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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) July 13, 1999 (June 30, 1999)
L.B. FOSTER COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 0-1043 25-1324733
(State of other jurisdiction) (Commission File No.) (IRS Employer
of incorporation) Identification No.)
415 HOLIDAY DRIVE, PITTSBURGH, PENNSYLVANIA 15220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code 412-928-3431
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to a Stock Purchase Agreement dated June 3, 1999, L.B. Foster
Company (the "Registrant") purchased all of the outstanding capital stock (the
"Stock") of CXT Incorporated ("CXT"), a Delaware corporation, on June 30, 1999.
The base purchase price for the Stock was $17,875,000, subject to downward
adjustment by the amount (the "Adjustment Amount'), if any, by which CXT's
consolidated net worth immediately prior to Closing fell below a stipulated
amount. At Closing, the estimated Adjustment Amount was $486,000. The Adjustment
Amount is subject to verification by a post-closing audit.
Registrant at Closing; (a) paid an aggregate sum of $15,514,000 to the
selling stockholders; (b) deposited $1,000,000 into escrow to secure the selling
stockholders' indemnification obligations; and (c) deposited $875,000 into a
trust account to be held pending the determination of the final Adjustment
Amount.
Registrant obtained funds for this transaction under its existing loan
agreement from its banking group comprised of Mellon Bank, N.A., PNC Bank,
National Association and First Union National Bank, N.A., after amending such
loan agreement by, inter alia, increasing the amount available for borrowing
from $45,000,000 to $70,000,000.
CXT is engaged in the business of manufacturing and selling engineered
concrete products. Among CXT's products are concrete railroad ties, concrete
grade crossings and concrete buildings. CXT has manufacturing facilities in
Spokane, Washington, Grand Island, Nebraska and Ogden, Utah. Registrant intends
that CXT continue to utilize these facilities and the buildings, equipment and
physical property thereon for the same purposes as CXT previously had used such
facilities.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a)(b) No financial statements or pro forma financial information are
required in connection with the acquisition described in Item 2 above.
(c) Exhibits
(1) Stock Purchase Agreement, dated June 3, 1999, by and
among the Registrant and the shareholders of CXT
Incorporated
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.
L.B. FOSTER COMPANY
By: /s/Roger F. Nejes
Title: Senior Vice President and Chief
Financial Officer
Date: July 13, 1999
Stock Purchase Agreement
This Stock Purchase Agreement ("Agreement") is made as of June 3, 1999, by L.B.
Foster Company, a Pennsylvania corporation ("Buyer") and Alaska Trust Company,
acting solely in its capacity as trustee of the CXT Employee Stock Ownership
Trust, N.A. Bianco, D. Firth, J.M. McLaughlin, the J.M. McLaughlin Individual
Retirement Account, D.L. Millard, R.O. Skrypchuk, the R.O. Skrypchuk Individual
Retirement Account, R.D. Steiger, J.G. White and the J.G. White Individual
Retirement Account (collectively the "Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the issued and
outstanding shares (the "Shares") of capital stock of CXT Incorporated, a
Delaware corporation (the "Company"), for the consideration and on the terms set
forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"Adjustment Amount"--as defined in Section 2.5.
"Applicable Contract"--any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets owned
or used by it is or may become bound; in each case excluding Contracts fully
performed by all parties thereto prior to the date of this Agreement.
"Balance Sheet"--as defined in Section 3.4.
"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
Material inaccuracy in or breach of, or any Material 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 materially 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"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes place.
"Company"--as defined in the Recitals of this Agreement.
"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 sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Sellers' Releases, and the
Escrow Agreement;
(c) the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of control over
the Company.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"CXT ESOP"--the CXT Employee Stock Ownership Plan, adopted by the Company on
October 19, 1990, as amended by Amendments No. 1 through 11 thereto, and
reflected in the Restated CXT Employee Stock Ownership Plan dated January 20,
1999.
"CXT ESOT"--the trust established and maintained pursuant to the CXT ESOP and
the CXT Employee Stock Ownership Trust Agreement dated October 19, 1990.
"Damages"--as defined in Section 10.2.
"Disclosure Letter"--the disclosure letter to be delivered by Sellers to Buyer
pursuant to the provisions of this Agreement.
"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;
excluding, however, Legal Requirements of general applicability to issuance or
transfer of corporate securities..
"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 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. ss. 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,
potential 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;
(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, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agreement"--as defined in Section 2.4.
"ESOT Trustee"--Alaska Trust Company, which is the duly appointed and acting
trustee of the CXT ESOT or, if applicable, its successor as trustee of the CXT
ESOT.
"Facilities"--any real property, leaseholds, or other interests currently or
formerly owned or operated by the Company and any buildings, plants, structures,
or equipment (including motor vehicles, tank cars, and rolling stock) currently
or formerly owned or operated by the 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;
(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 materially affect the value of the Facilities or the
Company.
"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.
"HSR Act"--the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"Intellectual Property Assets" --as defined in Section 3.22.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986, as amended, 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) as to any Person other than the ESOT Trustee, 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; it being understood among the parties
that the ESOT Trustee has made inquiry of officers of the Company as to matters
relating to the Company but has not conducted an independent investigation
thereof.
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.
"Materiality" or "Material" shall mean of significance to a reasonable person
and, if convertible into a dollar amount, shall mean an amount which is
reasonably expected to be in excess of $25,000.
"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 governmental program 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 not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar authority);
and
(c) such action is similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or group
of Persons exercising similar authority), 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 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. Without limiting the generality of the foregoing, said term
shall include the CXT ESOT and each of the Shareholder IRAs.
"Plan"--as defined in Section 3.13.
"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 particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such individual or
one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's Family
hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more members of
such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(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); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "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 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
"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, trustee, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"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' Releases"--as defined in Section 2.4.
"Shareholder IRAs"--the Individual Retirement Accounts holding Shares for the
benefit of J.M. McLaughlin, R.O. Skrypchuk and J.G. White.
"Shares"--as defined in the Recitals of this Agreement.
"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 tax imposed by a Governmental Body.
"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 SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Sellers
will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares
from Sellers.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be $17,875,000
minus the Adjustment Amount, if any.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Company's counsel at Spokane, Washington at 10:00 a.m.
(local time) on the later of (i) June 30, 1999 or (ii) the date that is ten
business days following the termination of the applicable waiting period under
the HSR Act, or on such other date or at such other time and place as the
parties may agree. Subject to the provisions of Section 9, 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.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock powers), with signatures guaranteed by a commercial bank or by a
member firm of the New York Stock Exchange, for transfer to Buyer;
(ii) releases in the form of Exhibits 2.4(a)(ii)-1 and 2.4(a)(ii)-2 executed by
Sellers (collectively, "Sellers' Releases");
(iii) a certificate, executed on behalf of the Sellers by the Company's
President and Chief Executive Officer and the Company's chief accounting officer
(which they shall have discussed with PricewaterhouseCoopers, LLP with respect
to compliance with GAAP, consistently applied), and approved by Buyer (which
approval shall not be unreasonably withheld or delayed), setting forth, with
reasonably detailed supporting calculations, the Company's estimated
consolidated net worth and the Adjustment Amount as of the Closing Date.
(iv) a certificate executed by Sellers representing and warranting (subject to
the limitation of liability and remedies set forth in Section 10) to Buyer 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 (except for
changes provided for herein 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 Buyer prior to the Closing Date in accordance
with Section 5.5); and
(b) Buyer will deliver to Sellers:
(i) $16,000,000 less the amount by which $5,600,000 exceeds the Company's
estimated Adjustment Amount, as calculated in the certificate delivered pursuant
to Section 2.4(a)(iii), payable to each of Sellers in the proportions set forth
in Exhibit 2.4(b)(i) by wire transfer to accounts specified by each of the
Sellers. (ii) the sum of $1,000,000 to the escrow agent referred to in Section
2.4(c) by wire transfer to an account specified by said escrow agent;
(iii) the sum of $875,000 to Lukins & Annis, P.S. to be held in trust pursuant
to the agreement set forth in Exhibit 2.4(b)(iii) for distribution in accordance
with the procedures set forth in Section 2.6.
