC
Venture Corp., a Delaware corporation ("RVC"), Ssangyong/Riverside Venture
Corp., a California corporation ("SRV") (RVC and SRV being sometimes
hereinafter individually referred to as the "Seller" and collectively referred
to as the "Sellers") and (for the limited purposes set forth in Sections
3.2(c), 9.3, 11.1, 11.2 and 12.5 of this Agreement) Ssangyong Cement Industrial
Co., Ltd., a Korean corporation ("Ssangyong") and (for the limited purpose set
forth in Section 11.3 of this Agreement) Texas Industries, Inc., a Delaware
corporation ("TXI");
RECITALS
WHEREAS, RVC is the present owner of a 51% partnership interest (the
"RVC Interest") in Riverside Cement Company, a California general partnership
(the "Partnership") and SRV is the present owner of a 49% partnership interest
(the "SRV Interest") in the Partnership (the RVC Interest and the SRV Interest
being collectively referred to hereinafter as the "Partnership Interests"); and
WHEREAS, upon the terms and conditions and for the consideration set
forth in this Agreement, TXIR shall purchase the RVC Interest and TXIC will
purchase the SRV Interest.
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
Acquired Companies - the Partnership and its Subsidiaries,
collectively.
Adjusted June 30 Balance Sheet - the audited balance sheet as at June
30, 1997 of the
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Partnership, adjusted as a result of negotiations between the parties to
increase certain reserves, which Adjusted June 30 Balance Sheet is attached
hereto as Exhibit 1.
Allocation Schedule - as defined in Section 2.2(e).
Applicable Contract - any Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is or may become
bound.
Balance Sheet - as defined in Section 3.4.
Base Purchase Price - as defined in Section 2.2(a).
Beazer Acknowledgment - as defined in Section 11.4.
Best Efforts - the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse
change in the benefits to such Person of this Agreement and the Contemplated
Transactions.
Breach - a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
Buyer or Buyers - as defined in the first paragraph of this Agreement.
Closing - as defined in Section 2.3.
Closing Balance Sheet - the balance sheet of the Partnership as at
December 31, 1997 prepared by Sellers in accordance with GAAP on a basis
consistent with the Adjusted June 30 Balance sheet, audited by Coopers &
Lybrand, the independent certified accountants of the Partnership.
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Closing Date - the date and time as of which the Closing actually
takes place.
Consent - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
Contemplated Transactions - all of the transactions contemplated by
this Agreement, including:
(a) the payment by the Partnership of all notes payable to
banks and other long term debt on or before the Initial Closing Date;
(b) an Assignment of the Power Plant Lease to TXIC and a
release of the Ssangyong Power Plant Lease Guaranty;
(c) the sale of the Partnership Interests by Sellers to
Buyers;
(d) the execution, delivery, and performance of the Sellers'
Releases;
(e) the delivery of the Beazer Acknowledgment;
(f) the performance by Buyers, Sellers and the Guarantors of
their respective covenants and obligations under this Agreement; and
(g) Buyers' acquisition and ownership of the Partnership
Interests and exercise of control over the Acquired Companies.
Contract - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
Damages - as defined in Section 10.2.
Disclosure Letter - the disclosure letter delivered by Sellers to
Buyers concurrently with the execution and delivery of this Agreement.
Effective Time - as defined in Section 2.3.
Encumbrance - any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
Environment - soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and
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any other environmental medium or natural resource.
Environmental, Health and Safety Liabilities - any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal
or administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal", "remedial" and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
Environmental Law - any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;
(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the
Environment;
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(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up
or prevention; or
(h) making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
ERISA - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
Facilities - any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by any
Acquired Company.
GAAP - generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
Governmental Authorization - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
Governmental Body - any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
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(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
Hazardous Activity - the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
Hazardous Materials - any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
Intellectual Property Assets - as defined in Section 3.22.
IRC - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
IRS - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
Knowledge - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
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A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor, or trustee
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter.
Legal Requirement - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
Material Interest means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 25% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 25% of the outstanding equity securities or
equity interests in a Person.
Occupational Safety and Health Law - any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
Order - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
Ordinary Course of Business - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is similar in nature and magnitude to actions
customarily taken in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business as
such Person.
Organizational Documents - (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general
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partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (e) any amendment to any of the foregoing.
Person - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
Plan - as defined in Section 3.13.
Power Plant Lease - that certain Amended and Restated Lease dated July
31, 1991 by and between U.S. West Financial Services, Inc. ("U.S. West") and
Beazer West, Inc. ("BWI") assigned on January 31, 1995 to SRV.
Proceeding - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
Related Person - with respect to a specified Person:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity).
Release - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
Representative - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
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Schedule and Exhibit. "Schedule" and "Exhibit" shall mean the
Schedules and Exhibits to this Agreement, unless otherwise stated. The
Schedules to this Agreement may be attached to this Agreement or may be set
forth in a separate document denoted as the Schedules to this Agreement, or
both. By reference in this Agreement to any such Schedules and Exhibits, they
are incorporated herein for all relevant purposes. The listing or disclosure
of a particular matter or thing on any Schedule or Exhibit shall be deemed to
constitute the listing or disclosure of such matter or thing on all other
Schedules or Exhibits.
Scheduled Contract - the Contracts referred to in parts (a), (b), (c),
(d), (e) and (f) of Section 3.17 unless otherwise defined.
Section 9.3 Termination Notice - the termination notice of Sellers
referred to in Section 9.3.
Securities Act - the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
Sellers - as defined in the first paragraph of this Agreement.
Sellers' Release - as defined in Section 2.4.
Ssangyong Power Plant Lease Guaranty - the guaranty of Ssangyong as
set forth in the Assignment and Release Agreement dated January 31, 1995 by and
among Beazer West Cement Company, BWI, Hanson America Inc., Ssangyong, SRV and
U.S. West.
Subsidiary - with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to
elect a majority of that corporation's or other Person's board of directors or
similar governing body, or otherwise having the power to direct the business
and policies of that corporation or other Person (other than securities or
other interests having such power only upon the happening of a contingency that
has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
Tax - any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the
Internal Revenue Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
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property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto.
Tax Return - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
Threat of Release - a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
Threatened - a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. SALE AND TRANSFER OF PARTNERSHIP INTERESTS
2.1 PARTNERSHIP INTERESTS
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Partnership Interests to Buyers, and Buyers
will purchase the Partnership Interests from Sellers.
2.2 PURCHASE PRICE
(a) Subject to the adjustments described in Section 2.2(b)
below, in consideration of the sale of the Partnership Interests,
Buyers shall pay to Sellers US$117,500,000.00 (the "Base Purchase
Price").
(b) To the extent that the Partnership's total assets,
excluding cash (the "Total Assets"), increase or decrease during the
period from June 30, 1997 through December 31, 1997, calculated by the
difference in such Total Assets as reflected on the Adjusted June 30
Balance Sheet and the Closing Balance Sheet, the Base Purchase Price
shall be
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increased or decreased accordingly, dollar for dollar. To the extent
that the Partnership's current liabilities, calculated by the
difference in such current liabilities as reflected on the Adjusted
June 30 Balance Sheet and the Closing Balance Sheet, increase or
decrease during such period, the Base Purchase Price shall be
decreased or increased accordingly, dollar for dollar. The Base
Purchase Price as adjusted by the net of any such increases or
decreases is herein referred to as the "Purchase Price".
(c) At the Closing, Buyers shall pay to the Sellers 95% of
the parties' mutually agreed upon estimate of the Purchase Price plus
an amount equal to 100% of the Partnership's cash balances as of
December 31, 1997. Within sixty (60) days of the Closing, the
Sellers, at their sole cost and expense will prepare the Closing
Balance Sheet and shall present it to Buyers for review and approval,
plus such of Sellers' work papers as demonstrate the nature of any
adjustments prepared by Sellers and such other work papers and
materials, (including an actuarial report prepared by Towers Perrin
that reflects the Plan assets and projected liabilities as of the
Effective Date) as Buyers shall reasonably request. Within five (5)
days after the parties have agreed on the Closing Balance Sheet,
Buyers will pay to the Sellers the remainder of the Purchase Price.
(d) In the event that the parties are unable to agree on the
Closing Balance Sheet within thirty (30) days after Buyers' receipt
thereof, Sellers and Buyers shall select a mutually agreeable
independent U.S. certified public accounting firm to review the
disputed items and such books and records of the Partnership as may be
deemed necessary or advisable. The determination of such accounting
firm as to the Closing Balance Sheet shall be binding upon the
parties, and Buyers, on the one hand, and the Sellers, on the other
hand, shall bear equally the fees and expenses of such accounting
firm.
(e) All payments of the Purchase Price shall be made by wire
transfer of immediately available funds to an account designated by
the Sellers at least three (3) business days prior to Closing. Such
payments shall be allocated in accordance with the allocations set
forth on Schedule 2.2 (the "Allocation Schedule").
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2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of Seller's counsel at 801 South Figueroa
Street, Los Angeles, California, at 10:00 a.m. (local time) on the later of (i)
January 15, 1998, or (ii) at such other time and place as the parties may
agree. Subject to the provisions of Section 9.1(d), failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement. Notwithstanding the foregoing provisions of this Section
2.3, for the purpose of passage of title, payment of salaries, wages,
adjustments, determination of inventory and all other economic or financial
effects of the consummation of the Contemplated Transactions, the closing shall
be deemed to have taken place in respect to the Partnership Interests, the
employees employed by Sellers at 5:00 p.m. Pacific Standard Time, on December
31, 1997 (the "Effective Time").
2.4 CLOSING OBLIGATIONS
(a) At the Closing:
(i) Sellers will deliver to Buyers:
(A) certificates representing the Partnership
Interests, duly executed;
(B) releases in the form of Exhibit
2.4(a)(i)(B) executed by Sellers (collectively,
"Sellers' Releases");
(C) a certificate executed by Sellers
representing and warranting to Buyers that each of
Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date
of this Agreement and is accurate in all respects as
of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the
Disclosure Letter that were delivered by Sellers to
Buyers prior to the Closing Date in accordance with
Section 5.5); and
(D) Sellers shall furnish to Buyers evidence,
in form and content satisfactory (in their sole
discretion) to Buyers, that the bank notes of the
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Partnership and all other long term debt of the
Partnership, including any accrued interest thereof,
has been fully paid and satisfied and that the
Partnership has been fully released and discharged
from any and all obligation under such bank notes and
long term debt.
(ii) Buyers will deliver to Sellers:
(A) the portion of the Purchase Price as set
forth in Section 2.2(c) above in accordance with
Sellers' instructions;
(B) a fully executed assignment of the Power
Plant Lease;
(C) a fully executed release of the
Ssangyong Power Plant Lease Guaranty; and
(D) a certificate executed by Buyers to the
effect that, except as otherwise stated in such
certificate, each of Buyers' representations and
warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if
made on the Closing Date.
