8-K
1
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):
May 10, 1995
________________________________________
THERMO PROCESS SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation or
organization)
12068 Market Street 48150
Livonia, Michigan (Zip Code)
(Address of principal executive offices)
(617) 622-1000
(Registrant's telephone number
including area code)
PAGE
Item 2. Acquisition or Disposition of Assets
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On May 10, 1995, Thermo Process Systems Inc. (the "Company") acquired
substantially all of the assets of Lancaster Laboratories, Inc. and its
affiliate Clewmark Holdings (together, "Lancaster Laboratories").
Lancaster Laboratories, based in Lancaster, Pennsylvania, is a provider of
high-quality analytical services to the environmental, food and
pharmaceutical industries.
The base purchase price for the assets was $16,760,000 in cash, plus
the assumption by the Company of approximately $5,400,000 in bank
indebtedness existing as of the closing of the acquisition. The purchase
price is subject to a post-closing adjustment, and will either be (i)
increased by the amount by which Lancaster Laboratories' net book value
as of the closing exceeds $11,108,000; or (ii) decreased by the amount
by which $11,108,000 exceeds Lancaster Laboratories' net book value as
of the closing. The Company has also agreed to pay an amount, not to
exceed $600,000, equal to the amount by which the sum of (A) Lancaster
Laboratories' division income (earnings before the corporate services fee
payable to Thermo Electron Corporation, amortization of good will,
interest and income taxes for the period beginning October 1, 1994 and
ending on the closing date, and (B) the division income generated by
Lancaster Laboratories' business (excluding the corporate services fee
payable to Thermo Electron Corporation and the amortization of goodwill
acquired by the Company in this acquisition) for the period beginning on
the closing date and ending September 30, 1995, are in excess of
$4,500,000. In no event will the aggregate purchase price, including
bank indebtedness assumed by the Company, exceed $25,000,000.
The acquisition was made pursuant to an Asset Purchase Agreement
May 10, 1995, among Thermo Analytical Inc. (a wholly owned the Company);
Lancaster Laboratories, Inc. and Clewmark Holdings (as sellers); and
Earl H. Hess, Anita F. Hess, Kenneth E. Hess, J. Wilson Hershey and
Carol D. Hess (as the principal owners of Lancaster Laboratories).
The purchase price was based on the Company's determination of the
fair market value of Lancaster Laboratories' business, and the of the
agreement were determined by arms' length negotiation among parties.
The Company has no present intention to use Lancaster Laboratories'
plant, equipment or other assets for purposes materially different from the
purposes for which such assets were used prior to the acquisition. However,
the Company will review Lancaster Laboratories' business and assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and, upon completion of this review, may develop
alternative plans or proposals, including mergers, transfers of a material
amount of assets or other transactions or changes relating to such
business.
Lancaster Laboratories had gross revenues of approximately $30,000,000
for the fiscal year ended September 30, 1994.
The cash portion of the base purchase price paid by the Company was
derived from cash distributed to the Company upon the dissolution of
the Thermo Terra Tech joint venture on May 9, 1995.
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Item 7. Financial Statements, Pro Forma Combined Condensed Financial
Information and Exhibits
(a) Financial Statements of Business Acquired: as it is
impracticable to file such information at this time, it will
be filed by amendment on or prior to July 24, 1995.
(b) Pro Forma Combined Condensed Financial Information: as it is
impracticable to file such information at this time, it will
be filed by amendment on or prior to July 24, 1995.
(c) Exhibits
1. Asset Purchase Agreement by and among Thermo Analytical
Inc. (as Buyer); Lancaster Laboratories, Inc. and Clewmark
Holdings (as Sellers); and Earl H. Hess, Anita F. Hess,
Kenneth E. Hess, J. Wilson Hershey and Carol D. Hess (as
the principal owners of Sellers). Schedules and exhibits
to the agreement (each of which are identified in the
agreement) are omitted in reliance on Rule 601(b)(2) of
Regulation S-K. The registrant hereby undertakes to
furnish such schedules and exhibits to the Commission
supplementally upon request.
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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, on this 24th day of May 1995.
THERMO PROCESS SYSTEMS INC.
By: /s/ John P. Appleton
John P. Appleton
President and Chief
Executive Officer
4
EX-1
2
Exhibit 1
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________________________________________________________________
________________________________________________________________
ASSET PURCHASE AGREEMENT
by and among
Thermo Analytical Inc.
(as Buyer),
Lancaster Laboratories, Inc.,
and
Clewmark Holdings
(as Sellers),
and
Earl H. Hess
Anita F. Hess
Kenneth E. Hess
J. Wilson Hershey
Carol D. Hess
(as the principal owners of Sellers)
effective as of May 1, 1995
________________________________________________________________
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PAGE
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into this 10th day of May, 1995, but effective for all
purposes as of May 1, 1995, by and among THERMO ANALYTICAL INC.,
a Delaware corporation ("Buyer"); LANCASTER LABORATORIES, INC., a
Pennsylvania corporation ("LLI"); CLEWMARK HOLDINGS, a
Pennsylvania general partnership ("Clewmark"); and EARL H. HESS,
ANITA F. HESS, KENNETH E. HESS, J. WILSON HERSHEY and CAROL D.
HESS, who comprise a majority-in-interest of the shareholders of
LLI and a majority-in-interest of the partners of Clewmark (the
above-named individuals are referred to in this Agreement
individually and collectively as the "Shareholders").
BACKGROUND
LLI is a Pennsylvania corporation engaged in the business of
providing analytical, research and development, and consulting
services primarily in the environmental, foods and pharmaceutical
fields. Clewmark is a Pennsylvania general partnership engaged
in the business of leasing equipment and real estate. A
substantial portion of Clewmark's assets are leased to LLI.
Buyer is a Delaware corporation. Buyer is a wholly-owned
subsidiary of Thermo Process Systems Inc., a Delaware
corporation.
LLI and Clewmark (referred to in this Agreement individually
and collectively as "Sellers") desire to sell to Buyer, and Buyer
desires to purchase from Sellers, certain of the assets of
Sellers, and Buyer desires to assume certain specifically
enumerated liabilities of Sellers, all upon and subject to the
terms and conditions hereinafter set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants, representations, warranties and
agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. Sale and Purchase of Assets. Simultaneously
with the execution and delivery of this Agreement, and subject to
the terms and conditions contained in this Agreement, Sellers
shall sell, convey, transfer, assign and deliver or cause to be
sold, conveyed, transferred, assigned and delivered to Buyer, and
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Buyer shall purchase from Sellers, for the purchase price
specified in Section 1.3 and subject to the terms and conditions
hereof, the "Assets," as hereinafter defined. The term "Assets"
shall mean all of Sellers' right, title and interest in and to,
as of the Closing, all of the assets of every kind and
description, whether tangible or intangible, wheresoever situated
and whether or not specifically referred to herein or in any
instrument of conveyance delivered pursuant hereto, primarily
used in, employed by or related to LLI's business, including,
without limitation, the following:
(a) Cash and Cash Equivalents. All cash, cash in
banks, cash equivalents, deposits, investments, securities,
funds, certificates of deposit, drafts, checks and similar
instruments outstanding and in existence on the Closing Date (as
defined in Section 2.1 hereof), other than the proceeds arising
from the transaction contemplated in this Agreement.
(b) Accounts and Notes Receivable. All accounts and
notes receivable of Sellers existing on the Closing Date as well
as Sellers' right to payment for services performed (in whole or
in part) but not yet billed as of the Closing.
(c) Laboratory Equipment. All laboratory equipment
and laboratory supplies owned by Sellers.
(d) Office Equipment. All office furniture, fixtures,
office equipment and office supplies and computer hardware owned
by Sellers.
(e) Motor Vehicles. All cars, trucks and other motor
vehicles owned or leased by Sellers.
(f) Leased Property. All right, title and interest of
Sellers under leases for personal property or real property
included in the Assumed Liabilities (as defined in Section 1.3(d)
hereof).
(g) Real Property. All real property, including
structures and improvements thereon, owned by Sellers
beneficially or of record;
(h) Patents and Trademarks. All right, title and
interest in, under or to all patents, trademarks, service marks,
copyrights, trade names and logos, and applications therefor.
(i) Licenses. All of Sellers' existing permits,
licenses, regulatory approvals and franchises of or from any
national, regional, state or local government or authority (to
the extent transfer is permitted by law).
(j) Other Intellectual Property. All inventions,
discoveries (whether patentable or unpatentable), processes,
designs, know-how, trade secrets, proprietary data, customer and
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supplier lists and other intellectual property of all kinds owned
by or licensed to Sellers.
(k) Miscellaneous Supplies. All of Sellers'
miscellaneous supplies not included in Sections 1.1(c) or 1.1(d)
above, as well as all catalogs, brochures, shipping and packaging
materials and labels, shipping equipment, graphics, art work,
photographic film, slides, negatives, color separations,
printer's and photographer's plates and so-called "camera ready
materials" and sales and advertising materials.
(l) Other. To the extent not covered by the
foregoing, and except as set forth on Exhibit A hereto, all
things and rights which, as of the Closing Date, are owned by
Sellers.
Section 1.2. Excluded Assets. Notwithstanding anything
contained in Section 1.1 to the contrary, the following assets
are specifically excluded from the Assets being transferred to
Buyer pursuant to this Agreement (collectively, the "Excluded
Assets"):
(a) The shares of capital stock of Mountain States
Analytical Inc., a Utah corporation ("MSAI"), owned by Sellers;
(b) The note receivable due from MSAI and all accrued
interest thereon;
(c) The real property, including structures and
improvements thereon, owned by Clewmark upon which the guest
house is located;
(d) The family center equipment and the equipment
leased to MSAI as set forth on Exhibit A; and
(e) All real property, including structures and
improvements thereon, owned by the Shareholders in their
individual names; provided, however, that the Assets shall
include all of Sellers' leasehold interests in and to all real
property owned by the Shareholders in their individual names
which property is (i) leased to Sellers and (ii) included in the
Assumed Liabilities, as defined in Section 1.3(d).
Section 1.3. Purchase Price. In exchange for the Assets,
and subject to the terms and conditions contained in this
Agreement, Buyer agrees to pay to Sellers an aggregate amount, in
no event to exceed Twenty-Five Million Dollars ($25,000,000) (the
"Purchase Price"), to be calculated and paid as follows:
(a) Base Purchase Price. Buyer agrees to pay to
Sellers Sixteen Million Seven Hundred Sixty Thousand Dollars
($16,760,000) (the "Base Purchase Price") by wire transfer at the
Closing.
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(b) Post-Closing Adjustment.
