0000950129-95-001128.txt : 19950914
0000950129-95-001128.hdr.sgml : 19950914
ACCESSION NUMBER: 0000950129-95-001128
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 19950824
ITEM INFORMATION: Acquisition or disposition of assets
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 19950908
SROS: NYSE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NATEC RESOURCES INC
CENTRAL INDEX KEY: 0000050361
STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400]
IRS NUMBER: 366059098
STATE OF INCORPORATION: UT
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-08104
FILM NUMBER: 95571866
BUSINESS ADDRESS:
STREET 1: 1177 W LOOP SOUTH
STREET 2: STE 900
CITY: HOUSTON
STATE: TX
ZIP: 77027
BUSINESS PHONE: 7135522552
MAIL ADDRESS:
STREET 1: 1177 WEST LOOP SOUTH
STREET 2: STE 900
CITY: HOUSTON
STATE: TX
ZIP: 77027
FORMER COMPANY:
FORMER CONFORMED NAME: INDUSTRIAL RESOURCES INC
DATE OF NAME CHANGE: 19891211
FORMER COMPANY:
FORMER CONFORMED NAME: UTAH SHALE CORP
DATE OF NAME CHANGE: 19750702
8-K
1
FORM 8-K DATED 8/24/95
1
UNITED STATES
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)
August 24, 1995
NATEC RESOURCES, INC.
________________________________________________
(Exact name of registrant as
specified in its charter)
Delaware 0-8104 36-6059098
_______________ ____________ ______________
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1177 West Loop South, Suite 800
Houston, Texas 77027
________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code (713) 552-2552
2
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On August 24, 1995, the Registrant sold substantially all of its
assets to North American Chemical Company (NACC), a unit of Harris Chemical
North America, Inc., pursuant to their Acquisition Agreement dated April 5,
1995, as amended. The assets sold include NaTec's 50% interest in White River
Nahcolite Minerals, Ltd. Liability Co. (White River), the owner of a sodium
bicarbonate mining and processing facility located in Colorado in which NaTec
has been a joint venture partner since 1992. NaTec retained its assets
unrelated to the operation of White River. Under the terms of the amended
Acquisition Agreement, the sales price, determined through arm's-length
negotiation, was $10.5 million, consisting of $500,000 cash and the delivery of
a $6 million non-interest bearing promissory note maturing January 15, 1996 by
White River, and NACC's $4 million non-interest bearing promissory note, which
has a three-year term. Both notes are secured by a security interest covering
the White River facility.
The Registrant dissolved and liquidated all of its assets immediately
following the asset sale to NACC, including the proceeds of such sale. As a
result of the liquidation, NaTec satisfied its outstanding prior debts to
creditors, but did not have sufficient assets to pay the entire liquidation
preference to its preferred stockholder or to make any distribution to holders
of NaTec's common stock.
ITEM 7. EXHIBITS
Exhibit 2A. Acquisition Agreement between NaTec Resources, Inc.
and North American Chemical Company dated as of April
5, 1995
Exhibit 2B. Amendment No. 1 to Acquisition Agreement dated July
31, 1995
Exhibit 99A. Pro Forma Statement of Net Assets in Liquidation as
of June 30, 1995
Exhibit 99B. Pro Forma Statement of Operations for the Fiscal Year
ended December 31, 1994
Exhibit 99C. Pro Forma Statement of Operations Adjustments
Exhibit 99D. Press release dated August 24, 1995
-2-
3
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 thereunto duly authorized.
NATEC RESOURCES, INC.
Dated: September 7, 1995 By: /s/ TIMOTHY R. DUNNE
_______________________________
Name: Timothy R. Dunne
Title: Vice President, General Counsel
and Secretary
-3-
4
INDEX TO EXHIBITS
Exhibit Description
------- ------------
Exhibit 2A. Acquisition Agreement between NaTec Resources, Inc.
and North American Chemical Company dated as of April
5, 1995
Exhibit 2B. Amendment No. 1 to Acquisition Agreement dated July
31, 1995
Exhibit 99A. Pro Forma Statement of Net Assets in Liquidation as
of June 30, 1995
Exhibit 99B. Pro Forma Statement of Operations for the Fiscal Year
ended December 31, 1994
Exhibit 99C. Pro Forma Statement of Operations Adjustments
Exhibit 99D. Press release dated August 24, 1995
EX-2.A
2
ACQUISITION AGREEMENT DATED 4/5/95
1
EXHIBIT 2A
================================================================================
ACQUISITION AGREEMENT
Between
NORTH AMERICAN CHEMICAL COMPANY
and
NATEC RESOURCES, INC.
Dated as of April 5, 1995
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE 1
SALE AND PURCHASE OF SHARES
1.1 Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Purchase Price and Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Transactions on the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
CLOSING AND TERMINATION
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Corporate Organization and Authority of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Corporate Organization and Authority of
the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Subsidiaries and Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Ownership of Membership Interests and Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Capitalization of the Companies; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 No Violation; Creditor Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 The Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Seller Reports; Financial Statements; Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Absence of Change or Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.15 Seller's Best Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
OF SELLER AND BUYER
5.1 Conduct of Business Prior to the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Expenses and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Access to Information and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Shareholder Approvals and Best Efforts; Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . 20
5.8 CRSS Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 6
CONDITIONS PRECEDENT OF BUYER
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7
CONDITIONS PRECEDENT OF SELLER
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Opinion of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.6 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Characterization of Indemnity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
9.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 10
MISCELLANEOUS
10.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Mutual Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Capital Expenditure Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Governing Law and Consent to Jurisdiction;
Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.10 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.11 Binding Effect; Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.12 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.13 Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.14 Certain References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Schedule 1.2(c)(i) Included Assets
Schedule 1.2(c)(ii) Excluded Assets
Schedule 1.2(d) Assumed Liabilities
Schedule 1.3(a)(v) Bill of Sale
Schedule 1.3(a)(vi) Assumption Agreement
Schedule 1.3(a)(vii) Security Agreement
Schedule 1.3(b)(iv)(A) Deed of Trust
Schedule 1.3(b)(iv)(B) Permitted Lien Exceptions and Exclusions
Schedule 3.2 Jurisdictions in which the Company is
qualified to do business
Schedule 3.3 List of Subsidiaries
Schedule 3.5 Capitalization of the Companies; Ownership
Schedule 3.6 No Violations
Schedule 3.7 List of Litigations
5
Schedule 3.8 Encumbrances on Personal Property
Schedule 3.9 Financial Statements
Schedule 3.10 Tax Issues
Schedule 3.12 Absence of Change or Event
Schedule 3.13(a) Non-Compliance with Law
Schedule 3.13(b) List of Permits
Schedule 4.3 No Violation
Schedule 5.8 CRSS Released Obligations
Schedule 6.2 Opinion of Seller's Counsel
Schedule 7.2 Opinion of Buyer's Counsel
Schedule 10.4 Capital Expenditure Program
Exhibit A-1 Best Efforts of CRSS Inc.
Exhibit A-2 CRSS Inc. Guaranty
Exhibit B Note
Exhibit C FIRPTA Certificate of Seller
Exhibit 10.3-1 General Release
Exhibit 10.3-2 General Release
6
ACQUISITION AGREEMENT dated as of April 5, 1995 (herein,
together with the Schedules and Exhibits attached hereto, referred to as the
"Agreement") between NORTH AMERICAN CHEMICAL COMPANY, a Delaware corporation
("Buyer"), and NATEC RESOURCES, INC., a Utah corporation (the "Seller").
W I T N E S S E T H :
WHEREAS, Seller is the beneficial and record holder of all of
the shares of capital stock (the "NMI Shares") of Natec Minerals, Inc., a
Delaware corporation ("NMI") engaged in the business (the "NMI Business") of
the ownership of membership interests in the White River Nahcolite Minerals
Limited Liability Company ("White River"); and
WHEREAS, Seller is the beneficial and record holder of all of
the shares of capital stock (the "OXA Shares") of Oldexaer, Inc., a Delaware
corporation ("OXA") engaged in the business (the "OXA Business") of the
ownership of membership interests in White River;
WHEREAS, NMI and OXA are henceforth collectively referred to
as the "Companies" and the NMI shares and the OXA Shares are henceforth
collectively referred to as the "Shares";
WHEREAS, Seller wishes to sell and Buyer wishes to purchase
the Shares upon the terms of this Agreement;
WHEREAS, Seller wishes to sell, transfer and convey to Buyer
all of its assets, other than the Excluded Assets (as defined below) and
certain designated liabilities as further described below, all such transferred
assets and liabilities being used in the business conducted by White River (the
use of such assets and liabilities in such business, collectively with the NMI
Business and the OXA Business, is hereinafter referred to as the "Business");
WHEREAS, Buyer wishes to acquire said assets and assume said
liabilities; and
WHEREAS, CRSS Inc., which effectively controls approximately
52% of the voting interests of Seller, has agreed pursuant to and subject to
the terms of a letter executed simultaneously herewith, a copy of which is
attached hereto as Exhibit A-1, to vote in favor of the transactions
contemplated hereby and has agreed pursuant to a letter executed simultaneously
herewith, a copy of which is attached hereto as Exhibit A-2, to guarantee
certain of Seller's obligations hereunder.
7
NOW, THEREFORE, in reliance upon the representations and
warranties made herein and in consideration of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES AND ASSETS
1.1 Sale of Shares. At the Closing provided for in
Section 2.1, Seller shall sell the Shares to Buyer and Buyer shall purchase the
Shares for the purchase price provided in Section 1.2.
1.2 Purchase Price and Payment for Shares.
(a) Purchase Price. The purchase price for the Shares
and the Assets (as defined below) is $10,000,000, payable on the terms and
conditions set forth below (the "Purchase Price").
(b) Payment of Purchase Price. The Purchase Price shall
be paid by Buyer as follows. At the Closing, Buyer shall deliver to Seller
$6,000,000 in immediately available funds by wire transfer to an account
designated by Seller at least two business days prior to the Closing Date (the
"Cash Consideration"). In addition, Buyer shall deliver to Seller at the
Closing a non-negotiable note in the amount of $4,000,000, bearing no interest,
in the form of Exhibit B attached hereto (the "Note").
(c) Sale of Assets. At the Closing provided for in
Section 2.1, Seller shall sell, transfer, convey, assign and deliver to Buyer
and Buyer shall purchase all of the assets of Seller, each of which is set
forth in Schedule 1.2(c)(i) attached hereto, other than the assets set forth
on Schedule 1.2(c)(ii), each of which shall be retained by Seller (the
"Excluded Assets") (said assets of Seller being so sold, transferred, conveyed,
assigned and delivered (other than the Excluded Assets) are hereinafter
referred to as the "Assets").
(d) Assumption of Certain Liabilities. At the Closing
provided for in Section 2.1, Seller shall delegate and Buyer shall assume those
liabilities set forth on Schedule 1.2(d) attached hereto (the "Assumed
Liabilities"), it being understood and agreed that Buyer shall assume no other
liabilities or obligations of Seller hereunder, and that any liabilities of the
Companies shall remain as liabilities of the Companies.
