EX-2 3 0003.txt CONFORMED COPY -------------- STOCK PURCHASE AGREEMENT by and between KINARK CORPORATION and NAWC HOLDING COMPANY, INC. As of June 23, 2000 TABLE OF CONTENTS ----------------- ARTICLE 1 PURCHASE AND SALE OF STOCK 1 Section 1.1 Purchase and Sale 1 Section 1.2 Consideration 1 Section 1.3 Accounts Receivable Adjustment and Accounts Payable Adjustment. 2 Section 1.4 Closing 4 Section 1.5 Deliveries by Seller 4 Section 1.6 Deliveries by Buyer 5 ARTICLE 2 RELATED MATTERS 5 Section 2.1 Use of Seller's Names and Logos 5 Section 2.2 No Ongoing or Transition Services 6 Section 2.3 Post-Closing Insurance Coverages. 6 Section 2.4 Intercompany Accounts 7 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER 7 Section 3.1 Organization 7 Section 3.2 Authorization 8 Section 3.3 Capital Stock 8 Section 3.4 Ownership of the Common Stock 9 Section 3.5 Consents and Approvals; No Violations 9 Section 3.6 Financial Statements 10 Section 3.7 Absence of Material Adverse Effect 10 Section 3.8 Title, Ownership and Related Matters 10 Section 3.9 Leases 11 Section 3.10 Intellectual Property 11 Section 3.11 Environmental Matters 12 Section 3.12 Litigation 13 Section 3.13 Compliance with Applicable Law 13 Section 3.14 Certain Contracts and Arrangements 13 Section 3.15 Employee Benefit Plans; ERISA 14 Section 3.16 Labor Matters 16 Section 3.17 Taxes 16 Section 3.18 Certain Fees 18 Section 3.19 Subsidiaries 18 Section 3.20 Insurance 18 Section 3.21 Undisclosed Liabilities 18 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER 19 Section 4.1 Organization and Authority of Buyer 19 Section 4.2 Consents and Approvals; No Violations 19 Section 4.3 Availability of Funds 20 Section 4.4 Litigation 20 Section 4.5 Investigation by Buyer 20 Section 4.6 Certain Fees 20 -i- Section 4.7 Investment Representations 21 ARTICLE 5 COVENANTS 21 Section 5.1 Conduct of the NAWC Business 21 Section 5.2 Access to Information 22 Section 5.3 Consents 23 Section 5.4 Reasonable Best Efforts 23 Section 5.5 Public Announcements 23 Section 5.6 Covenant to Satisfy Conditions 24 Section 5.7 Employees; Employee Benefits 24 Section 5.8 Certain Tax Matters 25 Section 5.9 Prior Knowledge 32 Section 5.10 Supplemental Disclosure 32 Section 5.11 Inquiries and Negotiations 33 Section 5.12 Post-Closing Insurance Coverages. 33 ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE PARTIES 34 Section 6.1 Conditions to Each Party's Obligation 34 Section 6.2 Conditions to Obligations of Seller 34 Section 6.3 Conditions to Obligations of Buyer 35 ARTICLE 7 TERMINATION 36 Section 7.1 Termination 36 Section 7.2 Procedure and Effect of Termination 37 ARTICLE 8 SURVIVAL OF REPRESENTATIONS 38 Section 8.1 Survival of Representations, Warranties and Agreements 38 ARTICLE 9 MISCELLANEOUS 38 Section 9.1 Fees and Expenses 38 Section 9.2 Further Assurances 39 Section 9.3 Notices 39 Section 9.4 Severability 40 Section 9.5 Binding Effect; Assignment 41 Section 9.6 No Third Party Beneficiaries 41 Section 9.7 Interpretation 41 Section 9.8 Jurisdiction and Consent to Service 42 Section 9.9 Entire Agreement 42 Section 9.10 Governing Law 42 Section 9.11 Specific Performance 42 Section 9.12 Counterparts 43 Section 9.13 Amendment, Modification and Waiver 43 Section 9.14 Knowledge 43 Section 9.15 Schedules and Exhibits 43 -ii- STOCK PURCHASE AGREEMENT ------------------------ STOCK PURCHASE AGREEMENT, dated June 23, 2000 (this "Agreement"), by and between Kinark Corporation, a Delaware corporation ("Seller"), and NAWC Holding Company, Inc., an Illinois corporation ("Buyer"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Seller owns all of the issued and outstanding shares of common stock (the "Shares") of North American Warehousing Company, an Illinois corporation, which conducts the "NAWC Business" of Seller (the "Company"); and WHEREAS, pursuant to the terms and conditions of this Agreement, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Shares. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE 1 PURCHASE AND SALE OF STOCK Section 1.1 Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, at the closing provided for in Section 1.4 hereof (the "Closing"), Seller agrees to sell, transfer and deliver to Buyer, and Buyer agrees to purchase, acquire and accept from Seller, the Shares, free and clear of all liens, claims, options, security interests or other encumbrances. Section 1.2 Consideration. Subject to the terms and conditions of this Agreement and subject to adjustment of the Purchase Price as provided for herein, in consideration of the aforesaid sale, transfer and delivery of the Shares, Buyer will deliver or cause to be delivered to Seller at the Closing $166,000 (the "Purchase Price") by wire transfer of immediately available federal funds to such bank account as shall be designated in writing by Seller to Buyer prior to such execution or at least three days prior to the Closing, as the case may be. Such Purchase Price shall be subject to adjustment as set forth in Section 1.3 hereof. Section 1.3 Accounts Receivable Adjustment and Accounts Payable Adjustment. (a) Adjustment. (i) If the gross accounts receivable of the Company as reflected on the Accounts Receivable and Accounts Payable Statement (as defined in Section 1.3(b)) (the "Closing Accounts Receivable") is less than $172,000 (the "Target Accounts Receivable"), the Purchase Price shall be reduced by the amount that the Target Accounts Receivable exceeds the Closing Accounts Receivable (the "Accounts Receivable Deficit"). The amount of any Accounts Receivable Deficit shall be payable by Seller to Buyer pursuant to Section 1.3(a)(iv). (ii) If the Closing Accounts Receivable is greater than $222,500, the Purchase Price shall be increased by the amount that the Closing Accounts Receivable exceeds $222,500 (the "Accounts Receivable Surplus"). The amount of any Accounts Receivable Surplus shall be payable by Buyer to Seller pursuant to Section 1.3(a)(iv). (iii) If the accounts payable of the Company on the Closing Date (as prepared consistently with prior periods) (such accounts payable totaled $50,524 on the Financial Statements, as defined in Section 3.6) exceed $57,500, the Purchase Price shall be reduced by the amount, if any, that the accounts payable exceeds $57,500 (the "Accounts Payable -2- Deficit"). The amount of any Accounts Payable Deficit shall be payable by Seller to Buyer pursuant to Section 1.3(a)(iv). (iv) Any amounts payable made pursuant to this Section 1.3(a) shall first offset the Purchase Price at the Closing, if applicable and if determined as of the Closing, and second, to the extent such amounts are not used to offset the Purchase Price, be payable within three business days of the date of determination thereof by wire transfer of immediately available federal funds and shall include simple interest calculated at the "Federal Funds Rate" (as reported in the "Money Rates" table of The Wall Street Journal on the Closing Date (as defined in Section 1.4)) from the Closing Date to the date of payment. (b) Accounts Receivable and Accounts Payable Statement. (i) Within ten (10) days after the Closing Date, Buyer shall deliver to Seller an accounts receivable and accounts payable statement (the "Proposed Accounts Receivable and Accounts Payable Statement") for the Company which shall specify the gross accounts receivable and accounts payable for the Company as of the Closing Date. (ii) If Seller disagrees with the Proposed Accounts Receivable and Accounts Payable Statement, it shall, within ten (10) days after receipt of the Proposed Accounts Receivable and Accounts Payable Statement, give written notice to Buyer setting forth the basis of Seller's objection in reasonable detail and, to the extent practicable, the adjustments to the Proposed Accounts Receivable and Accounts Payable Statement which Seller believes should be made. Failure to so notify Buyer shall constitute acceptance and approval of the Proposed Accounts Receivable and Accounts Payable Statement. If Buyer agrees that any change proposed by Seller is appropriate, the change shall be made to the Proposed Accounts Receivable and Accounts Payable Statement. If the proposed change is in dispute by Buyer, then -3- Seller and Buyer shall negotiate in good faith to resolve such dispute as expeditiously as possible. (iii) If, after a period of 15 days following the date on which Seller gives Buyer notice of any proposed change, any such proposed change still remains disputed, then Deloitte & Touche, or such accounting firm as selected by Buyer and accepted in writing by Seller, such acceptance not to be unreasonably withheld (the "Accounting Firm"), shall be engaged to resolve any remaining disputes. The Accounting Firm shall determine, based solely on independent review of material it deems appropriate, only those issues still in dispute. The Accounting Firm's determination shall be made within 30 days following the date on which the dispute is submitted and shall be final, binding and conclusive. The fees and any expenses of the Accounting Firm shall be shared equally by Seller and Buyer. (iv) The final "Accounts Receivable and Accounts Payable Statement" shall be the Proposed Accounts Receivable and Accounts Payable Statement as agreed upon by the parties pursuant to Section 1.3(b)(ii) or as determined by the Accounting Firm pursuant to Section 1.3(b)(iii). Section 1.4 Closing. The Closing of the transactions contemplated by this Agreement shall take place no later than June 30, 2000, at 11:00 a.m., local time, at the offices of the Company, or on such other date and at such other time or place as the parties may agree. The date of the Closing is sometimes referred to herein as the "Closing Date." Section 1.5 Deliveries by Seller. At the Closing, Seller will deliver or cause to be delivered to Buyer (unless delivered previously) the following: -4- (a) The stock