(i) No later than 30 days after the Closing,
Buyer and Sellers shall jointly prepare an unaudited balance
sheet for Sellers reflecting the assets, minus the Excluded
Assets, and liabilities of Sellers immediately prior to the
Closing (the "Closing Balance Sheet"). The Base Purchase
Price shall then be either:
(A) increased by the amount by which the Net
Book Value of the Assets (as defined below) as
calculated from the Closing Balance Sheet exceeds
Eleven Million One Hundred Eight Thousand Dollars
($11,108,000) (the "Post-Closing Payment"); or
(B) decreased by the amount by which Eleven
Million One Hundred Eight Thousand Dollars
($11,108,000) exceeds the Net Book Value of the Assets
as calculated from the Closing Balance Sheet (the
"Post-Closing Reduction") (collectively, the
Post-Closing Payment and Post-Closing Reduction shall
be referred to as the "Post-Closing Adjustment");
(ii) Upon determination of the Post-Closing
Adjustment, Buyer or Sellers, as the case may be, shall pay
the amount thereof to the other, together with interest from
the Closing Date calculated at a rate equal to the rate
announced from time to time by First National Bank of Boston
as its "base rate" (or the legal rate of interest, if
lower), by check, wire transfer or other method acceptable
to the party to which the Post-Closing Adjustment is due.
(iii) If Buyer and Sellers are unable to agree
upon the Post-Closing Adjustment by the close of business on
the 30th day after the Closing, then the parties shall
retain a mutually acceptable independent certified public
accounting firm to determine the Post-Closing Adjustment.
The Post-Closing Adjustment as so determined shall be
binding upon the parties for all purposes. Buyer shall bear
one-half (1/2), and Sellers shall bear one-half (1/2), of
the cost of retaining the independent certified public
accounting firm selected by the parties to determine the
Post-Closing Adjustment.
(iv) For purposes of this Agreement, the Net Book
Value of the Assets is defined as:
(A) the total net book value of Sellers'
Assets as of the Closing, less
(B) the sum of (I) twenty percent (20%) of
the net book value of accounts receivable with an
invoice date more than five (5) months, but less than
or equal to seven (7) months, prior to the Closing
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Date, (II) forty percent (40%) of the net book value of
accounts receivable with an invoice date more than
seven (7) months, but less than or equal to nine (9)
months, prior to the Closing Date, (III) seventy
percent (70%) of the net book value of accounts
receivable with an invoice date more than nine (9)
months, but less than or equal to twelve (12) months,
prior to the Closing Date, and (IV) one hundred percent
(100%) of the net book value of accounts receivable
with an invoice date more than twelve (12) months prior
to the Closing Date. (The sum of the allowance for
uncollectible accounts receivable as calculated in
accordance with this subsection is hereinafter referred
to in this Agreement as the "Allowance For
Uncollectible Accounts Receivable."), less
(C) the Assumed Liabilities, as defined in
Section 1.3(d);
all as reflected on a balance sheet prepared in accordance
with generally accepted accounting principles applied on a
consistent basis.
(c) Earn Out.
(i) Buyer shall pay to Sellers an additional
payment not to exceed Six Hundred Thousand Dollars
($600,000) (the "Earn-Out") equal to the amount by which, if
at all, the sum of (A) Sellers' earnings before interest and
income taxes for the period beginning October 1, 1994 and
ending on the Closing Date, and (B) Buyer's division income
(as defined by Thermo Electron Corporation for internal
reporting purposes, excluding the amortization of goodwill
acquired by Buyer in this transaction) for the period
beginning on the Closing Date and ending September 30, 1995,
are in excess of Four Million Five Hundred Thousand Dollars
($4,500,000).
(ii) Simultaneously with the calculation of the
Earn-Out, Buyer shall pay to Sellers ninety percent (90%) of
that portion of any accounts receivable collected by Buyer
which were included in the Allowance For Uncollectible
Accounts Receivable at the Closing.
(d) Assumption of Liabilities. Subject to the terms
and conditions contained in this Agreement, Buyer shall, at the
Closing, assume and agree to pay or perform, or cause to be paid
or performed, only those obligations and liabilities of Sellers
that exist on the Closing Balance Sheet (in the aggregate, the
"Assumed Liabilities"). Notwithstanding the foregoing, Buyer
shall not assume any bank indebtedness in excess of Five Million
Five Hundred Thousand Dollars ($5,500,000), net of any cash which
may exist on the Closing Balance Sheet (the "Net Bank
Indebtedness"). The Shareholders shall cause any Net Bank
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Indebtedness in excess of Five Million Five Hundred Thousand
Dollars ($5,500,000) to be paid prior to Closing. Buyer will not
assume any liabilities of Sellers other than the Assumed
Liabilities.
(e) Maximum Purchase Price. Notwithstanding anything
to the contrary in this Agreement, the sum of the Base Purchase
Price, the Post-Closing Payment, the Earn-Out and the Net Bank
Indebtedness shall not exceed Twenty-Five Million Dollars
($25,000,000).
Section 1.4. Allocation of Purchase Price. The Purchase
Price shall be allocated among the Assets as set forth in the
Allocation Schedule attached hereto as Exhibit B (the "Allocation
Schedule"). The Allocation Schedule shall be binding upon Buyer
and Sellers for all purposes, including federal tax purposes, and
the parties agree not to take a contrary position on any tax
return or any documents filed by any of the parties with federal,
state or local authorities.
Section 1.5. Guaranty of Post-Closing Payments. Thermo
Process Systems Inc. hereby unconditionally guarantees and agrees
to become surety for the full and timely payment by Buyer of the
Post-Closing Payment, the Earn-Out and the Assumed Liabilities.
ARTICLE II
CLOSING
Section 2.1. Time and Place of Closing. The closing of the
transactions contemplated by this Agreement (the "Closing") shall
take place effective as of May 1, 1995 (the "Closing Date").
Section 2.2. Action to be Taken by Buyer at the Closing.
At the Closing, in addition to the taking of such other action as
may be provided in this Agreement, Buyer shall (i) deliver the
Base Purchase Price to Sellers (to be divided between LLI and
Clewmark in accordance with Exhibit B hereof), (ii) deliver to
Sellers such instruments of assumption of liabilities, dated the
Closing Date and in form and substance reasonably satisfactory to
Sellers' counsel, as shall in the judgment of such counsel be
sufficient to vest in Buyer the obligation to satisfy and
discharge the Assumed Liabilities, and (iii) deliver the closing
certificates, documents and opinions of counsel as may be
requested by counsel to Sellers.
Section 2.3. Action to be Taken by Sellers and the
Shareholders at the Closing. At the Closing, in addition to the
taking of such other action as may be provided in this Agreement,
(i) Sellers shall deliver to Buyer such deeds, bills of sale and
other instruments of conveyance, transfer and assignment, dated
the Closing Date, and in form and substance reasonably
satisfactory to Buyer's counsel, as shall in the judgment of such
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counsel be sufficient to vest in Buyer all of the right, title
and interest in and to the Assets, (ii) the Shareholders shall
each execute a noncompetition agreement in the form of Exhibit C
hereto and (iii) Sellers and the Shareholders shall deliver the
closing certificates, documents and opinions of counsel as may be
requested by counsel to Buyer.
Section 2.4. Additional Action to Assure Transfers.
Nothing in this Agreement shall be construed to assign any
contract, right, commitment, agreement, permit, franchise, or
claim included in the Assets (individually, a "Purchased Contract
Right") which is by its terms or by law nonassignable without the
consent of the other party or parties thereto, unless such
consent shall have been given, or as to which all the remedies
for the enforcement thereof enjoyed by Sellers would not, as a
matter of law, pass to Buyer as an incident of the assignments
provided for by this Agreement. In order, however, to provide
Buyer the full realization and value of every Purchased Contract
Right of the character hereinbefore described, Sellers at and
after the Closing will, at the request and under the direction of
Buyer and in the name of Sellers or otherwise as Buyer shall
specify, take or cause to be taken all such action (including
without limitation the appointment of Buyer as attorney-in-fact
for Sellers, but with powers limited to the specific purposes
contemplated hereby) and do or cause to be done all such things
as shall in the reasonable opinion of Buyer or its counsel be
necessary or proper to (a) assure that the rights of Sellers
under all Purchased Contract Rights shall be preserved for the
benefit of Buyer, and (b) facilitate receipt by Buyer of the
consideration to which Sellers would otherwise be entitled in and
under all Purchased Contract Rights, which consideration shall be
held for the benefit of, and shall be delivered to, Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Definitions. The term "basis", when used
below, shall mean any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction that forms or could form the basis for any specified
consequence. The term "ordinary course of business", when used
below, shall mean the ordinary course of business of Sellers
consistent with their past custom and practice.
Section 3.2. Representations and Warranties. Sellers and
the Shareholders hereby jointly and severally represent and
warrant to Buyer that, except as set forth on the disclosure
schedule attached hereto as Exhibit D (the "Disclosure Schedule")
(specifically identifying the relevant subsection hereof):
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(a) Authority. Sellers and the Shareholders have full
right, power, capacity and authority to execute, deliver and
perform this Agreement (and the other agreements, documents and
certificates executed and delivered pursuant to this Agreement
(together, the "Sellers' Documents") and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and Sellers' Documents
and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary
corporate and partnership action on the part of Sellers. This
Agreement and Sellers' Documents constitute the valid and binding
obligations of Sellers and the Shareholders, enforceable against
them in accordance with the terms hereof and thereof. Neither
the execution, delivery and performance of this Agreement or of
Sellers' Documents, nor the consummation of the transactions
contemplated hereby and thereby will (i) conflict with or result
in a violation, breach, termination or acceleration of, or
default under (or would result in a violation, breach,
termination, acceleration or default with the giving of notice or
passage of time, or both) any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of LLI,
as amended, of the Partnership Agreement of Clewmark, or of any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Sellers or the Shareholders are
a party or by which Sellers or the Shareholders, or any of their
respective properties or assets may be bound or affected; (ii)
result in the violation of any order, writ, injunction, decree,
statute, rule or regulation applicable to Sellers or the
Shareholders, or their respective properties or assets; (iii)
result in the imposition of any lien, encumbrance, charge or
claim upon any of Sellers' assets or upon the Shareholders'
assets; or (iv) entitle any employee to severance or other
payments by Sellers or create any other obligation to an
employee, including an increase in benefits. Except for the
approvals required from the Federal Trade Commission and the
United States Department of Justice under the HSR Act (as defined
in Section 3.2(z) below), no consent or approval by, or
notification to or filing with, any court, governmental authority
or third party is required in connection with the execution,
delivery and performance of this Agreement or Sellers' Documents
by Sellers or by the Shareholders.
(b) Organization and Qualification of LLI. LLI is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and has all
requisite corporate and other power and authority to own, operate
and lease its properties and to carry on its business as it is
now being conducted. LLI is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction in which the character of the properties owned,
operated or leased by it or the nature of its activities is such
that such qualification or good standing is required by
applicable law. All such jurisdictions are listed on the
Disclosure Schedule.
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(c) Organization of Clewmark. Clewmark is a general
partnership duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and has all
requisite power and authority to own, operate and lease its
properties and to carry on its business as it is now being
conducted.