1.3 Transactions on the Closing Date. (a) At the
Closing, Seller will deliver to Buyer the following:
(i) stock certificates, in form suitable for
transfer, registered in the name of Seller, evidencing the Shares,
endorsed in blank or with an executed blank stock
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8
transfer power attached, and with all necessary stock transfer tax
stamps attached thereto;
(ii) all stock certificates, stock books, stock
transfer ledgers, minute books and the corporate seals of each of the
Companies;
(iii) resignations of the directors and officers
of each of the Companies;
(iv) each of the certificates and documents
contemplated by Article 6;
(v) a bill of sale, substantially in the form of
Schedule 1.3(a)(v) attached hereto (the "Bill of Sale");
(vi) an assignment and assumption agreement,
substantially in the form of Schedule 1.3(a)(vi) attached hereto (the
"Assumption Agreement"), and, where required for such assignment and
assumption, the consent or waiver of any third party, such consents
and waivers in each case to be in form and substance reasonably
satisfactory to Buyer; and
(vii) the Security Agreement substantially in the
form of Schedule 1.3(a)(vii) (the "Security Agreement").
(b) At the Closing, Buyer will deliver to Seller the
following:
(i) the Cash Consideration and the Note in
accordance with Section 1.2 above;
(ii) each of the certificates and documents
contemplated by Article 7;
(iii) the Assumption Agreement; and
(iv) (1) the Security Agreement, (2) the Deed of
Trust substantially in the form of Schedule 1.3(b)(iv)(A), and (3)
such other agreements and UCC filings as may be mutually agreed upon
to create, perfect, or allow a first priority perfected security
interest in, assignment of, and lien on all of the assets of White
River with the exception of Permitted Lien Exceptions (collectively,
the "Security Documents"). As used herein, the term "Permitted Lien
Exceptions" shall mean (i) those assets of White River which, as a
matter of law, require notice to or the consent or approval of a
governmental or a quasi-governmental authority to the assignment
thereof or to create a first priority perfected security interest
therein and those assets of White River constituting contract rights
and other general intangibles which require the notice to or consent
or approval of a third party to the assignment thereof or the grant of
a first priority perfected security interest
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9
therein (it being understood and agreed that Buyer shall cooperate
with Seller after the Closing in sending notices in those instances
where the absence of said notice results in a Permitted Lien Exception
and where Seller reasonably requests that such notice be given) and
(ii) Permitted Liens. As used herein, the term "Permitted Liens"
shall mean, with respect to any person: (i) pledges or deposits under
workers' compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts or leases to which such person is a party, or deposits to
secure public or statutory obligations of such person or deposits of
cash or U.S. Government bonds to secure surety or appeal bonds to
which such person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent; (ii) liens imposed
by law, such as carriers', warehousemen's and mechanics' liens or
other liens arising out of judgments or awards against such person
with respect to which such person shall then be prosecuting an appeal
or other proceedings for review; (iii) liens for property taxes not
yet subject to penalties for non-payment or which are being contested
in good faith and by appropriate proceedings; (iv) liens in favor of
issuers of performance bonds issued pursuant to the request of and for
the account of such person in the ordinary course of its business; (v)
survey exceptions, encumbrances, easements or reservations of, or
rights of others for rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or liens incidental to
the conduct of the business of such person or to the ownership of its
properties which do not in the aggregate materially detract from the
value of said properties or materially impair their use in the
operation of the business of such person; (vi) any lien arising
pursuant to an order of attachment, distraint or similar legal process
arising in connection with legal proceedings, but only if and so long
as execution or enforcement thereof is not unstayed for more than 90
days; (vii) liens existing on November 19, 1992; (viii) any lien
securing purchase money indebtedness but only if, in the case of each
such lien, (A) such lien shall at all times be confined to the
property or asset the purchase price of which was financed through the
incurrence of the purchase money indebtedness secured by such lien and
to fixed improvements thereafter erected on such property or asset and
(B) such lien attached to such property or asset within 90 days of the
acquisition of such property or asset; and (ix) any lien constituting
a renewal, extension or replacement of a Lien constituting a Permitted
Lien by virtue of clause (vi), (vii), (viii) or (ix) of this
definition; provided that Permitted Lien Exceptions shall not include
any of the matters described on Schedule 1.3(b)(iv)(B).
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ARTICLE 2
CLOSING AND TERMINATION
2.1 Closing. The closing of the transactions provided
for herein (the "Closing") will take place at the offices of Winthrop, Stimson,
Putnam & Roberts, One Battery Park Plaza, New York, New York, at 10:00 A.M.
(local time) on the fifth business day after the receipt of shareholder
approval referred to in Section 7.5 hereof (the "Closing Date") or at such
other place, time and date as may be agreed upon by Buyer and Seller.
2.2 Termination. Anything contained in this Agreement
other than in this Section 2.2 to the contrary notwithstanding, this Agreement
may be terminated in writing at any time:
(a) without liability on the part of any party hereto by
mutual consent of Buyer and Seller;
(b) without liability (except as set forth in Section 2.3) on
the part of any party hereto (unless occasioned by reason of a breach
by any party hereto of any of its representations, warranties or
obligations hereunder) by either Buyer or Seller, if the Closing shall
not have occurred on or before August 31, 1995 (or such later date as
may be agreed upon in writing by the parties hereto);
(c) by Buyer, if Seller shall materially breach any of its
representations, warranties or obligations hereunder and such breach
shall not have been cured or waived and Seller shall not have provided
reasonable assurance that such breach will be cured on or before the
Closing Date; or
(d) by Seller, if Buyer shall materially breach any of its
representations, warranties or obligations hereunder and such breach
shall not have been cured or waived and Buyer shall not have provided
reasonable assurance that such breach will be cured on or before the
Closing Date.
2.3 Buyer's Expenses. Seller hereby agrees to pay to Buyer
an amount equal to the out-of-pocket expenses incurred by Buyer in connection
with the transactions contemplated hereby, up to a maximum amount of $250,000,
if this Agreement is terminated (i) by Buyer pursuant to Section 2.2(c), in
which case said payment shall constitute Buyer's sole and exclusive remedy;
provided, however, that said $250,000 maximum shall not apply in the case of an
Intentional Breach (as defined in Article 8 hereof) by Seller, or (ii) by Buyer
or Seller pursuant to Section 2.2(b), but only if the shareholder approval
referred to in Section 7.5 shall not have been obtained or if the Fairness
Opinion (as defined in Section 7.6) shall have been withdrawn, in which case
said payment shall constitute Buyer's sole and exclusive remedy. Such
reimbursement for out-of-pocket expenses shall be made promptly, but in any
event within five (5) days
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after receipt by Seller of a statement prepared by Buyer documenting such
expenses. The provisions of this Section 2.3 shall survive termination of this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof
and as of the Closing Date that:
3.1 Corporate Organization and Authority of Seller. Seller
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all corporate power
and authority to carry on its business as now being conducted and to own its
properties. Seller has full corporate power and authority to enter into this
Agreement, the Bill of Sale, the Assignment and Assumption Agreement and the
Security Agreement (this Agreement, collectively with such other agreements,
are hereinafter collectively referred to as the "Agreements") and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Seller of the Agreements have been duly authorized by all
requisite corporate action (other than the approval of Seller's shareholders).
This Agreement has been, and each of the other Agreements will be as of the
Closing Date, duly executed and delivered by Seller, and (assuming due
execution and delivery by Buyer) this Agreement constitutes, and each of the
other Agreements when executed and delivered will constitute, a valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally or by general equitable
principles.
3.2 Corporate Organization and Authority of the Companies.
Each of the Companies is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority to carry on its business as now being conducted
and to own its properties and is duly licensed or qualified and in good
standing as a foreign corporation in each jurisdiction in which it is required
to be so licensed or so qualified, except where the failure to be so licensed
or so qualified would not have a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), results of
operations, business or business prospects (a "Material Adverse Effect") of the
Companies considered as a whole. Schedule 3.2 sets forth the jurisdictions in
which each of the Companies is qualified to do business. Seller has heretofore
delivered to Buyer complete and correct copies of the articles or certificates
of incorporation, by-laws or similar corporate organizational documents of each
of the Companies as currently in effect.
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3.3 Subsidiaries and Equity Investments. (a) Each of
the Companies has no subsidiaries and is not a general partner in any
partnership or coventurer in any joint venture or other business enterprise,
other than White River. The term "subsidiary" means any corporation of which
either of the Companies, directly or indirectly, owns or controls capital stock
representing more than fifty percent of the general voting power under ordinary
circumstances of such corporation.
(b) Except for White River, neither of the Companies owns,
directly or indirectly, any capital stock or other equity securities of any
corporation or has any direct or indirect equity or ownership interest,
including interests in partnerships and joint ventures, in any business. All
of the outstanding membership interests in White River owned by each of the
Companies are owned free and clear of all Encumbrances, (as such term is
defined in Section 3.4) except for restrictions on transfer under federal and
state securities laws and pursuant to agreements with Buyer and its affiliates.
Neither of the Companies has granted any outstanding options, warrants or other
rights of any kind to acquire any additional membership interests in White
River or securities convertible into or exchangeable for, or which otherwise
confer on the holder thereof any right to acquire, any such additional
interests, nor are any of the Companies committed to grant any such option,
warrant, right or security. Except as set forth in Schedule 3.3, there are no
agreements relating to the voting, purchase or sale of capital stock of any
joint venture interest held by either of the Companies.
3.4 Ownership of Membership Interests and Shares. (a)
Membership interests representing fifty percent of all of the membership
interests in White River are owned of record and beneficially by the Companies,
except for any change in percentage ownership of membership interests in White
River as provided for in Section 10.4. All of the outstanding shares of
capital stock of each of the Companies are owned of record and beneficially by
Seller.
(b) Seller has good and valid title to the Shares, free and
clear of any and all liens, claims, security interests or options
("Encumbrances"). Seller has full legal right, power and authority to sell,
transfer and convey the Shares to Buyer. Upon the delivery of the Shares in
the manner contemplated under Section 1.3, Buyer will acquire the beneficial
and legal, valid and indefeasible title to such Shares, free and clear of all
Encumbrances, except for restrictions on transfer under federal and state
securities laws.
(c) CRSS Inc. owns 12,096,700 shares constituting 47.5% of
the outstanding common stock of the Seller and 120,000 shares constituting 100%
of the outstanding preferred stock of the Seller.
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(d) Except for voting securities issued after the date hereof
pursuant to the exercise of options outstanding on the date hereof, Seller
currently has, and at the record date with respect to the Shareholder Approval
referred to in Section 7.5 will have, 25,477,387 shares of Common Stock issued
and outstanding, 100,000 shares of Series A Preferred Stock issued and
outstanding, 10,000 shares of Series B Preferred Stock issued and outstanding,
and 10,000 shares of Series C Preferred Stock issued and outstanding (not
taking into account any conversion by CRSS Inc. of any of the Series A, Series
B or Series C Preferred Stock or any of CRSS Inc.'s other convertible
instruments), and does not have any, and as of such record date will not have
any, other voting securities issued and outstanding, and (2) Seller has not
taken any action and will not take any action to impair CRSS Inc.'s rights,
including without limitation its voting and conversion rights, with respect to
any of the common stock, preferred stock or indebtedness of Seller which CRSS
Inc. currently owns or will own as of such record date. Seller will reasonably
cooperate with CRSS Inc. in exercising such rights.
