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EXHIBIT 10.33
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXX MANUFACTURING COMPANY,
SLEEPMASTER L.L.C.,
AND
THE STOCKHOLDERS LISTED ON
THE SELLER SIGNATURE
PAGE ATTACHED HERETO
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February 26, 1999
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TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE.............................................. 1
1A. Purchase and Sale of the Shares.......................... 1
1B. Purchase Price........................................... 1
1C. The Closing.............................................. 1
1D. Working Capital Purchase Price Adjustment................ 2
1E. Determination of Closing Net Working Capital............. 3
1F. Income Tax Purchase Price Adjustment..................... 4
1G. Operative Rules.......................................... 4
SECTION 2. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT THE CLOSING....... 5
2A. Representations and Warranties; Covenants................ 5
2B. Opinion of the Sellers' Counsel.......................... 5
2C. Litigation............................................... 5
2D. Consents and Approvals................................... 5
2E. Escrow Agreements........................................ 5
2F. Material Adverse Change.................................. 5
2G. Intentionally Omitted.................................... 6
2H. Employment and Noncompetition Arrangements............... 6
2I. Real Estate Matters...................................... 6
2J. Closing Documents........................................ 6
2K. Financing................................................ 7
2L. Fees and Expenses........................................ 7
2M. Resignation of Directors................................. 7
2N. Release of Liens......................................... 7
2O. Transactions with Affiliates............................. 7
2P. Waiver................................................... 7
SECTION 3. CONDITIONS OF THE SELLERS' OBLIGATIONS AT THE CLOSING.......... 8
3A. Representations and Warranties; Covenants................ 8
3B. Escrow Agreements........................................ 8
3C. Employment Agreements.................................... 8
3D. Litigation............................................... 8
3E. Opinion of the Purchaser's Counsel....................... 8
3F. Closing Documents........................................ 8
3G. HSR Act.................................................. 8
3H. Waiver................................................... 8
SECTION 4. PRE-CLOSING COVENANTS AND AGREEMENTS..................... 8
4A. Best Efforts; Further Assurances......................... 9
4B. Third Party Notices and Consents......................... 9
4C. Operation of Business.................................... 9
4D. Full Access.............................................. 10
4E. Press Release and Announcements.......................... 00
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0X. HSR Act.................................................. 10
4G. Compliance with Agreements and Laws...................... 10
4H. Payment of Obligations................................... 10
4I. Notice of Material Developments.......................... 11
4J. Exclusivity.............................................. 11
4K. Certain Pre-Closing Tax Matters.......................... 12
SECTION 5. POST-CLOSING COVENANTS AND AGREEMENTS.................... 12
5A. Confidentiality.......................................... 12
5B. Noncompete, Nonsolicitation.............................. 12
5C. Certain Post-Closing Tax Matters......................... 13
5D. Company Profit Sharing Plan.............................. 14
SECTION 6. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.... 14
6A. Organization, Corporate Power and Licenses............... 14
6B. Capital Stock and Related Matters; Subsidiaries.......... 15
6C. Authorization; No Breach. ............................... 15
6D. Consents................................................. 16
6E. Financial Statements..................................... 16
6F. Absence of Undisclosed Liabilities....................... 17
6G. Accounts Receivable...................................... 17
6H. Inventory................................................ 17
6I. Product Warranty......................................... 17
6J. Product Liability........................................ 17
6K. No Material Adverse Effect............................... 18
6L. Indebtedness............................................. 18
6M. Absence of Certain Developments.......................... 18
6N. Assets................................................... 20
6O. Tax Matters.............................................. 20
6P. Contracts and Commitments................................ 22
6Q. Intellectual Property Rights............................. 24
6R. Litigation, etc.......................................... 25
6S. Brokerage................................................ 26
6T. Insurance................................................ 26
6U. Employees................................................ 26
6V. ERISA.................................................... 26
6W. Compliance with Laws; Permits............................ 28
6X. Environmental and Safety Matters......................... 28
6Y. Affiliate Transactions................................... 29
6Z. Real Property............................................ 30
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLERS............ 30
7A. Power and Authority. .................................... 31
7B. Authorization; No Breach. ............................... 31
7C. Title to Shares.......................................... 31
7D. Brokerage................................................ 31
7E. Litigation, etc. ........................................ 32
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SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......... 32
8A. Organization, Power and Authority. ...................... 32
8B. Authorization; No Breach. ............................... 32
8C. Consents................................................. 32
8D. Brokerage................................................ 33
8E. Bank Financing........................................... 33
8F. Investment Representations............................... 33
SECTION 9. INDEMNIFICATION AND OTHER AGREEMENTS..................... 33
9A. Survival of Representations and Warranties............... 33
9B. General Indemnification. ................................ 34
SECTION 10. DEFINITIONS.............................................. 37
SECTION 11. TERMINATION.............................................. 44
11A. Conditions of Termination................................ 44
11B. Effect of Termination.................................... 44
SECTION 12. MISCELLANEOUS................................................. 45
12A. Fees and Expenses........................................ 45
12B. Remedies................................................. 45
12C. Consent to Amendments; Waivers........................... 45
12D. Successors and Assigns................................... 45
12E. Severability............................................. 46
12F. Counterparts............................................. 46
12G. Descriptive Headings; Interpretation..................... 46
12H. Entire Agreement......................................... 46
12I. No Third-Party Beneficiaries............................. 46
12J. Cooperation on Tax Matters............................... 46
12K. Schedules and Exhibits................................... 47
12L. GOVERNING LAW............................................ 47
12M. Notices.................................................. 47
12N. Jurisdiction and Venue................................... 48
12O. Waiver of Right to Jury Trial............................ 49
12P. No Strict Construction................................... 49
12Q. Dispute Resolution....................................... 49
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EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A - Adjustment Escrow Agreement
Exhibit B - Indemnity Escrow Agreement
Exhibit C - Opinion of the Sellers' Counsel
Exhibit D - Opinion of the Purchaser's Counsel
Exhibit E - Commitment Letter
Disclosure Schedules (with Section references):
Exclude Asset Schedule - 1B
Exceptions to GAAP Schedule - 1E(ii)
Consents Schedule - 2D, 6D
Real Property Schedule - 2I, 6Z
Affiliates Schedule - 2O
Foreign Qualifications Schedule - 6A
Capitalization Schedule - 6B
Authorization Schedule - 6C
Consents Schedule - 6D
Financial Statements Schedule - 6E
Disclosed Liabilities Schedule - 6F
Product Warranty Schedule - 6I
Indebtedness Schedule - 6L
Developments Schedule - 6M
Liens Schedule - 6N
Tax Schedule - 6O
Contracts Schedule - 6P
Intellectual Property Schedule - 6Q
Litigation Schedule - 6R
Brokerage Schedule - 6S, 7D
Insurance Schedule - 6T
Employees Schedule - 6U
Employee Benefits Schedule - 6V
Compliance Schedule - 6W(a)
Permits Schedule - 6W(b)
Environmental Schedule - 6X
Affiliate Transactions Schedule - 6Y
Real Property - 6Z
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
February 26, 1999, by and among Sleepmaster L.L.C., a New Jersey limited
liability company (or one or more of its affiliates, the "Purchaser"), Xxxx
Manufacturing Company, a Pennsylvania corporation (the "Company"), and the
stockholders listed on the Seller signature page attached hereto (collectively,
the "Sellers" and individually a "Seller"). Capitalized terms used herein and
not otherwise defined herein have the meanings given to such terms in Section 10
below.
WHEREAS, as of the date hereof, the Sellers collectively own
all of the outstanding capital stock of the Company (the "Shares");
WHEREAS, subject to the terms and conditions set forth herein,
the Purchaser desires to purchase the Shares from the Sellers, and the Sellers
desire to sell the Shares to the Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and understandings herein contained, the receipt and sufficiency of
which is hereby acknowledged, the Parties hereby agree as follows:
SECTION 1 PURCHASE AND SALE
1A. Purchase and Sale of the Shares. At the Closing, subject
to the terms and conditions set forth in Sections 2 and 3 below, as applicable,
the Purchaser shall purchase from the Sellers, and the Sellers shall sell,
convey, assign, transfer, and deliver to the Purchaser, all of the Shares free
and clear of any Liens.
1B. Purchase Price. The aggregate purchase price for the
Shares will be $24,685,000, subject to adjustment as provided in Section 1D plus
the forgiveness of the note from Xxxxxx X. Xxxx and Xxxx X. Xxxx, III to the
Company in the amount of $542,913.17 in connection with the sale of the life
insurance policies described on the Excluded Asset Schedule 1B (the "Purchase
Price"). The Purchase Price shall be payable as described in Section 1C below.
1C. The Closing. The closing of the purchase and sale of the
Shares and the transactions relating thereto (collectively, the "Closing") will
take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, xx at such other place as the Purchaser may specify by notice to the
Sellers, commencing at 9:00 a.m. local time on February 26, 1999, or, if any of
the conditions to Closing set forth in Sections 2 and 3 below have not been
satisfied or waived by the Party entitled to the benefit thereof on or prior to
such date, on the third business day following satisfaction or waiver of such
conditions. The date and time of the Closing are referred to as the "Closing
Date." At the Closing, subject to the satisfaction or waiver of each of the
conditions specified in Sections 2 and 3 below:
(i) The Purchaser will deliver one million dollars
($1,000,000) (the "Adjustment Escrow Fund") to The First National Bank of
Chicago, escrow agent (the "Escrow Agent") as security for any liability of the
Sellers pursuant to the purchase price adjustment in Section 1D
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below. The Adjustment Escrow Fund shall be held by the Escrow Agent pursuant to
the terms and conditions of the Adjustment Escrow Agreement.
(ii) The Purchaser will deliver $1.5 million dollars
($1,500,000) (the "Indemnity Escrow Fund") to the Escrow Agent as security for
any amounts owed to the Purchaser pursuant to the indemnification provisions set
forth in Section 9B(i). The Indemnity Escrow Fund shall be held by the Escrow
Agent pursuant to the terms and conditions of the Indemnity Escrow Agreement,
and $500,000 plus the amount of any accrued interest and/or income, shall be
distributed on the first anniversary less the amount of any claims made prior to
such date in accordance with the terms and conditions of the Indemnity Escrow
Agreements.
(iii) The Purchaser will deliver the balance of the Purchase
Price (reduced pursuant to Section 1C(i) and (ii) above) by wire transfer of
immediately available funds to the account or accounts specified in writing by
the Company
(iv) The Company will deliver to the Purchaser the stock
certificates for all of the Shares of the Company endorsed in blank or
accompanied by duly executed assignment documents.
(v) The Purchaser will cause the Company to cancel the
indebtedness of Xxxx X. Xxxx, III and Xxxxxx X. Xxxx to the Company which is
evidenced by the promissory note described in Section 1B hereof, to xxxx said
note as "paid in full" on the face thereof, and to deliver the original of said
note to the makers thereof.
1D. Working Capital Purchase Price Adjustment. If the Target
Net Working Capital exceeds the Closing Net Working Capital (defined below),
then not later than the third business day after the Closing Net Working Capital
is finally determined pursuant to Section 1E below, the Sellers will pay to the
Purchaser, in proportion to their prior respective holdings in the Company, an
amount equal to such excess in immediately available funds to the account
specified by the Purchaser, which amount shall first be satisfied out of the
Adjustment Escrow Fund. If the Adjustment Escrow Fund does not cover the amount
of such payment, the Sellers will pay the balance of such payment in immediately
available funds to the account specified in writing by the Purchaser. If the
Closing Net Working Capital exceeds the Target Net Working Capital, then not
later than the third business day after the Closing Net Working Capital is
finally determined pursuant to Section 1E below, the Company will pay to a
representative designated in writing by the Sellers (the "Sellers'
Representative") an amount equal to such excess in immediately available funds
to the account specified by the Sellers' Representative. Any amount to be paid
pursuant to this Section 1D will be treated as an adjustment to the Purchase
Price for all purposes.
1E. Determination of Closing Net Working Capital.
(i) Definitions. The "Closing Net Working Capital" means the
Net Working Capital as of the close of business on the Closing Date, as
determined in accordance with Sections 1E(ii), (iii) and (iv) below.
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(ii) Closing Balance Sheet. On or before the 60th day after
the Closing Date, the Purchaser will prepare a balance sheet as of the close of
business on the Closing Date which shall be audited by PricewaterhouseCoopers
LLP (the "Purchaser's Accountant") (together with the related audit report of
such firm the "Closing Balance Sheet"), and which shall set forth a calculation
of the Closing Net Working Capital, and the Purchaser will deliver a copy of the
Closing Balance Sheet to the Sellers' Representative. Except as set forth on the
Exceptions to GAAP Schedule 1E(ii), the Closing Balance Sheet shall (x) be
prepared in accordance with GAAP consistent with the preparation of the
Company's audited financial statements as of December 31, 1998 and (y) fairly
present the financial position of the Company as of the Closing Date. During the
30-day period immediately following the Purchaser's delivery of the Closing
Balance Sheet, the Purchaser will provide the Sellers' Representative and the
Sellers' accountant access to the Company's records, and will use reasonable
efforts to provide the Sellers' Representative and the Sellers' accountant
access to the Purchaser's Accountant and the work papers of the Purchaser's
Accountant related to the preparation of the Closing Balance Sheet and the
calculation of the Closing Net Working Capital. On or prior to the 30th day
following Purchaser's delivery of the Closing Balance Sheet, the Sellers'
Representative may give the Purchaser a written notice stating in reasonable
detail the Sellers' objections (an "Objection Notice") to the Closing Balance
Sheet. Any Objection Notice shall specify in reasonable detail the dollar amount
of any objection and the basis therefor. Any determination expressly set forth
on the Closing Balance Sheet which is not specifically objected to in the
Objection Notice shall be deemed final and binding upon the Parties upon
delivery of the Objection Notice. If the Sellers' Representative does not give
the Purchaser an Objection Notice within such 30-day period, then the Closing
Balance Sheet will be conclusive and binding upon the Parties and the Closing
Net Working Capital set forth in the Closing Balance Sheet will constitute the
Closing Net Working Capital for purposes of Section 1D above.