(d) Owned Real Estate. The Disclosure Schedule sets
forth true and correct and complete legal descriptions of all
parcels of real estate owned by Sellers, all of which are owned
in fee simple, free and clear of any assessment, claim, lease,
mortgage, security interest, conditional sale agreement or other
title retention agreement, restriction (including any zoning or
use or building restriction), easement or lien or encumbrance of
any kind or nature whatsoever, and free and clear of any pending,
proposed or threatened zoning or use or building change, except
as set forth on the Disclosure Schedule, which claim, lease,
mortgage, security interest, conditional sale agreement or other
title retention agreement, restriction, easement or lien or
encumbrance, or pending, proposed or threatened zoning or use or
building change, does not now, either singly or in the aggregate,
interfere in any material way with the present or any intended
use of any such real estate, or substantially decrease its value.
(e) Leased Real Estate. The Disclosure Schedule sets
forth true, correct and complete copies of all real estate leases
pursuant to which Sellers lease real estate. Sellers now enjoy
quiet and undisturbed possession under each of said leases. Such
leased real estate is free and clear of any zoning or use or
building restriction or any pending, proposed or threatened
zoning or use or building restriction which would now, either
singly or in the aggregate, interfere in any material way with
the present or any intended use of any of such leased real
estate. Said leases now are, and on the Closing Date will be,
valid and binding and in full force and effect, and are not now,
and on the Closing Date will not be, in default as to the payment
of rent or otherwise. All real estate leases between Clewmark,
as lessor, and LLI, as lessee, shall be terminated by Sellers
effective as of the Closing.
(f) Books and Records. The books and records of
Sellers, including without limitation the books of account, are
complete and correct and accurately reflect the conduct of the
business and affairs of Sellers.
(g) Subsidiaries. Except for Sellers' ninety percent
(90%) ownership of Mountain States Analytical Inc., Sellers (i)
have no subsidiaries and (ii) are not a partner or joint venturer
with any other person. Sellers are not subject to any
obligation, contingent or otherwise, to provide funds to or make
an investment (in the form of a loan, capital contribution or
otherwise) in any entity.
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(h) Financial Statements. Sellers have delivered to
Buyer prior to the execution of this Agreement true and complete
copies of: (i) the audited combined balance sheet of Sellers as
of September 30, 1994 and audited combined statements of
operations, stockholders'/partners' equity and cash flows for the
year ended September 30, 1994, accompanied by the report thereon
by Trout, Ebersole & Groff, Certified Public Accountants, and
(ii) the unaudited combined balance sheet of Sellers as of March
31, 1995 and the unaudited combined statements of operations and
cash flows for the six (6) months ended March 31, 1995 (all of
the financial statements referred to in this Section 3.2(h) are
collectively referred to in this Agreement as the "Financial
Statements"). The Financial Statements fairly present the
financial condition, results of operations and cash flows of
Sellers as of the dates and for the periods indicated, in each
case in accordance with generally accepted accounting principles
applied on a basis consistent with previous years.
(i) No Undisclosed Liabilities; No Dealings with
Shareholders, Officers, Directors or Employees. As of the
Closing Date, Sellers have no liabilities or obligations of any
nature, other than those reflected on the Closing Balance Sheet,
nor in any amounts in excess of those included for such
liabilities on the Closing Balance Sheet. As used in this
Agreement, the term "liability" includes those liabilities which
are known or unknown, absolute, accrued, contingent or otherwise,
and whether due or to become due. Sellers do not have any
contractual arrangement with, or commitment to or from, any of
Sellers' officers, management, directors, shareholders, partners,
employees or family members of any of the foregoing (other than
such as may have been entered into in the normal course of
employment), including, without limiting the generality of the
foregoing, any contractual arrangement or commitment whereby any
of such persons are directly or indirectly a joint investor or
coventurer with respect to, or owner, lessor, lessee, licensor or
licensee of, any real or personal property, tangible or
intangible, owned or used by, or a lender to or debtor of,
Sellers.
(j) Taxes. Sellers have accurately prepared and duly
and timely filed all federal, state, local or foreign tax and
other returns and reports which were required to be filed, in
respect of all income, franchise, capital stock, excise, sales,
use, property (real and personal), payroll and other taxes,
levies, imports, duties, license and registration fees, charges
or withholdings of any nature whatsoever and penalties or
interest associated therewith (collectively, "Taxes"). Sellers
have delivered to Buyer true and complete copies of the income,
franchise, capital stock, excise, sales, use, property and
employment tax returns filed by Sellers with any federal, state,
local or foreign governmental authority since January 1, 1990.
None of the federal, state, local or foreign Tax returns of
Sellers have been or are being audited or examined by the
governmental department or agency having jurisdiction, nor has
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any deficiency for any Tax been asserted against Sellers. No
waivers of any statutes of limitation are in effect in respect of
any Taxes. Sellers have never filed a consolidated income tax
return with another company. There are no claims pending or
threatened, against Sellers for past due Taxes, nor is there any
basis for any such claim. Sellers will not have any liability
for Taxes for or in respect of any period or periods up to and
including the Closing Date except for liabilities for property,
payroll and similar taxes accrued for on the Closing Balance
Sheet. Without limiting the generality of the foregoing, Sellers
have withheld or collected from each payment made to each of
their employees, consultants or other payees the amount of all
Taxes required to be withheld or collected therefrom, and, to the
extent required by law, have paid the same to the proper tax
receiving officers or authorized depositories.
(k) Properties; Environmental and Health and Safety
Matters. Sellers have good, full and marketable title to, or a
valid and continuing leasehold interest in, all properties and
assets, real and personal, reflected on the Closing Balance
Sheet, free and clear of all mortgages, liens, attachments,
pledges, encumbrances or security interests of any nature
whatsoever. All leases pursuant to which Sellers lease real or
personal property are in good standing, and are valid and in full
force and effect in accordance with their respective terms. There
are no defaults under any such leases attributable to Sellers,
and no event has occurred that (whether or not with notice, lapse
of time or both) would constitute a default. All buildings,
improvements, machinery, equipment, vehicles and items of
tangible personal property used in connection with the operations
of Sellers are being transferred to Buyer "as is," "where is."
The Disclosure Schedule accurately sets forth or
describes:
(i) (A) any and all landfills, surface
impoundments, pits, ponds, lagoons, underground
injection wells, waste piles, land treatment units,
sites, incinerators and any other units used by Sellers
for the handling, treatment, recycling, reuse, return,
storage and disposal (hereinafter "Management") of
Hazardous Materials, wastes or test sample remainder,
recyclable materials; and
(B) all underground, in-ground or on-ground
storage tanks on property which has been or is
currently owned or leased by Sellers (including their
predecessors in interest);
(ii) for all units identified in clause (i)(A)
for the five (5) year period immediately preceding the
Closing Date, information on the time period used, type of
Hazardous Materials, waste, test sample remainder, or
recyclable material, method of Management, and whether there
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has been a release of Hazardous Materials, pollutants or
contaminants from such units onto the ground or subsurface
or into the air, groundwater or surface waters;
(iii) for all tanks identified in clause (i)(B)
for the five (5) year period immediately preceding the
Closing Date, information on the time period used, material
being stored, and when and what tests, if any, have been
conducted regarding tank integrity and test results, and
whether there are releases of material from such units onto
the ground or subsurface or into the air, groundwater or
surface waters;
(iv) any evidence, including sample results, of
air, soil, surface water, or groundwater contamination on or
migrating from property which has been or is currently owned
or leased by Sellers which is not addressed by clauses (ii)
or (iii);
(v) a list of all sites to which Hazardous
Materials, wastes, test sample remainder or recyclable
materials have been sent by Sellers for Management, the
owner or operator of such off-site facilities, the
transporter of such Hazardous Materials, wastes, test sample
remainders or recyclable materials, type of Hazardous
Materials, wastes, test sample remainders or recyclable
materials, method of Management used, and time period of
use;
(vi) reports of releases or threatened releases
(including, but not limited to, continuous release reports)
of Hazardous Materials, occurring on or from facilities of
Sellers or disposal sites used by Sellers and reported to:
(A) the National Response Center, State
Emergency Response Commissions, Local Emergency
Planning Committees, the Pennsylvania Department of
Environmental Resources ("DER"), or the United States
Environmental Protection Agency (the "EPA") pursuant to
requirements of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization
Act of 1986 ("CERCLA"), the Resource Conservation and
Recovery Act ("RCRA"), the Clean Water Act ("CWA") or
other statutes; or
(B) any other foreign, state or local
governmental authority;
(vii) noncompliance by Sellers since January 1,
1990 with conditions of environmental permits or licenses
issued pursuant to, or other requirements of, the Clean Air
Act, CWA, RCRA, the Toxic Substances Control Act ("TSCA"),
the Safe Drinking Water Act, CERCLA, Atomic Energy Act,
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Nuclear Regulatory Act or similar foreign, state or local
statutes, laws, ordinances, rules or regulations;
(viii) Hazardous Waste Manifest Discrepancy
Reports, RCRA biennial reports or similar state reports,
SARA Title III and Form R reports, Discharge Monitoring
Reports, air emission monitoring reports and air emission
inventories, filed by Sellers with any government agency
since January 1, 1990;
(ix) Reports of environmental testing and audits
conducted since January 1, 1990 of facilities owned or
leased by Sellers, and action plans and progress reports
responding to test and audit findings. Such audits include
audits conducted by Sellers, their consultants, insurance
companies or governmental agencies;
(x) Claims, litigation and other legal
proceedings (including but not limited to notices of
violation, notices of noncompliance, citations, orders,
investigation reports, consent orders, consent decrees and
administrative or judicial enforcement proceedings) seeking
or alleging money damages (resulting from injury to person
or property), injunctive relief, remedial action, fines,
penalties or any other remedy by reason of:
(A) violation of or noncompliance with any
law, regulation, rule, common law doctrine or
requirement of law or regulation relating to pollution
or protection of the environment or public health
("Environmental Laws"), or any permit, license or
registration issued thereunder; or
(B) the disposal, discharge or release of
Hazardous Materials whether or not in compliance with
Environmental Laws; or
(C) the ownership, operation or use of any
landfill, surface impoundment, pit, pond, lagoon,
underground injection well, waste pile, land treatment
unit, wastewater treatment plant, air pollution control
equipment, or any other unit used for Management of
Hazardous Material, or recyclable material; or
(D) exposure to any Hazardous Materials,
chemical substances, radioactive material, noises,
odors, or vibration at or emanating from property which
has been or is currently owned or leased by Sellers;
including, in all cases, all legal proceedings which
have been concluded (e.g., a judgment or consent decree
has been entered) but pursuant to which work is ongoing
(e.g., a decree requiring remedial activity to be
undertaken);
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(xi) All permits and licenses and pending
applications for permits and licenses for facilities which
are currently owned or leased by Sellers, including, but not
limited to notifications to governmental agencies required
by Sections 3010(a) (notice of hazardous waste activity) and
9002 (underground storage tanks) of RCRA and by comparable
state laws, and notices and reports required pursuant to
Sections 302, 311, 312 and 313 of Title III of the Superfund
Amendments and Reauthorization Act of 1986 and comparable
state laws;
(xii) All current and expired or terminated
contracts involving the off-site transportation or
Management of Hazardous Materials, wastes, test sample
remainders or recyclable materials generated by Sellers;
(xiii) For the three (3) year period immediately
preceding the Closing Date, all reports or assessments,
surveys or analyses addressing the operational safety of
facilities and/or activities (e.g., transportation) of
Sellers and/or hazards and risks (including risk of episodic
releases and impact of routine, continuous releases)
associated therewith, including but not limited to process
risk surveys, operational safety surveys, air emissions
modeling, and risk assessments, and action plans and
progress reports responding to any such reports;
(xiv) A description of the manner in which
asbestos and/or PCB was or is used or otherwise present at
any facility which has been or is currently owned or leased
by Sellers; and
(xv) A list of all governmental inspections
relating to the environment of Sellers' facilities and any
reports or studies generated therewith.