(iv) a certificate executed by Buyer to the effect that, except as otherwise
stated in such certificate, each of Buyer's 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; and
(c) Buyer and Sellers will enter into an escrow agreement at Closing in the form
of Exhibit 2.4(c) (the "Escrow Agreement") with First Union National Bank.
(d) Title to the Shares held in the Shareholder IRAs is in the name of
custodians, which hold title thereto for the benefit of the Persons executing
this Agreement for such Shareholder IRAs. Each of said Persons agrees to take
all actions as may be necessary to cause their custodian to execute stock powers
to convey to Buyer at Closing the Shares held in such Person's Shareholder IRA.
(e) Company will have purchased a six (6) year extended reporting period
("tail") endorsement for the existing officers' and directors' liability
insurance maintained by the Company, the expense of which shall be included in
calculation of the Adjustment Amount.
2.5 ADJUSTMENT AMOUNT
The Adjustment Amount , if any, shall be equal to the amount by which the
consolidated net worth of the Company immediately prior to the Closing is less
than $5,600,000, as determined in accordance with GAAP and, in any event, with
all amounts contemplated under Sections 2.6 and 11.1 having been fully accrued
and set forth in the certificate executed pursuant to Section 2.4(a)(iii) or, if
Closing Financial Statements are prepared pursuant to Section 2.6, as set forth
in the Closing Financial Statements, as adjusted for any final determination
thereof by the Accountants pursuant to Section 2.6(a), if applicable. The Buyer
and the Company have reached an agreement for settlement of certain issues
relating to the following Contracts: (i) a Contract for sale, unloading and
handling of concrete ties for the St. Louis Bi-States Project; (ii) a Contract
for sale, unloading and handling of concrete ties for the POLA West Basin
Project; and (iii) a Contract for sale of concrete ties for the Tren Urbano
Project, which is set forth in a separate letter agreement (the "Side Letter")
between Buyer and Company of even date. The terms and provisions of the Side
Letter shall be fully reflected in the Closing Financial Statements and in
computation of the Adjustment Amount, if any.
2.6 ADJUSTMENT PROCEDURE
(a) Buyer will prepare and may, at Buyer's expense, cause
PricewaterhouseCoopers, LLP, the Company's certified public accountants, to
audit consolidated financial statements ("Closing Financial Statements") of the
Company as of the Closing Date and for the period from the date of the Balance
Sheet through the Closing Date, including a computation of the Company's
consolidated net worth and a calculation of the Adjustment Amount, if any, as
defined in Section 2.5, all in accordance with GAAP as of the Closing Date. The
Closing Financial Statements shall include reasonable and adequate reserves for
all unliquidated, disputed or otherwise non-quantifiable liabilities of the
Company. Buyer will deliver the Closing Financial Statements to Seller within
sixty days after the Closing Date. Each of the Sellers shall have the right to
object to the Closing Financial Statements and if the Closing Financial
Statements are prepared by PricewaterhouseCoopers, LLP, Buyer shall also have
the right to object thereto. Notice of any such objection must be given by the
objecting party to all other parties hereto in writing within thirty (30) days
following delivery of the Closing Financial Statements to the Sellers. Any such
notice must contain a statement of the basis for the objection to the Closing
Financial Statements. If no such notice is timely given, the Company's
consolidated net worth and the Adjustment Amount, if any, reflected in the
Closing Financial Statements shall be conclusive and binding on all of the
parties. If any such notice of objection is timely given, then the issues in
dispute will be submitted to Arthur Anderson & Co. or, if Arthur Anderson & Co.
is not available, Deloitte & Touche, certified public accountants (the
"Accountants"), for resolution. Such resolution shall be by written
determination of the Accountants, delivered to the parties within ninety (90)
days following submission of the dispute to the Accountants. If issues in
dispute are submitted to the Accountants for resolution, (i) each party will
furnish to the Accountants such workpapers and other documents and information
relating to the disputed issues as the Accountants may request and are available
to that party (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to all
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Sellers, collectively, and Buyer will each bear 50% of the fees of the
Accountants for such determination. Sellers' share of the fees shall be paid
first from the funds deposited into the trust established pursuant to Section
2.4(b)(iii) and, if the amounts in said trust after deduction and payment of the
portion, if any, thereof ultimately determined to belong to Buyer, are
insufficient, Sellers' share of such fees shall be paid from the funds deposited
into Escrow pursuant to Section 2.4(b)(ii).
(b) On the tenth business day following the final determination of the
Adjustment Amount, if the Purchase Price is greater than the aggregate of the
payments made pursuant to Sections 2.4(b)(i) and 2.4(b)(ii), Lukins & Annis,
P.S. shall release from its trust account, established pursuant to 2.4(b)(iii),
the difference to Sellers and shall release any remaining balance to Buyer, all
pursuant to the trust agreement in the form of Exhibit 2.4(b)(iii) If all of the
$875,000 held in said trust account becomes payable to Sellers pursuant to the
foregoing provisions, all earnings thereon shall be released to Sellers, and if
only a portion of the $875,000 becomes payable to Sellers, a portion of the
earnings on the $875,000 deposited into such trust account shall be released to
Sellers, which portion shall be calculated by multiplying the earnings by a
fraction, the numerator of which shall be the difference between the Purchase
Price and the amount paid at Closing pursuant to Sections 2.4(b)(i) and
2.4(b)(ii) and the denominator of which shall be $875,000. In the latter event,
the remaining balance of such earnings shall be released to Buyer. If the
Purchase Price is less than the aggregate amount paid at Closing pursuant to
Sections 2.4(b)(i) and 2.4(b)(ii), Lukins & Annis P.S. shall release from its
trust account to Buyer the $875,000 deposited into such trust account pursuant
to Section 2.4(b)(iii) together with all earnings therein. To the extent the
Purchase Price is less than the sum of the amounts paid or deposited pursuant to
Sections 2.4(b)(i), 2.4(b)(ii) and 2.4(b)(iii) and the difference is more than
the $875,000 deposited pursuant to Section 2.4(b)(iii), Buyer may recover said
difference from the funds deposited into Escrow pursuant to Section 2.4(b)(ii)
and Sellers shall be obliged to take all actions necessary or appropriate to
cause such funds to be released to Buyer. If the Purchase Price is more than the
sum of the amounts paid or deposited pursuant to Sections 2.4(b)(i), 2.4(b)(ii)
and 2.4(b)(iii), the difference shall be paid by Buyer to Sellers, together with
interest at 9% per annum compounded daily beginning on the Closing Date and
ending on the date of payment. Any payments to Sellers must be made in
immediately available funds and be made in the manner and will be allocated in
the proportions set forth in Section 2.4(b)(i).
2.7 ESOT TRUSTEE
The ESOT Trustee shall be independent of all other parties to this Agreement and
will rely in making its decision whether to Close the Contemplated Transactions
pursuant to this Agreement on behalf of the CXT ESOT, on the written report of
an appraiser who is qualified to value the Shares and is unrelated to the
Company or any of the parties to this Agreement. The appraisal shall be issued
and delivered on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
All Sellers, severally and jointly represent and warrant (subject to the
limitation of liability and remedies set forth in Section 10) to Buyer as
follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate list for
the Company of its name, its jurisdiction of incorporation, other jurisdictions
in which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under Applicable Contracts. The 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.
