STOCK PURCHASE AGREEMENT

 

4.10   Contracts and Commitments.  Schedule 4.10 hereto sets forth, as of the date of this Agreement, each Contract to which the Company is a party (other than Employee Plans and purchase orders entered into in the ordinary course of business), (a) with respect to amounts, obligations, or transaction values in excess of $100,000; (b) with terms of greater than two years, which is material and which cannot be terminated on 90 or fewer days notice; (c) governing the borrowing of a material amount of money or the guarantee of the repayment of borrowed money; (d) containing covenants in any material respect limiting the freedom of the Company to compete in any line of business or with any Person or in any geographic area or market; (e) with any directors, officers, shareholders or Affiliates of the Company; (f) granting to any Person a first refusal, first offer or similar preferential right to purchase or acquire any material right, asset or property of the Company; (g) pertaining to the lease of equipment or other personal property (except for personal property leases having a value per item or aggregate payments of less than $100,000); (h) that is a union contract or collective bargaining agreement; or (i) regarding the acquisition of any business enterprise whether via stock or asset purchase or otherwise.  Sellers have made available to Buyer true, correct and complete copies of each such Contract, as amended to the date of this Agreement (and, in the case of any such Contract tha t is oral, have provided Buyer with a written summary of the material terms of such oral Contract).  As of the date of this Agreement, each Contract listed on Schedule 4.10 hereto (or required to be listed on Schedule 4.10 hereto) is a valid, binding and enforceable obligation of the Company enforceable in accordance with its terms, other than with respect to the Remedies Exceptions.  With respect to each of the Contracts listed on Schedule 4.10 hereto (or required to be listed on Schedule 4.10 hereto): (i) neither the Company nor, to such Seller’s knowledge, any other party thereto is in default under or in violation of such Contract; (ii) to such Seller’s know ledge, no event has occurred that, with notice or lapse of time or both, would constitute such a default or violation of such Contract; and (iii) the Company has not made any material waiver or release with respect to any of its rights under any such Contract, except, in the case of the foregoing clauses (i) and (ii), for defaults or violations caused by any Affiliate of Buyer.

4.11   No Conflict or Violation.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby by such Seller will result in, (a) a violation of or a conflict with any provision of any of the charter or bylaws of such Seller or of the Company, (b) a breach of or default under or require the consent of any Person under any Contract to which such Seller is a party or by which it is bound or any Contract listed on Schedule 4.10 h ereto, (c) a violation by such Seller or by the Company, of any law, rule, regulation, order, judgment, or award (except that no representation is made as to the effect, if any, of antitrust or trade regulation laws), or (d) an imposition of any Material Lien on the Shares owned by such Seller, or any property or asset of the Company, except (1) in the case of consents as referenced in clause (b) above, consents that have already been obtained or consents identified on Schedule 4.11 hereto, and (2) in each case of clauses (a) through (d) above, with such exceptions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent such Seller from selling such Seller’s Shares to Buyer.

 

4.12   Governmental Consents and Approvals.  Except for any requisite filings with the Securities and Exchange Commission or under the HSR Act, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be made or obtained by such Seller or by the Company, that has not been made or obtained in connection with the execution, delivery and performance of this Agreement and the sale of such Seller’s Shares to Buyer (provided that no representation is made as to any su ch consent, approval, authorization, declaration, filing, or registration which may be required as a result of the nature of Buyer’s business).

 

4.13   Permits.  Schedule 4.13 hereto sets forth a list of the Company’s Permits on the date of this Agreement.  Such Permits are valid and in effect and the Company has not received any notice that any appropriate governmental authority intends to cancel, terminate or not renew any Permit, and the Company holds all Permits necessary for the conduct of the Company’s business as conducted on the date of this Agreement, except in each case for such failures to be valid or in effect, cancellations, terminations, non-renewals or failures to hold such Permits which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

4.14   Litigation.  Except as set forth on Schedule 4.14 hereto, there are on the date of this Agreement no (a) outstanding orders, judgments or awards against the Company issued by any court, governmental agency or arbitration tribunal of competent jurisdiction, or (b) actions, suits or legal, administrative or arbitration proceedings or investigations pending or, to such Seller’s knowledge, threatened in writing against the Company.  Except as described on Schedule 4.14, none of the matters listed on Schedule 4.14 (or required to be listed on Schedule 4.14) in respect of clause (b), would, if determined adversely to the Company, reasonably be expected to have a Material Adverse Effect.

 

4.15   Labor Matters.  Except as set forth on Schedule 4.15, (a) the Company enjoys generally good employee relations and there is no labor strike or labor disturbance pending or, to such Sellers’ knowledge, threatened against the Company, (b) no organizational attempt has been made or, to such Sellers’ knowledge, threatened by or on behalf of any labor union or collective bargaining unit with respect to the Company’s employees, and (c) there is no pending or, to such Sellers’ knowledge, threatened charge, complaint or grievance against the Company arising out of a collective bargaining agreement or related to any other employment law, with such exceptions as in each case which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.16   Compliance with Law.  Except as set forth on Schedule 4.16 hereto, the Company is in compliance with all applicable laws, rules and regulations, whether federal, state or local, applicable to its business, including, without limitation, those related to (a) civil rights, (b) zoning and building codes, (c) public health and safety, (d) worker health and safety, and (e) labor, employment, workplace reductions (e.g., federal WARN Act and comparable state and local laws relating t o plant closings and mass layoffs) and discrimination in employment, with such exceptions as in each case which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(xiii)  There is no pending or, to such Seller’s knowledge, threatened proceeding of any kind before any Governmental Entity with respect to any Employee Plan (other than routine claims for benefits).