(b) Upon receipt of the remainder of the Purchase Price as
set forth in Section 2.2(c), Sellers shall deliver to Buyers a standby
letter of credit, substantially in the form of Exhibit 2, issued by or
confirmed by a bank acceptable to Buyers (the "Letter of Credit").
The Letter of Credit shall be in the amount of U.S.$1,200,000 and
shall expire on the first anniversary of the issuance date.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyers as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction
of incorporation or organization and other jurisdictions in which it
is authorized to do business. Each Acquired Company is a corporation
or partnership duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation or organization,
with full corporate or partnership power and authority to conduct its
business as it is now being conducted, to
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own or use the properties and assets that it purports to own or use,
and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification. SRV is a corporation
duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and
authority to own its properties and carry on its business as currently
conducted except where the failure to be so qualified would not have a
materially adverse effect on such Acquired Company. RVC is a
corporation duly organized and validly existing under the laws of the
States of Delaware and California and has all requisite power and
authority to own its property and carry on its business as currently
conducted except where the failure to be so qualified would not have a
materially adverse effect on such Acquired Company.
(b) Sellers have delivered to Buyers copies of the
Organizational Documents of each Acquired Company and each Seller as
currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with
its terms. Upon the execution and delivery by Sellers of the Sellers'
Releases (collectively, the "Sellers' Closing Documents"), the
Sellers' Closing Documents will constitute the legal, valid, and
binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Sellers' Closing Documents and to
perform their obligations under this Agreement and the Sellers'
Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of
time):
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(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents
of the Acquired Companies or either Seller, or (B) any
resolution adopted by the board of directors, the stockholders
or partners of any Acquired Company or either Seller;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any Acquired Company or
either Seller, or any of the assets owned or used by any
Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by any Acquired Company or that otherwise relates
to the business of, or any of the assets owned or used by, any
Acquired Company;
(iv) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract except to the
extent that such events, individually or in the aggregate,
would not have a material adverse effect on the Acquired
Companies taken as a whole; or
(v) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or
used by any Acquired Company, except for such Encumbrances as
would not, individually or in the aggregate, have a material
adverse effect on the Acquired Companies, taken as a whole.
Except as set forth in Part 3.2 of the Disclosure Letter, no Seller or
Acquired Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
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(c) Sections 3.2(c), 11.1, 11.2 and 12.5 of this Agreement
constitute the legal, valid, and binding obligation of Ssangyong,
enforceable against Ssangyong in accordance with its terms. Upon the
execution and delivery by Sellers and Ssangyong of the Agreement,
Sections 3.2(c), 11.1, 11.2 and 12.5 thereof will constitute the
legal, valid, and binding obligations of Ssangyong, enforceable
against Ssangyong in accordance with their terms. Ssangyong has the
absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and to perform its obligations
under this Agreement. Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents
of Ssangyong, or (B) any resolution adopted by the board of
directors or the stockholders of Ssangyong;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Ssangyong, or any of the
assets owned or used by Ssangyong, may be subject; or
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by any Acquired Company or that otherwise relates
to the business of, or any of the assets owned or used by, any
Acquired Company.
Except as set forth in the Disclosure Letter, Ssangyong will not be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION
With the exception of the Partnership Interests (which are owned by
Sellers), all of the
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outstanding equity securities and other securities of each Acquired Company are
owned of record and beneficially by one or more of the Acquired Companies, free
and clear of all Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities or
Partnership Interest of any Acquired Company. All of the outstanding equity
securities and Partnership Interests of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are
no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities or Partnership Interest of any Acquired Company.
None of the outstanding equity securities or other securities of any Acquired
Company was issued in violation of the Securities Act or any other Legal
Requirement. No Acquired Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person (other than Acquired
Companies) or any direct or indirect equity or ownership interest in any other
business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyers consolidated balance sheets of the
Acquired Companies as at June 30, 1997 in each of the years 1995 through 1997,
and the related consolidated statements of income, changes in partner's
capital, and cash flow for each of the fiscal years then ended, together with
the report thereon of Coopers & Lybrand, independent certified public
accountants (the balance sheet for the period ended June 30, 1997 being herein
referred to as the "Balance Sheet"). Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
partnership capital, and cash flow of the Acquired Companies as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP; the financial statements referred to
in this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
Person other than the Acquired Companies are required by GAAP to be included in
the consolidated financial statements of the Partnership.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made available to
Buyers, are complete and correct and have been maintained in accordance with
sound business practices, including the
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maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate records of all meetings held of, and
corporate action taken by, the stockholders, partners, management committee,
the Boards of Directors, and committees of the Boards of Directors and
management committee of the Acquired Companies, and no meeting of any such
stockholders, Board of Directors, or management committee has been held for
which minutes have not been prepared and are not contained in such minute
books. At the Closing, all of those books and records will be in the possession
of the Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate
list of all real property, leaseholds, or other interests therein owned by any
Acquired Company. Sellers have delivered or made available to Buyers copies of
the deeds and other instruments (as recorded) by which the Acquired Companies
acquired such real property and interests, and copies of all title insurance
policies, opinions, abstracts, and surveys in the possession of Sellers or the
Acquired Companies and relating to such real property or interests. The
Acquired Companies own (with good and marketable title in the case of the real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that they purport to own located in the Facilities
owned or operated by the Acquired Companies or reflected as owned in the books
and records of the Acquired Companies, including all of the properties and
assets reflected in the Closing Balance Sheet (except for assets held under
capitalized leases disclosed or not required to be disclosed in Part 3.6 of the
Disclosure Letter and personal property sold since the date of the Balance
Sheet, as the case may be, in the Ordinary Course of Business). All material
properties and assets reflected in the Closing Balance Sheet are free and clear
of all Encumbrances and are not, in the case of real property, subject to any
rights of way, building use restrictions, exceptions, variances, reservations,
or limitations of any nature except, with respect to all such properties and
assets, (a) liens for current taxes not yet due and (b) with respect to real
property, (i) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of any Acquired
Company, and (ii) zoning laws and other land use restrictions
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<PAGE> 19
that do not impair the present or anticipated use of the property subject
thereto. All buildings, plants, and structures owned by the Acquired Companies
lie wholly within the boundaries of the real property owned by the Acquired
Companies and do not encroach upon the property of, or otherwise conflict with
the property rights of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Acquired
Companies are structurally sound, are in good operating condition and repair,
and are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Acquired Companies are sufficient for the continued conduct of the Acquired
Companies' businesses after the Closing in substantially the same manner as
conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Acquired Companies that are reflected
on the Closing Balance Sheet or on the accounting records of the Acquired
Companies as of the Effective Time (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Unless paid
prior to the Effective Time, the Accounts Receivable are or will be as of the
Effective Time current and collectible net of the respective reserves shown on
the Closing Balance Sheet or on the accounting records of the Acquired
Companies as of the Effective Time (which reserves are adequate and, except as
may be adjusted on the Adjusted June 30 Balance Sheet by mutual agreement of
the parties, calculated consistent with past practice). There is no contest,
claim, or right of set-off, other than returns in the Ordinary Course of
Business, under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable. Part 3.8 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the Effective Date, which list sets forth the aging of such
Accounts Receivable.
3.9 INVENTORY
All inventory of the Acquired Companies, whether or not reflected in
the Closing Balance
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Sheet, consists of a quality and quantity usable and salable in the Ordinary
Course of Business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Closing Balance Sheet or on the accounting records of the
Acquired Companies as of the Effective Date, as the case may be. All
inventories not written off have been priced at the lower of cost or market.
The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are reasonable in the present circumstances
of the Acquired Companies.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the
Acquired Companies have no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise)
except for liabilities or obligations reflected or reserved against in the
Closing Balance Sheet and current liabilities incurred in the Ordinary Course
of Business since the Effective Time.
3.11 TAXES
(a) Since February 2, 1991, the Acquired Companies have filed
or caused to be filed (on a timely basis) all Tax returns, reports and
declarations that are or were required to be filed by or with respect
to any of them. Sellers have delivered or made available to Buyers
copies of federal and state income tax returns filed by the Acquired
Companies since February 2, 1991. The Acquired Companies have paid, or
made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to
any assessment received by Sellers or any Acquired Company, except
such Taxes, if any, as are listed in Part 3.11 of the Disclosure
Letter and are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in
the Closing Balance Sheet. Neither SRV nor RVC have California sales
tax permits.
(b) The United States federal and state income tax returns of
each Acquired Company have been audited by the IRS or relevant state
tax authorities or are closed by the applicable statute of limitations
for all taxable years through June 30, 1994 (for federal income tax
returns) and June 30, 1993 (for state income tax returns). Part 3.11
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of the Disclosure Letter contains a complete and accurate list of all
audits of all such federal and state income tax returns since February
2, 1991, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such
audits have been paid, reserved against, settled, or, as described in
Part 3.11 of the Disclosure Letter, are being contested in good faith
by appropriate proceedings. Part 3.11 of the Disclosure Letter
describes all adjustments by the IRS to the United States federal
income tax returns filed by any Acquired Company or any group of
corporations including any Acquired Company for all taxable years
since February 2, 1991, and the resulting deficiencies proposed by the
IRS. Except as described in Part 3.11 of the Disclosure Letter since
February 2, 1991, no Seller or Acquired Company has given or been
requested to give waivers or extensions (or is or would be subject to
a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of federal or state income taxes
of any Acquired Company or for which any Acquired Company may be
liable.
(c) The charges, accruals, and reserves with respect to Taxes
on the respective books of each Acquired Company are adequate
(determined in accordance with GAAP) and are at least equal to that
Acquired Company's liability for Taxes. Since February 2, 1991, no
Acquired Company has received any written notice of any proposed tax
assessment against any Acquired Company that will not have been
resolved as of the Closing, except as disclosed in the Closing Balance
Sheet or in Part 3.11 of the Disclosure Letter. Since February 2,
1991, no consent to the application of Section 341(f)(2) of the IRC
has been filed with respect to any property or assets held, acquired,
or to be acquired by any Acquired Company. All Taxes that any
Acquired Company is or was required to withhold or collect with
respect to any employee, independent contractor or other third party
have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by any Acquired Company are, to
the Sellers' Knowledge, true, correct, and complete. There is no tax
sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement.
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3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, properties, prospects, assets, or
financial condition of any Acquired Company, and no event has occurred or
circumstance exists that is likely to result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have
the meanings set forth below.
"COMPANY AND OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted or followed by an Acquired Company or an ERISA
Affiliate of an Acquired Company.