(b) Sellers have delivered to Buyer copies of the Organizational Documents of
the Company, 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 Escrow Agreement and 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):
(i) contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Company, or (B) any resolution adopted by
the board of directors or the stockholders of the Company;
(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 the Company or any Seller, or any of the
assets owned or used by the 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 the Company or that otherwise relates to the business of, or any of the
assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to become liable for
the payment of, any Tax;
(v) cause any of the assets owned by the Company to be reassessed or revalued by
any taxing authority or other Governmental Body; (vi) 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; or
(vii) result in the imposition or creation of any Encumbrance upon or with
respect to any of the assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither Sellers nor
the 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.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 2,666,667 shares of
Class A common stock, par value $.01 per share, of which 1,086,633 shares are
issued and outstanding and 6,666,667 shares of Class B common stock, par value
$.01 per share of which 4,000,000 shares are issued and outstanding, which
together constitute the Shares. Sellers are and will be on the Closing Date the
record (except for the Shareholder IRAs held in the name of a custodian) and
beneficial owners and holders of the Shares, free and clear of all Encumbrances
and each of the Sellers owns the Shares set forth opposite each such Seller's
name in Exhibit 3.3 hereto. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities of the
Company, except a legend reflecting transfer restrictions under the current
Organizational Documents of the Company, which restrictions shall be deleted or
modified on or before the Closing Date pursuant to the amendments to said
Organizational Documents provided for herein. All of the outstanding equity
securities of the 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 of the Company
except: (i) the Organizational Documents; and (ii) an Incentive Bonus Plan dated
October 19, 1990 pursuant to which no Shares shall be issued after the date of
this Agreement. Between the date of this Agreement and the Date of Closing, no
Shares shall be issued or transferred, other than to Buyer, by any of the
Sellers or the Company and as of the Closing Date no party other than Buyer
shall own or have the right to acquire any Shares. None of the outstanding
equity securities or other securities of the Company was issued in violation of
the Securities Act or any other Legal Requirement. The Company neither owns, nor
has any Contract to acquire, any equity securities or other securities of any
Person (other than the Company) or any direct or indirect equity or ownership
interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer and included in Part 3.4 of the Disclosure
Letter: (a) consolidated balance sheets of the Company as of September 30 in
each of the years 1996 through 1998 and the related consolidated statements of
income, changes in consolidated net worth, and cash flow for each of the fiscal
years then ended, together with the report thereon of PricewaterhouseCoopers,
L.L.P. (successor to Coopers & Lybrand, LLP, independent certified public
accountants), (b) a consolidated balance sheet of the Company as of September
30, 1998 (including the notes thereto, the "Balance Sheet"), and the related
consolidated statements of income, changes in consolidated net worth, and cash
flow for the fiscal year then ended, together with the report thereon of
PricewaterhouseCoopers, L.L.P. (successor to Coopers & Lybrand, LLP, independent
certified public accountants), and (c) an unaudited consolidated balance sheet
of the Company as of April 30, 1999 (the "Interim Balance Sheet") and the
related unaudited consolidated statements of income, changes in consolidated net
worth, and cash flow for the seven months then ended, including in each case the
supporting statements in form and consistent with that previously provided. Such
financial statements and notes fairly present the financial condition and the
results of operations, changes in consolidated net worth, and cash flow of the
Company as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet); the financial statements
referred to in this Section 3.4 reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of any Person
other than the Company are required by GAAP to be included in the consolidated
financial statements of the Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records of the
Company, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The minute
books of the Company contain accurate and complete records of all meetings held
of, and corporate action taken by, the stockholders, the Boards of Directors,
and committees of the Boards of Directors of the Company, and no meeting of any
such stockholders, Board of Directors, or 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
Company.
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 the Company.
Sellers have delivered or made available to Buyer copies of the leases and other
instruments (as recorded, if applicable) by which the Company acquired such real
property and interests, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of Sellers or the Company and relating
to such property or interests. The Company owns (with good and marketable title
in the case of real property leaseholds, 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 it purports to own,
including all of the properties and assets reflected in the Balance Sheet and
the Interim 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 and the Interim
Balance Sheet, as the case may be, in the Ordinary Course of Business), and all
of the properties and assets purchased or otherwise acquired by the Company
since the date of the Balance Sheet (except for personal property acquired and
sold since the date of the Balance Sheet in the Ordinary Course of Business and
consistent with past practice), which subsequently purchased or acquired
properties and assets (other than inventory, supplies, equipment items not
properly treated as capital assets and short-term investments) are listed in
Part 3.6 of the Disclosure Letter. All Material properties and assets reflected
in the Balance Sheet and the Interim 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) mortgages or security interests shown on the Balance Sheet or the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Interim Balance Sheet (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet due, and (d) with respect to real
property, (i) easements and 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 the Company, and
(ii) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto. All buildings, plants, and
structures owned by the Company lie wholly within the boundaries of the real
property owned by the Company 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 Company 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 Company are sufficient for the
continued conduct of the Company's businesses after the Closing in substantially
the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the Balance Sheet
or the Interim Balance Sheet or on the accounting records of the Company as of
the Closing Date (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
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or the Interim Balance Sheet or on the accounting records of the Company
as of the Closing Date (which reserves are adequate and calculated consistent
with past practice and, in the case of the reserve as of the Closing Date, will
not represent a greater percentage of the Accounts Receivable as of the Closing
Date than the reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a Material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within one hundred eighty days
after the day on which it first becomes due and payable, except for any Accounts
Receivable payable in installments over a longer term pursuant to written
Contract which, subject to such reserves, will be paid in full without set-off,
in accordance with such written contracts. 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 date of the
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not reflected in the Balance Sheet or
the Interim Balance 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 Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date, as the case may be.
All inventories not written off have been priced at the lower of cost or market
on a first in-first out basis. The quantities of each item of inventory (whether
raw materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the Company has 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 Balance Sheet or the Interim
Balance Sheet and current liabilities for inventory purchases, payroll and
similar recurrent items incurred in the Ordinary Course of Business since the
respective dates thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed (on a timely basis since
September 30, 1995) all Tax Returns that are or were required to be filed by or
with respect to it, pursuant to applicable Legal Requirements. Sellers have
delivered or made available to Buyer copies of, and Part 3.11 of the Disclosure
Letter contains a complete and accurate list of, all such Tax Returns filed
since September 30, 1995. The Company has 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 the
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 Balance Sheet and
the Interim Balance Sheet.
(b) The United States federal and state income Tax Returns of the Company
subject to such Taxes 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 September 30, 1994. Part 3.11 of the Disclosure Letter
contains a complete and accurate list of all audits of all such Tax Returns,
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 to the United States federal
income Tax Returns filed by the Company or any group of corporations including
the Company for all taxable years since September 30, 1994, and the resulting
deficiencies proposed by the IRS. Except as described in Part 3.11 of the
Disclosure Letter, neither any Seller nor the 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 Taxes of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the respective
books of the Company are adequate (determined in accordance with GAAP) and are
at least equal to the Company's liability for Taxes. There exists no proposed
tax assessment against the Company except as disclosed in the Balance Sheet or
in Part 3.11 of the Disclosure Letter. 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 the Company. All Taxes that the Company is or was
required by Legal Requirements to withhold or collect 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 (or that include on a consolidated basis) the
Company are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Company after the date of this Agreement. The
Company is not, or within the five-year period preceding the Closing Date has
not been, an "S" corporation.
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 condition
of the Company, and no event has occurred or circumstance exists that may 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 Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans of which the Company or an ERISA Affiliate of the
Company is or was a Plan Sponsor, or to which the Company or an ERISA Affiliate
of the Company otherwise contributes or has contributed, or in which the Company
or an ERISA Affiliate of the 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 the Company or
any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other person that,
together with the Company, would be treated as a single employer under IRC ss.
414.
"Multi-Employer Plan" has the meaning given in ERISA ss. 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 ss. 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.
"Pension Plan" has the meaning given in ERISA ss. 3(2)(A).
"Plan" has the meaning given in ERISA ss. 3(3).
"Plan Sponsor" has the meaning given in ERISA ss. 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the requirements
of IRC ss. 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV of ERISA,
29 U.S.C.ss. 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC ss.
501(c)(9).
"Welfare Plan" has the meaning given in ERISA ss. 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 the 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 Company and the Company's other ERISA Affiliates,
calculated according to information made available pursuant to ERISA ss.
4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a calculation of the
liability of the Company for post-retirement benefits other than pensions, made
in accordance with Financial Accounting Statement 106 of the Financial
Accounting Standards Board, regardless of whether the Company is required by
this Statement to disclose such information.
(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 Buyer prior to 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 Company 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 Company and the ERISA Affiliates of the Company, 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 four years preceding the date of this
Agreement by third party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to any Company Plan,
Company Other Benefit Obligation, or Company VEBA;
(ix) all notifications to employees of their rights under ERISA ss. 601 et seq.
and IRC ss. 4980B;
(x) 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;
(xi) all notices that were given by the Company or any ERISA Affiliate of the
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;
(xii) all notices that were given by the IRS, the PBGC, or the Department of
Labor to the Company, any ERISA Affiliate of the Company, or any Company Plan
within the four years preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent determination
letter for each Plan of the Company that is a Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for each of the
three most recent plan years.
(xv) all notifications and certifications to employees of their periods of
creditable coverage and other rights under IRC ss.9801, et seq.