certificate or certificates (or similar evidence of ownership) representing all of the Shares, duly endorsed in blank or accompanied by stock or similar powers duly executed in blank; (b) The resignations of all members of the Board of Directors of the Company; and (c) All other documents (including a good standing certificate for the Company from the Secretary of State of the State of Illinois), instruments and writings (which shall include an opinion letter from King & Spalding concerning the organization, authority and capital stock of the Company and the organization and authority of Seller) required or reasonably requested by Buyer to be delivered by Seller at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith. Section 1.6 Deliveries by Buyer. At the Closing, Buyer will deliver or cause to be delivered to Seller (unless previously delivered) the following: (a) the Purchase Price in accordance with Section 1.2 hereof; and (b) all other documents (including a good standing certificate for Buyer from the Secretary of State of the State of Illinois), instruments and writings (which shall include an opinion letter from Schwartz & Freeman concerning the organization and authority of Buyer) required or reasonably requested by Seller to be delivered by the Buyer at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith. ARTICLE 2 RELATED MATTERS --------------- Section 2.1 Use of Seller's Names and Logos. It is expressly agreed that Buyer is not purchasing, acquiring or otherwise obtaining any right, title or interest in the name -5- "Kinark Corporation", or any tradenames, trademarks, identifying logos or service marks related thereto or employing the word "Kinark," or any part or variation of any of the foregoing or any confusingly similar tradename, trademark or logo (collectively, the "Seller Trademarks and Logos"). Buyer agrees that, neither it nor any of its Affiliates (as hereinafter defined) shall make any use of the Seller Trademarks and Logos from and after the Closing Date. Section 2.2 No Ongoing or Transition Services. Except as otherwise agreed to in writing by Seller and Buyer, at the Closing, all data processing, accounting, insurance (other as described in Section 2.3 below), banking, personnel, legal, communications and other products or services provided to the Company by Seller or any Affiliate of such Seller, including any agreements or understandings (written or oral) with respect thereto, will terminate. Schedule 2.2 attached hereto sets forth all services provided by Seller or any Affiliate of Seller to the Company and required for the conduct by the Company of its business. Section 2.3 Post-Closing Insurance Coverages. Except as otherwise specified on Schedule 3.20, Seller shall pay the premiums for policies for the insurance coverages for the Company described on Schedule 3.20 through December 31, 2000, all such policies to be reasonably similar, in cost and coverage, to the policies in effect for the Company prior to the Closing Date. In addition, Seller shall, at Seller's sole cost and expense, pay (and indemnify, defend and hold the Buyer and the Company harmless from) all loss, cost and expense arising out of or related to any workers compensation claims made against the Company before the Closing; the Company shall be responsible for (and Buyer shall indemnify, defend and hold Seller harmless from) all loss, cost and expense arising out of or related to any workers compensation claims first made against the Company after the Closing. -6- Section 2.4 Intercompany Accounts. On or prior to the Closing Date, all intercompany accounts between the Company, on the one hand, and the Seller or any of its Affiliates, on the other hand, shall be canceled. No adjustment shall be made to the Purchase Price as a result of any such cancellation. The parties agree that all funds deposited in the Company's Lockbox No. 77-52465 at First American National Bank on or prior to the Closing Date shall be paid to the Seller. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller hereby represents and warrants to Buyer as of the date hereof and as of the Closing Date as follows: Section 3.1 Organization. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Illinois, and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its operations as now being conducted. Schedule 3.1 sets forth all governmental permits and licenses held by the Company with respect to the conduct of the NAWC Business. The Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property or assets owned, leased or operated by the Company or the nature of the business conducted by the Company makes such qualification necessary, except where the failure to be so duly qualified or licensed and in good standing would not individually or in the aggregate have a Company Material Adverse Effect (as hereinafter defined). Schedule 3.1 sets forth each state in which the Company is currently qualified to do business. As used herein, a "Company Material Adverse Effect" shall mean any event, change or effect, individually or in the aggregate, with such other events, changes or effects, that has occurred which has a -7- material adverse effect upon the financial condition or business of the Company. Attached hereto are complete and correct copies of the articles of incorporation, including all amendments thereto, and by-laws of the Company, as currently in effect. Section 3.2 Authorization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has the corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder. The execution and delivery of this Agreement and the performance by Seller of its covenants and agreements hereunder have been duly and validly authorized by the Board of Directors of Seller and no other corporate proceedings on the part of Seller are necessary to authorize the execution, delivery and performance of this Agreement or the consummation of the transactions so contemplated. This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or limiting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Section 3.3 Capital Stock. Schedule 3.3 sets forth the authorized, issued and outstanding capital stock of all classes of the Company. The Shares constitute all of the issued and outstanding shares of common stock of the Company. The Shares have been validly issued and are fully paid and non- assessable. There are not any outstanding securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of the Company, nor are there any subscriptions, -8- warrants, options, rights or other arrangements or commitments (other than this Agreement) which could obligate the Company to issue any shares of its capital stock. Section 3.4 Ownership of the Common Stock. Seller is the sole owner of the Shares. Except as set forth on Schedule 3.4, Seller has good title to the Shares, free and clear of all liens, claims, options, security interests or other encumbrances. At the Closing, the exceptions set forth in Schedule 3.4 shall be discharged and shall no longer encumber the Shares. Seller is not a party to any option, warrant, right, call, put, or other agreement or commitment of any kind relating to the Shares or to any voting trust, proxy or other similar agreement relating to the Shares. Section 3.5 Consents and Approvals; No Violations. Except as set forth in Schedule 3.5, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the articles of incorporation or by-laws of the Company or of Seller; (b) require any filing with, or the obtaining of any permit, authorization, consent or approval of, any governmental or regulatory authority; (c) violate, conflict with, require consent under or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which the Company or Seller is a party or by which the Company or Seller or any of their respective assets may be bound; or (d) violate any order, injunction, decree, statute, rule or regulation applicable to the Company or Seller, excluding from the foregoing clauses (b), (c) and (d) such requirements, violations, conflicts, defaults or rights (i) which would not have a Company Material Adverse Effect -9- and would not adversely affect the ability of Seller to consummate the transactions contemplated by this Agreement or the ability of the Company to conduct the NAWC Business as currently conducted, or (ii) which become applicable as a result of the business or activities in which Buyer is or proposes to be engaged or as a result of any acts or omissions by, or the status of or any facts pertaining to, Buyer. Section 3.6 Financial Statements. Attached hereto is the unaudited balance sheet and income statement of the Company as of May 31, 2000. The foregoing unaudited balance sheet and income statement of the Company are hereinafter referred to as the "Financial Statements". Except as disclosed in the Financial Statements, the Financial Statements have been prepared from, and are in accordance with, the books and records of the Company and have been prepared consistently with prior periods and present fairly, in all material respects, the financial position and results of operation of the Company as of the date indicated subject to normal year-end audit adjustments. Section 3.7 Absence of Material Adverse Effect. Except as otherwise contemplated by this Agreement, since May 31, 2000, there has not been any Company Material Adverse Effect. Section 3.8 Title, Ownership and Related Matters. (a) As of the date hereof, the Company has interests in real property as set forth on Schedule 3.8(a). (b) Except as set forth on Schedule 3.8(b), the Company has, or as of the Closing will have, good title to (free and clear of all liens, claims, options, security interests, or other encumbrances), or rights by license, lease or other agreement to use all properties and assets (or rights thereto) necessary to permit the Company to conduct the NAWC Business as -10- currently