1
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
PURSUANT TO SECTION 701 OF
THE MICHIGAN BUSINESS CORPORATION ACT
Dated as of January 7, 1998
By and Among
IDEX CORPORATION
(a Delaware corporation),
XXXX ACQUISITION CORP.
(a Michigan Corporation),
XXXXXX X. XXXX,
RDV ARIA, L.L.C.
(a Michigan limited liability company)
and
XXXX MANUFACTURING CORPORATION
(a Michigan corporation)
2
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.3 Usage of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.4 References to Articles, Sections, Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . 14
1.5 Conversion Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 2
MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Closing Certificate; Preliminary Merger Consideration Closing Adjustment; Physical Inventory;
Audit; Closing Date Financial Report; Final Merger Consideration Closing Adjustment . . . . . . . . 16
2.4 Procedure for Payment of Merger Consideration; Funding of Escrow; Payment of Closing Date
Indebtedness; Closing Merger Consideration Reconciliation . . . . . . . . . . . . . . . . . . . . . 18
2.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 3
CLOSING
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Other Certificates, Agreements and Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE TARGET
4.1 Organization, Good Standing and Authority of the Target and each Subsidiary to Conduct Business . . 20
4.2 Power and Authority; Authorization; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.5 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9 Undisclosed Liabilities; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.10 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.11 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.13 Compliance with Laws; Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.16 Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.17 Transactions with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.18 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.20 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.21 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.22 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.23 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.24 Business Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.25 Bank Accounts, Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.26 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.27 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.28 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.29 Absence of Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.30 Products; Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.31 Material Misstatements or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.32 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Authorization; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.5 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.6 Financial Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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5.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 6
COVENANTS AND CONDUCT OF
THE PARTIES PRIOR TO CLOSING
6.1 Investigation by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.2 Environmental Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.3 Consents and Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.4 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.6 Delivery of Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.7 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.8 Employment Agreement; Employment Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.9 Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.10 Standard IDEX Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.11 Acquisition of Xxxx UK Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.12 Shareholder Meeting; Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.13 Matters Relating to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.14 Future Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 7
CONDITIONS TO THE TARGET'S
AND PRINCIPAL SHAREHOLDERS' OBLIGATIONS
7.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.3 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.4 Required Consents and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.5 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.6 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7 Payment of Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.8 Xxxx Employment Agreement, Employment Letters; Standard IDEX Agreements . . . . . . . . . . . . . . 54
7.9 No Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
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8.1 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.2 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.3 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.4 No Interruption or Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.5 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.6 Required Consents and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.7 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.8 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.9 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.10 Xxxx Employment Agreement; Standard IDEX Agreements . . . . . . . . . . . . . . . . . . . . . . . . 55
8.11 Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.12 No Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.13 Certificates of Key Management Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 9
COVENANTS AND CONDUCT OF THE PARTIES AFTER CLOSING
9.1 Survival and Indemnifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.2 Income Tax Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.3 Further Assurances; Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.4 Access to Records and Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.5 Director and Officer Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.6 Environmental Remediation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 10
MISCELLANEOUS
10.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.4 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.5 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.6 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.7 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.9 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.11 Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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10.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.13 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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SCHEDULES
Schedule Description
A Shareholders
1.1(ax) Life Insurance Policies
4.1 Subsidiaries; Foreign Qualification;
Tradenames; Equity Interests
4.3 Contractual Conflicts
4.4 Consents, Approvals
4.5 Proceedings
4.6 Capitalization
4.9(a) Undisclosed Liabilities
4.9(b) Encumbrances
4.10 Real Property, Liens,
Encumbrances and Proceedings
4.11(a) Owned Tangible Personal Property
4.11(b) Leased Tangible Personal Property
4.12(a) Sufficiency, Availability and Maintenance of Intellectual
Property
4.12(b) Intellectual Property Infringements
4.12(c) Intellectual Property Patents; Registrations, Licenses
4.12(d) Licenses of Third Party Intellectual Property
4.13 Permits, Licenses
4.14 Litigation
4.15(a) Labor Matters; Employee Contracts
4.15(b) U.K. Labor Matters
4.16(a) Employee Pension Benefit Plans; Employee Welfare
Benefit Plans
4.16(b) Xxxx U.K. Benefit Plans
4.17 Transactions with Certain Persons
4.18 Tax Matters
4.19 Insurance
4.20 Inventory Not Located at the Real
Property or Owned by the Corporation
4.21 Liens on Accounts Receivable
4.22 Contracts
4.23 Suppliers and Customers
4.25 Bank Accounts; Directors and Officers
4.26 Environmental Matters
4.27 Certain Business Changes
4.30 Product Warranties
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5.4 Consents, Approvals
6.3 Required Consents and Filings
6.10 Key Management Employees
9.1(a) Disclosure Letter
EXHIBITS
Exhibit Description
2.4(b) Shareholder Transmittal Letter
3.2 Certificate of Merger
6.7 Escrow Agreement
6.8(a) Xxxx Employment Agreement
6.8(b) Employment Letter
6.9 Non-Competition Agreement
6.10 Standard IDEX Agreements
7.4 Legal Opinion of Xxxxxxx, Xxxx, Xxxxxxx,
Xxxxx & Goodyear, LLP
8.7(a) Legal Opinion of Xxxxxx & Xxxxxxxxx
8.7(b) Legal Opinion of Xxxxxx Xxxxxxxx & Xxxx LLP
8.13 Key Management Certificate
9
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 7, 1998
is by and among IDEX CORPORATION, a Delaware corporation with its principal
place of business at 000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000
("IDEX" or "Buyer"), XXXX ACQUISITION CORP., a Michigan corporation and a
wholly-owned subsidiary of IDEX (the "Transitory Subsidiary"), XXXX
MANUFACTURING CORPORATION, a Michigan corporation with its principal place of
business at 0000 Xxx X-000, Xxxxxx Xxxxxx, Xxxxxxxx 00000 (the "Target"),
XXXXXX X. XXXX, an individual residing at 0000 Xxxxx Xxxxx, Xx. Xxxxxx,
Xxxxxxxx 00000 ("Xxxx") and RDV ARIA, L.L.C., a Michigan limited liability
company with its principal place of business c/o RDV Corporation, 500 Grand
Bank Building, 000 Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000 ("RDV") (Xxxx and
RDV being collectively the "Principal Shareholders" and individually a
"Principal Shareholder").
RECITALS:
A. IDEX desires to acquire, through a reverse subsidiary
merger of the Transitory Subsidiary with and into the Target, all of the shares
of the Target upon the terms and conditions contained in this Agreement.
B. The Target and the Principal Shareholders have agreed
to the merger of the Transitory Subsidiary with and into the Target upon the
terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, IDEX,
the Transitory Subsidiary, the Target and the Principal Shareholders agree as
follows:
ARTICLE 1
1
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
below shall have the following meanings:
(a) "Accounts Payable" shall mean (i) all trade payables
and accounts payable of the Target and the Subsidiaries as determined in
accordance with GAAP and (ii) all checks written on any "zero balance" or other
bank account of the Target or any Subsidiary on
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or prior to the Closing Date which have not cleared as of the Closing Date (to
the extent that cash has not been credited by the amount of any such checks).
(b) "Accounts Receivable" shall mean trade receivables
and accounts receivable of the Target and the Subsidiaries (including any note
or other receivable from any Shareholder, but excluding any other notes
receivable) as determined in accordance with GAAP.
(c) "Accrued Liabilities" shall mean (i) accrued expenses
of the Target and the Subsidiaries (other than Accounts Payable and expenses
accrued for any Income Tax Liability, post-retirement benefits and deferred
income taxes) as determined in accordance with GAAP, (ii) overdrafts on any
bank account of the Target or any Subsidiary (other than Accounts Payable) and
(iii) retrospective insurance premiums or charges on or with respect to any
Insurance.
(d) "Affiliate" shall mean, as to any Person, any other
Person which directly or indirectly controls, or is under common control with,
or is controlled by, such Person. As used in this definition "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interest, by contract
or otherwise).
(e) "Agreement" shall mean, unless the context otherwise
requires, this Agreement and Plan of Merger together with those Schedules and
Exhibits attached hereto to which the Target, any Subsidiary or any Principal
Shareholder is a party.
(f) "Broker's Fee" shall mean the fee owing by the Target
to XxXxxxxx & Corporation Securities, Inc. upon the consummation of the
transactions contemplated by this Agreement, to the extent not paid by Target
prior to the Closing.
(g) "Business" shall mean the design, manufacture,
distribution, sales and service of air moving products including vacuum pumps,
air motors, gear motors, regenerative blowers, vacuum generators and
compressors, and other related products, for a variety of markets including
laboratory, medical and dental, instrumentation, chemical processing,
pharmaceutical, food and beverage and water treatment, and all other related
activities, as conducted by the Target or any Subsidiary on the date of this
Agreement.
(h) "Buyer's Accountants" shall mean the firm of Deloitte
& Touche.
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(i) "Capitalized Lease Obligation" shall mean the amount
of liability capitalized or disclosed (or which should be disclosed in
accordance with GAAP) on a balance sheet in respect of a lease or other
agreement for the use of property which should be capitalized on the lessee's
or user's balance sheet in accordance with GAAP.
(j) "Change of Control" shall mean a change of control as
that term is defined in the Securities Exchange Act of 1934, as amended, or as
that term is otherwise defined in any agreement in which it appears.
(k) "Claims Period" shall mean the period beginning on
the date of this Agreement and ending on the eighteen (18) month anniversary of
the Closing Date.
(l) "Closing Date" shall mean the later to occur of (i)
January 21, 1998 and (ii) five (5) days after the satisfaction or waiver of all
conditions to the obligations of the parties to consummate the transactions
contemplated by this Agreement (other than with respect to actions the
respective parties will take at Closing themselves), or if such day is not a
business day, the next succeeding business day, or any other date as the
parties shall mutually agree.
(m) "Closing Date Cash" shall mean, whether positive or
negative, (i) the cash of the Target and the Subsidiaries minus (ii) the Unpaid
Redemption Amount, and minus (iii) that portion of the cash which represents
assets of the Rabbi Trust, assets of the non-qualified 401(k) plan or assets of
the Target's ESP plan (all as disclosed on the Schedules to Section 4.15 or
4.16), as of the Closing Date.
(n) "Closing Date Consolidated PPE Gross Book Value"
shall mean the book value (before allowance for depreciation and amortization)
of the Owned Current Real Property and Owned Tangible Personal Property of the
Target and the Subsidiaries, determined in accordance with GAAP, as of the
Closing Date.
(o) "Closing Date Consolidated Working Capital" shall
mean (i) the sum of (A) the Accounts Receivable (net of reserves for doubtful
accounts), (B) the Inventory and (C) the Other Current Assets minus (ii) the
sum of (A) the Accounts Payable and (B) the Accrued Liabilities, in each case
as of the Closing Date.
(p) "Closing Date Indebtedness" shall mean the aggregate
outstanding Indebtedness of the Target and the Subsidiaries, as of the Closing
Date.
(q) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
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(r) "Consolidated PPE Gross Book Value Adjustment" shall
mean (i) if the Closing Date Consolidated PPE Gross Book Value is equal to or
greater than $62,000,000, Zero Dollars ($0.00) or (ii) if the Closing Date
Consolidated PPE Gross Book Value is less than $62,000,000, the difference,
expressed as a negative number, between $62,000,000 and the Closing Date
Consolidated PPE Gross Book Value.
(s) "Consolidated Working Capital Adjustment" shall mean
either (i) if the Closing Date Consolidated Working Capital is greater than
$15,500,000, the amount (expressed as a positive number) by which the Closing
Date Consolidated Working Capital exceeds $15,500,000, (ii) if the Closing Date
Consolidated Working Capital is less than $14,500,000, the amount (expressed as
a negative number) by which the Closing Date Consolidated Working Capital is
less than $14,500,000 or (iii) if the Closing Date Consolidated Working Capital
is equal to or greater than $14,500,000 but less than or equal to $15,500,000,
Zero Dollars ($0.00).
(t) "Current Real Property" shall mean all Real Property
currently owned or leased by the Target or any Subsidiary.
(u) "Dissenting Share" means any Target Share which any
Shareholder who or which has exercised and perfected his, her or its dissenters
rights under the Michigan Business Corporation Act holds of record.
(v) "Employee Benefit Plan" shall mean any (i) non
qualified deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (ii) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan) or (iv) Employee Welfare
Benefit Plan or fringe benefit plan or program, any of which is maintained,
administered or contributed to by the Target or any Subsidiary, or which covers
any employee or former employee of the Target or any Subsidiary by reason of
such employee's employment by the Target or any Subsidiary.
(w) "Employee Contract" shall mean any written or legally
binding oral contract, agreement, arrangement, policy, program, plan or
practice (exclusive of any such contract which is terminable within thirty (30)
days without liability to the Target or any Subsidiary) directly or indirectly
providing for or relating to any employment, consulting, remuneration,
compensation or benefit, severance or other similar arrangement, insurance
coverage (including any self-insured arrangements), medical-surgical-hospital
or other health benefits, workers' compensation, disability benefits,
supplemental employment benefits, vacation benefits and other forms of paid or
unpaid leave, retirement benefits, deferred
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compensation, savings or bonus plans, profit-sharing, stock options, stock
appreciation rights, or other forms of incentive compensation or
post-retirement compensation or benefit, employment guarantee or security, or
limitation on right to discipline or discharge, which (i) is not an Employee
Benefit Plan, (ii) has been entered into or maintained, as the case may be, by
the Target or any Subsidiary and (iii) covers any one or more current or former
director, officer, employee or consultant of the Target or any Subsidiary.
(x) "Employee Pension Benefit Plan" shall have the
meaning set forth in ERISA Section 3(2).
(y) "Employee Welfare Benefit Plan" shall have the
meaning set forth in ERISA Section 3(1).
(z) "Enforceability Limitations" shall mean (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights and (ii) general principles
of equity (whether applied by a court of law or equity) including, without
limitation, the discretion of the appropriate court with respect to specific
performance, injunctive relief or other terms of equitable remedies.
(aa) "Environment" shall mean any water or water vapor,
land (including land surface or sub-surface), air, fish, wildlife, biota and
all other natural resources, whether outside, inside or under any structure.
(bb) "Environmental Claims" shall mean any notice of
violation, notice of potential or actual responsibility or liability, claim,
suit, action, demand, directive or order, or any other assertion of a right to
legal, administrative or equitable relief, resulting from, relating to or
arising out of (i) the presence of, the Release or threatened Release into the
Environment of, or exposure to, any Hazardous Substance which is required to be
reported under or is in violation of any Environmental Laws, (ii) the
generation, manufacture, processing, distribution, use, handling,
transportation, storage, treatment or disposal of any Hazardous Substance which
is required to be reported under or is in violation of any Environmental Laws,
(iii) the violation, or alleged violation, of any Environmental Laws or (iv)
the non-compliance or alleged non-compliance with any Environmental Laws.
(cc) "Environmental Laws" shall mean any statutes,
ordinances, directives or other laws, any rules or regulations, orders,
guidelines or policies, and any licenses, permits, orders, judgments, notices
or other requirements enacted, promulgated, or issued by any Governmental
Authority, relating to pollution or protection of public health or the
Environment, or to the identification, generation, manufacture, processing,
distribution, use, handling, treatment, storage, disposal, transporting,
presence, Release or threatened Release of
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any Hazardous Substances, pollutants, contaminants, wastes or any other
substances or materials. Without limiting the generality of the foregoing,
Environmental Laws shall include the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Toxic Substances
Control Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, and all analogous laws enacted,
promulgated or lawfully issued by any Governmental Authority, but shall exclude
any Governmental Requirement of the Occupational Safety and Health
Administration and any similar state laws.
(dd) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(ee) "ERISA Affiliate" shall mean a trade or business,
whether or not incorporated, which is deemed to be in common control or
affiliated with the Target or any Subsidiary within the meaning of Section 4001
of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
(ff) "Escrow Agent" shall mean Bank of America, N.A..
(gg) "Escrow Funds" shall mean the amount of funds on
deposit with and held by the Escrow Agent from time to time pursuant to this
Agreement and the Escrow Agreement, which amount shall initially be equal to
the Initial Escrow Deposit.
(hh) "GAAP" shall mean United States generally accepted
accounting principles applied consistent with the past practice of the Target
and the Subsidiaries.
(ii) "Xxxx UK" shall mean Xxxx Manufacturing Company
Limited, a U.K. company.
(jj) "Governmental Authority" shall mean any federal,
state, local or foreign government, or any political subdivision of any of the
foregoing, or any court, agency or other entity, body, organization or group,
exercising any executive, legislative, judicial, quasi-judicial, regulatory or
administrative function of government.
(kk) "Governmental Requirement" shall mean any published
law, statute, ordinance, directive, rule or regulation of any Governmental
Authority now in effect.
(ll) "Guarantee" shall mean (without duplication on a
consolidated basis) all obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of any
Person guaranteeing any Indebtedness, dividend or
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other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For
purposes of any computations made under this Agreement, a Guarantee in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of the Indebtedness for borrowed money which has been
guaranteed, and a Guarantee in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
(mm) "Hazardous Substances" shall mean any pollutants,
contaminants, substances or other materials, whether solids, liquids or gases,
as defined in or regulated by any Environmental Laws.
(nn) "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended from time to time.
(oo) "IDEX" shall mean IDEX Corporation, a Delaware
corporation.
(pp) "Income Tax Liability" shall mean liability for any
federal, state, local or foreign income, business and occupation or similar
Taxes owing by the Target or any Subsidiary to any Governmental Authority
attributable to the operations and activities of the Target or any Subsidiary
for any period ending on or prior to the Closing Date, including without
limitation Taxes computed through the Closing Date with respect to any partial
year.
(qq) "Indebtedness" shall mean, with respect to any Person
(without duplication on a consolidated basis), (i) all obligations of such
Person for borrowed money, including without limitation all obligations for
principal and interest, and for prepayment and other penalties, fees, costs and
charges of whatsoever nature with respect thereto, (ii) all such obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (iii)
all obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (iv) all obligations
of such Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to
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suppliers and similar accrued liabilities incurred in the ordinary course of
business and paid in a manner consistent with industry practice), (v) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien or
security interest on property owned or acquired by such Person whether or not
the obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations) relating
to the issuance of letters of credit for the account of such Person, (ix) all
obligations arising out of foreign exchange contracts and (x) all obligations
arising out of interest rate and currency swap agreements, cap, floor and
collar agreements, interest rate, insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.
(rr) "Independent Accountants" shall mean KPMG Peat
Marwick LLP or, if KPMG Peat Marwick LLP is unable to serve as provided in
Section 2.3(c), another "Big Five" independent accounting firm, or successor
thereof, agreed upon by the Principal Shareholders and Buyer. If the Principal
Shareholders and Buyer are not able to agree upon an accounting firm, then the
Independent Accountants shall be a "Big Five" firm selected by lot (except that
any "Big Five" firm with a prior relationship with Buyer, the Principal
Shareholders or the Target shall be excluded).
(ss) "Initial Escrow Deposit" shall mean $11,800,000.
(tt) "Insurance" shall mean any fire, product liability,
automobile liability, general liability, worker's compensation, medical
insurance stop-loss coverage or other form of insurance maintained by the
Target or any Subsidiary, and any tail coverage purchased with respect thereto.
(uu) "Intellectual Property" shall mean all intellectual
property used to conduct the Business including, without limitation, (i) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and re-examinations thereof, (ii)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names (including, without limitation, the name "Xxxx Manufacturing"), together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all copyrightable
works, all copyrights, and all applications, registrations and renewals in
connection therewith, (iv) all mask works and all applications, registrations,
and renewals in connection therewith, (v) all trade secrets and confidential
business information (including ideas, research and development,
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know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (vi) all computer software (including data and related
documentation and including software installed on hard disk drives) and (vii)
all copies and tangible embodiments of any of the foregoing (in whatever form
or medium).
(vv) "Inventory" shall mean all raw material,
work-in-process and finished goods inventory of the Business. Solely for
purposes of calculating Closing Date Consolidated Working Capital, "Inventory"
shall mean the Inventory of the Business net of reserves for damaged, obsolete
and excess inventory (as determined in accordance with GAAP).
(ww) "Life Insurance" shall mean those policies of life
insurance owned by the Target on the lives of Xxxx and certain other executives
and having an aggregate cash surrender value of approximately $2,400,000 (net
of policy loans of approximately $200,000), a list of which policies is set
forth on Schedule 1.1(ax).