(d) Except as set forth in Part 3.13(d) of the Disclosure Letter:
(i) The Company has performed all of their respective obligations under all
Company Plans, Company Other Benefit Obligations, and Company VEBAs, including
but not limited to timely contributions of employee payroll withholdings which
are or become "plan assets" within the meaning of 29 CFR ss.2510.3-102. The
Company has 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 the 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 the Company or to Buyer.
(iii) The Company, with respect to all Company Plans, Company Other Benefits
Obligations, and Company VEBAs, is, and each Company Plan, Company Other Benefit
Obligation, and Company VEBA is, in full compliance 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
and in particular as follows:
(A) No transaction prohibited by ERISA ss. 406 and no "prohibited transaction"
under IRC ss. 4975(c), and no breaches of fiduciary duty under ERISA ss.404 have
occurred with respect to any Company Plan for which an exemption is not
available under ERISA or the IRC.
(B) Neither any Seller nor the Company nor ERISA Affiliate of the Company has
any liability to the IRS with respect to any Plan, including any liability
imposed by Chapter 43 of the IRC.
(C) Neither any Seller nor the Company nor ERISA Affiliate of the Company has
any liability to the PBGC with respect to any Plan or has any liability under
ERISA ss. 502 or ss. 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 ss. 162 or ss. 404. No amount, or any asset of any Company Plan or Company
VEBA, is subject to tax as unrelated business taxable income.
(iv) 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, except for vesting or acceleration of
benefits under the CXT ESOP to the extent which may be required by law as a
result of termination thereof as provided for in this Agreement.
(v) Since January 20, 1999, 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 or, with respect to the Qualified
Plans, could give rise to a partial termination (except for termination of the
CXT ESOP as provided for in this Agreement) within the meaning of IRC
ss.411(d)(3).
(vii) Other than claims for benefits submitted by participants or beneficiaries,
no claim against, or legal proceeding (including any audit, examination, inquiry
or investigation by any governmental agency or organization) involving, any
Company Plan, Company Other Benefit Obligation, or Company VEBA is pending or,
to Sellers' Knowledge, is Threatened.
(viii) No Company Plan is a stock bonus, pension, or profit-sharing plan within
the meaning of IRC ss. 401(a), except the CXT ESOP.
(ix) Each Qualified Plan of the Company is qualified in form and operation under
IRC ss. 401(a); each trust for each such Plan is exempt from federal income tax
under IRC ss. 501(a). Each Company VEBA is exempt from federal income tax. 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
associated with a Plan. Neither Seller, the Company nor any ERISA Affiliate of
the Company has taken or is taking voluntary corrective action (in accordance
with procedures of the Internal Revenue Service) with respect to any Company
Plan.
(x) The Company and each ERISA Affiliate of the Company has met the minimum
funding standard, and has made all contributions required, under ERISA ss. 302
and IRC ss. 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Company has paid all amounts due to the PBGC pursuant to ERISA ss.
4007.
(xiii) Neither the Company nor any ERISA Affiliate of the 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 ss.
4062(e), ss. 4063, or ss. 4064.
(xiv) Neither the Company nor any ERISA Affiliate of the 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 ss. 4042 for the termination of, or the
appointment of a trustee to administer, any Company Plan.
(xv) 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
ss. 307 or IRC ss. 401(a)(29).
(xvi) 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.
(xvii) The actuarial report for each Pension Plan of the Company and each ERISA
Affiliate of the Company fairly presents the financial condition and the results
of operations of each such Plan in accordance with GAAP.
(xviii) Since the last valuation date for each Pension Plan of the Company and
each ERISA Affiliate of the Company, no event has occurred or circumstance
exists that would increase the amount of benefits under any such Plan (other
than the Contemplated Transactions and the impact thereof on the benefits
payable under the CXT ESOP) or that would cause the excess of Plan assets over
benefit liabilities (as defined in ERISA ss. 4001) to decrease, or the amount by
which benefit liabilities exceed assets to increase.
(xiv) No reportable event (as defined in ERISA ss. 4043 and in regulations
issued thereunder) has occurred.
(xx) Neither Seller nor the Company has Knowledge of any facts or circumstances
that may give rise to any liability of any Seller, the Company, or Buyer to the
PBGC under Title IV of ERISA.
(xxi) Neither the Company nor any ERISA Affiliate of the 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.
(xxii) Neither the Company nor any ERISA Affiliate of the Company has withdrawn
from any Multi-Employer Plan with respect to which there is any outstanding
liability as of the date of this Agreement. 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 the Company or
Buyer to a Multi-Employer Plan.
(xxiii) Neither the Company nor any ERISA Affiliate of the 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.
(xxiv) No Multi-Employer Plan to which the Company or any ERISA Affiliate of the
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.
(xxv) Except to the extent required under ERISA ss. 601 et seq. and IRC ss.
4980B, the Company does not provide health or welfare benefits for any retired
or former employee and is not obligated to provide health or welfare benefits to
any active employee following such employee's retirement or other termination of
service.
(xxvi) The Company has the right to modify and terminate benefits to retirees
(other than pensions) with respect to both retired and active employees without
incurring liability for benefits after they have been so terminated.
(xxvii) Sellers and all Company have complied with the provisions of ERISAss.601
et seq. and IRCss.4980B and with the provisions of IRCss.9801, et seq.
(xxviii) No payment that is owed or may become due to any director, officer,
employee, or agent of the Company will be non-deductible to the Company or
subject to tax under IRC ss. 280G or ss. 4999; nor will the 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.
(xxix) The consummation of the Contemplated Transactions will not result in the
payment, vesting, or acceleration of any benefit under any Company Plan, Company
Other Benefit Obligation or Company VEBA, except the CXT ESOP.
(xxx) With respect to any Plan that: (1) is intended to be an "employee stock
ownership plan", within the meaning of IRC ss.4975(e)(7); and (2) holds Shares
of the Company:
(A) All Shares held therein are and at all times have been "qualifying employer
securities", within the meaning of ERISA ss.407(d)(5), and every transaction
which would otherwise give rise to a "prohibited transaction" under ERISA ss.
406 and IRC ss.4975 qualifies for an exemption;
(B) There are no unpaid or outstanding securities acquisition loans, debts or
other obligations (including notes issued in redemption of Plan benefit
distributions) held by the Plan or under which the Plan has agreed to pay the
Company, an ERISA Affiliate of the Company or any third party;
(C) Neither the Sellers, the Company nor any ERISA Affiliate of the Company have
guaranteed or otherwise secured the repayment of any loans, debts or other
obligations held by the Plan or under which the Plan has agreed to pay, other
than debts of the CXT ESOT which have previously been paid in full;
(D) On an annual or more frequent basis, the Plan has satisfied the requirement
for obtaining an independent appraisal of the Shares, as provided in IRC
ss.401(a)(28);
(E) All votes, consents, approvals and other legal requirements necessary and
appropriate to consummate the sale contemplated by this Agreement have been
obtained by Sellers (or others as appropriate) and are legally binding and
enforceable, except for approval of the Contemplated Transactions and approval
of amendment of the Organizational Documents of the Company by its shareholders;
and
(F) No trustee of the Plan has, within the most recent 24 months, tendered his
or her resignation or been removed by the Company in accordance with the Plan,
except for resignation of the former members of the Board of Trustees of the CXT
ESOT and appointment of Alaska Trust Company as successor trustee.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since October 1, 1995, 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;
(ii) no event has occurred or circumstance exists that (with or without notice
or lapse of time) (A) may constitute or result in a violation by the Company of,
or a failure on the part of the Company to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any remedial action of any nature;
and
(iii) the Company has not received, at any time since October 1, 1995, 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 the
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 the Company or that otherwise
relates to the business of, or to any of the assets owned or used by, the
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:
(i) the Company is, and at all times since October 1, 1995, has been, in full
compliance with all of the terms and requirements of each 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) the Company has not received, at any time since October 1, 1995, 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 Company to lawfully conduct and operate their businesses in the
manner they currently conduct and operate such businesses and to permit the
Company to own and use their assets in the manner in which they currently own
and use such assets.