"COMPANY PLAN" means all Plans of which an Acquired Company or an
ERISA Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise participates or has participated.
All references to Plans are to Company Plans unless the context requires
otherwise.
"COMPANY VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate of an Acquired Company.
"ERISA AFFILIATE" means, with respect to an Acquired Company, any
other person that, together with the Company, would be treated as a single
employer under IRC Section 414.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA Section
3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
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"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" has the meaning given in ERISA Section 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
Section 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
(b) (i) Part 3.13(i) of the Disclosure Letter contains a
complete and accurate list of all Company Plans, Company Other
Benefit Obligations, and Company VEBAs, and identifies as such
all Company Plans that are (A) defined benefit Pension Plans,
(B) Qualified Plans, (C) Title IV Plans, or (D) Multi-
Employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains
a complete and accurate list of (A) all ERISA Affiliates of
each Acquired Company, and (B) all Plans of which any such
ERISA Affiliate is or was a Plan Sponsor, in which any such
ERISA Affiliate participates or has participated, or to which
any such ERISA Affiliate contributes or has contributed.
(iii) Part 3.13(iii) of the Disclosure Letter sets
forth, for each Multi-Employer Plan, as of its last valuation
date, the amount of potential withdrawal liability of the
Acquired Companies and the Acquired Companies' other ERISA
Affiliates, calculated according to information made available
pursuant to ERISA Section 4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets
forth a calculation of the liability of the Acquired Companies
for post-retirement benefits other than pensions, made in
accordance with Financial Accounting Statement 106 of the
Financial Accounting Standards Board, regardless of whether
any Acquired Company is required by this Statement to disclose
such information.
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(v) Part 3.13(v) of the Disclosure Letter sets forth
the financial cost of all obligations owed under any Company
Plan or Company Other Benefit Obligation that is not subject
to the disclosure and reporting requirements of ERISA.
(c) Sellers have delivered to Buyers, or will deliver to
Buyers within ten (10) days of the date of this Agreement:
(i) all documents that set forth the terms of each
Company Plan, Company Other Benefit Obligation, or Company
VEBA and of any related trust, including (A) all plan
descriptions and summary plan descriptions of Company Plans
for which Sellers or the Acquired Companies are required to
prepare, file, and distribute plan descriptions and summary
plan descriptions, and (B) all summaries and descriptions
furnished to participants and beneficiaries regarding Company
Plans, Company Other Benefit Obligations, and Company VEBAs
for which a plan description or summary plan description is
not required;
(ii) all personnel, payroll, and employment manuals
and policies;
(iii) all collective bargaining agreements pursuant
to which contributions have been made or obligations incurred
(including both pension and welfare benefits) by the Acquired
Companies and the ERISA Affiliates of the Acquired Companies,
and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such
entities;
(iv) a written description of any Company Plan or
Company Other Benefit Obligation that is not otherwise in
writing;
(v) all registration statements filed with respect
to any Company Plan;
(vi) all insurance policies purchased by or to
provide benefits under any Company Plan;
(vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other
independent contractors that relate to any Company Plan,
Company Other Benefit Obligation, or Company VEBA;
(viii) all reports submitted within the two years
preceding the date of this Agreement by third party
administrators, actuaries, investment managers,
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consultants, or other independent contractors with respect to
any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(ix) the Form 5500 filed in each of the most recent
three plan years with respect to each Company Plan, including
all schedules thereto and the opinions of independent
accountants;
(x) all notices that were given by any Acquired
Company or any ERISA Affiliate of an Acquired Company or any
Company Plan to the IRS, the PBGC, or any participant or
beneficiary, pursuant to statute, within the four years
preceding the date of this Agreement, including notices that
are expressly mentioned elsewhere in this Section 3.13;
(xi) all notices that were given by the IRS, the
PBGC, or the Department of Labor to any Acquired Company, any
ERISA Affiliate of an Acquired Company, or any Company Plan
within the four years preceding the date of this Agreement;
(xii) with respect to Qualified Plans and VEBAs, the
most recent determination letter for each Plan of the Acquired
Companies that is a Qualified Plan; and
(xiii) with respect to Title IV Plans, the Form
PBGC-1 filed for each of the three most recent plan years.
(d) Except as set forth in Part 3.13(d)(iii) of the Disclosure
Letter:
(i) With respect to the Company Plans, Company Other
Benefit Obligations, and Company VEBAs, all required
contributions that are due have been made. The Acquired
Companies have made appropriate entries in their financial
records and statements for all obligations and liabilities
under such Plans, VEBAs, and Obligations that have accrued but
are not due.
(ii) No statement, either written or oral, has been
made by any Acquired Company to any Person with regard to any
Plan or Other Benefit Obligation that was not in accordance
with the Plan or Other Benefit Obligation and that could have
an adverse economic consequence to any Acquired Company or to
Buyers.
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(iii) The Acquired Companies, with respect to all
Company Plans, Company Other Benefits Obligations, and Company
VEBAs, are, and each Company Plan, Company Other Benefit
Obligation, and Company VEBA is, in compliance in all material
respects with ERISA, the IRC, and other applicable Laws
including the provisions of such Laws expressly mentioned in
this Section 3.13, and with any applicable collective
bargaining agreement.
(A) No transaction prohibited by ERISA
Section 406 and no "prohibited transaction" under
IRC Section 4975(c) have occurred with respect to
any Company Plan for which there is any material
liability or civil penalty assessed pursuant to ERISA
Section 502(i) or taxes imposed by IRC Section
4975.
(B) No Seller or Acquired Company has any
material liability to the IRS with respect to any
Plan, including any liability imposed by Chapter 43
of the IRC.
(C) No Seller or Acquired Company has any
material liability to the PBGC with respect to any
Plan or has any material liability under ERISA
Section 502 or Section 4071.
(D) All filings required by ERISA and the IRC
as to each Plan have been timely filed, and all
notices and disclosures to participants required by
either ERISA or the IRC have been timely provided.
(E) All contributions and payments made or
accrued with respect to all Company Plans, Company
Other Benefit Obligations, and Company VEBAs are
deductible under IRC Section 162 or Section 404. No
amount, or any asset of any Company Plan or Company
VEBA, is subject to tax as unrelated business taxable
income.
(iv) Except as otherwise provided in part 3.13(d)(iv)
of the Disclosure Letter, each Company Plan can be terminated
within thirty days, without payment of any additional
contribution or amount and without the vesting or acceleration
of any benefits promised by such Plan.
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(v) Since June 30, 1997, there has been no
establishment or amendment of any Company Plan, Company VEBA,
or Company Other Benefit Obligation.
(vi) No event has occurred or circumstance exists
that could result in a material increase in premium costs of
Company Plans and Company Other Benefit Obligations that are
insured, or a material increase in benefit costs of such Plans
and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal
proceeding involving, any Company Plan, Company Other Benefit
Obligation, or Company VEBA is pending or, to Sellers'
Knowledge, is Threatened.
(viii) Each Qualified Plan of each Acquired Company
is qualified in form and operation under IRC Section 401(a);
each trust for each such Plan is exempt from federal income
tax under IRC Section 501(a). Each Company VEBA is exempt from
federal income tax. To Seller's Knowledge, no event has
occurred or circumstance exists that will or could give rise
to disqualification or loss of tax-exempt status of any such
Plan or trust.
(ix) Each Acquired Company and each ERISA Affiliate
of an Acquired Company has met the minimum funding standard,
and has made all contributions required, under ERISA Section
302 and IRC Section 402.
(x) The Acquired Companies have paid all amounts due
to the PBGC pursuant to ERISA Section 4007.
(xi) No Acquired Company or any ERISA Affiliate of an
Acquired Company has ceased operations at any facility or has
withdrawn from any Title IV Plan in a manner that would
subject to any entity or Sellers to liability under ERISA
Section 4062(e), Section 4063, or Section 4064.
(xii) No Acquired Company or any ERISA Affiliate of
an Acquired Company has filed a notice of intent to terminate
any Plan or has adopted any amendment to treat a Plan as
terminated. The PBGC has not instituted proceedings to treat
any Company Plan as terminated. No event has occurred or
circumstance exists that may constitute grounds under ERISA
Section 4042 for the
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termination of, or the appointment of a trustee to administer,
any Company Plan.
(xiii) No amendment has been made, or is reasonably
expected to be made, to any Plan that has required or could
require the provision of security under ERISA Section 307 or
IRC Section 401(a)(29).
(xiv) No accumulated funding deficiency, whether or
not waived, exists with respect to any Company Plan; no event
has occurred or circumstance exists that may result in an
accumulated funding deficiency as of the last day of the
current plan year of any such Plan.
(xv) The actuarial report for each defined benefit
Pension Plan of each Acquired Company and each ERISA Affiliate
of each Acquired Company fairly presents the financial
condition and the results of operations of each such Plan in
accordance with GAAP.
(xvi) Since the last valuation date for each defined
benefit Pension Plan of each Acquired Company and each ERISA
Affiliate of an Acquired Company, no event has occurred or
circumstance exists that would increase the amount of benefits
under any such Plan or that would cause the excess of Plan
assets over benefit liabilities (as defined in ERISA Section
4001) to decrease, or the amount by which benefit liabilities
exceed assets to increase.
(xvii) No reportable event (as defined in ERISA
Section 4043 and in regulations issued thereunder) has
occurred.
(xviii) No Seller or Acquired Company has Knowledge
of any facts or circumstances that may give rise to any
material liability of any Seller, any Acquired Company, or
Buyers to the PBGC under Title IV of ERISA.
(xix) No Acquired Company or any ERISA Affiliate of
an Acquired Company has ever established, maintained, or
contributed to or otherwise participated in, or had an
obligation to maintain, contribute to, or otherwise
participate in, any Multi-Employer Plan.
(xx) No Acquired Company or any ERISA Affiliate of an
Acquired Company has withdrawn from any Multi-Employer Plan
with respect to which
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there is any outstanding liability as of the date of this
Agreement. To Seller's Knowledge, no event has occurred or
circumstance exists that presents a risk of the occurrence of
any withdrawal from, or the participation, termination,
reorganization, or insolvency of, any Multi-Employer Plan that
could result in any liability of either any Acquired Company
or Buyers to a Multi-Employer Plan.
(xxi) No Acquired Company or any ERISA Affiliate of
an Acquired Company has received notice from any
Multi-Employer Plan that it is in reorganization or is
insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any
excise tax, or that such Plan intends to terminate or has
terminated.
(xxii) To Sellers' Knowledge, no Multi-Employer Plan
to which any Acquired Company or any ERISA Affiliate of an
Acquired Company contributes or has contributed is a party to
any pending merger or asset or liability transfer or is
subject to any proceeding brought by the PBGC.