(a)  All federal income Returns and all other material Returns that are required to be filed by or with respect to the Company have been timely filed and were complete and correct in all material respects.  All material Taxes required to be paid by or with respect to the Company (whether or not shown on any Return) have been paid in full.  There are no positions taken on such Returns with respect to any issue that could reasonably be expected to result in the Company being subject to penalties under Section 6662 of the Code.  During the past six (6) years, no claim has been made by a Governmental Entity in a jurisdiction where the Company does not file Returns that the Company i s or may be subject to taxation by that jurisdiction.

 

(b)  Except as set forth on Schedule 4.18, no Return of the Company is under audit or examination by any Tax authority for a material amount of unpaid Taxes of or with respect to the Company, and no written notice of such an audit or examination has been received by the Company.

 

(c)  There is not in force any extension of time with respect to the due date for the filing of any Return or any waiver or agreement for any extension of time for the assessment or payment of any Tax due with respect to the period covered by any Return.

 

(d)  Except as set forth on Schedule 4.18, there is no claim against the Company for any Taxes of a material amount, and no assessments, deficiency or adjustment of a material amount has been asserted or proposed with respect to any Return and no issues relating to Taxes were raised in writing by a Tax authority in a completed audit or examination that, in each case, would reasonably be expected to result in an assessment, deficiency, or adjustment of a material amount for a later taxable period.

 

(e)  There are no material Liens as a result of a failure (or alleged failure) to pay Taxes on any of the assets of the Company other than Liens for Taxes not yet due and payable.

 

(f)  Except as set forth on Schedule 4.18, the Company is not bound by any Tax sharing, Tax indemnity or similar agreement with respect to Taxes, or has any liability for the Taxes of any Person (other than Taxes of the Company) under Regulation §1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract (other than pursuant to customary provisions in contracts not primarily relating to Taxes), or otherwise.

 

(g)  The Company is not, nor has it been during the period specified in Code §897(e)(1)(A)(ii), a “United States real property holding corporation” within the meaning of Code §897(c).

(h)  Except as set forth on Schedule 4.18, the Company has never been a member of an affiliated group filing a consolidated federal income Return.

 

(i)  The Company has complied with all applicable laws relating to the withholding of Taxes and the remittance of withheld Taxes to the applicable Tax authority.

(l)  As of the date of the balance sheet contained in the Interim Financial Statements, the unpaid Taxes of the Company did not exceed the reserve for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Interim Financial Statements (rather than in any notes thereto), and since such date the Company has not incurred any material liability for Taxes outside the ordinary course of business.

 

(m)  Except as set forth on Schedule 4.18, the Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

(a)  To such Seller’s knowledge, Schedule 4.19 hereto lists all insurance policies, and summaries of the coverage thereof, in effect on the date of this Agreement of the Company, which policies are current in all payments and are valid and binding.

 

(b)  Except as set forth on Schedule 4.19 hereto, and except as would not reasonably be expected to result in material liability to the Company, neither such Seller nor the Company has received with respect to such policies (i) any written notice of a refusal of coverage or that a defense will be afforded with reservation of rights, or (ii) any written notice of cancellation or any other indication that any insurance policy is no longer valid or binding or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder.

 

4.20   Environmental Matters.  Except as set forth on Schedule 4.20 hereto, (i) the Company has not received any unresolved written order, notice, or other communication from any governmental body of any violation or failure to comply with any Environmental Law, other than those which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; (ii) there are no Environmental Conditions at the Facilities other than those which, individua lly or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; (iii) such Seller has not received written notice from any Governmental Entity alleging that the Company has liability for Environmental Conditions at an offsite facility to which Hazardous Materials generated at any of the Facilities have been treated, stored or disposed other than those which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; (iv) Sellers have delivered or made available to Buyer true and complete copies and results of reports, studies, analyses, tests, or monitoring pertaining to Hazardous Materials and specifically prepared with respect to the Facilities within the last ten years that are within the possession or control of any Seller; and (v) the Company is in material compliance with all applicable Environmental Laws, other than those which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effe ct.

 

4.21   Intellectual Property.  The Company does not own any patents or patent applications, any registered trademarks or copyrights or applications therefor, or any foreign patents, copyrights or trademarks.  Except as set forth on Schedule 4.21 hereto, to such Seller’s knowledge, the Company exclusively owns, or has valid and continuing rights to use or otherwise exploit, as the case may be, all patents and patent rights, trademarks and trademark rights, trade names and trade name rights, domain names, service marks and service mark rights, service names and service name rights, brand names, inventions, processes, methods, designs, devices, tools, specifications, techniques, algorithms, formulae, improvements, copyrights and copyright rights, trade dress, business and product names, logos, slogans, trade secrets, industrial models, computer programs, software (whether in source or object code) and related documentation, technical information, manufacturing, engineering and technical drawings and know-how (collectively, the “Intellectual Property Assets”), used in the business as currently conducted and, to such Seller’s knowledge, such Intellectual Property Assets that are owned by the Company do not infringe, violate or constitute an unauthorized use or misappropriation of any United States patent, copyright, trademark or other similar right of any Person, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No claim is pending or, to such Seller’s knowledge, threatened in writing to the effect that the operations of the Company infringe upon, misappropriate or conflict with the rights of any other Person, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No claim is pending or, to such Seller’s knowledge, threatened in writing to the effect that any such Intellectual Property Assets owned by the Company is invalid or unenforceable by the Company, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.22   Affiliate Transactions.  Except as disclosed on Schedule 4.22, neither such Seller nor its Affiliates have (a) borrowed money from or loaned money to the Company which remains outstanding or (b) any contractual arrangements with the Company.

 

4.23   No Brokers.  Except for Houlihan Lokey, and except as set forth on Schedule 4.23 hereto, neither such Seller, its Affiliates or the Company has entered into any Contract which will result in an obligation of the Company or Sellers to pay any finder’s fee, brokerage commission or similar payment in connection with the transactions contemplated hereby.  The brokerage fees payable to Houlihan Lokey shall be paid by Sellers.