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 the Company or that otherwise relates
to or may affect the business of, or any of the assets owned or used by, the
Company; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of Sellers and the Company, (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 Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 3.15 of the Disclosure
Letter. The Proceedings listed in Part 3.15 of the Disclosure Letter will not
have a Material adverse effect on the business, operations, assets, condition,
or prospects of the Company.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Company, or any of the assets owned or
used by the 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, the Company; and
(iii) to the Knowledge of Sellers and the Company, no officer, director, agent,
or employee of the 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 either the Company or the
Buyer.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) the Company is, and at all times since October 1, 1995, 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 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 the Company, or any of the
assets owned or used by the Company, is subject; and
(iii) the Company has not received, at any time since October 1, 1995, 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 the Company, or any of the assets owned or used by the 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 (September 30, 1998), the Company has conducted its businesses
only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the 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 the Company;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business and authorized prior to December 31, 1998) employee or entry
into any employment, severance, or similar Contract with any director, officer,
or employee;
(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 the Company;
(e) damage to or destruction or loss of any asset or property of the Company,
whether or not covered by insurance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects of the Company;
(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 the Company of at least $25,000;
(g) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any asset or property of the Company or mortgage,
pledge, or imposition of any lien or other encumbrance on any Material asset or
property of the 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 a value to the Company
in excess of $10,000;
(i) Material change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the 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 Buyer true and complete copies, of:
(i) each Applicable Contract that involves performance of services or delivery
of goods or materials by the Company of an amount or value in excess of $25,000;
(ii) each Applicable Contract that involves performance of services or delivery
of goods or materials to the Company of an amount or value in excess of $25,000;
(iii) each Applicable Contract that was not entered into in the Ordinary Course
of Business and that involves expenditures or receipts of the Company in excess
of $25,000;
(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 $25,000 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 the
Company with any other Person;
(viii) each Applicable Contract containing covenants that in any way purport to
restrict the business activity of the Company or any Affiliate of the Company or
limit the freedom of the Company or any Affiliate of the 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;
(xi) each Applicable Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by the Company to
be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures in excess of $25,000;
(xiii) each written warranty, guaranty, and or other similar undertaking with
respect to contractual performance extended by the 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 such Contracts, including the parties to the Contracts, the amount of
the remaining commitment of the Company under the Contracts, and the Company's
office where details relating to the Contracts are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) No Seller (and no Related Person of any Seller) has or may acquire any
rights under, and no 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, the Company; and
(ii) No officer, director, agent, employee, consultant, or contractor of the
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 the
Company, or (B) assign to the 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 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.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) The Company is, and at all times since September 30, 1998 has been, in full
compliance with all applicable terms and requirements of each Contract under
which the Company has or had any obligation or liability or by which the Company
or any of the assets owned or used by the Company is or was bound;
(ii) each other Person that has or had any obligation or liability under any
Contract under which the Company has or had any rights is, and at all times
since September 30, 1998 has been, in full compliance with all applicable terms
and requirements of such Contract;
(iii) 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 the 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 Applicable Contract; and
(iv) The Company has not given to or received from any other Person, at any time
since October 1, 1995, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Contract which could give rise to Damages in
excess of $25,000.
(e) There are no renegotiations of, attempts to renegotiate, or outstanding
rights to renegotiate any Material amounts paid or payable to the Company under
current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or provision of
products or services by the Company has been entered into in the Ordinary Course
of Business and have been entered into without the commission of any 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 Buyer:
(i) true and complete copies of all policies of insurance to which the Company
is a party or under which the Company, or any director of the Company, is or has
been covered at any time within the three years preceding the date of this
Agreement;
(ii) true and complete copies of all pending applications for policies of
insurance; and
(iii) any statement by the auditor of the 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 policy) by or affecting the 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 the Company; and
(iii) all obligations of the Company 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 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
claimed or with a total incurred value in excess of $5,000 which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance, and period of
coverage; and
(C) the amount paid, the amount reserved 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 the Company is a party or that provide coverage to any
Seller, the Company, or any director or officer of the Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially sound and reputable;
(C) taken together, provide adequate insurance coverage for the assets and the
operations of the Company for risks to which the Company is normally obtained by
other persons exposed to similar risks;
(D) are sufficient for compliance with all Legal Requirements and Contracts to
which the Company is a party or by which any of them is bound;
(E) will continue in full force and effect following the consummation of the
Contemplated Transactions; and
(F) do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Company.
(ii) Neither Seller nor the 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 Company has paid all premiums due, and have otherwise performed all of
their respective obligations, under each policy to which the Company is a party
or that provides coverage to the Company or director thereof.
(iv) The Company has 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 to the Knowledge of
Sellers and Company (it being understood and agreed that the foregoing Knowledge
qualification does not lessen the absolute indemnification obligations of
Sellers under Section 10.3):
(a) The Company is, and at all times has been, in full compliance with, and has
not been and is not in violation of or liable under, any Environmental Law.
Neither any Seller nor the Company has any basis to expect, nor has any of them
or any other Person for whose conduct they are or may be held to be responsible
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 the 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, the
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) There are no pending or, to the Knowledge of Sellers and the Company,
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 the Company has or had an interest.
(c) Neither any Seller nor the Company has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held responsible,
received, 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 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 the 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, the
Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) Neither any Seller nor the Company, nor any other Person for whose conduct
they are or may be held responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which Sellers or the
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) 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.
Neither any Seller, the Company, any other Person for whose conduct they are or
may be held responsible, nor 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 the Company has or had an interest [except in full compliance with all
applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Sellers and the Company,
Threat of Release, of any Hazardous Materials at or from the Facilities or at
any other locations where any Hazardous Materials were 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 the Company has or had an interest, or
to the Knowledge of Sellers and the Company any geologically or hydrologically
adjoining property, whether by Sellers, the Company, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Sellers or the Company pertaining to Hazardous Materials or Hazardous Activities
in, on, or under the Facilities, or concerning compliance by Sellers, the
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 or director of the Company,
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 September 30, 1998; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Company 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 or director of the 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 or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business, including
any Proprietary Rights Agreement with Sellers or the Company by any such
employee or director. To Sellers' Knowledge, no director, officer, or other key
employee, other than John G. White of the Company intends to terminate his
employment with the Company due to Closing of the Contemplated Transactions or
for any reason within 12 months of the Closing, with the exception of R.D.
Steiger (who is considering resignation to pursue a business opportunity).
(c) Part 3.20 of the Disclosure Letter also contains a complete and accurate
list of the following information for each retired employee or director of the
Company, 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,
with the exception of benefits payable pursuant to the CXT ESOP (as to which
full and complete information has previously been provided to Buyer).
3.21 LABOR RELATIONS; COMPLIANCE
Except as set forth in Part 3.21 of the Disclosure Letter:
Since October 1, 1995, the Company has not been or is a party to any collective
bargaining or other labor Contract. Since October 1, 1995, there has not been,
there is not presently pending or existing, and to Sellers' Knowledge there is
not Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any Proceeding against or affecting the 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 Company or its
premises, or (c) any application for certification of a collective bargaining
agent. To Sellers' and the Company's 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 the Company, and no such
action is contemplated by the Company. The Company has complied in all 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. The Company is not 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.
3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property Assets"
includes:
(i) the name CXT Incorporated, all fictional business names, trading names,
registered and unregistered trademarks, service marks, and applications
(collectively, "Marks");
(ii) all patents, patent applications, and inventions and discoveries that may
be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings, and
blue prints (collectively, "Trade Secrets"); owned, used, or licensed by the
Company as licensee or licensor.
(b) Agreements--Part 3.22(b) of the Disclosure Letter contains a complete and
accurate list and summary description, including any royalties paid or received
by the Company, of all Contracts relating to the Intellectual Property Assets to
which the Company is a party or by which the 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 $5,000 under
which the Company is the licensee. There are no outstanding and, to Sellers'
Knowledge, no Threatened disputes or disagreements with respect to any such
agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for the operation
of the Company's businesses both as they are currently conducted and as
reflected in the business plan given to Buyer. Except as set forth in Part
3.22(c)(i) of the Disclosure Letter, the Company 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.
(ii) Except as set forth in Part 3.22(c)(ii) of the Disclosure Letter, all
former and current employees of the Company have executed written Contracts with
one or more of the Company that assigns to the Company all rights to any
inventions, improvements, discoveries, or information relating to the business
of the Company. No employee of the 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 the Company.