(xx) "Losses" shall mean all losses, liabilities,
deficiencies, damages (excluding (i) other than with respect to Environmental
Claims, consequential damages and (ii) other than as asserted in any
third-party claim, punitive damages), Encumbrances (other than any Permitted
Encumbrance), fines, penalties, claims, costs and expenses, including without
limitation all fines, penalties and other amounts paid pursuant to a judgment,
compromise or settlement, court costs and reasonable legal and accounting fees
and disbursements.
(yy) "Merger Consideration" shall mean $118,000,000, as
adjusted by the Merger Consideration Closing Adjustment.
(zz) "Merger Consideration Closing Adjustment" shall mean
(i) the sum, whether positive or negative, of (A) the Consolidated Working
Capital Adjustment and (B) the Consolidated PPE Gross Book Value Adjustment
minus (ii) the Closing Date Indebtedness minus (iii) the Income Tax Liability
minus (iv) the Broker's Fee plus (v) the Closing Date Cash and plus (vi) the
aggregate cash surrender value of the Uncommitted Life Insurance, net of policy
loans and any tax consequences to the Target upon the surrender of such
policies as if such surrender had occurred at Closing ("Net Cash Surrender
Value").
(aaa) "Multiemployer Plan" shall have the meaning set forth
in Section 3(37) of ERISA.
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(bbb) "Owned Current Real Property" shall mean all Current
Real Property owned by the Target or any Subsidiary.
(ccc) "Owned Tangible Personal Property" shall mean all
Tangible Personal Property owned by the Target or any Subsidiary.
(ddd) "Other Current Assets" shall mean the current assets
of the Target and the Subsidiaries other than Accounts Receivable, Inventory,
cash, deferred taxes and prepaid expenses relating to any Income Tax Liability.
(eee) "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(fff) "Per Share Merger Consideration" shall mean the
Merger Consideration divided by the total number of Target Shares issued and
outstanding on the Closing Date.
(ggg) "Permits" shall mean all permits, licenses,
certificates, consents, franchises, approvals and other authorizations issued
by or obtained from any Governmental Authority or other Person or otherwise
maintained in connection with the operation of the Business or the use or
ownership by the Target and the Subsidiaries of their respective properties and
assets.
(hhh) "Permitted Encumbrance" shall mean any Encumbrance
(i) for Taxes not yet due and payable or being contested in good faith, (ii)
relating to any Capitalized Lease Obligation, operating lease, conditional sale
agreement or other title retention agreement, or any purchase money security
interest, (iii) which secures any Indebtedness to the extent reflected on the
Closing Date Financial Report, (iv) arising in connection with any bills of
lading, warehouse receipts and other documents of title in the ordinary course
of business, (v) relating to mechanics', materialmens' and other similar liens
arising in the ordinary course of business which will be removed by the payment
of the Accounts Payable and the Accrued Liabilities to the extent reflected on
the Closing Date Financial Report, (vi) consisting of easements, rights-of-way,
restrictions and other similar encumbrances on any of the Current Real Property
not materially interfering with the ordinary course of business, or (vii)
relating to any replacement, extension, modification or renewal of any
Encumbrance described in clauses (i) through (vi) above.
(iii) "Person" shall mean any corporation, Governmental
Authority, individual, partnership, limited liability company, trust or other
entity.
00
- 00 -
(xxx) "Predecessor" shall mean a Person, if any, whose
status or activities could give rise to an Environmental Claim against the
Target or any Subsidiary as a successor in interest to such Person.
(kkk) "Principal Shareholders" shall mean Xxxx and RDV.
(lll) "Proceeding" shall mean any claim, demand, action,
suit, litigation, administrative proceeding, dispute, order, writ, injunction,
judgment, assessment, decree, grievance, arbitral action, investigation or
other proceeding of, by, before or involving any Governmental Authority.
(mmm) "Prohibited Transaction" shall have the meaning set
forth in ERISA Section 406 and Code Section 4975.
(nnn) "Pro Rata Percentage" shall mean as to any
Shareholder a fraction, expressed as a percentage, the numerator of which is
the number of Target Shares owned by such Shareholder on the Closing Date and
the denominator of which is the total number of Target Shares issued and
outstanding on the Closing Date.
(ooo) "Real Property" shall mean all real property now or
in the past twenty (20) years owned or leased by the Target, any Subsidiary or
any Predecessor, or in which the Target, any Subsidiary or any Predecessor has
now or in the past had any interest, and all buildings, structures and
improvements located on, in or under such real property, together with all
rights, licenses, privileges, interests, hereditaments, reversions and
easements appurtenant thereto, including, without limitation, (i) all minerals,
oil, gas and other hydro-carbon substances on and under the surface of the real
property, (ii) all development rights, air rights, water, water rights and
water stock relating to the real property, (iii) any adjacent strips or gores
of real estate, and (iv) any other easements, rights-of-way or appurtenances
used in conjunction with the beneficial use and enjoyment of the real property;
provided, however, that with respect to any Predecessor, "Real Property" shall
mean only such real property as was owned or leased while such Predecessor was
an Affiliate of the Target or any Subsidiary.
(ppp) "Redemption Transaction" shall mean that certain
series of transactions consummated in August and September of 1996 pursuant to
which (i) the Target redeemed or otherwise reacquired all of its issued and
outstanding preferred stock and 441,176 shares of its Class A and Class B
common stock, and (ii) RDV became a substantial stockholder of the Target.
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(qqq) "Related Person" shall mean any partner, shareholder,
director, officer or employee of the Target or any Subsidiary, any Person
related to any such partner, shareholder, director, officer or employee by
blood or marriage, or any corporation, partnership, trust or other entity in
which any such Person has a substantial interest as a shareholder, partner,
trustee or otherwise.
(rrr) "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
migration, dumping or disposing into the Environment which could give rise to
an Environmental Claim or is required to be reported under any Environmental
Laws.
(sss) "Reportable Event" shall have the meaning set forth
in ERISA Section 4043.
(ttt) "Representative" shall mean any officer, director,
principal, attorney, accountant, agent, employee, member or other
representative of any Person.
(uuu) "Shareholders" shall mean the holders of all of the
issued and outstanding capital stock of the Target as of the Closing Date
including, without limitation, the Principal Shareholders, a list of which
holders is set forth on Schedule A.
(vvv) "Subsidiary" shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by the Target.
(www) "Tangible Personal Property" shall mean all tangible
personal property of the Business (other than Inventory) owned or leased by the
Target or any Subsidiary or in which the Target or any Subsidiary has any
interest including, without limitation, show equipment, production and
processing equipment, warehouse equipment, computer hardware, furniture and
fixtures, transportation equipment, leasehold improvements, supplies and other
tangible assets, together with any transferable manufacturer or vendor
warranties related thereto.
(xxx) "Target" shall mean Xxxx Manufacturing Corporation,
a Michigan corporation.
(yyy) "Target Shares" shall mean all of the issued and
outstanding shares of Class A common stock, par value $1.00 per share, and
Class B common stock, par value $1.00 per share, of the Target, comprising
404,480 Class A common shares and 205,220 Class B common shares.
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(zzz) "Target's Pre-Closing Accountants" shall mean the
firm of Xxxxx Xxxxxxxx LLP, acting as accountants for the Target and the
Subsidiaries prior to Closing.
(aaaa) "Tax" shall mean any federal, state, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
startup, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, intangible property, sales, use, transfer,
registration, value added, goods and services, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
(bbbb) "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and any amendment thereof.
(cccc) "Transitory Subsidiary" shall mean Xxxx Acquisition
Corp., a Michigan corporation.
(dddd) "Transitory Subsidiary Shares" shall mean all of the
issued and outstanding shares of common stock, without par value, of the
Transitory Subsidiary, comprising 100 common shares.
(eeee) "Uncommitted Life Insurance" shall mean (i) those
policies of Life Insurance, or portions thereof, which are not committed to any
particular employee but were allocated to fund the deferred compensation
arrangements described in the footnote on page 15 of the audited financial
statements of the Target for the period ended December 29, 1996 and (ii) the
policies or portions thereof which name the Target as beneficiary of policy
proceeds upon death but only to the extent such proceeds are to be owned by the
Target and are not allocated, set aside or otherwise paid to, or held for, a
particular employee or beneficiary thereof.
(ffff) "Unpaid Redemption Amount" shall mean the amount, if
any, of all redemption payments owing to any former shareholders of the Target
pursuant to the Redemption Transaction.
1.2 Other Defined Terms. The following terms shall have
the meanings defined for such terms in the Sections set forth below:
Term Section
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Agreement in Principle 10.12
Casualty 10.1
Casualty Amount 10.1
Certificate of Merger 3.2
Closing 3.1
Closing Certificate 2.3(a)
Closing Date Financial Report 2.3(c)
Closing Merger Consideration Reconciliation 2.4(d)
COBRA 4.16(a)(xiv)
Confidentiality Letter 6.1
Disapproved Encumbrances 6.13(b)
Effective Time 2.2
Employment Letter 6.8(b)
Escrow Agreement 6.7
Facilities 9.6
Final Merger Consideration Closing Adjustment 2.3(c)
Financial Statements 4.8
Xxxx Employment Agreement 6.8(a)
IDEX Indemnified Parties 9.1(b)
Interim Financial Statements 4.8
Material Contracts 4.22
MDEQ 9.6
Merger 2.1
Net Cash Surrender Value 1.1(cf)
Non-Competition Agreement 6.9
Preliminary Merger Consideration
Closing Adjustment 2.3(a)
Required Consents and Filings 6.3
RMT 9.6
Shareholders' Meeting 6.12
Standard IDEX Agreements 6.10
Surveys 6.13(a)
Surviving Corporation 2.1
Target Indemnified Parties 9.1(b)
Third Party Source 9.1(e)(iv)
Title Commitments 6.13(a)
Title Policy 6.13(a)
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1.3 Usage of Terms. Except where the context otherwise
requires, words importing the singular number shall include the plural number
and vice versa. Use of the word "including" shall mean "including, without
limitation."
1.4 References to Articles, Sections, Exhibits and
Schedules. All references in this Agreement to Articles, Sections (and other
subdivisions), Exhibits and Schedules refer to the corresponding Articles,
Sections (and other subdivisions), Exhibits and Schedules of or attached to
this Agreement, unless the context expressly, or by necessary implication,
otherwise requires.
1.5 Conversion Rates. For purposes of calculating
amounts determined with reference to GAAP (including, without limitation, for
purposes of calculating the Closing Date Consolidated PPE Gross Book Value and
the Closing Date Consolidated Working Capital), the foreign currency conversion
rate for U.S. Dollars to British Pounds Sterling shall be determined in
accordance with GAAP. For all other purposes, the established foreign currency
conversion rate for U.S. Dollars to British Pounds Sterling shall be as
follows:
U.S. $1.69 = L.1.00 British Pounds Sterling
ARTICLE 2
MERGER
2.1 The Merger. Subject to the terms and conditions
contained in this Agreement, on the Closing Date the Transitory Subsidiary
shall merge with and into the Target (the "Merger") and the Target shall be the
corporation surviving the Merger (the "Surviving Corporation").
2.2 Effect of Merger.
(a) General. The Merger shall become effective
on the date that the Certificate of Merger is filed with the Department of
Consumer and Industry Services of the State of Michigan or on such other date
as is set forth in the Certificate of Merger as permitted by the Michigan
Business Corporation Act (the "Effective Time"). The Merger shall have the
effect set forth in Section 724 of the Michigan Business Corporation Act. The
Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and on
behalf of either the Target or the Transitory Subsidiary in order to carry out
and effectuate the transactions contemplated by this Agreement.
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(b) Articles of Incorporation. The Articles of
Incorporation of the Target immediately prior to the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation at and as of
the Effective Time.
(c) Bylaws. The Bylaws of the Transitory
Subsidiary immediately prior to the Effective Time shall become the Bylaws of
the Surviving Corporation at and as of the Effective Time.
(d) Directors and Officers. The directors and
officers of the Transitory Subsidiary immediately prior to the Effective Time
shall become the directors and officers of the Surviving Corporation at and as
of the Effective Time.
(e) Conversion of Target Shares. At and as of
the Effective Time, (i) each Target Share (other than any Dissenting Share)
shall be converted into the right to receive the Per Share Merger
Consideration, which amount shall be payable in accordance with the procedures
set forth in Section 2.4 and (ii) subject to the compliance by the holder of
each Dissenting Share with the provisions of the Michigan Business Corporation
Act, such Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with the
provisions of the Michigan Business Corporation Act; provided, however, that
the Per Share Merger Consideration shall be subject to equitable adjustment in
the event of any stock split, stock dividend, reverse stock split or other
change in the number of Target Shares outstanding. After the Effective Time,
no Target Share shall be deemed to be outstanding or to have any rights other
than as set forth in the preceding sentence.
(f) Conversion of Transitory Subsidiary Shares.
At and as of the Effective Time, each Transitory Subsidiary Share shall be
converted into one share of common stock of the Surviving Corporation.
2.3 Closing Certificate; Preliminary Merger Consideration
Closing Adjustment; Physical Inventory; Audit; Closing Date Financial Report;
Final Merger Consideration Closing Adjustment.
(a) Closing Certificate; Preliminary Merger Consideration
Closing Adjustment. On the fifth business day prior to the Closing Date, the
President or the Chief Financial Officer of the Target shall in good faith
prepare and deliver to Buyer a certificate (the "Closing Certificate")
containing (i) a proforma estimate of the Closing Date Consolidated Working
Capital, the Closing Date Consolidated PPE Gross Book Value, the Consolidated
Working Capital Adjustment, the Consolidated PPE Gross Book Value Adjustment,
the Closing Date Indebtedness, the Income Tax Liability, the Broker's Fee, the
Closing Date
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Cash, the Net Cash Surrender Value of the Uncommitted Life Insurance and the
Merger Consideration Closing Adjustment based thereon (the "Preliminary Merger
Consideration Closing Adjustment"), and (ii) a list of all outstanding loans of
the Target to any Shareholder and the payoff amounts of such loans as of the
Closing Date, which Closing Certificate shall be subject to limited procedures
of inquiry by Buyer and Buyer's Accountants as to reasonableness. The Closing
shall proceed, and the payments required to be made on the Closing Date
pursuant to Section 2.4(a) shall be determined, on the basis of the Closing
Certificate and the Preliminary Merger Consideration Closing Adjustment.
(b) Physical Inventory. The results of the physical
inventory conducted in October 1997 with respect to the Target and on November
27 and 28 with respect to Xxxx UK, as adjusted by additions to or deletions
from Inventory to the Closing Date, shall be used in the preparation of the
Closing Certificate and the Closing Date Financial Report. With respect to any
Inventory of the Target and its Subsidiaries located at any premises not owned
or leased by the Target or any Subsidiary, or otherwise not included in such
physical inventory, (i) for purposes of the Preliminary Merger Consideration
Closing Adjustment, the Target shall provide to Buyer in writing a good faith
estimate as to the amount of such Inventory prior to the Closing Date and (ii)
for purposes of the Final Merger Consideration Closing Adjustment, the Target
and its Subsidiaries or Target's Pre-Closing Accountants shall obtain from each
Person who is in possession of any such Inventory written certification as to
the amount of such Inventory as of the Closing Date.
(c) Audit; Closing Date Financial Report. As promptly as
possible after the Closing, the Target shall cause the Target's Pre-Closing
Accountants to prepare in consultation with, and deliver to, the Principal
Shareholders (i) an audited consolidated balance sheet with consolidating
schedule of the Target and its Subsidiaries as of the Closing Date in
accordance with GAAP and otherwise consistent with past practices and
procedures and (ii) a supplemental report setting forth the Closing Date
Consolidated Working Capital, the Closing Date Consolidated PPE Gross Book
Value, the Consolidated Working Capital Adjustment, the Consolidated PPE Gross
Book Value Adjustment, the Closing Date Indebtedness, the Income Tax Liability,
the Broker's Fee, the Closing Date Cash, the Net Cash Surrender Value of the
Uncommitted Life Insurance and the definitive Merger Consideration Closing
Adjustment based on the Closing Date Financial Report (the "Final Merger
Consideration Closing Adjustment"), each of which shall be reported on by the
Target's Pre-Closing Accountants without qualification (collectively, the
"Closing Date Financial Report"). Any third-party expenses or fees incurred in
preparing or in connection with the Closing Date Financial Report and the Final
Merger Consideration Closing Adjustment shall be borne by the Shareholders in
accordance with Section 10.8. As promptly as reasonably practicable and, in
any event, not later than 60 days after the Closing Date, the Target's
Pre-Closing Accountants shall deliver to Buyer the Closing Date Financial
Report, together with their audit report and shall make
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available any work papers or other information then or thereafter requested by
Buyer. If Buyer does not object, or otherwise fails to respond, to the Closing
Date Financial Report within 15 business days after delivery to Buyer, such
Closing Date Financial Report shall automatically become final and conclusive.
In the event that Buyer objects to the Closing Date Financial Report within
such 15 business day review period, the Principal Shareholders and Buyer shall
promptly meet and endeavor to reach agreement as to the content of the Closing
Date Financial Report. If the Principal Shareholders and Buyer agree on the
content of the Closing Date Financial Report, such Closing Date Financial
Report shall become final and conclusive. If the Principal Shareholders and
Buyer are unable to reach agreement within 15 business days after the end of
Buyer's 15 business day review period, then the Independent Accountants shall
promptly be retained to determine whether the disputed items in the Closing
Date Financial Report were determined in accordance with this Agreement, which
determination shall be made as quickly as possible. Only disputed item(s)
shall be submitted to the Independent Accountants for review. In resolving any
disputed item, the Independent Accountants may not assign a value to such item
greater than the greatest value for such item claimed by either party or less
than the lowest value for such item claimed by either party, in each case as
presented to the Independent Accountants. Such determination of the
Independent Accountants shall be final and binding on the Shareholders and
Buyer, and all expenses of the Independent Accountants shall be borne equally
by the Shareholders and Buyer in accordance with Section 10.8. The Merger
Consideration and the payments required to be made after the Closing Date
pursuant to Section 2.4(d) shall be finally determined on the basis of the
Closing Date Financial Report and the Final Merger Consideration Closing
Adjustment.
2.4 Procedure for Payment of Merger Consideration;
Funding of Escrow; Payment of Closing Date Indebtedness; Closing Merger
Consideration Reconciliation.
(a) On the Closing Date, Buyer shall pay the Merger
Consideration, as adjusted by the Preliminary Merger Consideration Closing
Adjustment, in accordance with the following procedure:
(i) Buyer shall deposit the Initial Escrow
Deposit with the Escrow Agent to be held and disbursed in accordance with the
Escrow Agreement;
(ii) Subject to subsections (iii) and (iv) of this
Section 2.4(a), and subject to the receipt of documents to be surrendered
pursuant to subsection (b) of this Section 2.4, Buyer shall pay to the
Shareholders an aggregate amount equal to (A) the Merger Consideration, as
adjusted by the Preliminary Merger Consideration Closing Adjustment, minus (B)
the Initial Escrow Deposit, in cash or immediately available funds (without
interest), with the amount allocable to each Shareholder to be such
Shareholder's Pro Rata Percentage of the Merger Consideration.
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(iii) Notwithstanding anything to the contrary in
this Section 2.4(a), any Shareholder who holds Dissenting Shares will not
receive his, her or its Pro Rata Percentage of the Merger Consideration
pursuant to this Section 2.4(a), but shall instead be entitled to the rights
granted pursuant to Sections 761-774 of the Michigan Business Corporation Act;
and
(iv) Notwithstanding anything to the contrary in
this Section 2.4(a), with respect to any Shareholder who owes any amount to the
Target as of the Effective Time pursuant to an outstanding shareholder loan,
the aggregate amount of principal, accrued interest and other charges owing to
the Target pursuant to such shareholder loan shall be offset against and
satisfied from such Shareholder's Pro Rata Percentage of the Merger
Consideration.
(b) As soon as practicable after the date of this
Agreement and upon receipt from the Target of a complete list of Shareholder
mailing addresses, Buyer shall deliver to each Shareholder a letter of
transmittal (with instructions for its use) in the form of Exhibit 2.4(b) for
such Shareholder to use in surrendering the certificates which represent his,
her or its Target Shares against payment of such Shareholder's Pro Rata
Percentage of the Merger Consideration in accordance with this Section 2.4.
(c) On the Closing Date, Buyer shall cause to be paid in
full the Closing Date Indebtedness and the Broker's Fee.