Sellers are not and have not been in violation of
any law, regulation or ordinance (including without
limitation, laws, regulations or ordinances relating to
building, health code, zoning, environmental, land use or
similar matters) relating to their properties or facilities.
The real property occupied or used by Sellers at any time is
not and has not been polluted or contaminated, nor has it
ever been the subject of environmental clean-up or
remediation. Such properties do not contain any Hazardous
Material, nor has any Hazardous Material been discharged or
spilled thereon. Sellers have never owned or operated a
petroleum or hazardous waste landfill or any petroleum or
other hazardous waste treatment, storage or disposal
facility. There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or
plans of Sellers or their predecessors, either collectively,
individually or severally, which may interfere with or
prevent continued compliance, or which may give rise to any
14
PAGE
common law or legal liability, or otherwise form the basis
of any claim, action, suit, proceeding, hearing, or
investigation, based on or related to the disposal, storage,
handling, manufacture, processing, distribution, use,
treatment, or transport, or the emission, discharge, release
or threatened release into the environment, of any
substance, Hazardous Material, pollutant, contaminant, or
waste, whether or not by Sellers or affecting their
properties. There are no proceedings affecting any of such
properties pending or, to the best of Sellers' knowledge
threatened, which could have an adverse effect on the
present or future use of any such property for the purposes
for which it was acquired or the purpose for which it is
used. Sellers have not received any notice from any
governmental agency or other party seeking any information
or alleging any liability with regard to the real property
occupied or used by Sellers now or at any time or with
regard to any off-site environmental conditions.
For purposes of this Agreement, "Hazardous
Material" means any flammable, explosive or radioactive
material, petroleum or any fraction thereof, or any
hazardous or toxic waste, substance or material, including
substances defined as "hazardous substances", "hazardous
materials", "pollutant", "contaminant", "solid waste" or
"toxic substances" under any applicable laws relating to
protection of the public health, welfare or natural
resources, including, without limitation, laws regulating
hazardous or toxic materials and substances, air pollution
(including noise and odors), water pollution, liquid and
solid waste, pesticides, drinking water, community and
employee health, environmental land use management,
stormwater, sediment control, nuisances, radiation,
wetlands, endangered species, environmental permitting and
petroleum products, and all rules and regulations
promulgated pursuant to such applicable laws.
(l) Accounts and Notes Receivable. All accounts and
notes receivable shown on the Closing Balance Sheet have arisen
in the ordinary course of business, are in the process of
collection and are collectible in the ordinary course of
business.
(m) Governmental Authorizations. Set forth on the
Disclosure Schedule is a complete and accurate list of all
governmental permits, licenses, franchises, concessions, security
clearances, zoning variances and other approvals, authorizations
and orders which have been obtained in connection with the
conduct of the business now being conducted by LLI. Such
permits, licenses, franchises, concessions, zoning variances,
approvals, authorizations and orders constitute all governmental
permits, licenses, franchises, concessions, zoning variances,
approvals, authorizations and orders which are required under all
applicable local, provincial, national or foreign laws and
15
PAGE
regulations for the operation of the business being conducted by
LLI as it has been heretofore conducted. All such permits,
licenses, franchises, concessions, zoning variances, approvals,
authorizations and orders are presently in full force and effect,
Sellers are in compliance with the requirements thereof (except
for minor violations that could not result in a suspension or
forfeiture thereof), no suspension or cancellation of any of them
is threatened to the knowledge of Sellers or of the Shareholders,
and the execution of this Agreement and of Sellers' Documents and
the consummation of the transactions contemplated herein and
therein will not adversely affect the validity or effectiveness
of, and will not require, for retention thereof after such change
of ownership, the consent or approval of any party to, or any
other person or governmental agency having jurisdiction of, any
such permit, license, franchise, concession, zoning variance,
approval, authorization or order. Neither Sellers nor the
Shareholders have any knowledge of any fact or circumstance which
would prevent, limit or restrict LLI from continuing to operate
its business in the present manner, and no new material
requirements pertaining to the manner of operating its specific
business (not businesses in general) have been issued or
announced by any governmental authority during the past year, nor
are there any disputes pending between Sellers and any
governmental authority about LLI's operations as presently being
conducted. Sellers have furnished or made available to Buyer all
reports and applications filed by Sellers with any governmental
agency in the last five (5) years.
(n) Patents and Trademarks. Sellers solely own or
have the exclusive right to use, free and clear of any obligation
of payment, encumbrance, lien or claim, all patents, trademarks,
trade names, service marks, brand names and copyrights, and
registrations and applications therefor, used in the conduct of
LLI's business or the use of which is necessary for LLI's
business as now being conducted (the "Intangibles"). Set forth
on the Disclosure Schedule is an accurate list and description of
all Intangibles and licenses, sublicenses or other rights or
obligations entered into or granted by or to Sellers with respect
thereto. Sellers own or possess adequate rights to use, free and
clear of any obligation of payment, encumbrance, lien or claim,
all other inventions, technology, technical know-how, processes,
designs, trade secrets, vendor and customer lists and other
confidential information required for or used in LLI's business.
No person has made any claim or demand upon Sellers pertaining
to, and no proceeding is pending or, so far as is known to
Sellers or the Shareholders threatened, which challenges (i) the
rights of Sellers in respect of any Intangibles or (ii) the
rights of Sellers to any other inventions, technology, technical
know-how, processes, designs, trade secrets or intellectual
property or confidential information used in the conduct of its
business. No Intangible owned or used by Sellers are subject to
any order, ruling, decree, judgment or stipulation by or with any
court, arbitrator or administrative agency. Sellers have not
infringed, or engaged in the unauthorized use of, any patent,
16
PAGE
trademark, trade name, service mark, brand name or copyright, or
any invention, technology, technical know-how, process, design,
trade secret or other intellectual property of another. Neither
Sellers nor the Shareholders are aware of any infringement or
unauthorized use by a third party of any patent, trademark, trade
name, service mark, brand name or copyright, or any invention,
technology, technical know-how, process, design, trade secret or
other intellectual property owned or used by Sellers.
(o) Insurance. Sellers are not in default with
respect to any provisions of any policy of general liability,
fire, title or other form of insurance held by them, are current
in the payment of all premiums due or have reserved for such
premiums due on such insurance, and have not failed to give any
notice or present any claim thereunder in due and timely fashion,
except for claims that are immaterial in both the nature of the
claim and in the amount of such claim. Sellers maintain
insurance on all of their assets and business from insurers which
are financially sound and reputable, in amounts and coverages and
against the kinds of risks and losses reasonably prudent to be
insured against by corporations engaged in the same or similar
businesses. All policies of insurance held by Sellers are listed
on the Disclosure Schedule. No basis exists which would
jeopardize the coverage under any such insurance.
(p) Employee Benefit Plans. For the purposes of this
Section 3.2(p), the following definitions shall apply:
(i) Accumulated Funding Deficiency: An
"accumulated funding deficiency" as defined in ERISA Section
302(a)(2) or the last two sentences of Section 412(a) of the
Code, or, in either case, successor provisions to such
provisions adopted by amendments to ERISA or the Code, as
the case may be, and including, in each case, other
provisions of ERISA, of the Code or of other law, and
regulations adopted under ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise
affecting the application of such provisions, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(ii) Complete Withdrawal: A "complete
withdrawal" from a Multiemployer Plan as defined in Section
4203 of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other
provisions of ERISA or of other law, and regulations adopted
under ERISA or such other law, modifying, amending,
interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or
circumstances of a particular entity that is a party to, or
17
PAGE
is affected by or is involved in the transactions
contemplated by this Agreement and with respect to which
entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant.
(iii) ERISA: The Employee Retirement Income
Security Act of 1974, as amended and in effect at the time
of execution of this Agreement.
(iv) LLI's ERISA Affiliate: LLI's ERISA
Affiliate shall mean any member of any controlled group of
corporations, group of trades or businesses under common
control, or affiliated service group (as defined for
purposes of Section 414(b), (c) and (m), respectively, of
the Code) which includes LLI.
(v) Multiemployer Plan: A "multiemployer plan"
as defined in ERISA Section 3(37) or Section 414(f) of the
Code, or, in either case, successor provisions to such
provisions adopted by amendments to ERISA or the Code, as
the case may be, and including, in each case, other
provisions of ERISA, of the Code or of other law, and
regulations adopted under ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise
affecting the application of such provisions, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transaction contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(vi) Partial Withdrawal: A "partial withdrawal"
from a Multiemployer Plan as defined in Section 4205 of
ERISA or successor provisions to such provision adopted by
amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted under ERISA or such
other law, modifying, amending, interpreting or otherwise
affecting the application of such provision, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(vii) Plan Termination: A termination of a
Pension Plan, whether partial or complete, within the
meaning of Title IV of ERISA.
(viii) PBGC: The Pension Benefit Guaranty
Corporation.
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PAGE
(ix) Pension Plan: A "pension plan" or "employee
pension benefit plan" as defined in Section 3(2) of ERISA or
successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other
law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement,
is relevant.
(x) Prohibited Transaction: A "prohibited
transaction" as defined in ERISA Section 406 or Section
4975(c) of the Code, or in either case, successor provisions
to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other
provisions of ERISA, of the Code or of other law, and
regulations adopted under ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise
affecting the application of such provisions, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(xi) Reportable Event: A "reportable event" as
defined in Section 4043(b) of ERISA or successor provisions
to such provisions adopted by amendments to ERISA and
including other provisions of ERISA or of other law, and
regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement,
is relevant.
(xii) Welfare Plan: A "welfare plan" or an
"employee welfare benefit plan" as defined in Section 3(1)
of ERISA or successor provisions to such provision adopted
by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA
or such other law, modifying, amending, interpreting or
otherwise affecting the application of such provision,
either in general or as applied to the nature or
circumstances of a particular entity that is a party to, or
is affected by or is involved in the transactions
19
PAGE
contemplated by this Agreement and with respect to which
entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant.