(iii) Dispute and Amicable Resolution. If the Sellers'
Representative gives a timely Objection Notice as described in Section 1E(ii)
above, then the Purchaser and the Sellers' Representative will negotiate in good
faith to resolve their disputes regarding the Closing Balance Sheet.
(iv) Resolution by Independent Accounting Firm. If the
Purchaser and the Sellers' Representative are unable to resolve all disputes
regarding the Closing Net Working Capital on or prior to the 45th day after the
Objection Notice is given, then the Purchaser and the Sellers' Representative
will retain a firm of certified public accountants chosen randomly by lot from
among the "big five" accounting firms other than the Sellers' accountant and the
Purchaser's Accountant (the "Independent Accounting Firm") to determine the
Closing Net Working Capital as soon as practicable. The Independent Accounting
Firm shall only decide the specific items under dispute by the Parties and shall
determine the Closing Net Working Capital in accordance with the principles set
forth in this Agreement. The Closing Net Working Capital determined by the
Independent Accounting Firm will be conclusive and binding upon the Parties and
will constitute the Closing Net Working Capital for purposes of Section 1D
above. The fees and expenses of the Independent Accounting Firm in connection
with its determination of the Closing Net Working Capital will be paid one-half
by the Sellers and one-half by the Purchaser.
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(v) Instructions to Escrow Agent. Upon the final determination
of the Closing Net Working Capital, the Purchaser and the Sellers'
Representative agree to prepare, execute and deliver joint written instructions
to the Escrow Agent (pursuant to the terms of the Adjustment Escrow Agreement)
with respect to the distribution of the entire Adjustment Escrow Fund.
1F. Income Tax Purchase Price Adjustment. If the Closing Tax
Liability exceeds the Prepaid Taxes (both defined in Section 1G below), then not
later than the third business day after the determination that the Closing Tax
Liability exceeds the Prepaid Taxes, the Sellers will pay to the Company, in
proportion to their prior respective holdings in the Company, an amount equal to
such excess in immediately available funds to the account specified by the
Purchaser, which amount shall first be satisfied out of the Indemnity Escrow
Fund. If the Indemnity Escrow Fund does not cover the amount of such payment,
the Sellers will pay the balance of such payment in immediately available funds
to the account specified in writing by the Company. If the Prepaid Taxes exceed
the Closing Tax Liability, then not later than the third business day after the
later of (i) the determination of the Closing Tax Liability or (ii) the receipt
by the Company in cash from the relevant taxing authority of the amount
constituting the Prepaid Taxes (or the use by the Company of the Prepaid Taxes
as an offset against other liabilities owed by the Company), the Company will
pay to the Sellers' Representative an amount equal to such excess in immediately
available funds to the account specified by the Sellers' Representative. Any
amount to be paid pursuant to this Section 1F will be treated as an adjustment
to the Purchase Price for all purposes.
1G. Operative Rules.
(i) The "Closing Tax Liability" means the aggregate Tax
liability of the Company for both federal income Taxes and state income Taxes,
as shown on all Tax Returns prepared and filed pursuant to Section 5C of this
Agreement. If the Company must file a federal or state income Tax Return that
includes but does not end on the Closing Date (a "Straddle Return"), then
Closing Tax Liability shall include only the portion of the Tax shown on that
Straddle Return allocable to the period ending on the Closing Date pursuant to
Section 5C.
(ii) "Prepaid Taxes" means, without duplication, (a) the
amount shown as "Prepaid taxes" on the Closing Balance Sheet as an asset of the
Company and, to the extent not included in the "Prepaid taxes" line item on the
Closing Balance Sheet, (b) all payments made by the Company (whether as
estimated payments or through the crediting of amounts otherwise owed to the
Company) prior to the Closing Date that reduce the amount the Company must pay
in order to satisfy its Closing Tax Liability.
(iii) Any payment made pursuant to Section 1F above shall not
reduce any payment or affect a Party's right to receive a payment pursuant to
Section 9 of this Agreement if any amount is determined to be owed pursuant to
the provisions of Section 9 of this Agreement.
SECTION 2 CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT THE
CLOSING. The obligation of the Purchaser to take the actions set forth in
Section 1 above is subject to the satisfaction as of the Closing of the
following conditions:
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2A. Representations and Warranties; Covenants. The
representations and warranties contained in Sections 6 and 7 hereof shall be
true and correct in all material respects at and as of the date hereof and as of
the Closing Date, and the Company and the Sellers shall have performed in all
material respects all of the covenants required to be performed by the Company
and the Sellers hereunder prior to the Closing.
2B. Opinion of the Sellers' Counsel. The Purchaser shall have
received from Barley, Snyder, Xxxxx & Xxxxx, LLC, counsel for the Company, an
opinion with respect to the matters set forth in Exhibit C attached hereto,
which shall be addressed to the Purchaser, and dated as of the Closing Date.
2C. Litigation. No suit, action or other proceeding, or
injunction, order, decree or judgment relating thereto, shall be threatened or
shall be pending in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the transactions contemplated hereby
or that would reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
2D. Consents and Approvals. The Company shall have made all
filings and shall have obtained and delivered to the Purchaser all governmental
and/or third party permits, authorizations, consents and approvals required to
be obtained by the Company to consummate the transactions contemplated by this
Agreement (the "Consents") as set forth on the Consents Schedule 2D and the
Purchaser shall have received any governmental and/or third party consents or
approvals required to be obtained in connection with the transactions
contemplated hereby, including the consents of Serta, Inc. and its stockholders.
All applicable waiting periods under the HSR Act shall have expired or been
terminated.
2E. Escrow Agreements. Each of the Sellers' Representative,
the Purchaser and the Escrow Agent will have executed and delivered the
Adjustment Escrow Agreement and the Indemnity Escrow Agreement (together, the
"Escrow Agreements") and the Escrow Agreements shall be in full force and effect
as of the Closing and shall not have been amended or modified.
2F. Material Adverse Change. Since December 31, 1998, there
shall not have occurred any material adverse change including any litigation in
the business, assets, condition (financial or otherwise), results of operations,
cash flows, or prospects of the Company.
2G. Intentionally Omitted.
2H. Employment and Noncompetition Arrangements. The Company
shall have entered into employment and/or noncompetition arrangements with
certain key members of management in form and substance satisfactory to the
Purchaser, including employment agreements with each of Xxxx X. Xxxx, III and
Xxxxxx X. Xxxx, and such employment and/or noncompetition arrangements shall be
in full force and effect as of the Closing and shall not have been amended or
modified.
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2I. Real Estate Matters.
(i) A title insurance company selected by the Purchaser (the
"Title Company") shall be willing to insure at standard rates the Company's
marketable title in and to the Owned Real Property in fee simple, the Company's
leasehold estate in any financable Leased Real Property (a "Financable
Leasehold"), and the Purchaser's lender's ("Lender") mortgage lien on the Owned
Real Property and each Financable Leasehold, in each case free and clear of all
Liens except for Permitted Liens and including such endorsements and affirmative
coverages as the Purchaser and Lender shall reasonably require (including
non-imputation endorsements). The Sellers shall provide all such affidavits and
indemnities as the Title Company reasonably shall require in order to afford
such coverages; provided, that the Purchaser shall bear the cost of obtaining
such title insurance.
(ii) The Purchaser shall have received a survey of each Owned
Real Property and each Leased Real Property to which the Company holds a
Financable Leasehold, in each case conforming to the Minimum Standard Detail
Requirements jointly established and approved in 1992 by ALTA and ACSM,
certified to the Company, the Lender, the Purchaser and the Title Company and
showing no Liens except for Permitted Liens. The Purchaser shall bear the cost
of obtaining such surveys.
(iii) All Real Property shall be in substantially the same
condition and repair as that on the date of this Agreement, reasonable wear and
tear excepted.
(iv) The Purchaser shall have received from each Seller an
affidavit (a) stating under penalties of perjury that such Seller is not a
"foreign person," as defined in Section 1445(f)(3) of the Internal Revenue Code,
(b) setting forth such Seller's taxpayer identification number, and (c) granting
Purchaser permission to furnish a copy of such affidavit to the Internal Revenue
Service.
2J. Closing Documents. At the Closing, the Company and the
Sellers shall have delivered to the Purchaser all of the following:
(i) a certificate of an officer of the Company, dated as of
the Closing Date stating that the conditions specified in Sections 2A, 2C, 2D,
2E, 2F and 2O have been fully satisfied;
(ii) all existing minute books, stock transfer records,
corporate seals and other materials relating to the Company's respective
corporate administration which are in the possession of the Company, the Sellers
or any Affiliate of the Sellers;
(iii) good standing certificates of the Company from its
jurisdiction of incorporation and each jurisdiction in which the Company is
qualified to do business as a foreign corporation, in each case dated within 5
days prior to the Closing Date;
(iv) a waiver and termination of the Shareholders Agreement;
(v) copies of all Consents; and
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(vi) such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or its special counsel may
reasonably request.
2K. Financing. The Purchaser shall have received the cash
proceeds of the financing transactions necessary in order to consummate the
transactions contemplated hereby and to fund the ongoing working capital needs
of the Company, all on terms and conditions satisfactory to the Purchaser.
2L. Fees and Expenses. The Sellers shall timely pay any and
all real property transfer, transfer gains, documentary, sales, use, stamp,
registration and other such taxes and fees, if any, assessed in connection with
the transactions contemplated by this Agreement and shall deliver to the
Purchaser evidence satisfactory to Purchaser and the Title Company of the
payment of such taxes.
2M. Resignation of Directors. The Company and the Purchaser
shall have received the resignation of all of the directors of the Company.
2N. Release of Liens. The Company shall have obtained releases
of all Liens (other than any Permitted Liens) relating to the assets and
properties of the Company and shall have delivered satisfactory evidence, as
determined by the Purchaser, of such releases to the Purchaser.
2O. Transactions with Affiliates. All transactions, agreements
or other arrangements between the Company and any of its Affiliates or any of
the Sellers, other than as set forth on the Affiliates Schedule 2O, this
Agreement and the Employment and Stock Purchase Agreements, shall have been
terminated.
2P. Waiver. Any condition specified in this Section 2 may be
waived if consented to in writing by the Purchaser.
SECTION 3 CONDITIONS OF THE SELLERS' OBLIGATIONS AT THE
CLOSING. The obligation of each of the Sellers to take the actions set forth in
Section 1 above is subject to the satisfaction as of the Closing of the
following conditions:
3A. Representations and Warranties; Covenants. The
representations and warranties contained in Section 8 hereof shall be true and
correct in all material respects at and as of the date hereof and as of the
Closing Date, and the Purchaser shall have performed in all material respects
all of the covenants required to be performed by the Purchaser prior to the
Closing.
3B. Escrow Agreements. Each of the Purchaser, the Sellers'
Representative and the Escrow Agent will have executed and delivered the Escrow
Agreements, and the Escrow Agreements shall be in full force and effect as of
the Closing and shall not have been amended or modified.
3C. Employment Agreements. The Company shall have entered into
employment agreements in form and substance satisfactory to the Purchaser with
each of Xxxx X. Xxxx, III and
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Xxxxxx X. Xxxx and such employment agreements shall be in full force and effect
as of the Closing and shall not have been amended or modified.
3D. Litigation. No suit, action or other proceeding, or
injunction, order, decree or judgment relating thereto, shall be threatened or
shall be pending in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the transactions contemplated hereby
and no injunction, judgment, order, decree or ruling with respect thereto shall
be in effect.
3E. Opinion of the Purchaser's Counsel. The Sellers shall have
received from Xxxxxxxx & Xxxxx, special counsel to the Purchaser, an opinion
with respect to the matters set forth in Exhibit D attached hereto, which shall
be addressed to the Sellers and dated as of the Closing Date.
3F. Closing Documents. At the Closing, the Purchaser shall
have delivered to the Sellers a certificate of an officer of the Purchaser,
dated the Closing Date, stating that the conditions specified in Section 3A
shall have been fully satisfied.
3G. HSR Act. All applicable waiting periods under the HSR Act
shall have been expired or been terminated.
3H. Waiver. Any condition specified in this Section 3 may be
waived if consented to in writing by the Sellers.
SECTION 4 PRE-CLOSING COVENANTS AND AGREEMENTS. Each of the
Parties agrees as follows with respect to the period between the date of this
Agreement and the Closing:
4A. Best Efforts; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its
commercially reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement and to fulfill all of the
conditions set forth in Sections 2 and 3 above and the execution and delivery of
the agreements and instruments contemplated hereby to be executed and delivered
at the Closing. In the event any claim, action, suit, investigation or other
proceeding by any Governmental Authority or other Person is commenced which
questions the validity or legality of the transactions contemplated hereby or
seeks damages in connection therewith, the Parties agree to cooperate and use
commercially reasonable best efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order is issued
in any such action, suit or other proceeding, to use commercially reasonable
best efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby.
4B. Third Party Notices and Consents. The Sellers shall and
shall cause the Company to use their respective best efforts to (i) give
required notices to third parties, (ii) obtain any required Consents (including
the consents of Serta, Inc. and its stockholders), and (iii) take any
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actions reasonably required by any third party, in each case in connection with
the matters contemplated by this Agreement.