(d) Within five (5) business days after determination of
the Final Merger Consideration Closing Adjustment, Buyer or Shareholders, as
the case may be, shall pay or otherwise reconcile to the other in accordance
with this Section 2.4(d) the amount by which the Merger Consideration, as
adjusted by the Final Merger Consideration Closing Adjustment, is greater or
less than the Merger Consideration, as adjusted by the Preliminary Merger
Consideration Closing Adjustment (such difference being the "Closing Merger
Consideration Reconciliation"). If the Closing Merger Consideration
Reconciliation is positive, then either (i) Buyer shall pay to each Shareholder
such Shareholder's Pro Rata Percentage of the Closing Merger Consideration
Reconciliation in cash or immediately available funds or (ii) if Buyer fails to
make such payments, Principal Shareholders shall have the right, on behalf of
the Shareholders, to apply to the Escrow Agent for payment of such amount from
the Escrow Funds in accordance with the Escrow Agreement and Buyer shall have
an obligation to restore the Escrow Funds by depositing such amount with the
Escrow Agent. If the Closing Merger Consideration Reconciliation is negative,
then Buyer shall have the right to apply to the Escrow Agent for payment of
such amount from the Escrow Funds in accordance with the Escrow Agreement. If
(i) Buyer fails to pay any amount owing to the Shareholders or the Escrow Agent
pursuant to this Section 2.4(d) (including by application of the Escrow Funds)
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or (ii) the Shareholders fail to pay any amount owing to Buyer pursuant to this
Section 2.4(d) (including by application of the Escrow Funds), within the
specified five business day period, then the amount so owing shall be payable
on demand and interest shall accrue on the unpaid amount from the date due
until paid at a rate equal to the lower of (A) ten percent (10%) per annum or
(B) the highest rate permitted by law.
2.5 Taxes. The Shareholders shall be responsible for the
payment of any transfer, sales, use or other similar taxes imposed by reason of
the transfer of the Target Shares (including, without limitation, taxes
attributable to any part or all of the Current Real Property imposed as a
result of the direct or indirect transfer or change of control of the Target
but excluding any taxes attributable to any uncapping of the assessment of any
Current Real Property) pursuant to this Agreement and any deficiency, interest
or penalty with respect to such taxes.
ARTICLE 3
CLOSING
3.1 Closing. The closing of the transaction contemplated
by this Agreement shall be held at 9:00 a.m. local time on the Closing Date at
the offices of Xxxxxx & Xxxxxxxxx, 600 1st Source Bank Center, 100 North
Michigan, South Bend, Indiana or any other place as Buyer and the Principal
Shareholders mutually agree ("Closing"). The Closing shall be effective as of
the close of business on the Closing Date.
3.2 Certificate of Merger. On or prior to the Closing
Date, the Target and the Transitory Subsidiary will file with the Department of
Consumer and Industry Services of Michigan a Certificate of Merger pursuant to
Section 707 of the Michigan Business Corporation Act in the form of Exhibit 3.2
(the "Certificate of Merger"), with effect that the Effective Time shall be on
the Closing Date.
3.3 Merger Consideration. On the Closing Date, (a) Buyer
shall deliver and tender the Initial Escrow Deposit to the Escrow Agent and (b)
subject to the provisions of Section 2.4(a), Buyer shall deliver and tender the
Merger Consideration to the Shareholders.
3.4 Other Certificates, Agreements and Items. On the
Closing Date, Buyer and the Principal Shareholders shall deliver the
certificates, agreements and other items described in Articles 7 and 8 of this
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE TARGET
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The Target represents and warrants to Buyer, as of the date of
this Agreement and as of the Closing Date, as follows:
4.1 Organization, Good Standing and Authority of the
Target and each Subsidiary to Conduct Business. The Target is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
state of Michigan. Each Subsidiary is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction in which it is organized.
Schedule 4.1 sets forth the identity of each Subsidiary, the jurisdiction of
organization of each Subsidiary, each jurisdiction other than the jurisdiction
of organization where the Target and each Subsidiary is qualified to do
business and each trade name or assumed name used by the Target and each
Subsidiary in the conduct of the Business. To the Knowledge of the Target, the
Target is, and each Subsidiary is, duly qualified to do business in, and is in
good standing under the laws of, each jurisdiction in which such qualification
is necessary under the applicable law as a result of the conduct of its
respective business or the ownership of its respective properties. The Target
has, and each Subsidiary has, full power and authority to conduct its business
as it is presently being conducted and to own and lease its properties and
assets. Except as set forth on Schedule 4.1, neither the Target nor any
Subsidiary has any stock or equity interest in any corporation, firm or
organization, and the Target and each Subsidiary conducts its business directly
and not through any association, joint venture, partnership or other business
entity.
4.2 Power and Authority; Authorization; Binding Effect.
Each of the Target and each Principal Shareholder has all necessary power and
authority and has taken all action necessary to execute and deliver this
Agreement, to consummate the transactions contemplated by this Agreement and to
perform its or his obligations under this Agreement. Copies of all resolutions
of the board of directors of the Target with respect to the transactions
contemplated by this Agreement, certified by the Secretary or an Assistant
Secretary of the Target, in form satisfactory to counsel for Buyer, have been
delivered to Buyer. Copies of all resolutions or other authorizations of RDV
and/or its members required in connection with the transactions contemplated by
this Agreement, certified by the Secretary or other appropriate officer of RDV,
have been delivered to Buyer. This Agreement has been duly executed and
delivered by the Target and each Principal Shareholder and constitutes a legal,
valid and binding obligation of the Target and each Principal Shareholder
enforceable against the Target and each Principal Shareholder in accordance
with its terms, except as such enforcement may be limited by the Enforceability
Limitations. Xxxx, the President and Chief Executive Officer of the Target,
is, and at all times through the Closing Date will be, duly authorized to
execute and deliver, for and on behalf of the Target, this Agreement and all
other agreements, instruments, certificates and other documents incident or
related hereto.
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4.3 No Conflict or Violation. The execution and delivery
of this Agreement, the consummation of the transactions contemplated by this
Agreement and the performance by the Target and the Principal Shareholders of
this Agreement (a) do not and will not result in a violation of or conflict
with any provision of the certificate or articles of incorporation, bylaws or
other organization charters, certificates or documents of the Target, any
Subsidiary or RDV, (b) to the Knowledge of the Target, except as set forth on
Schedule 4.3, do not and will not constitute a breach of, or constitute an
event, occurrence, condition or act which is or, with the giving of notice, the
lapse of time or the happening of any future event or condition, would become,
a default under, or result in the acceleration of, any obligations under, any
term or provision of, any Material Contract, material Encumbrance or material
Permit to which the Target, any Subsidiary or any Principal Shareholder is a
party, (c) to the Knowledge of the Target, do not and would not reasonably be
expected to result in a violation by the Target, any Subsidiary or any
Principal Shareholder of any Governmental Requirement or any Proceeding, or (d)
do not and will not result in an imposition of any Encumbrance on the Shares or
on any assets of the Target or any Subsidiary.
4.4 Consents and Approvals. Except for any approvals
required under the HSR Act and as otherwise set forth on Schedule 4.4, to the
Knowledge of the Target, no consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Authority or other
Person is required to be made or obtained by the Target, any Subsidiary or any
Shareholder in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
4.5 No Proceedings. Except as set forth on Schedule 4.5,
there is no Proceeding pending, or to the Knowledge of the Target, threatened
or anticipated, relating to or affecting in any adverse manner the transactions
contemplated by this Agreement.
4.6 Capitalization. Schedule 4.6 sets forth the
authorized, issued and outstanding shares of capital stock of the Target and
each Subsidiary, the ownership thereof and any Encumbrances thereon. All of
the Target Shares are duly authorized, validly issued, fully paid and
nonassessable, and were issued in compliance with all applicable laws. All
voting rights with respect to the Target are vested in the Target Shares.
Except as set forth on Schedule 4.6, other than the Target Shares (a) there are
no outstanding shares of capital stock of the Target or any Subsidiary, or
outstanding securities convertible into or exchangeable or exercisable for
shares of capital stock of the Target or any Subsidiary, (b) there are no
bonds, debentures, notes, or other Indebtedness having the right to vote on any
matters on which the Target's or any Subsidiary's shareholders may vote, (c)
there are no outstanding options, warrants, rights, contracts, commitments,
understandings or arrangements by which the Target or any Subsidiary is bound
to issue, repurchase or otherwise acquire or retire any capital stock of the
Target or any Subsidiary, (d) there are no voting agreements, voting trusts,
buy-sell
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agreements, options or rights or obligations relating to the shareholders or
the capital stock of the Target or any Subsidiary, and (e) except for certain
provisions of this Agreement and the Escrow Agreement to be executed and
delivered at the Closing, there are no agreements between any Shareholder and
the Target or any Subsidiary which will survive the Closing. Upon consummation
of the transactions contemplated by this Agreement, Buyer will acquire the
Target Shares free of any Encumbrance.
4.7 Corporate Records. The minute books of the Target
and each Subsidiary are complete and accurate in all material respects and the
record contained therein of all meetings and actions of shareholders and
directors and of any executive committee or other committee of the shareholders
or board of directors is complete and accurate in all material respects for the
period from January 1, 1978 to the present. The stock record book of the
Target and each Subsidiary is complete and accurate and contains a complete and
accurate record of all share transactions for the Target and each Subsidiary
for the period from January 1, 1978 to the present. True and complete copies
of the articles of association and other similar governing and organizational
documents of the Target, each Subsidiary and each other entity listed on
Schedule 4.1 have been made available for review by Buyer, and true and
complete copies of the minute book and stock record book of the Target and each
Subsidiary have been made available for review by Buyer.
4.8 Financial Statements. The Target has delivered to
Buyer (a) consolidated audited financial statements of the Target and the
Subsidiaries for the five-year period ended December 29, 1996 (consisting of
the audit opinion, a balance sheet, a statement of income and retained
earnings, a statement of cash flows and all related footnotes), certified by
the Target's Pre-Closing Accountants without qualification, and consolidating
financial statements of the Target for the five-year period ended December 29,
1996 (consisting of balance sheets, statements of income, profit and loss and
statements of cash flows) (collectively, the "Financial Statements"), (b)
consolidated unaudited interim financial statements of the Target and the
Subsidiaries (consisting of a balance sheet and a statement of income, profit
and loss) for the period ended November 23, 1997 and consolidating interim
financial statements of the Target and each Subsidiary for the period ended
November 23, 1997 (consisting of balance sheets, statements of income, profit
and loss and statements of cash flows) (collectively, the "Interim Financial
Statements"). Copies of the Financial Statements and the Interim Financial
Statements have been delivered to Buyer. The Financial Statements and the
Interim Financial Statements fairly present the financial condition and the
results of operations of the Target and the Subsidiaries as of their respective
dates and for the periods then ended in accordance with GAAP (in the case of
the Financial Statements) or in accordance with the Target's, or the applicable
Subsidiary's standard accounting practices with respect to interim statements
(in the case of the Interim Financial Statements), and except to the extent
required by changes in GAAP and as may be provided in the notes to the
Financial Statements
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and Interim Financial Statements, and except in the case of the Interim
Financial Statements for the lack of footnotes and normal year-end and audit
adjustments. The books and records of the Target and the Subsidiaries fairly
reflect in all material respects the assets, liabilities and operations of the
Target and the Subsidiaries in accordance with sound accounting practice and
the Financial Statements and the Interim Financial Statements are in conformity
therewith. The Financial Statements provide fully for all fixed and
non-contingent liabilities of the Target and the Subsidiaries, and disclose or
provide for all material contingent liabilities of the Target and the
Subsidiaries of a type required to be disclosed or provided for in financial
statements in accordance with GAAP.
4.9 Undisclosed Liabilities; Encumbrances.
(a) Except as disclosed on Schedule 4.9(a), there are no
liabilities or obligations of any nature, whether absolute, accrued,
contingent, known, unknown, matured, unmatured or otherwise, and whether or not
required to be disclosed or provided for in financial statements in accordance
with GAAP, of the Target or the Subsidiaries (including, without limitation,
liabilities relating to any Employee Benefit Plan) except (a) liabilities and
obligations reflected or reserved for in the Financial Statements and the
Interim Financial Statements (including liabilities disclosed in the footnotes
thereto), (b) liabilities and obligations specifically disclosed in this
Agreement, (c) liabilities subject to coverage and to the extent covered under
any of the Insurance, (d) liabilities reflected in the calculation of the Final
Merger Consideration Closing Adjustment, (e) liabilities of which Buyer has
actual knowledge and of which the Target does not have Knowledge, or (f)
liabilities and obligations incurred between November 23, 1997 and the Closing
Date in the ordinary course of the business of the Target and the Subsidiaries,
consistent with past practice, and as permitted by this Agreement.
(b) Except as set forth on Schedule 4.9(b), all of the
properties and assets owned by the Target and the Subsidiaries, whether
tangible or intangible, including without limitation the Accounts Receivable,
the Inventory, the Current Real Property, the Tangible Personal Property and
the Intellectual Property, are owned by the Target and the Subsidiaries free
and clear of any Encumbrances other than the Permitted Encumbrances which are
listed on Schedule 4.9(b).
4.10 Real Property. Schedule 4.10 contains a true,
complete and correct list of all Current Real Property and, to the Knowledge of
the Target, a true, complete and correct list of all other Real Property.
Except as set forth on Schedule 4.10, (a) the Target or the applicable
Subsidiary, as the case may be, has good and marketable title to the Current
Real Property owned by the Target or such Subsidiary, (b) the Target or the
applicable Subsidiary, as the case may be, enjoys peaceful and undisturbed
possession of the Current Real Property
33
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leased by the Target or such Subsidiary, (c) none of the owned Current Real
Property and, to the Knowledge of the Target, none of the leased Current Real
Property is subject to any commitment for sale or use by any Person other than
the Target or its Subsidiaries, (d) none of the Current Real Property is
subject to any Encumbrance other than the Permitted Encumbrances which in any
material respect interferes with or impairs the value, transferability or
present and continued use thereof in the usual and normal conduct of the
Business, (e) to the Knowledge of the Target, no labor has been performed or
material furnished for the Current Real Property for which a mechanic's or
materialman's lien or liens, or any other lien, has been or could be claimed by
any Person, (f) to the Knowledge of the Target, the owned Current Real Property
and each user thereof and the leased Current Real Property and each user
thereof, is in compliance in all material respects with all applicable
Governmental Requirements which apply to the Current Real Property (including
without limitation all zoning, subdivision and other applicable land use
ordinances) and all existing covenants, conditions, restrictions and easements
which are recorded in the published record as to the title of the Current Real
Property or otherwise Known to the Target, and, to the Knowledge of the Target,
the current use of the Current Real Property does not constitute a
non-conforming use under the applicable zoning ordinances and (g) to the
Knowledge of the Target, no default or breach exists with respect to, and
neither the Target nor any Subsidiary has received any notice of any default or
breach under, any Encumbrance affecting any of the Current Real Property.
There are no condemnation or eminent domain proceedings pending, or to the
Knowledge of the Target, contemplated or threatened, against the Current Real
Property or any part thereof, and neither the Target nor any Subsidiary Knows
of any official action contemplated, threatened or initiated by any
Governmental Authority to take or use the Current Real Property or any part
thereof. There are no existing, or to the Knowledge of the Target,
contemplated or threatened, general or special assessments unrelated to a
Permitted Encumbrance affecting in any material respect the Current Real
Property or any portion thereof. Neither the Target nor any Subsidiary has
received notice of, nor does the Target have any Knowledge of, any pending or
threatened Proceeding (including without limitation condemnation or eminent
domain proceeding) before any Governmental Authority which relates to the
ownership, maintenance, use or operation of the Current Real Property, nor does
the Target Know of any fact which might give rise to any such Proceeding or any
type of existing or intended use of any real property adjacent to the Current
Real Property which might materially adversely affect the use of the Current
Real Property. To the Knowledge of the Target, none of the Current Real
Property is located within any area determined to be flood-prone under the
Federal Flood Protection Act of 1973, or any comparable state or local
Governmental Requirement. Neither the Target nor any Subsidiary has received
any notice within the past three years from any insurance company of any
defects or inadequacies in the Current Real Property or any part thereof which
would materially and adversely affect the insurability of the Current Real
Property or the premiums for the insurance thereof, and no notice has been
received by the Target or any Subsidiary from any insurance company which
34
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has issued a policy with respect to any portion of the Current Real Property or
by any board of fire underwriters (or other body exercising similar functions)
requesting the performance of any repairs, alterations or other work which has
not been complied with. To the Knowledge of the Target, all water, sewer, gas,
electric, telephone and drainage facilities and all other utilities required by
law or by the normal use and operation of the Current Real Property are
installed to the improvements situated on the Current Real Property, are
connected pursuant to valid permits and are adequate to service the Current
Real Property as currently used and to permit compliance in all material
respects with all applicable Governmental Requirements and normal usage of the
Current Real Property. To the Knowledge of the Target, access to and from the
Current Real Property is via public streets, which streets are sufficient to
ensure adequate vehicular and pedestrian access for the present operation of
the Business. To the Knowledge of the Target, the buildings and improvements
on the Current Real Property (including, without limitation, the heating, air
conditioning, mechanical, electrical and other systems used in connection
therewith) are in a reasonable state of repair, have been well maintained in
accordance with reasonable commercial practices. Except as set forth on
Schedule 4.10, to the Knowledge of the Target, there are no repairs or
replacements exceeding $150,000 in the aggregate for all Current Real Property
or $50,000 for any single repair or replacement which are currently
contemplated by the Target or any Subsidiary or which, to the Knowledge of the
Target, should be made in order to maintain said buildings and improvements in
a reasonable state of repair except in each case to the extent such costs or
expenses are reflected on or reserved against in the Financial Statements or
the Interim Financial Statements, or are included as Accrued Liabilities on the
Closing Date Financial Report.
4.11 Tangible Personal Property. Schedule 4.11(a) lists
each item of Tangible Personal Property owned by the Target and each Subsidiary
having a value in excess of $25,000, and Schedule 4.11(b) lists each item of
Tangible Personal Property leased by the Target and each Subsidiary (other than
individual leases of office equipment having an annual rental of less than
$10,000). The Tangible Personal Property constitutes substantially all of the
tangible personal property used in the operation of the Business of the Target
and each Subsidiary and constitutes substantially all tangible personal
property necessary to conduct the Business of the Target and each Subsidiary as
presently conducted. To the Knowledge of the Target, all of the Tangible
Personal Property necessary to conduct the Business of the Target and each
Subsidiary as presently conducted is located at the Current Real Property and
there is no tangible personal property located at any of the Current Real
Property which is not owned or leased by the Target or any Subsidiary. The
Tangible Personal Property necessary to conduct the Business of the Target and
each Subsidiary as presently conducted is in all material respects in good
working order, ordinary wear and tear excepted. Neither the Target nor any
Subsidiary currently intends to incur and, to the Knowledge of the Target,
neither the Target nor any Subsidiary should incur, costs and expenses
exceeding $100,000 in the aggregate for
35
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all Tangible Personal Property or $25,000 for any single item of Tangible
Personal Property to repair or replace any Tangible Personal Property or to
maintain the Tangible Personal Property in good working order except in each
case to the extent such costs or expenses are reflected on or reserved against
in the Financial Statements or the Interim Financial Statements, or are
included as Accrued Liabilities on the Closing Date Financial Report.
4.12 Intellectual Property.
(a) To the Knowledge of the Target, except as set forth
on Schedule 4.12(a), (i) the Intellectual Property constitutes substantially
all of the intellectual property used in the operation of the Business and
constitutes substantially all intellectual property necessary and sufficient to
conduct the Business as currently conducted, (ii) each item of Intellectual
Property owned or used by the Target or any Subsidiary immediately prior to the
Closing Date will be owned or available for use by Buyer on substantially
similar terms and conditions immediately subsequent to the Closing Date, (iii)
each of the Target and each Subsidiary has taken all reasonable actions to
maintain and protect each item of Intellectual Property owned by the Target or
a Subsidiary necessary to the conduct of the Business as currently conducted.
(b) To the Knowledge of the Target, except as set forth
on Schedule 4.12(b), (i) neither the Target nor any Subsidiary has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties, and neither the Target nor any
Subsidiary has received any charge, complaint, claim, demand or notice alleging
any such interference, infringement, misappropriation or violation (including
any claim that the Target or any Subsidiary must license or refrain from using
any intellectual property rights of any third party) which has not been
resolved, and (ii) no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any of the Target's or the
applicable Subsidiary's ownership or use of the Intellectual Property.