Except as disclosed in the Disclosure Schedule:
Sellers do not maintain or contribute to any Pension Plan or
any Welfare Plan, nor have Sellers or any of LLI's ERISA
Affiliates ever had, an obligation to contribute to any
Multiemployer Plan. All Pension Plans and Welfare Plans of
Sellers have been administered in compliance with their terms,
ERISA and, where applicable, the Code. Sellers have received
from the Internal Revenue Service a favorable determination
letter with respect to the qualification of each such Pension
Plan which is intended to qualify under Section 401(a) of the
Code and the exemption of any corresponding trust. A copy of
each such determination letter has been furnished to Buyer. With
respect to each Pension Plan: (1) there is no fact, including,
without limitation, any Reportable Event, that exists that would
constitute grounds for termination of such Plan by the PBGC or
for the appointment by the appropriate United States District
Court of a trustee to administer such plan, in each case as
contemplated by ERISA; (2) neither Sellers nor any fiduciary,
trustee or administrator of any Pension Plan or Welfare Plan have
engaged in any Prohibited Transaction that could subject Sellers
to any tax or any penalty imposed by ERISA or the Code; (3)
Sellers have no liability to the PBGC (other than for payment of
premiums); and (4) there is no Accumulated Funding Deficiency
with respect to any Pension Plan maintained by Sellers or any of
LLI's ERISA Affiliates, whether or not waived.
Sellers or any of LLI's ERISA Affiliates, or any "party
interest" or "disqualified person" (as such term are defined in
Section 3 of ERISA and Section 4975 of the Code), with respect to
any Pension Plan or Welfare Plan, have not taken any action
including the making of any investment, or failed to take any
action, that could subject any of them or any other person to any
liability for any tax or for breach of fiduciary duty with
respect to or in connection with any Pension Plan or Welfare
Plan. No Pension Plan or Welfare Plan, administrator or
fiduciary of any Pension Plan or Welfare Plan, or Sellers have
any liability under any provision of any applicable law by reason
of any communication or failure to communicate with respect to or
in connection with any Pension Plan or Welfare Plan, or any
filing or failure to file with any governmental entity. No
Pension Plan or Welfare Plan, administrator or fiduciary of any
Pension Plan or Welfare Plan, or Sellers or any of LLI's ERISA
Affiliates have any liability to any plan participant,
beneficiary or other person under any provision of any applicable
law by reason of any payment of benefits or other amounts or
failure to pay benefits or any other amounts, or by reason of any
credit or failure to give credit for any benefits or rights (such
as, but not limited to, vesting rights) with respect to benefits
under or in connection with any Pension Plan or Welfare Plan,
20
PAGE
other than benefit claims in the normal administration of each
Pension Plan or Welfare Plan. Sellers are not delinquent or in
arrears on any amounts owed to, or with respect to any
contributions under, any Pension Plan or Welfare Plan. No person
is a participant in or eligible for participation (without regard
to age or service) in, any Pension Plan or Welfare Plan who is
not a present or former employee of Sellers or a beneficiary of
such Pension Plan or Welfare Plan. None of the Pension Plans or
Welfare Plans provides for continuing accrual of benefits or
coverage for any participant or the beneficiary of any
participant after such participant's termination of employment
with Sellers.
There are no unfunded obligations under any Pension Plan or
Welfare Plan providing benefits after termination of employment
to any employee of Sellers (or beneficiary thereof), including
without limitation retiree health coverage and deferred
compensation. There has been no Plan Termination that has
occurred during the five-year period ending on the date hereof.
Sellers have incurred no liability under Title IV of ERISA with
respect to any Pension Plan maintained by a trade or business
(whether or not incorporated) which is under common control, with
or part of a controlled group of corporations with, Sellers,
within the meaning of Sections 414(b) or (c) of the Code. No
event has occurred and no condition exists with respect to any
Pension Plan or Welfare Plan that would subject Sellers to any
tax under Section 4972, 4977, 4979 or 4980B of the Code or to a
fine under ERISA Section 502(c) with respect to any such plan.
No Welfare Plan is funded with a trust or other funding vehicle,
other than insurance policies. No plan documentation or
agreement, summary plan description or other written
communication distributed to employees with respect to any
Welfare Plan or Pension Plan prohibits Sellers from amending or
terminating any such plan. There has occurred no Complete
Withdrawal or Partial Withdrawal with respect to any
Multiemployer Plan that could cause Sellers to incur any
liability under or as a result of ERISA other than to the extent
previously paid or fully provided for in the Closing Balance
Sheet, and all payments required to be made to any such Plan by
Sellers under any applicable collective bargaining agreements
have been made. As of the date of the Closing Balance Sheet,
Sellers had no liability in connection with any Pension Plan,
Welfare Plan or other employee benefit plan which was not fully
provided for on the Closing Balance Sheet. There are no actions,
arbitration's or claims pending or threatened with respect to any
Pension Plan, Welfare Plan or other employee benefit plans or any
fiduciary or sponsor thereof.
(q) Descriptions and Lists. Set forth on the
Disclosure Schedule is an accurate and complete list of the
following oral or written contracts, agreements, leases and other
documents presently in effect to which Sellers are a party or by
which they or their properties or assets are bound:
21
PAGE
(i) a list of all interests in real property
owned or leased by Sellers;
(ii) a list of:
(A) all customers of LLI who, in the 1994
calendar year, purchased Ten Thousand Dollars ($10,000)
or more of services from LLI;
(B) all distributorship, sales, agency,
franchise or license agreements of Sellers;
(C) each agreement containing any covenant
restricting the freedom of Sellers to compete in any
line of business or area or with any person;
(D) each agreement obligating, absolutely or
on a contingent basis, Sellers to make payments to a
third party based on future sales, revenues or earnings
of Sellers from a product or service; and
(E) each agreement of Sellers not made in
the ordinary course of business which is not otherwise
disclosed pursuant to another section of the Disclosure
Schedule;
(iii) a list of:
(A) the names and salaries, bonuses,
vacation and other allowances, and other employment
conditions, of all present officers and employees of
Sellers, including the last date of any increase in
such persons' compensation;
(B) any persons on leave of absence or who
are currently collecting disability payments; and
(C) all employment, consulting or similar
compensation agreements of Sellers which may not be
terminated by Sellers without penalty within thirty
days after the Closing;
(iv) a list of all bonus, incentive compensation,
deferred compensation, profit-sharing, stock option,
retirement, pension, severance, indemnification, insurance,
death benefit or other fringe benefit plans, agreements or
arrangements of Sellers (or applying to Sellers) in effect,
or under which any amounts remain unpaid, on the date hereof
or to become effective after the date hereof, the methods of
computing Sellers' obligations thereunder, and a description
of any funding vehicles therefor;
(v) a list of all labor unions or other
organizations representing, purporting to represent or
22
PAGE
attempting to represent any employees of Sellers, and a list
of all collective bargaining agreements of Sellers with any
labor unions or other representatives or employees,
including agreements, amendments, supplements, letters and
memoranda of understanding of all kinds with the local unit
of each such union or other organization;
(vi) a list of each agreement or other instrument
or arrangement defining the terms on which any indebtedness
of Sellers are or may be issued;
(vii) a list of each outstanding commitment by
Sellers to make a capital expenditure, capital addition or
capital improvement involving an amount in excess of Ten
Thousand Dollars ($10,000);
(viii) a list of:
(A) aged accounts receivable from a person,
entity or group of affiliated persons or entities from
whom the aggregate of such receivables exceeded One
Thousand Dollars ($1,000);
(B) any prepaid expense in excess of Ten
Thousand Dollars ($10,000);
(C) all items of machinery, equipment or
other tangible personal property with a depreciated
book value in excess of One Thousand Dollars ($1,000);
and
(D) all automobiles and trucks.
(ix) the name and location of every bank in which
Sellers have an account, safe deposit box or line of credit,
the identifying number of all such accounts and safe deposit
boxes, and the names of all persons having power to borrow,
discount debt obligations, cash or draw checks or otherwise
act on behalf of Sellers in any dealings with such banks;
(x) a list of each credit customer which ordered
services from Sellers during the year ended September 30,
1994 and during the six months ended March 31, 1995;
(xi) all industrial hygiene surveys and personnel
safety statistics prepared since January 1, 1990;
(xii) summaries of all epidemiological or
toxicological studies, conducted by or on behalf of, or in
the possession of Sellers;
(xiii) all occupational safety and health reports
filed with governmental agencies or instrumentalities since
January 1, 1990;
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(xiv) annual summaries of workers compensation
liabilities since January 1, 1990;
(xv) all citations, notices of violations, orders,
consent orders, administrative or judicial enforcement
proceedings from governmental agencies or instrumentalities
with respect to health or safety matters issued or pending
since January 1, 1990;
(xvi) each inspection by any governmental agency or
instrumentality concerning health, safety or environmental
matters;
(xvii) all submissions to health, safety and product
safety regulatory agencies since January 1, 1990;
(xviii) all medical surveillance programs provided
for employees;
(xix) a list of each accident or event which has
resulted in, or to Sellers' best knowledge, may result in a
claim against Sellers that personal injury, property damage
or economic loss was caused by Sellers or involved any
employee in his capacity as an employee, or any property of,
or service sold by, Sellers; and
(xx) a list of all claims pending under the
insurance policies listed pursuant to Section 3.2(o)
(including, in their aggregate amount, employee benefit
claims other than health or dental insurance claims).
Sellers have furnished to Buyer a true, correct and
complete copy of each document that is referred to or otherwise
related to any item referred to in this Section 3.2(q) or
otherwise in this Agreement.
(r) Validity. There is no default or claimed or
purported or alleged default on the part of Sellers, or basis on
which, with notice or lapse of time or both (including notice of
this Agreement), a default would exist, in any obligation on the
part of Sellers to be performed under any lease, contract, plan,
policy or other instrument or arrangement referred to in Section
3.2(q) or otherwise in this Agreement.
(s) No Changes. Since September 30, 1994 there has
not been:
(i) any material adverse change in the financial
condition, assets, liabilities, earnings, business or
prospects of Sellers;
(ii) any damage, destruction or loss (whether or
not covered by insurance) to property materially adversely
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affecting the condition (financial or otherwise), assets,
liabilities, earnings or business of Sellers;
(iii) any declaration, setting aside or payment of
any dividend, or other distribution by Sellers, except
distributions to enable the shareholders of LLI and the
partners of Clewmark to discharge their individual tax
obligations arising from the flow-through treatment of
Sellers' income to its respective owners, or any direct or
indirect redemption, purchase or other acquisition of an
equity interest in Sellers;
(iv) any issuance or sale by Sellers of any bonds
or other securities, or any partial or complete formation,
acquisition, disposition or liquidation of Sellers;
(v) any mortgage, lien, attachment, pledge,
encumbrance or security interest created on any asset,
tangible or intangible, of Sellers, or assumed, either by
Sellers or by others, with respect to any such asset, except
for liens for taxes not yet due;
(vi) any indebtedness or other liability or
obligation (whether absolute, accrued, contingent or
otherwise) incurred, or other transaction engaged in, by
Sellers, except those in the ordinary course of business
which are individually, and in the aggregate to one group of
related parties, less than Ten Thousand Dollars ($10,000) in
amount;
(vii) any obligation or liability discharged or
satisfied by Sellers, except items included in current
liabilities shown on the Closing Balance Sheet which are in
the ordinary course of business and are individually, and in
the aggregate to one group of related parties, less than Ten
Thousand Dollars ($10,000) in amount;
(viii) any sale, assignment, lease, transfer or
other disposition of any tangible asset of Sellers, except
in the ordinary course of business, or any sale, assignment,
lease, transfer or other disposition of any of their
patents, trademarks, trade names, brand names, copyrights,
licenses or other intangible assets;
(ix) any amendment, termination or waiver of any
material right belonging to Sellers;
(x) any increase in the compensation or benefits
payable or to become payable by Sellers to any of their
officers or employees except for ordinary increases for
non-management employees in accordance with prior practice;
(xi) any transaction or contract with a
shareholder of LLI, a partner of Clewmark, or a member of
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any such owner's family, including a loan, change of
employment conditions, change of pension rights or bonus;
(xii) any other action or event not in the
ordinary course of business.