4C. Operation of Business. The Company shall, and the Sellers
shall cause the Company to, operate its business only in the usual and ordinary
course of business consistent with past custom and practice and in accordance
with all Laws and will preserve the goodwill and organization of its business
and the relationships with its customers, suppliers, employees and other Persons
having business relations with the Company. Without limiting the generality of
the foregoing, prior to the Closing, without the prior written consent of the
Purchaser, the Company and each of the Sellers covenant that:
(i) the Company shall not, and each of the Sellers shall cause
the Company to not, directly or indirectly, except as expressly contemplated by
this Agreement, take or omit to take any action that would require disclosure
under Section 6M below or that would otherwise result in a breach of any of the
representations, warranties or covenants made by the Company or the Sellers in
this Agreement; and
(ii) the Company will, and each of the Sellers shall cause the
Company to, use its commercially reasonable best efforts to (1) preserve intact
the organization and goodwill of the Company, (2) keep available the services of
each of its officers, employees and sales representatives, and (3) maintain
satisfactory relationships with each of its material suppliers and customers.
(iii) the Company shall not, and each of the Sellers shall
cause the Company to not, sell, assign, transfer, lease, license, or abandon any
of its assets, tangible or intangible, except the life insurance policies listed
on the audited consolidated balance sheets of the Company as of December 31,
1998 or in the ordinary course of business consistent with past custom and
practice for a fair consideration.
4D. Full Access. The Company shall, and each of the Sellers
shall cause the Company to, afford, and cause its affiliates, officers,
directors, employees, attorneys, accountants, advisors and other agents (the
"Company Personnel") to afford, to the Purchaser, its financing sources and the
Purchaser's accounting, legal and other representatives full and complete access
at all reasonable times to all premises, properties and Company Personnel of the
Company and to all business, financial, legal, real estate, tax, compensation
and other data and information (including all books, records, contracts,
customer lists, other documents and records and any working papers of the
Company Personnel) concerning the Company and its affairs and operations as
requested by the Purchaser or its representatives or agents.
4E. Press Release and Announcements. None of the Company, the
Sellers or any of their respective representatives shall make any public
announcement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the Purchaser. The foregoing
notwithstanding, any such public announcement may be made if required by
applicable law or a securities exchange rule, provided that the Party required
to make such public announcement shall confer with the other Parties concerning
the timing and content of such public announcement before the same is made.
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4F. HSR Act. In connection with the transactions contemplated
by this Agreement, the Parties shall comply promptly with the notification and
reporting requirements of the HSR Act and use all commercially reasonable best
efforts to obtain early termination of the waiting period under the HSR Act. The
Parties shall substantially comply with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by any antitrust authority.
4G. Compliance with Agreements and Laws. The Company shall,
and each of the Sellers shall cause the Company to, (i) comply with all material
obligations pursuant to any contract or agreement, whether oral or written,
express or implied and (ii) comply in all material respects with all applicable
Laws. Without limiting the generality of the foregoing, each of the Sellers
shall cause the Company to, comply in all material respects with all
Environmental and Safety Requirements and all permits, licenses or other
authorizations issued thereunder; respond in accordance with applicable law to
any Release or threatened Release of any hazardous material, substance or waste
in a manner which complies in all material respects with all Environmental and
Safety Requirements; and provide such documents or information, or conduct at
its own cost such studies or assessments, relating to matters arising under
Environmental and Safety Requirements as the Purchaser may reasonably request.
4H. Payment of Obligations. The Company shall, and each of the
Sellers shall cause the Company to, pay and discharge when payable all Taxes,
assessments and governmental charges imposed upon its properties or upon the
income or profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all claims for labor, materials or
supplies.
4I. Notice of Material Developments. Each Party shall give
prompt written notice to the other Parties of (i) any variances in any of its
representations or warranties contained in this Agreement, (ii) any breach of
any covenant hereunder by such Party, and (iii) any other material development
which would render any of the conditions in Section 2 or 3 incapable of being
satisfied.
4J. Exclusivity. None of the Company, the Sellers or any of
their respective representatives, officers, directors, agents, stockholders or
Affiliates (all such persons and entities, the "Company Group") shall directly
or indirectly initiate, solicit, entertain, negotiate, accept or discuss any
proposal or offer (an "Acquisition Proposal") to acquire all or any significant
part of the Company, whether by merger, purchase of stock, purchase of assets,
tender offer or otherwise (a "Third Party Acquisition"), or provide any
nonpublic information to any third party in connection with an Acquisition
Proposal or a Third Party Acquisition, or enter into any agreement, arrangement
or understanding requiring the Company or any Seller to abandon, terminate or
fail to consummate the transactions contemplated under this Agreement. The
Company shall (i) immediately notify the Purchaser if any member of the Company
Group receives any indication of interest, request for information or offer in
respect of an Acquisition Proposal, (ii) communicate to the Purchaser in
reasonable detail the terms of any such indication, request or proposal, and
(iii) provide the Purchaser with copies of all written communications relating
to any such indication, request or proposal. The Company and the Sellers
represent that no member of the Company Group is party to or bound by any
agreement with respect to an Acquisition Proposal or a Third Party Acquisition
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other than under this Agreement and the members of the Company Group have
terminated all discussions with third parties (other than the Purchaser)
regarding Acquisition Proposals or Third Party Acquisitions. The Company and the
Sellers shall use their best efforts to cause each other member of the Company
Group to comply with the provisions of this Section 4J. In the event that any of
the Company or the Sellers breaches the provisions of this Section 4J and the
transactions contemplated hereby are not consummated for any reason (other than
as a direct result of a breach of this Agreement by the Purchaser in the absence
of any breach of this Agreement by the Company or the Sellers), the Company
and/or the Sellers shall promptly reimburse the Purchaser and its Affiliates for
all out-of-pocket fees and expenses incurred before or after the date of this
Agreement by the Purchaser and its Affiliates related to the transactions
contemplated hereby, including fees and expenses of legal counsel, accountants
and other consultants and advisors retained by the Purchaser in connection with
the transactions contemplated hereby. The foregoing provisions are in addition
to, and not in derogation of, any statutory or other remedy that the Purchaser
may have for a breach of this Section 4J.
4K. Certain Pre-Closing Tax Matters. Except as expressly
contemplated by this Agreement, without the prior written consent of the
Purchaser, neither the Sellers nor the Company shall make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Tax Return, enter into any closing agreement, settle
any Tax claim or assessment relating to the Company, surrender any right to
claim a refund of Taxes, consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment relating to the Company, fail
to timely file any Tax Return, take a position on a Tax Return not in keeping
with prior practice or take any other similar action, or omit to take any action
relating to the filing of any Tax Return or the payment of any Tax, if such
election, adoption, change, amendment, agreement, settlement, surrender, consent
or other action or omission could have the effect of increasing the present or
future Tax liability or decreasing any present or future Tax asset of the
Company or the Purchaser.
SECTION 5 POST-CLOSING COVENANTS AND AGREEMENTS.
5A. Confidentiality. In consideration of the mutual covenants
contained herein, each of the Sellers agrees that, for all times after the
Closing Date, except as required by law or court order, he or she shall not,
directly or indirectly, disclose to any unauthorized Person or use for his or
her own account any Confidential Information unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of such Seller's acts or omissions to act. Each of
the Sellers further agrees to use his or her commercially reasonable best
efforts and diligence to safeguard the Confidential Information and to protect
it against disclosure, misuse, espionage, loss or theft.
5B. Noncompete, Nonsolicitation.
(i) For a period of 5 years following the Closing Date (the
"Noncompete Period"), none of the Sellers shall directly or indirectly own,
operate, lease, manage, control, participate in, consult with, advise,
authorize, his name to be used by, provide services for, or in any manner engage
in (including by himself or in association with any person, firm, corporate or
other
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business organization or through any other entity) the manufacture or
distribution of mattresses, box springs, bedding products, or any products
competitive with such products within any geographical area in which the Company
Group has obtained or is in the process of obtaining a Serta license. Nothing
herein shall prohibit a Seller (x) from being a passive owner of not more than
2% of the outstanding stock of a corporation which is publicly traded, so long
as the Seller has no active participation in the business of such corporation or
(y) from owning an interest in the Company Group, or any part thereof. For the
avoidance of doubt, each of Xxxxxx X. Xxxx and Xxxx X. Xxxx, III acknowledge
that, in addition to his obligations pursuant to this Section 5B, he has agreed
to be bound by the provisions of Section 5 of the Xxxxxx Xxxx Employment
Agreement, with respect to Xxxxxx X. Xxxx, and the Xxxx Xxxx Employment
Agreement, with respect to Xxxx X. Xxxx, III.
(ii) During the Noncompete Period, none of the Sellers shall
directly or indirectly (x) induce or attempt to induce any employee of the
Company Group to leave the employ of the Company Group, or in any way interfere
with the relationship between the Company Group and any employee thereof,
including, inducing or attempting to induce any union, employee or group of
employees to interfere with the business or operations of the Company Group, (y)
hire any person who was an employee of the Company Group, or (z) induce or
attempt to induce any customer, supplier, distributor, franchisee, licensee or
other business relation of the Company Group to cease doing business with the
Company Group, or in any way interfere with the relationship between any such
customer, supplier, distributor, franchisee, licensee or business relation and
the Company Group.
(iii) Each of the Sellers agrees and acknowledges that: (a) the
covenants set forth in this Section 5B are reasonably limited in both time and
geographical scope and in all other respects, (b) the covenants set forth in
this Section 5B are reasonably necessary for the protection of the Company, (c)
the Purchaser would not have entered into this Agreement but for the covenants
of each of the Sellers contained herein, and (d) the covenants contained herein
have been made in order to induce the Purchaser to enter into this Agreement.
(iv) If, at the time of enforcement of this Section 5B, a
court shall hold that the duration, scope or area restrictions stated herein are
unreasonable under the circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(v) Each of the Sellers recognizes and affirms that in the
event of his breach of any provision of this Section 5B, money damages would be
inadequate and the Purchaser and the Company Group would have no adequate remedy
at law. Accordingly, each of the Sellers agrees that in the event of a breach or
a threatened breach by any such Seller of any of the provisions of this Section
5B, the Purchaser and the Company Group, in addition and supplementary to other
rights and remedies existing in their favor, may apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the provisions
hereof (without posting a bond or other security).
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5C. Certain Post-Closing Tax Matters. The Company shall
prepare, or cause to be prepared, and file, or cause to be filed, any Tax
Returns of the Company for Tax periods which end on or before the Closing Date
and which have not been filed as of the Closing Date. The Company shall prepare,
or cause to be prepared, and file, or cause to be filed, any Tax Returns of the
Company for Tax periods which begin before the Closing Date and end after the
Closing Date. The Company shall permit the Sellers to review and comment on each
such Tax Return described in the preceding sentence prior to filing. The Sellers
shall pay to the Company within ten days following the date on which Taxes are
paid with respect to the Tax periods described in the first two sentences of
this Section 5C, an amount equal to the portion of such Taxes which relates to
the portion of such Tax periods ending on and including the Closing Date to the
extent such Taxes were not (i) included in the calculation of Prepaid Taxes as
defined in Section 1G(ii) or (ii) paid to the Company pursuant to Section 1F.
For purposes of this Section 5C, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates to the portion
of such Taxable period ending on the Closing Date shall (a) in the case of any
Taxes other than Taxes based upon or related to income or receipts, be deemed to
be the amount of such Tax for the entire Taxable period multiplied by a
fraction, the numerator of which is the number of days in the Taxable period
ending on and including the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (b) in the case of any Tax
based upon or related to income or receipts, be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Closing Date. Any
amount to be paid by the Sellers pursuant to this Section 5C shall be satisfied
first from the Indemnity Escrow Fund and then pursuant to the terms of Section 9
of this Agreement.
5D. Company Profit Sharing Plan. Except as may be otherwise
required by law or to maintain the qualified status of any employee benefit plan
maintained by the Company or the Purchaser, the Company shall maintain the Xxxx
Manufacturing Company Employees Profit Sharing Plan and Trust, as amended (the
"Plan"), for not less than 36 months following the Closing Date (the "Mandatory
Plan Maintenance Period"). The Company may, at its option, cause the Plan to be
terminated and liquidated at any time after the Mandatory Plan Maintenance
Period. At no time (during the Mandatory Maintenance Period or thereafter) shall
the Company Group or any member or affiliate thereof cause the Plan to be merged
or combined with any other employee benefit pension plan or cause any of the
Plan's assets to be transferred to or combined or commingled with any assets
whatsoever of those of any other Person (except for direct plan rollovers
elected by a Plan participant). At all times after the Closing, the Plan's sole
trustee shall be a corporate trustee with local offices appointed, at Closing
and then from time to time as necessary or desirable, by the Company. To the
extent permitted by law, all costs and fees associated with the Plan may be paid
from Plan assets. The Company may, but shall not be required to make
contributions to the Plan during the Mandatory Maintenance Period or thereafter.
SECTION 6 REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY.(1) As a material inducement to the Purchaser to enter into this
Agreement and to purchase the Shares
----------
(1) These representations and warranties remain subject to change based
upon the results of the Purchaser's due diligence review of the
Company.
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hereunder, the Company and each of the Sellers, jointly and severally, hereby
represent and warrant to the Purchaser that the following statements contained
in this Section 6 are correct and complete as of the date hereof:
6A. Organization, Corporate Power and Licenses. The Company is
a corporation duly organized, validly existing and in good standing under the
Laws of its state of incorporation and is duly authorized to conduct business in
every jurisdiction where such qualification is required, which such
jurisdictions are set forth on the Foreign Qualifications Schedule 6A attached
hereto. The Company possesses all requisite corporate power and authority and
all licenses, permits, and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to carry out the transactions contemplated by this
Agreement. The copies of the charter documents and bylaws which have been
furnished to the Purchaser reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete. The minute books
(containing the records of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books and
the stock record books of the Company are correct and complete.