3.5 Capitalization of the Companies; Ownership. The
authorized, issued and outstanding capital stock of each of the Companies is
set forth in Schedule 3.5. All of the issued and outstanding shares of capital
stock of each of the Companies are duly authorized, validly issued, fully paid
and nonassessable. There are no outstanding options, warrants or other rights
of any kind to acquire any additional shares of capital stock of the Companies
or securities convertible into or exchangeable for, or which otherwise confer
on the holder thereof any right to acquire, any such additional shares, nor are
the Companies committed to issue any such option, warrant, right or security.
3.6 No Violation; Creditor Consent. Except as set forth
in Schedule 3.6, neither Seller, nor either of the Companies, is subject to or
bound by any provision of:
(a) to Seller's best knowledge any law, statute, rule,
regulation or judicial or administrative decision,
(b) any articles or certificate of incorporation or by-laws,
(c) any mortgage, deed of trust, lease, note, shareholders'
agreement, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship, other restriction, or
(d) to Seller's best knowledge any judgment, order, writ,
injunction or decree of any court, governmental body, administrative
agency or arbitrator,
that would prevent or be violated by or that would result in the creation of
any Encumbrance as a result of, or under which there would be a default or
right of cancellation, termination, payment
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or acceleration of payment as a result of, the execution, delivery and
performance by Seller of the Agreements and the consummation of the
transactions contemplated hereby and thereby. Except as set forth in Schedule
3.6 and for filings required by the applicable federal securities laws, no
consent, approval or authorization of or declaration or filing with any
individual, corporation, partnership, trust or unincorporated organization or
any government or any agency or political subdivision thereof (a "Person") is
required for the valid execution, delivery and performance by Seller of the
Agreements and the consummation of the transactions contemplated hereby and
thereby. Except for CRSS Inc., the consent or approval of no creditor of
Seller or any Company is necessary to consummate the transactions contemplated
hereby.
3.7 Litigation. Except as set forth in Schedule 3.7,
there is (i) no outstanding consent, order, judgment, injunction, award or
decree of any court, government or regulatory body or arbitration tribunal
against or involving either of the Companies or Seller, (ii) no action, suit,
dispute or governmental, administrative, arbitration or regulatory proceeding
pending or, to Seller's best knowledge, threatened against or involving either
of the Companies or Seller and (iii) to Seller's best knowledge, no
investigation pending or threatened against or relating to either of the
Companies, any of their respective officers or directors as such or Seller
(collectively, "Proceedings"). None of the foregoing Proceedings, if adversely
determined against Seller or either of the Companies, would have a Material
Adverse Effect on the Companies either singularly or in the aggregate or on the
ability of Seller to consummate the transactions contemplated hereby.
3.8 The Assets. Except as set forth in Schedule 3.8, neither
the Seller, the Companies, nor any of Seller's affiliates (other than White
River) use any asset, other than the Assets, in the Business. Except as set
forth in Schedule 3.8, either the Seller or a Company, as the case may be, has
good and valid title to all of the Assets, free and clear of all Encumbrances.
3.9 Seller Reports; Financial Statements; Liabilities.
Except as set forth on Schedule 3.9:
(a) Since January 1, 1992, Seller has filed all reports,
registrations, proxy or information statements and all other documents,
together with any amendments required to be made thereto, required to be filed
with the Securities and Exchange Commission ("SEC") under the Securities Act or
the Exchange Act (collectively, the "Seller Reports"). Included in such Seller
Reports are (i) audited consolidated balance sheets of Seller and its
subsidiaries at December 31, 1993 and 1992, and the related consolidated
statements of income, shareholders' equity and cash flows (or changes in
financial position prior to the adoption of statement of Financial Accounting
Standards Board Number 95 ("FASB 95")) for the years then ended, and the notes
thereto and
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(ii) the unaudited consolidated balance sheet of Seller and its subsidiaries at
September 30, 1994, and the related unaudited consolidated statements of
income, shareholders' equity and cash flows for the nine-month period then
ended and the notes thereto. Seller shall furnish Buyer copies of its filings
with the SEC filed after the date hereof and prior to the Closing Date. Seller
has heretofore furnished to Buyer balance sheets and statements of income of
each of the Companies (each of which is attached as part of Schedule 3.9) as at
the dates and for the periods ended as reflected therein (the "Company
Financials").
(b) All of the financial statements included in the Seller
Reports (which are collectively referred to herein as the "Seller Consolidated
Financial Statements") and the Company Financials fairly presented, or will
fairly present, as the case may be, in all material respects, the consolidated
financial position of Seller and its subsidiaries, and the financial position
of each of the Companies, as the case may be, at the dates mentioned and the
consolidated results of operations, shareholders' equity and, in the case of
the Seller Reports, cash flows (or changes in financial position) for the
periods then ended in conformity with generally accepted accounting principles
applied on a consistent basis (subject to any exceptions as to consistency
specified therein or as may be indicated in the notes thereto or in the case of
the unaudited statements, as may be permitted by Article 10 of Regulation S-X
promulgated by the SEC), and, in the case of the Company Financials, to the
absence of footnotes. The unaudited consolidated statements of income for the
period ended September 30, 1994 include, and all subsequent statements
furnished pursuant hereto, will include, all adjustments necessary for a fair
presentation. To the best of Seller's knowledge, as of their respective dates,
the Seller Reports referred to herein complied, or will comply, as the case may
be, in all material respects with all applicable rules and regulations
promulgated by the SEC and did not, or will not, as the case may be, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (b) shall be deemed not
to be breached with respect to any matter relating solely to Seller and which
matter reflects an item which is not adverse to Seller and does not affect the
value of the assets being purchased hereunder.
(c) There are no liabilities, debts, obligations or claims
against the Companies of any nature, absolute or contingent, except (i) as and
to the extent reflected or reserved against on the financial statements
referred to in Section 3.9; (ii) specifically described and identified as an
exception to this paragraph in any of the Schedules delivered to Buyer pursuant
to this Agreement; or (iii) incurred since September 30, 1994 in the ordinary
course of business consistent with prior practice and Section 3.12 hereof.
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3.10 Tax Matters. (a) For purposes of this Agreement,
(i) "Tax" or "Taxes" shall mean any federal, state,
local, foreign or other taxes (including, without limitation, income
(net or gross), gross receipts, profits, alternative or add-on
minimum, franchise, license, capital, capital stock, intangible,
services, premium, mining, transfer, sales, use, ad valorem, payroll,
wage, severance, employment, occupation, property (real or personal),
windfall profits, import, excise, custom, stamp, withholding or
estimated taxes), fees, duties, assessments, withholdings or
governmental charges of any kind whatsoever (including interest,
penalties, additions to tax or additional amounts with respect to such
items);
(ii) "Pre-Closing Periods" shall mean all Tax periods of
either of the Companies ending on or before the Closing Date and, with
respect to any Tax period that includes but does not end on the
Closing Date, the portion of such period that ends on and includes the
Closing Date;
(iii) "Returns" shall mean all returns, declarations,
reports, estimates, information returns and statements of any nature
regarding Taxes for any Pre-Closing Period required to be filed by any
Person and relating to either of the Companies; and
(iv) "Code" shall mean the Internal Revenue Code of 1986,
as amended, or, if appropriate, any predecessor statute.
(b) Except as set forth in Schedule 3.10,
(i) all Returns have been or will be timely filed
when due in accordance with all applicable laws;
(ii) all Taxes due regarding either of the Companies in
respect of the Pre-Closing Tax Periods, whether or not shown to be due
on the Returns, including all Taxes for which a notice of assessment
or demand for payment has been received by either of the Companies,
have been or will be timely paid when due;
(iii) the Returns completely, accurately and correctly
reflect the facts regarding the income, properties, operations and
status of any entity required to be shown thereon;
(iv) the charges, accruals, and reserves for Taxes due,
or accrued but not yet due, relating to the income, properties or
operations of the Companies for any Pre-Closing Period as reflected on
the books of the Companies are adequate to cover such Taxes;
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(v) there are no agreements or consents currently in
effect for the extension or waiver of the time (A) to file any Return
or (B) for assessment or collection of any Taxes relating to either of
the Companies for any Pre-Closing Period, and no Person has been
requested to enter into any such agreement or consent;
(vi) no Return of either of the Companies, or of any
affiliated, consolidated, combined or similar groups of which either
of the Companies is a member, is being examined by, and no written
notification of intention to examine has been received from, the
Internal Revenue Service or any other taxing authority;
(vii) all Returns with respect to taxable years ending on
or prior to December 31, 1990 have been examined and closed, or are
Returns with respect to which the applicable statute of limitations,
after giving effect to any extensions and waivers, has expired;
(viii) all Taxes that each of the Companies is required by
law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the appropriate governmental authorities
to the extent due and payable;
(ix) the Companies have treated White River as a
partnership for United States federal income tax purposes and have not
taken any position that is inconsistent with such treatment; and
(x) no Tax ruling has been requested of any governmental
authority, with respect to any Tax matter relating to either of the
Companies.
Anything in this Section to the contrary notwithstanding, Seller makes no
representations or warranties with respect to the amount of any net operating
losses of the Companies.
3.11 Employee Matters. Neither Company has any employees.
3.12 Absence of Change or Event. Except as set forth in
Schedule 3.12, since September 30, 1994, the Companies have conducted their
respective businesses only in the ordinary course and have not:
(a) when considered as a whole, incurred any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or
to become due, except liabilities or obligations incurred in the
ordinary course of business and consistent with prior practice;
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(b) declared or paid any dividend or made any other payment
or distribution in respect of their capital stock, or directly or
indirectly redeemed, purchased or otherwise acquired any of their
capital stock; or
(c) made or changed any election concerning Taxes or Tax
Returns, changed an annual accounting period, adopted or changed any
accounting method, filed any amended return or claim for Tax refund,
entered into any closing agreement with respect to Taxes, settled any
Tax claim, examination, audit or assessment or surrendered any right
to claim a refund of Taxes or obtained or entered into any Tax ruling,
agreement, contract, understanding, arrangement or plan.
3.13 Compliance With Law. (a) Except as set forth in
Schedule 3.13(a), the operations and activities of the Companies have complied
and are in material compliance in all respects with all applicable federal,
state and local laws, including, without limitation, health and safety statutes
and regulations and all Environmental Laws, including, without limitation, all
restrictions, conditions, standards, limitations, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder.
The foregoing provisions of this paragraph (a) shall be deemed not to be
breached with respect to any matter relating solely to Seller and which matter
reflects an item which is not adverse to Seller and does not affect the value
of the assets being purchased hereunder.
(b) Schedule 3.13(b) sets forth all material federal, state,
local and foreign governmental licenses, permits and other authorizations
("Permits") of the Companies.
3.14 Disclosure. (a) To Seller's best knowledge, no
representations or warranties by Seller in this Agreement, including the
Schedules, and no statement contained in any document (including, without
limitation, the financial statements, certificates, or other writings furnished
or to be furnished by Seller to Buyer or any of its representatives pursuant to
the provisions hereof or in connection with the transactions contemplated
hereby), contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
or therein not misleading.
(b) Seller has furnished or caused to be furnished to Buyer
complete and correct copies of all agreements, instruments and documents set
forth on a Schedule. Each of the Schedules is complete and correct.
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3.15 Seller's Best Knowledge. The term "Seller's best
knowledge", shall mean the best knowledge of John T. McCormack, President of
Seller, after due inquiry.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof
and as of the Closing Date that:
4.1 Organization. Buyer is a corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as currently
conducted.