conducted, except where the failure to have such title or rights would not have a Company Material Adverse Effect. Section 3.9 Leases. Attached hereto are true and complete copies of all real property leases and subleases for space occupied by the Company and material personal property leases (collectively, the "Leases") and all written amendments and agreements relating thereto. All of the Leases are valid, binding and enforceable in accordance with their terms, and the Company is not, nor, to the Knowledge of Seller (as hereinafter defined), is the other party to any Lease, in default under such Lease and the Company has received no notices of default which, with the passage of time, would result in such a default where such default would have a Company Material Adverse Effect. Schedule 3.9 lists all leases not set forth on Schedule 3.8(b). Section 3.10 Intellectual Property. (a) Except as would not have a Company Material Adverse Effect, (i) the conduct of the NAWC Business does not infringe upon any intellectual property right of any third party and (ii) there are no pending, or to the Knowledge of Seller threatened, proceedings or litigation or other adverse claims by any Person (as hereinafter defined) against the use by the Company of any trademarks, trade names, service marks, service names, logos, assumed names, copyrights, patents or registrations and applications therefor which are owned by the Company and are necessary for the operation of the Company's business as currently conducted (collectively, the "Intellectual Property"). (b) The Company owns or has valid licenses or other rights to use the Intellectual Property necessary to permit the Company to conduct its operations as currently conducted, except where the failure to have such ownership, licenses or rights would not have a Company Material Adverse Effect. All of the Intellectual Property owned by the Company is listed on -11- Schedule 3.10(b). To the Knowledge of Seller, no person has interfered with, infringed upon, misappropriated or violated the Company's Intellectual Property rights. Section 3.11 Environmental Matters. To the Knowledge of Seller, other than as would not have a Company Material Adverse Effect, there are no past or present events or circumstances which may interfere in any material respect with the conduct of the NAWC Business, result in a material breach of any of the Leases, prevent the Company's continued compliance with any law, or which may give rise to any liability, or otherwise form the basis of any claim, proceeding or investigation, based on or related to the use, storage or disposal, or the release into the environment (including without limitation soil, groundwater, air, indoor air and indoor surfaces), of any pollutant or hazardous material with respect to the Company. As used in this Section 3.11, the term "hazardous material" means any waste, pollutant, hazardous substances, toxic, ignitable, reactive or corrosive substance, hazardous waste, special waste, industrial substance, by-product, process intermediate product or waste, petroleum or petroleum-derived substance or waste, chemical liquids or solids, liquid or gaseous products, or any constituent of any such substance or waste, the use, handling or disposal of which by the Company is in any way governed by or subject to any applicable law, rule or regulation of any governmental or regulatory authority. The Company has not received any charge, complaint, action, suit, arbitration, proceeding or claim asserting violation of or failure to comply with any federal statute or local law (including rules or regulations thereto) concerning the environment or the use, generation, storage, manufacture, disposition, discharge, leak, emission, escape or release of any hazardous material and the Company has received no notices which, with the passage of time, would result in such a violation of or failure to comply with -12- such statute or law. Section 3.12 Litigation. Except as set forth in Schedule 3.12, there is no claim, action, suit, arbitration, proceeding or governmental investigation pending or, to the Knowledge of Seller, threatened against the Company, by or before any court, governmental or regulatory authority or by any third party. Section 3.13 Compliance with Applicable Law. To the Knowledge of Seller, the Company is in compliance, in all material respects, with all and have not received any notices of material violations of any applicable laws, ordinances, rules and regulations of any federal, state, local or foreign governmental authority applicable to the Company or its operations, except as set forth on Schedule 3.13 or in this Agreement. Section 3.14 Certain Contracts and Arrangements. Except as set forth in Schedule 3.14, as of the date hereof, the Company is not a party to any (a) written employment agreement; (b) indenture, mortgage, note, installment obligation, agreement or other instrument relating to the borrowing of money by the Company (other than intercompany accounts which shall be governed by Section 2.3 hereof), or the guaranty by the Company of any obligation for the borrowing of money; or (c) other agreement, including without limitation, purchase orders, or any enforceable oral agreement, which individually involves the receipt or payment after the Closing of more than $10,000 or which is not terminable upon 90 days prior written notice (together with those contracts, agreements and understandings described in clauses (a) and (b), the "Contracts"). Attached hereto are copies of all such Contracts. All such Contracts are valid, binding and enforceable in accordance with their terms and, to the Knowledge of Seller, the Company is not nor is any other party thereto in default under any of the aforesaid Contracts, other than such defaults, if any, which would not, individually or in the aggregate, have a Company Material Adverse Effect. -13- Section 3.15 Employee Benefit Plans; ERISA. (a) Except as listed on Schedule 3.15, there are no "employee benefit plans" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) maintained for the benefit of employees of the Company or other employee benefit, bonus or fringe benefit plans maintained for the benefit of the employees of the Company to which, or with respect to which, the Company has a liability for its payment of benefits or makes contributions annually (the "Plans"). Schedule 3.15 sets forth all Plans offered to employees of the Company or to which the Company contributes. Seller has provided to Buyer copies of each of the Plans, including all amendments adopted to date, copies of all related trust agreements, insurance and annuity contracts, administration contracts, investment management, subscription or participation agreements, and record keeping agreements, each as in effect on the date hereof. There are no Plans which are not in written form. True and correct copies of the most recent annual report, actuarial report, summary plan description, and determination letter from the Internal Revenue Service or other governmental authority, with respect to each Plan (to the extent applicable), have been provided to Buyer and there has been no material adverse change in the financial condition of any Plan from the date stated in the annual reports and actuarial reports provided to the Buyer. (b) Each of the Plans (and each related trust, if applicable) complies in form and in operation in all material respects with the applicable requirements of ERISA and the Code and to the knowledge of Seller no event has occurred which will or reasonably could cause any Plan to fail to comply with such requirements. -14- (c) All required reports and descriptions (including Form 5500, Annual Reports, summary Annual Reports, and Summary Plan Descriptions) have been filed or distributed in a timely manner with respect to each Plan (to the extent applicable). (d) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been paid to each Plan or accrued in accordance with the past custom and practice and will be paid in the ordinary course after the Closing Date. (e) Each Plan intended to meet the requirements of a "qualified plan" under Code Section 401(a) has received a favorable determination letter from the Internal Revenue Service with respect to all amendments required to be made to such Plan for which the remedial amendment period provided under Section 401(b) has expired. (f) No Plan has been completely or partially terminated or has been the subject of a Reportable Event as to which notices would be required to be filed with the Pension Benefit Guaranty Corporation (the "PBGC"). No proceeding by the PBGC to terminate any Plan has been instituted or threatened. (g) To the knowledge of Seller, there have been no Prohibited Transactions with respect to any Plan. No charge, complaint, action, suit, proceeding, hearing, investigation, claim, demand, tax or other assessment, fine or penalty (each an "Action") with respect to the qualification or administration of any Plan (other than routine claims for benefits) is pending. To the Seller's knowledge, other than routine claims for benefits, (i) no Action with respect to any Plan is threatened, and (ii) no facts exist which reasonably could give rise to an Action (other than routine claims for benefits) with respect to any Plan. -15- (h) As to all Plans: (i) none of the assets of any Plan is invested in employer securities or employer real property as defined in Section 407(d) of ERISA; (ii) the Company has no liability or contingent liability under any Plan for providing post-retirement or post-termination medical or life insurance benefits (whether insured or uninsured), other than statutory liability for providing group health plan continuation coverage under Part 6 of Title I of ERISA and Section 4980B (or any predecessor section thereto) of the Code or other coverage mandated by