(c) Schedule 4.12(c) identifies each patent, trademark
and service xxxx registration and copyright registration which is owned or has
been issued to the Target or any Subsidiary with respect to any of the
Intellectual Property, identifies each currently pending patent application or
application for trademark, service xxxx or copyright registration which the
Target or any Subsidiary has made with respect to any of the Intellectual
Property, and identifies each license or other agreement which the Target or
any Subsidiary has granted to any third party with respect to any of the
Intellectual Property. The Target has made available to Buyer correct and
complete copies of all such patents, trademark and service xxxx registrations,
copyright registrations, applications, licenses, agreements, and permissions
(as amended to date) and has made available to Buyer correct and complete
copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. Schedule 4.12(c) also identifies each trade
name or unregistered trademark having a material
36
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value owned by the Target or any Subsidiary in connection with the Business.
To the Knowledge of the Target, with respect to each item of Intellectual
Property required to be identified in Schedule 4.12(c): (i) each of the Target
and each Subsidiary, as the case may be, possesses all right, title, and
interest in and to the item, free and clear of any license or Encumbrance other
than the Permitted Encumbrances, (ii) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge, (iii) no
Proceeding is pending or threatened which challenges the legality, validity,
enforceability, use or ownership of the item and (iv) neither the Target nor
any Subsidiary is subject to any enforceable obligation to indemnify any Person
for or against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(d) Schedule 4.12(d) identifies each item of Intellectual
Property that is necessary to the conduct of the Business as currently
conducted and that any third party owns and that the Target or any Subsidiary
uses pursuant to license, sublicense or agreement. The Target has made
available to Buyer correct and complete copies of all such licenses,
sublicenses and other agreements (as amended to date). To the Knowledge of the
Target, except as set forth on Schedule 4.12(d), with respect to each item of
Intellectual Property required to be identified in Schedule 4.12(d): (i) the
license, sublicense or other agreement covering the item is enforceable against
the Target or the applicable Subsidiary and enforceable against each other
party thereto, except as may be limited by the Enforceability Limitations, (ii)
following the Closing, the license, sublicense or other agreement will continue
to be enforceable on substantially similar terms and conditions against each of
the Target and each Subsidiary and any other party thereto, except as may be
limited by the Enforceability Limitations, (iii) neither the Target nor any
Subsidiary nor any other party to the license, sublicense or other agreement is
in breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination, material
modification or acceleration thereunder, (iv) neither the Target nor any
Subsidiary nor any other party to the license, sublicense or other agreement
has repudiated any provision thereof, (v) the underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling or charge, (vi) no Proceeding is pending or threatened which challenges
the legality, validity or enforceability of the underlying item of Intellectual
Property and (vii) neither the Target nor any Subsidiary has granted any
sublicense or similar right with respect to the license, sublicense or other
agreement.
(e) To the Knowledge of the Target, Buyer's use of the
Intellectual Property that is necessary to the conduct of the Business as
currently conducted and will not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any intellectual property rights of third
parties as a result of the continued operation of the Business as presently
conducted.
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4.13 Compliance with Laws; Permits. To the Knowledge of
the Target, the Target and each Subsidiary and the conduct of the Business of
the Target and each Subsidiary is in compliance in all material respects with
all Governmental Requirements. Neither the Target nor any Subsidiary has
received any notice from a Governmental Authority that the Target or any
Subsidiary is not in compliance with any Governmental Requirement, and the
Target does not have any Knowledge that any presently existing circumstances
are reasonably likely to result in material violations of any Governmental
Requirement. Schedule 4.13 identifies all material Permits issued to or
maintained by the Target and each Subsidiary. To the Knowledge of the Target,
the Permits constitute all material permits, consents, licenses, franchises,
authorizations and approvals used in the operation of the business of the
Target and each Subsidiary and necessary to conduct the Business as presently
conducted. To the Knowledge of the Target, all of the material Permits are
valid and in full force and effect, no material violations have been
experienced, noted or recorded and no Proceeding is pending or threatened, to
revoke or limit any of them. Except as set forth on Schedule 4.13, the
consummation of the transactions contemplated by this Agreement do not and will
not violate in any material respect or render any of the material Permits
invalid, require any amendment or reissuance of any of the material Permits or
require the consent of the Governmental Authority which has issued any of the
material Permits.
4.14 Litigation. Except as set forth on Schedule 4.14,
there is no Proceeding pending or, to the Knowledge of the Target, threatened
against or relating to the Target or any Subsidiary, or any of their respective
officers, directors or employees (in their respective capacities as such), or
its properties, assets or business.
4.15 Labor Matters.
(a) With respect to the Target and each Subsidiary other
than Xxxx UK:
(i) Schedule 4.15(a) identifies the name and
current compensation (including bonuses) of each current employee of the Target
and each Subsidiary whose total compensation (including bonuses) earned in 1996
exceeded $50,000 or whose annualized compensation (including bonuses) in 1997
is budgeted to exceed $50,000. Except as set forth on Schedule 4.15(a), (a)
neither the Target nor any Subsidiary has any obligations under or is a party
to any written or legally binding oral labor agreement, collective bargaining
agreement or other agreement with any labor organization or employee group and
neither the Target nor any Subsidiary has a works council, (b) to the Knowledge
of the Target, neither the Target nor any Subsidiary is currently engaged in
any unfair labor practice and there is no unfair labor practice charge or other
employee-related or employment-related complaint against the Target or any
Subsidiary pending or, to the Knowledge of the Target, threatened before any
Governmental Authority, (c) there is currently no labor strike, labor
disturbance, slowdown,
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work stoppage or other material labor dispute or arbitration pending or, to the
Knowledge of the Target, threatened against the Target or any Subsidiary nor is
any material grievance currently being asserted, (d) neither the Target nor any
Subsidiary has experienced a labor strike, labor disturbance, slowdown, work
stoppage or other material labor dispute at any time during the three years
immediately preceding the date of this Agreement and (e) to the Knowledge of
the Target, there is no organizational campaign being conducted or contemplated
and there is no pending or threatened petition before any Governmental
Authority or other dispute as to the representation of any employees of the
Target or any Subsidiary. To the Knowledge of the Target, except as set forth
on Schedule 4.15(a), each of the Target and each Subsidiary has complied in all
materials respects with, and is currently in compliance in all material
respects with, all Governmental Requirements relating to any of its employees
(including, without limitation, any Governmental Requirement of the
Occupational Safety and Health Administration), and none of the Target any
Subsidiary has received, within the past three years, any written notice of
failure to comply in any material respect with any such Governmental
Requirement.
(ii) Schedule 4.15(a) contains a list identifying
each Employee Contract. To the Knowledge of the Target, all Employee Contracts
are valid and binding on all parties thereto, are in full force and effect, and
no party to any such Employee Contract is in material default thereunder.
Except as provided on Schedule 4.15(a) or reflected or reserved for on the
Financial Statements or the Interim Financial Statements or as incurred in the
ordinary course of business since the date of the Interim Financial Statements,
neither the Target nor any Subsidiary has any liability for unpaid wages,
salaries, bonuses, commissions, vacation pay, severance pay, health insurance,
life insurance, or other form of employee compensation. Except as set forth on
Schedule 4.15(a), there is no amount in excess of $500 owing to the Target or
any Subsidiary from any current or former director, officer, employee or
consultant or owing by the Target or any Subsidiary to any current or former
director, officer, employee or consultant. Neither the Target nor any
Subsidiary is a party to any Employee Contract which provides that the terms
and conditions that would otherwise govern the relationship of the parties
thereto will be altered upon a Change of Control. True and complete copies or
descriptions of the Employee Contracts have been made available to Buyers.
Each Employee Contract complies in all material respects with the requirements
prescribed by any and all Governmental Requirements which are applicable to
such Employee Contract.
(iii) To the Knowledge of the Target, all of the
Target's and each Subsidiary's employees who are employed in the United States
are (i) United States citizens, or lawful permanent residents of the United
States, (ii) aliens whose right to work in the United States is unrestricted,
(iii) aliens who have valid, unexpired work authorization issued by the
Attorney General of the United States (Immigration and Naturalization Service)
or (iv) aliens
39
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who have been continually employed by the Target since November 6, 1986.
Neither the Target nor any Subsidiary is, or during the past five (5) years has
been, the subject of an immigration Proceeding, nor during the past five (5)
years has the Target or any Subsidiary been assessed any fine or penalty by, or
been the subject of any order or directive of, the United States Department of
Labor or the Attorney General of the United States (Immigration and
Naturalization Service).
(b) With respect to Xxxx UK:
(i) There is no existing, pending or, to the
Knowledge of the Target, threatened industrial or trade dispute involving Xxxx
UK and any of its employees, there are no agreements or arrangements (whether
oral or in writing or existing by reason of custom and practice) between Xxxx
UK and any trade union or other employees' representatives concerning or
affecting Xxxx UK's employees and there are no trade unions or other employees'
representatives whom Xxxx UK recognizes to any extent for collective bargaining
purposes.
(ii) Xxxx UK has neither given notice of any
redundancies to the Secretary of State nor stated consultations with any
independent trade union or employees' representatives within the period of one
year prior to the date of this Agreement. To the Knowledge of the Target, no
circumstances have arisen within the period of one year prior to the date of
this Agreement under which Xxxx UK is likely to be required to pay damages for
wrongful dismissal, to make any statutory redundance payment or make or pay any
compensation in respect of unfair dismissal, to make any other payment under
any employment protection legislation or to reinstate or re-engage any former
employee. To the Knowledge of the Target, no circumstances have arisen under
which Xxxx UK is likely to be required to pay damages or compensation, or
suffer any penalty or be required to take corrective action or be subject to
any form of discipline under Part II of the Employment Rights Xxx 0000, the Sex
Discrimination Xxx 0000, the Equal Pay Xxx 0000, Article 119 of the Treaty of
Rome, the Race Relations Xxx 0000 or the Disability Discrimination Xxx 0000.
To the Knowledge of the Target, there are no current, pending or threatened
claims of any type against it by any existing or former employees.
(iii) To the Knowledge of the Target, other than
the Service Agreements with Xxxxxxx Xxxxxxx Xxxxx and Xxxxxx Xxxx Xxxxx, there
are no existing service or other agreements or contracts between Xxxx UK and
any of its directors or executives or employees which cannot be lawfully
terminated by three calendar months' notice or less without giving rise to any
claim for damages or compensation other than claims as above, and Xxxx UK has
complied with all its obligations under all statutes and regulations, codes,
orders and awards in connection with its employees and with all collective
agreements with respect to trade unions or to employees of Xxxx UK.
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(iv) Schedule 4.15(b) contains (i) the names and
dates of birth and commencement of employment of all Persons who will at the
Closing Date be employees or directors of Xxxx UK, (ii) details of all material
compensation, bonuses and similar remuneration payable and any other benefits
provided or which Xxxx UK is bound to provide during the current fiscal year to
all such persons.
4.16 Employee Benefit Plans.
(a) With respect to the Employee Benefit Plans of the
Target and each Subsidiary other than Xxxx UK:
(i) Schedule 4.16(a) sets forth a list
identifying each Employee Pension Benefit Plan, including any Multiemployer
Plan, and a list identifying each Employee Welfare Benefit Plan that, in either
case, are currently, or in the past five years have been, maintained,
administered or contributed to by the Target or any Subsidiary, or which cover
any employee or former employee of the Target or any Subsidiary. Except as
otherwise identified on Schedule 4.16(a), (i) no Employee Benefit Plan is
maintained, administered or contributed to by any entity other than the Target
or a Subsidiary, and (ii) no Employee Benefit Plan is maintained under any
trust arrangement which covers any employee benefit arrangement which is not an
Employee Benefit Plan.
(ii) The Target has made available or has caused
to be delivered to Buyer true and complete copies of (i) the Employee Benefit
Plans listed in Schedule 4.16(a) (including related trust agreements, custodial
agreements, insurance contracts, investment contracts and other funding
arrangements, if any, and adoption agreements, if any), (ii) any amendments to
the Employee Benefit Plans, (iii) written interpretations of the Employee
Benefit Plans, (iv) material written communications to employees by the plan
administrator of any Employee Benefit Plan (including, but not limited to,
summary plan descriptions and summaries of material modifications, as defined
under ERISA), (v) the three most recent annual reports (e.g., the complete Form
5500 series) prepared in connection with each Employee Benefit Plan (if any
such report was required), including all attachments (including without
limitation the audited financial statements, if any) and (vi) the three most
recent actuarial valuation reports prepared in connection with each Employee
Benefit Plan (if any such report was required).
(iii) Except as set forth on Schedule 4.16(a) and
except for the ongoing termination of the Xxxx Manufacturing Corporation
Pension Plan and Trust, there has been no amendment to, written interpretation
or announcement (whether or not written) by the Target or any Subsidiary
relating to, or change in employee participation or coverage under any Employee
Benefit Plan that would increase materially the expense of maintaining such
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Employee Benefit Plan above the level of expense incurred in respect of such
Employee Benefit Plan for the most recent plan year with respect to Employee
Benefit Plans. The execution of this Agreement and the consummation of the
transactions contemplated hereby do not and will not constitute an event under
any Employee Benefit Plan, which (either alone or upon the occurrence of a
subsequent event other than any action by Buyer that triggers Section 402(e) of
ERISA) will or may result in any payment, acceleration, vesting or increase in
benefits to any employee, former employee or director of the Target or any
Subsidiary.
(iv) To the Knowledge of the Target, each Employee
Benefit Plan has been maintained in compliance in all material respects with
its terms and the requirements prescribed by any and all Governmental
Requirements, including but not limited to, ERISA and the Code, which are
applicable to such Employee Benefit Plan.
(v) Except as set forth on Schedule 4.16(a), each
Employee Pension Benefit Plan that has been treated or is required under any
Governmental Requirements to be treated as a "qualified" plan is "qualified"
within the meaning of Section 401(a) of the Code, and has been qualified during
the period from the date of its adoption to the date of this Agreement, and
each trust created thereunder is tax-exempt status under Section 501(a) of the
Code. The Target has made available to Buyer the latest determination letters
of the Internal Revenue Service relating to each Employee Pension Benefit Plan.
Such determination letters have not been revoked. Furthermore, there are no
pending Proceedings or, to the Knowledge of the Target, threatened Proceedings
in which the "qualified" status of any Employee Pension Benefit Plan is at
issue and in which revocation of the determination letter has been threatened.
Each such Employee Pension Benefit Plan has not been amended or operated, since
the receipt of the most recent determination letter, in a manner that would
adversely affect the "qualified" status of the Plan. No distributions have
been made from any of the Employee Pension Benefit Plans that would violate in
any respect the restrictions under Treas. Reg. Section 1.401(a)(4)-5(b), and
none will have been made by the date of Closing.
(vi) There are no pending or, to the Knowledge of
the Target, threatened (i) Proceedings by any employees, former employees or
plan participants or the beneficiaries, spouses or representatives of any of
them, other than ordinary and usual claims for benefits by participants or
beneficiaries, or (ii) Proceedings by any Governmental Authority, in each case,
of or against any Employee Benefit Plan, the assets held thereunder, the
trustee of any such assets, or the Target or any Subsidiary relating to any of
the Employee Benefit Plans, other than the normal processing by the
Governmental Authorities of the ongoing termination of the Xxxx Manufacturing
Corporation Pension Plan and Trust. If any of the actions described in this
subsection are initiated prior to the Closing Date, the Target shall notify
Buyer of such action prior to the date of Closing.
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(vii) To the Knowledge of the Target, neither the
Target nor any Subsidiary has engaged (i) in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of Section 404 of
ERISA, or (ii) in any Prohibited Transaction with respect to any Employee
Benefit Plans. Furthermore, to the Knowledge of the Target, no other "party in
interest," as defined in Section 3(14) of ERISA, or "disqualified person," as
defined in Section 4975(e)(2) of the Code, has engaged in any such Prohibited
Transaction.
(viii) Except as disclosed in Schedule 4.16(a), no
unpaid liability has been incurred by the Target, any Subsidiary or any ERISA
Affiliate for any tax, penalty or other similar liability with respect to any
Employee Benefit Plan and, to the Knowledge of the Target, such Plans are not
expected to incur any such liability prior to the date of Closing, other than
any such liability which has been or will be satisfied in full or reserved for
in the Financial Statements, in Interim Financial Statements or as an Accrued
Liability in the Closing Date Financial Report.
(ix) The Target or the Subsidiaries have made all
required contributions under each Employee Pension Benefit Plan on a timely
basis or, if not yet due, adequate accruals therefore have been provided for in
the Financial Statements or the Interim Financial Statements, or will be
provided for as an Accrued Liability in the Closing Date Financial Report. No
Employee Pension Benefit Plan has incurred any "accumulated funding deficiency"
within the meaning of Section 302 of ERISA or Section 412 of the Code and no
Employee Pension Benefit Plan has applied for or received a waiver of the
minimum funding standards imposed by Section 412 of the Code.
(x) Except for required premium payments, no
liability to the PBGC has been incurred by the Target or any Subsidiary with
respect to any Employee Pension Benefit Plan that has not been satisfied in
full, and, to the Knowledge of the Target, no event has occurred and there
exists no condition or set of circumstances that could result in the imposition
of any such liability. The Target or the Subsidiaries have complied, or will
comply, in all material respects, with all requirements for premium payments,
including any interest and penalty charges for late payment, due to PBGC on or
before the date of Closing with respect to each Employee Pension Benefit Plan
for which any premiums are required. Other than the ongoing termination of the
Xxxx Manufacturing Corporation Pension Plan and Trust, no Proceedings to
terminate, pursuant to Section 4042 of ERISA, have been instituted or, to the
Knowledge of the Target, are threatened by the PBGC with respect to any
Employee Pension Benefit Plan (or any Employee Pension Benefit Plan maintained
by an ERISA Affiliate). Except as set forth on Schedule 4.16(a), and other
than the ongoing termination of the Xxxx Manufacturing Corporation Pension Plan
and Trust, there has been, during the immediately preceding five years, no
termination or partial termination, as defined in Section 411(d) of the Code
and the regulations thereunder, of any Employee Pension Benefit Plan.
43
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Other than the ongoing termination of the Xxxx Manufacturing Corporation
Pension Plan and Trust, no reportable event, within the meaning of Section 4043
of ERISA, has occurred with respect to any Employee Pension Benefit Plan.
(xi) As of the date of this Agreement, with
respect to each Employee Pension Benefit Plan which is covered by Title IV of
ERISA and which is not a Multiemployer Plan, the current value of the
accumulated benefit obligations (based on the actuarial assumptions that would
be utilized upon termination of such Employee Pension Benefit Plan) do not
exceed the current fair value of the assets of such Employee Pension Benefit
Plan. Except as listed in Schedule 4.16(a) and other than in connection with
the ongoing termination of the Xxxx Manufacturing Corporation Pension Plan and
Trust, there has been (i) to the Knowledge of the Target, no material adverse
change in the financial condition of any such Employee Pension Benefit Plan,
(ii) no change in actuarial assumptions with respect to any such Employee
Pension Benefit Plan and (iii) no increase in benefits under any such Employee
Pension Benefit Plan as a result of plan amendment, written interpretations,
announcements, change in applicable law or otherwise which, individually or in
the aggregate, would reasonably be expected to result in the value of any such
Employee Pension Benefit Plan's accrued benefits exceeding the current value of
such Employee Pension Benefit Plan's assets.
(xii) Except as set forth on Schedule 4.16(a), none
of the Target, any Subsidiary or any ERISA Affiliate has ever maintained,
adopted or established, contributed or been required to contribute to, or
otherwise participate or been required to participate in, nor will they become
obligated to do so through the Closing Date, any Multiemployer Plan. No amount
is due from, or owed by, the Target, any Subsidiary or any ERISA Affiliate on
account of a Multiemployer Plan of ERISA or on account of any withdrawal
therefrom.
(xiii) Except as set forth on Schedule 4.16(a), no
Employee Benefit Plan provides benefits, including without limitation, any
severance or other post-employment benefit, salary continuation, termination,
death, disability, or health or medical benefits (whether or not insured), life
insurance or similar benefit with respect to current or former employees (or
their spouses or dependents) of the Target or any Subsidiary beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) death, disability or retirement benefits under any
Employee Pension Benefit Plan, (iii) deferred compensation benefits accrued as
liabilities on the Financial Statements or Interim Financial Statements or as
an Accrued Liability on the Closing Date Financial Report, or (iv) benefits
described in the Employee Benefit Plan documents made available to Buyer.