 

4.24   Disclaimer of Other Representations.  Except as set forth in this Article IV, each Seller makes no representations or warranties, express or implied, to Buyer in respect of the Company or in connection with the transactions contemplated hereby.

 

5.1   Organization of Buyer.  Buyer is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to conduct its business as it is presently being conducted and to own and lease its properties and assets.

 

5.2   Authorization.  Buyer has all necessary corporate power and authority and has taken all corporate action necessary to enter into this Agreement, to purchase the Shares from Sellers, and to perform its obligations under this Agreement.  This Agreement has been duly executed and delivered by Buyer and is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, other than with respect to the Remedies Exceptions.

 

5.3   No Conflict or Violation.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby by Buyer will result in (a) a violation of or a conflict with any provision of the charter or bylaws of Buyer, (b) a breach of or a default under any contract to which Buyer is a party or by which Buyer is bound, or (c) a violation by Buyer of any law, rule, regulation, order, judgment, or award, which violation would have a material adverse effect on Buyer’s ability to consummate the transactions cont emplated hereby.

5.4   Governmental Consents and Approvals.  Except for requisite filings under the HSR Act, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority, is required to be made or obtained by Buyer that has not been obtained or made in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby.

 

5.5   No Brokers.  Neither Buyer nor any Affiliate of Buyer has entered into or will enter into any Contract, which will result in the obligation of any Seller or the Company to pay any finder’s fee, brokerage commission or similar payment in connection with the transactions contemplated hereby.

 

5.6   Available Funds.  Buyer has available, or has fully binding, non-contingent  commitments for, funds sufficient to consummate the transactions described herein, evidence of which has been delivered to Sellers.

 

5.7   Buyer’s Access; Acquisition for Investment.  Buyer acknowledges that it has been afforded full access to the Company, to the Books and Records, and to the Company’s personnel; that the representations and warranties of Sellers herein are primarily for the purpose of allocating risk rather than making disclosure; and that Buyer is able to and has informed itself as to the merits and risks of an investment in the Company.  The Shares are being acquired for Buyer’s own account and not with a view to a distribution or resa le of any such Shares otherwise than in accordance with applicable law.

 

5.8   Disclaimer of Other Representations.  Except as set forth in this Article V, Buyer makes no representations or warranties, express or implied, to Sellers in connection with the transactions contemplated hereby.

 

6.2   Investigation by Buyer.  Each Seller shall Cause the Company to allow Buyer, at its own expense, during regular business hours, continued access to Company personnel and information reasonably requested by Buyer and reasonably related to the operation of the Facilities and the business of the Company, provided, however, the Company shall not be required to allow Buyer access to any competitively sensitive information i f and to the extent the Company has been advised by its legal counsel that such access may be considered improper; provided, further, that any information obtained from the Company or Sellers is subject to Section 10.10 and the Confidentiality Agreement; provided, further, that such access does not disrupt the normal operations of the Company.  All such information shall be provided to Buyer in such form as such information may then exist or be readily available.

6.3   Certain Transactions.  Each Seller shall Cause the Company not to, without the prior written approval of Buyer, except as contemplated by this Agreement:

(a)  incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise become responsible for obligations of any other individual, partnership, firm or corporation, or make any loans or advances to any individual, partnership, firm or corporation, in each case other than in the ordinary course of business, including, without limitation, borrowings for working capital, general corporate purposes and distributions in respect of shares of the Company’s Common Stock;

 

(b)  permit any of its assets to become subject to a Material Lien or sell, transfer or otherwise dispose of any assets or cancel, release or assign any indebtedness owed to it or any claims held by it, in case other than in the ordinary course of business; or

 

(c)  enter into any Contract which would be required to be listed on Schedule 4.10 hereto, or terminate or make any material change in any of its Contracts listed on Schedule 4.10 hereto, which such transaction would reasonably be expected to have a Material Adverse Effect;

 

(d)  grant any increases in the compensation or benefits to any of the Company’s current or former employees, directors, officers, consultants or independent contractors, other than in the ordinary course of business consistent with past practice or to the extent required by law or any existing Employee Plan;

(e)  except to the extent required by law or any existing Employee Plan, accelerate the vesting or payment of the compensation payable or the benefits provided to, or that become payable to, any of the Company’s current or former employees, directors, officers, consultants or independent contractors, or otherwise pay any amounts not due to any such individuals under applicable law or the terms of any Employee Plan;

(f)  fund or make any contribution to any Employee Plan or trust to which contributions or funding are not required under applicable law, the terms of any Employee Plan, or by this Agreement; or

(g)  establish, adopt, enter into, amend (in any respect) or terminate any Employee Plan except as otherwise expressly permitted or required in this Agreement, or establish, adopt or enter into any other employee benefit plan or arrangement that would be considered an Employee Plan if it were in existence on the date of this Agreement.

6.4   Reasonable Efforts.  Subject to the terms and conditions of this Agreement, each of Sellers, on one hand, and Buyer, on the other hand, agrees for the benefit of the other to use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to assure that all conditions to Closing set forth in Articles VII and VIII of this Agreement, as applicable, are satisfied as expeditiously as possible.  Without limiting the generality of the foregoing, no later than five days after the date of this Agreement, each of Ameron and Buyer shall use its commercially reasonable efforts upon reasonable written notice from the other party to provide such other party with any information within its possession or control reasonably necessary for such other party to make its required filings under the HSR Act.  Each of the Sellers and Buyer, or in the event that Ameron is the sole “ultimate parent entity” of the Company as such term is defined in the HSR Act, Ameron and Buyer, shall as promptly as practicable (and in no event later than ten days after receiving from the other party the information requested under the previous sentence) make all filings under the HSR Act required to consummate the transactions contemplated hereby.  Between the date of this Agreement a nd the Closing Date, each Seller and Buyer will, and each Seller will Cause the Company to, reasonably cooperate with each other with respect to all such filings.