4.2 Corporate Authority. Buyer has full corporate power
and authority to enter into the Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Buyer of the Agreements have been duly authorized by all requisite corporate
action. This Agreement has been, and each of the other Agreements will be as
of the Closing Date, duly executed and delivered by Buyer, and (assuming due
execution and delivery by Seller) this Agreement constitutes, and each of the
other Agreements when executed and delivered will constitute, a valid and
binding obligation of Buyer, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally or by general equitable
principles.
4.3 No Violation. Except as set forth in Schedule 4.3,
and except for any notice, consent or approval contemplated by Permitted Lien
Exceptions, Buyer is not subject to or bound by any provision of:
(a) to the best of Buyer's knowledge, any law,
statute, rule, regulation or judicial or administrative decision,
(b) any articles or certificate of incorporation
or by-laws,
(c) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, other instrument or
agreement, license, permit, trust, custodianship, other restriction,
or
(d) to the best of Buyer's knowledge any
judgment, order, writ, injunction or decree of any court, governmental
body, administrative agency or arbitrator,
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that would prevent or be violated by, or under which there would be
a default as a result of, or under which there would be a default or
right of cancellation, termination, payment or acceleration of
payment as a result of, the execution, delivery and performance by
Buyer of the Agreements and the consummation of the transactions
contemplated hereby and thereby. Except as set forth in Schedule 4.3,
and except for notices, consents or approvals contemplated by
Permitted Lien Exceptions, no consent, approval or authorization of
or declaration or filing with any Person is required for the valid
execution, delivery and performance by Buyer of the Agreements and the
consummation of the transactions contemplated hereby and thereby.
4.4 Investment Intent. Buyer is acquiring the Shares for its
own account for investment and not with a view to any distribution thereof.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
OF SELLER AND BUYER
5.1 Conduct of Business Prior to the Closing Date. Seller
agrees that, between the date hereof and the Closing Date, except as
contemplated by this Agreement or permitted by written consent of Buyer, Seller
shall cause each of the Companies to operate its respective business only in
the ordinary course consistent with prior practice and not to take any action
of the nature referred to in Section 3.12, except as permitted therein.
5.2 Tax Covenants: (a) Seller shall cause the Companies to
be included in Seller's consolidated federal income Tax Returns for all periods
for which they are eligible to be so included, including without limitation the
period from January 1, 1995 to the Closing Date, and in any other required
state, local and foreign consolidated, affiliated, combined, unitary or other
similar group Tax Returns that include Seller or any affiliate of Seller for
all Pre-Closing Periods for which either of them is required to be so included.
Seller shall (A) timely prepare and file all such Returns and timely pay when
due all Taxes relating to such Returns and (B) timely prepare and file, or
cause to be prepared and filed, all other Returns of the Companies (x) for all
taxable periods ending on or prior to the Closing Date or (y) required to be
filed prior to the Closing Date, taking into account extensions of the time to
file, and timely pay, or cause to be paid, when due all Taxes relating to such
Returns. Prior to the filing of any Return described in the preceding sentence
that was not filed before the Closing Date (other than Seller's consolidated
federal income Tax Return for the 1994 taxable year and any other required
state, local and foreign consolidated, affiliated, combined, unitary or other
similar group Tax Returns for the 1994 taxable year that include Seller),
Seller shall provide Buyer with a substantially final draft of such Return
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(or, with respect to Returns described in clause (A) above, the portion of such
draft Return that relates to either of the Companies) at least fifteen (15)
business days prior to the due date for filing such Return, and Buyer shall
have the right to review such Return prior to the filing of such Return. Buyer
shall notify Seller of any reasonable objections Buyer may have to any items
set forth in such draft Returns, and Buyer and Seller agree to consult and
resolve in good faith any such objections and to mutually consent to the filing
of such Returns. Such Returns shall be prepared or completed in a manner
consistent with prior practice of Seller and the Companies with respect to
Returns concerning the income, properties or operations of the Companies
(including elections and accounting methods and conventions), except as
otherwise required by law or regulation or otherwise agreed to by Buyer prior
to the filing thereof.
(b) Seller and Buyer shall use their best efforts to agree,
on or prior to the Closing Date, to an allocation of the Purchase Price
(together with liabilities assumed hereunder and other relevant items) among
the Assets, the NMI Shares and the OXA Shares. Provided the parties are able
to agree to an allocation, such allocation will comply with the requirements of
Code Section 1060 and the Temporary Treasury Regulations thereunder. Seller
and Buyer represent, warrant and agree that such allocation will be determined
through arm's length negotiations. Seller and Buyer each agrees that, to the
extent they are able to agree to such an allocation and to the extent permitted
by applicable law, it will adopt and utilize the amounts allocated to each of
the Assets (or class of assets), the NMI Shares and the OXA Shares for purposes
of all federal, state and other income Tax returns or reports of any nature
filed by it and that it will not voluntarily take any position inconsistent
therewith upon examination of any such Tax returns or reports, in any claim for
refund, in any litigation or otherwise with respect to such Tax returns or
reports.
(c) Any Taxes with respect to either of the Companies that
relate to a tax period beginning before the Closing Date and ending after the
Closing Date (an "Overlap Period") shall be apportioned between Seller and
Buyer, (i) in the case of real and personal property Taxes (and any other
Taxes not measured or measurable, in whole or in part, by net or gross income
or receipts), on a per diem basis and, (ii) in the case of other Taxes, as
determined from the books and records, including workpapers, of the Companies
during the portion of such period ending on the Closing Date and the portion of
such period beginning on the day following the Closing Date consistent with the
past practices of Seller and the Companies. Buyer shall cause the Companies to
file any Returns for any Overlap Period, and Buyer shall pay, or cause to be
paid, all state, local or foreign Taxes shown as due on any such Returns.
Prior to the filing of any Return described in the preceding sentence, Buyer
shall provide Seller with a draft of such Return at least fifteen
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(15) business days prior to the due date for filing such Return, and Seller
shall have the right to review such Return prior to the filing of such Return.
Seller shall notify Buyer of any reasonable objections Seller may have to any
items set forth in such draft Returns, and Buyer and Seller agree to consult
and resolve in good faith any such objections and to mutually consent to the
filing of such Returns. Seller shall pay Buyer its share of any such Taxes (to
the extent Seller is liable therefor in accordance with this Section 5.2(c) and
to the extent not already paid by Seller) due pursuant to the filing of any
such Returns under the provisions of this Section 5.2(c) within five (5)
business days of receipt of notice of such filing by Buyer, which notice shall
set forth in reasonable detail the calculations regarding Seller's share of
such Taxes.
(d) Seller shall have the right to represent the interests of
the Companies in any Tax audit or administrative or court proceeding relating
to any Returns in respect of any period ending on or prior to the Closing Date
(including any proceeding relating to either of the Companies for Pre-Closing
Periods) and to employ counsel reasonably acceptable to Buyer at its own
expense. Buyer agrees to cooperate fully with Seller and its counsel in the
defense against or compromise of any claim in said proceeding. Buyer shall
have the right to represent the interests of the Companies in any such audits
or proceedings for any Overlap Period; provided that, Buyer shall keep Seller
informed on a reasonable basis of the status of such audits or proceedings and
review any proposed or final assessment with respect to any Overlap Period with
Seller. In the event that (i) Seller compromises or settles any Tax claim, or
consents or agrees to any Tax liability, relating to the Companies for any
Pre-Closing Period or (ii) Buyer compromises or settles any Tax claim, or
consents or agrees to any Tax liability, relating to the Companies for any
Overlap Period, the other party shall have the right to review such compromise,
settlement, consent or agreement. Notwithstanding anything to the contrary
contained or implied in this Agreement, without the prior written approval of
the other party, neither Seller or any affiliate of Seller, on the one hand,
nor Buyer or any affiliate of Buyer, on the other hand, shall agree or consent
to compromise or settle, either administratively or after the commencement of
litigation, any issue or claim arising in any such audit or proceeding, or
otherwise agree or consent to any Tax liability, relating to the Companies, to
the extent that any such compromise, settlement, consent or agreement may
materially affect the Tax liability of the other party, any of its affiliates,
or either of the Companies, (x) in the case of Seller, acting in respect of a
Pre-Closing Period, for any period ending after the Closing Date and (y) in the
case of Buyer, acting in respect of an Overlap Period, for any period ending
on or before the Closing Date.
(e) Buyer shall promptly notify Seller in writing upon
receipt by Buyer, any affiliate of Buyer, or either of the Companies of notice
of any pending or threatened Tax audits or
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assessments relating to the income, properties or operations of either of the
Companies for Pre-Closing Periods only, so long as Pre-Closing Periods remain
open; provided, however, that failure by Buyer to comply with this Section
5.2(e) shall not affect Buyer's right to indemnification relating to Taxes to
the extent that such failure does not prejudice the rights of Seller. Seller
shall promptly notify Buyer in writing upon receipt by Seller or any affiliate
of Seller of notice of any pending or threatened Tax audits or assessments
relating to the income, properties or operations of either of the Companies for
Pre-Closing Periods only.
(f) Neither Seller nor any affiliate of Seller shall, without
the prior written consent of Buyer, file, or cause to be filed, any amended Tax
return or claim for Tax refund, with respect to either of the Companies for any
Pre-Closing Period, to the extent that any such filing may affect the Tax
liability of Buyer, any of its affiliates or either of the Companies for any
period ending after the Closing Date.
(g) Any and all existing Tax sharing, allocation,
compensation or like agreements or arrangements, whether or not written, that
include either of the Companies, including without limitation any arrangement
by which either of the Companies makes compensating payments to the other or to
any other member of any affiliated, consolidated, combined, unitary or other
similar Tax group for the use of certain Tax attributes, shall be terminated as
of the day before the Closing Date (pursuant to a writing executed on or before
the Closing Date by all parties concerned) and shall have no further force or
effect. All liabilities of either of the Companies to Seller or any affiliate
of Seller (for Taxes or otherwise pursuant to such agreements or arrangements)
shall be canceled on or prior to the Closing Date. Any and all powers of
attorney relating to Tax matters concerning either of the Companies shall be
terminated as to that Company on or prior to the Closing Date and shall have no
further force or effect.
(h) After the Closing Date, Buyer and Seller shall provide
each other, and Buyer shall cause the Companies to provide Seller, with such
cooperation and information relating to the Companies as either party
reasonably may request in (A) filing any Tax return, amended return or claim
for refund, (B) determining any Tax liability or a right to refund of Taxes,
(C) conducting or defending any audit or other proceeding in respect of Taxes
or (D) effectuating the terms of this Agreement. The parties shall retain, and
Buyer shall cause the Companies to retain, all returns, schedules and work
papers, and all material records and other documents relating thereto, until
the expiration of the statute of limitations (and, to the extent notified by
any party, any extensions thereof) of the taxable years to which such returns
and other documents relate and, unless such returns and other documents are
offered and delivered to Seller or Buyer, as applicable, until the final
determination of any Tax in respect of such years. Any information obtained
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under this Section 5.2 shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax return, amended return, or claim
for refund, determining any Tax liability or right to refund of Taxes, or in
conducting or defending any audit or other proceeding in respect of Taxes.
Notwithstanding the foregoing, neither Seller nor Buyer, nor any of their
affiliates, shall be required unreasonably to prepare any document, or
determine any information not then in its possession, in response to a request
under this Section 5.2(i).