(xxiii) Sellers and all Acquired Companies have
complied with the provisions of ERISA Section 601 et seq. and
IRC Section 4980B.
(xxiv) No payment that is owed or may become due to
any director, officer, employee, or agent of any Acquired
Company will be non-deductible to the Acquired Companies or
subject to tax under IRC Section 280G or Section 4999; nor
will any Acquired Company be required to "gross up" or
otherwise compensate any such person because of the imposition
of any excise tax on a payment to such person.
(xxv) The consummation of the Contemplated
Transactions will not result in the payment, vesting, or
acceleration of any benefit.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter,
to Sellers' Knowledge:
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(i) each Acquired Company is, and at all times since
June 30, 1997 has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct
or operation of its business or the ownership or use of any of
its assets except for such failures to comply with Legal
Requirements which would not, individually or in the
aggregate, have a material adverse effect on any Acquired
Company;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) will
constitute or result in a violation by any Acquired Company
of, or a failure on the part of any Acquired Company to comply
with, any Legal Requirement except for such failures to comply
with Legal Requirements which would not, individually, or in
the aggregate, have a material adverse effect on any Acquired
Company, or (B) may give rise to any obligation on the part of
any Acquired Company to undertake, or to bear all or any
portion of the cost of, any material remedial action of any
nature; and
(iii) no Acquired Company has received, at any time
since June 30, 1997, any notice or other communication
(whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete
and accurate list of each Governmental Authorization that is held by
any Acquired Company or that otherwise relates to the business of, or
to any of the assets owned or used by, any Acquired Company. Each
Governmental Authorization listed or required to be listed in Part
3.14 of the Disclosure Letter is valid and in full force and effect.
Except as set forth in Part 3.14 of the Disclosure Letter, to Sellers'
Knowledge:
(i) each Acquired Company is, and at all times since
June 30, 1997 has been, in substantial compliance with all of
the terms and requirements of each
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Governmental Authorization identified or required to be
identified in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received, at any time
since June 30, 1997, any notice or other communication
(whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed
for the renewal of the Governmental Authorizations listed or
required to be listed in Part 3.14 of the Disclosure Letter
have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations
have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
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3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against any
Acquired Company or that otherwise relates to or may have a
material effect on the business of, or any of the assets owned
or used by, any Acquired Company; or
(ii) that challenges, or that would, if successful,
prevent, delay, make illegal, or otherwise interfere with, any
of the Contemplated Transactions.
To the Knowledge of Sellers and the Acquired Companies, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. Sellers have delivered to Buyers or shall have made available
to Buyers on Buyers' request copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 3.15 of the Disclosure
Letter.
(b) Except as set forth in Parts 3.14, 3.15 and 3.19 of the
Disclosure Letter:
(i) there is no Order to which any of the Acquired
Companies, or any of the assets owned or used by any Acquired
Company, is subject;
(ii) neither Seller is subject to any Order that
relates to the business of, or any of the assets owned or used
by, any Acquired Company; and
(iii) to the Knowledge of Sellers and the Acquired
Companies, no officer, director, agent, or employee of any
Acquired Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
(c) Except as set forth in Parts 3.14, 3.15 and 3.19 of the
Disclosure Letter:
(i) each Acquired Company is, and at all times since
June 30, 1997 has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of
the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or
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result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement
of any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, is subject; and
(iii) no Acquired Company has received, at any time
since June 30, 1997, any notice or other communication
(whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible, or
potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any
of the assets owned or used by any Acquired Company, is or has
been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since the
date of the Balance Sheet, the Acquired Companies have conducted their
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares
of capital stock of any Acquired Company; issuance of any security
convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by any Acquired
Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of
shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with any director or
officer;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of any Acquired Company;
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(e) damage to or destruction or loss of any asset or property
of any Acquired Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition, or prospects of the Acquired Companies, taken as
a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii)
any Contract or transaction involving a total remaining commitment by
or to any Acquired Company of at least $100,000.00;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or
property of any Acquired Company or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of any
Acquired Company, including the sale, lease, or other disposition of
any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with an
aggregate value to any Acquired Company in excess of $100,000.00;
(i) material change in the accounting methods used by any
Acquired Company; or
(j) agreement, whether oral or written, by any Acquired
Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and Sellers have delivered to Buyers true and
complete copies, of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by
one or more Acquired Companies of an amount or value in excess
of $100,000.00;
(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to
one or more Acquired Companies of an amount or value in excess
of $100,000.00;
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(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves
expenditures or receipts of one or more Acquired Companies in
excess of $100,000.00;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any
real or personal property (except personal property leases and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $100,000.00 and
with terms of less than one year);
(v) each licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights, or
other intellectual property, including agreements with current
or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other
employee representative of a group of employees;
(vii) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by any Acquired Company
with any other Person;
(viii) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of
any Acquired Company or any Affiliate of an Acquired Company
or limit the freedom of any Acquired Company or any Affiliate
of an Acquired Company to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing for payments
to or by any Person based on sales, purchases, or profits,
other than direct payments for goods;
(x) each power of attorney that is currently
effective and outstanding;
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(xi) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides
for an express undertaking by any Acquired Company to be
responsible for consequential damages;
(xii) each Applicable Contract for capital
expenditures in excess of $100,000.00;
(xiii) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by any Acquired Company other than in the Ordinary
Course of Business; and
(xiv) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably complete
details concerning Scheduled Contracts, including the parties to the Scheduled
Contracts, the amount of the remaining commitment of the Acquired Companies
under the Scheduled Contracts, and the Acquired Companies' office where details
relating to the Scheduled Contracts are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) neither Seller (and no Related Person of either
Seller) has or may acquire any rights under, and neither
Seller has or may become subject to any obligation or
liability under, any contract that relates to the business of,
or any of the assets owned or used by, any Acquired Company;
and
(ii) to the Knowledge of Sellers and the Acquired
Companies, no officer, director, agent, employee, consultant,
or contractor of any Acquired Company is bound by any contract
that purports to limit the ability of such officer, director,
agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the
business of any Acquired Company, or (B) assign to any
Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Scheduled Contract identified or required to be
identified in Part 3.17(a) of the Disclosure Letter is in full force
and effect and is valid and enforceable in accordance with its terms.
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(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) each Acquired Company is, and at all times since
June 30, 1997 has been, in full compliance with all applicable
terms and requirements of each Scheduled Contract under which
such Acquired Company has or had any obligation or liability
or by which such Acquired Company or any of the assets owned
or used by such Acquired Company is or was bound;
(ii) to the Knowledge of Sellers, each other Person
that has or had any obligation or liability under any
Scheduled Contract under which an Acquired Company has or had
any rights is, and at all times since June 30, 1997 has been,
in full compliance with all applicable terms and requirements
of such Scheduled Contract;
(iii) to the Knowledge of Sellers, no event has
occurred or circumstance exists that (with or without notice
or lapse of time) may contravene, conflict with, or result in
a violation or breach of, or give any Acquired Company or
other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Scheduled Contract;
and
(iv) no Acquired Company has given to or received
from any other Person, at any time since June 30, 1997, any
notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Scheduled
Contract.
(e) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or
payable to any Acquired Company under current or completed Scheduled
Contracts with any Person and to the Knowledge of Sellers and the
Acquired Companies, no such Person has made written demand for such
renegotiation.
(f) The Scheduled Contracts relating to the sale, design,
manufacture, or provision of products or services by the Acquired
Companies have been entered into in the Ordinary Course of Business
and have been entered into without the commission of any
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act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any
Legal Requirement.
3.18 INSURANCE
(a) Sellers have delivered to Buyers:
(i) true and complete copies of all policies of
insurance to which any Acquired Company is a party or under
which any Acquired Company, or any director or management
committee member of any Acquired Company, is or has been
covered at any time within the four (4) years preceding the
date of this Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement during the past four years by the
auditor of any Acquired Company's financial statements with
regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting
any Acquired Company, including any reserves established
thereunder;
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by any
Acquired Company; and
(iii) all obligations of the Acquired Companies to
third parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the three (3) preceding
policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $500,000.00,
which sets forth:
(A) the name of the claimant;
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(B) a description of the policy by insurer,
type of insurance, and period of coverage; and
(C) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for
all claims that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which any Acquired Company is a
party or that provide coverage to either Seller, any Acquired
Company, or any director, member of management committee or
officer of an Acquired Company:
(A) are valid, outstanding, and enforceable;
(B) taken together, provide insurance
coverage which are customary for the assets and the
operations of the Acquired Companies for all risks
normally insured against by a Person carrying on the
same business or businesses as the Acquired Companies
for all risks to which the Acquired Companies are
normally exposed;
(C) are sufficient for compliance with all
Legal Requirements and Applicable Contracts to which
any Acquired Company is a party or by which any of
them is bound;
(D) will continue in full force and effect
following the consummation of the Contemplated
Transactions; and
(E) do not provide for any retrospective
premium adjustment or other experienced-based
liability on the part of any Acquired Company.
(ii) No Seller or Acquired Company has received (A)
any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) The Acquired Companies have paid all premiums
due, and have otherwise performed all of their respective
obligations, under each policy to which any Acquired Company
is a party or that provides coverage to any Acquired Company
or director or member of management committee thereof.
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(iv) The Acquired Companies have given notice to the
insurer of all claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the disclosure letter:
(a) To Sellers' Knowledge, each Acquired Company is, and at
all times has been, in substantial compliance with, and has not been
and is not in material violation of or liable under, any Environmental
Law. No Seller or Acquired Company has received any actual or
Threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or
(ii) the current or prior owner or operator of any Facilities, of any
actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has had an interest, or with respect
to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, any Acquired Company, or any other Person for
whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(b) To the Knowledge of Sellers and the Acquired Companies,
there are no pending or Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health,
and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the Facilities
or any other properties and assets (whether real, personal, or mixed)
in which Sellers or any Acquired Company has or had an interest.
(c) No Seller or Acquired Company has Knowledge of any
citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation
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or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of
the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company had an
interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred,
imported, used, or processed by Sellers, any Acquired Company have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(d) To Sellers' Knowledge, no Seller or Acquired Company has
any Environmental, Health, and Safety Liabilities with respect to the
Facilities or to the Knowledge of Sellers and the Acquired Companies,
with respect to any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company (or any
predecessor), has or had an interest, or at any property geologically
or hydrologically adjoining the Facilities or any such other property
or assets.