(d) Patents
(i) Part 3.22(d) of the Disclosure Letter contains a complete and accurate list
and summary description of all Patents. Except as set forth in Part 3.22(d)(i)
of the Disclosure Letter, the Company 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 and
proofs of working or use), are 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 Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding. To Sellers' Knowledge, there is no
potentially interfering patent or patent application of any third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has been challenged or
threatened in any way. None of the products manufactured and sold, nor any
process or know-how used, by the Company infringes or is alleged to infringe any
patent or other proprietary right of any other Person.
(v) All products made, used, or sold under the Patents have been marked with the
proper patent notice.
(e) Trademarks
(i) Part 3.22(e) of Disclosure Letter contains a complete and accurate list and
summary description of all Marks. Except as set forth in Part 3.22(e)(i) of the
Disclosure Letter, the Company 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 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, there is no potentially interfering trademark or
trademark application of any third party.
(v) No Mark is infringed or, to Sellers' Knowledge, has been challenged or
threatened in any way. None of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service mark of any third
party.
(vi) All products and materials containing a Mark bear the proper federal
registration notice where permitted by law.
(f) Copyrights
(i) Part 3.22(f) of the Disclosure Letter contains a complete and accurate list
and summary description of all Copyrights of Material value to the Company.
Except as set forth in Part 3.22(f)(i) of the Disclosure Letter, the Company 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 valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has been challenged
or threatened in any way. 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.
(iv) All works encompassed by the Copyrights have been marked with the proper
copyright notice.
(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 identify
and explain it and to allow its full and proper use without reliance on the
knowledge or memory of any individual.
(ii) Sellers and the Company have taken all reasonable precautions to protect
the secrecy, confidentiality, and value of their Trade Secrets.
(iii) The Company has good title and an absolute (but not necessarily exclusive)
right to use the Trade Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to Sellers' Knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person (other than the
Company) or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS
Since October 1, 1995, neither the Company nor any director, officer, agent, or
employee of the Company, or to Sellers' Knowledge, any other Person associated
with or acting for or on behalf of the 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 (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Affiliate of the Company, or (iv) in violation
of any Legal Requirement, (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company.
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 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 any Seller that has specific application to any
Seller or the 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 Company 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 the Company has, or since
October 1, 1995, has had, any interest in any property (whether real, personal,
or mixed and whether tangible or intangible), used in or pertaining to the
Company's businesses. No Seller or any Related Person of Sellers or of the
Company is, or since October 1, 1995, 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 the Company, or (ii) engaged in competition with the Company
with respect to any line of the products or services of the Company (a
"Competing Business") in any market presently served by the 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 the Company is a party to any Contract with,
or has any claim or right against, the Company.
3.26 BROKERS OR FINDERS
Except as set forth in Part 3.26 of the Disclosure Letter:
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.
3.27 NO SUBSIDIARIES
The Company has no Subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the Commonwealth of Pennsylvania.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Escrow Agreement, (the "Buyer's Closing
Documents"), the Buyer's Closing Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and delivery of
this Agreement by Buyer nor the consummation or performance of any of the
Contemplated Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the stockholders of
Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required to
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.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its 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 Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Buyer and its 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
Buyer as a result of the action of Buyer or its officers or agents.
4.6 FINANCING
Buyer has obtained a written loan commitment for the financing required by Buyer
to fund payment of the Purchase Price.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
Sellers agree (subject to the limitation of liability and remedies set forth in
Section 10) as follows:
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company and its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"Buyer's Advisors") full and free access to the Company's personnel, properties
(including subsurface testing), contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, (c) furnish Buyer,
commencing for the month of May, 1999 and each month thereafter through Closing,
an unaudited consolidated balance sheet of the Company as of the last day of
each month and the related unaudited consolidated statements of income, changes
in consolidated net worth and cash flow for the period from September 30, 1998
through the end of such month, including in each case, the supporting statements
in form consistent with that previously provided and (d) furnish Buyer and
Buyer's Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company to:
(a) conduct the business of the Company only in the Ordinary Course of Business;
(b) preserve intact the current business organization of the Company, keep
available the services of the current officers, employees, and agents of the
Company, and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with the Company;
(c) confer with Buyer concerning operational matters of a Material nature;
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company; and
(e) retain the trustees who serve with respect to any Plans or Company Other
Benefit Obligations.
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 the
Company not to, without the prior consent of Buyer, 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 may occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will, and
will cause the Company to, make all filings required by Legal Requirements to be
made by them in order to consummate the Contemplated Transactions (including all
filings under the HSR Act). Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in Schedule 4.2
(including taking all actions requested by Buyer to cause early termination of
any applicable waiting period under the HSR Act).
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller or the Company becomes aware of
any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes 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 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 Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, each Seller will promptly
notify Buyer of the occurrence of any 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, if any, owed to the Company by any of Sellers or any Related
Person of any of Sellers 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 the 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 Buyer) relating to any transaction involving the sale of the
business or assets (other than in the Ordinary Course of Business) of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
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.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Buyer 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 Buyer 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 BEST EFFORTS
Except as set forth in the proviso to Section 6.1 and except with respect to
Sections 7.4, 7.6 and 7.7, between the date of this Agreement and the Closing
Date, Buyer will use its Best Efforts to cause the conditions in Sections 7 and
8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer 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 Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
Each of Sellers' representations and warranties in Sections must have been
accurate 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 (except for
changes provided for herein, 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, the certificate required and delivered under Section 2.4(a)(iii)
must show the Company's consolidated net worth as of the Closing Date to be at
least $4,750,000 and each of the other covenants and obligations in Sections
5.3, 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.
7.4 EMPLOYMENT AND BENEFITS MATTERS; NON COMPETITION, DIRECTOR RESIGNATIONS
(a) An employment, confidentiality and/or non competition agreement,
satisfactory to Buyer, must have been executed by each of John G. White, Russ
Skrypchuk, Derek Firth, James McLaughlin, D. L. Millard, N. A. Bianco and R.D.
Steiger.
(b) On or prior to the Closing Date, Company must have approved and executed an
amendment to terminate every Plan which holds Shares of or provides for the
issuance of shares in the Company, to be effective prior to the Closing, which
amendments shall be as set forth in the form attached hereto as Exhibit 7.4.
(c) Company must have obtained from all the individuals or entities who serve as
trustees under those Plans which hold Shares of the Company (or such lesser
number of individuals as is satisfactory to Buyer) a written commitment to
continue to serve in their capacity as trustee of such Plans until the earlier
of: removal by the Company; a date two years after the Closing Date; their
termination of employment with the Company or its successor; or the date on
which the assets of the Plan are finally distributed by reason of its
termination.
(d) Each individual who serves as a member of the Company's Board of Directors
must have tendered his or her unconditional resignation from the Board effective
as of the Closing.
7.5 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Lukins & Annis, P.S., dated the Closing Date, in the form of
Exhibit 7.5(a)-1 and an opinion of McDermott, Will & Emery, dated the Closing
Date, in the form of Exhibit 7.5(a)-2;
(b) estoppel certificates executed on behalf of the Union Pacific Railroad
Company dated as of a date not more than 30 days prior to the Closing Date, in
the form of Exhibit 7.5(b); and
(c) such other documents as Buyer may reasonably request for the purpose of (i)
enabling its counsel to provide the opinion referred to in Section 8.4(a), (ii)
evidencing the accuracy of any of Sellers' representations and warranties, (iii)
evidencing the performance by either Seller of, or the compliance by either
Seller with, any covenant or obligation required to be performed or complied
with by such Seller, (iv) evidencing the satisfaction of any condition referred
to in this Section 7, or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.6 CORPORATE DOCUMENTS
The Company's Certificate of Incorporation and Bylaws and the CXT ESOP each
shall have been amended in the manner set forth in Exhibits 7.6.1, 7.6.2 and
7.4, respectively.
7.7 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, 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.
7.8 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person other than the
Sellers, the custodians of the Shareholders IRAs and the Participants in the CXT
ESOP (as to a beneficial interest) to the extent set forth in Exhibit 3.3, 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 of,
or any other voting, equity, or ownership interest in, any of the Company, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.9 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 Buyer or any Person affiliated with Buyer 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.
7.10 DISCLOSURE LETTER
Buyer shall have received the Disclosure Letter and shall have approved the
content thereof, as hereinafter provided.