Law; and (iii) there has been no act or omission occurring prior to the Closing date that would impair the right or ability of the Company to unilaterally amend or terminate any Plan which it has the right or ability to unilaterally amend or terminate. Section 3.16 Labor Matters. There are no controversies pending or, to the Knowledge of the Seller, threatened, between the Company and any of its employees, which controversies have had or are reasonably likely to have a Company Material Adverse Effect. The Company is not a party to any collective bargaining agreement or other labor union contract applicable to individuals employed by the Company and there are no grievances outstanding against the Company under any such agreement or contract which are reasonably likely to have a Company Material Adverse Effect. There are no unfair labor practice complaints pending against the Company before the National Labor Relations Board. To the Knowledge of Seller, there are no strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of the Company which are reasonably likely to have a Company Material Adverse Effect. Section 3.17 Taxes. -16- (a) Seller or the Company (i) has timely filed or caused to be filed on a timely basis with the appropriate taxing authorities all material Tax Returns (as hereinafter defined) required to be filed by or with respect to the Company, and (ii) has paid or made adequate provision for the payment of all Taxes (as hereinafter defined) shown to be due on such Tax Returns. Such Tax Returns are true, correct and complete in all material respects. (b) (i) There are no liens for Taxes with respect to the assets of the Company except for statutory liens for current taxes not yet delinquent and no material claims with respect to Taxes are being asserted by any taxing authority in writing that would have a Company Material Adverse Effect; (ii) none of the Tax Returns applicable to the Company is currently being audited or examined by any taxing authority; (iii) there is no material unpaid tax deficiency, determination or assessment currently outstanding against the Company; (iv) there are no outstanding agreements or waivers extending the statute of limitations relating to the assessment of Taxes applicable to the Company; and (v) neither the Company nor Seller on behalf of the Company has filed a consent pursuant to Section 341(f) of the Code. (c) As used in this Agreement: (i) "Taxes" shall mean all taxes, levies, charges or fees including income, corporation, advance corporation, gross receipts, transfer, excise, property, sales, use, value-added, license, payroll, pay-as-you-earn, withholding, social security and franchise or other governmental taxes or charges, imposed by the United States or any state, county, local or foreign government, and such term shall include any interest, penalties or additions to tax attributable to such taxes. (ii) "Tax Return" shall mean any report, return or statement required to be supplied to a taxing authority in connection with Taxes. -17- Section 3.18 Certain Fees. Neither Seller nor the Company or any of their respective Affiliates has employed any financial advisor, broker or finder or incurred any liability for any financial advisory, broker's or finder's fees in connection with this Agreement or the transactions contemplated hereby. Section 3.19 Subsidiaries. The Company does not own any subsidiary corporation in whole or in part or any ownership or equity interest in any other Person. Section 3.20 Insurance. Schedule 3.20 sets forth a description of all insurance policies and fidelity bonds relating to the NAWC Business including (i) type of coverage, (ii) identity of insurer and policy number, (iii) coverage term, (iv) and other material insuring provisions. Except as set forth in Schedule 3.20, there is no claim by the Company pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights. All premiums payable under all such policies and bonds have been paid timely and the Company has otherwise complied fully with the terms and conditions of all such policies and bonds. Such policies of insurance and bonds remain in full force and effect. Seller and the Company do not know of any threatened termination of, premium increase with respect to, or material alteration of coverage under, any of such policies or bonds. Section 3.21 Undisclosed Liabilities. The Company has no liability (and to the knowledge of Seller, there is no basis for any present or future charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand against the Company, giving rise to any liability) which is not reflected in the Financial Statements or in this Agreement, except for liabilities arising in the ordinary course of business. ARTICLE 4 -18- REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer hereby represents and warrants to Seller as follows: Section 4.1 Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois. Buyer has the corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder. The execution and delivery of this Agreement and the performance by Buyer of its covenants and agreements hereunder have been duly and validly authorized by the Board of Directors of Buyer and no other corporate proceedings on the part of Buyer are necessary to authorize the execution, delivery and performance of this Agreement or the consummation of the transactions so contemplated. This Agreement has been duly executed and delivered by Buyer and constitutes a valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except that (i) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Section 4.2 Consents and Approvals; No Violations. Except as set forth on Schedule 4.2, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the articles of incorporation or by-laws of Buyer; (b) require any filing with, or the obtaining of any permit, authorization, consent or approval of, any governmental or regulatory authority; (c) violate, conflict with or result in a default (or any event which, with notice or -19- lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which Buyer is a party or by which Buyer or any of its assets may be bound; or (d) violate any order, injunction, decree, statute, rule or regulation applicable to Buyer, excluding from the foregoing clauses (b), (c) and (d) such requirements, violations, conflicts, defaults or rights (i) which would not adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement or (ii) which become applicable as a result of any acts or omissions by, or the status of or any facts pertaining to, the Company or Seller. Section 4.3 Availability of Funds. Buyer will have at the Closing Date sufficient immediately available funds to pay the Purchase Price. Section 4.4 Litigation. Except as set forth on Schedule 4.4, there is no claim, action, suit, proceeding or governmental investigation pending or, to the Knowledge of Buyer (as hereinafter defined), threatened against Buyer, by or before any court, governmental or regulatory authority or by any third party which challenges the validity of this Agreement or which would be reasonably likely to adversely affect or restrict Buyer's ability to consummate the transactions contemplated hereby. Section 4.5 Investigation by Buyer. Buyer will conduct its own independent review and analysis of the business, operations, technology, assets, liabilities, results of operations, financial condition and prospects of the Company. Section 4.6 Certain Fees. Neither Buyer nor any of its Affiliates has employed any financial advisor, broker or finder or incurred any liability for any financial advisory, -20- broker's or finders' fees in connection with this Agreement or the transactions contemplated hereby. Section 4.7 Investment Representations. Buyer is acquiring the Shares solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof. ARTICLE 5 COVENANTS --------- Section 5.1 Conduct of the NAWC Business. Seller agrees that, during the period from the date of this Agreement to the Closing, except as otherwise contemplated by this Agreement or consented to by Buyer in writing: (a) Seller shall cause the Company to use its reasonable best efforts to conduct its business operations in the ordinary course consistent with past practice; (b) Seller shall cause the Company to use its reasonable best efforts to (i) maintain and preserve its business operations, (ii) retain the services of its employees, except for attrition of such employees in the ordinary course of business, and (iii) maintain, preserve and retain relationships with its suppliers and customers; and (c) Seller shall cause the Company not to sell or dispose of any material business assets, except in the ordinary course of business. Buyer recognizes that Buyer Executives (as defined in Section 9.14) are currently employees of the Company and shall cause such Buyer Executives to use their reasonable best efforts in such capacities to comply with the agreements set forth in this Section. -21- Section 5.2 Access to Information. (a) Between the date of this Agreement and the Closing, Seller shall (i) give Buyer and its authorized representatives reasonable access to all books, records, offices and other facilities and properties of the Company and to the Company Executives (as hereinafter defined); (ii) permit Buyer to make such inspections thereof as Buyer may reasonably request; and (iii) cause the officers of the Company to furnish Buyer with such financial and operating data and other information with respect to the business and properties of the Company as Buyer may from time to time reasonably request; provided, however, that any such investigation shall be conducted during normal business hours under the supervision of Seller's personnel and in such a manner as to maintain the confidentiality of this Agreement and the transactions contemplated hereby and not interfere unreasonably with the business