 

6.5   Notice of Breach; Cure.

 

(a)  If a party breaches a representation or warranty in Articles IV or V, or a covenant in Article VI, it shall promptly upon discovery of the breach notify the other parties and state whether the breach is wholly or substantially curable.

 

(b)  If the breaching party has notified the other parties that any breach referenced in Section 6.5(a) is wholly or substantially curable, the breaching party shall promptly commence reasonable efforts to cure.  If any party otherwise has a right to terminate this Agreement as a result of such curable breach under Section 10.1(a)(iv), that right may not be exercised except as permitted by Section 6.5(c).

 

(c)  If the breach is not curable, or is not substantially or fully cured within 30 days after receipt of the notice referenced in Section 6.5(a), and if a party has a right to terminate this Agreement as a result of such breach under Section 10.1(a)(iv), it must exercise that right within ten days after receipt of notice of a breach which is not curable or within five days after 30 days have been allowed for cure and cure or substantial cure has not occurred.

 

(d)  If either party has a right to terminate this Agreement as a result of any such breach under Section 10.1(a)(iv) or a party has such a right but fails to exercise it within the time allowed above, provided the breaching party has made reasonable efforts to cure as provided above, then the breached representation, warranty or covenant shall be deemed amended so as to waive all claims related to the breach and its consequences.

 

6.6   Termination of 401(k) Plan.  Sellers shall deliver to Buyer an action taken by the Company’s Board of Directors providing for the termination of the Company’s 401(k) plan, effective not later than immediately prior to the Closing.

 

6.7   Definition of “Cause the Company”.  As used in this Agreement with respect to each Seller, the term “Cause the Company” shall mean the exercise of voting rights (to the extent the applicable action requires a vote) and of rights of board representation with respect to the Company by such Seller to direct (or attempt to direct) the Company and its management to take, or not take, the applicable action.

The obligations of each Seller to consummate the transactions provided for hereby are subject, in the discretion of such Seller, to the satisfaction, on or prior to the Closing Date, of each of the following conditions applicable to such Seller, provided, that each Seller shall have the right to waive any such condition, and the parties hereto agree that the Closing constitutes a waiver by such Seller of any such condition and of any claim or right relating to the subject matter of any such condition.

 

7.1   Representations, Warranties and Covenants.  All representations and warranties of Buyer contained in this Agreement, disregarding all qualifications relating to materiality, material adverse effect or words of similar import, shall be true and correct in all material respects at and as of the Closing Date (except as and to the extent that the facts and conditions upon which such representations and warranties are based are expressly required or permitted to be changed by the terms of this Agreement, and except for those that expressly relate to a particular date, which shall be true and correct in all material respects as of such date).  Buyer shall have performed in all material respects all agreements and covenants required hereby to be performed by it prior to or at the Closing Date.

 

7.2   Governmental Consents.  All applicable waiting periods under the HSR Act shall have expired or otherwise been terminated and there shall have been received all other requisite authorizations, consents and approvals of governments and Governmental Entities (if any).

 

7.3   No Governmental Proceedings or Litigation.  No action, suit or proceeding before any court or governmental body shall have been instituted (and be pending) by any governmental authority to restrain or prohibit this Agreement or the consummation of the transactions contemplated hereby.  No preliminary or permanent injunction or other order issued by any federal or state court of competent jurisdiction preventing consummation of the transactions contemplated hereby shall be in effect.

 

7.4   Certificates.  Buyer will furnish each Seller with a certificate to evidence compliance with the conditions set forth in this Article VII as may be reasonably requested by such Seller.  Each Seller shall have received a certificate executed by the Chief Executive Officer and Chief Financial Officer of the Company affirming the accuracy in all material respects of the representations and warranties contained in Article IV as to the Company, and the performance of the covenants in Article VI as to the Company, at and as of the Closing Date.

The obligations of Buyer to consummate the transactions provided for hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, provided, that Buyer shall have the right to waive any such condition, and the parties hereto agree that the Closing constitutes a waiver by Buyer of any such condition and of any claim or right relating to the subject matter of any such condition.

 

8.1   Representations, Warranties and Covenants.  All representations and warranties of each Seller contained in Article IV (other than Sections 4.1(c) and 4.4), disregarding all qualifications relating to materiality, Material Adverse Effect or words of similar import, shall be true and correct at and as of the Closing Date (except as and to the exte nt that the facts and conditions upon which such representations and warranties are based are expressly required or permitted to be changed by the terms of this Agreement and except for those that expressly relate to a particular date, which shall be true and correct as of such date), with only such exceptions as have not had, individually or in the aggregate, a Material Adverse Effect.  All representations and warranties of each Seller contained in Sections 4.1(c) and 4.4 of this Agreement, disregarding all qualifications relating to materiality, Material Adverse Effect or words of similar import, shall be true and correct in all material respects at and as of the Closing Date (except as and to the extent that the facts and conditions upon which such representations and warranties are based are expressly required or permitted to be changed by the terms of this Agre ement and except for those that expressly relate to a particular date, which shall be true and correct in all material respects as of such date).  Each Seller shall have performed in all material respects all agreements and covenants required hereby to be performed by it prior to or at the Closing Date.

 

8.2   Governmental Consents.  All applicable waiting periods under the HSR Act shall have expired or otherwise been terminated and there shall have been received all other requisite authorizations, consents and approvals of governments and governmental agencies (if any).