(t) Litigation or Proceedings. Sellers are not
engaged in, or a party to, or threatened with, any claim or legal
action or other proceeding before any court, any arbitrator of
any kind or any administrative agency, or any governmental
investigation, nor does any basis for any claim or legal action
or other proceeding or governmental investigation exist. There
are no orders, rulings, decrees, judgments or stipulations to
which Sellers are a party by or with any court, arbitrator or
administrative agency affecting Sellers, or their business or
properties.
(u) Compliance with Laws. Sellers (i) have not been
and are not in violation of any applicable building, zoning,
occupational safety and health, pension, export control,
environmental control or other federal, state, local or foreign
law, ordinance, regulation, rule, order or governmental policy
applicable to their plants, structures or equipment or the
operation thereof, or any employment, equal opportunity or
similar law, ordinance, regulation, rule, order or governmental
policy, or any other law, ordinance, regulation, rule, order or
governmental policy applicable to Sellers, or their business or
assets; (ii) has not received any complaint from any governmental
authority, and none is threatened, alleging that Sellers have
violated any such law, ordinance, regulation, order or policy;
(iii) have not received any notice from any governmental
authority of any pending proceedings to take all or any part of
the properties of Sellers (whether leased or owned) by
condemnation or right of eminent domain and no such proceeding is
threatened; and (iv) are not a party to any agreement or
instrument, or subject to any corporate charter, partnership
agreement or other corporate or partnership restriction or
judgment, order, writ, injunction, rule, regulation, code or
ordinance, which materially and adversely affects, or might
reasonably be expected materially and adversely to affect, the
business, operations, prospects, properties, assets or financial
condition of Sellers.
(v) Labor Matters. There are no activities or
controversies, such as labor organizing activities, election
petitions or proceedings, labor strikes, disputes, slowdowns,
work stoppages or unfair labor practice complaints, pending or
threatened against Sellers or between Sellers and any of their
employees, nor have there been any such activities or
controversies within the three years prior to this Agreement. No
labor grievance has been filed and no arbitration proceeding has
arisen out of or under collective bargaining agreements and is
pending and no claim therefor has been asserted.
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(w) Brokers and Finders. Except for Sellers'
obligations to Price Waterhouse L.L.P., which Sellers shall
discharge in full at the Closing, neither Sellers nor the
Shareholders have employed any broker, agent or finder or
incurred any liability on behalf of Sellers for any brokerage
fees, agents' commissions or finders' fees in connection with the
transactions contemplated hereby.
(x) Service Warranties. A statement of the current
standard warranty used for each of the services of LLI is set
forth on the Disclosure Schedule. The Disclosure Schedule also
lists and accurately summarizes any and all other service
warranties made by or on behalf of LLI which deviate materially
from LLI's current standard warranties and which remain in effect
on the date hereof, or pursuant to which LLI has any remaining
obligations.
(y) Reserved.
(z) No Termination of Relationship. As of the date
hereof, neither Sellers nor the Shareholders are aware that any
relationship between Sellers and a distributor, customer,
supplier, lender, employee or other person may be terminated or
adversely affected as a result of the execution of this
Agreement.
(aa) Backlog. The Disclosure Schedule contains an
accurate list of the value of all uncompleted work on samples
received prior to the Closing Date. Any quotations for work
which are outstanding at that time contain terms and conditions
that are consistent with LLI's practices over the past year.
(bb) Hart-Scott-Rodino Filing. All information
provided by Sellers in discharging all applicable requirements
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations
promulgated thereunder, relating to making, filing with and
furnishing information to the Federal Trade Commission and the
United States Department of Justice in connection with the
transactions contemplated hereby, is true, correct and complete
in all respects.
(cc) Statements True and Correct; Further
Representations and Warranties. The statements contained herein
or in any written documents prepared and delivered by or on
behalf of the Shareholders or Sellers pursuant to the terms
hereof are true, correct and complete in all respects, and such
documents do not omit any fact required to be stated herein or
therein or necessary to make the statements contained herein or
therein, in the light of the circumstances under which they were
made, not misleading.
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Section 3.3. Representations and Warranties of Buyer.
Buyer represents and warrants to Sellers and the Shareholders
that:
(a) Organization and Good Standing. Buyer is a
corporation organized under the laws of the State of Delaware,
and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now
being conducted.
(b) Authority. The execution and delivery of this
Agreement (and the other agreements, documents and certificates
executed and delivered pursuant to this Agreement (together, the
"Buyer Documents"), and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of Buyer, and this
Agreement and Buyer Documents constitute the valid and legally
binding obligations of Buyer enforceable in accordance with their
respective terms. Neither the execution and delivery of this
Agreement or of Buyer Documents nor the consummation of the
transactions contemplated hereby or thereby will (i) conflict
with or result in a violation, breach or termination of or
default under (or would result in a violation, breach,
termination or default with the giving of notice or passage of
time or both) any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Buyer, or of any note,
bond, mortgage, indenture, license, agreement or other instrument
or obligation to which Buyer is a party, or by which Buyer or any
of its properties or assets may be bound or affected or (ii)
result in the violation of any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, or its
properties or assets. No consent or approval by, or notification
to or filing with, any court, governmental authority or third
party is required in connection with the execution, delivery and
performance of this Agreement or Buyer Documents by Buyer or the
consummation of the transactions contemplated hereby or thereby.
(c) Brokers and Finders. Buyer has not employed any
broker, agent or finder or incurred any liability for any
brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated hereby.
(d) Hart-Scott-Rodino Filing. All information
provided by Buyer in discharging all applicable requirements
under the HSR Act, and the rules and regulations promulgated
thereunder, relating to making, filing with and furnishing
information to the Federal Trade Commission and the United States
Department of Justice in connection with the transactions
contemplated hereby, is true, correct and complete in all
respects.
(e) Financial Capacity. Buyer has delivered to
Sellers a true and complete copy of each report and definitive
proxy statement filed by Buyer with the U.S. Securities and
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PAGE
Exchange Commission (the "Commission") since January 1, 1994 (as
such documents have since the time of their filing been amended,
"Buyer's SEC Documents") which are all the reports and proxy
statements (other than preliminary material) that Buyer was
required to file with the Commission since such date. As of
their respective dates, Buyer's SEC Documents complied in all
material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder applicable to
Buyer's SEC Documents and none of the Buyer's SEC Documents when
filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, at the time and in
light of the circumstances under which they were made, not
misleading. The financial statements of Buyer included in
Buyer's SEC Documents complied as to form in all material
respects with applicable accounting requirements and with
published rules and regulations of the Commission with respect
thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the Commission) and fairly present
(subject, in the case of the unaudited statements, to normal
recurring audit adjustments) the financial position of Buyer as
at the dates thereof and the results of its operations and cash
flows for the periods then ended.
ARTICLE IV
CERTAIN COVENANTS
Section 4.1. Expenses. Except as provided herein, each
party shall bear its own expenses, tax and other costs incident
to or resulting from this Agreement and the transactions
contemplated herein. All realty transfer taxes shall be paid
one-half (1/2) by Sellers and one-half (1/2) by Buyer. All
recording costs for instruments of transfer, all sales taxes and
all filing fees for the HSR application shall be paid by Buyer.
Section 4.2. Further Assurances.
(a) From time to time and at any time after the
Closing, and without further expense to Buyer, Sellers and the
Shareholders will execute and furnish to Buyer such instruments
of assignment and transfer, conveyances, bills of sale and other
documents as Buyer may reasonably request in order to effect or
evidence the transfer to Buyer of all Sellers' right, title, and
interest in and to the Assets, or to collect, and reduce to
Buyer's possession, the Assets, or to otherwise give full effect
to this Agreement and to effectuate the intent of the parties.
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PAGE
(b) From time to time and at any time after the
Closing, and without further expense to Sellers or the
Shareholders, Buyer will execute and furnish to Sellers such
instruments of assumption as Sellers or the Shareholders may
reasonably request in order to effect or evidence the assumption
by Buyer of the Assumed Liabilities or to otherwise give full
effect to this Agreement and to effectuate the intent of the
parties.
Section 4.3. Confidentiality of Information. Sellers and
the Shareholders agree that such party (a) has obtained and may
in the future obtain confidential and proprietary information
about Sellers, Buyer or any parent, subsidiary or affiliate of
Buyer (as the case may be, a "Buyer Entity"), including, but not
limited to, business plans, strategies, customer lists, and
financial and statistical information and (b) will not disclose,
directly or indirectly, such information or use it for any
purpose other than for such Buyer Entity's benefit. The
obligations of confidentiality in this Section 4.3 shall not
apply to any information which (a) was known to such party or to
the public prior to receipt by such party from another party
hereto; (b) is or becomes generally available to the public other
than as a breach of this Agreement by such party; (c) is
disclosed to such party by a third party having a legal right to
make such disclosure (e.g., other than by employees, auditors and
other representatives of the parties to this Agreement); or (d)
is required to be disclosed in compliance with applicable law or
legal process. The obligations under this Section 4.3 shall
terminate on the third anniversary of the Closing Date.
Sellers and the Shareholders agree that damages are an
inadequate remedy for any breach of this Section 4.3 and that
Buyer shall, whether or not it is pursuing any potential remedies
at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other
security upon any actual or threatened breach hereof.
Section 4.4. Corporate Identity. Sellers and the
Shareholders acknowledge that, as between them and Buyer, as of
and following the Closing, Buyer has the absolute and exclusive
proprietary right to all names, marks, trade names and trademarks
incorporating the name "Lancaster Laboratories," "LLI," "Express
Labs" or any derivative or variation thereof or any distinctive
mark associated therewith (collectively, "LLI Names") and to all
corporate symbols or logos incorporating the name "Lancaster
Laboratories," "LLI," "Express Labs" or any derivative or
variation thereof or any distinctive mark associated therewith
(collectively, "LLI Logos"), and that all rights thereto and the
goodwill represented thereby and pertaining thereto are being
transferred to Buyer. From and after the Closing Date neither
Sellers nor the Shareholders will use any LLI Name or LLI Logo in
or on any of their literature, sales materials or otherwise in
connection with the sale of any services.