operations of Seller or the Company. (b) Buyer (i) shall treat and hold as confidential any Confidential Information (as hereinafter defined), (ii) shall not use any of the Confidential Information except in connection with this Agreement, and (iii) if this Agreement is terminated for any reason whatsoever, shall return to Seller all tangible embodiments (and all copies) which are in its possession. (c) "Confidential Information" means any confidential or proprietary information of Seller or its subsidiaries (including the Company) that is furnished in writing to Buyer in connection with this Agreement; provided, however, that it shall not include any information which (i) at the time of disclosure, is available publicly, or (ii) after disclosure, becomes available publicly through no fault of Buyer. -22- Section 5.3 Consents. (a) Each of Seller and Buyer shall cooperate, and use its reasonable best efforts, to make all filings and obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and other third parties necessary to consummate the transactions contemplated by this Agreement. In addition to the foregoing, Buyer agrees to provide such assurances as to financial capability, resources and creditworthiness as may be reasonably requested by any third party whose consent or approval is sought in connection with the transactions contemplated hereby. (b) With respect to any agreements for which any required consent or approval is not obtained prior to the Closing, each of Seller and Buyer shall each use its reasonable best efforts to obtain any such consent or approval after the Closing Date until such consent or approval has been obtained. Section 5.4 Reasonable Best Efforts. Each of Seller and Buyer shall cooperate, and use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. After the Closing, Buyer shall cooperate, and use its reasonable best efforts to provide Seller reasonable access to all books and records (including tax) of the Company, as reasonably necessary, concerning any legal matter involving the Seller. Section 5.5 Public Announcements. Prior to the Closing, the parties shall not issue any report, statement or press release or otherwise make any public statements with respect to this Agreement and the transactions contemplated hereby, except as in the reasonable judgment of Seller may be required by law or in the reasonable interests of Seller in connection with the obligations of Seller, as a publicly-held, exchange-listed company (specifically, the issuance of a press -23- release by Seller upon execution of this Agreement or later shall not be a violation of this provision). Upon the Closing, Seller will consult with Buyer with respect to the issuance of a joint report, statement or press release with respect to this Agreement and the transactions contemplated hereby. Section 5.6 Covenant to Satisfy Conditions. Seller will use its reasonable best efforts to ensure that the conditions set forth in Article 6 hereof are satisfied, insofar as such matters are within the control of Seller, and Buyer will use its reasonable best efforts to ensure that the conditions set forth in Article 6 hereof are satisfied, insofar as such matters are within the control of Buyer. Seller and Buyer further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties hereto to consummate the transactions contemplated hereby, to use all reasonable efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may be. Section 5.7 Employees; Employee Benefits. (a) After the Closing Date, Buyer shall treat all service completed by each employee of the Company ("Employee") with the Company or any Affiliate thereof, and any predecessor thereto, the same as service completed with Buyer for all purposes, including waiting periods relating to preexisting conditions under medical plans, vacations, severance pay, eligibility to participate in, vesting or payment of benefits under, and eligibility for early retirement or any subsidized benefit provided for under any employee benefit plan (including, but not limited to, any ?employee benefit plan? as defined in Section 3(3) of ERISA) maintained by Buyer on or after the Closing Date except for purposes of computing benefits under the actual benefit formula in a defined benefit plan (as defined in Section 3(35) of ERISA). For purposes of computing deductible amounts (or like adjustments -24- or limitations on coverage) under any employee welfare benefit plan (including, without limitation, any "employee welfare benefit plan" as defined in Section 3(l) of ERISA), expenses and claims previously recognized for similar purposes under the applicable welfare benefit plan of the Company or any Affiliate shall be credited or recognized under the comparable plan maintained after the Closing Date by Buyer. (b) After the Closing Date, Buyer shall be responsible for, and shall indemnify and hold harmless Seller and its Affiliates and their officers, directors, employees, Affiliates and agents and the fiduciaries (including plan administrators) of the Plans, from and against, any and all claims, losses, damages, costs and expenses (including, without limitation, attorneys' fees and expenses) and other liabilities and obligations relating to or arising out of (i) all salaries, bonuses, commissions, vacation entitlements and other benefits accrued but unpaid as of the Closing and reflected on the balance sheets of the Company on the Closing Date, (ii) the employee benefit liabilities assumed by Buyer under this Agreement or any failure by Buyer to comply with the provisions of this Agreement and (iii) any claims of, or damages or penalties sought by, any Employee, or any governmental entity on behalf of or concerning any Employee, with respect to any act or failure to act by Buyer to the extent arising from the employment, discharge, layoff or termination of any Employee. (c) After the Closing Date, Buyer shall not require Seller to make any additional contributions to any Plan (including the defined benefit pension plan described in Section 3.15(a)) and agrees that the Company shall be responsible for funding all Plans through the applicable maturity date. Section 5.8 Certain Tax Matters (a) Certain Definitions. As used in this Agreement: -25- (i) "Independent Accountants" means the Accounting Firm (as defined in Section 1.3(b)(iii)). (ii) "Pre-Closing Period" means any taxable period, including that portion of any Straddle Period, which ends on or before the Closing Date. (iii) "Straddle Period" means any taxable period that includes (but does not end on) the Closing Date. (b) Return Filing, Refunds, Credits and Transfer Taxes. (i) Except with regard to Tax Returns for Straddle Periods, Seller shall prepare, or cause to be prepared, and file, or cause to be filed, on a timely basis all Tax Returns of or including the Company for all Pre-Closing Periods, including the taxable period which ends on December 31, 1999 (the "Pre-Closing Period Returns"). Seller shall pay, or cause to be paid, all Taxes with respect to the Company shown to be due on the Pre-Closing Period Returns. (ii) Buyer shall prepare, or cause to be prepared, and shall file, or cause to be filed, on a timely basis all Tax Returns (other than the Pre-Closing Period Returns) with respect to the Company, including Tax Returns, if any, covering periods after the Closing Date for the Straddle Period (the "Straddle Period Returns"). Buyer shall pay, or cause to be paid, all Taxes shown to be due on such Tax Returns. (iii) Buyer shall provide Seller with copies of any Straddle Period Returns at least thirty business days prior to the due date thereof (giving effect to any extensions thereto), accompanied by a statement calculating in reasonable detail Seller's indemnification obligation pursuant to Section 5.8(d) hereof (the "Indemnification Statement"). Seller shall have the right to review such Straddle Period Returns and -26- Indemnification Statement prior to the filing of such Straddle Period Returns. If Seller disputes any amounts shown due on such Tax Returns or the amount calculated in the Indemnification Statement, Seller and Buyer shall consult and resolve in good faith any issues arising as a result of the review of such Straddle Period Return and Indemnification Statement. If Seller agrees to the Indemnification Statement amount, Seller shall pay to Buyer an amount equal to the Taxes shown on the Indemnification Statement less any amounts paid by Seller or the Company on or before the Closing Date with respect to estimated taxes not later than three business days before the due date (including any extensions thereof) for payment of Taxes with respect to such Straddle Period Return. If the parties are unable to resolve any dispute within fifteen business days after Seller?s receipt of such Straddle Period Return and Indemnification Statement, such dispute shall be resolved by the Independent Accountants, which shall resolve any issue in dispute as promptly as practicable. If the Independent Accountants are unable to make a determination with respect to any disputed issue prior to the due date (including any extensions) for the filing of the Straddle Period Return in question, (A) Buyer shall file, or shall cause to be filed, such Straddle Period Return without such determination having been made and (B) Seller shall pay to Buyer, not later than three days before the due date (including any extensions thereof) for the payment of Taxes with respect to such Straddle Period Return, an amount determined by Seller as the proper amount chargeable to Seller pursuant to this Section 5.8. Upon delivery to Seller and Buyer by the Independent Accountants of its determination, appropriate adjustments shall be made to the amount paid by Seller in accordance with the immediately preceding sentence in order to reflect the decision of the Independent Accountants. The determination