6B. Capital Stock and Related Matters; Subsidiaries.
(i) As of immediately prior to the Closing, the authorized
capital stock of the Company consists of 2,000 shares of common stock, $100 par
value per share, of which 1022.5975 are issued and outstanding. The Shares
constitute all of the outstanding capital stock of the Company and are held
beneficially and of record by the Sellers (free and clear of all Liens) as set
forth on the Capitalization Schedule 6B attached hereto. The Capitalization
Schedule 6B attached hereto, also sets forth any securities convertible or
exchangeable for any equity securities of the Company and any options or other
rights to purchase equity securities of the Company and the amount and type of
such securities or options or rights held by such Persons as of the Closing Date
and immediately thereafter. The Company does not have outstanding (1) any stock
or securities convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor any rights or options to
subscribe for or to purchase its capital stock or (2) any stock or securities
convertible into or exchangeable for its capital stock or any stock appreciation
rights or phantom stock or similar plans or rights. The Company is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any warrants, options or other
rights to acquire its capital stock. As of the Closing and immediately
thereafter, all of the outstanding shares of the Company's capital stock shall
be validly issued, fully paid and nonassessable.
(ii) The Company has not violated any applicable federal or
state securities laws in connection with the offer, sale or issuance of any of
its capital stock or the offer, sale or issuance of any of its debt securities.
Except as set forth on the Capitalization Schedule 6B, there are no voting
trusts, proxies, or other agreements or understandings among the Company's
shareholders or any other Person with respect to the voting, transfer or
registration of the Company's capital stock or with respect to any other aspect
of the Company's affairs.
(iii) The Company does not have any Subsidiaries.
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6C. Authorization; No Breach. The Sellers' and the Company's
execution, delivery and performance of this Agreement and all other agreements
and instruments contemplated hereby to which such person is a party have been
duly authorized by such person. This Agreement constitutes a valid and binding
obligation of the Sellers and the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by (x) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (y) applicable equitable principles
(whether considered in a proceeding at law or in equity), and all other
agreements and instruments contemplated hereby to which the Company is a party,
when executed and delivered by the Company in accordance with the terms hereof,
shall each constitute a valid and binding obligation of the Company, enforceable
in accordance with its terms, except as such enforceability may be limited by
(a) applicable insolvency, bankruptcy, reorganization, moratorium or other
similar laws affecting creditors' rights generally and (b) applicable equitable
principles (whether considered in a proceeding at law or in equity). Except as
set forth on the attached Authorization Schedule 6C, the execution and delivery
by the Sellers and the Company of this Agreement and all other agreements and
instruments contemplated hereby to which any such person is a party, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under (whether
with or without the passage of time, the giving of notice or both), (iii) result
in the creation of any Lien upon the Company's capital stock or assets pursuant
to, (iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or notice or declaration to, the
articles of incorporation or bylaws of the Company, or any Law to which the
Company is subject, or any order, judgment or decree or any material agreement
or instrument to which the Company is subject. The Company is not a party to or
bound by any written or oral agreement or understanding with respect to an
Acquisition Proposal or a Third Party Acquisition other than this Agreement, and
all of them have terminated all discussions with third parties (other than the
Purchaser) regarding Acquisition Proposals or Third Party Acquisitions.
6D. Consents. No consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Entity or other third
party is necessary for the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby, except for
applicable requirements of the HSR Act or as set forth on the attached Consents
Schedule 6D.
6E. Financial Statements. Attached hereto as the Financial
Statements Schedule 6E are the audited balance sheet of the Company as of
December 31, 1998 (the "December 31 Balance Sheet") and the audited balance
sheets of the Company as of December 31, 1995, December 31, 1996, and December
31, 1997 and the related statements of combined income and cash flows (or the
equivalent) for the respective twelve-month periods then ended.
Except as set forth on the Financial Statements Schedule 6E, all of the
foregoing financial statements (including in all cases the notes thereto, if
any) are correct and complete and are consistent with the books and records of
the Company (which books and records are correct and complete) and fairly
present the financial condition, operating results and cash flows of the Company
and have been
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prepared in accordance with GAAP consistently applied throughout such financial
statements and the periods covered thereby.
6F. Absence of Undisclosed Liabilities. Except as set forth on
the attached Disclosed Liabilities Schedule 6F, the Company has no obligation or
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the date hereof, or any action or
inaction at or prior to the date hereof, or any state of facts existing at or
prior to the date hereof (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, or demand
against the Company giving rise to any liability), other than: (i) liabilities
set forth on the liabilities side of the December 31 Balance Sheet (excluding
any notes thereto), (ii) liabilities and obligations which have arisen after the
date of the December 31 Balance Sheet in the ordinary course of business
consistent with past custom and practice (none of which is a liability resulting
from breach of contract, breach of warranty, tort, infringement, claim or
lawsuit) and (iii) other liabilities and obligations expressly disclosed on
Schedule 6F.
6G. Accounts Receivable. All notes and accounts receivable
reflected on the December 31 Balance Sheet and all notes and accounts receivable
to be reflected on the Closing Balance Sheet (net of allowances for doubtful
accounts as reflected thereon and as determined in accordance with GAAP
consistently applied with respect to each such financial statement) are or shall
be valid receivables arising in the ordinary course of business consistent with
past custom and practice, subject to no setoffs or counterclaims, and are
current and collectible.
6H. Inventory. The inventory of the Company consists of raw
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow moving, obsolete,
damaged, or defective, subject only to the reserve for inventory shown on the
December 31 Balance Sheet and the reserve inventory to be shown on the Closing
Balance Sheet (as determined in accordance with GAAP consistently applied with
respect to each such financial statement), and such inventory consists or shall
consist of a quantity and quality usable and saleable in the ordinary course of
business consistent with past custom and practice.
6I. Product Warranty. All products manufactured, sold, leased
or delivered by the Company have been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no liability (and there is no reasonable basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against it giving rise to any such liability) for replacement or repair
thereof or other damages in connection therewith in excess of past custom and
practice and experience. No products manufactured, sold, leased or delivered by
the Company and no services rendered by the Company are subject to any
Guarantee, warranty or other indemnity beyond the applicable standard terms and
conditions of such sale, lease or service. The attached Product Warranty
Schedule 6I includes copies of such standard terms and conditions of sale, lease
and service for the Company (containing applicable guaranty, warranty and
indemnity provisions).
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6J. Product Liability. The Company has no Liability (and there
is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or properly as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company.
6K. No Material Adverse Effect. Since December 31, 1998, there
has occurred no fact, event or circumstance which has had or would reasonably be
expected to have a Material Adverse Effect.
6L. Indebtedness. On December 31, 1998, all Indebtedness of
the Company was $1,263,252 and is described on the Indebtedness Schedule 6L.
None of such Indebtedness shall exist following the Closing.
6M. Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on the attached Developments
Schedule 6M, since December 31, 1998, the Company has conducted its business
only in the ordinary course of business consistent with past custom and
practice, and the Company has not:
(i) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities or rights
convertible, exchangeable or exercisable into any capital stock or other equity
securities;
(ii) incurred any Indebtedness, other than any Indebtedness
incurred in the ordinary course of business consistent with past custom and
practice;
(iii) discharged or satisfied any material Lien or paid any
material obligation or liability, other than current liabilities paid in the
ordinary course of business consistent with past custom and practice;
(iv) declared, set aside or made any payment or distribution
of cash or other property to the Sellers with respect to their capital stock or
other equity securities or purchased, redeemed or otherwise acquired any shares
of its capital stock or other equity securities (including any warrants, options
or other rights to acquire its capital stock or other equity securities);
(v) mortgaged or pledged or imposed any security interest upon
any of its properties or assets, tangible or intangible, or subjected them to
any Lien, except Permitted Liens;
(vi) sold, assigned, transferred, leased, licensed or
abandoned any of its assets, tangible or intangible (including the Intellectual
Property Rights), except the sale of the life insurance policies listed on the
Excluded Asset Schedule 1B to Xxxxxx X. Xxxx and Xxxx X. Xxxx, III or other than
in the ordinary course of business consistent with past custom and practice for
a fair consideration;
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(vii) made or granted any bonus or any wage or salary
increase or made any other change in employment to any director, officer,
employee or group of employees (except as required by pre-existing contracts
described on the attached Contracts Schedule 6P), or made or granted any
increase in any bonus, profit sharing, incentive, severance, or other employee
benefit plan, contract or arrangement, or amended or modified or terminated any
existing employee benefit plan or arrangement or adopted any new employee
benefit plan or arrangement;
(viii) entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contracts or agreements;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $50,000;
(x) delayed, postponed or cancelled the payment of any
accounts payable or any other liability or obligation or agreed or negotiated
with any party to extend the payment date of any accounts payable or accelerated
the collection of any accounts or notes receivable;
(xi) made any loans or advances to, Guarantees for the benefit
of, or any Investments in, any Persons or formed any Subsidiary;
(xii) suffered any damage, destruction or casualty loss
exceeding in the aggregate $25,000, whether or not covered by insurance, or
experienced any material changes in the amount and scope of insurance coverage;
(xiii) made any change in any method of accounting or
accounting policies, other than those required by GAAP which have been disclosed
in writing to the Purchaser, or made any write-down in the value of its
inventory that is other than in the ordinary course of business consistent with
past custom and practice;
(xiv) directly or indirectly engaged in any transaction, made
any loan to or entered into any arrangement with any officer, director, partner,
shareholder, employee or other Affiliate of the Company, except as in the
ordinary course of business consistent with past custom and practice;
(xv) except as contemplated hereby, amended its articles of
incorporation, bylaws or other organizational documents;
(xvi) granted any license or sublicense of any rights under or
with respect to any Intellectual Property Rights;
(xvii) cancelled, compromised, waived, or released any right
or claim (or series of related rights and claims) involving more than $25,000;
(xviii) entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $10,000;
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(xix) accelerated, terminated, modified, or cancelled any
agreement, contract or license (or series of related agreements, contracts, or
licenses) involving more than $10,000 to which the Company is a party or by
which it is bound;
(xx) experienced any other occurrence, event, incident, or
taken any action or omitted to take any action which would have a Material
Adverse Effect; or
(xxi) agreed, whether orally or in writing, to do any of the
foregoing.
6N. Assets.
(i) Except as set forth on the Liens Schedule 6N attached
hereto, the Company has good and valid title to, or a valid leasehold interest
in, the properties and assets, tangible or intangible, used by it, located on
its premises or shown on the December 31 Balance Sheet or acquired thereafter,
free and clear of all Liens, except for (a) properties and assets disposed of in
the ordinary course of business consistent with past custom and practice since
the December 31 Balance Sheet and (b) Permitted Liens.
(ii) The Company owns, has a valid leasehold interest in, or
has a valid license to use, all the assets, properties and rights, whether
tangible or intangible, necessary for the conduct of its business as presently
conducted and as presently proposed to be conducted.
6O. Tax Matters.
(i) Except as set forth on the attached Taxes Schedule 6O:
(a) the Company has filed all Tax Returns which it is
required to file under applicable laws and regulations, and all such
Tax Returns are complete and correct and have been prepared in
compliance with all applicable laws and regulations;
(b) the Company has paid all Taxes due and owing by it
(whether or not such Taxes are shown or required to be shown on a Tax
Return) and has withheld and paid over to the appropriate taxing
authority all Taxes which it is required to withhold from amounts paid
or owing to any employee, shareholder, creditor or other third party;
(c) the Company has not waived any statute of limitations
with respect to any Taxes or agreed to any extension of time for filing
any Tax Return which has not been filed; and the Company has not
consented to extend to a date later than the date hereof the period in
which any Tax may be assessed or collected by any Taxing Authority;
(d) the accrual for Taxes on the December 31 Balance Sheet
would be adequate to pay all Tax liabilities of the Company if its
current tax year were treated as ending on the date of such balance
sheet (excluding any amount recorded which is attributable solely to
timing differences between book and Tax income) and the Company is
entitled to the entire amount of and has made proper claim for any
refund of Taxes either
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included in the computation of Net Working Capital or included in the
December 31 Balance Sheet, whether as a receivable, a prepaid expense,
or as a reduction of a liability;
(e) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted
with respect to the Company;
(f) there are no material unresolved questions or claims
concerning the Company's Tax liability;
(g) no claim has ever been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns that the
Company so not filing is or may be subject to Taxes assessed by such
jurisdiction or a filing requirement in that jurisdiction;
(h) the Company has never been a member of an Affiliated
Group or filed or been included in a combined, consolidated or unitary
income Tax Return, other than for an Affiliated Group of which the
Company is the common parent corporation;
(i) the Company is not a party to or bound by any Tax
allocation or Tax sharing agreement;
(j) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of the Company; and
(k) the Company shall not be required to (i) as a result
of a change in method of accounting for a taxable period ending on or
prior to the Closing Date, include any adjustment in taxable income for
any taxable period (or portion thereof) ending after the Closing Date,
(ii) as a result of any "closing agreement," as described in Section
7121 of the Code (or any similar provision of state, local or foreign
income Tax law), include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date, (iii) as a result of any sale
reported on the installment method where such sale occurred on or prior
to the Closing Date, include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date, or (iv) as a result of any
prepaid amount received on or prior to the Closing Date, include any
item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the
Closing Date.