 

8.3   No Governmental Proceedings or Litigation.  No action, suit or proceeding before any court or by any governmental body shall have been instituted (and be pending) by any governmental authority to restrain or prohibit this Agreement or the consummation of the transactions contemplated hereby.  No preliminary or permanent injunction or other order issued by any federal or state court of competent jurisdiction preventing consummation of the transactions contemplated hereby shall be in effect.

 

8.4   Certificates.  Each Seller will furnish Buyer with a certificate to evidence compliance with Section 8.1 with respect to such Seller and compliance with each of the other conditions set forth in this Article VIII as may be reasonably requested by Buyer.  Buyer shall have received a certificate executed by the Chief Executive Officer and Chief Financial Officer of the Company affirming the accuracy i n all material respects of the representations and warranties contained in Article IV as to the Company, and the performance of the covenants in Article VI as to the Company, at and as of the Closing Date.

9.1   Books and Records.  Buyer agrees that it will use all reasonable efforts to cause the Company to cooperate with and make available to each Seller, during normal business hours, all Books and Records, information and employees (without substantial disruption of employment) retained and remaining in existence after the Closing Date which are necessary or useful to such Seller in connection with any litigation, investigation, Tax Claim or any other matter requiring any such Books and Records, information or employees for any reasonable business purp ose related to their involvement with the Company or the transactions contemplated hereby, for a period reasonably necessary after the Closing Date to comply with such Seller’s obligations under contracts, at law, or with respect to taxes.  Without limiting the generality of the foregoing, Buyer shall use all reasonable efforts to cause the Company to retain, until the applicable statutes of limitations (including any extensions) have expired, copies of all Returns, supporting work schedules, and other records or information that may be relevant to such Returns for all Tax periods or portions thereof ending before or including the Closing Date and shall not destroy or otherwise dispose of any such records without first providing each Seller with a reasonable opportunity to review and copy the same.  The Seller requesting such access shall bear all of the out-of-pocket costs and expenses (including without limitation, attorneys’ fees, but excluding reimbursement for salaries, w ages, and employee benefits) reasonably incurred in connection with providing such Books and Records, information or employees.

 

9.2   Survival of Representations, etc.

 

  The representations and warranties of each Seller and Buyer shall terminate and expire on the eighteen-month anniversary of the Closing Date and thereafter no claim may be asserted on account of an alleged breach thereof; provided, however, that (a) the representations and warranties contained in Sections 4.1(c) and 4.18 shall survive until the 30 days after the expiration of the applicable statute of limitations and (b) the representations and warranties contained in Sections 4.17 and 4.20 shall survive until the three year anniversary of the Closing Date.  After the Closing, absent fraud the indemnification provided for in this Article IX shall be the exclusive remedy for any misrepresentation or breach of warranty contained in Articles IV and V or breach of a covenant contained in Article VI of this Agreement but shall not limit any party’s right to seek an injunction, a declaratory judgment or specific performance.

 

9.3   Indemnification.

 

(a)  By Sellers.  Subject to and as provided herein and in Section 9.3(d), after the Closing, each Seller shall indemnify and hold harmless Buyer from and against any and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and expenses, including without limitation, interest, penalties and reasonable attorneys’ fees (collectively, “Damages”), incurred by Buyer in connection with or arising out of or resulting from (i) any breach by such Seller of (A) any representation or warranty of such Seller contained in Article IV or (B) any Closing certificate delivered by such Seller pursuant to Section 8.4 or (ii) any covenant of such Seller contained in Article VI, which, in the case of (i) and (ii) above, would not have been incurred if any such breached representation, warranty or Closing certificate had been true, or any such breached covenant had been performed, as of the Closing Date.

Subject to and as provided herein and in Section 9.3(d), after the Closing, Sellers shall indemnify and hold harmless Buyer from and against 50% of any and all Damages incurred by Buyer in connection with or arising out of or resulting from the matter identified in Item 4 of Schedule 4.14.

 

The calculation of the amount of Damages or any indemnification obligation pursuant to Section 9.6(b) shall take into account and be reduced by (A) any reduction in the Tax liability of Buyer or its Affiliates (“Tax Benefit”) as a result of any Damage or amount that is subject to indemnification hereunder and (B) applicable insurance to the extent actually recovered.  Buyer and Seller shall cooperate in good faith, and shall provide each other the information necessary, to determine the amount of any Tax Benefit.  Buyer shall not be entitled to indemnification to the extent Damages were included in the calculation of Closing Working Capital.

 

For purposes of calculating Damages, the reserves and accruals on the Closing Balance Sheet shall only be applied to matters relating to the period prior to the Closing Date which otherwise may constitute or result in Damages.  Subject to this Section 9.3(a) and Section 9.3(d), no indemnifiable Damages shall be owed under this Agreement until applicable reserves or accruals have been exhausted, and then only to the extent (without duplication) that such Damages, in the aggregate, exceed the amount of such reserves and accruals and any amount which may be available under Section 9.3(d)(i) with respect to such Damag es (which shall not be diminished as a result of the application of any such reserve or accrual), but subject to the limit of Section 9.3(d)(ii).  Only reasonable out-of-pocket expenses and charges (and not internal expenses and allocations, such as charges for management time and general and administrative expense allocations, which shall not be indemnified) shall be charged against such reserves.

 

Notwithstanding the foregoing, no Seller shall have any obligation to indemnify Buyer unless a reasonably detailed claim in writing specifying the nature of the breach or claim is received by such Seller from Buyer prior to the eighteen-month anniversary of the Closing Date (except (x) in the case of a breach of Sections 4.1(c) and 4.18, as to which the period shall be the applicable statute of limitations plus 30 days and (y) in the case of a breach of Sections 4.17 and 4.20, as to which the period shall be the three year anniversary of the Closing Date).