(e) To Sellers' Knowledge, there are no Hazardous Materials
present on or in the Environment at the Facilities or at any
geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any
structure therein or thereon except in substantial compliance with
Applicable Environmental Laws. Neither Seller nor any Acquired
Company, or to the Knowledge of Sellers and the Acquired Companies,
any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to the Facilities or any
other properties or assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has or had an interest except in
substantial compliance with all applicable Environmental Laws.
(f) To Seller's Knowledge, there has been no Release of any
Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were
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generated, manufactured, refined, transferred, produced, imported,
used, or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has or had an interest, or any
geologically or hydrologically adjoining property, whether by Sellers
or any Acquired Company.
(g) Sellers have delivered to Buyers true and complete copies
and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by Sellers or any Acquired Company pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by Sellers, any Acquired Company,
or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee of the
Acquired Companies, including each employee on leave of absence or
layoff status: employer; name; job title; current compensation paid or
payable and any change in compensation since June 30, 1997; vacation
accrued; and service credited for purposes of vesting and eligibility
to participate under any Acquired Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, other Employee Pension
Benefit Plan or Employee Welfare Benefit Plan, or any other employee
benefit plan or any Director Plan.
(b) No employee of any Acquired Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement,
between such employee and any other Person ("Proprietary Rights
Agreement") that materially adversely affects or will affect (i) the
performance of his/her duties as an employee or director of the
Acquired Companies, or (ii) the ability of any Acquired Company to
conduct its business, including any Proprietary Rights
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Agreement with Sellers or the Acquired Companies by any such
employee. Except as Buyers have been advised in writing, the Sellers
are not aware of any officer or other key employee of any Acquired
Company who intends to terminate his/her employment with such Acquired
Company.
(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list as of December 31, 1997 of the following
information for each retired employee or director of the Acquired
Companies, or their dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
Since June 30, 1997, there has not been, there is not presently
pending or existing, and there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) or any Proceeding
against or affecting any Acquired Company relating to the alleged violation of
any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Acquired Companies or their
premises. To Sellers' Knowledge, no event has occurred or circumstance exists
that could provide the basis for any work stoppage or other labor dispute.
There is no lockout of any employees by any Acquired Company, and no such
action is contemplated by any Acquired Company. Each Acquired Company has
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health, and plant closing. No
Acquired Company is liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
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3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets - The term "Intellectual
Property Assets" includes:
(i) the name Riverside Cement Company, all fictional
business names, trading names, registered and unregistered
trademarks, service marks, and applications pending as of the
Closing Date (collectively, "Marks");
(ii) all patents and all patent applications pending
as of the Closing Date (collectively, "Patents");
(iii) all Federally registered copyrights in both
published works and unpublished works (collectively,
"Copyrights");
(iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints;
owned, used, or licensed by any Acquired Company as licensee
or licensor and treated by any Acquired Company as a trade
secret as that term is defined under the Uniform Trade Secret
Act (collectively, "Trade Secrets").
(b) Agreements - Part 3.22(b) of the Disclosure Letter
contains a complete and accurate list of all Contracts relating to the
Intellectual Property Assets to which any Acquired Company is a party
or by which any Acquired Company is bound, except for any license
implied by the sale of a product and perpetual, paid-up licenses for
commonly available software programs with a value of less than
$1,000.00 under which an Acquired Company is the licensee. There are
no outstanding and, to Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such Contracts.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those
necessary for the operation of the Acquired Companies'
businesses as they are currently conducted. Subject to the
list of Contracts in Part 3.22(b) of the Disclosure Letter,
one or more of the Acquired Companies is the owner of all
right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third
party all of the Intellectual Property Assets.
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(ii) Except as set forth in Part 3.22(c) of the
Disclosure Letter, all former and current employees of each
Acquired Company who are involved on a daily basis in the
design or development of Intellectual Property Assets ("IP
Employee") have executed written Contracts with one or more of
the Acquired Companies that assign to one or more of the
Acquired Companies all rights to any inventions, improvements,
discoveries, or information relating to the business of any
Acquired Company. No IP Employee of any Acquired Company has
entered into any Contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than one or
more of the Acquired Companies.
(d) Patents
(i) Part 3.22(d) of the Disclosure Letter contains a
complete and accurate list of all Patents. One or more of the
Acquired Companies is the owner of all right, title, and
interest in and to each of the Patents, free and clear of all
liens, security interests, charges, encumbrances, entities,
and other adverse claims.
(ii) All of the issued Patents are currently in
compliance with formal legal requirements (including payment
of filing, examination, and maintenance fees), to Sellers'
Knowledge, are valid and enforceable, and are not subject to
any maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference or reissue, proceeding and, to Sellers'
Knowledge, any reexamination or opposition proceeding. To
Sellers' Knowledge, there is no potentially interfering patent
or patent application of any third party.
(iv) To Sellers' Knowledge, no Patent is infringed or
has been challenged or threatened in any way. To Sellers'
Knowledge, none of the products manufactured and sold, nor any
process or know-how used, by any Acquired Company infringes or
is alleged to infringe any patent or other proprietary right
of any other Person.
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(e) Trademarks
(i) Part 3.22(e) of the Disclosure Letter contains a
complete and accurate list of all Marks. One or more of the
Acquired Companies is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all
liens, security interests, charges, encumbrances, equities,
and other adverse claims.
(ii) All Marks that have been registered with the
United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the
timely post-registration filing of affidavits of use and
incontestability and renewal applications), are, to Sellers'
Knowledge, valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Mark has been or is now involved in any
opposition, invalidation, or cancellation and, to Sellers'
Knowledge, no such action is Threatened with the respect to
any of the Marks.
(iv) To Sellers' Knowledge, no Mark is infringed or
has been challenged or threatened in any way. To Sellers'
Knowledge, none of the Marks used by any Acquired Company
infringes or is alleged to infringe any trade name, trademark,
or service mark of any third party.
(f) Copyrights
(i) Part 3.22(f) of the Disclosure Letter contains a
complete and accurate list of all Copyrights. One or more of
the Acquired Companies is the owner of all right, title, and
interest in and to each of the Copyrights, free and clear of
all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All the Copyrights have been registered and are
currently in compliance with formal legal requirements, are,
to Seller's Knowledge, valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling
due within ninety (90) days after the date of Closing.
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(iii) To Seller's Knowledge, no Copyright is
infringed or, to Sellers' Knowledge, has been challenged or
threatened in any way. To Seller's Knowledge, none of the
subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
(g) Trade Secrets
(i) With respect to each Trade Secret, the
documentation relating to such Trade Secret is current,
accurate, and sufficient in detail and content to reasonably
identify and explain it and to allow its full and proper use.
(ii) Sellers and the Acquired Companies have taken
all reasonable precautions to protect the secrecy,
confidentiality, and value of their Trade Secrets.
(iii) One or more of the Acquired Companies has good
title and an absolute (but not necessarily exclusive) right to
use the Trade Secrets. To Seller's Knowledge, the Trade
Secrets are not part of the public knowledge or literature,
and have not been used, divulged, or appropriated either for
the benefit of any Person (other than one or more of the
Acquired Companies) or to the detriment of the Acquired
Companies. No Trade Secret is subject to any adverse claim or
has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS
Since February 2, 1991, no Acquired Company or director, officer,
agent, or employee of any Acquired Company, or to Sellers' Knowledge any other
Person associated with or acting for or on behalf of any Acquired Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services in violation of any
Legal Requirement, or (b) established or maintained any fund or asset that has
not been recorded in the books and records of the Acquired Companies.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement
and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements
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herein or therein, in light of the circumstances in which they were
made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
(c) There is no fact known to either Seller that has specific
application to either Seller or any Acquired Company (other than
general economic or industry conditions) and that materially adversely
affects or, as far as either Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial
condition, or results of operations of the Acquired Companies (on a
consolidated basis) that has not been set forth in this Agreement or
the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of Sellers or of any Acquired Company
has, or since the first day of the next to last completed fiscal year of the
Acquired Companies has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining
to the Acquired Companies' businesses. No Seller or any Related Person of
Sellers or of any Acquired Company is, or since the first day of the next to
last completed fiscal year of the Acquired Companies has owned (of record or as
a beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with any Acquired Company other than
business dealings or transactions conducted in the Ordinary Course of Business
with the Acquired Companies at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with any
Acquired Company with respect to any line of the products or services of such
Acquired Company (a "Competing Business") in any market presently served by
such Acquired Company except for less than one percent of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth in
Part 3.25 of the Disclosure Letter, no Seller or any Related Person of Sellers
or of any Acquired Company is a party to any Contract with, or has any claim or
right against, any Acquired Company.
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3.26 BROKERS OR FINDERS
Except as Buyers have been advised in writing, Sellers and their
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers represent and warrant to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyers are corporations duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of each Buyer, enforceable against each of them in
accordance with its terms. Upon the execution and delivery by Buyers,
the Buyers' Closing Documents will constitute the legal, valid, and
binding obligations of Buyers, enforceable against each Buyer in
accordance with its terms. Buyers have the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and
the Buyers' Closing Document and to perform its obligations under this
Agreement and the Buyers' Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution
and delivery of this Agreement by Buyers nor the consummation or
performance of any of the Contemplated Transactions by Buyers will
give any Person the right to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyers' Organizational
Documents;
(ii) any resolution adopted by the board of directors
or the stockholders of Buyers;
(iii) any Legal Requirement or Order to which Buyers
may be subject; or
(iv) any Contract to which Buyers are a party or by
which Buyers may be bound.
Except as set forth in Schedule 4.2, Buyers are not and will
not be required to obtain any Consent from any Person in connection
with the execution and delivery of this
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Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 INVESTMENT INTENT
Buyers are acquiring the Shares for their own account and not with a
view to their distribution within the meaning of Section 2(11) of the
Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against either
Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyers' Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Except as Sellers have been advised in writing, Buyers and their
officers and agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Sellers harmless from any such payment alleged to be due by or through Buyers
as a result of the action of Buyers or their officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause each Acquired Company and its Representatives to, (a) afford
Buyers and their Representatives and prospective lenders and their
Representatives (collectively, "Buyers' Advisors") reasonable access to each
Acquired Company's personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data, (b) furnish Buyers
and Buyers' Advisors with copies of all such contracts, books and records, and
other existing documents and data as Buyers may reasonably request, and (c)
furnish Buyers and Buyers' Advisors with such additional financial, operating,
and other data and information as Buyers may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause each Acquired Company to:
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(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current
business organization of such Acquired Company, keep available the
services of the current officers, employees, and agents of such
Acquired Company, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with such Acquired Company;
(c) confer with Buyers concerning operational matters of a
material nature; and
(d) otherwise report periodically to Buyers concerning the
status of the business, operations, and finances of such Acquired
Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, Sellers will not, and will cause
each Acquired Company not to, without the prior consent of Buyers, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers
will, and will cause each Acquired Company to, make all filings required by
Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Sellers
will, and will cause each Acquired Company to, (a) cooperate with Buyers with
respect to all filings that Buyers elect to make or are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyers in obtaining all consents identified in Schedule 4.2 and
not yet obtained.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller
will promptly notify Buyers in writing if such Seller or any Acquired Company
becomes aware of any fact or condition that causes or constitutes a material
Breach of any of Sellers' representations and warranties as of the date of this
Agreement, or if such Seller or any Acquired Company becomes
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aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a material Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, Sellers will promptly
deliver to Buyers a supplement to the Disclosure Letter specifying such change.