(xiv) To the Knowledge of the Target, the Employee
Welfare Benefit Plans that are group health plans (as defined for the purposes
of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA, and
all regulations thereunder, ("COBRA")) have
44
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complied at all times in all material respects with requirements of COBRA to
provide health care continuation coverage to qualified beneficiaries who have
elected, or may elect to have, such coverage. To the Knowledge of the Target,
the Target, the Subsidiaries, or their respective agents who administer any of
the Employee Welfare Benefit Plans, have complied in all material respects at
all times with the notification and written notice requirements of COBRA.
There are no pending, and to the Knowledge of the Target, threatened claims,
suits, or other proceedings by any employee, former employee, participants or
by the beneficiary, dependent or representative of any such person, involving
the failure of any Employee Welfare Benefit Plan or of any other group health
plan ever maintained by the Target or any Subsidiary to comply with the health
care continuation coverage requirements of COBRA.
(xv) To the Knowledge of the Target, the Employee
Welfare Benefit Plans that are group health plans (as defined for the purposes
of Section 9805 of the Code) have complied at all times in all material
respects, and will continue to comply in all material respects through the date
of Closing, with requirements of Sections 9801 and 9802 of the Code.
(xvi) To the Knowledge of the Target, except as set
forth on Schedule 4.16(a), there is no contract, agreement, plan or arrangement
covering any employee or former employee of the Target or any Subsidiary that,
individually or in aggregate, could reasonably be expected to give rise to the
payment by the Target or any Subsidiary, directly or indirectly, of any amount
that would not be deductible pursuant to the terms of Section 280G of the Code.
(b) With respect to the employee benefit plans of Xxxx
UK, the Target makes the representations, warranties and indemnities set forth
on Schedule 4.16(b).
4.17 Transactions with Certain Persons. To the Knowledge
of the Target, except as set forth on Schedule 4.17 and except for the
Redemption Transaction, no Shareholder nor any Related Person is presently or
at any time during the past five years has been a party to any material
transaction with the Target or any Subsidiary, including, without limitation,
any material contract, agreement or other arrangement (a) providing for the
furnishing of material services to or by, (b) providing for the rental or sale
of real or personal property to or from, or (c) otherwise requiring payments to
or from (other than for services as officers, directors or employees of the
Target or any Subsidiary), such Related Person. To the Knowledge of the
Target, except as set forth on Schedule 4.17, there is no outstanding amount in
excess of $2,000 owing (including, without limitation, pursuant to any advance,
note or other indebtedness instrument) from the Target or any Subsidiary to any
Related Person or from any Related Person to the Target or any Subsidiary.
Each of the related-party transactions set forth on Schedule 4.17 was entered
into between the Target or any Subsidiary
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and the Related Person on an arms length basis on terms no less favorable to
the Target or the Subsidiary than could be obtained from an unrelated third
party.
4.18 Tax Matters. Except as set forth on Schedule 4.18, (a) to the
Knowledge of the Target, the Target and each Subsidiary have duly filed all Tax
Returns required to be filed with any Governmental Authority and all such Tax
Returns were correct and complete in all material respects; (b) the federal
income Tax Returns of the Target and all Subsidiaries (other than any
Subsidiary domiciled in the United Kingdom or any other country other than the
United States) are and have been at all times in the past prepared and filed on
a consolidated basis for federal income tax purposes; (c) the Target and each
Subsidiary have paid in full all Taxes required to be paid by the Target and
each Subsidiary before such payment became delinquent other than Taxes being
contested in good faith or for which adequate reserves have been established
and, to the Knowledge of the Target, no material deficiencies have been or are
reasonably expected to be assessed with respect thereto for any period through
December 31, 1996 and, to the Knowledge of the Target, adequate reserves have
been accrued on the Interim Financial Statements for all periods after January
1, 1997 to the date of such Interim Financial Statement; (d) all Taxes which
the Target and each Subsidiary have been required to collect or withhold have
been duly collected or withheld and, to the extent required when due, have been
or will be duly paid to the proper taxing authority; (e) the income Tax Returns
of the Target and each Subsidiary have not been examined by any Governmental
Authority for any period on or after December 31, 1992, there are no audits
Known by the Target or any Subsidiary to be pending of the Target's or any
Subsidiary's Tax Returns and, to the Knowledge of the Target, there are no
claims which have been or are reasonably expected to be asserted relating to
the Target's Tax Returns filed for any year; (f) neither the Target nor any
Subsidiary is a party to any tax-sharing agreement or similar arrangement with
any other party; (g) there are no federal, state, local or foreign tax liens
upon any of the properties or assets of the Target or any Subsidiary and there
are no unpaid Taxes which are or could reasonably be expected to become a lien
on the properties or assets of the Target, except in each such case for current
Taxes not yet due and payable and for Taxes being contested in good faith; and
(h) there have been no waivers of statutes of limitations by the Target or any
Subsidiary with respect to any Governmental Authority. Except as set forth on
Schedule 4.18, neither the Target nor any Subsidiary is currently contesting
any Taxes. Correct and complete copies of all Tax Returns of the Target and
each Subsidiary requested by Buyer or any of Buyer's Representatives have been,
or will be, provided to Buyer. Neither the Target nor any Subsidiary has filed
a consent pursuant to, or made an election under, Section 341(f) of the Code.
Neither the Target nor any Subsidiary has agreed or been required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
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4.19 Insurance. Schedule 4.19 contains a complete and accurate list
of all policies or binders of Insurance (showing as to each policy or binder
the carrier, policy number, coverage limits, applicable deductibles, expiration
dates, annual premiums and a general description of the type of coverage
provided) maintained by the Target and each Subsidiary and relating to the
Target's and each Subsidiary's properties and assets or personnel. To the
Knowledge of the Target, all of the Insurance is sufficient for compliance in
all material respects with all requirements of law and of all contracts to
which the Target or any Subsidiary is a party. To the Knowledge of the Target,
neither the Target nor any Subsidiary is in default in any material respect
under any of the Insurance, and neither the Target nor any Subsidiary has
failed to give any notice or to present any claim under any of the Insurance in
a due and timely fashion. To the Knowledge of the Target, there are no facts
upon which any insurer would reasonably be expected to be justified in reducing
coverage or increasing premiums more than is normal or customary on any of the
existing Insurance. No notice of cancellation or termination has been received
with respect to any of the Insurance, and all premiums with respect to any of
the Insurance have been timely paid. The Insurance provides sufficient
coverage for the assets and operations of the Target and each Subsidiary that
are material to the operation of the Business as currently conducted and is in
full force and effect. Except as disclosed on Schedule 4.19, (a) none of the
policies or binders of Insurance listed on Schedule 4.19 provide for
retrospective insurance premiums or charges and (b) to the Knowledge of the
Target, any retrospective insurance premiums or charges on or with respect to
any of the Insurance for any period or occurrence through the Closing Date will
not exceed amounts which have been reserved therefor on the Financial
Statements or the Interim Financial Statements or which are reflected as
Accrued Liabilities on the Closing Date Financial Report.
4.20 Inventory. Subject to any allowances or reserves in the
Financial Statements, Interim Financial Statements or the Closing Date
Financial Report, and to any increase in such allowances or reserves made
through the Closing Date in accordance with GAAP, the Inventory of the Target
and each Subsidiary (a) consists only of items of quality and quantity
commercially usable and salable (as hereinafter defined) in the ordinary course
of the business of the Target and each Subsidiary, (b) is reasonably related to
the normal demands of the business of the Target and each Subsidiary as
currently conducted by the Target and each Subsidiary and (c) is not damaged or
obsolete. The Inventory (before allowances or reserves) which is deemed to be
"excess" (as hereinafter defined) as of the Closing Date will not exceed
$1,000,000. Except as set forth on Schedule 4.20, (a) all of the Inventory is
owned by the Target and each Subsidiary free of any Encumbrance other than
Permitted Encumbrances and is located at the Current Real Property and (b) the
Inventory as reflected in the Financial Statements and Interim Financial
Statements has been valued at the lower of cost or fair market value, net of
reserves, in a manner consistent with past practices and procedures (including,
without limitation, the method of computing overhead and other indirect
expenses
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to be applied to inventory) and in accordance with GAAP. Notwithstanding
clause (b) of the preceding sentence, the Inventory of Xxxx UK as reflected in
the Financial Statements and the Interim Financial Statements has been valued
using the first-in, first-out (FIFO) method, in a manner consistent with past
practice and procedures and in accordance with GAAP. For purposes of this
Section 4.20, (a) the term "usable and salable" shall mean Inventory which is
in merchantable condition and of the quality regularly sold to customers of the
Target and any Subsidiary in the usual course of business and (b) Inventory
shall be deemed to be "excess" if and only to the extent that (i) it has not
already been excluded as damaged or obsolete in accordance with GAAP and (ii)
the total amount of any item of Inventory exceeds the aggregate usage of such
item for the immediately preceding twelve-month period determined with
reference to the sales records of the Target and the Subsidiaries for such
period, except that any item of Inventory which relates to products introduced
by the Target or any Subsidiary within the immediately preceding twenty-four
month period shall be deemed to be "excess" only if the total amount of any
such item of Inventory exceeds the aggregate usage of such item, as forecasted
in good faith by the Target, for the immediately following twelve-month period.
4.21 Accounts Receivable. All of the Accounts Receivable are bona
fide receivables, are reflected on the books and records of the Target and each
Subsidiary, arose in the ordinary course of the business of the Target and each
Subsidiary and will be collected at their full face amount, net of reserves for
doubtful accounts as reflected on the Closing Date Financial Report. Except as
set forth on Schedule 4.21, no Person has any liens on the Accounts Receivable
other than Permitted Encumbrances, there is no right of offset against any of
the Accounts Receivable, and no agreement for deduction or discount has been
made with respect to any of the Accounts Receivable.
4.22 Contracts. Schedule 4.22 contains a true and correct list and
description of the following contracts and other agreements, whether written or
oral, to which the Target or any Subsidiary is a party or by which the Target
or any Subsidiary is bound (the "Material Contracts"):
(a) any agreement (or group of related agreements with the same
Person) for the lease of personal property to or from any Person (whether or
not capitalized under GAAP) providing for lease payments in excess of $25,000
per year,
(b) other than blanket purchase orders in an aggregate amount not
to exceed $500,000 annually and of a duration of less than one (1) year, any
agreement (or group of related agreements) not cancelable by the Target or any
Subsidiary without penalty on 90 days or less notice for the purchase or sale
of raw materials, commodities, supplies, products or other personal property,
or for the furnishing or receipt of services, the performance of which
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will extend over a period of more than one (1) year, reasonably be expected to
result in a Loss to the Target or any Subsidiary exceeding $25,000 or involve
consideration in excess of $50,000,
(c) any agreement concerning a partnership or joint venture,
(d) any agreement (or group of related agreements) under which the
Target or any Subsidiary has created, incurred, assumed, or guaranteed (A) any
Indebtedness or (B) any Indebtedness or other deferred continuing payment
obligation relating to any prior acquisition by the Target or any Subsidiary
(including, without limitation any obligation relating to non-compete covenants
or consulting),
(e) any agreement under which the Target or any Subsidiary has
imposed an Encumbrance other than a Permitted Encumbrance on any of its assets,
tangible or intangible,
(f) any letter of credit or performance bond,
(g) any confidentiality or noncompetition or similar agreement,
other than Employee Contracts and non-disclosure agreements with other Persons
entered into in the ordinary course of the Business,
(h) any agreement with any Affiliate of the Target (other than a
Subsidiary) which are not on an arm's length basis and which could not be
readily obtained from other sources,
(i) any profit sharing, deferred compensation, severance, or other
plan or arrangement for the benefit of the Target or any Subsidiary's current
or former partners, shareholders, directors, officers or employees (other than
any Employee Benefit Plans or Employee Contract),
(j) any collective bargaining agreement,
(k) any agreement for the prospective acquisition of the business
or product line of any other Person,
(l) any distributor, sales representative or dealer agreement,
(m) any Intellectual Property license or royalty agreement,
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(n) any independent contractor agreement requiring payments by the
Target or any Subsidiary in excess of $25,000 per year,
(o) any currency hedging contract,
(p) any agreement providing for indemnification by or for the
benefit of the Target or any Subsidiary other than routine indemnification
agreements entered into in the ordinary course of the Business,
(q) any agreement or contract for the lease of Real Property to or
from any Person,
(r) any agreement with any Governmental Authority,
(s) any agreement or contract entered into in connection with the
settlement of any litigation within the last five years,
(t) any agreement or contract which was not entered into in the
ordinary course of business, which contains terms other than on an arms-length
basis or which is in excess of the normal business requirements of the business
of the Target or any Subsidiary,
(u) any agreement or contract which requires the Target or any
Subsidiary to make any capital expenditures in excess of $25,000, or
(v) any other agreement (or group of related agreements) not
cancelable by the Target or any Subsidiary without penalty on 90 days or less
notice the performance of which will extend over a period of more than one (1)
year or involves consideration in excess of $50,000, or under which the
consequence of default or termination could result in Losses in excess of
$25,000.
True and correct copies of all written Material Contracts and written
descriptions of all oral Material Contracts have been made available to Buyer.
To the Knowledge of the Target, each of the Material Contracts is valid,
binding and enforceable by the Target or the applicable Subsidiary in
accordance with its terms (subject to the Enforceability Limitations), is not
subject to termination except in accordance with its terms, and is not subject
to termination by reason of a Change of Control. To the Knowledge of the
Target, except as set forth on Schedule 4.22, each of the Material Contracts is
in full force and effect, all fees, rents, royalties and other payments due
thereunder are current, neither the Target, any Subsidiary nor any other party
is in material default thereunder or in material breach thereof, and each
Material Contract will remain valid, binding, enforceable (subject to the
Enforceability
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Limitations) and in full force and effect following the Closing (except to the
extent that any such Material Contract has expired or been terminated in
accordance with its terms). Neither the Target nor any Subsidiary has during
the past five years sought or obtained any waiver of or under any material
provision of any Material Contract (including, without limitation, any waiver
from any lender or other creditor of any material term, condition or default
under any Material Contract). To the Knowledge of the Target, there exists no
event or occurrence, condition or act which constitutes or, with the giving of
notice, the lapse of time or the happening of any future event or condition,
would reasonably be expected to become, a default by the Target, any Subsidiary
or any other party under any of the Material Contracts and the Target, has not
received notice of and does not Know of a threatened default under any of the
Material Contracts.
4.23 Suppliers and Customers. Except as set forth on Schedule 4.23,
during the past eighteen (18) months, no substantial supplier or customer
(accounting for more than 2% of aggregate annual purchases or more than 2% of
aggregate annual revenues, as the case may be, of the Target or any Subsidiary)
has, to the Knowledge of the Target, indicated to the Target or any Subsidiary
that it intends to terminate its relationship with the Target or any Subsidiary
and the Target has no Knowledge of any material problem or dispute with any
such supplier or customer. The Target does not believe that the consummation
of the transactions contemplated hereby will or might disrupt the existing
relationships with any such supplier or customer.
4.24 Business Records. All material records of accounts, material
personnel records and other material business records for the past five (5)
years relating to the Target or any Subsidiary have not been destroyed and are
available upon request. In addition, to the Knowledge of the Target, all such
business records relating to periods prior to such five-year period which the
Target or any Subsidiary is required to maintain (including, without
limitation, personnel records and information relevant to current or future tax
filings) have not been destroyed and are available upon request.
4.25 Bank Accounts, Directors and Officers. Schedule 4.25 contains
(a) a true, complete and correct list of all bank accounts and safe deposit
boxes maintained by the Target and each Subsidiary and all persons entitled to
draw thereon, to withdraw therefrom or with access thereto, (b) a description
of all lock box arrangements for the Target and each Subsidiary, (c) the names
of all the directors and officers of the Target and each Subsidiary and (d) a
true, complete and correct list of all powers of attorney executed by the
Target and each Subsidiary.
4.26 Environmental Matters. To the Knowledge of the Target, except
as disclosed in Schedule 4.26, the Target, each Subsidiary, each Predecessor
and their assets,
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properties and operations are in compliance in all material respects with all
Environmental Laws. To the Knowledge of the Target, except as disclosed in
Schedule 4.26, there has been and is no Release or threatened Release of any
Hazardous Substance at, on, under, in, to or from any of the Real Property
whether as a result of or in connection with the operations and activities at
the Real Property or otherwise, other than Releases which were or are in
compliance in all material respects with all Environmental Laws. To the
Knowledge of the Target, except as set forth on Schedule 4.26, none of the
Target, any Subsidiary or any Predecessor has received any notice of alleged,
actual or potential responsibility for, or any inquiry or investigation
regarding, the presence, Release or threatened Release of any Hazardous
Substance at any location, whether at the Real Property or otherwise, which
Hazardous Substances were allegedly manufactured, used, generated, processed,
treated, stored, disposed or otherwise handled at or transported from the Real
Property or otherwise and which previous Release or threatened Release was not
in compliance in all material respects with all Environmental Laws. To the
Knowledge of the Target, none of the Target, any Subsidiary or any Predecessor
has received any notice of any other claim, demand or action by any Person
alleging any actual or threatened injury or damage to any Person, property,
natural resource or the environment arising from or relating to the presence,
Release or threatened Release of any Hazardous Substances at, on, under, in, to
or from the Real Property or in connection with any operations or activities
thereat, or at, on, under, in, to or from any other property, except as set
forth on Schedule 4.26. To the Knowledge of the Target, except as set forth on
Schedule 4.26, neither the Real Property nor any operations or activities
thereat is or has been subject to any judicial or administrative proceeding,
order, consent, agreement or any lien relating to any Environmental Laws or
Environmental Claims. To the Knowledge of the Target, except as set forth on
Schedule 4.26, there are no underground storage tanks presently located at the
Real Property and there have been no releases of any Hazardous Substances from
any underground storage tanks or related piping at the Real Property. To the
Knowledge of the Target, except as set forth on Schedule 4.26, there are no
PCBs located at, on or in the Real Property, and there is no asbestos or
asbestos-containing material located at, on or in the Real Property.
4.27 Absence of Certain Changes. Except as set forth on Schedule
4.27 or as specifically contemplated by this Agreement, since December 29, 1996
there has not been:
(a) any material adverse change in the business, financial
condition or operations of the Target and the Subsidiaries taken as a whole,
other than as a result of any change, circumstance or occurrence affecting the
industry or economy generally;
(b) any damage, destruction or loss, whether covered by insurance
or not, materially and adversely affecting the properties or businesses of the
Target or any Subsidiary;
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(c) any declaration, payment or setting aside for payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to the capital stock, of the Target or any Subsidiary, or any direct or
indirect redemption, purchase or other acquisition of any shares of capital
stock of the Target or any Subsidiary;
(d) any increase in the compensation of or granting of bonuses
payable or to become payable by the Target or any Subsidiary to any officer or
employee except increases occurring in the ordinary course of business and in
amounts consistent with past practice and procedures;
(e) any sale or transfer by the Target or any Subsidiary of any
tangible or intangible asset, any mortgage or pledge or creation of any
Encumbrance other than Permitted Encumbrances relating to any such asset, any
lease of real property or equipment, or any cancellation of any debt or claim,
except in the ordinary course of business;
(f) any settlement of any Proceeding involving more than $25,000;
(g) any material price concessions or, to the Knowledge of the
Target, discussions regarding material price concessions, or actual or, to the
Knowledge of the Target, anticipated cost increases, which could reasonably be
expected to cause a material decrease in gross profit during the next twelve
months;
(h) to the Knowledge of the Target, any other transaction not in
the ordinary course of business involving consideration greater than $50,000;
or
(i) any material change in accounting methods or principles
utilized by the Target or any Subsidiary.
4.28 No Brokers. Except for the Broker's Fee, which obligation is
the sole responsibility of and shall be paid for by the Target, none of the
Target, any Subsidiary or any Shareholder has entered into any agreement,
arrangement or understanding with any Person which will result in the
obligation to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
4.29 Absence of Certain Payments. To the Knowledge of the Target,
none of the Target, any Subsidiary or any Affiliate, or any of their respective
officers, directors, employees or agents or other people acting on behalf of
any of them, or any Affiliate of any of the foregoing, have (i) engaged in any
activity prohibited by the United States Foreign Corrupt Practices Act of 1977
or any other similar law, regulation, decree, directive or order of any
Governmental Authority and (ii) without limiting the generality of the
preceding clause (i),
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used any corporate or other funds for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activity to officials of any Governmental Authority. To the Knowledge of the
Target, none of the Target, any Subsidiary or any of their respective
directors, officers, employees or agents or other Persons acting on behalf of
any of them, or any Affiliate of any of the foregoing, has accepted or received
any unlawful contributions, payments, gifts or expenditures.