by the Independent Accountants shall be final, conclusive and binding on -27- the parties. The fees and any expenses of the Independent Accountants incurred pursuant to this Section 5.8(b)(iii) shall be shared equally by Seller and Buyer. (iv) Seller and Buyer shall reasonably cooperate, and shall cause their respective Affiliates, officers, employees, agents, lawyers, auditors and representatives reasonably to cooperate, in preparing and filing all Tax Returns (including amended returns and claims for refund), including maintaining and making available to each other all records necessary in connection with Taxes and in resolving all disputes and audits with respect to all taxable periods relating to Taxes. Buyer and Seller recognize that Seller will need access, from time to time, after the Closing Date, to certain accounting and tax records and information held by the Company to the extent such records and information pertain to events occurring prior to the Closing Date; therefore, Buyer agrees that from and after the Closing Date, Buyer shall, and shall cause the Company to, (A) retain and maintain such records for six (6) years and (B) allow Seller and its agents and representatives (and agents and representatives of its Affiliates) to inspect, review and make copies of such records as Seller may deem necessary or appropriate from time to time during such period. Buyer shall indemnify Seller from and against any penalties, additions to tax or interest imposed on Seller as a result of any failure of Buyer to make tax records or other information available to Seller in a timely manner. (v) Buyer and Seller shall not, and shall cause the Company not to, dispose of or destroy any of the business records and files of the Company relating to Taxes in existence on the Closing Date without first offering to turn over possession thereof to the other party by written notice to such party at least thirty days prior to the proposed date of such disposition or destruction. -28- (vi) Any refunds and credits of Taxes of the Company or similar benefit (including any interest or similar benefit) received from or credited thereon by the applicable tax authority with respect to (A) any taxable period ending on or before the Closing Date or (B) Taxes for which the Seller has indemnified the Buyer under the Agreement, shall be for the account of Seller, and if received or utilized by Buyer or the Company, shall be paid to Seller within five business days after Buyer or the Company receives such refund or utilizes such credit. Except as provided in the next sentence, any refunds or credits of the Company with respect to any Straddle Period that are payable to Seller pursuant to the preceding sentence shall be apportioned between Seller, on the one hand, and Buyer, on the other hand, on the basis of an interim closing of the books. In the case of any such refund or credit attributable to any Taxes that are imposed on a periodic basis and are attributable to the Straddle Period, other than Taxes based upon or related to gross or net income or receipts, the refund or credit of such Taxes of the Company for the Pre-Closing Period shall be deemed to be the amount of such refund or credit for the Straddle Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the Straddle Period. (vii) Notwithstanding any other provisions of this Agreement to the contrary, all sales, use, transfer, stamp, duties, recording and similar Taxes incurred in connection with the transactions contemplated by this Agreement shall be timely paid by the party responsible for such Taxes and such responsible party shall accurately file or cause to be filed all necessary Tax Returns and other documentation with respect to such Taxes. (c) Elections. Buyer shall not, and shall cause the Company not to, make, amend or revoke any Tax election if such action would adversely affect Seller or any Person (other -29- than the Company) as to whom or with whom Seller has filed a consolidated return with respect to any taxable period ending on or before the Closing Date or for the Pre-Closing Period or any Tax refund with respect thereto. (d) Tax Indemnification. (i) Buyer shall indemnify, defend and hold harmless Seller and its Affiliates, at any time after the Closing, from and against any liability for Taxes of the Company for any taxable period ending after the Closing Date (except for Straddle Periods, in which case Buyer?s indemnity will cover all such Taxes other than taxes based upon or related to gross or net income, in which case, Buyer's indemnity will cover only that portion of such income Taxes that is not attributable to the Pre- Closing Period). (ii) Seller shall indemnify, defend and hold harmless Buyer and its Affiliates, at any time after the Closing, from and against any liability for Taxes based upon or related to gross or net income of the Company for the Pre-Closing Period (including the portion of any Straddle Period ending on the Closing Date). (iii) In determining the responsibility of Seller and Buyer for Taxes based upon or related to gross or net income attributable to any Straddle Period, such income Taxes shall be apportioned on the basis of an interim closing of the books as of the Closing Date. (iv) If a claim for Taxes shall be made by any taxing authority in writing, which, if successful, might result in an indemnity payment pursuant to this Section 5.8, the party seeking indemnification (the "Tax Indemnified Party") shall promptly notify the other party (the "Tax Indemnifying Party") in writing of such claim (a "Tax Claim") within a reasonably sufficient period of time to allow the Tax Indemnifying Party -30- effectively to contest such Tax Claim, and in reasonable detail to apprise the Tax Indemnifying Party of the nature of the Tax Claim, and provide copies of all correspondence and documents received by it from the relevant taxing authority. Failure to give prompt notice of a Tax Claim hereunder shall affect the Tax Indemnifying Party's obligation under this Section 5.8(d) to the extent that the Tax Indemnifying Party is prejudiced by such failure to give prompt notice. (v) With respect to any Tax Claim which might result in an indemnity payment to Buyer pursuant to this Section 5.8(d) (including, without limitation, income Taxes of the Company for a Straddle Period), Seller shall control all proceedings taken in connection with such Tax Claim and, without limiting the foregoing, may in its sole discretion and at its sole expense pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in its sole discretion, either pay the Tax claimed and sue for a refund where applicable law permits such refund suits or contest such Tax Claim. Buyer shall not under any circumstances settle or otherwise compromise any Tax Claim referred to in the preceding sentence without Seller's prior written consent. In connection with any proceeding taken in connection with such Tax Claim, (A) Seller shall keep Buyer informed of all material developments and events relating to such Tax Claim if involving a material liability for Taxes and (B) Buyer shall have the right, at its sole expense, to participate in any such proceedings. Buyer shall cooperate in a commercially reasonable manner with Seller in contesting such Tax Claim (without charge to Seller), which cooperation shall include, without limitation, the retention and the provision to Seller of records and information which are reasonably relevant to such Tax Claim, and making employees reasonably available to Seller to provide additional information or explanation of any material -31- provided hereunder or to testify at proceedings relating to such Tax Claim, provided that no charges shall be incurred by Seller for the services of such employees. (vi) With respect to any Tax Claim not described in Section 5.8(d)(v) hereof which might result in an indemnity payment to Seller pursuant hereto, Buyer shall control all proceedings in accordance with provisions that are parallel to those in Section 5.8(d)(v) hereof. Section 5.9 Prior Knowledge. If at any time on or before the Closing Date, Buyer obtains any knowledge (whether through investigation or otherwise) of any material fact which causes Buyer to reasonably believe that any of the representations, warranties, covenants or agreements of any Seller contained herein are untrue or inaccurate in any respect, then Buyer shall inform Seller of such material fact promptly following Buyer's obtaining knowledge thereof. In the event Buyer fails to inform Seller of such material fact as provided herein, such failure will constitute a waiver and release by Buyer of any rights it may have under this Agreement to delay the Closing or terminate this Agreement or otherwise as a result of such representation, warranty, covenant or agreement being untrue or inaccurate because of such material fact. Section 5.10 Supplemental Disclosure. Seller shall have the right from time to time prior to the Closing to supplement or amend its schedules and exhibits with respect to any matter required to be set forth or described in such schedules and exhibits; provided that if the matter giving rise to such supplement or amendment to the schedules and exhibits has a Company Material Adverse Effect, Buyer shall have the right, prior to the Closing, within five business days of receipt by Buyer of such supplemental or amended disclosure, to terminate the Agreement pursuant to Section 7.1(d) by written notice to Seller. -32- Section 5.11 Inquiries and Negotiations. From the date hereof until the termination of this Agreement pursuant to Section 7.1, Seller, the Company and its respective officers, directors, employees, representatives and other agents will not, directly or indirectly, solicit or initiate any discussions, submissions of proposals or offers or negotiations with or continue or participate in any negotiations or