(i) Seller shall deliver to Buyer, on or before the Closing
Date, a certificate, in the form of Exhibit C, to the effect that Seller is not
a "foreign person" within the meaning of Code Section 1445. If, on or before
the Closing Date, Buyer shall not have received such certificate, Buyer may
withhold from the Purchase Price payable at Closing to Seller pursuant hereto
such sums as are required to be withheld therefrom under Section 1445 of the
Code.
(j) Buyer and Seller shall share equally, and shall pay when
due, any liability for any transfer, gains, documentary, sales, use,
registration, stamp, value added or other similar Taxes payable by reason of
the transactions contemplated by this Agreement or attributable to the sale,
transfer or delivery of the Assets or Shares hereunder, and shall also share
equally all expenses related to the filing of all necessary Tax returns and
other documentation with respect to all such Taxes.
5.3 Expenses and Finder's Fees. Buyer and Seller will bear
their own expenses in connection with this Agreement and its performance.
Seller, on the one hand, and Buyer, on the other hand, each represents and
warrants to the other that the negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on in such a manner as not
to give rise to any valid claims against the other party or the Companies for a
brokerage commission, finder's fee or other like payment.
5.4 Access to Information and Confidentiality. Seller agrees
that Buyer may conduct such reasonable investigation with respect to the
business, business prospects, assets, liabilities (contingent or otherwise),
results of operations, employees and financial condition of the Companies as
will permit Buyer to evaluate its interest in the transactions contemplated by
this Agreement. Each of Seller and Buyer will hold and will cause its
representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the Companies
furnished to Buyer and all documents and information concerning Buyer furnished
to Seller in connection with the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been (a)
previously known by Buyer prior to its disclosure to Buyer by Seller, (b)
previously
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known by Seller prior to its disclosure to Seller by Buyer, (c) in the public
domain through no fault of either Seller or Buyer or (d) later lawfully
acquired by either Seller or Buyer from other sources that are not under an
obligation of confidentiality) and will not release or disclose such
information to any other Person, except in connection with this Agreement to
its lenders, auditors, attorneys, financial advisors and other consultants and
advisors. In the event that any party subject to the requirements of this
Section 5.4 is required pursuant to applicable law or regulation or required by
legal process to disclose any of such information protected by this Section,
such party will provide the other party with prompt written notice of such
request or receipt of such legal process to enable the other party to seek an
appropriate protective order and will consult with the other party to enable
the other party to take appropriate actions to resist or narrow the scope of
such request or process.
5. No Solicitation. Except as set forth in the last
sentence of this Section 5.5, Seller shall not, and shall direct each of the
Companies and its affiliates (other than CRSS Inc.), officers, employees,
representatives and agents not to, directly or indirectly, encourage, solicit,
initiate or engage in discussions or negotiations with, or provide any
non-public information to, any Person concerning any merger, sales of
substantial assets, sales of shares of capital stock or similar transactions
involving the Companies or enter into any agreement with respect thereto.
Seller will promptly communicate to Buyer the terms of any proposal which it
may receive in respect of all such transactions prohibited by the foregoing.
Seller shall be relieved of its obligations under this Section 5.5 to the
extent that it is advised in a written opinion of Utah counsel expert in the
area that it would be inconsistent with its fiduciary obligations to the
shareholders of Seller under Utah law to comply with this Section 5.5.
5.6 Press Releases. Except as required by law or stock
exchange regulation, any public announcements regarding the transactions
contemplated hereby shall be made only with the mutual consent of Seller and
Buyer. If any public announcement is required by law or applicable stock
exchange regulation, the parties hereto shall consult with each other
regarding, and coordinate, such announcements to the extent consistent with
such legal obligations.
5.7 Shareholder Approvals and Best Efforts; Reimbursement of
Expenses. As soon as is reasonably practicable after the execution of this
Agreement, Seller shall prepare and file with the SEC an information or proxy
statement with respect to the transactions contemplated hereby and which
complies with all applicable laws. Each party hereto shall furnish all
information concerning it and the holders of its capital stock as the other
party hereto may reasonably request in connection with such actions. Seller
shall call a shareholders' meeting (or
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cause such meeting to be called) in accordance with applicable laws to be held
as soon as practicable after the execution of this Agreement for the purpose of
voting upon this Agreement and the transactions contemplated hereby. In
connection with said shareholders' meeting, Seller shall prepare and file said
information or proxy statement with the SEC and Seller shall mail it to its
shareholders. The Board of Directors of Seller has approved this Agreement and
the transactions contemplated hereby and has recommended to Seller's
shareholders that they approve this Agreement and the transactions contemplated
hereby, subject only to the exercise of its Fiduciary Out (as defined below).
Seller shall use its best efforts to obtain all shareholder approvals and
creditor approvals necessary to consummate the transactions contemplated
hereby, except in each case to the extent that the Board of Directors of Seller
shall be advised in a written opinion of Utah counsel expert in the area that
it would be inconsistent with its fiduciary obligations to the shareholders of
Seller under Utah law to so use such best efforts (the "Fiduciary Out").
5.8 CRSS Release. Schedule 5.8 sets forth certain
obligations of CRSS Inc. with respect to guarantees of performance bonds,
letters of credit and other obligations of White River of a similar nature.
Buyer shall use its best efforts and cooperate with Seller and CRRS Inc. in
trying to substitute Buyer for CRSS Inc. as the obligor of such obligations, it
being understood and agreed that Buyer shall be under no obligation to pay any
consideration to the obligees of such obligations to obtain such substitutions.
To the extent CRSS Inc. is not released from such obligations, Buyer hereby
agrees to indemnify and hold harmless CRSS Inc. from such obligations under,
but not subject to the limitations of, Article 8 hereof and to provide to
Seller a letter of credit as security for said obligations from a bank having
total assets of not less than $100 milliion.
ARTICLE 6
CONDITIONS PRECEDENT OF BUYER
Buyer need not consummate the transactions contemplated by
this Agreement unless the following conditions shall be fulfilled:
6.1 Representations and Warranties. Except as otherwise
contemplated or permitted by this Agreement, (a) the representations and
warranties of Seller contained in this Agreement or in any certificate or
document delivered to Buyer pursuant hereto shall be deemed to have been made
again at and as of the Closing Date and shall then be true in all material
respects and (b) Seller shall have performed and complied in all material
respects with all agreements and conditions required by
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this Agreement to be performed or complied with by Seller prior to or on the
Closing Date, and Buyer shall have been furnished with a certificate of an
appropriate officer of Seller, dated the Closing Date, certifying to the effect
of clauses (a) and (b) of this Section 6.1.
6.2 Opinion of Counsel. Buyer shall have been furnished
with an opinion dated the Closing Date of Messrs. Van Cott, Bagley, Cornwall &
McCarthy, counsel for Seller, substantially in the form attached hereto as
Schedule 6.2.
6.3 No Injunction. No injunction, restraining order or
decree of any nature of any court or governmental or regulatory authority shall
exist against Buyer, Seller, the Companies or any of their respective
affiliates, or any of the principals, officers or directors of any of them,
that restrains, prevents or materially changes the transactions contemplated
hereby.
6.4 Consents. All consents of third parties, including,
without limitation, governmental authorities and non-governmental
self-regulatory agencies, and all filings with and notifications of
governmental authorities, regulatory agencies (including non-governmental
self-regulatory agencies) or other entities which regulate the business of
Buyer, Seller or any Company necessary on the part of Buyer, Seller or any
Company, to the execution and delivery of the Agreements and the consummation
of the transactions contemplated hereby and thereby and to permit the continued
operation of the Business in substantially the same manner after the Closing
Date as theretofore conducted, other than routine post-closing notifications or
filings, shall have been obtained or effected.
ARTICLE 7
CONDITIONS PRECEDENT OF SELLER
Seller need not consummate the transactions contemplated
hereby unless the following conditions shall be fulfilled:
7.1 Representations and Warranties. Except as otherwise
contemplated or permitted by this Agreement, (a) the representations and
warranties of Buyer contained in this Agreement or in any certificate or
document delivered to Seller pursuant hereto shall be deemed to have been made
again at and as of the Closing Date and shall then be true in all material
respects and (b) Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date, and Seller
shall have been furnished a
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certificate of an appropriate officer of Buyer, dated the Closing Date,
certifying to the effect of clauses (a) and (b) of this Section 7.1.
7.2 Opinion of Buyer's Counsel. Seller shall have been
furnished with an opinion dated the Closing Date of Messrs. Winthrop, Stimson,
Putnam & Roberts, special counsel for Buyer, substantially in the form attached
hereto as Schedule 7.2.
7.3 No Injunction. No injunction, restraining order or
decree of any nature of any court or governmental or regulatory authority shall
exist against Buyer, Seller, the Companies or any of their respective
affiliates, or any of the principals, officers or directors of any of them,
that restrains, prevents or materially changes the transactions contemplated
hereby.
7.4 Consents. All consents of third parties including,
without limitation, governmental authorities, and non-governmental
self-regulatory agencies, and all filings with and notifications of
governmental authorities, regulatory agencies (including non-governmental
self-regulatory agencies) or other entities which regulate the business of
Seller, necessary on the part of Seller, to the execution and delivery of the
Agreements and the consummation of the transactions contemplated hereby and
thereby, other than routine post-closing notifications or filings, shall have
been obtained or effected.
7.5 Shareholder Approval. Seller's shareholders shall have
approved this Agreement and the transactions contemplated hereby.
7.6 Fairness Opinion. A fairness opinion from an
investment banker or valuation firm selected by Seller and addressed to the
Board of Directors of Seller to the effect that the sale of the Shares and the
Assets is fair to Seller from a financial point of view (the "Fairness
Opinion") shall not have been withdrawn prior to Closing.
7.7 Security Documents. Buyer shall have executed and
delivered the Security Documents.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Seller. Seller hereby agrees to
defend, indemnify and hold harmless Buyer and each of the Companies and their
respective successors, assigns and affiliates (collectively, the "Buyer
Indemnitees") from and against any and all losses, deficiencies, liabilities,
damages, assessments, judgments, costs and expenses, including attorneys' fees
(both
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those incurred in connection with the defense or prosecution of the
indemnifiable claim and those incurred in connection with the enforcement of
this provision), (collectively, "Buyer Losses"), caused by, resulting from or
arising out of:
(a) (i) breaches of representation or warranty hereunder
on the part of Seller; (ii) failures by Seller to perform or otherwise
fulfill any undertaking or other agreement or obligation hereunder;
and (iii) any liabilities or obligations of Seller or either of the
Companies that arose prior to Closing (provided the Closing shall have
occurred), whether absolute or contingent, known or unknown, other
than the Assumed Liabilities;
(b) provided the Closing shall have occurred, any and all (i)
Taxes imposed on Seller or any affiliate of Seller (including, without
limitation, the Companies) for, or relating to, all Pre-Closing
Periods, including, but not limited to, (A) any liability of either of
the Companies under any Tax sharing agreement, whether or not written,
and (B) any Tax liability resulting from the termination, as of the
Closing Date, of either Company as a member of any consolidated,
affiliated, combined, unitary or other similar Tax group and (ii)
liabilities of Seller or any affiliate of Seller (including, without
limitation, the Companies) for Taxes imposed under Treasury Regulation
Section 1.1502-6 or any analogous state, local or foreign tax
provision, as a result of being a member of a consolidated,
affiliated, combined, unitary or other similar group for any taxable
period commencing before the Closing Date; and
(c) any and all actions, suits, proceedings, claims, demands,
incident to any of the foregoing or such indemnification;
provided, however, that if any claim, liability, demand, assessment, action,
suit or proceeding ("Proceeding") shall be asserted in respect of which a Buyer
Indemnitee proposes to demand indemnification ("Buyer Indemnified Claims"),
Buyer or such other Buyer Indemnitee shall notify Seller thereof, provided
further, however, that the failure to so notify Seller shall not reduce or
affect Seller's obligations with respect thereto except to the extent that
Seller is prejudiced thereby. Subject to rights of or duties to any insurer or
other third Person having liability therefor, Seller shall have the right
promptly upon receipt of such notice and after acknowledging liability to Buyer
therefor to assume the control of the defense, compromise or settlement of any
such Buyer Indemnified Claims (provided that any compromise or settlement must
be reasonably approved by Buyer), including, at its own expense, employment of
counsel reasonably satisfactory to Buyer; provided, however, that if Seller
shall have exercised its right to assume such control, Buyer may, in its sole
discretion and at its expense, employ counsel to represent it (in addition to
counsel employed by
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Seller) in any such matter, and in such event counsel selected by Seller shall
be required to reasonably cooperate with such counsel of Buyer in such defense,
compromise or settlement.