(ii) The Company:
(a) has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code;
(b) has never made an election under Section 341(f) of the
Code; or
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(c) is not liable for the Taxes of another Person that is
not currently a member of the Affiliated Group of which the Company is
the common parent corporation (1) under Treasury Regulation Section
1.1502-6 (or comparable provisions of state, local or foreigN law), (2)
as a transferee or successor, or (3) by contract or indemnity or
otherwise; or
(d) has not made, is not obligated to make and is not
party to an agreement which under certain circumstances could obligate
it to make payments which will not be deductible under Section 280G of
the Code (or any similar provision of state, local or foreign income
Tax law).
6P. Contracts and Commitments.
(i) Except as expressly contemplated by this Agreement or as
set forth on the attached Contracts Schedule 6P, the Company is not a party to
or bound by any written or oral:
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to its current or former directors, officers or employees
or any other employee benefit plan, arrangement or practice, whether
formal or informal;
(b) collective bargaining agreement or any other contract
with any labor union, or severance agreements, programs, policies or
arrangements;
(c) management agreement or contract for the employment of
any officer, individual employee or other Person on a full-time,
part-time, consulting or other basis (i) providing annual cash or other
compensation in excess of $10,000, (ii) providing for the payment of
any cash or other compensation or benefits upon the consummation of the
transactions contemplated hereby or (iii) otherwise restricting its
ability to terminate the employment of any employee at anytime for any
lawful reason or for no reason without penalty or liability;
(d) contract or agreement involving any Governmental
Entity;
(e) agreement or indenture relating to borrowed money or
other Indebtedness or the mortgaging, pledging or otherwise placing a
Lien on any material asset or material group of assets of the Company
or any letter of credit arrangements;
(f) Guarantee, other than endorsements made for collection
in the ordinary course of business consistent with past custom and
practice;
(g) lease or agreement under which the Company is (i)
lessee of or holds or operates any personal property, owned by any
other party, except for any lease of personal property under which the
aggregate annual rental payments do not exceed $10,000 or (ii) lessor
of or permits any third party to hold or operate any property, real or
personal, owned or controlled by the Company;
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(h) contract or group of related contracts with the same
party or group of affiliated parties for the purchase or sale of raw
materials, commodities, supplies, products, equipment or other personal
property or services under which the undelivered balance since December
31, 1998 of such products and services has a selling price in excess of
$10,000;
(i) other contract or group of related contracts with the
same party or group of affiliated parties continuing over a period of
more than six months from the date or dates thereof, not terminable by
the Company upon 30 days' or less notice without penalty or involving
more than $10,000;
(j) contract relating to the marketing, sale, advertising
or promotion of its products;
(k) agreements relating to the ownership of, investments
in or loans and advances to any Person, including investments in joint
ventures and minority equity investments;
(l) license, royalty, indemnification or other agreement
with respect to any intangible property (including any Intellectual
Property Rights);
(m) broker, agent, sales representative, sales or
distribution agreement;
(n) power of attorney or other similar agreement or grant
of agency;
(o) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the world, including
any nondisclosure or confidentiality agreements; or
(p) other agreement which involves a consideration in
excess of $50,000 annually, whether or not in the ordinary course of
business consistent with past custom and practice.
(ii) All of the contracts, agreements and instruments set
forth or required to be set forth on the attached Contracts Schedule 6P (the
"Material Contracts") are valid, binding and enforceable in accordance with
their respective terms, except as such enforceability may be limited by (x)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (y) applicable equitable
principles (whether considered in a proceeding at law or in equity). Each of the
Material Contracts shall be in full force and effect without penalty in
accordance with its terms upon consummation of the transactions contemplated
hereby. The Company has performed all obligations required to be performed by it
and is not in default under or in breach of nor in receipt of any claim of
default or breach under any Material Contract; no event has occurred which with
the passage of time or the giving of notice or both would result in a default,
breach or event of noncompliance by the Company under any Material Contract; and
the Company has no knowledge of any breach or cancellation or anticipated breach
or cancellation by the other parties to any Material Contract to which they are
parties.
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(iii) The Purchaser has been supplied with a true and correct
copy of each written Material Contract, together with all amendments, waivers or
other changes thereto (all of which amendments, waivers or other changes thereto
are described on the attached Contracts Schedule 6P).
6Q. Intellectual Property Rights.
(i) The attached Intellectual Property Schedule 6Q contains a
complete and accurate list of all (a) patented and registered Intellectual
Property Rights owned or used by the Company, (b) pending patent applications
and applications for registrations of other Intellectual Property Rights filed
by the Company, (c) all computer software owned or used by the Company other
than commercially available software with a license fee of less than $1,000, and
(d) material unregistered trade names, corporate names, trademarks, service
marks and copyrights owned or used by the Company. The attached Intellectual
Property Schedule 6Q also contains a complete and accurate list of all licenses
or similar agreements relating to Intellectual Property Rights to which the
Company is a party, in each case identifying the subject Intellectual Property
Rights.
(ii) The Company owns all right, title and interest to, or has
the right to use pursuant to a valid and effective written license, all Company
Intellectual Property Rights. The Company Intellectual Property Rights comprise
all of the Intellectual Property Rights necessary and desirable for the
operation of the business of the Company as presently conducted and as presently
proposed to be conducted, free and clear of all Liens other than Permitted
Liens. No loss or expiration of any of the Company Intellectual Property Rights
is threatened, pending or reasonably foreseeable. The Company has taken all
commercially reasonable actions to maintain and protect the Company Intellectual
Property Rights. To the knowledge of the Company, the owners of any Intellectual
Property Rights licensed to the Company have taken all commercially reasonable
action to maintain and protect the Intellectual Property Rights subject to such
licenses.
(iii) Except as set forth on the attached Intellectual Property
Schedule 6Q, (a) there are no claims against the Company that were either made
within the past five (5) years or are presently pending asserting the
invalidity, misuse or unenforceability of any of the Company Intellectual
Property Rights, and there is no basis for any such claim, (b) the operation of
the business of the Company as currently conducted and as proposed to be
conducted has not infringed, misappropriated or conflicted with and will not
infringe, misappropriate or conflict with any Intellectual Property Rights of
other Persons and the Company has not received any notice regarding any of the
foregoing (including any demands or offers to license any Intellectual Property
Rights from any other Person) or is aware of any facts which indicate a
likelihood of any of the foregoing, (c) no third party has infringed,
misappropriated or otherwise conflicted with any of the Company Intellectual
Property Rights. The transactions contemplated by this Agreement shall have no
Material Adverse Effect on the right, title or interest of the Company in and to
the Company Intellectual Property Rights and all of such Company Intellectual
Property Rights shall be owned or available for use by the Company on
substantially identical terms and conditions immediately after the Closing.
(iv) Except as set forth on Intellectual Property Schedule 6Q,
to the knowledge of the Company, the computer software identified on
Intellectual Property Schedule 6Q pursuant to
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Section 6Q(i)(c) is Millennium Compliant Software except as could not reasonably
be expected to have a Material Adverse Effect. For the purposes of this Section
6Q(iv), "Millennium Compliant Software" means software that will correctly
differentiate between years in different centuries that end in the same two
digits, and will accurately process date/time data (including, but not limited
to, calculating, comparing and sequencing) from, into and between the twentieth
and twenty-first centuries, including leap year calculations.
6R. Litigation, etc. Except as set forth on the attached
Litigation Schedule 6R, there are no (and, during the five years preceding the
date hereof, there have not been any) actions, suits, proceedings (including any
arbitration proceedings, orders, investigations or claims pending or threatened
against the Company or pending or threatened against any of the officers,
directors or employees of the Company with respect to their businesses or
proposed business activities), or pending or threatened by the Company against
any third party, at law or in equity, or before or by any Government Entity
(including any actions, suits, proceedings or investigations with respect to the
transactions contemplated by this Agreement); the Company is not subject to any
arbitration proceedings under collective bargaining agreements or otherwise or
any governmental investigations or inquiries; and there is no basis for any of
the foregoing. The Company is fully insured with respect to each of the matters
set forth on the attached Litigation Schedule 6R. The Company is not subject to
any judgment, order or decree of any Government Entity, and the Company has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any liability which would
reasonably be expected to have a Material Adverse Effect.
6S. Brokerage. Except as set forth on the Brokerage Schedule
6S attached hereto (all items listed on the Brokerage Schedule 6S shall be the
responsibility of, and shall be borne by, the Sellers), there are and shall be
no claims for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement to which the Company is a party or to which the Company
is subject. Neither the Company nor the Purchaser shall have any obligation for
any fees or expenses set forth on the Brokerage Schedule 6S.
6T. Insurance. The attached Insurance Schedule 6T contains a
description of each insurance policy maintained by the Company with respect to
its properties, assets and business, and each such policy shall be in full force
and effect as of the Closing or a substituted policy shall have been obtained
therefor. The Company is not in default with respect to its obligations under
any insurance policy maintained by it, and the Company has never been denied
insurance coverage. Other than with respect to the employee benefits matters
covered by Section 6V and except as set forth on the attached Insurance Schedule
6T, the Company does not have any self-insurance or co-insurance programs.
6U. Employees. The Employees Schedule 6W attached hereto
contains a true and complete list as of December 31, 1998 of (i) the employees
employed by the Company having an annual base salary in calendar year 1998 of
$25,000 or more, (ii) the rate of all current compensation payable by the
Company to each such employee, including any bonus, contingent or deferred
compensation, and (iii) the directors of each of the Company. No executive or
key employee of the
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Company and no group of employees of the Company has any plans to terminate
employment with the Company. The Company (a) does not have any material labor
relations problems (including any additional union organization activities,
threatened or actual strikes or work stoppages or material grievances), (b) has
not engaged in any unfair labor practices, (c) during the past five years, has
not suffered any labor strike, lockout, work stoppage or other material labor
dispute or, (d) does not have any union organization campaign in progress with
respect to any of the employees, nor does any question concerning representation
exists respecting such employees. The Company has not engaged in any plant
closing or employee layoff activities within the last two (2) years that would
violate or in any way implicate the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state or local plant
closing or mass layoff statute, rule or regulation.
6V. ERISA.
(i) The Employee Benefits Schedule 6V lists each Employee
Benefit Plan which the Company maintains, contributes to, or has an obligation
to contribute to, or with respect to which the Company has any liability or
potential liability.
(a) Each Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation with its
terms and with the applicable requirements of ERISA, the Code, and
other applicable laws.
(b) All required reports and descriptions (including Form
5500 annual reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been filed or distributed appropriately with respect
to each Employee Benefit Plan. The requirements of Part 6 of Subtitle B
of Title I of ERISA and of Code Section 4980B have been met with
respect to each Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(c) All contributions (including all employer
contributions and employee salary reduction contributions) which are
due have been paid to each Employee Benefit Plan which is an Employee
Pension Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance with the
past custom and practice of the Company. All premiums or other payments
for all periods ending on or before the Closing Date have been paid
with respect to each Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(d) Each Employee Benefit Plan which is intended to be
qualified under Code Section 401(a) has received a favorable
determination letter from the Internal Revenue Service and nothing has
occurred since the date of such determination letter that could
adversely affect the qualified status of such plan.
(e) The Sellers have delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 annual report, and
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all related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Company, and the Controlled Group of Corporations which includes the Company
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(a) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. The Company has
no knowledge of any basis for any such action, suit, proceeding,
hearing, or investigation.
(b) The Company has not incurred, and the Company has no
reason to expect that the Company will incur, any Liability to the PBGC
or otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(iii) The Company and the other members of the Controlled
Group of Corporations that includes the Company do not contribute to, have never
contributed to, and never have been required to contribute to any Employee
Pension Benefit Plan subject to Title IV of ERISA, including any Multiemployer
Plan, and do not have any Liability (including withdrawal liability) under any
such Employee Pension Benefit Plan or Multiemployer Plan.
(iv) Except as set forth on the attached Employee Benefits
Schedule 6V, the Company has no obligation to provide medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
6W. Compliance with Laws; Permits. Except as set forth on the
attached Compliance Schedule 6W(a):
(i) The Company has complied with all applicable Laws relating
to the operation of its respective business. No notices have been received by
and no claims have been filed against the Company alleging a violation of any
such Laws.
(ii) Except with respect to permits relating to Environmental
and Safety Regulations which are addressed in Section 6X below, the Company
holds all permits, licenses, certificates, accreditations and other
authorizations of all Government Entities required for the conduct of its
business and the ownership of its properties, and the attached Permits Schedule
6W(b) sets forth a list of all of such permits, licenses, certificates,
accreditations and other authorizations. No notices have been received by the
Company alleging the failure to hold any permit, license,
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certificate, accreditation or other authorization of any Government Entity. The
Company is in compliance with all terms and conditions of all permits, licenses,
accreditations and authorizations which it holds. Except as disclosed on the
attached Permits Schedule 6W(b) all of such permits, licenses, accreditations
and authorizations will be available for use by the Company immediately after
the Closing.
6X. Environmental and Safety Matters. Except as set forth on
the attached Environmental Schedule 6X:
(i) The Company has complied with and is currently in
compliance with all Environmental and Safety Requirements. The Company has not
received any oral or written notice, report or information regarding any
violations of or any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) or corrective, investigatory or remedial obligations
arising under Environmental and Safety Requirements which relate to the Company
or any of its current or former properties or facilities.
(ii) Without limiting the generality of the foregoing, the
Company has obtained and complied with, and is currently in compliance with, all
permits, licenses and other authorizations that may be required pursuant to any
Environmental and Safety Requirements for the occupancy of its properties or
facilities or the operation of its business. A list of all such permits,
licenses and other authorizations is set forth on the attached Permits Schedule
6W.