During the same period, each Seller will promptly notify Buyers of the
occurrence of any material Breach of any covenant of Sellers in this Section 5
or of the occurrence of any event that may make the satisfaction of the
conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to an Acquired Company by either Seller or any Related Person
of either Seller to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Sellers will not, and will cause each Acquired Company and each of
their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyers) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of any Acquired Company, or any of the capital
stock of any Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will
use their Best Efforts to cause the conditions in Sections 7 and 8 to be
satisfied.
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6. COVENANTS OF BUYERS PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyers
will, and will cause each of their Related Persons to, make all filings
required by Legal Requirements to be made by them to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyers will, and will cause each Related Person to, cooperate with
Sellers with respect to all filings that Sellers are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with Sellers in obtaining all consents identified in Part 3.2 of the
Disclosure Letter; provided that this Agreement will not require Buyers to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.2 POWER PLANT LEASE
As promptly as practicable after the date of this Agreement, Buyers
will use their Best Efforts to obtain the consent of U.S. West to the
assignment of the Power Plant Lease to TXIC and to obtain a release of
Ssangyong from the Ssangyong Power Plant Lease Guaranty.
6.3 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of
this Agreement and the Closing Date, Buyers will use their Best Efforts to
cause the conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyers' obligation to purchase the Partnership Interests and to take
the other actions required to be taken by Buyers at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyers, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations
and warranties (considered individually), must have been accurate in
all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on
the Closing Date, without giving effect to any supplement to the
Disclosure Letter.
(b) Each of Sellers representations and warranties in Sections
3.1, 3.2(b)(iv), 3.2(b)(v), 3.12, 3.13(d)(iii), 3.13(d)(xviii),
3.14(a), 3.15(a), 3.19(a), 3.19(d), 3.19(e),
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3.20(b), 3.22(d)(ii), 3.22(d)(iii), 3.22(d)(iv), 3.22(e)(ii),
3.22(e)(iii), 3.22(g)(iii) and 5.5 must have been accurate in all
respects as of the date of this Agreement, and must be accurate in all
respects as of the Closing Date as if made on the Closing Date,
without giving effect to any supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to
Section 2.4 must have been delivered, and each of the other covenants
and obligations in Sections 5.4 and 5.8 must have been performed and
complied with in all respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter,
and each Consent identified in Schedule 4.2, must have been obtained and must
be in full force and effect. Without limiting the generality of the foregoing,
Sellers shall have obtained the approval of the Cho Hung Bank to the
Contemplated Transactions.
7.4 DELIVERY OF CERTIFICATES
Sellers shall have delivered to Buyers a certificate or certificates
certifying as to the satisfaction of the conditions set forth in this Section
7.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced
or Threatened against Buyers, or against any Person affiliated with Buyers, any
Proceeding (a) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions, or (b) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
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7.6 NO CLAIM REGARDING SHARE OR PARTNERSHIP INTERESTS OWNERSHIP OR
SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock or
partnership interests of, or any other voting, equity, or ownership interest
in, any of the Acquired Companies, or (b) is entitled to all or any portion of
the Purchase Price payable for the Partnership Interests.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Buyers or any Person affiliated with Buyers to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental
Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Partnership Interests and to take the
other actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
8.2 BUYERS' PERFORMANCE
(a) All of the covenants and obligations that Buyers are
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
(b) Buyers must have delivered each of the documents required
to be delivered by Buyers pursuant to Section 2.4 and must have made
the cash payments required to be made by Buyers pursuant to Sections
2.4(b)(i) and 2.4(b)(ii).
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8.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter
must have been obtained and must be in full force and effect, including,
without limitation, the consent of U.S. West to the assignment to TXIC of the
Power Plant Lease and the release by U.S. West of Ssangyong from the Ssangyong
Power Plant Lease Guaranty.
8.4 ADDITIONAL DOCUMENTS
Buyers shall have delivered to Sellers a certificate or certificates
certifying as to the satisfaction of the conditions set forth in this Section
8.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Partnership Interests by Sellers
to Buyers, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyers or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and
such Breach has not been waived;
(b) (i) by Buyers if any of the conditions in Section 7 has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyers to comply with their obligations under this Agreement) and
Buyers have not waived such condition on or before the Closing Date;
or (ii) by Sellers, if any of the conditions in Section 8 has not been
satisfied of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have
not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyers and Sellers; or
(d) by either Buyers or Sellers if the Closing has not
occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before January 31, 1998, or such later date as
the parties may agree upon.
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9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further obligations of the
parties under this Agreement will terminate, except that the obligations in
Sections 12.1 and 12.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the Breach of the Agreement by the other
party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
9.3 SUBSEQUENT DELIVERY OF DISCLOSURE LETTER
This Agreement contemplates that the Disclosure Letter will be
delivered by Sellers to Buyers concurrently with the execution and delivery of
this Agreement, which Disclosure Letter or portions thereof and/or Appendices
thereto have not in fact been so delivered. Accordingly, notwithstanding any
provision of this Agreement to the contrary, Buyers, Sellers and Ssangyong
agree as follows:
Sellers shall deliver to Buyers the Disclosure Letter or the
undelivered portion thereof or Appendices thereto, as the case may be, as soon
as practicable after the execution and delivery of this Agreement but not later
than the end of the business day (Central Standard Time) on January 9, 1998.
All such material, when delivered, shall be deemed to have been delivered as of
the effective date of this Agreement and shall have the same force and effect
as if delivered upon execution and delivery of this Agreement. Buyers shall
have until the end of the business day (Pacific Standard Time), January 14,
1998, to give Sellers written notice if, on the basis of any information
contained in such materials, they have decided they wish to terminate this
Agreement ("Section 9.3 Termination Notice"). The 9.3 Termination Notice will
be (a) delivered by hand or (b) sent by telecopier (with written confirmation
of receipt) in each case to appropriate addresses and telecopier numbers set
forth in Section 12.4. Sellers shall have ten (10) business days after the
receipt of such Section 9.3 Termination Notice to amend, as
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appropriate, and to review with Buyers such information and if Buyers do not
withdraw such Section 9.3 Termination Notice within such ten (10) day period,
then all further obligations of Buyers and Sellers under this Agreement shall
terminate without further liability of one party to the other. If a Section
9.3 Termination Notice is subsequently withdrawn, then the parties shall
consummate the sale of the Partnership Interests as soon as practicable after
such withdrawal.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, the
certificate delivered pursuant to Section 2.4(a)(v), and any other certificate
or document delivered pursuant to this Agreement will survive the Closing for
the period set forth in Section 10.5 below. The right to indemnification,
payment of Damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation.
The waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages,
or other remedy based on such representations, warranties, covenants, and
obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Except for matters for which Buyers are indemnified under the
provisions of Section 10.3, Sellers, jointly and severally, will indemnify and
hold harmless Buyers, the Acquired Companies, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage, expense (including
reasonable attorneys' fees), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
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(a) any Breach of any representation or warranty made by
Sellers in this Agreement, the Disclosure Letter, the supplements to
the Disclosure Letter, or any other certificate or document delivered
by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by
Sellers in this Agreement as if such representation or warranty were
made on and as of the Effective Time, other than any such Breach that
is disclosed in a supplement to the Disclosure Letter and is expressly
identified in the certificate delivered pursuant to Section 2.4(a)(v)
as having caused the condition specified in Section 7.1 not to be
satisfied;
(c) any Breach by either Seller of any covenant or obligation
of such Seller in this Agreement;
(d) any product shipped or manufactured by, or any services
provided by, any Acquired Company from February 2, 1991 through the
Effective Date; or
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with either
Seller or any Acquired Company (or any Person acting on their behalf)
in connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will not be
exclusive of or limit any other remedies that may be available to Buyers or the
other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS; ENVIRONMENTAL
MATTERS
Sellers, jointly and severally, will indemnify and hold harmless
Buyers, the Acquired Companies, and the other Indemnified Persons for, and will
pay to Buyers, the Acquired Companies, and the other Indemnified Persons the
amount of, any Damages (including costs of cleanup, containment, or other
remediation) arising, directly or indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities to the
extent they arise out of or relate to: (i) (A) the ownership,
operation, or condition at any time from February 2, 1991 through the
Effective Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible)
in which Sellers or any Acquired Company has or had an interest, or
(B) any Hazardous Materials or
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other contaminants that were present on the Facilities or such other
properties and assets at any time from February 2, 1991 through the
Effective Date; or (ii) (A) any Hazardous Materials or other
contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise
handled by Sellers or any Acquired Company or by any other Person for
whose conduct they are or may be held responsible at any time from
February 2, 1991 through the Effective Date, or (B) any Hazardous
Activities that were, or were allegedly, conducted by Sellers or any
Acquired Company from February 2, 1991 through the Effective Date; or
(b) any bodily injury (including illness, disability, and
death, and regardless of when any such bodily injury occurred, was
incurred, or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction, and deprivation of
the use of real property), or other damage of or to any Person,
including any employee or former employee of Sellers or any Acquired
Company or any other Person for whose conduct they are or may be held
responsible, in any way arising from or allegedly arising from any
Hazardous Activity conducted or allegedly conducted with respect to
the Facilities or the operation of the Acquired Companies from
February 2, 1991 through the Effective Date, or from Hazardous
Material that was (i) present or suspected to be present from February
2, 1991 through the Effective Date on or at the Facilities (or present
or suspected to be present on any other property, if such Hazardous
Material emanated or allegedly emanated from any of the Facilities and
was present or suspected to be present on any of the Facilities from
February 2, 1991 through the Effective Date) or (ii) Released or
allegedly Released by Sellers or any Acquired Company or any other
Person for whose conduct they are or may be held responsible, at any
time from February 2, 1991 through the Effective Date.
So long as Sellers have agreed to accept any indemnity
obligation arising pursuant to this Section 10.3 promptly upon Buyers'
timely tender thereof, Sellers shall be entitled to control any
Cleanup, any related Proceeding and other Proceeding with respect to
which indemnity may be sought under this Section 10.3.