Seller may, without Buyer's prior written consent, settle or
compromise any such Proceeding or consent to entry of any judgment with respect
to any such Proceeding that requires solely the payment of money damages by
Seller and that includes as an unconditional term thereof the release by the
claimant or the plaintiff of the Buyer Indemnitees from all liability in
respect of such Proceeding. As a condition to asserting any rights under this
Article, each of the Buyer's Indemnitees must appoint Buyer as its sole agent
for all matters relating to any claim under this Article.
Buyer acknowledges that it has been responsible for the
management of White River, and therefore in no event shall Seller or any of its
affiliates be liable or otherwise responsible for, and in no event shall Buyer
be entitled to terminate this Agreement based on (i) any losses, deficiencies,
liabilities, acts or omissions of Buyer or any of its affiliates relating to
White River or (ii) any breach of representation, warranty or covenant of
Seller herein resulting therefrom.
8.2 Indemnification by Buyer. Buyer hereby agrees to
defend, indemnify and hold harmless Seller and its successors, assigns and
affiliates (collectively, "Seller Indemnitees") from and against any and all
losses, deficiencies, liabilities, damages, assessments, judgments, costs and
expenses, including attorneys' fees (both those incurred in connection with the
defense or prosecution of the indemnifiable claim and those incurred in
connection with the enforcement of this provision) (collectively, "Seller
Losses"), resulting from or arising out of:
(a) (i) breaches of representation and warranty hereunder on
the part of Buyer; (ii) failures by Buyer to perform or otherwise
fulfill any undertaking or agreement or obligation hereunder; (iii)
the Assumed Liabilities (provided the Closing shall have occurred);
and (iv) all other post-Closing liabilities of the Companies or White
River (provided the Closing shall have occurred) including, without
limitation, with respect to environmental matters arising after the
Closing as to which Seller is liable or claimed to be liable as a
secured party of White River; and
(b) any and all actions, suits, proceedings, claims and
demands incident to any of the foregoing or such indemnification;
provided, however, that if any Proceeding shall be asserted in respect of which
a Seller Indemnitee proposes to demand indemnification ("Seller Indemnified
Claims"), Seller or such other Seller Indemnitee shall notify Buyer thereof,
provided
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further, however, that the failure to so notify Buyer shall not reduce or
affect Buyer's obligations with respect thereto except to the extent that Buyer
is materially prejudiced thereby. Subject to rights of or duties to any
insurer or other third Person having liability therefor, Buyer shall have the
right promptly upon receipt of such notice and after acknowledging liability to
Seller therefor to assume the control of the defense, compromise or settlement
of any such Seller Indemnified Claims (provided that any compromise or
settlement must be reasonably approved by Seller) including, at its own
expense, employment of counsel reasonably satisfactory to Seller; provided,
however, that if Buyer shall have exercised its right to assume such control,
Seller may, in its sole discretion and at its expense, employ counsel to
represent it (in addition to counsel employed by Buyer) in any such matter, and
in such event counsel selected by Buyer shall be required to reasonably
cooperate with such counsel of Seller in such defense, compromise or
settlement.
Buyer may, without Seller's prior written consent, settle or
compromise any such Proceeding or consent to entry of any judgment with respect
to any such Proceeding that requires solely the payment of money damages by
Buyer and that includes as an unconditional term thereof the release by the
claimant or the plaintiff of the Seller Indemnitees from all liability in
respect of such Proceeding. As a condition to asserting any rights under this
Article, each of the Seller's Indemnitees must appoint Seller as its sole agent
for all matters relating to any claim under this Article.
8.3 Characterization of Indemnity Payments. Any
indemnification payment made pursuant to this Agreement shall be treated by the
parties for Tax purposes as an adjustment to the Purchase Price, unless
otherwise required by law.
8.4 Remedies Exclusive. The remedies provided herein
shall be exclusive and shall preclude the assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto; provided that this Section shall not preclude either party from
asserting that it was fraudulently induced by the other party to enter into
this Agreement.
8.5 Limitations. (a) In calculating the amount of any
Buyer Losses or Seller Losses for which Seller or Buyer, respectively, is
liable under this Article, there shall be taken into consideration the amount
of any insurance recoveries the Buyer's Indemnitees or the Seller's
Indemnitees, respectively, in fact receive as a direct consequence of the
circumstances to which the Buyer Losses or the Seller Losses, respectively,
related, or from which the Buyer Losses or Seller Losses, respectively,
resulted or arose (net of any additional costs (including, without limitation,
retrospective or future premiums, self-retention amounts, deductibles, legal
and administrative costs, costs of investigation and attorneys' fees (whether
or not
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incurred by any Buyer Indemnitee in connection with any action, suit,
proceeding or claim against the Company or Seller hereunder or by a Seller
Indemnitee against the Buyer hereunder), overhead and costs of compliance under
any insurance policy) of any nature incurred by reason of such recovery).
(b) Neither CRSS nor any of its affiliates other than
Seller shall be liable, directly or indirectly, to Buyer or any Buyer
Indemnitee with respect to any Buyer Losses, either pursuant to this Article 8
or otherwise, except to the extent set forth in the letter from CRSS to Buyer
dated the date hereof, substantially in the form of Exhibit A-2 hereof, and
except to the extent provided in Section 10.12.
(c) Except for Buyer Losses with respect to claims for
breach of Sections 3.4(a)-(b), 3.5 or 3.9(c) hereof, no claim or claims shall
be asserted by a Seller Indemnitee or a Buyer Indemnitee pursuant to the
provisions of this Section 8.1(a)(i) or Section 8.2(a)(i), unless and until the
aggregate amount of such damages for all Seller Indemnitees or Buyer
Indemnitees, as the case may be, exceeds $250,000 in the aggregate, in which
case the Seller Indemnitee or the Buyer Indemnitee, as the case may be, may
recover the full amount of such damages. No claim for Buyer Losses shall be
asserted by a Buyer Indemnitee by reason of a breach of Section 3.9(c) hereof
unless and until the aggregate amount of such Buyer Losses paid to Buyer
Indemnitees exceeds $100,000 in the aggregate, in which case the Buyer
Indemnitee may recover the full amount of such Buyer Losses. No claim for
Buyer Losses shall be asserted by a Buyer Indemnitee with respect to any
attorneys fees incurred by reason of a claim under Sections 3.4(a)-(b) or 3.5
hereof, if the underlying claim giving rise to such claim for Buyer Losses
shall not prevail, unless and until the aggregate amount of such Buyer Losses
paid to Buyer Indemnitees exceeds $100,000 in the aggregate, in which case the
Buyer Indemnitee may recover the full amount of such Buyer Losses (it being
understood and agreed that no threshold shall apply with respect to claims for
Buyer Losses by reason of a breach of Sections 3.4(a)-(b) and Section 3.5
(other than Buyer Losses comprising attorneys fees incurred in connection with
unsuccessful claims under said Sections)). Seller's liability hereunder for
claims under Section 8.1(a)(i) shall not exceed $10 million in the aggregate.
Buyer's liability hereunder for claims under Section 8.2(a)(i) shall not exceed
$10 million in the aggregate.
(d) Except with respect to damages recoverable by a Buyer
Indemnitee for an intentional breach of a representation, warranty, covenant or
other obligation hereunder (an "Intentional Breach"), the aggregate amount of
Buyer Losses recoverable by all Buyer Indemnitees for any breach of a
representation, warranty, covenant or other obligation hereunder shall be
limited to $250,000 in the aggregate if the Closing shall not have occurred.
Anything in this Agreement to the contrary notwithstanding, no Buyer Indemnitee
shall assert as Buyer Losses the amount of any
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benefit that would have accrued to such Buyer Indemnitee had the Closing
occurred and the release of litigation contemplated by Section 10.3 hereof
become effective.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Representations, Warranties and Covenants. The
covenants contained in this Agreement shall survive the Closing Date without
limitation. The representations and warranties contained herein shall survive
the Closing Date for a period of two (2) years, except that any representation
or warranty of Seller contained in Sections 3.1 (Corporate Organization and
Authority of Seller) through and including 3.6 (No Violation), 3.10 (Tax
Matters) and 3.13 (Compliance with Law) shall survive until expiration of the
applicable statute of limitations. Buyer's claim for indemnification under
Section 8.1(a)(i) for a breach of any representation or warranty shall be made
on or prior to the date, if any, on which the survival period for such
representation or warranty expires, it being understood that claims made on or
prior to such expiration date shall survive such expiration date.
ARTICLE 10
MISCELLANEOUS
10.1 Cooperation. Each of the parties hereto shall use its
reasonable efforts to take or cause to be taken all actions, to cooperate with
the other party hereto, with respect to all actions, and to do or cause to be
done all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.
10.2 Waiver. Any failure of Seller to comply with any of its
obligations or agreements herein contained may be waived only in writing by
Buyer. Any failure of Buyer to comply with any of its obligations or
agreements herein contained may be waived only in writing by Seller.
10.3 Mutual Release. Buyer and Seller hereby release the
other and each of their respective affiliates (and each of their respective
officers and directors), effective as of the Closing Date and conditional upon
the occurrence of the Closing, from all liability to the other as of the
Closing Date, including, without limitation, with respect to the ongoing
litigation and arbitration proceedings. In furtherance thereof, each shall
deliver at Closing a release in the form of Exhibit 10.3 attached hereto. No
party to such litigation shall pursue such litigation until the Closing or
until this Agreement shall have been terminated. Seller shall and shall cause
each of the
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Companies to file on the Closing Date a Notice of Dismissal with Prejudice or
similar document in proceedings pending in the District Court of Harris County,
Texas, 125th Judicial District, captioned, NaTec Resources, Inc. and NaTec
Minerals, Inc. v. D. George Harris & Associates, Inc., Harris Chemical Group,
Inc. and North American Chemical Company, having Cause No. 94-025523. Buyer
shall cause to be filed on the Closing Date a Notice of Withdrawal of Demand
for Arbitration and Statement of Claim in arbitration proceedings now pending
under the administration of the American Arbitration Association, New York
office, captioned, In the Matter of the Arbitration between North American
Carbonate Company and North American Bicarbonate Company, and NaTec Minerals,
Inc., and Oldexaer, Inc., having caption number 13-181-00582-94. Effective as
of the Closing, the parties hereto shall take all steps necessary to terminate
the mediation proceedings between the Members of White River now pending under
the auspices of the Center for Public Resources.