(iii) Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall impose any obligations on the
Company for site investigation or cleanup, or notification to or consent of any
government agencies or third parties under any Environmental and Safety
Requirements (including any so called "transaction-triggered" or "responsible
property transfer" laws and regulations).
(iv) None of the following exists at any property or facility
owned, occupied or operated by the Company:
(a) underground storage tanks;
(b) asbestos-containing materials in any
form or condition;
(c) materials or equipment containing
polychlorinated biphenyls; or
(d) landfills, surface impoundments or other
disposal areas.
(v) The Company has not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled or Released any substance
(including any hazardous substance) or owned, occupied or operated any facility
or property (and no such property or facility is contaminated by any such
substance) in a manner that has given or could give rise to any liabilities
(including any liability for response costs, corrective action costs, personal
injury, natural resource
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damages, property damage or attorneys fees or any investigative, corrective or
remedial obligations) pursuant to CERCLA or any other Environmental and Safety
Requirements.
(vi) The Company has not, either expressly or by operation of
law, assumed or undertaken any liability or corrective, investigatory or
remedial obligation of any other Person relating to any Environmental and Safety
Requirements.
6Y. Affiliate Transactions. Except as set forth on the
attached Affiliate Transactions Schedule 6Y, no officer, director, employee,
shareholder or Affiliate of the Company or any individual related by blood,
marriage or adoption to any such individual or any entity in which any such
Person or individual owns any beneficial interest, is a party to any agreement,
contract, commitment or transaction with the Company or has any material
interest in any material property used by the Company.
6Z. Real Property.
(i) The attached Real Property Schedule 6Z sets forth a legal
description of each parcel of real property owned by the Company (the "Owned
Real Property"). The Company has good and marketable title in and to all of the
Owned Real Property subject to no Liens other than Permitted Liens.
(ii) The attached Real Property Schedule 6Z sets forth a list
of all leases, subleases and other occupancy agreements, including all
amendments, extensions and other modifications (the "Leases") for real property
(the "Leased Real Property"; the Owned Real Property and the Leased Real
Property are collectively the "Real Property") to which the Company is a
"tenant," "subtenant," or other lessee party. The Company has a good and valid
leasehold interest in and to all of the Leased Real Property, subject to no
Liens except Permitted Liens. Each Lease is in full force and effect and is
enforceable in accordance with its terms. There exists no default or condition
which, with the giving of notice, the passage of time or both, could become a
default under any Lease. The Company and the Sellers have previously delivered
to Purchaser true and complete copies of all the Leases. Except as described on
Consents Schedule 2D, no consent, waiver, approval or authorization is required
from the landlord under any Lease as a result of the execution of this Agreement
or the consummation of the transactions contemplated hereby.
(iii) The Real Property constitutes all of the real property
owned, leased, occupied or otherwise utilized in connection with the business of
the Company. Other than the Company, there are no parties in possession or
parties having any current or future right to occupy any of the Real Property.
The Real Property is in good condition and repair and is sufficient and
appropriate for the conduct of the business of the Company. The Real Property
and all plants, buildings and improvements located thereon conform to all
applicable building, zoning and other laws, ordinances, rules and regulations.
All permits, licenses and other approvals necessary to the current occupancy and
use of the Real Property have been obtained, are in full force and effect and
have not been violated. There exists no violation of any covenant, condition,
restriction, easement, agreement or order affecting any portion of the Real
Property. Except as set forth on the attached Real Property Schedule 6Z, all
improvements located on the Real Property have direct access to a public road
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adjoining such Real Property. No such improvements or accessways encroach on
land not included in the Real Property and no such improvement is dependent for
its access, operation or utility on any land, building or other improvement not
included in the Real Property. There is no pending or any threatened
condemnation proceeding affecting any portion of the Real Property. There are no
outstanding options or rights of first refusal with respect to the purchase or
use of any of the Real Property, any portion thereof or interest therein. The
Company is not obligated to purchase or lease any real property.
SECTION 7 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Shares hereunder, each Seller hereby, jointly and severally represents and
warrants to the Purchaser and the Company that the following representations and
warranties are true and correct as of the date hereof and as of the Closing
Date:
7A. Power and Authority. Each Seller possesses all requisite
power and authority necessary to carry out the transactions contemplated by this
Agreement.
7B. Authorization; No Breach. This Agreement and all other
agreements or instruments contemplated hereby to which any Seller is a party or
by which any Seller is bound, when executed and delivered by such Seller in
accordance with the terms hereof, shall each constitute a valid and binding
obligation of such Seller, enforceable in accordance with its terms, except as
such enforceability may be limited by (x) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (y) applicable equitable principles (whether considered in a
proceeding at law or in equity). The execution, delivery and performance by each
Seller of this Agreement and all other agreements contemplated hereby to which
such Seller is a party, and the fulfillment of and compliance with the
respective terms hereof and thereof by such Seller, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under (whether with or without the passage of time,
the giving of notice or both), (iii) result in the creation of any lien,
security interest, mortgage, charge or encumbrance upon such Seller's assets
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any third party or Government Entity pursuant
to, any Law to which such Seller is subject, the articles of incorporation or
bylaws of such Seller, if applicable, or any material agreement, instrument,
order, judgment or decree to which such Seller is subject. None of the Sellers
is a party to or bound by any written or oral agreement or understanding with
respect to an Acquisition Proposal or a Third Party Acquisition other than this
Agreement, and all of them have terminated all discussions with third parties
(other than the Purchaser) regarding Acquisition Proposals or Third Party
Acquisitions.
7C. Title to Shares. All of the Shares are owned of record and
beneficially by the Sellers, and each Seller has good and marketable title to
the Shares owned by such Seller, free and clear of all Liens, agreements, voting
trusts, proxies and other arrangements or restrictions of any kind whatsoever.
None of the Sellers is a Party to any plan, warrant, purchase right or other
contract or commitment that could require such Seller to sell, transfer, or
otherwise dispose of any capital
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stock of the Company (other than this agreement). None of the Sellers is a party
to any voting trust, proxy, or other agreement or understanding with respect to
the voting of any capital stock of the Company.
7D. Brokerage. Except as set forth on the Brokerage Schedule
7D attached hereto, there are no claims for brokerage commissions, finders' fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement to which any Seller is a party
or to which any Seller is subject. Each Seller shall pay, indemnify, defend and
hold the Company and the Purchaser harmless against, any liability, loss or
expense (including reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such claim.
7E. Litigation, etc. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims
pending or threatened against or affecting any of the Sellers in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with the transactions contemplated hereby.
SECTION 8 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. As
a material inducement to the Company and the each of the Sellers to enter into
this Agreement and take the actions set forth in Section 1, the Purchaser hereby
represents and warrants to the Company and each of the Sellers that the
following statements contained in this Section 8 are correct and complete as of
the date hereof and as of the Closing Date:
8A. Organization, Power and Authority. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the Laws of its jurisdiction of formation. The Purchaser possesses all
requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
8B. Authorization; No Breach. The execution, delivery and
performance of this Agreement and all other agreements or instruments
contemplated hereby to which the Purchaser is a party or by which the Purchaser
is bound have been duly authorized by the Purchaser. This Agreement and all
other agreements contemplated hereby to which the Purchaser is a party, when
executed and delivered by the Purchaser in accordance with the terms hereof,
shall each constitute a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except as such enforceability may be
limited by (x) applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (y) applicable
equitable principles (whether considered in a proceeding at law or in equity).
The execution, delivery and performance by the Purchaser of this Agreement and
all other agreements contemplated hereby to which the Purchaser is a party, and
the fulfillment of and compliance with the respective terms hereof and thereof
by the Purchaser, do not and shall not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under
(whether with or without the passage of time, the giving of notice or both),
(iii) give any third party the right to modify, terminate or accelerate any
obligation under, (iv) result in a violation of the organizational documents of
the Purchaser, or any Law to which the Purchaser is subject, or any agreement,
instrument, order, judgment or decree to which the Purchaser is subject.
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8C. Consents. No consent, approval or authorization of, or
designation, declaration or filing with any Governmental Entity or other third
party is necessary for the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby, except for
applicable requirements of the HSR Act, the consents of Serta, Inc. and its
stockholders, or as set forth on the attached Consents Schedule 8C.
8D. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement to which
the Purchaser is a party or to which the Purchaser is subject. The Purchaser
shall pay, indemnify, defend and hold the Company and the Sellers harmless
against, any liability, loss or expense (including reasonable attorneys' fees
and out-of-pocket expenses) arising in connection with any such claim.
8E. Bank Financing. Attached as Exhibit E is a correct and
complete copy of the financing letter from First Source Financial, Inc. ("First
Source") to the Purchaser regarding First Source's desire to provide (together
with its syndicate of banks) the financing for the transaction contemplated
herein.
8F. Investment Representations.
(i) The Purchaser hereby represents that it is acquiring the
Shares purchased hereunder for its own account with the present intention of
holding such Shares for purposes of investment, and that it has no intention of
selling any such Shares in a public distribution in violation of the federal
securities laws or any applicable state securities laws; provided, that nothing
contained herein shall prevent the Purchaser or any subsequent holder of any of
the Shares from transferring such securities.
(ii) The Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
(iii) The Purchaser understands that the Shares have not been
registered under the Securities Act on the basis that the sale provided for in
this Agreement is exempt from the registration provisions thereof and that the
Company's reliance on such exemption is predicated upon the representations of
the Purchaser set forth herein.
SECTION 9 INDEMNIFICATION AND OTHER AGREEMENTS.
9A. Survival of Representations and Warranties. The
representations and warranties in this Agreement and the Schedules and Exhibits
attached hereto shall survive the Closing as follows:
(i) the representations and warranties in Section 6O (Tax
Matters) shall terminate on the sixtieth (60th) day following the expiration of
the applicable statutes of limitations (after giving effect to any extensions or
waivers thereof);
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(ii) the representations and warranties in Section 6B (Capital
Stock and Related Matters; Subsidiaries), Section 6C (Authorization; No Breach),
Section 6L (Indebtedness), Section 6S (Brokerage), Section 6Y (Affiliate
Transactions), Section 7B (Authorization; No Breach), Section 7C (Title to
Shares), Section 7D (Brokerage), Section 8B (Authorization; No Breach) and
Section 8D (Brokerage) shall survive and shall not terminate;
(iii) the representations and warranties in Section 6V (ERISA)
and Section 6X (Environmental and Safety Matters) shall terminate on the third
anniversary of the Closing Date; and
(iv) all other representations and warranties in this
Agreement and the Schedules and Exhibits attached hereto shall terminate on the
second anniversary of the Closing Date;
provided, that any representation or warranty in respect of which indemnity may
be sought under Section 9B, and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this Section
9A if notice of the inaccuracy or breach or potential inaccuracy or breach
thereof giving rise to such right or potential right of indemnity shall have
been given to the Party against whom such indemnity may be sought prior to such
time. The representations and warranties in this Agreement and the Schedules and
Exhibits attached hereto or in any writing delivered by any Party to another
Party in connection with this Agreement shall survive for the periods set forth
in this Section 9A and shall in no event be affected by any investigation,
inquiry or examination made for or on behalf of any Party, or the knowledge of
any Party's officers, directors, shareholders, employees or agents or the
acceptance by any Party of any certificate or opinion hereunder.
9B. General Indemnification.
(i) Indemnification for the Benefit of the Company and the
Purchaser by the Sellers. Following the Closing, the Sellers, jointly and
severally, shall indemnify the Purchaser and its Affiliates, shareholders,
partners, officers, directors, employees, agents, representatives, successors
and permitted assigns and the Company (collectively, the "Seller Indemnified
Parties") and save and hold each of them harmless against and pay on behalf of
or reimburse such Seller Indemnified Parties as and when incurred for any direct
or indirect loss, liability, demand, claim, action, cause of action, cost,
damage (including consequential damages and damages for lost profits),
deficiency, Tax, penalty, fine or expense, whether or not arising out of third
party claims (including interest, penalties, reasonable attorneys', consultants'
and experts' fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, "Losses"), which any such
Seller Indemnified Party may suffer, sustain or become subject to, as a result
of, in connection with, relating or incidental to or by virtue of: (a) any facts
or circumstances which constitute a breach of any representation or warranty of
the Company or the Sellers under this Agreement, or in any of the certificates
or other instruments or documents furnished by the Company or the Sellers
pursuant to this Agreement; (b) any nonfulfillment or breach of any covenant,
agreement or other provision by the Company or the Sellers under this Agreement
required to be performed or complied with by the Company or the Sellers at or
prior to the Closing; (c) any nonfulfillment or breach of any covenant,
agreement or other provision by the Sellers under this Agreement required to be
performed or complied with by the Sellers after the Closing; or (d) any
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claim by any Person (other than the Purchaser) with respect to, or arising as a
result of, any Acquisition Proposal or Third Party Acquisition proposed prior to
the Closing Date. If and to the extent any provision of this Section 9B is
unenforceable for any reason, each Seller hereby agrees to make the maximum
contribution to the payment and satisfaction of any Loss for which
indemnification is provided for in this Section 9B which is permissable under
applicable Laws. Notwithstanding anything contained herein, in no event shall
the Company be required to provide indemnification or contribution for any
obligation of the Sellers under this Section 9B(i).