 

(b)  By Buyer.  Subject to and as provided herein and in Section 9.3(d), after the Closing Buyer shall indemnify and hold harmless each Seller from and against any and all Damages incurred by such Seller in connection with or arising out of or resulting from (i) any breach of any representation or warranty contained in Article V or the Closing certificate delivered by Buyer pursuant to Section 7.4, or (ii) any covenant of Buyer conta ined in Article VI which, in the case of (i) and (ii) above, would not have been incurred if any such breached representation, warranty or Closing certificate had been true, or any such breached covenant had been performed, as of the Closing Date.  The calculation of the amount of Damages shall take into account and be reduced by applicable insurance to the extent recovered.  Notwithstanding the foregoing, Buyer shall not be obligated to indemnify such Seller unless a reasonably detailed claim in writing specifying the nature of the breach or claim is received from such Seller by Buyer prior to the eighteen-month anniversary of the Closing Date.

(c)  Procedures Relating to Indemnification.  In order for a party to be entitled to any indemnification under this Agreement in respect of a claim or demand made by any third party (a “Claim”) against that party or the Company (the “Indemnified Party”), such Indemnified Party must notify the indemnifying party or parties of the Claim reasonably promptly after receipt of notice of the Claim, provided, however, that failure to give such notification shall not affect the indemnification provided under this Agreement except to the extent the indemnifying party or parties shall have been actually prejudiced as a result of such failure (except that the indemnifying party or parties shall not be liable for any expenses incurred during the period in which the Indemnified Party failed to give such notice).  After such notice, the indemnifying party or parties shall be entitled, if it or they so elects, to take control of the defense and investigation of such Claim and to employ and engage attorneys of its or their own choice who are reasonably satisfactory to the Indemnified Party to handle and defend the same, at the indemnifying party’s or parties’ risk and expense; provided, that (i) if two or more Sellers are the indemnifying parties for the same Claim, then such Sellers may jointly make such election or one or more of such Sellers may authorize another Seller that is an indemnifying party to make such election and (ii) if such Claim involves a permanent injunction or any customer or supplier of the Company and would be reasonably expected to have a Material Adverse Effect if successful, then no Seller shall be permitted to so take control of such defense or investigation but may, at its own cost, participate in the investigation, trial and defense of such Claim and any appeal arising therefrom.  The Indemnified Party shall cooperate in all reasonable respects with the indemnifying party or parties and such attorneys in the investigation, trial and defense of such Claim and any appeal arising therefrom, provided, however, that the Indemnified Party may, at its own cost, participate in the investigation, trial and defense of such Claim and any appea l arising therefrom.  If the indemnifying party or parties shall assume the defense with counsel reasonably satisfactory to the Indemnified Party, the indemnifying party or parties shall not be liable for any legal expenses subsequently incurred by the Indemnified Party.  The indemnifying party or parties shall be liable for the fees and expenses of counsel employed by the Indemnified Party for any period during which the indemnifying party or parties has failed to assume the defense thereof (other than during the period prior to the time the Indemnified Party shall have given notice of the Claim as provided above).  If the indemnifying party or parties shall have assumed the defense of a Claim, the Indemnified Party shall agree to any settlement, compromise or discharge of a Claim which the indemnifying party or parties may recommend and which by its terms obligates the indemnifying party or parties to pay the full amount it is obligated to pay under this Agreement in connectio n with such Claim, which releases the Indemnified Party completely in connection with such Claim, and which would not otherwise have a material adverse effect on the Indemnified Party.  In no event may settlement of any indemnified matter hereunder be effected without the prior written consent of the indemnifying party or parties, which consent shall not be unreasonably withheld, and provided the settlement releases the indemnifying party or parties completely in connection with such Claim and would not have a material adverse effect on the indemnifying party or parties (other than the effect of its obligation to make indemnification payments).  Buyer shall cause the Company to perform its obligations as an Indemnified Party under this Section 9.3(c).

(iii)  Although a party may be entitled to make a claim for indemnification pursuant to one or more provisions of this Article IX, no party shall be entitled to be indemnified more than once under this Agreement for the same claim or the same Damages.

 

(e)  Waiver.  With regard to this Section 9.3, the parties acknowledge that they have read and are familiar with, and hereby waive the benefit of, the provisions of California Civil Code Section 1542, which is set forth below:

(f)  Any payments made to any party pursuant to this Article IX shall constitute an adjustment of the Purchase Price of the Shares for Tax purposes and shall be treated as such by Buyer and Sellers on their Returns to the extent permitted by law.

 

(g)  In the event a Seller is required to make a payment to Buyer pursuant to the terms of Section 2.2(e)(i) or this Section 9.3, such payment shall be satisfied first, with a withdrawal from such Seller’s sub-account in the Escrow Account, and second, only after the funds in such sub-account have been exhausted, by such Seller directly.  For the avoidance of doubt, each Seller’s sub-account in the Escrow Account shall contain the amount contributed by such Seller to the Escrow Account pursuant to this Agreement, and such Seller’s sub-account shall be used solely to satisfy payments payable by such Seller pursuant to Section 2.2(e)(i) or this Section 9.3.

(h)  The right to indemnification or the payment of Damages of Buyer or any Indemnified Party or other remedies based on any representation, warranty, covenant or obligation of Sellers permitted pursuant to this Agreement shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation; provided, however, that (i) if Buyer notifies Sellers in writing prior to Closing of any inaccuracy, breac h or non-compliance of or with any representation, warranty, covenant or obligation of a Seller under this Agreement, or if a Seller notifies Buyer in writing prior to Closing of any inaccuracy, breach or non-compliance of or with any representation, warranty, covenant or obligation of such Seller under this Agreement, and (ii) Buyer has the right to terminate this Agreement as a result of such inaccuracy, breach or non-compliance but fails to exercise such right in accordance with this Agreement, then the applicable representation, warranty, covenant or obligation shall be deemed amended so as to waive all claims related to the inaccuracy or breach and its consequences.