4.30 Products; Product Warranties.
(a) A form of each written product warranty Known to the Target
relating to products manufactured or sold by the Target and each Subsidiary at
any time during the five-year period preceding the date of this Agreement is
attached to or set forth in Schedule 4.30.
(b) Schedule 4.30 sets forth a true and complete list, of (i) all
products manufactured, marketed or sold by the Target or any Subsidiary that
have been recalled or withdrawn (whether voluntarily or otherwise) at any time
during the past three years and (ii) all proceedings (whether completed or
pending) at any time during the past three years seeking the recall,
withdrawal, suspension or seizure of any product sold by the Target or any
Subsidiary, except that, notwithstanding the foregoing, with respect to Xxxx UK
such list shall be limited to the past two years.
(c) The Target has no Knowledge of any material defect in design,
materials or manufacture in any products heretofore or currently manufactured,
distributed or sold by the Target or any Subsidiary or any defect in repair to
or replacement of any such products by the Target or any Subsidiary that would
reasonably be expected to constitute a "defect" for the purposes of applicable
product liability laws.
(d) Schedule 4.30 sets forth, on a year-by-year basis, a summary
list of the aggregate warranty expenses (including parts and labor, but not
overhead) and other unreimbursed repair, maintenance and replacement expenses
incurred by the Target and each Subsidiary at any time on or after January 1,
1992. The reserves for warranty expenses reflected on the Financial Statements
and Interim Financial Statements are $300,000, which is consistent with past
practice and procedures.
(e) To the Knowledge of the Target, except as provided in any of
the product warranties described in paragraph (a) of this Section 4.30 and as
otherwise set forth on Schedule 4.30 and except for any warranty arising by
operation of law, neither the Target nor any Subsidiary has sold any products
or services which are subject to any warranty extending beyond one year after
the date of this Agreement.
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4.31 Material Misstatements or Omissions. None of the
representations or warranties by the Target in this Agreement contains any
untrue statement of a material fact, or omits to state any material fact
necessary to make the statements or facts contained therein not misleading.
4.32 Exclusivity. None of the Target, any Subsidiary or any
Shareholder has made and shall not be deemed to have made any representation or
warranty other than as expressly made by the Target in this Article 4 and the
Schedules pursuant thereto. Without limiting the generality of the foregoing,
none of the Target, any Subsidiary or any Shareholder has made and shall not be
deemed to have made any representation or warranty with respect to (a) any
projections, estimates or budgets delivered or made available to Buyer or its
Representatives before or after the date of this Agreement, or (b) except as
expressly covered by a representation or warranty contained in this Article 4,
any information or documents (financial or otherwise) made available to Buyer
or any of its Representatives before or after the date of the Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders, as of the
date of this Agreement and as of the Closing Date, as follows:
5.1 Organization and Good Standing. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has full power and authority to conduct its business as it is
being presently conducted and to own and lease its properties and assets. The
Transitory Subsidiary is a corporation, duly organized, validly existing and in
good standing under the laws of the state of Michigan.
5.2 Authorization; Binding Effect. Each of Buyer and the
Transitory Subsidiary has all necessary power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated by this
Agreement and to perform its obligations under this Agreement. Copies of all
resolutions of the board of directors of Buyer and the Transitory Subsidiary
with respect to the transactions contemplated by this Agreement, certified by
the Secretary or an Assistant Secretary of Buyer and the Transitory Subsidiary,
in form satisfactory to counsel for the Target, have been delivered to the
Target. This Agreement has been duly executed and delivered by each of Buyer
and the Transitory Subsidiary and constitutes a legal, valid and binding
obligation of Buyer and the Transitory Subsidiary, enforceable against Buyer
and the Transitory Subsidiary in accordance with its terms.
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5.3 No Conflict or Violation. The execution and delivery of this
Agreement, the consummation of the transactions contemplated by this Agreement
and the performance by each of Buyer and the Transitory Subsidiary of its
obligations under this Agreement do not, and will not, result in (a) a
violation of or a conflict with any provision of the Certificate or Articles of
Incorporation, Bylaws or other organization certificates or documents of Buyer
or the Transitory Subsidiary, (b) to the knowledge of Buyer, a breach of, or
constitute an event, occurrence, condition or act that is, or with the giving
of notice, the lapse of time or the happening of any future event, or condition
would become, default under, any term or provision of any contract, agreement,
indebtedness, lease, commitment, license, franchise, permit, authorization or
concession to which Buyer or the Transitory Subsidiary is a party or (c) a
violation by Buyer or the Transitory Subsidiary of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or
award.
5.4 Consents and Approvals. Except as required under the HSR Act
and as otherwise set forth on Schedule 5.4, to the knowledge of Buyer, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or other Person is required to be made or
obtained by Buyer or the Transitory Subsidiary in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
5.5 No Proceedings. There is no Proceeding pending, or to the
knowledge of Buyer, threatened or anticipated against, relating to or affecting
in any materially adverse manner the transactions contemplated by this
Agreement.
5.6 Financial Resources. Buyer has adequate financial resources
to consummate the transactions contemplated by this Agreement.
5.7 No Brokers. Neither Buyer nor the Transitory Subsidiary has
entered into or will enter into any agreement, arrangement or understanding
with any Person which will result in the obligation to pay any finder's fee,
brokerage commission or similar payment in connection with the transaction
contemplated hereby.
ARTICLE 6
COVENANTS AND CONDUCT OF
THE PARTIES PRIOR TO CLOSING
The Target and the Principal Shareholders jointly and severally on the
one hand, and Buyer on the other hand, each covenant with the other as follows:
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6.1 Investigation by Buyer. During the period beginning on the
date of this Agreement and ending on the Closing Date, Buyer and each
Representative of Buyer may continue to conduct a due diligence review of the
Target and each Subsidiary. Buyer and each Representative of Buyer shall be
granted, at reasonable times and upon reasonable advance notice, full access to
all Current Real Property in connection with such due diligence review. In
connection with such due diligence review, the Target, each Subsidiary and each
Principal Shareholder, and each Representative of the Target, each Subsidiary
and each Principal Shareholder, shall, upon reasonable prior notice, (a)
cooperate with Buyer and each Representative of Buyer, (b) provide all
information, and all documents and other data relating to such information,
reasonably requested by Buyer or any Representative of Buyer and (c) permit
Buyer and each Representative of Buyer to inspect any assets of the Target and
each Subsidiary. Buyer acknowledges and agrees that its investigation and the
due diligence review of the Target, the Subsidiaries and the Principal
Shareholders, including without limitation, its environmental investigation
described in Section 6.2, is subject to the confidentiality restrictions set
forth in the Confidentiality Letter dated May 19, 1997 between the Target (or
the Target's agent) and IDEX (the "Confidentiality Letter").
6.2 Environmental Audits. In addition to any environmental
investigations and audits conducted by Buyer or its Representatives with the
Principal Shareholders' approval prior to the date of this Agreement, Buyer
shall, at Buyer's sole expense, be permitted, at reasonable times and upon
reasonable advance notice, to cause further environmental audits of the Real
Property to be conducted assessing the presence and or disposition of Hazardous
Substances and compliance with Environmental Laws; provided, however, that
Buyer will not conduct or cause to be conducted any "Phase II" environmental
audits or other invasive testing procedures without the express prior written
consent of the Principal Shareholders. The Target and each Subsidiary hereby
grant a license to Buyer's qualified environmental consultants approved by the
Target to enter upon the Real Property, upon giving the Principal Shareholders,
the Target, or any Subsidiary reasonable notice, with men and materials to
conduct such environmental audits.
6.3 Consents and Best Efforts. As soon as practicable, Buyer and
Target, as applicable, shall commence all reasonable actions to obtain the
consents and approvals and to make the filings set forth on Schedule 6.3 (the
"Required Consents and Filings") required to consummate the transactions
contemplated by this Agreement.
6.4 Conduct of Business Pending Closing.
(a) From the date of this Agreement to the Closing Date, and
except as otherwise specifically provided in this Agreement or consented to or
approved by Buyer in
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advance in writing, the Target and the Principal Shareholders shall conform,
and shall cause each Subsidiary to conform, to the following:
(i) The Target and each Subsidiary shall carry on its business
substantially in the same manner as heretofore conducted and shall not engage
in any transaction or activity, enter into any agreement or make any commitment
except in the ordinary course of business.
(ii) No change or amendment shall be made in or to the
certificate or articles of incorporation or other governing or organizational
charter or instruments of the Target or any Subsidiary.
(iii) Except for amounts owing to former shareholders of the
Target pursuant to the Redemption Transaction, neither the Target nor any
Subsidiary shall declare, pay or set aside for payment any dividend or other
distribution (whether in cash, stock or property) with respect to its capital
stock or directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock.
(iv) The Target and each Subsidiary shall use its best efforts to
preserve its corporate existence and business organization intact and to
preserve its properties, assets and relationships with its employees,
suppliers, customers and others with whom it has business relations.
(v) Except for contracts or commitments made in the ordinary
course of business of the Target and each Subsidiary, no contracts or
commitments that would constitute a Material Contract if existing on the date
of this Agreement shall be entered into by or on behalf of the Target or any
Subsidiary. No material amendments or changes shall be made to any of the
Material Contracts.
(vi) Neither the Target nor any Subsidiary shall (i) grant any
increase in compensation, other than normal merit, seniority and cost-of-living
increases to employees who are not officers of the Target or any Subsidiary, or
(ii) enter into, or amend in any respect, any Employee Benefit Plan or Employee
Contract.
(vii) Neither the Target nor any Subsidiary shall create, incur,
assume or guarantee or otherwise become liable with respect to any Indebtedness
other than in the ordinary course of business of the Target or such Subsidiary.
Neither the Target nor any Subsidiary shall alter, amend or otherwise modify in
any material respect the terms or conditions of any existing Xxxxxxxxxxxx.
00
- 00 -
(xxxx) Xxxx of the Target, any Subsidiary or any Shareholder shall
enter into any settlement with respect to any Proceeding against or relating to
the Target or any Subsidiary, or any of their respective officers, directors or
employees or properties, assets or business.
(ix) None of the Target, any Subsidiary or any Principal
Shareholder shall knowingly take any action which would cause, or fail to take
any action the failure of which would cause, any representation or warranty of
the Target in this Agreement to be breached or to be or become untrue in any
material respect.
(b) Neither Buyer nor Transitory Subsidiary shall knowingly take
any action which would cause, or fail to take any action the failure of which
would cause, any representation or warranty of the Buyer, the Transitory
Subsidiary or the Target in this Agreement to be breached or to be or become
untrue in any material respect.
6.5 Notification of Certain Matters.
(a) The Target shall give prompt notice to Buyer of (i) any fact
or circumstance, or any occurrence or failure to occur of any event, of which
the Target has Knowledge, which fact, circumstance, occurrence or failure
causes or, with notice or the lapse of time, would cause any representation or
warranty of the Target contained in this Agreement to be breached or untrue or
inaccurate in any respect any time from the date of this Agreement to the
Closing Date and (ii) any failure of the Target or any Subsidiary to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by the Target or any Subsidiary under this Agreement.
(b) Buyer shall give prompt notice to the Target of (i) any fact
or circumstance, or any occurrence or failure to occur of any event, of which
Buyer has knowledge, which fact, circumstance, occurrence or failure causes or,
with notice or the lapse of time, would cause any representation or warranty of
Buyer contained in this Agreement to be breached or untrue or inaccurate in any
respect any time from the date of this Agreement to the Closing Date and (ii)
any failure of Buyer to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by Buyer under this Agreement.
(c) In the event that Buyer receives a notice from the Target
pursuant to Section 6.5(a) or otherwise has actual knowledge which relates to a
breached or untrue representation or warranty of the Target, then (i) if in
Buyer's or the Target's reasonable judgment such breached or untrue
representation or warranty together with all other breached or untrue
representations and warranties of which Buyer has been notified pursuant to
Section 6.5(a) or of which Buyer has otherwise obtained actual knowledge would
have, if
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revealed after the Closing Date, resulted in Losses in excess of $1,500,000,
then each of Buyer and the Target shall have five (5) business days after
delivery of such notice or obtaining such actual knowledge to notify the other
party in writing as to whether it elects to terminate this Agreement, in which
case no party hereto shall have any liability to any other party or (ii) if in
both Buyer's and the Target's reasonable judgment such breached or untrue
representation or warranty together with all other breached or untrue
representations and warranties of which Buyer has been notified pursuant to
Section 6.5(a) or of which Buyer has otherwise obtained actual knowledge would
have, if revealed after the Closing Date, not resulted in Losses exceeding
$1,500,000, then Buyer and the Target shall be required to proceed with Closing
subject to Buyer preserving its indemnification rights pursuant to Section
9.1(b)(i) and any other rights and remedies it may have under this Agreement.
If neither Buyer nor the Target notifies the other pursuant to clause (i) of
the preceding sentence within such 5-day period of its election to terminate
this Agreement, Buyer and the Target shall be required to proceed with Closing
subject to Buyer preserving its indemnification rights pursuant to Section
9.1(b)(i) and any other rights and remedies it may have under this Agreement.
(d) In the event the Target receives a notice from Buyer pursuant
to Section 6.5(b) which relates to a representation or warranty which is
breached or untrue in any material respect of Buyer, the Target shall have five
(5) business days after receipt of such notice to respond in writing as to
whether it desires to terminate this Agreement or proceed with Closing subject
to preserving its indemnification rights pursuant to Section 9.1(c) and any
other rights and remedies which it may have under this Agreement. If the
Target fails to respond within such 5-day period, it shall be required to
proceed with Closing subject to preserving its indemnification rights pursuant
to Section 9.1(c)(i) and any other rights and remedies which it may have under
this Agreement.
6.6 Delivery of Interim Financial Statements. Within twenty (20)
days of the end of each monthly accounting period after the execution of this
Agreement and prior to the Closing Date, the Target shall deliver or cause to
be delivered to Buyer monthly and year-to-date interim financial statements of
the Target and the Subsidiaries. Upon delivery, such year-to-date interim
financial statements shall automatically become and be deemed to be Interim
Financial Statements for purposes of this Agreement.
6.7 Escrow Agreement. On the Closing Date, IDEX, Xxxx and Escrow
Agent shall enter into an escrow agreement in the form of Exhibit 6.7 (the
"Escrow Agreement").
6.8 Employment Agreement; Employment Letters. On the Closing
Date, (a) Xxxx shall enter into an employment agreement with the Surviving
Corporation in the form of Exhibit 6.8(a) (the "Xxxx Employment Agreement"),
(b) each of Xxx Xxxxx, Xxxxx Xxxxxx
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and Xxxxx Xxxxxxxxx shall receive an employment letter from the Surviving
Corporation substantially in the form of Exhibit 6.8(b) (the "Employment
Letter").
6.9 Non-Competition Agreement. On the Closing Date, Xxxxxxx
Xxxxxxx, Xxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxx Xxxx and Xxx Van
Den Xxxx shall enter into a non-competition agreement in the form of Exhibit
6.9 (each a "Non-Competition Agreement").
6.10 Standard IDEX Agreements. On the Closing Date, Xxxx and each
of the key management employees listed on Schedule 6.10 shall execute (i)
IDEX's standard form of Employee Inventions and Proprietary Information
Agreement and (ii) IDEX's standard form of Standards of Ethics and Business
Policy (together the "Standard IDEX Agreements"), copies of which are attached
at Exhibit 6.10.
6.11 Acquisition of Xxxx UK Shares. On or prior to the Closing
Date, the Target shall (a) acquire for cash from Xxxx Xxxxx and Xxxx Xxxxx all
of the shares of capital stock of Xxxx UK owned by each of Xxxx Xxxxx and Xxxx
Xxxxx, respectively and (b) obtain a release from each of Xxxx Xxxxx and Xxxx
Xxxxx of and from any claims which either Xxxx Xxxxx or Xxxx Xxxxx may have to
acquire any additional shares of capital stock of Xxxx UK including without
limitation pursuant to letters from the Target to Xxxx Xxxxx and Xxxx Xxxxx
dated February 19, 1988.
6.12 Shareholder Meeting; Vote.
(a) The Target shall take all reasonable actions necessary to
consummate the Merger in accordance with applicable Governmental Requirements
including, without limitation, duly calling, giving notice of, convening and
holding an annual or special meeting of the Shareholders (the "Shareholders'
Meeting"), to be held as soon as practicable, for the purpose of approving and
adopting this Agreement, the Merger and the transactions contemplated hereby
and thereby.
(b) At the Shareholders' Meeting, the Principal Shareholders and
their Affiliates will vote all of the Target Shares owned by them and will
exercise all voting rights or proxies held by them in favor of approval and
adoption of this Agreement, the Merger and the transactions contemplated hereby
and thereby.
6.13 Matters Relating to Real Property.
(a) No later than five days after the date of this Agreement,
Buyer will order title binders or commitments from a title insurance company
selected by Buyer (the "Title
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Commitments"), and a survey from a surveyor or surveyors selected by Buyer (the
"Surveys"), for each parcel of Current Real Property owned by the Target. Each
Title Commitment shall include a current title report and commitment to issue
an Owner's title insurance policy (the "Title Policy") to Buyer.
(b) Within ten days after receipt of Title Commitment and Surveys,
Buyer shall notify the Target in writing of any Encumbrances or other title
objections disclosed by the Title Commitments or Surveys which do not
constitute Permitted Encumbrances (the "Disapproved Encumbrances"). If Buyer
does not provide such written notice to the Target within such time period, it
will be conclusively presumed that Buyer has approved the Title Commitments and
Surveys and all matters they disclose. If Buyer does provide such notice to
the Target within such time period, Buyer shall have the right to terminate
this Agreement if within five days after the date of the receipt of such
notice, the Target has not agreed to cause the Disapproved Encumbrances to be
removed or insured over by Closing at Shareholders' expense.
(c) All costs and expenses with respect to the Title Commitment
and the Surveys, together with premiums for the issuance of the Title Policy,
shall be borne equally by Shareholders, on the one hand, and Buyer, on the
other hand.
6.14 Future Operations. It is Buyer's intention that (a) the
Surviving Corporation and its subsidiaries will provide their respective
employees with compensation no less favorable than that provided pursuant to
Target's and its Subsidiaries' past practices, taking into account all forms of
incentive and other compensation and fringe benefits, and (b) Target's
corporation headquarters will be maintained in Benton Harbor, Michigan. The
foregoing constitutes only a nonbinding statement of intention, is subject to
change at any time and does not create any rights in favor of, and may not be
relied on, by any party, including any employee of Target or any Subsidiary.
ARTICLE 7
CONDITIONS TO THE TARGET'S
AND PRINCIPAL SHAREHOLDERS' OBLIGATIONS
The obligation of the Target and Principal Shareholders to consummate
the transaction contemplated by this Agreement is subject, in the discretion of
the Target and the Principal Shareholders, to the satisfaction, on or prior to
the Closing Date, of each of the following conditions (any of which, in the
Target and the Principal Shareholders' absolute and sole discretion, may be
waived in whole or in part without impairing or affecting any right of
indemnification or other right or remedy hereunder):
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7.1 Representations, Warranties and Covenants. Subject to Section
6.5, all representations and warranties of Buyer contained in this Agreement
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 Buyer and the Transitory
Subsidiary shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it prior to or at the
Closing Date.
7.2 No Proceedings. No Proceeding shall be outstanding, pending,
threatened or anticipated against Buyer, Shareholders, the Target or any
Subsidiary, seeking to enjoin or render illegal the transactions contemplated
by this Agreement.
7.3 Closing Certificate. Buyer shall have furnished the Target
and the Principal Shareholders with a certificate of an officer of Buyer, in
form and substance satisfactory to the Target, to evidence compliance with the
conditions set forth in Sections 7.1 and 7.2 of this Article 7.
7.4 Required Consents and Filings. The Required Consents and
Filings shall have been obtained or made.
7.5 Legal Opinion. The Target and the Principal Shareholders
shall have received an opinion of Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear,
LLP, substantially in form of Exhibit 7.4.
7.6 HSR Act. The applicable waiting period, including any
extensions thereof, under the HSR Act shall have expired or been terminated and
no action shall have been taken by the Federal Trade Commission or the
Antitrust Division of the Justice Department to prevent the consummation of the
transactions contemplated by this Agreement.