discussions with, or provide any information or data of any nature whatsoever to, or otherwise cooperate in any other way with, any Person other than Buyer and its officers, directors, employees, representatives and agents in connection with any proposed merger, consolidation, sale of all or substantially all of the assets of the Company, sale of shares of capital stock or other equity securities, tender or exchange offer, recapitalization, debt restructuring or similar transaction involving the Company Section 5.12 Post-Closing Insurance Coverages. Except as otherwise specified on Schedule 3.20, Seller shall pay the premiums for policies for the insurance coverages for the Company described on Schedule 3.20 through December 31, 2000, all such policies to be reasonably similar, in cost and coverage, to the policies in effect for the Company prior to the Closing Date. In addition, Seller shall, at Seller's sole cost and expense, pay (and indemnify, defend and hold the Buyer and the Company harmless from) all loss, cost and expense arising out of or related to any workers compensation claims made against the Company before the Closing; the Company shall be responsible for (and Buyer shall indemnify, defend and hold Seller harmless from) all loss, cost and expense arising out of or related to any workers compensation claims first made against the Company after the Closing. -33- ARTICLE 6 CONDITIONS TO OBLIGATIONS OF THE PARTIES ---------------------------------------- Section 6.1 Conditions to Each Party's Obligation. The respective obligation of each party to consummate the transactions contemplated herein is subject to the satisfaction at or prior to the Closing of the following conditions: (a) No statute, rule or regulation shall have been enacted, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the transactions contemplated hereby; (b) There shall not be in effect any judgment, order, injunction or decree of any court of competent jurisdiction enjoining the consummation of the transactions contemplated hereby; (c) There shall not be any suit, action, investigation, inquiry or other proceeding instituted, pending or threatened by any governmental or other regulatory or administrative agency or commission which seeks to enjoin or otherwise prevent consummation of the transactions contemplated hereby; and (d) The transactions contemplated by another Stock Purchase Agreement, dated the date hereof, by and between Seller and LRT Holding Company, Inc., an Illinois corporation, shall have been consummated prior to the Closing. Section 6.2 Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated hereby are further subject to the satisfaction (or written waiver) at or prior to the Closing of the following conditions: (a) The representations and warranties of Buyer contained in Article 4 of this Agreement shall be true and correct in all material respects at the date hereof and as of the -34- Closing as if made at and as of such time, except for changes permitted or contemplated hereby and except for representations and warranties which are as of a specific date; (b) Buyer shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the Closing pursuant to the terms hereof; (c) Buyer shall have delivered to Seller or its Affiliates those items set forth in Section 1.6 hereof; and (d) The Company and Seller shall have executed a document canceling all intercompany accounts between such parties as of the Closing. Section 6.3 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated hereby are further subject to the satisfaction (or written waiver) at or prior to the Closing of the following conditions: (a) The representations and warranties of Seller contained in Article 3 of this Agreement shall be true and correct in all material respects at the date hereof and as of the Closing as if made at and as of such time, except for changes permitted or contemplated hereby and except for representations and warranties which are as of a specific date; (b) Seller shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the Closing pursuant to the terms hereof; (c) Seller shall have delivered to Buyer those items set forth in Section 1.5 hereof; and (d) Seller shall have delivered to Buyer an executed document of Bank One, Oklahoma, N.A. consenting to the transaction described herein, releasing the Company as a -35- guarantor under the Credit Agreement dated September 24, 1999 between Seller and Bank One and releasing the Shares as collateral to such agreement (all related Bank One liens on assets of the Company shall have been terminated as well). ARTICLE 7 TERMINATION ----------- Section 7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned: (a) at any time, by mutual written consent of Seller and Buyer; (b) if the transactions contemplated hereby shall have been permanently enjoined by a court of competent jurisdiction, provided that no party hereto who brought or is affiliated with the party who brought the action seeking the permanent enjoinment of the transactions contemplated hereby may seek termination of this Agreement pursuant to this Section 7.1(b); (c) if the transactions contemplated hereby or any of the conditions to Closing hereunder become impossible to perform or obtain, as applicable, provided that no party hereto who caused or is affiliated with any Person who caused such impossibility, may seek termination of this Agreement pursuant to this Section 7.1(c); (d) by Buyer, following receipt of any supplement or amendment to the schedules and exhibits to be provided by Seller under this Agreement, by written notice to Seller if (i) the matter which gives rise to such supplement or amendment has a Company Material Adverse Effect and (ii) the notice of termination pursuant to this Section 7.1(d) is given by Buyer to Seller prior to Closing and within five business days of Buyer's -36- receipt of the supplement or amendment to the schedules and exhibits to be provided by Seller under this Agreement; or (e) at any time after June 30, 2000, by Seller, on the one hand, or Buyer, on the other hand, if the Closing shall not have occurred on or prior to such date. Section 7.2 Procedure and Effect of Termination. In the event of the termination of this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 7.1 hereof, written notice thereof shall forthwith be given by Seller, on the one hand, or Buyer, on the other hand, so terminating to the other party and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by Seller, on the one hand, or Buyer, on the other hand. If this Agreement is terminated pursuant to Section 7.1 hereof: (a) each party shall redeliver all documents, work papers and other materials of the other parties relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same or, upon prior written notice to such party, shall destroy all such documents, work papers and other materials and deliver notice to the parties seeking destruction of such documents that such destruction has been completed, and all confidential information received by any party hereto with respect to the other party shall be treated in accordance with Section 5.2(b) hereof; (b) all filings, applications and other submissions made pursuant hereto shall, at the option of Seller, and to the extent practicable, be withdrawn from the agency or other Person to which made; and (c) there shall be no liability or obligation hereunder on the part of Seller or Buyer or any of their respective directors, officers, employees, Affiliates, -37- controlling Persons, agents or representatives, except that Seller or Buyer, as the case may be, shall have liability to the other party if the basis of termination is a material breach by Seller or Buyer, as the case may be, of one or more of the provisions of this Agreement, and except that the obligations provided for in this Section 7.2 and Section 9.1 hereof shall survive any such termination. ARTICLE 8 SURVIVAL OF REPRESENTATIONS --------------------------- Section 8.1 Survival of Representations, Warranties and Agreements. No representations, warranties and agreements of Seller and Buyer shall survive the Closing except those made in Sections 3.1, 3.2, 3.3, 3.4, 3.18, 4.1, 4.6, 4.7, 5.4, 5.7, 5.8, 7.2 and 9.1, respectively, shall survive the Closing for a period of one (1) year. Any covenant or agreement of any party contained herein which by its terms shall survive the Closing shall survive until fully performed; and provided, further, that this Section 8.1 is not intended in any way to limit any covenant or agreement of the parties which contemplates performance after the Closing. ARTICLE 9 MISCELLANEOUS ------------- Section 9.1 Fees and Expenses. Except as set forth in this Section 9.1 and Section 5.8(b)(vii), whether or not the transactions contemplated herein are consummated pursuant hereto, Seller, on the one hand, and Buyer, on the other hand, shall pay all fees and expenses incurred by, or on behalf of, Seller or Buyer, respectively, in connection with, or in anticipation of, this Agreement and the consummation of the transactions contemplated hereby. Seller, on the one hand, and Buyer, on the other hand, shall indemnify and hold harmless the other from and against any and all claims or liabilities for financial advisory -38- and finders' fees incurred by reason of any action taken by such party or otherwise arising out of the transactions contemplated by this Agreement by any Person claiming to have been engaged by such party. Section 9.2 Further Assurances. From time to time after the Closing Date, at the reasonable request of the other party hereto and at the expense of the party so requesting, each of the parties hereto shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby. Section 9.3 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return receipt requested; or (d) overnight delivery service. Notices shall be sent to the appropriate party at its address or facsimile number given below (or at such other address or facsimile number for such party as shall be specified by notice given hereunder): If to Buyer, to: NAWC Holding Company, Inc. 6800 West 68th Street Bedford Park, Illinois 60638 Fax No. (708) 788-0935 Attention: A. Roy Phillips, President with a copy to: Schwartz & Freeman 401 North Michigan Avenue Suite 1900 Chicago, Illinois 60611 Fax No. (312) 222-0818 Attention: David Sugar, Esq. -39- If to Seller, to: Kinark Corporation 2250 East 73rd Street Suite 300 Tulsa, Oklahoma 74136-6832 Fax No. (918) 494-3999 Attention: Ronald J. Evans, President and Chief Executive Officer with a copy to: King & Spalding 191 Peachtree Street Atlanta, Georgia 30303-1763 Fax No. (404) 572-5146 Attention: Paul A. Quiros, Esq. All such notices, requests, demands, waivers and communications shall be deemed received upon (i) actual receipt thereof by the addressee, (ii) actual delivery thereof to the appropriate address or (iii) in the case of a facsimile transmissions upon transmission thereof by the sender and issuance by the transmitting machine of a confirmation slip that the number of pages constituting the notice have been transmitted without error. In the case of notices sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received. Section 9.4 Severability. Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which remaining provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and enforced to the fullest extent permitted by law. -40- Section 9.5 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, including, without limitation, by operation of law, by any party hereto without the prior written consent of the other parties hereto. Section 9.6 No Third Party Beneficiaries. This Agreement is solely for the benefit of Seller, and its successors and permitted assigns, with respect to the obligations of Buyer under this Agreement, and for the benefit of Buyer, and its respective successors and permitted assigns, with respect to the obligations of Seller, under this Agreement, and for the benefit of the Employees with respect to the obligations of Buyer under Section 5.7 of this Agreement, and this Agreement shall not be deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement, cause of action or other right. Section 9.7 Interpretation. (a) The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. (b) As used in this Agreement, the term "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (c) As used in this Agreement, the term "Affiliate" shall have the meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. -41- Section 9.8 Jurisdiction and Consent to Service. Without limiting the jurisdiction or venue of any other court, each of Seller and Buyer (a) agrees that any suit, action or proceeding arising out of or relating to this Agreement may be brought solely in the state or federal courts of Illinois; (b) consents to the exclusive jurisdiction of each such court in any suit, action or proceeding relating to or arising out of this Agreement; (c) waives any objection which it may have to the laying of venue in any such suit, action or proceeding in any such court; and (d) agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process. Section 9.9 Entire Agreement. This Agreement and other documents referred to herein or delivered pursuant hereto, including but not limited to the schedules and exhibits, which form a part hereof constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties or any of them with respect to the subject matter hereof. Section 9.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. Section 9.11 Specific Performance. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the parties agree that, in addition to any other remedies, each shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy. -42- Section 9.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The parties agree that faxed signature pages shall constitute valid original signatures when attached to this Agreement. Section 9.13 Amendment, Modification and Waiver. This Agreement may be amended, modified or supplemented at any time by written agreement of Seller and Buyer. Any failure of Seller or Buyer to comply with any term or provision of this Agreement may be waived, with respect to Buyer, by Seller and, with respect to Seller, by Buyer, by an instrument in writing signed by or on behalf of the appropriate party, but such waiver or failure to insist upon strict compliance with such term or provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply. Section 9.14 Knowledge. "To the Knowledge of Seller" or any similar phrase contained in this Agreement shall mean the actual knowledge of the Company Executives. For purposes hereof, the "Company Executives" shall consist of: Ronald J. Evans and Paul R. Chastain. "To the Knowledge of Buyer" or any similar phrase contained in this Agreement shall mean the actual knowledge of the Buyer Executives. For purposes hereof, the "Buyer Executives" shall consist of: A. Roy Phillips. Section 9.15 Schedules and Exhibits. The schedules, attachments and all exhibits hereto are hereby incorporated into this Agreement and are hereby made a party hereof as if set out in full in this Agreement. -43- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. KINARK CORPORATION By: /s/Ronald J. Evans ------------------- Name: Ronald J. Evans Title: President and Chief Executive Officer NAWC HOLDING COMPANY, INC. By: /s/A. Roy Phillips -------------------- Name: A. Roy Phillips Title: President Schedule 2.2 Services Provided by Seller to the Company ------------------------------------------ 1. Negotiates and places property and liability insurance coverages. Makes premium payments. 2. Schedules review of financial records by independent auditing firm. 3. Negotiates bank credit agreements and designates operating bank accounts. 4. Maintains the minute books, stock ledgers and corporate seals. 5. Engages independent accountants to prepare Illinois state income tax returns. 6. Engages legal counsel. Schedule 3.1 Governmental Permits and Licenses & States Authorized to Conduct Business ------------------------------------------------------------------------- 1. Company is authorized to conduct business in Illinois. 2. Governmental Permits: Village of Bedford Park Renewal Certificate State of Illinois Warehouse License for Bedford Park Warehouse Illinois Business Registration NUC-1 (Resale Certificate Application) for North American Warehousing Company Schedule 3.3 Common Stock ------------ North American Warehousing Company ---------------------------------- Number of shares authorized -- 10,000 Number of shares issued and outstanding -- 1,000 Number of shares of Preferred Series A Stock authorized, issued and outstanding -- One (1) Schedule 3.4 Ownership of Common Stock ------------------------- All of the outstanding common stock of the Company is pledged as collateral to the Credit Agreement dated September 24, 1999 between Seller and Bank One, Oklahoma, N.A. Schedule 3.5 Consents and Approvals ---------------------- 1. Pursuant to Section 7.1.6 of the Credit Agreement dated September 24, 1999 between Seller and Bank One, Oklahoma, N.A., Seller's divestiture of the Company requires the prior consent of Bank One. Further, Bank One acknowledges in such agreement that it will cooperate with Seller to accommodate such divestiture. Schedule 3.8(a) Interest in Real Property ------------------------- 1. North American Warehousing Company has an option to purchase a 200,808 square foot warehouse located at 6800 W. 68th Street in Bedford Park, Illinois for a purchase price of $5,250,000.00, under the terms of the Ninth Lease Amendment dated June 1, 1999 to the Lease dated June 14, 1979 between Company and Landlord. The Company has the right to exercise the purchase option at any time prior to expiration of the amended lease on December 31, 2001, provided Company has paid the Purchase Option Fee when due each month. Failure to pay the Purchase Option Fee when due shall cause the Purchase Option to terminate unconditionally and irrevocably. Refer to Paragraphs 4 and 5 of the Ninth Lease Amendment, copy attached. Schedule 3.8(b) Title and Ownership ------------------- Exceptions to Good Title -- None Schedule 3.9 Leases - Other -------------- See Schedule 3.8(a) Schedule 3.10(b) Intellectual Property --------------------- None Schedule 3.12 Litigation ---------- None. Schedule 3.13 Compliance With Applicable Law ------------------------------ Exceptions -- None Schedule 3.14 Contracts and Arrangements -------------------------- 1. The Company is guarantor under the Credit Agreement dated September 24, 1999 between Seller and Bank One, Oklahoma, N.A. 2. See Schedule 3.8(a). 3. Management Agreement with Lake River Corporation. Schedule 3.15 Employee Benefit Plans ---------------------- None. Schedule 3.20 INSURANCE Coverage Annual Coverage Agent/Carrier Policy No. Term Premium ----------------- ------------------ -------------- ------------- --------- General Liability Marsh & McLennan 2855853-01 12/31/99 - 00 $12,660 (M&M)/ Steadfast Insurance (Atl.Inc.) Zurich American 285261401 12/31/99 - 00 10,392 Umbrella/Excess M&M/National Union BE 7391742 12/31/99 - 00 25,169 Fire Property Insurance M&M/Reliance PA NZB0133193 12/31/99 - 00 24,301 & Business Inter- ruption D&O Liability (A) M&M/Continental 132024383 12/14/99 - --- Casualty Closing Boiler & M&M/Hartford FBP-HN-4914483-01 12/31/99 - 00 2,166 Machinery Steam Comprehensive M&M/Gulf Insurance GA05835957 6/26/00 - 01 --- Crime Fiduciary L&W/National Union 4857845 6/22/00 - 01 --- Fire Group Travel L&W/Hartford ETB-19158 8/01/97 - --- Closing *Seller's policy number (A) These policies are exceptions to Seller's transfer and premium payments, as per Sections 2.3 and 3.20. Schedule 4.2 None. Schedule 4.4 None.