(ii) Indemnification for the Benefit of the Sellers by the
Company and the Purchaser. Following the Closing, the Company and the Purchaser
shall indemnify the Sellers and their Affiliates, shareholders, officers,
directors, employees, agents, representatives, successors and permitted assigns
(collectively, the "Company Indemnified Parties") and hold them harmless against
any Losses which the Company Indemnified Parties may suffer, sustain or become
subject to, as a result of, in connection with, relating or incidental to or by
virtue of: (a) any facts or circumstances which constitute a breach of any
representation or warranty of the Purchaser under this Agreement, or in any of
the certificates or other instruments or documents furnished by the Purchaser
pursuant to this Agreement; (b) any nonfulfillment or breach of any covenant,
agreement or other provision by the Purchaser under this Agreement; or (c) any
matters which occur after the Closing Date as a result of the direction or
approval of the Board following the Closing Date.
(iii) Manner of Payment.
(a) Any indemnification obligations of the Sellers
pursuant to Section 9B(i) shall first be satisfied out of the Indemnity
Escrow Fund to the extent thereof and thereafter shall be paid by wire
transfer of immediately available funds to an account designated in
writing by the applicable Seller Indemnified Party within 15 days after
the determination thereof.
(b) Any indemnification obligations of the Company
pursuant to Section 9B(ii) shall be paid by wire transfer of
immediately available funds to an account designated in writing by the
applicable Company Indemnified Party within 15 days after the
determination thereof.
(c) Any such indemnification payments described in clause
(a) or (b) above shall include interest at 8% per annum calculated on
the basis of the actual number of days elapsed over 360, from the date
any such Loss is suffered or sustained to the date of payment. The
amount of any Loss for which indemnification is provided pursuant to
this Section 9B shall be net of any amounts actually recovered by the
indemnified party under insurance policies with respect to such Loss.
(iv) Instructions to Escrow Agent. In the event of a
determination that a payment is due to any Seller Indemnified Party, the
Purchaser and the Sellers' Representative shall issue joint written instructions
to the Escrow Agent to distribute a portion of the Indemnity Escrow Fund equal
to such payment.
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(v) Defense of Third Party Claims. Any Person making a claim
for indemnification under this Section 9B (an "Indemnitee") shall notify the
indemnifying party (an "Indemnitor") (in the case of a notice to the Sellers,
notice shall be sufficient if made solely to the Sellers' Representatives) of
the claim in writing promptly after receiving written notice of any action,
lawsuit, proceeding, investigation or other claim against it (if by a third
party), describing the claim, the amount thereof (if known and quantifiable) and
the basis thereof; provided that the failure to so notify an Indemnitor shall
not relieve the Indemnitor of its obligations hereunder unless the Indemnitor
shall be actually prejudiced by such failure to so notify. Any Indemnitor shall
be entitled to participate in the defense of such action, lawsuit, proceeding,
investigation or other claim giving rise to an Indemnitee's claim for
indemnification at such Indemnitor's expense, and at its option (subject to the
limitations set forth below) shall be entitled to assume the defense thereof by
appointing a reputable counsel reasonably acceptable to the Indemnitee to be the
lead counsel in connection with such defense; provided, that prior to the
Indemnitor assuming control of such defense it shall first demonstrate to the
Indemnitee in writing such Indemnitor's financial ability to provide full
indemnification to the Indemnitee with respect to such action, lawsuit,
proceeding, investigation or other claim giving rise to such claim for
indemnification hereunder; and provided further, that:
(a) the Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice for such
purpose; provided that the fees and expenses of such separate counsel
shall be borne by the Indemnitee (other than any fees and expenses of
such separate counsel that are incurred prior to the date the
Indemnitor effectively assumes control of such defense which,
notwithstanding the foregoing, shall be borne by the Indemnitor);
(b) the Indemnitor shall not be entitled to assume control
of such defense and shall pay the fees and expenses of counsel retained
by the Indemnitee if (1) the claim for indemnification relates to or
arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (2) the Indemnitee reasonably believes an
adverse determination with respect to the action, lawsuit,
investigation, proceeding or other claim giving rise to such claim for
indemnification would be severely detrimental to or materially
injurious to the Indemnitee's reputation or future business prospects;
(3) the claim seeks an injunction or equitable relief against the
Indemnitee; (4) a conflict of interest exists between the Indemnitor
and the Indemnitee (other than the mere existence of the Indemnitor's
obligation to indemnify the Indemnitee pursuant to this Section 9B)
which renders the Indemnitor incapable of defending against any such
claim or prevents the fair representation of the Indemnitee; or (5) the
Indemnitor failed or is failing to vigorously prosecute or defend such
claim;
(c) if the Indemnitor shall control the defense of any
such claim, the Indemnitor shall obtain the prior written consent of
the Indemnitee before entering into any settlement of a claim or
ceasing to defend such claim if, pursuant to or as a result of such
settlement or cessation, injunctive or other equitable relief will be
imposed against the Indemnitee or if such settlement does not expressly
and unconditionally release the
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Indemnitee from all liabilities and obligations with respect to such
claim, without prejudice; and
(d) if the claim for Indemnification relates to Taxes, the
Indemnitor's rights to control the defense of such matter shall extend
only to the specific issue for which indemnification is claimed (and
not the entire return or taxable period).
(vi) Limitations on Indemnification. Notwithstanding any
provision herein to the contrary, the maximum liability of all of the Sellers
with respect to any Losses suffered by the Seller Indemnified Parties as a
result of any facts or circumstances which constitute a breach of any
representation or warranty contained in this Agreement shall be an aggregate
amount equal to $1,500,000; provided, that the Sellers will only be required to
indemnify the Seller Indemnified Parties for any breaches of the representations
and warranties described in Sections 9A(iii) and (iv) if such Losses in the
aggregate exceed $150,000 (the "Basket Amount") and then only to the extent of
such excess over $150,000.
(vii) Other Indemnification Provisions; Certain Waivers; etc.
The provisions of Section 9 shall be the exclusive remedy and procedure for all
claims for breach or indemnification pursuant to this Agreement or the Schedules
hereto; provided, however that any claim for common law fraud or suit for
specific performance shall not be subject to the limitations set forth in this
Section 9B(vii). Each Seller hereby agrees that he shall not make any claim for
indemnification hereunder against the Company by reason of the fact that he was
a shareholder, director, officer, employee or agent of the Company or was
serving at the request of the Company as a partner, trustee, director, officer,
employee or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses
or otherwise) with respect to any action, suit, proceeding, complaint, claim or
demand brought by any of the Seller Indemnified Parties against such Seller
pursuant to this Agreement and such Seller hereby acknowledges and agrees that
he shall have no claims or right to contribution or indemnity from the Company
with respect to any amounts paid by the Sellers pursuant to this Section 9B.
SECTION 10 DEFINITIONS. For the purposes of this Agreement,
the following terms have the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section
4J.
"Adjustment Escrow Agreement" shall be the Adjustment Escrow
Agreement to be entered into among the Purchaser, the Sellers' Representative
and the Escrow Agent substantially in the form of Exhibit A attached hereto.
"Adjustment Escrow Fund" has the meaning set forth in Section
1C.
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
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"Affiliated Group" means any affiliated group as defined in
Code Section 1504 that has filed a consolidated return for federal income tax
purposes (or any similar group under state, local or foreign law) for a period
during which any of the Company was a member.
"Agreement" has the meaning set forth in the Preamble.
"Board" means the board of directors of the Company.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
"Closing" has the meaning set forth in Section 1C.
"Closing Balance Sheet" has the meaning set forth in Section
1E(ii).
"Closing Date" has the meaning set forth in Section 1C.
"Closing Net Working Capital" has the meaning set forth in
Section 1E.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Group" means the Company, Sleepmaster Holdings
L.L.C., a New Jersey limited liability company, Sleepmaster L.L.C., a New Jersey
limited liability company, and their respective Subsidiaries.
"Company Intellectual Property Rights" means all of the
Intellectual Property Rights owned or used by the Company (along with all
income, royalties, damages and payments due or payable at the Closing or
thereafter (including , damages and payments for past or future infringements or
misappropriations thereof)), the right to xxx and recover for past infringements
or misappropriations thereof, any and all corresponding rights that, now or
hereafter, may be secured throughout the world and all copies and tangible
embodiments of any such Intellectual Property Rights.
"Confidential Information" means the information, observations
and data of the Company or any of its Subsidiaries concerning the business or
affairs of the Company or any Subsidiary (including the Company's technology,
computer programs, know-how, designs, inventions, methods of doing business and
supplier and customer information) (i) which is material nonpublic information,
(ii) which is proprietary to the Company or any of its Subsidiaries, (iii) the
disclosure of which could reasonably be expected to be detrimental or adverse to
the Company or any of its Subsidiaries, or (iv) is the property of the Company
or such Subsidiary and that the continued success of the Company and its
Subsidiaries depends in large part on keeping this information from becoming
known to competitors of the Company and its Subsidiaries.
"Consents" has the meaning set forth in Section 2D.
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"Controlled Group of Corporations" has the meaning set forth
in Code Section 1563.
"December 31 Balance Sheet" means the audited consolidated
balance sheet of the Company as of December 31, 1998.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution or defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), (c) Employee
Welfare Benefit Plan, or (d) other material fringe benefit plan, program or
arrangement.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
"Employment and Stock Purchase Agreements" means the
Employment and Stock Purchase Agreement by and among the Company, Xxxxxx X.
Xxxx, Sleepmaster Holdings L.L.C. ("Holdings"), and Sleep Investor L.L.C. (the
"Investor") dated as of the date hereof and the Employment and Stock Purchase
Agreement by and among the Company, Xxxx X. Xxxx, III, Holdings, and the
Investor dated as of the date hereof.
"Environmental and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law, in
each case concerning public health and safety, worker health and safety and
pollution or protection of the environment (including all those relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, Release,
threatened Release, control or cleanup of any hazardous or otherwise regulated
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning set forth in Section 1C.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Government Entity" means individually, and "Government
Entities" means collectively, the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions
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of government, including any court, in each case having jurisdiction over the
Company or any of its Subsidiaries.
"Guarantee" means any guarantee of the payment or performance
of any Indebtedness or other obligation and any other arrangement whereby credit
is extended to one obligor on the basis of any promise of such Person, whether
that promise is expressed in terms of an obligation to pay the Indebtedness of
such obligor, to provide reimbursement, or to purchase an obligation owed by
such obligor, or to purchase goods and services from such obligor pursuant to a
take-or-pay contract, or to maintain the capital, working capital, solvency or
general financial condition of such obligor, whether or not any such arrangement
is listed in the balance sheet of such Person, or referred to in a footnote
thereto, but shall not include endorsements of items for collection in the
ordinary course of business consistent with past custom and practice..
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder.
"Indebtedness" means at a particular time, without
duplication, (i) any obligations under any indebtedness for borrowed money
(including all principal, interest premiums, penalties, fees, expenses and
brokerage costs), (ii) any obligations for deferred compensation, (iii) any
obligations to pay the deferred purchase price of property or services (except
for accounts payable in the ordinary course of business consistent with past
custom and practice), (iv) any indebtedness evidenced by any note, bond,
debenture or other debt security, (v) any commitment by which a Person assures a
creditor against loss (including contingent reimbursement obligations with
respect to letters of credit), (vi) any indebtedness pursuant to a Guarantee,
(vii) any obligations under capitalized leases or with respect to which a Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or
with respect to which obligations a Person assures a creditor against loss, and
(viii) any indebtedness secured by a Lien on a Person's assets, but excludes any
liabilities included in the calculation of Closing Net Working Capital.
"Indemnity Escrow Agreement" shall be the Indemnity Escrow
Agreement to be entered into among the Purchaser, the Sellers' Representative
and the Escrow Agent substantially in the form of Exhibit B attached hereto.
"Indemnity Escrow Fund" has the meaning set forth in Section
1C.
"Intellectual Property Rights" means all (i) patents, patent
applications and patent disclosures, as well as any reissues, continuations,
continuations-in-part, divisions, extensions or reexaminations thereof, (ii)
trademarks, service marks, trade dress, trade names, logos and corporate names
and registrations and applications for registration thereof, together with all
of the goodwill associated therewith, (iii) copyrights and copyrightable works
and registrations and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data, data bases and documentation thereof, (vi) trade secrets and other
confidential information (including ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs,
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plans, proposals, technical data, financial and marketing plans and customer and
supplier lists and information).
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Xxxx Xxxx Employment Agreement" shall mean the Employment and
Stock Purchase Agreement by and among Xxxx X. Xxxx, III, the Company and the
other parties thereto dated as of the date hereof.
"Laws" means all statutes, laws, codes, ordinances,
regulations, rules, orders, judgments, writs, injunctions, acts or decrees of
any Government Entity.
"Leased Real Property" has the meaning set forth in Section
6Z(ii).
"Liabilities" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Lien" or "Liens" means any mortgage, pledge, security
interest, encumbrance, encroachment, claim, lease, right of possession, other
defect in title or lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute (other than to reflect ownership by a third party of property leased to
the Company under a lease which is not in the nature of a conditional sale or
title retention agreement), or any subordination arrangement in favor of another
Person.
"Material Adverse Effect" means a material and adverse effect
upon the business, operations, assets, liabilities, financial condition,
operating results, business prospects, cash flow, net worth or employee,
customer or supplier relations of the Company taken as a whole.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"Net Working Capital" means, for purposes of Section 1D above,
the excess of the consolidated current assets of the Company as of the close of
business on the date of determination over the consolidated current liabilities
of the Company as of the close of business on the date of determination
determined in accordance with GAAP on a basis consistent with the Company's
audited financial statements as of December 31, 1998, except as adjusted below.