7.11 HSR ACT
All waiting periods under the HRS Act shall have expired.
7.12 AUDITORS' COMMITMENT
Buyer shall have obtained a written commitment, reasonably satisfactory to
Buyer, of PricewaterhouseCoopers, LLP to provide at Buyer's request the Closing
Financial Statements contemplated under Section 2.6.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares 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 Buyer's 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 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is 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) Buyer must have delivered each of the documents required to be delivered by
Buyer pursuant to Section 2.4 and must have made the cash payments required to
be made by Buyer pursuant to Sections 2.4(b)(i) and 2.4(b)(ii).
8.3 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.
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered to Sellers:
(a) an opinion of David L. Voltz, dated the Closing Date, in the form of Exhibit
8.4(a); and
(b) such other documents as Sellers may reasonably request for the purpose of
(i) enabling their counsel to provide the opinion referred to in Section 7.5
(a), (ii) evidencing the accuracy of any representation or warranty of Buyer,
(iii) evidencing the performance by Buyer of, or the compliance by Buyer with,
any covenant or obligation required to be performed or complied with by Buyer,
(ii) evidencing the satisfaction of any condition referred to in this Section 8,
or (v) otherwise facilitating the consummation of any of the Contemplated
Transactions.
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 Shares by Sellers to Buyer, and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
8.6 STOCKHOLDER ACTION
The stockholders of the Company shall have adopted resolutions: (i) approving
the Contemplated Transactions; and (ii) amending the Company's Certificate of
Incorporation and Bylaws in the manner set forth in Exhibits 7.7.1 and 7.7.2; it
being understood among the parties that approval of such amendments will be a
"Super-Majority Issue", as defined in the Organizational Documents of the
Company.
8.7 FAIRNESS OPINION
The ESOT Trustee shall have received a written opinion from Houlihan, Lokey,
Howard & Zukin, Inc., or such other financial advisor as the ESOT Trustee may
select, in form and substance satisfactory to the ESOT Trustee, stating in part
that: (i) the consideration to be received by the CXT ESOT and its Participants
for the Contemplated Transactions is "adequate consideration", within the
meaning of ERISA ss.3(18); and (ii) the Contemplated Transactions are fair to
the CXT ESOT and its Participants from a financial point of view.
8.8 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Sellers, the Company or against any Person affiliated with
Sellers or the Company, 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.
8.9 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 Sellers, the Company or any Person affiliated with
Sellers or the Company 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.
8.10 HRS ACT
All waiting periods under the HRS Act shall have expired.
8.11 CERTIFICATES
The certificates required to be delivered pursuant to Section 2.4(a)(iii) must
show the Company's consolidated net worth as of the Closing Date to be at least
$4,750.000.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer 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 Buyer 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 Buyer to comply with its
obligations under this Agreement) and Buyer has 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 Buyer and Sellers; or
(d) by either Buyer 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 July 31, 1999, or
such later date as the parties may agree upon.
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 11.1 and
11.3 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 (subject to
the limitation of liability and remedies set forth in Section 10).
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)(iii), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. 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 in
the case of all Sellers except the ESOT Trustee, 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
Subject to the limitation of liability and remedies set forth in Section 10.5,
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Company, 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
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in this
Agreement (without giving effect to any supplement to the Disclosure Letter),
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
Closing Date without giving effect to any supplement to the Disclosure Letter,
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)(iv) as having caused the condition specified in Section 7.1 not
to be satisfied;
(c) any Breach by Sellers of any covenant or obligation of Sellers in this
Agreement;
(d) subject to any applicable reserves shown on the Closing Financial Statements
or, if applicable and in lieu thereof, the final determination of the
Accountants under Section 2.6 hereof, any claim by any Person based on any
alleged defect in any product shipped, manufactured or sold by, or any services
provided by or through, the Company prior to the Closing Date;
(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 the Company (or any Person acting
on their behalf) in connection with any of the Contemplated Transactions, except
for any such fees or commissions paid or payable by the Company as set forth in
Part 3.26 of the Disclosure Letter. If any portion of such fees or commissions
is payable by the Company after the Closing Date, the amount thereof shall be
reflected as a liability on the certificate to be delivered pursuant to Section
2.4(a)(iii) and on the Closing Financial Statements and the liability for such
fees or commissions shall be included in the determination under Section 2.6.;
(f) any claim by any current or former shareholder of the Company or
participant in the CXT ESOP against the Company based on any alleged act or
omission of any current or former officer or director of the Company or current
or former trustee of the CXT ESOT alleged to have occurred prior to the Closing
Date; or
(g) any claim by any current or former officer or director of the Company or
current or former trustee of the CXT ESOT for indemnification pursuant to the
Organizational Documents of the Company or the written agreement between the
Company and the ESOT Trustee.
Except as provided in Section 10.5, the remedies provided in this Section 10.2
will not be exclusive of or limit any other remedies that may be available to
Buyer or the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--ENVIRONMENTAL MATTERS
In addition to the provisions of Section 10.2, but subject to the limitation of
liability and remedies set forth in Section 10.5, Sellers, jointly and
severally, will indemnify and hold harmless Buyer, the Company, and the other
Indemnified Persons for, and will pay to Buyer, the Company, 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 arising out of or relating
to: (i) (A) the ownership, operation, or condition at any time on or prior to
the Closing Date of the Facilities or any other properties and assets (whether
real, personal, or mixed and whether tangible or intangible) in which Sellers or
the Company has or had an interest, or (B) any Hazardous Materials or other
contaminants that were present on the Facilities or such other properties and
assets at any time on or prior to the Closing 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 the Company or by any other Person for whose conduct they are or may
be held responsible at any time on or prior to the Closing Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by Sellers or the
Company or by any other Person for whose conduct they are or may be held
responsible; 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 the 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
Company prior to the Closing Date, or from Hazardous Material that was (i)
present or suspected to be present on or before the Closing 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 on or prior to
the Closing Date) or (ii) Released or allegedly Released by Sellers or the
Company or any other Person for whose conduct they are or may be held
responsible, at any time on or prior to the Closing Date.
Buyer will be entitled to control any Cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.9 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3.
If Buyer should recover Damages from a third party with respect to any
Environmental, Health and Safety Liabilities and the sum of the Damages so
recovered from the third party and Damages recovered by Buyer from Sellers for
such Environmental, Health and Safety Liabilities exceeds Buyer's total Damages
with respect to such Environmental, Health and Safety Liabilities, the excess
(up to the amount previously paid by Sellers with respect to such Environmental,
Health and Safety Liabilities) shall be refunded to Sellers in the proportions
specified in Exhibit 2.4(b)(i).
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Subject to Section 10.6, Buyer 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 Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
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 Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions and (d) any
liability of the Company specifically disclosed on the Closing Financial
Statements or, if applicable and in lieu thereof, the final determination of the
Accountants under Section 2.6 hereof (which liabilities shall be taken into
account in determination of the Adjustment Amount, if any).
10.5 LIMITATIONS ON AMOUNT--SELLERS
(a) Subject to Sections 10.5(c) and 10.5(d) each of the Persons (a "Seller") who
collectively comprise the Sellers shall be severally but not jointly liable for
all of Buyer's Damages caused by: (i) any fraud of such Seller; and (ii) any
defect in title of such Seller to the Shares to be conveyed by such Seller
pursuant hereto, including any Encumbrance thereon.
(b) If the Closing does not occur due to breach by a Seller of any covenant,
representation or warranty contained herein, the Company shall be liable to
Buyer for up to a maximum of $1,000,000 of Buyer's Damages caused thereby.
(c) Except as provided in Sections 10.5(a) and 10.5(b), in the event of a breach
of a Seller of any covenant, representation or warranty of such Seller contained
herein, the sole and exclusive remedy of Buyer and Buyer's sole recourse under
the indemnification provisions of this Section 10 shall be recovery of Buyer's
Damages from the funds deposited to escrow pursuant to Section 2.4(b)(ii) and
interest thereon, up to a maximum amount equal to the total amount then held in
escrow. Notwithstanding Section 10.5(a) and subject to Sellers' rights of
contribution pursuant to Section 10.11 below, Sellers shall be jointly and
severally liable with respect to all sums deposited into Escrow for matters
indemnifiable under Sections 10.2 and 10.3.