 

9.4   Insurance.  So long as indemnification is being or may be sought under this Article IX, Buyer shall use all reasonable efforts to cause the Company to cause its properties, assets and business to be insured at least to the extent it was insured at the Closing Date.  Buyer agrees to use all reasonable efforts to cause the Company to make and pursue claims for coverage under applicable insurance policies (whether in force before or after the Closing).

 

9.5   Further Assurances.  From and after the Closing Date, Buyer and Sellers agree to execute and deliver all further instruments, documents and agreements, and take all further action, that may be reasonably necessary or desirable in order to effect the transfer of the Shares and other actions contemplated by this Agreement.

(b)  Each Seller, severally and not jointly based on the relative ownership percentages of such indemnifying Sellers set forth on Exhibit A hereto, shall indemnify the Company, Buyer and each Affiliate of Buyer and hold them harmless from and against (i) all Taxes of the Company for all Pre-Closing Tax Periods, (ii) Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company is or was a member on or before the Closing Date, including Taxes for which the Company may be liable under Treasury Regulation Section 1.1502-6(a) or any similar provision of state, local or foreign law, and (iii) any and all taxes of any other Person imposed on the Company as a transferee or successor, by contract, or pursuant to any law, rule or regulation, which Taxes are payable with respect to Pre-Closing Tax Periods, except, in each case, to the extent such Taxes were reflected in the final determination of Closing Working Capital pursuant to Section 2.2(a) (such amounts described in (i), (ii) and (iii), the “Indemnified Taxes”); provided, however, that Indemnified Taxes shall not include any liability for Taxes resulting from actions taken or elections made by Buyer or its Affiliates (including the Company) after the Closing that are not contemplated by this Agreement.

(c)  Sellers shall be entitled to any net refunds or credits of or against any Indemnified Taxes except to the extent such refund or credit arises as the result of a carryback of a loss or other Tax benefit from a period beginning after the Closing Date or was taken into account in the final determination of Closing Working Capital pursuant to Section 2.2(a).  Such refunds shall be allocated among Sellers in the proportion to which they own the Shares as set forth on Exhibit A hereto.  Buyer shall be entitled to any other refunds or credits of or against a ny Taxes.

 

(d)  Buyer and its Affiliates (including the Company) shall not amend any Tax Returns of the Company for any Pre-Closing Tax Period without the prior written consent of each Seller, which approval shall not be unreasonably withheld or delayed.

 

(e)  Buyer and its Affiliates (including the Company) shall not agree to the waiver or any extension of the statute of limitations relating to any Pre-Closing Tax Period without the consent of each Seller, which consent shall not be unreasonably withheld or delayed.

(g)  The parties shall ensure that the transactions contemplated hereby are structured in a manner that causes the Tax year of the Company to end as of the Closing Date for all federal income Tax purposes.

(h)  To the extent any provision of this Section 9.6 is inconsistent with other provisions of Article IX, this Section 9.6 shall control.

9.7   Tax-Qualified Plans.  Each employee of the Company who remains an employee of Buyer or its Affiliates following the Closing and who satisfies the eligibility requirements of Buyer’s 401(k) plan shall become eligible to participate in Buyer’s 401(k) plan on the Closing Date and shall be credited with eligibility service and vesting service for all periods of service with the Company and Ameron to the extent so credited with such service under the Company’s 401(k) plan.  Buyer and the Company, respectively, shall take al l necessary action to amend Buyer’s 401(k) plan and the Company’s 401(k) plan, as necessary, to provide that any such employee with an outstanding loan under the Company’s 401(k) plan shall be entitled to have such loan distributed in-kind and rolled over into the Buyer’s 401(k) plan and Buyer shall thereafter maintain such loan under Buyer’s 401(k) plan.  During the period commencing on the Closing Date and ending at the time of the distribution of such loans, such loans shall continue to be maintained under the Company’s 401(k) plan and Buyer shall make payroll deductions in respect of required payments under any such loan and remit such amounts to the Company’s 401(k) plan as payments on such loan in accordance with the terms and conditions of the Company’s 401(k) plan and the procedures and requirements applicable thereunder.  During such period, provided that the participant continues to make all required installment payments with respe ct to such loan, such loan shall not be placed in default, and Buyer and the Company shall take all necessary action to cause such loan not to be placed in default.

(b)  In the event that as of the Cut-Off Date a condition precedent to the obligations of either party is not satisfied, nothing contained herein shall be deemed to require such other party to terminate this Agreement, and such other party may waive such condition precedent and proceed with the Closing.

 

(c)  Subject to Section 10.1(d), in the event of the termination of this Agreement by either a Seller or Buyer as above provided, neither Sellers, on the one hand, nor Buyer, on the other, shall have any liability under this Agreement of any nature whatsoever (other than pursuant to Sections 10.7 and 10.10) to the other, including any liability for Damages, unless the termination is pursuant to clause 10.1(a)(iv) above, and any of Sellers, on the o ne hand, or Buyer, on the other, is in default under its obligations under this Agreement as of the date of such termination, in which event the party or parties in breach shall be liable to the other party or parties for such breach.

 

(d)  If this Agreement is terminated by any Seller pursuant to Section 10.1(a)(ii) or (iv) or by Buyer pursuant to Section 10.1(a)(iii) (other than solely due to (i) the failure of the condition set forth in Section 8.1 or (ii) the failure of the conditions set forth in Sections 8.1 and 8.4), then Buyer shall p romptly pay to each Seller its pro rata share (based on the proportionate ownership percentages set forth on Exhibit A) of an aggregate amount equal to $10,000,000 in immediately available funds, pursuant to Section 10.3.  If this Agreement is terminated by either Buyer or Sellers or the Closing does not occur for any reason, Buyer shall pay to each Seller its pro rata share (based on the proportionate ownership percentages set forth on Exhibit A) of an aggregate amount equal to 100% of the documented expenses (if any) incurred by the Company or Sellers in connection with the extension of the Baghouse Construction Permit (it being understood that none of Sellers or the Company shall be required to incur any such expenses); and provided, t hat such reimbursement obligation shall not exceed $100,000.