Consolidated current assets will include (a) cash and cash equivalents; (b)
accounts receivable net of an allowance established by the Company of $32,000;
(c) inventories of raw materials, finished goods and goods for resale; (d)
prepaid assets, except prepaid income taxes and deferred tax assets; and (e)
locker stock. Consolidated current liabilities will include (a) trade accounts
payable and (b) accrued
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liabilities (as modified below). Accrued liabilities for the profit sharing plan
and bonuses (including other payroll accruals) will not exceed $200,000 and
$397,000, respectively. For the avoidance of doubt, any liabilities for the
profit sharing plan and bonuses in excess of these specified amounts shall be
paid prior to Closing. Prepaid income taxes, deferred income tax assets and
liabilities and income tax liabilities shall be excluded from the calculation of
Net Working Capital.
"Noncompete Period" has the meaning set forth in Section
5B(i).
"Owned Real Property" has the meaning set forth in Section
6Z(i).
"Party" has the meaning set forth in the Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (i) Liens for Taxes or assessments and
similar charges, which either are (a) not delinquent or (b) being contested in
good faith and by appropriate proceedings, and adequate reserves (as determined
in accordance with GAAP, consistently applied) have been established on the
Company's books with respect thereto, (ii) mechanics', materialmen's or
contractors' Liens or encumbrances or any similar statutory Lien or restriction
for amounts not yet due and payable and for which the Title Company has
affirmatively insured against collection, (iii) zoning, building and other land
use regulations imposed by governmental agencies having jurisdiction over the
Real Property which are not violated by the current occupation, use and
operation of the Real Property, and (iv) covenants, conditions, restrictions,
easements and other similar matters currently of record affecting title to the
Real Property which do not materially impair the occupancy or use, value or
marketability of the parcel of Real Property which they encumber for the
purposes for which it is currently used in connection with the business of the
Company.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Prohibited Transactions" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"Purchaser" has the meaning set forth in the Preamble.
"Real Property" has the meaning set forth in Section 6Z(ii).
"Release" shall have the meaning set forth in CERCLA.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"Sellers" has the meaning set forth in the Preamble.
"Sellers' Representative" has the meaning set forth in Section
1D.
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"Shareholders Agreement" means the shareholders agreement by
and among Xxxxxx X. Xxxx, Xxxx X. Xxxx, Xx., Xxxx X. Xxxx, III, Xxxxxxx X. Xxxx,
Xxxxxx X. Xxxx, Xxxxxxx X. Xxxx, Xxxxxxxxx X. Xxxxxx and Xxxxxxxx X. Xxxxxx,
Xx., dated as of February 1, 1984 as amended to date.
"Xxxxxx Xxxx Employment Agreement" shall mean the Employment
and Stock Purchase Agreement by and among Xxxxxx X. Xxxx, the Company, and the
other parties signatory thereto dated as of the date hereof.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Target Net Working Capital" means $2,325,854.
"Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including
deficiencies, penalties, additions to tax, and interest attributable thereto)
whether disputed or not.
"Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
"Third Party Acquisition" has the meaning set forth in Section
4J.
"Title Company" has the meaning set forth in Section 2I
"Treasury Regulation" means the United States Treasury
Regulations promulgated under the Code, and any reference to any particular
Treasury Regulation section shall be interpreted to include any final or
temporary revision of or successor to that section regardless of how numbered or
classified.
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SECTION 11 TERMINATION.
11A. Conditions of Termination. This Agreement may be
terminated at any time prior to the Closing (or as otherwise specified):
(i) by the mutual written consent of the Parties;
(ii) by the Purchaser if the Purchaser shall have received
notice of a breach of the representations and warranties set forth in Sections 6
and/or 7 or a breach of a covenant hereunder which renders the condition in
Section 2A incapable of being satisfied; or
(iii) by the Sellers if the Sellers shall have received notice
of a breach of the representations and warranties set forth in Section 8 or a
breach of a covenant hereunder which renders the condition in Section 3A
incapable of being satisfied; or
(iv) by the Purchaser on the one hand, or the Sellers and the
Company on the other hand, if the transactions contemplated hereby have not been
consummated by February 28, 1999; provided, that the reason for the delay beyond
February 28, 1999 shall not have been caused by the Party initiating such
termination.
11B. Effect of Termination. In the event of termination of
this Agreement as provided above, this Agreement shall forthwith become void and
of no further force and effect, except that the covenants and agreements set
forth in the second to last sentence of Section 4J and in Sections 00X, 00X,
00X, 00X, 00X, 00X, 12M, 12P and 12Q shall survive such termination
indefinitely, and except that nothing in this Section 11B shall be deemed to
release any Party from any liability for any breach by such Party of the terms
and provisions of this Agreement or to impair the right of any Party to compel
specific performance by another Party of its obligations under this Agreement.
SECTION 12 MISCELLANEOUS.
12A. Fees and Expenses. Except as otherwise set forth herein,
the Purchaser will be responsible for all costs and expenses incurred by the
Purchaser in connection with the negotiation, preparation and entry into this
Agreement and the consummation of the transactions contemplated hereby, and the
Sellers will pay their pro rata share (based on their ownership of the Shares)
of all costs and expenses incurred by the Sellers or the Company in connection
with the negotiation, preparation and entry into this Agreement and the
consummation of the transactions contemplated hereby.
12B. Remedies. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by Laws. All such rights and remedies shall be cumulative
and non-exclusive, and may be exercised singularly or concurrently. One or more
successive actions may be brought against the Company, either in the same action
or in separate actions, as often as the
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Purchaser or any of such holders deems advisable, until all of the obligations
to such Person are paid and performed in full.
12C. Consent to Amendments; Waivers. This Agreement may be
amended, or any provision of this Agreement may be waived upon the approval, in
a writing, executed by the Purchaser, the Company, and the Sellers'
Representative. No course of dealing between or among the Purchaser, the
Company, and the Sellers' Representative shall be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any such Party or such holder under or by reason of this Agreement.
12D. Successors and Assigns.
(i) This Agreement and all covenants and agreements contained
herein and rights, interests or obligations hereunder, by or on behalf of any of
the Parties hereto, shall bind and inure to the benefit of the respective
successors and permitted assigns of the Parties hereto whether so expressed or
not, except that neither this Agreement nor any of the covenants and agreements
herein or rights, interests or obligations hereunder may be assigned or
delegated by the Sellers, or assigned or delegated by the Company prior to the
Closing, without the prior written consent of the Purchaser and except as
otherwise provided by Section 12D(ii) below, neither this Agreement nor any of
the covenants and agreements herein or rights, interests or obligations
hereunder may be assigned or delegated by the Purchaser without the prior
written consent of the Sellers.
(ii) The Purchaser may assign this Agreement and its rights
and obligations hereunder to one of its Affiliates and to its lenders for
collateral assignment purposes; provided, that no such assignment shall relieve
the Purchaser from its obligations hereunder. The Purchaser may assign this
Agreement and its rights and obligations hereunder in connection with a merger
or consolidation involving the Company or in connection with a sale of all or
substantially all of the stock or assets of the Company. In addition, and
whether or not any express assignment has been made, the provisions of this
Agreement which are for a Party's benefit as a holder of the Company's equity
securities are also for the benefit of, and enforceable by, any subsequent
holder of the Company's equity securities.
12E. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held to be prohibited by,
illegal or unenforceable under applicable law or rule in any respect by a court
of competent jurisdiction, such provision shall be ineffective only to the
extent of such prohibition, illegality or unenforceability, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
12F. Counterparts. This Agreement may be executed in
counterparts (including by means of telecopied signature pages), any one of
which need not contain the signatures of more than one Party, but all such
counterparts taken together shall constitute one and the same agreement.
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12G. Descriptive Headings; Interpretation. The headings and
captions used in this Agreement and the table of contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized terms used in any Schedule or
Exhibit attached hereto and not otherwise defined therein shall have the
meanings set forth in this Agreement. The use of the word "including" herein
shall mean "including without limitation."
12H. Entire Agreement. This Agreement, the agreements and
documents referred to herein and the Confidentiality Agreement contain the
entire agreement and understanding among the Parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, whether
written or oral, relating to such subject matter in any way, including, without
limitation the letter of agreement dated November 18, 1998 by and among the
Company, certain of the Sellers and the Purchaser.
12I. No Third-Party Beneficiaries. This Agreement is for the
sole benefit of the Parties and their permitted successors and assigns and
nothing herein expressed or implied shall give or be construed to give any
Person, other than the Parties and such permitted successors and assigns, any
legal or equitable rights hereunder.
12J. Cooperation on Tax Matters. The Parties shall cooperate
fully, as and to the extent reasonably requested by each Party and at the
requesting Party's expense, in connection with any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon any Party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
12K. Schedules and Exhibits. All Schedules and Exhibits
attached hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein.
12L. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE
SCHEDULES AND EXHIBITS HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK. IN FURTHERANCE OF THE FOREGOING,
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT (AND ALL SCHEDULES AND EXHIBITS HERETO), EVEN
THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE
SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
12M. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient or when sent by facsimile
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followed by delivery by reputable overnight courier service, one day after being
sent to the recipient by reputable overnight courier service (charges prepaid)
or five days after being mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications shall be sent to the Purchaser, the Sellers and the Company
at the addresses indicated below or to such other address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. All notices, demands and other communications hereunder
may be given by any other means (including telecopy or electronic mail), but
shall not be deemed to have been duly given unless and until it is actually
received by the intended recipient.
The Company:
Xxxx Manufacturing Company
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxx
Xx. Xxxx X. Xxxx III
Facsimile: (000) 000-0000
with copies to:
(which shall not constitute notice to the Company)
The Sellers' Representative (on behalf of the Sellers):
with a copy to:
(which shall not constitute notice to the Sellers)
Barley, Snyder, Xxxxx & Xxxxx, LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
The Purchasers:
Sleepmaster L.L.C.
c/o Serta Mattress Company
0000 Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
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with a copy to:
(which shall not constitute notice to the Purchaser)
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
12N. Jurisdiction and Venue. SUBJECT TO SECTION 12Q, ALL
JUDICIAL PROCEEDINGS BROUGHT BY OR AGAINST THE COMPANY, THE PURCHASER OR THE
SELLERS WITH RESPECT TO THIS AGREEMENT, ANY OTHER AGREEMENT CONTEMPLATED HEREBY
OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE BROUGHT IN ANY STATE
COURT OF COMPETENT JURISDICTION IN THE CITY OF PHILADELPHIA IN THE COMMONWEALTH
OF PENNSYLVANIA OR FEDERAL COURT IN THE EASTERN DISTRICT OF THE COMMONWEALTH OF
PENNSYLVANIA. BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE COMPANY, THE
PURCHASER AND EACH SELLER ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH
ITS OR HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
12O. Waiver of Right to Jury Trial. THE COMPANY, THE PURCHASER
AND EACH SELLER HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL
BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER AGREEMENT CONTEMPLATED HEREBY OR
THEREBY OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF.
12P. No Strict Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties, and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
12Q. Dispute Resolution.
(i) Arbitration. In the event of disputes between the Parties
with respect to the terms and conditions of this Agreement (other than disputes
with respect to Section 1E), such disputes shall be resolved by and through an
arbitration proceeding to be conducted under the auspices of the Philadelphia
Court of Common Pleas or the American Arbitration Association (or any like
organization successor thereto) in the Eastern District of Pennsylvania. Such
arbitration proceeding shall be conducted in as expedited a manner as is
practical, and the arbitrator or arbitrators in any such arbitration (an
"Arbitration") shall be persons who are expert in the subject
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of mergers and acquisitions. Both the foregoing agreement of the Parties to
arbitrate any and all such claims, and the results, determination, finding,
judgment and/or award rendered through such Arbitration, shall be final and
binding on the Parties hereto and may be specifically enforced by legal
proceedings. The Parties agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
Party may, in its sole discretion, ask for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(ii) Procedure. The Arbitration shall be conducted before a
panel of arbitrators selected in accordance with the rules of the American
Arbitration Association. Each Party shall bear separately the cost of their
respective attorneys, witnesses and experts in connection with such arbitration.
Time is of the essence of this arbitration procedure, and the arbitrators shall
be instructed and required to render their decision within ten (10) days
following completion of the Arbitration.
(iii) Venue and Jurisdiction. Any and all legal proceedings to
enforce this Agreement (including any action to compel arbitration hereunder or
to enforce any award or judgment rendered thereby), shall be governed in
accordance with Section 12N.
(iv) Procedure. The Arbitration shall be conducted before a
panel of arbitrators selected in accordance with the rules of the American
Arbitration Association. Each Party shall bear separately the cost of their
respective attorneys, witnesses and experts in connection with such arbitration.
Time is of the essence of this arbitration procedure, and the arbitrators shall
be instructed and required to render their decision within ten (10) days
following completion of the Arbitration.
(v) Venue and Jurisdiction. Any and all legal proceedings to
enforce this Agreement (including any action to compel arbitration hereunder or
to enforce any award or judgment rendered thereby), shall be governed in
accordance with Section 12N.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement on the date first written above.
XXXX MANUFACTURING COMPANY
By:________________________________
Name:
Title:
SLEEPMASTER L.L.C.
By:________________________________
Name:
Title:
54
SELLER SIGNATURE PAGE
XXXXXX X. XXXX
___________________________________
XXXX X. XXXX, III
___________________________________
XXXXXX GRANTOR RETAINED
ANNUITY TRUST
___________________________________
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EXHIBIT A
Adjustment Escrow Agreement
A - 1
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EXHIBIT B
Indemnity Escrow Agreement
B - 1
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EXHIBIT C
Opinion of the Sellers' Counsel
C - 1
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EXHIBIT D
Opinion of the Purchaser's Counsel
D - 1
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EXHIBIT E
Commitment Letter
E - 1
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EXHIBIT F
Description of Year 2000 Compliance Problems
F - 1