Notwithstanding the foregoing, Sellers shall provide Buyer with a copy
of, and opportunity to review and consent to, any
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work plan for investigation, remedial action or other response action
required or otherwise intended to address Cleanup. The procedures
described in Section 10.9 will apply to any claim solely for monetary
damages relating to a matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYERS
Buyers will indemnify and hold harmless Sellers, and will pay to
Sellers the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any Breach of any representation or warranty made by Buyers
in this Agreement or in any certificate delivered by Buyers pursuant to this
Agreement, (b) any Breach by Buyers of any covenant or obligation of Buyers in
this Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyers (or any Person acting on
their behalf) in connection with any of the Contemplated Transactions, or (d)
the operation of the Acquired Companies after the Closing Date.
10.5 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the
Closing Date, other than those in Sections 3.3, 3.11, 3.13, and 3.19, unless on
or before two (2) years from the Closing Date Buyers notify Sellers of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Buyers; a claim with respect to Section 3.3, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time; a claim with respect to Section 3.11 or
3.13 may be made on or before four (4) years from the Closing Date; a claim
with respect to Section 3.19 may be made on or before five (5) years from the
Closing Date. If the Closing occurs, Buyers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the
Effective Time, unless on or before two (2) years from the Closing Date Sellers
notify Buyers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers.
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10.6 LIMITATIONS ON AMOUNT - SELLERS
Sellers will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a), clause (b) or, to the extent
relating to any failure to perform or comply prior to the Effective Time,
clause (c) of Section 10.2 until the total of all Damages with respect to such
matters exceeds $250,000.00, and then only for the amount by which such Damages
exceed $250,000.00, Sellers will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (d) of Section 10.2
until the total of all Damages with respect to such matters exceeds
$250,000.00, and then only for the amount by which such Damages exceed
$250,000.00. However, this Section 10.6 will not apply to any Breach of any of
Sellers' representations and warranties of which either Seller had Knowledge at
any time prior to the date on which such representation and warranty is made or
any intentional Breach by either Seller of any covenant or obligation, and
Sellers will be jointly and severally liable for all Damages with respect to
such Breaches.
10.7 LIMITATIONS ON AMOUNT - BUYERS
Buyers will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a) or (b) of Section 10.4 until the
total of all Damages with respect to such matters exceeds $250,000.00, and then
only for the amount by which such Damages exceed $250,000.00. However, this
Section 10.7 will not apply to any Breach of any of Buyers' representations and
warranties of which Buyers had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional Breach by Buyers of
any covenant or obligation, and Buyers will be liable for all Damages with
respect to such Breaches.
10.8 LETTER OF CREDIT
In the event there arises a Breach by Sellers under the provisions of
the Agreement giving rise to a claim, Buyers will give Sellers notice thereof,
specifying in reasonable detail the basis for and amount of such claims. If
such claims are not satisfied within fifteen (15) days of Sellers' receipt of
such notice, Buyers shall be entitled to draw upon the letter of credit
presented to Buyers pursuant to Section 2.4(b) hereof, in the amount of such
claim. The failure of Buyers to draw under the letter of credit will not
constitute an election of remedies or limit Buyers in any manner in the
enforcement of any other remedies that might be available to them.
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10.9 PROCEDURE FOR INDEMNIFICATION; THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under
Section 10.2, 10.4, or (to the extent provided in the last sentence of
Section 10.3) Section 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to
be made against an indemnifying party under such Section, give notice
to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.9(a) is
brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, unless the claim involves Taxes, be entitled
to participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the
defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise
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or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no
finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other
claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound
by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters
alleged therein, and agree that process may be served on Sellers with
respect to such a claim anywhere in the world.
10.10 PROCEDURE FOR INDEMNIFICATION; OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
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11. CERTAIN COVENANTS
11.1 COVENANT NOT TO COMPETE OR SOLICIT
(a) The Sellers and Ssangyong hereby agree that for a period
of five (5) years following the Closing, neither they nor any Related
Person shall, within the States of California, Nevada, Utah or
Arizona, directly or indirectly, engage in the importation,
exportation, manufacture or marketing of "gray cement" or any
component thereof and that for the period specified above, neither
they nor any Related Person shall, within the States of California,
Arizona, Nevada, Utah, New Mexico, Oregon, Washington and Hawaii,
directly or indirectly, engage in the importation, exportation,
manufacture or marketing of "white cement" or any component thereof.
The parties intend that the covenant contained in the previous
paragraph shall be construed as a series of separate, identical
covenants, one for each of the separate States listed above. If in
any proceeding of any court or other judicial or administrative body
shall refuse to enforce any of the separate covenants deemed included
in the preceding paragraph, each such unenforceable covenant shall be
eliminated from these provisions for the purpose of these proceedings
only to the extent necessary to permit the remaining separate
covenants to be enforced to the fullest extent possible.
(b) Sellers and Ssangyong specifically recognize, acknowledge
and agree that any breach of any of the covenants contained in
paragraph (a) of this Section 11.1 would cause irreparable injury to
the Partnership which could not be adequately compensable in monetary
damages and that the remedy at law for any such breach will be
entirely insufficient and inadequate to protect the Partnership's
legitimate interests. Therefore, the Sellers and Ssangyong
specifically recognize, acknowledge and agree that the Partnership
shall at any and all times be and remain fully entitled to seek and
obtain, without the posting of any bond or other security, immediate
temporary, preliminary and permanent injunctive relief, damages and/or
other remedies available to the Partnership at law, in equity and/or
otherwise.
11.2 SSANGYONG GUARANTY
(a) By its execution of this Agreement, Ssangyong hereby
irrevocably and unconditionally guarantees to Buyers the due and
punctual performance and satisfaction
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by Sellers of each and every covenant, agreement, representation and
warranty set forth in this Agreement, or any Schedule, Exhibit or
other document, certificate or paper ancillary hereto (the
"SsangyongGuaranteed Obligations"). This guaranty is an absolute ,
present and continuing guaranty and is in no way conditioned upon any
attempt to first proceed against Sellers for Breach or violation of
any such covenant, agreement, representation and warranty.
(b) The obligations of Ssangyong under this guaranty shall to
the fullest extent by law be primary, absolute, irrevocable and
unconditional, irrespective of the validity, regularity or
enforceability of any of such covenants, agreements, representations
and warranties of this Agreement and shall remain in full force and
effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether
or not Ssangyong shall have any knowledge or notice thereof),
including, without limitation, (i) any amendment, modification of or
supplement to the Agreement or any other instrument referred to
therein or any assignment or transfer of any thereof or any interest
therein; (ii) any waiver, consent, extension, indulgence or other
action or inaction under or in respect to the Agreement or any
instrument referred to therein; (iii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with
respect to any Seller or its property; (iv) any merger, amalgamation
or consolidation of any Seller or of Ssangyong into or with any other
corporation or entity or any sale, lease or transfer of any or all of
the assets of any Seller or of Ssangyong to any Person; (v) any
failure on the part of Ssangyong and the Sellers for any reason to
comply with or perform any of the terms of any agreement between
and/or among them; or (vi) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
Seller. Ssangyong covenants that its obligations hereunder will not
be discharged except by payment or performance in full of the
Ssangyong Guaranteed Obligations.
(c) Not in any way in limitation of the provisions of
paragraphs (a) or (b) above, Ssangyong hereby unconditionally and
irrevocably assumes with respect to the Buyers, the responsibilities
and obligations of an "indemnifying party" under Section 10 of the
Agreement.
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(d) Ssangyong unconditionally waives to the fullest extent
permitted by law (i) notice of any action taken or omitted in reliance
by any Buyer on this guaranty and of any breach or default by any
Seller under the Agreement, (ii) all notices which may be required by
any Legal Requirement or otherwise to preserve any of the rights of
each Buyer against Sellers or Ssangyong; (iii) any requirement of
diligence on the part of any Buyer and (iv) any other act or omission
or thing or delay to do any other act or thing which might in any
manner or to any extent vary the risk of Ssangyong or which might
otherwise operate as a discharge of Ssangyong.
11.3 TXI GUARANTY
(a) By its execution of this Agreement, TXI hereby
irrevocably and unconditionally guarantees to Sellers the due and
punctual performance and satisfaction by Buyers of each and every
covenant, agreement, representation and warranty set forth in this
Agreement, or any Schedule, Exhibit or other document, certificate or
paper ancillary hereto (the "TXI Guaranteed Obligations"). This
guaranty is an absolute , present and continuing guaranty and is in no
way conditioned upon any attempt to first proceed against Buyers for
Breach or violation of any such covenant, agreement, representation
and warranty.
(b) The obligations of TXI under this guaranty shall to the
fullest extent by law be primary, absolute, irrevocable and
unconditional, irrespective of the validity, regularity or
enforceability of any of such covenants, agreements, representations
and warranties of this Agreement and shall remain in full force and
effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether
or not TXI shall have any knowledge or notice thereof), including,
without limitation, (i) any amendment, modification of or supplement
to the Agreement or any other instrument referred to therein or any
assignment or transfer of any thereof or any interest therein; (ii)
any waiver, consent, extension, indulgence or other action or inaction
under or in respect to the Agreement or any instrument referred to
therein; (iii) any bankruptcy, insolvency, readjustment, composition,
liquidation or
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similar proceeding with respect to any Buyer or its property; (iv) any
merger, amalgamation or consolidation of any Buyer or of TXI into or
with any other corporation or entity or any sale, lease or transfer of
any or all of the assets of any Buyer or of TXI to any Person; (v) any
failure on the part of TXI and the Buyers for any reason to comply
with or perform any of the terms of any agreement between and/or among
them; or (vi) any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a Buyer. TXI covenants
that its obligations hereunder will not be discharged except by
payment or performance in full of the TXI Guaranteed Obligations.
(c) Not in any way in limitation of the provisions of
paragraphs (a) or (b) above, TXI hereby unconditionally and
irrevocably assumes with respect to the Sellers, the responsibilities
and obligations of an "indemnifying party" under Section 10 of the
Agreement.
(d) TXI unconditionally waives to the fullest extent
permitted by law (i) notice of any action taken or omitted in reliance
by any Seller on this guaranty and of any breach or default by any
Buyer under the Agreement, (ii) all notices which may be required by
any Legal Requirement or otherwise to preserve any of the rights of
each Seller against Buyers or TXI; (iii) any requirement of diligence
on the part of any Seller and (iv) any other act or omission or thing
or delay to do any other act or thing which might in any manner or to
any extent vary the risk of TXI or which might otherwise operate as a
discharge of TXI.