7.7 Payment of Merger Consideration. Buyer shall have paid the
Merger Consideration to the Shareholders in accordance with Section 2.4(a).
7.8 Xxxx Employment Agreement, Employment Letters; Standard IDEX
Agreements. Buyer shall have signed (or caused the Surviving Corporation to
sign) the Xxxx Employment Agreement and delivered the Employment Letters
pursuant to Section 6.8 and shall have signed the Standard IDEX Agreements with
each of Xxxx and the key management employees listed on Schedule 6.10.
7.9 No Casualty. The Target shall not have elected to terminate
this Agreement in accordance with Section 10.1, to the extent applicable.
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ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the transaction contemplated by
this Agreement is subject, in the discretion of Buyer, to the satisfaction, on
or prior to the Closing Date, of each of the following conditions (any of
which, in Buyer's absolute and sole discretion, may be waived in whole or in
part without impairing or affecting any right of indemnification or other right
or remedy hereunder):
8.1 Shareholder Approval. This Agreement and the Merger shall
have been approved by the affirmative vote of 80% of the Target Shares entitled
to vote thereon and the affirmative vote of 80% of the outstanding shares of
any class of the Target Shares entitled to vote thereon, and the number of
Dissenting Shares shall not have exceeded one percent (1%) of the total number
of outstanding Target Shares entitled to vote thereon. Buyer shall have
received copies of resolutions adopted by the Shareholders approving the
transactions contemplated by this Agreement, certified by the Secretary or an
Assistant Secretary of the Target.
8.2 Representations, Warranties and Covenants. Subject to Section
6.5, all representations and warranties of the Target contained in this
Agreement shall be true and correct 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. The Target and the Principal Shareholders shall
have performed in all material respects all agreements and covenants required
by this Agreement to be performed by them prior to or at the Closing Date.
8.3 No Proceedings. No Proceeding shall be outstanding, pending,
threatened or anticipated against Buyer, Shareholders, the Target or any
Subsidiary, seeking to enjoin or render illegal the transactions contemplated
by this Agreement.
8.4 No Interruption or Adverse Change. No interruptions or
suspensions of the Business as now conducted shall have occurred or, to the
Knowledge of the Target, been threatened which, if they were to have occurred
after the Closing Date, would have, in Buyer's reasonable judgment, resulted in
Losses in the aggregate in excess of $2,500,000. No changes in the business,
prospects, assets or financial condition of the Target and its Subsidiaries
shall have occurred or, to the Knowledge of the Target, been threatened which,
if they were to have occurred after the Closing Date, would have, in Buyer's
reasonable judgment, resulted in Losses in the aggregate in excess of
$2,500,000.
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8.5 Closing Certificate. The Target and the Principal
Shareholders shall have furnished Buyer with a certificate or certificates to
evidence compliance with the conditions set forth in Sections 8.1 through 8.4
of this Article 8.
8.6 Required Consents and Filings. The Required Consents and
Filings shall have been obtained or made.
8.7 Legal Opinions. Buyer shall have received favorable opinions
from (a) Xxxxxx & Xxxxxxxxx, counsel to the Target and Shareholders (other than
RDV), substantially in the form of Exhibit 8.7(a) and (b) Xxxxxx Xxxxxxxx &
Xxxx LLP, counsel to RDV, substantially in the form of Exhibit 8.7(b).
8.8 Resignations. All directors and officers of the Target and
each Subsidiary (other than Xxxx Xxxxx and Xxxx Xxxxx) shall have resigned from
their positions as directors and officers and shall have submitted resignations
in such capacities dated as of the Closing Date.
8.9 HSR Act. The applicable waiting period, including any
extensions thereof, under the HSR Act shall have expired or been terminated and
no action shall have been taken by the Federal Trade Commission or the
Antitrust Division of the Justice Department to prevent the consummation of the
transactions contemplated by this Agreement.
8.10 Xxxx Employment Agreement; Standard IDEX Agreements. Xxxx
shall have signed the Xxxx Employment Agreement pursuant to Section 6.8 and
each of Xxxx and the key management employees listed on Schedule 6.10 shall
have signed each of the Standard IDEX Agreements.
8.11 Non-Competition Agreement. Each of Xxxxxxx Xxxxxxx, Xxxx X.
Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxx Xxxx and Xxx Van Der Xxxx shall
have executed and delivered to Buyer the Non-Competition Agreement.
8.12 No Casualty. Buyer shall not have elected to terminate this
Agreement in accordance with Section 10.1, to the extent applicable.
8.13 Certificates of Key Management Employees. Each of Xxxx, Xxxxx
Xxxxxx, Xxx Xxxxx, Xxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxx and
Xxxx Xxxxx shall have executed and delivered to Buyer a certificate in the form
of Exhibit 8.13.
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ARTICLE 9
COVENANTS AND CONDUCT OF THE PARTIES AFTER CLOSING
9.1 Survival and Indemnifications.
(a) Survival of Representations, Warranties, Covenants and
Agreements.
(i) All representations and warranties made by the Target
contained in this Agreement shall survive the Closing Date for the duration of
the Claims Period. Any claim made by Buyer with respect to such
representations and warranties must be initiated by giving notice during the
Claims Period. All of said representations and warranties shall in no respect
be limited or diminished by any past or future inspection, investigation,
examination or possession (whether before or after the Closing) on the part of
Buyer, or its Representatives; provided, however, that, subject to Section 6.5,
to the extent that as a result of any such inspection, investigation,
examination or possession prior to the Closing Buyer has actual knowledge that
any representation or warranty of the Target is untrue or that any covenant or
agreement made by the Target, any Subsidiary or any Shareholder contained in
Articles 2, 6 and 10 have not been performed, then neither the Target nor any
Shareholder shall have any liability with respect to such untrue representation
or warranty or unperformed covenant. For purposes of the preceding sentence,
Buyer shall not be deemed to have knowledge of any information or documents not
set forth on or listed in the Schedules to Article 4 of this Agreement, except
that, to the extent not listed on such Schedules, Buyer shall be deemed to have
knowledge of all matters contained in the documents listed in that certain
letter dated the date of this Agreement from Xxxxxx & Xxxxxxxxx to IDEX and
attached hereto as Schedule 9.1(a) to the extent such documents have been
provided to Buyer or Buyer's Representatives. All covenants and agreements
made by the Target, any Subsidiary or any Shareholder contained in Articles 2,
6 and 10 of this Agreement which are required to be performed prior to the
Closing Date shall survive the Closing for the duration of the Claims Period,
and any claim made by Buyer with respect thereto must be initiated by written
notice during the Claims Period. All covenants and agreements made by the
Target, any Subsidiary or any Shareholder contained in Articles 2, 9 and 10 of
this Agreement which are required to be performed on or after the Closing Date
(including, without limitation, the indemnification obligations set forth in
this Section) shall survive the Closing Date until fully performed or
discharged.
(ii) All representations and warranties made by Buyer
contained in this Agreement shall survive the Closing Date for the duration of
the Claims Period. Any claim made by the Target (before the Closing) or
Shareholders (before or after the Closing) with respect to such representations
and warranties must be initiated during the Claims Period. All covenants and
agreements made in this Agreement which are required to be performed
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prior to the Closing Date shall survive the Closing for the duration of the
Claims Period, and any Claim made by Target (before the Closing) or
Shareholders (before or after the Closing) with respect thereto must be
initiated during the Claims Period. All covenants and agreements made by Buyer
contained in this Agreement which are required to be performed on or after the
Closing Date (including, without limitation, the indemnification obligations
set forth in this Section) shall survive the Closing Date until fully performed
or discharged.
(iii) Except in the case of fraud, this Article 9 constitutes
the sole and exclusive remedy of Shareholders, the IDEX Indemnified Parties and
the Target Indemnified Parties with respect to any subject matter addressed in
this Agreement, and such parties hereby irrevocably waive and release the other
from any and all claims and other causes of action, including claims for
contribution, relating to that subject matter.
(iv) In the event that any of the representations and
warranties of the Target contained in Section 4.9(a) is breached or untrue, then
notwithstanding the fact that any other representation or warranty of the
Target contained in this Agreement is not breached or untrue, the Target shall
be liable to the Buyer pursuant to Section 9.1(b)(i) for such breached or
untrue representation or warranty contained in Section 4.9(a).
(b) Indemnification by the Target and the Shareholders.
The Target and the Shareholders, jointly and severally, hereby agree to defend,
indemnify and agree to hold harmless Buyer and its Affiliates, and their
respective directors, officers, employees and agents (the "IDEX Indemnified
Parties") (before and after the Closing), and the Target and each Subsidiary,
and their respective directors, officers, employees and agents (the "Target
Indemnified Parties") (after the Closing only), from, against and in respect of
the following:
(i) any and all Losses suffered or incurred by the IDEX
Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), by reason of a breach of any
representation or warranty by the Target contained in this Agreement or by
reason of the nonfulfillment of any covenant or agreement by the Target
contained in Section 6.5(a); provided, however, that the Target and
Shareholders shall have no liability under this subsection 9.1(b)(i) until the
Losses suffered or incurred with respect thereto, together with all Losses
suffered or incurred by the IDEX Indemnified Parties and the Target Indemnified
Parties pursuant to Section 9.6, in the aggregate exceed, and then only to the
extent such Losses are in excess of, $750,000;
(ii) any and all Losses suffered or incurred by
the IDEX Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), for any Income Tax Liability;
provided, however, that Buyer shall not be entitled to
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indemnification for any such Losses to the extent such amounts have been
deducted from the Merger Consideration;
(iii) any and all Losses suffered or incurred by the IDEX
Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), by reason of a breach or failure
by the Shareholders to pay any Taxes which are the obligation of Shareholders
pursuant to Section 2.5;
(iv) any and all Losses suffered or incurred by the IDEX
Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), arising out of or relating to the
Redemption Transaction;
(v) any and all Losses suffered or incurred by the IDEX
Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), by reason of the nonfulfillment
of any covenant or agreement by the Target (other than any such covenant or
agreement contained in Section 6.5(a)) or any Shareholder contained in Articles
2, 6 and 10 of this Agreement which is required to be performed prior to the
Closing Date; and
(vi) any and all Losses suffered or incurred by the IDEX
Indemnified Parties (before and after the Closing), or by the Target
Indemnified Parties (after the Closing only), by reason of the nonfulfillment
of any covenant or agreement by any Principal Shareholder contained in (A)
Sections 9.1, 9.3, 9.4 and 9.6 of this Agreement or (B) the Escrow Agreement;
(c) Indemnification by Buyer. Buyer hereby agrees to
indemnify and hold harmless the Target (before the Closing only) and
Shareholders (before and after the Closing) from, against, and in respect of:
(i) any and all Losses suffered or damage
suffered or incurred by the Shareholders resulting from a breach of any
representation or warranty by Buyer contained in this Agreement; provided,
however, that Buyer shall have no liability under this subsection 9.1(c)(i)
until the Losses suffered or incurred with respect thereto in the aggregate
exceed, and then only to the extent such Losses are in excess of, $750,000;
(ii) any and all Losses suffered or incurred by
the Target (before the Closing only) or the Shareholders (before or after the
Closing) resulting from the nonfulfillment of any covenant or agreement by
Buyer contained in this Agreement; and
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(iii) any and all Losses suffered or incurred by the
Shareholders resulting from the operation of the Business after the Closing
Date.
(d) Notification and Defense of Claims.
(i) As used in this Section, any party seeking
indemnification pursuant to this Section is referred to as an "indemnified
party" and any party from whom indemnification is sought pursuant to this
Section is referred to and as "indemnifying party". An indemnified party which
proposes to assert the right to be indemnified under this Section shall submit
a written demand for indemnification setting forth in summary form the facts as
known which form the basis for the claim for indemnification. In order for an
indemnified party to be entitled to any indemnification provided hereunder in
respect of, arising out of, or involving a claim made by any third party
against any indemnified party, the indemnified party must notify the
indemnifying party in writing of such claim within twenty (20) days after
receipt by the indemnified party of written notice of such claim, enclosing a
copy of all papers served; provided, however, that the failure to so notify the
indemnifying party of such claim shall not relieve the indemnifying party from
any liability which it may have to the indemnified party, except to the extent
that the indemnifying party is prejudiced thereby. With regard to any claim
made for indemnification because of any breach of representation or warranty,
written notice of such claim must be delivered within the Claims Period
specified in Section 9.1(a). Thereafter, the indemnified party shall deliver
to the indemnifying party, within twenty (20) days after receipt by the
indemnified party, copies of all further notices relating to such claim.
(ii) If a third-party claim is made for which an
indemnified party is entitled to indemnification pursuant to Section 9.1(b) and
if the amount claimed pursuant to such third-party claim, or the potential
liability arising out of such third-party claim (in the judgment of the
indemnified party), does not, after taking into account all other
indemnification obligations of the indemnifying party pursuant to Section
9.1(b), exceed the indemnifying party's maximum indemnification obligation
pursuant to Sections 9.1(b) and 9.1(e), then the indemnifying party shall be
entitled, if the indemnifying party so chooses, and provided that the
indemnifying party acknowledges the indemnifying party's obligation to
indemnify the indemnified party, to assume primary responsibility for the
defense of such claim with counsel selected by the indemnifying party and not
reasonably objected to by the indemnified party. If the indemnifying party
assumes the defense of a third-party claim as set forth in this paragraph, or
does not assume the defense of a third-party claim but acknowledges its
obligation to indemnify the indemnified party, then in no event shall the
indemnified party admit any liability with respect to, or settle, compromise or
discharge, any such claim without the indemnifying party's prior written
consent. If the indemnifying party does not assume the defense of any such
claim and does not acknowledge its obligation to indemnify the
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indemnified party, then the indemnified party may defend such claim in a manner
as it may deem appropriate (including, but not limited to, settling such claim
on such terms as the indemnified party may deem appropriate).
(iii) If a third-party claim is made for which an
indemnified party is entitled to indemnification pursuant to Section 9.1(b) and
if the amount claimed pursuant to such third-party claim, or the potential
liability arising out of such third-party claim (in the judgment of the
indemnified party), after taking into account all other indemnification
obligations of the indemnifying party pursuant to Section 9.1(b), exceeds the
indemnifying party's maximum indemnification obligations pursuant to Sections
9.1(b) and 9.1(e), then, provided that the indemnifying party has acknowledged
the indemnifying party's obligation to indemnify the indemnified party, the
indemnifying party and the indemnified party shall jointly assume
responsibility for, and shall cooperate in, the defense of such claim, except
that either party may agree to allow the other party to assume primary
responsibility for such defense. In the event that the indemnifying party and
the indemnified party are jointly defending any such claim, neither the
indemnifying party nor the indemnified party shall admit any liability with
respect to, or settle, compromise or discharge, any such claim without the
other party's prior written consent. If the indemnifying party does not
acknowledge its obligation to indemnify the indemnified party, then the
indemnified party may defend such claim in a manner it may deem appropriate
(including, but not limited to, settling such claim on such terms as the
indemnified party may deem appropriate).
(iv) In the event that the indemnifying party has
acknowledged its obligation to indemnify the indemnified party with respect to
a third-party claim under either of subsections 9.1(d)(ii) or 9.1(d)(iii) and,
subsequent to acknowledging its obligation new facts are discovered such that
the indemnifying party in good faith no longer believes it has an obligation to
indemnify the indemnified party, then the indemnifying party shall promptly so
notify the indemnified party that it is withdrawing its prior acknowledgement
of an obligation to indemnify. Upon receipt of such a notice, to the extent
the indemnifying party has assumed primary responsibility for the defense of
such third-party claim or the indemnifying party and the indemnified party are
jointly defending such claim, the parties shall cooperate and take all
reasonable actions necessary to cause the indemnified party to assume primary
responsibility for the defense of such claim and the indemnified party may
thereafter defend such claim in a manner as it may deem appropriate (including,
but not limited to, settling such claim on such terms as the indemnified party
may claim appropriate).
(v) In the event that any claim for indemnification is
made with respect to any third-party claim pursuant to this Section 9.1(d), (A)
the party assuming primary responsibility for the defense of such claim shall
at all times keep the other party informed as to the status of such claim, (B)
the party not primarily responsible for the defense of such claim
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shall cooperate fully with the other party in connection with such defense and
(C) the party not primarily responsible for the defense of such claim shall be
entitled to participate in, but not control, the defense of such claim with its
own counsel at its own expense.
(e) Limitation on Indemnification
(i) All indemnity claims of Buyer against the
Target or the Shareholders after the Closing pursuant to Sections 9.1(b)(i)
through (v) shall be satisfied solely from and limited to the Escrow Funds from
time to time held by the Escrow Agent pursuant to the Escrow Agreement and
shall be paid in accordance with procedures contained in the Escrow Agreement.
Any indemnity claims of Buyer against the Target or the Shareholders after the
Closing pursuant to Section 9.1(b)(vi) shall be limited to the Escrow Funds;
provided, however, that in addition to such remedies, Buyer shall be entitled
to specific performance or other appropriate equitable relief.
(ii) Buyer shall not be entitled to indemnification for
any breach of this Agreement to the extent that the matter regarding the breach
reduces the Merger Consideration pursuant to Section 2.3.
(iii) Because Buyer will control the Target and the
Subsidiaries after Closing, the Shareholders shall have no responsibility, for
indemnification or otherwise, for any failure of the Target or any Subsidiary
to perform after the Closing any covenants, agreements or other obligations of
the Target or any Subsidiary under this Agreement or any instrument or
agreement delivered in connection with the consummation of the transactions
contemplated by this Agreement.
(iv) Except with respect to any Losses relating to
liabilities for failure to comply with any Environmental Laws, to the extent
that insurance or "pass-through" warranty coverage from a manufacturer or other
form of recovery or reimbursement from a third party (the "Third Party Source")
is available to any IDEX Indemnified Party or any Target Indemnified Party
(after Closing) to cover any Losses for which indemnification may be sought
hereunder, Buyer will, and will cause all other indemnified parties to use
reasonable commercial efforts (not to include the bringing of any litigation)
to recover the amount of its Losses available from the Third Party Source and
will only seek indemnification hereunder if Buyer or any other indemnified
parties fails to recover from the Third Party Source or if the amount of the
recovery in insufficient to satisfy all of the Losses indemnifiable under this
Article (and in the latter instance will only seek indemnity for the amount of
the deficiency). To the extent of any indemnification of Losses as described
in the previous sentence, or any indemnification of Losses relating to
liabilities for failure to comply with any Environmental Laws, Buyer will, and
will cause any other indemnified parties to, assign to the indemnifying
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party or parties, to the fullest extent allowable, their claim against each
Third Party Source, or if assignment is not permissible, the indemnifying party
or parties will be entitled to retain all recoveries made as a result of any
such action. Subject to the terms and conditions of Section 9.4, Buyer will,
and cause the Surviving Corporation and its Subsidiaries to, make their
respective books and records relating to such claim available to assist the
indemnifying party or parties in prosecuting any such claim.
(v) No IDEX Indemnified Party or any Target
Indemnified Party (after Closing) will be entitled to indemnification to the
extent the item for which indemnification is sought is reflected in or reserved
against as an Accrued Liability or Account Payable on the Closing Date
Financial Report. Any amounts recoverable by any IDEX Indemnified Party or any
Target Indemnified Party (after Closing) under this Agreement will be net of
any tax benefits incurred by the indemnified party or parties. To the extent
the tax benefit is incurred after any recovery pursuant to this Article 9,
there will be a corresponding adjustment between the parties without regard to
the time limitation imposed under this Article 9.
9.2 Income Tax Refunds. On and after the Closing Date,
Buyer shall from time to time pay to Xxxx, as agent for the Shareholders, all
refunds received by the Target or any Subsidiary in respect of any federal,
state, local or foreign income, business and occupation or similar Taxes paid
by the Target or any Subsidiary to any Governmental Authority for any period on
or prior to the Closing Date, net of any tax liability of the Target or any
Subsidiary arising by reason of or attributable to such refunds.
9.3 Further Assurances; Information.
(a) Both before and after the Closing Date, each party
will cooperate in good faith with each other party and will take all
appropriate action and execute any agreement, instrument or other writing of
any kind which may be reasonably necessary or advisable to carry out and
confirm the transactions contemplated by this Agreement (including, but not
limited to, obtaining consents or approvals to the Merger from any Person).