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Section 4.5. Covenant Against Competition; Solicitation and
Hiring of Former Employees. For a period of three years after
the Closing, Sellers will not, directly or indirectly:
(a) engage in any business other than MSAI that
provides any services competitive with those offered by LLI as of
the Closing Date in any jurisdiction within the United States of
America in which LLI offers such services as of the Closing Date,
or
(b) without the prior written consent of Buyer, (i)
solicit any person employed by Buyer (or any of its affiliates)
to terminate his or her employment with Buyer (or any of such
affiliates) or to become an employee of Sellers or any affiliate
of Sellers, or (ii) hire any such employee except employees
involuntarily terminated by Buyer (or any of its affiliates).
The parties hereto agree that the scope, duration
and geographic area of the covenant against competition set forth
in Section 4.5(a) above are reasonable. In the event that any
court of competent jurisdiction determines that the scope,
duration or the geographic area, or both, are unreasonable and
that such provision is to that extent unenforceable, the parties
hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest scope,
the greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that such
noncompetition provision shall be deemed to be a series of
separate covenants, one for each and every county of each and
every state in which this provision is intended to be effective.
Sellers agree that damages are an inadequate
remedy for any breach of this Section 4.5 and that Buyer shall,
whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and
permanent injunctions without bond or other security upon any
actual or threatened breach hereof.
Section 4.6. Payment of Liabilities. Sellers and the
Shareholders each covenant to pay any and all liabilities and
obligations of Sellers that may exist as of the Closing Date
(including those liabilities which are then known, unknown,
absolute, contingent or otherwise, and whether due or to become
due) to the extent that such liabilities and obligations are not
Assumed Liabilities.
Section 4.7. Certain Employee Matters.
(a) Buyer will use its best efforts to give employees
of Sellers credit for service with Sellers when such employees
become eligible for participation in Buyer's 401(k) plan and
other plans which have vesting or length of service requirements,
and will recognize Sellers' policies with respect to vacation and
personal time days accrued through the Closing Date. Buyer,
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however, reserves the right to conform such policies after the
Closing Date to Buyer's and its parent's policies, and assumes
all responsibility for notifying employees of such changes as
they become effective.
(b) As permitted by Revenue Procedure 84-77, Buyer
shall be responsible to provide employees of Sellers a statement
on Form W-2 covering calendar year 1995. Sellers shall provide
to Buyer all records concerning 1995 compensation and
withholding, through the Closing Date, for each such employee.
Section 4.8. SEC Financials. Sellers and the Shareholders
acknowledge that Thermo Process Systems Inc., Buyer's managing
general partner, may be required to file a Current Report on Form
8-K with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, as a result of the
acquisition of the Assets. Buyer agrees that it shall be
responsible for preparing any financial statements which may be
required to comply with the requirements of Item 7 of Form 8-K
and Sellers and the Shareholders agree to cooperate fully in the
preparation of such financial statements. Buyer shall be
responsible for paying all fees charged by its independent
accountants for auditing such financial statements.
Section 4.9. Continuation of Insurance Coverage. Buyer,
at its expense, shall purchase and maintain during its ownership
of the Assets (but in no event terminating prior to March 31,
1998) professional liability insurance coverage on a claims-made
basis, such insurance to include coverage for claims brought
against Sellers based upon acts or omissions occurring within the
ten (10) year period immediately prior to the Closing Date. In
addition, Buyer, at its expense, shall purchase and maintain
during its ownership of the Assets general liability insurance
coverage on an occurrences basis, including contractual liability
coverage. Both the professional liability insurance policy and
the general liability insurance policy purchased by Buyer shall
be in such amounts, and upon such terms as are no less favorable
to Buyer as Sellers' existing policies are to Sellers.
ARTICLE V
INDEMNIFICATION
Section 5.1. Indemnification by Sellers and the
Shareholders. Buyer upon its demand shall be indemnified by
Sellers and the Shareholders, jointly and severally, for the full
amount of all damages (as defined below) suffered by it as a
direct or indirect result of:
(a) the inaccuracy of any representation or warranty
made by Sellers or by the Shareholders in or pursuant to this
Agreement (including without limitation Section 3.2);
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(b) any failure by Sellers or the Shareholders to
perform any obligation or comply with any covenant or agreement
specified herein (including without limitation the covenants set
forth in Article 4) or in any other document executed at the
Closing;
(c) any claim asserted with respect to any liabilities
that are not Assumed Liabilities;
(d) the imposition of any successor or transferee
liability including, without limitation, any liability to the
Pennsylvania Department of Revenue as a result of Sellers'
failure to comply with the bulk sale provisions of the
Pennsylvania Fiscal Code or the Pennsylvania Tax Reform Act of
1971 and any other bulk sale provision applicable to the
transactions contemplated in this Agreement (collectively, the
"Bulk Sales Acts"); and
(e) any other claims (including, without limitation,
claims alleging death or injury to persons or damage to property
caused by, or resulting from, any defect or claimed defect in or
with respect to services of LLI (whether based in tort or
contract), any tort, default in the performance or breach of any
contract or commitment, or for consequential, special or punitive
damages) for all conditions, acts or failures to act of Sellers
or other occurrences prior to or on the Closing Date or resulting
from or caused by any service provided by LLI prior to the
Closing Date; all bodily injury and property damage arising after
the Closing Date out of continuous or repeated exposure to
substantially the same general conditions in existence on or
before the Closing Date shall be considered as arising out of one
occurrence prior to the Closing Date.
For the purpose of Sections 5.1, 5.2, 5.3 and 5.4, (a)
the term "damages" shall be determined and computed by reference
to the effect of the compensable event on Buyer (and not just by
reference to any effect on the value of the shares of Buyer or
Buyer's parent companies), and shall be deemed to include (i) all
losses, liabilities, expenses or costs incurred by Buyer,
including reasonable attorneys' fees, and (ii) interest at a rate
per annum equal to that announced from time to time by First
National Bank of Boston as its "base rate" (or the legal rate of
interest, if lower) from the date 30 days after notice of any
such claim for indemnification is given to Sellers and the
Shareholders, or if an unliquidated claim, from such later date
as the claim is liquidated, to the date full indemnification is
made therefor; and (b) damages shall not include any amounts for
which Buyer actually receives payment under an insurance policy,
excluding self-insured amounts and deductible amounts.
Buyer shall give Sellers and the Shareholders notice of
any claim, action or proceeding by a third party which is
reasonably likely to result in a claim for indemnification under
this Section 5.1. Buyer shall have the right to defend, contest,
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PAGE
protest, settle and otherwise control the resolution of any such
claim, action or proceeding (unless Buyer decides not to contest
such matter or such claim, action or proceeding involves only
monetary damages and relates to a matter which, if adversely
determined, would have no impact on Buyer's liability in another
proceeding, goodwill or reputation or on the future conduct by
Buyer of its business or on its tax or accounting positions, in
which case the next paragraph shall apply), but shall keep
Sellers and the Shareholders apprised of material developments.
Sellers and the Shareholders shall have the right to participate
in any such legal proceeding, subject to Buyer's right of control
thereof, at their expense and with counsel selected by them.
If the claim, action or proceeding is one which, if
adversely determined, would involve only monetary damages and
have no impact on Buyer's liability in another proceeding,
goodwill or reputation or on the future conduct by Buyer of its
business or on its tax or accounting positions, then (i) Sellers
and the Shareholders shall have the right, at their expense, to
defend, contest, protest and otherwise control the resolution
thereof, but shall keep Buyer apprised of material developments,
and (ii) Buyer shall have the right to participate in any such
legal proceeding, subject to the right of Sellers' and the
Shareholders' right of control thereof, at Buyer's expense and
with counsel selected by Buyer.
Section 5.2. Limitations of Liability.
(a) The right of Buyer to be indemnified pursuant to
Section 5.1 shall not apply until the sum of the damages suffered
by Buyer on a cumulative basis exceeds One Hundred Thousand
Dollars ($100,000), whereupon Buyer shall be entitled to recover
all damages suffered which exceed One Hundred Thousand Dollars
($100,000).
(b) The right of Buyer to be indemnified pursuant to
Section 5.1 shall be as follows:
(i) With respect to claims based solely on
breaches of the representations and warranties in Section
3.2(j), Buyer shall have the right to be indemnified for any
claims that are asserted before the expiration of any
applicable statute of limitations for unpaid Taxes;
(ii) With respect to claims based solely on
breaches of the representations and warranties in Section
3.2(a), the first sentence of Section 3.2(b), Section
3.2(c), Section 3.2(f), Section 3.2(g), the first sentence
of Section 3.2(i) or the first sentence of Section 3.2(k),
Buyer's right to be indemnified pursuant to Section 5.1
shall survive the execution of this Agreement indefinitely;
(iii) With respect to claims based solely on
breaches of the representations and warranties in Section
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3.2, other than breaches of the representation and
warranties identified in Subsections 5(b)(i) or 5(b)(ii)
above, Buyer shall have the right to be indemnified only for
such claims that have been asserted by Buyer before the
second anniversary of the Closing Date; and
(iv) Notwithstanding the provisions of
Subsections 5.2(b)(i), (ii) and (iii) above, the limitations
in this Section 5.2 shall not apply in the event either
Sellers or the Shareholders have actual knowledge of a
breach of a representation or warranty on or prior to the
Closing Date.
(c) With respect to claims based solely on the
breaches of the representations and warranties in Section 3.2,
the right of Buyer to be indemnified pursuant to Section 5.1
shall constitute Buyer's sole and exclusive remedy.
Section 5.3. Indemnification by Buyer. Buyer hereby agrees
to indemnify Sellers and the Shareholders upon their demand for
the full amount of all damages suffered by any of them from (i)
the inaccuracy of any representation or warranty made by Buyer in
or pursuant to this Agreement or (ii) any failure by Buyer to
perform any obligation or comply with any covenant or agreement
specified herein or in any other document executed at the
Closing. "Damages" shall be calculated for this purpose in a
manner consistent with the principles of Section 5.1.
Sellers and the Shareholders shall give Buyer notice of
any claim, action or proceeding by a third party which is
reasonably likely to result in a claim for indemnification by
Buyer under this Section 5.3. Buyer shall have the right to
defend, contest, protest and otherwise control the resolution of
any such claim, action or proceeding, but shall keep Sellers and
the Shareholders apprised of material developments. Sellers and
the Shareholders shall have the right to participate in any such
legal proceeding, subject to Buyer's right to control thereof, at
their expense and represented by counsel of their choice.
Section 5.4. Limitation of Liability.
(a) The right of Sellers and the Shareholders to be
indemnified pursuant to Section 5.3 shall not apply until the sum
of the damages suffered by Sellers and the Shareholders on a
cumulative basis exceeds One Hundred Thousand Dollars ($100,000),
whereupon Sellers and the Shareholders shall be entitled to
recover all damages suffered which exceed One Hundred Thousand
Dollars ($100,000).
(b) The liability of Buyer under this Section 5.4 for
breaches of representations and warranties in Section 3.3 of this
Agreement shall only be for claims that are asserted by Sellers
and the Shareholders before the second anniversary of the Closing
Date; provided, however, that such two-year limitation shall not
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apply in the event that Buyer has actual knowledge of a breach of
a representation or warranty on or prior to the Closing Date.