(d) Whenever this Agreement provides for joint and several liability of Sellers,
such joint liability shall be limited to the total amount from time to time held
in escrow pursuant to the Escrow Agreement and the sole and exclusive remedy of
Buyer and Buyer's sole recourse with respect to such joint liability shall be
recovery in respect thereof from the funds deposited to escrow. Except as
provided in Section 10.5(a), whenever this Agreement provides for joint and
several liability or for several liability of a Seller, such several liability
shall also be limited to the total amount from time to time held in escrow
pursuant to the Escrow Agreement and the sole and exclusive remedy of Buyer and
Buyer's sole recourse with respect to such several liability shall be recovery
in respect thereof from the funds deposited to escrow. The several liability of
each Seller under Section 10.5(a) shall not be limited by the amount deposited
to escrow.
10.6 LIMITATIONS ON AMOUNT--BUYER
Other than with respect to fraud, Buyer will have no liability (for
indemnification or otherwise) in excess of, in the aggregate, $1,000,000 with
respect to the matters described in clause (a) or (b) of Section 10.4.
10.7 ESCROW; RIGHT OF SET-OFF
Buyer may give notice of a Claim and exercise a right of set-off with respect
thereto in the manner provided in the Escrow Agreement. Subject to the
limitation of liability and remedies set forth in Section 10.5, neither the
exercise of nor the failure to exercise such right of set-off or to give a
notice of a Claim under the Escrow Agreement will constitute an election of
remedies or limit Buyer in any manner in the enforcement of any other remedies
that may be available to it.
10.8 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 10.8(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, at the indemnifying party's sole
expense, in such Proceeding in a reasonable manner. Buyer shall have the sole
right and power to settle or compromise any Proceeding with respect to which it
is an indemnified party and Sellers shall be bound by such compromise or
settlement and shall be obliged to indemnify Buyer, subject to the limitations
of Section 10.5, except to the extent that Sellers can demonstrate through a
clear preponderance of evidence, that the claims which were alleged and settled
and/or compromised were not with the scope of Seller's indemnification
obligations.
(c) Sellers and Buyer 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 all of them 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.
10.11 CONTRIBUTION
In the event a Seller (the "Culpable Seller") causes other Sellers to incur
Damages due to Culpable Seller's failure to convey to Buyer good title to
Culpable Seller's Shares, free of all Encumbrances, such Culpable Seller shall
be obliged to indemnify and hold harmless the other Sellers from all Damages
arising, directly or indirectly, from or in connection with Culpable Seller's
failure to deliver to Buyer good title, free of Encumbrances, to such Culpable
Seller's Shares.
11. GENERAL PROVISIONS
11.1 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. The Company will pay all amounts payable to V.M.
Equity Partners, Inc. in connection with this Agreement and the Contemplated
Transactions and all sums owed or estimated to be ultimately owed by the Company
(net of any sums payable from the CXT ESOT) in connection with the orderly final
administration of the CXT ESOP, liquidation of the CXT ESOP and final
distribution thereof to the part or parts in the CXT ESOP, including all
appraisers' fees and costs, and all fees and other sums due to Alaska Trust
Company with respect thereto as set forth in its engagement letter dated January
15, 1998, the Indemnification Agreement between the Company and Alaska Trust
Company dated January 24, 1999 and any "tail" insurance purchased by the
Company, all of which shall be deemed payable at Closing for purposes of
calculating the Adjustment Amount. Buyer will pay one-half and the Company will
each pay one-half of the HSR Act filing fee. 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. All expenses incurred with respect to the Contemplated Transactions by
the Sellers other than any Tax which may be imposed on a Seller as a result
thereof shall be paid by the Company. If any such expenses remain payable by the
Company on the Closing Date, including any sum due to V.M. Equity Partners,
Inc., the amount thereof shall be reflected as a liability on the certificate to
be delivered pursuant to Section 2.4(a)(iii) and the Closing Financial
Statements, and taken into account in determination of the Adjustment Amount, if
any.
11.2 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 Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Sellers shall, and shall
cause the Company to, keep this Agreement strictly confidential and may not make
any disclosure of this Agreement to any Person. Sellers and Buyer will consult
with each other concerning the means by which the Company's employees,
customers, and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company to maintain in confidence any
written, oral, or other information obtained in confidence from such party or
the 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 obtaining any consent or
approval required for the consummation of the Contemplated Transactions, or (c)
the furnishing or use of such information is 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
Buyer's request cause the Company to waive, any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information of the Company except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information.
11.4 NOTICES
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: Buyer:
CXT ESOT L. B. Foster Company
Address: Address:
c/o Alaska Trust Company 415 Holiday Drive
Resolution Plaza, Suite 601 Pittsburgh, PA 15220-2282
1029 W. Third Ave.
Anchorage, AK 99501 Facsimile No.: (412) 928-7891
Facsimile No: (907) 258-1649
N.A. Bianco
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
D. Firth
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
J. M. McLaughlin and
J.M. McLaughlin IRA
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
D. L. Millard
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
R. O. Skrypchuk and
R.O. Skrypchuk IRA
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
R. D. Steiger
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
J..G. White and
J.G. White IRA
Address:
15602 E. Marietta Ave., Bldg. S17
Spokane, WA 99214-0757
Facsimile No. (509) 921-7877
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the Commonwealth of Pennsylvania, County of Allegheny, or, if
it has or can acquire jurisdiction, in the United States District Court for the
Western District of Pennsylvania, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
11.6 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.
11.7 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 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.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between Buyer and Sellers
dated on or about April 6, 1999 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.
11.9 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.
(c) The Sellers shall deliver the Disclosure Letter to Buyer no later than the
fifteenth day following the date this Agreement is executed by the parties. If
Buyer, in Buyer's sole and absolute discretion, disapproves, for any reason, all
or any portion of the provisions of the Disclosure Letter, Buyer shall notify
Sellers in writing thereof within ten days following receipt of the Disclosure
Letter. Any such notice shall set forth with particularity the matters contained
in the Disclosure Letter which are disapproved by Buyer and the basis for such
disapproval. If Buyer gives Sellers timely notice of disapproval of any portion
of the Disclosure Letter and the parties are unable to agree as to modification
thereof to make the Disclosure Letter acceptable to Buyer within ten days
following the date Sellers receive notification of Buyer's disapproval, this
Agreement shall terminate and be of no further force or effect. Approval of the
Disclosure Letter or failure to object to the content thereof shall not
constitute a waiver by Buyer of Buyer's rights in respect of any Material
inaccuracy in the content thereof.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement without the prior
consent of the other parties. 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 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.
11.11 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.
11.12 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.
11.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of Pennsylvania
without regard to conflicts of laws principles.
11.15 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.
BUYER: SELLERS:
L.B. FOSTER COMPANY CXT EMPLOYEE STOCK
OWNERSHIP TRUST
By: /s/Lee B. Foster By Alaska Trust Company, Trustee
Title: President and CEO
By:/s/Douglas J. Blattmachr
Douglas J. Blattmachr, President
Attest:/s/David L. Voltz
Secretary
/s/ N.A.Bianco
--------------------------
N. A. Bianco
/s/ D. Firth
--------------------------
D. Firth
/s/J. M. McLaughlin
--------------------------
J. M. McLaughlin
J. M. McLaughlin, IRA
By:/s/J. M. McLaughlin
---------------------------
J. M. McLaughlin
/s/D. L. Millard
--------------------------
D. L. Millard
/s/R. O. Skrypchuk
--------------------------
R. O. Skrypchuk
The undersigned do hereby affix their signatures to the above and foregoing
Stock Purchase Agreement, dated June 3, 1999, consisting of sixty-four (64)
pages, and Exhibits, of which this is the last.
R. O. Skrypchuk, IRA
By:/s/R. O. Skrypchuk
--------------------------
R. O. Skrypchuk
/s/R. D. Steiger
--------------------------
R. D. Steiger
/s/J. G. White
--------------------------
J. G. White
J. G. White, IRA
By:/s/ J. G. White
--------------------------
J. G. White
CXT Incorporated agrees to be legally bound to the extent as set forth in
Section 10.5
CXT INCORPORATED
Attest:/s/R.O. Skrypchuk By: /s/J.G. White
- --------------------------------- ----------------------------
R.O. Skrypchuk, Secretary J.G. WHITE, President