 

10.2   Assignment.  Neither this Agreement nor any of the rights or obligations under this Agreement may be assigned by any party without the prior written consent of the other parties.  Notwithstanding the foregoing, to the extent required under the ABL Facility, Buyer’s rights under this Agreement (but not its obligations, including, without limitation, Buyer’s obligation to deliver the Purchase Price to Sellers in accordance with this Agreement) may be assigned in whole or in part as collateral security to the lenders (or any a gent on their behalf) party to the ABL Facility or to any successors or assignees of the lenders under the ABL Facility or any successor or replacement for the ABL Facility; provided that each such assignee shall accept such rights subject to the terms of this Agreement and Buyer shall provide written notice to each Seller prior to the time such assignment is made.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

10.3   Notices; Transfer of Funds.  Unless otherwise provided herein, any notice, request, instruction or other communication to be given or made under this Agreement by any party shall be in writing and delivered personally or sent by prepaid first class mail, electronic mail, overnight courier, or facsimile, as follows:

(a)  This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of New York (without reference to the choice of law provisions) except with respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement and as to those matters the law of the jurisdiction under which the respective entity derives its powers shall govern.

 

(b)  Each of the parties hereto irrevocably consents to the service of any process, pleading, notices or other papers by the mailing of copies thereof by registered, certified or first class mail, postage prepaid, to such party at such party’s address set forth herein, or by any other method provided or permitted under New York law.

 

(c)  Each party irrevocably and unconditionally agrees and consents that any suit, action or other legal proceeding arising out of or related to this Agreement shall be brought and heard in the Borough of Manhattan, the City of New York, or if it has or can acquire jurisdiction, the United States District Court for the Southern District of New York (collectively, a “New York Court”), and each party irrevocably consents to personal jurisdiction in any and all tribunals in said locations.

 

(d)  To the extent that Buyer or any Seller has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each hereby irrevocably waives such immunity in respect of its obligations under this Agreement.  Each of the parties hereto: (i) waives and agrees not to plead or make any objection to the venue of any action, suit or proceeding in respect of this Agreement (a “Proceeding”) in a New York Court; (ii) waives and agrees not to ple ad or make any claim that any Proceeding brought in a New York Court has been brought in an improper or otherwise inconvenient forum; (iii) waives and agrees not to plead or make any claim that a New York Court lacks personal jurisdiction; and (iv) waives any right to remove any Proceeding to a federal court except where such courts are vested with sole and exclusive jurisdiction.

10.5   Entire Agreement; Amendments and Waivers.  This Agreement, together with all exhibits and schedules hereto, and the Confidentiality Agreement, dated March 15, 2010, with respect to the Company (the “Confidentiality Agreement”), constitutes the entire agreement among the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations, disclosures, and discussions, whether oral or written, of the parties. & #160;Except as otherwise expressly provided herein, no supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

 

10.6   Multiple Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

10.7   Expenses.  Except as set forth below or as otherwise specified herein, each party hereto shall pay its own legal, accounting, out-of-pocket and other expenses incident to this Agreement and to any action taken by such party in preparation for carrying this Agreement into effect; provided that the fee with respect to the filing to be made under the HSR Act shall be paid one-half by Sellers and one-half by Buyer.  In addition, except as otherwise set forth herein, the amoun ts payable by Sellers under the terms of this Agreement shall be borne among Sellers in the proportion in which they own Shares as set forth on Exhibit A hereto or paid by the Company.  Buyer agrees that if there is a Second Request as a result of Buyer’s proposed purchase of the Shares, upon request Buyer will reimburse on a current, monthly basis Sellers and/or the Company for the reasonable costs (including fees and expenses of attorneys and advisors) actually incurred in responding to, preparing to respond to, or incurred in preparations in anticipation of, such request.  Sellers shall provide and shall use reasonable efforts to Cause the Company to provide reasonable detail on a monthly basis for the reimbursement of such costs.

 

10.8   Invalidity.  In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

 

10.9   Titles.  The titles, captions or headings of the Articles and Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

10.10   Confidential Information.  The parties acknowledge that the transaction described herein is of a confidential nature and shall not be disclosed except to consultants, advisors and Affiliates, or as required by law, until such time as the parties make a public announcement regarding the transaction.  No party shall issue any public statement or press release regarding the transactions contemplated hereby without prior consultation with the other parties, except to the extent required by law.

 

10.11   No Third-Party Beneficiaries.  No Person (other than parties to this Agreement or their respective successors or permitted assigns) shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained except that the Company shall have rights as provided in Section 10.7.

 

10.12   Matters Among Sellers.  All representations, warranties and agreements of Tokyo, Mitsui and Ameron are several and not joint, and no Seller shall be deemed to represent as to the incorporation, power, authority, ownership, consents or any other matters regarding any other Seller, but only as to itself.  Any action required or permitted to be taken by Sellers under this Agreement, including any election, notice, amendment, waiver or consent from Sellers, may be effected by any Seller acting on its own behalf, but shall not bind the oth er Sellers.

 

10.13   Construction.  The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any provision of this Agreement.

 

10.14   Variation of Pronouns.  All pronouns and all variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity or identities of the antecedent Person or Persons may require.

 

10.15   Required Withholdings.  Any payments to be made by a party hereunder shall be subject, if applicable, to any required withholding of any state or federal taxes with respect to payments to non-United States entities, all such withheld amounts shall be treated as delivered to Sellers hereunder.