10.4 Capital Expenditure Program. Buyer and Seller hereby
agree to and approve the commencement of a capital expenditure program at White
River described in detail on Schedule 10.4 hereof, which expenditure program
shall commence immediately, and shall cause the management committee of White
River to approve said program and make a capital call therefor to the extent
White River does not have adequate funds to make such capital expenditures.
Such capital calls shall be made effective (the "Call Date") as of the date
that Seller mails a proxy or an information statement in respect of the
transactions contemplated hereby to its shareholders. These funds shall be
contributed by the owners of the membership interests in White River in
accordance with the Limited Liability Company Operating Agreement Among Buyer,
North American Bicarbonate Company and the Companies dated November 19, 1992
(the "Operating Agreement") on the 90th day following the Call Date. To the
extent that any party shall not honor such capital call by such 90th day, the
other party may, in its sole discretion, either (i) by paying all or a portion
of such unpaid amount, purchase all or a portion of the defaulting member's
Membership Interest (as defined in the Operating Agreement) (the amount of the
Membership Interest thus purchased will equal the portion of the unpaid amount
paid by the non-defaulting member divided by the net book value of White River)
or (ii) by contributing all or a portion of such unpaid amount and increase its
Membership Interest accordingly (the amount of the increase in Membership
Interest thus obtained will equal the portion of the unpaid amount contributed
by the non-defaulting member divided by the net book value of White River and
the Membership Interests of the members as provided in Section 3.03 of the
Operating Agreement will thereupon by deemed restated accordingly). The
provisions of this Section 10.4 shall remain in full force and effect
regardless of whether or not the Closing shall have occurred. If Seller shall
have honored any such capital call, Buyer and/or White River shall return the
amount thereof to Seller at the Closing if the Closing shall occur. Nothing in
this Section 10.4 shall prejudice or impair in
29
35
any way the claims or rights of either Buyer or Seller with respect to the
proceedings described in Section 10.3 above or the subject matters of those
proceedings.
10.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt
of: hand delivery; certified or registered mail, return receipt requested; or
telecopy transmission with confirmation of receipt:
(i) If to Seller, to:
Natec Resources, Inc.
1177 West Loop South
P.O. Box 56571
Houston, Texas 77256-6571
Telecopier: (713) 552-2538
Telephone: (713) 552-2344
Attention: John T. McCormack
with a copy to:
Van Cott, Bagley, Cornwall & McCarthy
50 South Main Street, Suite 1600
P.O. Box 45340
Salt Lake City, Utah 84145
Telecopier: (801) 534-0058
Telephone: (801) 532-3333
Attention: Brent Christensen, Esq.
(ii) If to Buyer, to
North American Chemical Company
c/o Harris Chemical Group, Inc.
399 Park Avenue, 32nd Floor
New York, New York 10022
Telecopier: (212) 207-6450
Attention: Donald G. Kilpatrick, Esq.
(with a copy to)
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telecopier: (212) 858-1500
Telephone: (212) 858-1000
Attention: Kenneth E. Adelsberg, Esq.
30
36
Such names and addresses may be changed by written notice to each person listed
above.
10.6 Governing Law and Consent to Jurisdiction; Dispute
Resolution. (a) This Agreement shall be governed by and construed in
accordance with the internal substantive laws and not the choice of law rules
of the State of New York.
(b) Subject to the next succeeding sentence, any judicial
proceeding brought against any party to this Agreement with respect to any
claim related to this Agreement, shall be brought in any court of competent
jurisdiction in the City of New York, and, by the execution and delivery of
this Agreement, each party to this Agreement accepts, generally and
unconditionally, the exclusive jurisdiction of such courts and any related
appellate court and irrevocably agrees to be bound by any judgment rendered
thereby in connection with any claim related to this Agreement and irrevocably
waives any objection it may now or hereafter have as to the venue of any such
proceeding brought in such a court or that such a court is an inconvenient
forum. Each party to this Agreement hereby waives personal service of process
and consents that service of process upon it may be made by certified or
registered mail, return receipt requested, at its address specified or
determined in accordance with the notice provisions of this Agreement, and
service so made shall be deemed completed on the third business day after such
service is deposited in the mail.
(c) EACH PARTY TO THIS AGREEMENT HEREBY WAIVES TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING ANY CLAIM
ARISING OUT OF OR RELATED TO THIS AGREEMENT.
10.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.8 Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.9 Entire Agreement. This Agreement, including the
Exhibits and Schedules hereto and the documents referred to herein, embodies
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
10.10 Amendment and Modification. This Agreement may be
amended or modified only by written agreement of the parties hereto.
10.11 Binding Effect; Benefits. This Agreement shall inure
to the benefit of and be binding upon the parties hereto
31
37
and their respective successors and assigns; nothing in this Agreement, express
or implied, is intended to confer on any Person other than the parties hereto
and their respective successors and assigns (and, to the extent provided in
Sections 8.1 and 8.2, the other Buyer Indemnitees and Seller Indemnitees) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
10.12 Assignability. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other party except
as follows: Buyer (i) may grant a security interest in its rights under this
Agreement to its lender(s) as security for Buyer's obligations to such
lender(s) (and such lender(s) may exercise its rights and remedies with respect
to such security interest) and (ii) may assign its rights under the Agreement
to any affiliate of Buyer; provided in each case that Buyer remain primarily
liable hereunder. Seller may assign all of its rights and obligations
hereunder to CRSS Inc. in which case Seller shall remain liable and CRSS Inc.
shall become liable for all of Seller's obligations hereunder.
10.13 Disclosure Letter. All references in this Agreement to
Schedules to this Agreement shall be deemed to mean Schedules to a disclosure
letter delivered by Seller to Buyer on the date hereof or to a disclosure
letter delivered by Buyer to Seller on the date hereof, as the case may be.
10.14 Certain References. The use of the terms "herein",
"hereof" or similar words contained in this Agreement shall refer to this
Agreement in its entirety unless there shall be a specific reference to the
contrary.
10.15 Supply of Sodium Bicarbonate. Seller hereby agrees to
use its best efforts to cause White River to be granted a right of first
refusal to supply sodium bicarbonate to any user (including, without
limitation, Seller) or licensee of technology or patents constituting Excluded
Assets and to permit White River to have the Seller's benefits of, and the
right to exercise on behalf of Seller, the right of first refusal set forth in
paragraph 10 of the Amending and Assignment Agreement made as of the 1st day of
April, 1994 between Seller, Paragon Environmental Systems and Airborne
Pollution Abatement Technologies, Inc.
32
38
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
NORTH AMERICAN CHEMICAL COMPANY
By /s/ John T. McCormack
-------------------------------
Name: John T. McCormack
Title: President
NATEC RESOURCES, INC.
By /s/ D. G. Kilpatrick
-------------------------------
Name: D. G. Kilpatrick
Title: Vice President
33
EX-2.B
3
AMENDMENT # 1 TO ACQUISITION AGREEMENT
1
EXHIBIT 2B
This AMENDMENT NO. 1 TO ACQUISITION AGREEMENT dated as of the July 31, 1995
(herein, together with the Schedules, Annexes and Exhibits attached hereto,
referred to as the "Amendment") between NORTH AMERICAN CHEMICAL COMPANY, a
Delaware corporation ("Buyer"), and NATEC RESOURCES, INC., a Utah corporation
(the "Seller").
W I T N E S S E T H :
WHEREAS, Buyer and Seller entered into that certain
Acquisition Agreement (including all exhibits and schedules thereto, the
"Agreement") between Buyer and Seller, dated as of April 5, 1995, pursuant to
which Buyer seeks to purchase and Seller seeks to sell the shares of capital
stock held by Seller in Natec Minerals, Inc. and Oldexaer, Inc., and pursuant
to which Buyer seeks to acquire, and Seller seeks to sell, transfer and convey,
certain assets and liabilities of Seller (the "Transactions"). All capitalized
terms used and not otherwise defined herein shall have the meaning ascribed to
them in the Agreement.
WHEREAS, Buyer and Seller desire to increase the amount of
consideration to be conveyed to Seller in exchange for deferring the delivery
of cash consideration and having White River assume, and become the obligor
with respect to, NACC's current obligation to pay $6 million to Seller.
WHEREAS, Buyer and Seller desire to make further amendments to
the Agreement as provided herein all in accordance with Section 10.10 of the
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained, the parties agree as follows:
Buyer and Seller hereby agree that the terms of the Agreement
be and hereby are modified and amended as follows:
1. Sections 1.2(a) and 1.2(b) and the Title thereof are
amended and restated in its entirety to read as follows:
"1.2 Consideration and Payment for Shares"
"(a) Consideration. The consideration for the Shares
and the Assets (as defined below) is $10,500,000,
payable on the terms and conditions set forth below
(the "Consideration").
2
(b) Payment of Consideration. The Consideration
shall be paid by Buyer as follows. At the Closing,
Buyer shall deliver to Seller $500,000 in immediately
available funds by wire transfer to an account
designated by Seller at least two business days prior
to the Closing Date (the "Cash Consideration"). In
addition, (i) Buyer shall deliver to Seller at the
Closing its non-negotiable note in the amount of
$4,000,000 bearing no interest, in the form of Exhibit
B-1 attached hereto (the "Note") and (ii) White River
shall deliver to Seller at the Closing its
non-negotiable note in the amount of $6,000,000
bearing no interest, in the form of Exhibit B-2
attached hereto (the "White River Note")(the Note and
the White River Note are collectively referred to
herein as the "Notes")."
2. Exhibit B to the Agreement is deleted and replaced in
its entirety with Exhibit B-1 attached hereto.
3. There shall be attached to the Agreement Exhibit B-2,
a copy of which is attached hereto and made a part hereof, and Exhibit B-2 is
incorporated in the Agreement to the extent such exhibit would be attached and
incorporated if attached to the Agreement upon original execution thereof.
4. The Security Agreement attached to the Agreement as
Schedule 1.3(a)(vii) is deleted and replaced with the Security Agreement
attached hereto as Schedule 1.3(a)(vii).
5. Section 10.3 of the Agreement is amended and restated
in its entirety to read as follows:
"10.3 Mutual Release. Buyer and Seller hereby
release the other and each of their respective
affiliates (and each of their respective officers and
directors), effective as of the date (the "Release
Date") of the payment in full of the White River
Note, from all liability to the other as of the
Release Date, including, without limitation, with
respect to the ongoing litigation and arbitration
proceedings. In furtherance thereof, each shall
deliver on the Release Date a release in the form of
Exhibit 10.3 attached hereto. No party to such
litigation shall pursue such litigation until the
Release Date or January 16, 1995. Seller shall and
shall cause each of the Companies to file on the
Release Date a Notice of Dismissal with Prejudice or
similar document in proceedings pending in the
District Court of Harris County, Texas, 125th
Judicial District, captioned,NaTec Resources, Inc.
and NaTec Minerals, Inc. v. D. George Harris &
Associates
2
3
Inc., Harris Chemical Group, Inc. and North American
Chemical Company, having cause No. 94-025523. Buyer
shall cause to be filed on the Release Date a
Notice of Withdrawal of Demand for Arbitration and
Statement of Claim in arbitration proceedings now
pending under the administration of the American
Arbitration Association, New York office, captioned In
the Matter of the Arbitration between North American
Carbonate Company and North American Bicarbonate
Company, and NaTec Minerals, Inc., and Oldexaer, Inc,
having caption number 13-181-00582-94. Effective as
of the Release Date, the parties hereto shall
take all steps necessary to terminate the mediation
proceedings between the members of White River now
pending under the auspices of the Center for Public
Resources."