(c) With respect to claims based solely on the
breaches of the representations and warranties in Section 3.3,
the right of Sellers and the Shareholders to be indemnified
pursuant to Section 5.3 shall constitute Sellers' and the
Shareholders' sole and exclusive remedy.
ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
Section 6.1. Representations, Warranties and Covenants.
The representations and warranties of Sellers contained in this
Agreement shall be true, complete and accurate at and as of the
Closing Date, shall be deemed made again at and as of such date
and shall be true, complete and accurate as so made again;
Sellers shall have performed all obligations and complied with
all covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date; and Buyer
shall have received from LLI a certificate signed by an officer
of LLI and a certificate signed by the managing partner of
Clewmark, each dated the Closing Date to the foregoing effect.
Section 6.2. Approvals of Governmental Authorities. Any
and all permits, approvals or other action, other than compliance
with the Pennsylvania Bulk Sales Acts, necessary or advisable in
the reasonable opinion of Buyer's counsel to consummate lawfully
the transactions contemplated by this Agreement under any and all
federal, state and local government laws and regulations,
including but not limited to any necessary approvals required
from the Federal Trade Commission or the United States Department
of Justice under the HSR Act, shall have been received or
performed and shall not contain or result in any provision which
is unduly burdensome to Buyer in its reasonable opinion.
Section 6.3. No Adverse Proceedings or Events. No suit,
action or other proceeding against Sellers or Buyer or their
respective officers, directors or partners shall have been
instituted, or any investigation undertaken which might
reasonably be expected to result in any such suit, action or
proceeding, nor any order of court entered, at or before the
Closing, in which it is, or will be, sought to restrain or
prohibit the transactions contemplated by this Agreement, create
an obligation to Buyer or create a lien on any of the Assets
other than an Assumed Liability.
Section 6.4. No Adverse Change. There shall not have
occurred an event or condition which would create a lien upon any
of the Assets, create an obligation of Buyer, or which would
adversely affect the transactions contemplated by this Agreement.
Furthermore, there shall not exist any development in the status
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or outlook of Sellers' business between September 30, 1994 and
the Closing Date, which is, in the reasonable judgment of Buyer,
materially adverse to Sellers.
Section 6.5. Consents and Actions; Contracts. All
contractual rights shall have been assigned to Buyer.
Section 6.6. Due Diligence. Buyer shall be satisfied, in
its sole discretion, with the results of its due diligence review
of LLI's business and the Assets of Sellers, including but not
limited to Buyer's contacts with customers, employees and
suppliers, review of environmental, tax, employee benefits and
insurance matters, review of the lease terms for any and all real
property occupied by Sellers and legal due diligence including
but not limited to litigation and contract review. If requested
by Buyer, Sellers shall have negotiated mutually satisfactory
amendments to all leases, agreements and other arrangements
between Sellers and other parties currently having an interest in
such property.
Section 6.7. LLI Approval. The Board of Directors and the
Shareholders of LLI shall have duly authorized the execution and
carrying out of this Agreement; LLI shall deliver to Buyer on the
Closing Date copies of resolutions of the Board of Directors and
of the Shareholders of LLI certified by the Secretary of LLI
evidencing the same.
Section 6.8 Clewmark Approval. The partners of Clewmark
shall have authorized the execution and carrying out of this
Agreement; Clewmark shall deliver to Buyer on the Closing Date
copies of resolutions of the partners of Clewmark certified by
the general partner evidencing the same.
Section 6.9. Noncompetition Agreement. The Shareholders
shall have executed and delivered to Buyer noncompetition
agreements in the form of Exhibit C.
Section 6.10. Other Evidence. Buyer shall have received
from Sellers such further certificates and documents evidencing
due action in accordance with this Agreement as Buyer shall
reasonably request.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
Section 7.1. Representations, Warranties and Covenants.
The representations and warranties of Buyer contained in this
Agreement shall be true, complete and accurate at and as of the
Closing Date, shall be deemed made again at and as of such date
and shall be true, complete and accurate as so made again, and
Buyer shall have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied
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with by it on or prior to the Closing and Sellers shall have
received from Buyer certificates signed by an officer of Buyer
and dated as of the Closing Date to the foregoing effect.
Section 7.2. No Adverse Proceedings or Events. No suit,
action or other proceeding against Sellers or Buyer or their
respective officers, directors or partners shall have been
instituted, or any investigation undertaken which might
reasonably be expected to result in any such suit, action or
proceeding, nor any order of court entered, at or before the
Closing, in which it is, or will be, sought to restrain or
prohibit the transactions contemplated by this Agreement or
obtain damages against Sellers, Buyer or any of their respective
officers, directors or partners in connection therewith.
Section 7.3. Employment of Key Management. At the Closing,
Buyer shall employ Kenneth E. Hess, J. Wilson Hershey and
Carol D. Hess on mutually acceptable terms and conditions.
Section 7.4. Consent of Meridian Bank and Releases. At or
prior to the Closing, Buyer shall either (i) deliver to Sellers a
consent by Meridian Bank to the transactions contemplated in this
Agreement and specifically, to the assumption by Buyer of all of
Sellers' indebtedness to Meridian Bank, or (ii) discharge all of
Sellers' indebtedness to Meridian Bank. In either case, Buyer
shall cause Meridian Bank, at or prior to the Closing, to return
to Sellers all guaranty or surety agreements executed by LLI,
Clewmark or any of their respective shareholders and partners,
guarantying Sellers' indebtedness to Meridian Bank.
Section 7.5. Evidence of Insurance Coverage. At the
Closing, Buyer shall deliver to Sellers an insurance binder
evidencing that Buyer has secured the insurance policies
contemplated in Section 4.9 above.
Section 7.6. Other Evidence. Buyer shall have furnished to
Sellers such further certificates and documents evidencing due
action in accordance with this Agreement as Sellers shall
reasonably request.
ARTICLE VIII
GENERAL
Section 8.1. Notices. All notices, requests, demands,
consents and other communications which are required or permitted
hereunder shall be in writing, and shall be deemed given when
actually received or if earlier, one day after deposit with a
nationally recognized air courier or express mail, charges
prepaid or three days after deposit in the U.S. mail by certified
mail, return receipt requested, postage prepaid, addressed as
follows:
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If to Buyer:
Thermo Analytical Inc.
c/o Thermo Process Systems Inc.
81 Wyman Street
Waltham, Massachusetts 02254
Attention: President
If to Sellers or the Shareholders:
Earl H. Hess
2435 New Holland Pike
Lancaster, Pennsylvania 17540
With a copy to:
Barley, Snyder, Senft & Cohen
126 E. King Street
Lancaster, PA 17602
Attention: Kathleen A. Gray
or to such other address as any party hereto may designate in
writing to the other parties, specifying a change of address for
the purpose of this Agreement.
Section 8.2. Survival and Materiality of Representations.
Each of the representations, warranties and agreements made by
the parties hereto shall be deemed material and shall survive the
Closing and the consummation of the transactions contemplated
hereby regardless of any due diligence investigations by the
parties prior to the Closing. All statements contained in any
certificates or other instruments delivered by or on behalf of
Buyer, Sellers or the Shareholders pursuant hereto or in
connection with the transactions contemplated hereby shall be
deemed material and shall constitute representations and
warranties by the person making such statement.
Section 8.3. Entire Agreement. This legal Agreement
supersedes any and all oral or written agreements or
understandings heretofore made relating to the subject matter
hereof (including without limitation any confidentiality
agreement between Buyer and Sellers and/or the Shareholders and
the Letter of Intent executed by Buyer, Sellers and the
Shareholders dated April 10, 1995) and constitutes the entire
legal agreement of the parties relating to the subject matter
hereof.
Section 8.4. Modification; Waiver. This Agreement may be
amended, modified or supplemented by a writing signed by the
parties against whom enforcement of any amendment is sought. The
parties hereto may, by a written signed instrument, extend the
time for or waive the performance of any of the obligations of
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another party hereto or waive compliance by such other party with
any of the covenants or conditions contained herein.
Section 8.5. Bulk Sales Acts. Buyer waives compliance by
Sellers with the provisions of the Bulk Sales Acts, it being
understood that Sellers and the Shareholders shall remain fully
liable and shall indemnify Buyer for any and all losses or
liabilities incurred by Buyer as a result of Sellers'
non-compliance with the Bulk Sales Acts.
Section 8.6. No Implied Rights or Remedies. Except as
otherwise expressly provided herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or to
give any person, firm or corporation, other than the parties
hereto, any rights or remedies under or by reason of this
Agreement.
Section 8.7. Headings. The headings in this Agreement are
inserted for convenience of reference only and shall not be a
part of or control or affect the meaning hereof.
Section 8.8. Severability. If any provision of this
Agreement shall be declared void or unenforceable by any judicial
or administrative authority, the validity of any other provision
shall not be affected thereby.
Section 8.9. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
Section 8.10. Relief. In the event litigation is
maintained by a party to this Agreement against any other party
to enforce this Agreement or to seek any remedy for breach, then
the party prevailing in such litigation shall be entitled to
recover from the non-prevailing party reasonable attorneys' fees
and costs of suit.
Section 8.11. Exhibits. The Exhibits attached hereto and
referred to in this Agreement are a part of this Agreement for
all purposes.
Section 8.12. Agreement Binding. This Agreement and the
rights and duties hereunder shall be binding upon and inure to
the benefit of the successors, assigns, heirs and legal and
personal representatives of the parties hereto.
Section 8.13. Gender. In this Agreement, unless the
context requires otherwise the singular includes the plural, the
plural the singular, the masculine gender includes the neuter,
masculine and feminine genders and vice versa.
Section 8.14. Governing Law. This Agreement shall be
governed exclusively by the laws of the Commonwealth of
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Pennsylvania and the federal laws of the United States of
America.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO ANALYTICAL INC.
By: /s/ Daniel H. Stuermer
Title: President
LANCASTER LABORATORIES, INC.
By: /s/ Earl H. Hess
Title: President
CLEWMARK HOLDINGS
By: /s/ Kenneth E. Hess
Title: Managing Partner
SHAREHOLDERS
/s/ Earl H. Hess
Earl H. Hess
/s/ Anita F. Hess
Anita F. Hess
/s/ Kenneth E. Hess
Kenneth E. Hess
/s/ J. Wilson Hershey
J. Wilson Hershey
/s/ Carol D. Hess
Carol D. Hess
Thermo Process Systems Inc. is executing this Agreement solely
for the purpose of evidencing its agreement to guaranty and to
become surety for certain obligations of Thermo Analytical Inc.
as more fully set forth in Section 1.5 of this Agreement.
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THERMO PROCESS SYSTEMS INC.
By: /s/ John P. Appleton
Title: President and
Chief Executive Officer
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EXHIBITS TO ASSET PURCHASE AGREEMENT
Exhibit A - Excluded Assets
Exhibit B - Allocation Schedule
Exhibit C - Non-Competition Agreement
Exhibit D - Disclosure Schedule
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