(b) If at any time within three years of the date hereof,
Buyer proposes to register under the Securities Act of 1933 any securities of
Buyer in connection with any registered offering thereof and in connection
therewith the Securities Exchange Commission makes any comments or requests any
information with respect to accounting information presented in the
registration statement pertaining to any period prior to the Closing Date, then
the Principal Shareholders will use reasonable efforts to respond promptly to
such comments or questions, and will use their reasonable best efforts to cause
Target's Pre-Closing Accountants to respond to comments on the relevant
financial statements or to provide such information as
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the Securities Exchange Commission requests in order to cause the Securities
Exchange Commission to declare effective such registration statement, at the
expense of Buyer or its designated Affiliates, as the case may be. In
addition, the Principal Shareholders shall use their best efforts to provide to
any underwriters in connection with any such registration a comfort letter
requested by such underwriter relating to financial information pertaining to
any period prior to the Closing Date in accordance with SAS 72. Xxxx also
agrees to make himself reasonably available upon reasonable notice for
discussions with representatives of underwriters in connection with any such
proposed registration. In connection with any information or cooperation
provided by any Principal Shareholder pursuant to this Section 9.3(b), IDEX
shall pay all reasonable out-of-pocket costs incurred by such Principal
Shareholder and shall provide to such Principal Shareholder customary
protections and indemnities.
9.4 Access to Records and Personnel.
(a) For a period of six (6) years after the Closing Date,
the Principal Shareholders and their Representatives shall have reasonable
access to all books and records of Target and each Subsidiary, and to all
former employees of Target and each Subsidiary having knowledge with respect
thereto, to the extent that such access may reasonably be required in
connection with matters relating to (i) indemnification obligations and other
liabilities of the Target or the Shareholders under this Agreement or (ii) the
preparation of any tax returns required to be filed by the Target with respect
to any periods prior to the Closing. Such access shall be afforded by Buyer
upon receipt of reasonable advance notice and during normal business hours,
provided such access does not unduly disrupt Buyer's normal business
operations. The Principal Shareholders shall be solely responsible for any
costs or expenses incurred by them pursuant to this Section 9.4. Buyer shall
maintain all of such books and records during such six-year period, provided
that if Buyer shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, Buyer shall, prior to such disposition,
give the Principal Shareholders a reasonable opportunity, at the Principal
Shareholders' expense, to segregate and remove such books and records as the
Principal Shareholders may select.
(b) For a period of six (6) years after the Closing Date,
Buyer and its Representatives shall have reasonable access to all of the books
and records relating to the Business which any Principal Shareholder, or any of
its or their Representatives, may retain after the Closing Date. Such access
shall be afforded by each Principal Shareholder and its or their
Representatives upon receipt of reasonable advance notice and during normal
business hours. Buyer shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 9.4. Each Principal Shareholder shall
maintain all of such books and records retained by it or him during such
six-year period, provided that if any Principal Shareholder
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shall desire to dispose of any of such books and records prior to the
expiration of such six-year period, such Principal Shareholder shall, prior to
such disposition, give Buyer a reasonable opportunity, at Buyer's expense, to
segregate and remove such books and records as Buyer may select.
9.5 Director and Officer Indemnity. After the Closing,
Buyer will cause the Target and each Subsidiary to continue to indemnify and
hold harmless all past and present officers, directors, employees and agents of
the Target and each Subsidiary against all Losses, including without limitation
fees and expenses of legal counsel, arising out of or related to any acts or
omissions, or alleged acts or omissions, occurring at or before Closing to the
same extent and on the same or comparable terms and conditions provided for in
the Target's and Subsidiaries' respective articles of incorporation, bylaws or
other organizational charters as of the Closing Date or under applicable law.
9.6 Environmental Remediation Program. The Target and
the Shareholders, to the extent of the Escrow Funds, jointly and severally
hereby agree to indemnify and reimburse the IDEX Indemnified Parties and the
Target Indemnified Parties for Losses resulting from, relating to or arising
out of certain environmental remediation projects to be developed, approved,
implemented and paid for, all in accordance with the following:
(i) Buyer and the Target shall jointly engage
Residuals Management Technology, Inc. - Chicago ("RMT") to develop remedial
action plans to address environmental contamination or conditions at the
Target's facilities located in Xxxxxx Harbor and Bridgman, Michigan
(collectively, the "Facilities"). The remedial action plans shall be designed
to most cost-effectively remediate contamination and/or conditions at the
Facilities to achieve cleanup criteria that are developed under Part 201 of the
Michigan Natural Resources and Environmental Protection Act, and are consistent
with the current zoning and/or non-conforming use of the property to be
remediated. The remedial action plans shall also be designed to remediate the
contamination and/or conditions to the cleanup criteria approved by the
Michigan Department of Environmental Quality (the "MDEQ") in a seven to
ten-year period from the Closing Date, or in any shorter period as required by
MDEQ. The remedial action plans shall each conform to the requirements of
Michigan law and be supported by all of the data and other information
necessary to justify the proposed remedial actions. The remedial action plans
and supporting materials shall be submitted to the MDEQ within ninety (90) days
of the Closing Date with a request for its review and approval in accordance
with Michigan law.
(ii) Buyer and the Principal Shareholders shall
cooperate in good faith with each other in directing RMT's work in the
preparation of the remedial action plans and the obtaining of approval of a
plan by the MDEQ which will assure remediation to the
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approved clean-up criteria in a seven to ten-year period from the Closing Date.
No remedial action plan shall be deemed final for purposes of submission to the
MDEQ unless Buyer and the Principal Shareholders approve it.
(iii) If the MDEQ approves the remedial action
plans and, as a result, the parties are able to determine with reasonable
certainty the cost to perform the plans before the eighteen (18) month
anniversary of the Closing Date, then an amount equal to that cost shall be
retained in Escrow Funds to finance the performance of the remedial action
plans and the balance of the Escrow Funds (not subject to claim pursuant to
another Section of this Agreement) shall be released to the Shareholders. If
the remedial action plans are not approved by the MDEQ before the eighteen (18)
month anniversary of the Closing Date, or if the parties cannot in good faith
otherwise in that time period determine with reasonable certainty the cost to
perform the plans, then, unless otherwise determined by the third parties in
accordance with subsection (vi) of this Section 9.6, $5,000,000 shall be
retained in Escrow Funds until such time as the cost of remediation as approved
by the MDEQ can be determined with reasonable certainty, at which time an
amount equal to that cost shall be retained in Escrow Funds and the balance of
the Escrow Funds (not subject to claim pursuant to another Section of this
Agreement) shall be released to the Shareholders. In any event, the cost to
perform the remedial action plans and the corresponding amount to be retained
in Escrow Funds to finance them shall be determined as quickly as practicable
following approval by MDEQ and expressed as a single sum certain, and not as a
range of costs, notwithstanding that the plans may take seven to ten years to
complete.
(iv) Buyer shall, on a semiannual basis, submit
claims against and be reimbursed from the Escrow Funds for Losses covered by
this Section 9.6.
(v) Notwithstanding anything to the contrary contained
in this Section 9.6, the Target and the Shareholders shall have no liability
under this Section 9.6 until the Losses suffered or incurred with respect
thereto, together with all Losses suffered or incurred by the IDEX Indemnified
Parties and the Target Indemnified Parties under Section 9.1(b)(i), in the
aggregate exceed, and then only to the extent such Losses are in excess of,
$750,000.
(vi) If Buyer and the Principal Shareholders are
unable to agree on any aspect of the work covered by this Section, including,
but not limited to, the content of proposed remedial action plans or
determining with reasonable certainty the cost to implement the remedial action
plans and perform them to completion, then either party may require that those
disagreements shall be submitted immediately to the environmental consulting
firm of Xxxxxxxx & Xxxxxx (Detroit, Michigan) and Xxx Xxxx, Esq. of Xxxxxx,
Xxxxxxx (Grand Rapids, Michigan) to resolve the dispute. The decision of said
third parties shall be final and binding
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on the Parties and the expenses and fees of said third parties shall be borne
equally by Shareholders and Buyer in accordance with Section 10.8.
ARTICLE 10
MISCELLANEOUS
10.1 Risk of Loss. Risk of loss with respect to any of
the property or assets of the Target or any Subsidiary shall be borne by the
Target and Shareholders at all times prior to the Closing and shall pass to
Buyer only upon transfer to Buyer of title to the Shares. If any of the
Current Real Property or Tangible Personal Property is lost, damaged or
destroyed by fire, theft, casualty or any other cause or causes prior to the
Closing (a "Casualty"), Target shall promptly notify Buyer in writing of such
Casualty and the details thereof and answer promptly any reasonable requests
from Buyer for details or information, and Buyer shall proceed with the Closing
at the Merger Consideration, minus the dollar amount (based upon replacement
value) of the Casualty loss, plus any insurance proceeds received or receivable
by the Target or the applicable Subsidiary as a result of such Casualty;
provided, however, that if such Casualty(ies) in the aggregate from the date
hereof through the Closing Date exceed $2,500,000, then (a) Buyer may terminate
this Agreement and (b) if the insurance proceeds received or receivable by
Target, together with amounts which Buyer may elect to pay to the Target in
additional to such proceeds, do not equal the full amount of such
Casualty(ies), the Target may terminate this Agreement. The aforesaid option
shall be exercised by Buyer or the Target by written notice to the other given
within fifteen (15) days or the number of days remaining to the Closing,
whichever is less, after the later of Buyer receiving (i) written notice of
such Casualty and (ii) satisfactory responses to all of its reasonable
requests, if any, for details or information. If this Agreement is not
terminated by Buyer or the Target pursuant to this Section 10.1 and if Buyer
and the Target are unable to agree as to the dollar amount of the loss or the
insurance proceeds to be recovered, the parties hereto shall proceed with the
Closing as scheduled, except that Buyer shall pay to the Escrow Agent, in
addition to the Escrow Funds, an additional amount as determined by the
Independent Accountants (the "Casualty Amount") and the Closing Date Payment
shall be reduced by the Casualty Amount. The Escrow Agent shall hold the
Casualty Amount until the dispute has been resolved following the Closing
either by agreement of Buyer and the Principal Shareholders.
10.2 Termination. This Agreement may be terminated at any
time prior to the Closing Date as follows:
(a) By mutual written agreement of Buyer and Target;
(b) By Buyer or Target by written notice to the other in
the event that all approvals under the HSR Act have not been obtained, or the
Closing Date has not occurred for
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any other reason, on or prior to April 30, 1998, but only if the terminating
party is not in breach of, or default under, any provision of this Agreement;
(c) By Buyer or the Target pursuant to Section 6.5 or
Section 10.1; or
(d) By Buyer by written notice to the Target of its
election to terminate this Agreement pursuant to Section 6.13.
Except as otherwise provided in Section 6.5, in the event of the termination of
this Agreement by any party as provided in the preceding sentence, no party
shall have any liability hereunder of any nature whatsoever, other than for
indemnification pursuant to Section 9.1 of this Agreement. Except as otherwise
provided in Section 9.1(a), in the event that a condition precedent to its
obligations is not satisfied, nothing contained in this Agreement shall be
deemed to require any party to terminate this Agreement, rather than to waive
such condition precedent and proceed with the Closing, which waiver shall not
impair or affect any right of indemnification or other right or remedy
hereunder. Buyer's obligations under the Confidentiality Letter will survive
the termination of this Agreement for any reason unimpaired.
10.3 Notices. Unless otherwise provided in this
Agreement, any notice, request, instruction or other communication to be given
hereunder by any party to the other shall be in writing and (a) delivered
personally (to be effective when so delivered), (b) mailed by registered or
certified mail, return receipt requested (to be effective four days after the
date it is mailed) or (c) sent by facsimile transmission (to be effective upon
receipt by the sender of electronic confirmation of the delivery of the
facsimile), with a confirmation sent by way of one of the above methods, as
follows:
If to the Shareholders addressed to:
Xxxxxx X. Xxxx
0000 Xxxxx Xxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: ______________________
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and to:
RDV Aria, L.L.C.
c/o RDV Corporation
500 Grand Bank Building
000 Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxxx
600 1st Source Bank Center
000 Xxxxx Xxxxxxxx
Xxxxx Xxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx Xx., Esq.
Xxxxx X'Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and to:
Xxxxxx Xxxxxxxx & Xxxx LLP
000 Xxx Xxxx Xxxxxxxx
000 Xxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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If to Buyer, addressed to:
IDEX Corporation
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP
Attn: Xxxxxxx X. Xxxxx, Esq.
Xxxxx X.X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
0000 Xxx X & X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any party may designate in a writing to any other party any other address or
telecopier number to which, and any other Person to whom or which, a copy of
any such notice, request, instruction or other communication should be sent.
10.4 Knowledge. For purposes of this Agreement,
"Knowledge", "Know", "Known", "information" or "belief" with respect to Target
shall mean (except as otherwise provided in this sentence) the actual
knowledge, information or belief, as appropriate to the context of the
statement in which the term is used, of (i) with respect to Target's domestic
U.S. operations, each of Xxxxxx Xxxx, Xxxxx Xxxxxx, and Xxx Xxxxx, or the
knowledge, information or belief which such individuals would have after having
made reasonable inquiry of Xxx Xxxxxxx, XxXxx Xxxxxxx or Xxxx Xxxxxxx in their
respective areas of operations and after having made a review of documents and
records, on whatever media, of a date not more than three (3) years old in
those relevant files at Xxxx'x U.S. headquarters with which such individuals or
Xxx Xxxxxxx, XxXxx Xxxxxxx or Xxxx Xxxxxxx normally deal in the performance of
his or their duties with respect to the matters which are relevant to the
representation, warranty, covenant, or agreement being made or given; (ii) with
respect to Xxxx UK, each of Xxxxxx Xxxx, Xxxxx Xxxxxx and Xxx Xxxxx and each of
Xxxx Xxxxx and Xxxx Xxxxx, or the knowledge, information or belief which Xxxx
Xxxxx and Xxxx Xxxxx would have after having made a review of documents and
records, on whatever media, of a date not more than three (3)
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years old in those relevant files at Xxxx UK's England headquarters with which
Xxxx Xxxxx or Xxxx Xxxxx normally deal in the performance of his/or their
duties with respect to the matters which are relevant to the representation,
warranty, covenant, or agreement being made or given.
10.5 Public Statements. The Principal Shareholders and
Buyer agree to cooperate, both prior to and after the Closing, in issuing any
press releases or otherwise making public statements with respect to the
transactions contemplated by this Agreement, and no press release or other
public statements shall be issued without the joint consent of Buyer and the
Principal Shareholders, provided, however, that if either party is required by
applicable law or the rules of the New York Stock Exchange, Inc., the
Securities Exchange Commission or other third Person to disclose the existence
or terms of this Agreement, the disclosing party shall notify the other party
and provide to them a copy of any such public disclosure before releasing the
disclosure.
10.6 Choice of Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
laws of Michigan, without regard to principles of conflicts of law, except
that, 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,
the law of the jurisdiction under which the respective entity was organized
shall govern.
10.7 Equitable Remedies. Because a remedy at law for any
breach of the provisions of Section 9.1(b)(vi), 9.1(c)(ii) or the last sentence
of Section 6.1 will be inadequate, in addition to all other remedies available
to the Target, the Shareholders and Buyer, as the case may be, the Target, the
Shareholders and Buyer (from and after the Closing) shall have the remedies of
a restraining order, injunction or other equitable relief to enforce the
provisions hereof. The parties hereto hereby agree that the issues in any
action brought under Section 9.1(b)(vi), 9.1(c)(ii) or the last sentence of
Section 6.1 will be limited to claims under such sections. All expenses,
including, without limitation, attorneys fees and expenses, arising out of
claims under Section 9.1(b)(vi), 9.1(c)(ii) or the last sentence of Section 6.1
shall be borne by the losing party to the fullest extent permitted by law.
10.8 Expenses. Except as otherwise specifically provided
in this Agreement, Shareholders and Buyer shall pay their own legal, accounting
and other expenses, incident to this Agreement. Buyer shall pay all of
Shareholders' reasonable legal and accounting fees (based on customary hourly
rates for acquisition work) and other expenses incident to this Agreement to
the extent that such legal, accounting and other expenses, together with any
such legal, accounting and other expenses paid or accrued by the Target on or
prior to the Closing Date, do not exceed in the aggregate $250,000. To the
extent the legal, accounting and other
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expenses of Shareholders exceed in the aggregate the amount paid by Buyer
pursuant to the preceding sentence, then Buyer shall pay such excess legal,
accounting and other expenses on Shareholders' behalf and shall have the right
to apply to the Escrow Agent for reimbursement of such amounts out of the
Escrow Funds. It is specifically understood that if a Closing does not occur,
Buyer shall have no responsibility to reimburse Target or Shareholders for any
fees or expenses.
10.9 Titles. The headings of the articles and sections of
this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement.
10.10 Waiver. No failure of Target, Shareholders or Buyer
to require, and no delay by Target, Shareholders or Buyer in requiring, the
other to comply with any provision of this Agreement shall constitute a waiver
of the right to require such compliance. No failure of the Target,
Shareholders or Buyer to exercise, and no delay by the Target, Shareholders or
Buyer in exercising, any right or remedy under this Agreement shall constitute
a waiver of such right or remedy. No waiver by the Target, Shareholders or
Buyer of any right or remedy under this Agreement shall be effective unless
made in writing. Any waiver by the Target, Shareholders or Buyer of any right
or remedy under this Agreement shall be limited to the specific instance and
shall not constitute a waiver of such right or remedy in the future.
10.11 Binding. This Agreement shall be binding upon the
Target, Shareholders and Buyer and upon each successor and assignee of the
Target, Shareholders and Buyer and shall inure to the benefit of, and be
enforceable by, the Target, Shareholders and Buyer and each successor and
assignee of the Target, Shareholders and Buyer; provided, however, that, except
as provided for in the following sentence, neither the Target, Shareholders nor
Buyer shall assign any right or obligation arising pursuant to this Agreement
without first obtaining the written consent of the other parties. Buyer may
assign all or a portion of its rights and obligations under this Agreement to
one or more affiliates of Buyer, provided that Buyer shall remain liable
hereunder notwithstanding any such assignment.
10.12 Entire Agreement. This Agreement contains the entire
agreement between the Target, Shareholders and Buyer with respect to the
subject of this Agreement, and supersedes each course of conduct previously
pursued, accepted or acquiesced in, and each written and oral agreement and
representation previously made, by the Target, Shareholders or Buyer with
respect thereto, whether or not relied or acted upon including, without
limitation, the letter from Xxxxxx X. Xxxxx to the Target dated September 15,
1997 (the "Agreement in Principle"); provided however that (a) the exclusivity
covenant contained in the third full paragraph on page 4 of the Agreement in
Principle and (b) the Confidentiality Letter shall each survive the execution
of this Agreement unimpaired.
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10.13 Modification. No course of performance or other
conduct hereafter pursued, accepted or acquiesced in, and no oral agreement or
representation made in the future, by the Target, Shareholders or Buyer,
whether or not relied or acted upon, and no usage of trade, whether or not
relied or acted upon, shall modify or terminate this Agreement, impair or
otherwise affect any obligation of the Target, Shareholders or Buyer pursuant
to this Agreement or otherwise operate as a waiver of any such right or remedy.
No modification of this Agreement or waiver of any such right or remedy shall
be effective unless made in writing duly executed by the Target, Principal
Shareholders and Buyer.
10.14 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same instrument. Any party
may execute this Agreement by facsimile signature and the other party shall be
entitled to rely on such facsimile signature as evidence that this Agreement
has been duly executed by such party. Any party executing this Agreement by
facsimile signature shall immediately forward to the other party an original
signature page by overnight mail.
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IN WITNESS WHEREOF, Buyer has caused to be executed by an
officer of Buyer, the Transitory Subsidiary has caused to be executed and
delivered by an officer of the Transitory Subsidiary, each of the Principal
Shareholders has executed and the Target has caused to be executed by an
officer of the Target, this Agreement on the day and year indicated at the
beginning of this Agreement.
IDEX:
IDEX CORPORATION
By_______________________________________
Xxxxxx X. Xxxxx
Chief Executive Officer
XXXX ACQUISITION CORP.
By_______________________________________
Xxxxxx X. Xxxxx
President
PRINCIPAL SHAREHOLDERS:
_________________________________________
Xxxxxx X. Xxxx
RDV ARIA, L.L.C.
By: RDV Corporation, a member
By:_____________________________________
Xxxxx X. Xxxxxxxx
President
TARGET:
XXXX MANUFACTURING CORPORATION
By_______________________________________
Xxxxxx X. Xxxx
Chief Executive Officer