11.4 BEAZER RETAINED OBLIGATIONS
(a) All terms defined in this Section 11.4 not otherwise
defined in this Agreement shall have the meaning ascribed to them in
that certain Stock Purchase Agreement dated the 2nd day of February,
1991 between and among Beazer West Cement Company, a Delaware
corporation (formerly Riverside Cement Company, a Delaware
corporation) ("Beazer"), Beazer West, Inc. and Ssangyong (the "Stock
Purchase Agreement") pursuant to which Ssangyong purchased all of the
issued and outstanding shares of capital stock of RVC.
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(b) Prior to or at the Closing, and as a condition thereto,
Sellers shall deliver to Buyers, in form and substance satisfactory
(in their sole discretion) to Buyers, and each of them, a written
acknowledgment from Beazer or its successor, if any ("Beazer
Acknowledgment"), that Beazer has retained the irrevocable obligation
and continues to be irrevocably obligated, responsible and liable to
pay, perform and discharge, any retained liability or obligation of
Beazer under the Stock Purchase Agreement, whether accrued, absolute,
contingent or otherwise, including, without limitation, liabilities
which are obligations of Beazer relating to the cleanup or appropriate
remedial action with respect to hazardous or toxic materials,
substances or wastes, if any, present upon any of the Venture Assets
as a result of the operation of the Business by Beazer thereon prior
to the Commencement Date (the "Environmental Liabilities").
11.5 CERTAIN TAX MATTERS AND INTER-COMPANY TRANSACTIONS.
(a) Sellers shall cause the Partnership to make an IRC
Section 754 election in the last partnership return filed or caused
to be filed by them as partners of the Partnership.
(b) SRV and RVC agree to cooperate with and permit TXI to
make a request under IRC Reg. Sec. 1.755- 1(a)(2) for permission from
the IRS to use an alternative method to allocate the basis in the
Partnership assets if the parent company deems it necessary or
desirable to do so.
(c) SRV and RVC further agree to execute any powers of
attorney and make any elections necessary to give TXI the right to
represent the Partnership before the IRS regarding the foregoing
elections, if made. Buyers will indemnify and hold Sellers harmless
with respect to any costs or expenses incurred by Sellers with respect
to any IRS review, audit or challenge with regard to such elections.
(d) SRV and RVC acknowledge and agree that they are
responsible for filing all final tax returns for Partin Limestone
Products, Inc. ("Partin") and the Partnership through the Effective
Time and further agree to provide such information, schedules and data
as TXI may reasonably request in connection with the treatment, in the
final tax returns by the Partnership, of the elections referred to in
parts (a) and (b) of this Section 11.5.
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12. GENERAL PROVISIONS
12.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party
to this Agreement will bear its respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Sellers will cause the Acquired
Companies not to incur any out-of-pocket expenses in connection with this
Agreement. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
12.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyers determine. Unless consented to by Buyers in
advance or required by Legal Requirements, prior to the Closing Sellers shall,
and shall cause the Acquired Companies to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Sellers and Buyers will consult with each other concerning the means by which
the Acquired Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Buyers will have the right to be present for any such
communication.
12.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyers and
Sellers will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Buyers and the Acquired Companies to
maintain in confidence, and not use to the detriment of another party or an
Acquired Company any written, oral, or other information obtained in confidence
from written information stamped "confidential" when originally furnished by
another party or an Acquired Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or
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obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyers' request cause the Acquired Companies to waive, any cause of
action, right, or claim arising out of the access of Buyers or their
representatives to any trade secrets or other confidential information of the
Acquired Companies except for the intentional competitive misuse by Buyers of
such trade secrets or confidential information.
12.4 NOTICES
Except with respect to a Section 9.3 Termination Notice, all notices,
consents, waivers, and other communications under this Agreement must be in
writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
SELLERS:
S. Y. Kim
Management Committee Member
Riverside Cement Company
2384 Lancaster Court
Hayward, California 94542
Facsimile No. (510) 582-9718
and
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K. H. Hong
President, RVC Venture Corp.
c/o Riverside Cement Company
660 N. Diamond Bar Blvd.
Diamond Bar, CA 91765
Facsimile No. (909) 860-5816
with a copy to:
Joon Yong Kim, Esq.
Graham & James LLP
801 South Figueroa Street
Los Angeles, California 90017-5554
Facsimile No. (213) 623-4581
BUYER:
Mel G. Brekhus
Vice President
Texas Industries, Inc.
Dallas, Texas 75247-6913
Facsimile No. (972)647-3355
with a copy to:
Robert C. Moore, Esq.
Vice President & General Counsel
Texas Industries, Inc.
1341 W. Mockingbird Lane
Dallas, Texas 75247-6913
Facsimile No. (972)647-3320
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12.5 ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be settled
by binding arbitration in accordance with the UNCITRAL Arbitration Rules (the
"Rules") as at present in force. The International Chamber of Commerce (the
"ICC") shall administer the arbitration and act as appointing authority
pursuant to the Rules. The arbitration panel shall be composed of three (3)
arbitrators appointed pursuant to Article 7 of the Rules; the parties further
agree that the third arbitrator shall be appointed by either (i) the two
arbitrators appointed by the parties or (ii) in the event that the two
arbitrators appointed by the parties cannot agree on a mutually acceptable
individual, the ICC shall appoint the third arbitrator who shall have
appropriate expertise in the subject matter of the arbitration. In the event
of any conflict between the Rules and this Section, the provisions of this
Section shall govern. The arbitration, including the rendering of the award,
shall take place in London, England. The language to be used in the
arbitration shall be English. Judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy.
12.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
12.7 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or
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renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
12.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supercedes all prior agreements between the parties
with respect to its subject matter (including the Offer Letter between and
among Ssangyong Business Group, Ssangyong, the Partnership and Texas
Industries, Inc. dated August 13, 1997) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
12.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in any
Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly
relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure
Letter with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will control.
12.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties, except that Buyers may assign
any of their rights under this Agreement to any subsidiary or the parent
company of the Buyers. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this
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Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
12.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
12.12 SECTION HEADINGS; CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
12.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
12.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of California
without regard to conflicts of laws principles.
[intentionally left blank]
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12.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYERS:
TXI CALIFORNIA INC. TXI RIVERSIDE INC.
By /s/ MEL G. BREKHUS By /s/ MEL G. BREKHUS
---------------------------- ----------------------------------
Mel G. Brekhus Mel G. Brekhus
Vice President Vice President
SELLERS:
RVC VENTURE CORP. SSANGYONG/RIVERSIDE VENTURE
CORP.
By /s/ KYUNG HUM HONG By /s/ KYUNG HUM HONG
---------------------------- ----------------------------------
Kyung Hum Hong Kyung Hum Hong
President Vice President
GUARANTORS:
SSANGYONG CEMENT INDUSTRIAL CO., LTD. TEXAS INDUSTRIES, INC.
By /s/ KI HO KIM By /s/ MEL G. BREKHUS
---------------------------- ----------------------------------
Ki Ho Kim Mel G. Brekhus
Vice Chairman Vice President
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EXHIBIT 1
Riverside Joint Venture
Consolidated Balance Sheet
As of June 30, 1997
<PAGE> 78
EXHIBIT 2
[LETTERHEAD OF ISSUING BANK]
[DATE]
Letter of Credit No. __________
Expiry Date: __________________
We hereby establish this irrevocable stand-by letter of credit no.
________ for the joint benefit of [TXI Riverside Inc. and TXI California Inc.]
(collectively, "Beneficiary") for the account of [SsangYong Cement Industrial
Co., Ltd.] ("Account Party") up to an aggregate amount of U.S.$1,200,000
available by presentation at __________ [insert bank name and address] of the
following documents.
1. This credit.
2. Beneficiary's signed draft at sight drawn on us, stating
"Drawn under irrevocable stand-by letter of credit no.
________, dated __________".
3. Beneficiary's statement on Beneficiary's letterhead signed
by a vice president, accounting manager or other officer of
the Beneficiary and counter-signed by a vice president,
accounting manager or other officer of the Account Party,
stating that: "The undersigned certify that the amount shown
on the draft is due and payable under the terms of the
Partnership Interests Purchase Agreement between Beneficiary
and Account Party.
Multiple drawings hereunder shall be permissible, but no drawing
shall be for less than $______ nor for more than $______.
This letter of credit expires on ________, 1999.
We hereby engage with you that all drafts accompanied by documents
drawn under and in compliance with the terms of this letter of credit will be
duly honored upon presentation as specified.
This letter of credit is subject to the Uniform Customs and Practice
for Documentary Credits (1990 revision) International Chamber of Commerce
Publication No. 500 and, to the extent not inconsistent therewith, the laws of
the State of California.
[INSERT NAME OF ISSUING BANK]
By
---------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 7(c).2
[TXI LETTERHEAD]
TXI ACQUIRES RIVERSIDE CEMENT IN $120 MILLION TRANSACTION
60% Capacity Increase puts TXI into
Top 10% of U.S. Cement Producers
Dallas, Texas, January 16, 1998 -- Dallas based TXI (NYSE-TXI) acquired
Riverside Cement of California in a $120 million transaction.
"The Riverside acquisition will increase TXI's total cement capacity by 60% to
3.6 million tons per year and move TXI into the top 10% of cement producers in
the U.S.," Rogers said.
"The Riverside acquisition follows TXI's business plan of expanding cement
production capacity and growing in desirable U.S. markets," stated Rogers. "Our
experience as the largest producer of cement in Texas will be a major asset as
we move forward with Riverside Cement. For instance, we intend to increase
Riverside's capacity by using TXI's patented CemStar(sm) process."
Riverside has annual revenues in excess of $100 million from two cement plants
in California. Its Oro Grande plant has a total capacity of 1.3 million tons of
Portland Cement. The company's facility near Riverside is one of only three
cement plants in the United States that produces white Portland cement. The
company is also one of the largest bag cement producers in the nation and the
leading producer on the West Coast.
-more-
<PAGE> 2
add 1
"TXI is very pleased with this acquisition which further demonstrates our desire
to be the leading supplier of cement in the markets we choose to serve,"
continued Rogers. "This opportunity in California, coupled with our new steel
facility being built in Virginia, will also allow TXI to have an important
presence on both U.S. coasts."
TXI is a growth company that achieves superior financial performance through
market leadership, technological excellence, innovation and low-cost
manufacturing.
Through Chaparral Steel, TXI is a significant producer of structural and bar
steel products for North American Construction and specialty steel markets. TXI
is the largest producer of cement in Texas and a major supplier of aggregate
and concrete products in Texas, Louisiana, California and Colorado. In addition,
TXI is a leading North American recycling company.
TXI shares are traded on the New York Stock Exchange under the symbol "TXI".
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