6. Section 1.3(b)(iv)(3) of the Agreement is amended by
inserting the words "and the Excluded White River Assets (as defined in the
Security Agreement)" before the period and after the words "(collectively, the
"Security Documents")".
7. A new Section 1.3(c) of the Agreement shall be added
and read in its entirety as follows: "(c) At the Closing, there shall also be
delivered the White River Note, it being understood and agreed that no
representative of Seller (or its subsidiaries) on the White River management
committee will participate in the authorization of the issuance of the White
River Note."
8. Buyer shall cause the Amendment No. 1 to Limited
Liability Company Operating Agreement to be fully executed and delivered
effective as of the date hereof substantially in the form attached hereto as
Annex A to provide, among other things, that until the payment in full of the
principal amount of the White River Note, the management committee of White
River shall continue to be comprised of four managers, with two of its managers
to be designated by Seller (or, upon its liquidation, CRSS Inc.) and two
jointly by North American Carbonate Company, a Delaware corporation ("NACCarb")
and North American Bicarbonate Company, a Delaware corporation ("NABC").
9. The second sentence of Section 5.8 of the Agreement
is amended by inserting the following after the words "Buyer shall": ", after
payment of the White River Note," and the first clause of the third sentence
of Section [5.8] of the Agreement is amended to read as follows: "To the extent
CRSS Inc. is not released from such obligations after the Closing Date".
10. The parties hereby agree that until the payment in
full of the principal amount of the White River Note, the management committee
of White River shall continue to be comprised of four managers, with two of its
members to be
3
4
designated by Seller (or, upon its liquidation, CRSS Inc.) and two jointly by
NACCarb and NABC.
11. There is added a new Section 10.16 to the Agreement,
to read in its entirety as follows:
10.16 Purchase Option. Upon the occurrence
and continuance of an Event of Default under the
White River Note, the holder thereof, in its sole
discretion and upon ten (10) days' prior written
notice to Buyer, shall have the option to purchase,
in sole consideration of the cancellation of the
Notes, all of the Mortgaged Property (as defined in
the Deed of Trust) and all of the Collateral (as
defined in the Security Agreement)(the "Purchase
Option"). Buyer shall, and shall cause White River
to, execute any and all documents and take any and
all actions reasonably requested by Seller to effect
the transactions contemplated by this Agreement.
12. Buyer shall cause the Capital Contribution Agreement
to be executed and delivered effective as of the date hereof substantially in
the form attached hereto as Annex B to provide for the contribution by NACCarb
and NABC to White River of $5,850,000, on the terms and conditions set forth in
said agreement.
13. The reference to "August 31, 1995" in Section 2.2(b)
of the Agreement is hereby amended to read "September 30, 1995".
14. Except as specifically provided herein, the Agreement
shall continue in full force and effect in accordance with its terms without
amendment or modification.
4
5
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.
NATEC RESOURCES, INC.
By: /s/ John T. McCormack
------------------------------
Name: John T. McCormack
Title: President
NORTH AMERICAN CHEMICAL COMPANY
By: /s/ D. G. Kilpatrick
------------------------------
Name: D. G. Kilpatrick
Title: Vice President
5
EX-99.A
4
PRO FORMA NET ASSETS
1
EXHIBIT 99A
NATEC RESOURCES, INC.
PRO FORMA STATEMENT OF NET ASSETS IN LIQUIDATION
AS OF JUNE 30, 1995
NaTec Pro forma NaTec
Historical Adjustments(1) Pro forma
--------- -------------- ---------
Assets
------
Cash and cash equivalents $ 118,254 $ 500,000 (2) $ 118,254
(500,000)(3)
Accounts receivable 161,767 -- 161,767
Property, plant and equipment, net 50,988 -- 50,988
Investment in joint venture 9,478,581 (9,478,581)(2) --
Other assets 94,977 -- 94,977
Notes receivable from each NACC and White River 0 8,978,581 (2) 8,978,581
----------- ---------- -----------
9,904,567 (500,000) 9,404,567
Liabilities
-----------
Accounts payable 159,245 (159,245) --
Accrued expenses 184,112 (184,112) --
Amounts payable to related party 7,958,346 (156,643)(3) 7,801,703
Note payable 58,547 -- 58,547
Estimated costs during period of liquidation 200,000 -- 200,000
----------- ---------- -----------
8,560,250 (500,000) 8,060,250
----------- ---------- -----------
Net assets in liquidation 1,344,317 0 1,344,317
=========== ========== ===========
-----------------------------
(1) Reflects pro forma results giving effect to the asset sale to North
American Chemical Company, but does not give effect to the dissolution
and liquidation of NaTec Resources, Inc.
(2) To reflect cash received of $500,000, the $6 million promissory note
issued by White River Nahcolite Minerals Ltd. Liability Company
payable to NaTec Resources, Inc. (the "White River Note") (discounted
to present value of $5,823,325) and the $4 million promissory note
issued by North American Chemical Company payable to NaTec Resources,
Inc. (the "NACC Note") (discounted to present value of $3,155,256) in
exchange for the sale of the assets and related business. Such notes
have been discounted to present value at an interest rate of 9%. The
discounted valuation of the White River Note assumes the entire $6
million will be collected on January 15, 1996. The
2
discounted valuation of the NACC Note assumes it will be collected
$600,000 in the first year and $700,000 in the second year (each
such amount being the minimum required to be paid on the NACC Note
in those years in accordance with its terms), with the $2.7 million
balance treated as being collected on the third anniversary of the
NACC Note.
(3) To pay current obligations, including a portion of the obligations to
CRSS Inc. which are due and payable as of June 30, 1995. Such
obligations consist of a convertible note in the principal amount of
approximately $4,100,000, three promissory notes in the aggregate
principal amount of approximately $1,430,000, and accrued interest of
approximately $600,000.
EX-99.B
5
PRO FORMA STATEMENT OF OPERATIONS
1
EXHIBIT 99B
NATEC RESOURCES, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
NaTec Pro forma NaTec
Historical Adjustments Pro forma
----------- ------------ -----------
Revenues $ 1,106,173 $ (926,901) (1) $ 179,272
Cost of sales 1,101,424 (909,108) (1) 192,316
------------ ---------- -----------
Gross profit (loss) 4,749 (17,793) (13,044)
Operating costs (2) 1,147,585 (300,000) (3) 847,585
Equity loss in joint venture (193,874) 193,874 (4) --
------------ ---------- -----------
Loss from operations (1,336,710) 476,081 (860,629)
Other income and expenses
Interest income 85,948 (51,281) (5) 316,441
281,774 (6)
Interest expense (540,517) -- (540,517)
Loss on sale of stock -- (991,644) (7) (991,644)
Adjustment to liquidation basis (2,035,147) 1,385,147 (8) (650,000)
------------ ---------- -----------
(2,489,716) 623,996 (1,865,720)
------------ ---------- -----------
Net loss (3,826,426) 1,100,077 (2,726,349)
Preferred stock dividends (1,430,000) -- (1,430,000)
------------ ---------- -----------
Net loss attributable to common shares $(5,256,426) $ 1,100,077 $(4,156,349)
=========== =========== ===========
Net loss from common shares $ (0.21) $ (0.16)
=========== ===========
Average shares outstanding 25,482,616 25,482,616
=========== ============
EX-99.C
6
PRO FORMA OPERATIONS ADJUSTMENTS
1
EXHIBIT 99C
NATEC RESOURCES, INC.
PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
PROFORMA STATEMENT OF OPERATIONS ADJUSTMENTS
(1) To reduce revenues and cost of sales of sodium bicarbonate sales under
supply agreements which will be sold to North American Chemical
Company ("NACC"). NaTec Resources, Inc. ("NaTec") has no material
continuing liability to customers under such supply agreements.
(2) Includes only fixed overhead and administrative costs which will not
be reduced as a result of the asset sale to NACC. All other costs
related to the sale of sodium bicarbonate are included in "Cost of
sales" in the Pro Forma Statement of Operations.
(3) To adjust for salaries and other costs associated with employees that
would have been terminated as of January 1, 1994 if the transaction
had occurred on that date.
(4) To reflect the asset sale contemplated by the Acquisition Agreement
dated as of April 5, 1995 between NACC and NaTec (the "Acquisition
Agreement") as if the transaction occurred as of January 1, 1994.
(5) To reduce imputed interest income on the non-interest bearing
promissory note in the original principal amount of $8 million issued
by NACC in 1992 upon NACC's purchase of 50% of NaTec's interest in
White River Nahcolite Minerals Ltd. Liability Company, such note to be
cancelled under the terms of the Acquisition Agreement.
(6) To reflect imputed interest income to be received by NaTec under the
terms of the Acquisition Agreement on the $6 million promissory note
issued by White River Nahcolite Minerals Ltd. Liability Company
payable to NaTec Resources, Inc. and the $4 million promissory note
issued by North American Chemical Company payable to NaTec Resources,
Inc.
(7) To reflect the estimated loss on asset sale to NACC under the terms of
the amended Acquisition Agreement.
(8) To reduce the adjustment resulting from the adoption of the
liquidation basis of accounting for amounts related to the estimated
loss on the asset sale to NACC.
EX-99.D
7
PRESS RELEASE DATED 8/24/95
1
EXHIBIT 99D
NEWS RELEASE Contact: Mr. John McCormack
(713) 552-2552
NATEC RESOURCES ANNOUNCES THE SALE OF SUBSTANTIALLY ALL ITS ASSETS TO NORTH
AMERICAN CHEMICAL COMPANY AND ITS LIQUIDATION AND DISSOLUTION
HOUSTON, TEXAS; NEW YORK, NY; August 24, 1995 --
NaTec and North American Chemical Company (NACC), a unit of Harris
Chemical North America, Inc., jointly announced today that they have
consummated today the sale by NaTec of substantially all of its assets to NACC
pursuant to their previously announced Acquisition Agreement. The assets sold
include NaTec's 50% interest in White River Nahcolite Minerals, Ltd. Liability
Co. (White River), the owner of a sodium bicarbonate mining and processing
facility located in Colorado in which NaTec has been a joint venture partner
since 1992. NaTec retained its assets unrelated to the operation of White
River.
Under the terms of the amended Acquisition Agreement, the sales price
was $10.5 million, consisting of $500,000 cash and the delivery of a $6 million
non-interest bearing promissory note maturing January 15, 1996 by White River,
and NACC's $4 million non-interest bearing promissory note, which has a
three-year term. Both notes are secured by a security interest covering the
White River facility.
NaTec also announced today the dissolution and liquidation of all of
its assets immediately following the asset sale to NACC. As a result of the
liquidation, NaTec satisfied its outstanding prior debts to creditors, but did
not have sufficient assets to pay the entire liquidation preference to its
preferred stockholder or to make any distribution to holders of NaTec's common
stock.