Exhbit 2.01
STOCK PURCHASE AGREEMENT
by and among
XXXXXXXXX WORLD INDUSTRIES, INC.
XXXXXXXXX ENTERPRISES, INC.
and
INTERCO INCORPORATED
November 18, 1995
TABLE OF CONTENTS
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1. PURCHASE AND SALE OF SHARES...........................................1
1.1 Sale of Shares.................................................1
1.2 Payment of Purchase Price......................................2
2. CLOSING...............................................................2
2.1 The Closing; Post-Closing Purchase Price Adjustment............2
2.2 Stock Certificates.............................................2
2.3 Post-Closing Purchase Price Adjustment.........................3
3. REPRESENTATIONS AND WARRANTIES OF SELLER..............................5
3.1 Organization and Corporate Power...............................5
3.2 Authorization..................................................6
3.3 Financial Statements...........................................6
3.4 Absence of Undisclosed Liabilities.............................7
3.5 Absence of Certain Developments................................7
3.6 Real Property..................................................9
3.7 Tangible Personal Property....................................10
3.8 Inventories and Supplies......................................11
3.9 Intellectual Property Rights..................................11
3.10 Accounts and Notes Receivable................................12
3.11 Outstanding Capital Stock....................................12
3.12 Options or Other Rights......................................13
3.13 Title to Shares..............................................13
3.14 Subsidiaries.................................................13
3.15 Compliance with Laws.........................................14
3.16 No Breach....................................................14
3.17 Litigation...................................................15
3.18 Material and Affiliated Contracts............................16
3.19 Licenses and Permits.........................................17
3.20 Labor Matters................................................18
3.21 Charters and Bylaws..........................................18
3.22 Tax Matters..................................................19
3.23 Workers' Compensation........................................23
3.24 Insurance....................................................23
3.25 Employee Benefit Plans.......................................24
3.26 Necessary Property...........................................31
3.27 Environmental Matters........................................32
3.28 Full Disclosure..............................................36
3.29 Limitation...................................................37
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4. REPRESENTATIONS AND WARRANTIES OF BUYER................................37
4.1 Organization and Corporate Power...............................37
4.2 Authorization..................................................37
4.3 No Breach......................................................38
4.4 No Investigation...............................................38
4.5 Buyer's Financing..............................................39
4.6 Securities Act of 1933.........................................39
5. COVENANTS AND AGREEMENTS...............................................39
5.1 Preservation of Business.......................................39
5.2 Negative Covenants of Seller...................................40
5.3 Seller Tax Matters.............................................41
5.4 Buyer Tax Matters..............................................42
5.5 Other Tax Matters..............................................43
5.6 Intercompany Accounts..........................................46
5.7 Notice of Developments.........................................46
5.8 Reasonable Efforts and Certain Filings.........................47
5.9 Employees and Employee Benefits................................47
5.10 Exclusivity...................................................54
5.11 Non-Hire......................................................55
5.12 Noncompetition................................................55
5.13 Pre- and Post-Closing Cooperation.............................56
5.14 Insurance.....................................................57
5.15 Confidentiality...............................................59
5.16 Industrial Revenue Bonds......................................60
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER......................61
6.1 Representations and Covenants..................................61
6.2 Closing Certificate............................................62
6.3 Legal Opinion..................................................62
6.4 Injunction.....................................................62
6.5 Governmental Authority.........................................62
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.......................63
7.1 Representations and Covenants..................................63
7.2 Closing Certificate............................................63
7.3 Legal Opinion..................................................63
7.4 Injunction.....................................................63
7.5 Governmental Authority.........................................64
7.6 No Loss........................................................64
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7.7 Financing......................................................64
7.8 Resignations...................................................64
7.9 Trademark License..............................................64
7.10 Consents......................................................65
7.11 Environmental Reports.........................................65
8. INDEMNIFICATION........................................................65
8.1 Indemnity of Seller............................................65
8.2 Indemnity of Buyer.............................................66
8.3 Mitigation.....................................................67
8.4 Matters Involving Third Parties................................68
8.5 Tax Indemnification............................................69
8.6 Indemnification Payment........................................69
8.7 Environmental Indemnification..................................70
8.8 Procedures Relating to Environmental Indemnity by Seller.......73
9. MISCELLANEOUS..........................................................76
9.1 Fees and Expenses..............................................76
9.2 Brokers........................................................77
9.3 Access to the Company's Properties.............................77
9.4 Books and Records..............................................78
9.5 Notices........................................................79
9.6 Successors and Assigns.........................................80
9.7 Entire Agreement and Modification..............................80
9.8 Termination By Buyer...........................................81
9.9 Termination By Seller..........................................81
9.10 Other Termination.............................................82
9.11 Effect of Termination.........................................82
9.12 Survival of Representations, Covenants and Warranties.........83
9.13 Section and Other Headings....................................83
9.14 Governing Law.................................................84
9.15 Counterparts..................................................84
9.16 Further Assurances............................................84
9.17 Severability..................................................84
9.18 Confidentiality...............................................84
9.19 No Third Party Beneficiaries..................................85
9.20 Jurisdiction..................................................85
9.21 Specific Performance..........................................85
9.22 Intercompany Relationships....................................86
9.23 Parent Guarantee..............................................86
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9.24 Definition of Knowledge.......................................86
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STOCK PURCHASE AGREEMENT
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THIS AGREEMENT (the "Agreement"), dated November 18, 1995, among XXXXXXXXX
WORLD INDUSTRIES, INC., a Pennsylvania corporation ("Parent"), XXXXXXXXX
ENTERPRISES, INC., a Vermont corporation ("Seller"), and INTERCO INCORPORATED, a
Delaware corporation ("Buyer").
WITNESSETH:
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WHEREAS, Seller, a wholly-owned subsidiary of Parent, owns beneficially and
of record all of the issued and outstanding shares (the "Shares") of Common
Stock, par value $1.00 per share, of Thomasville Furniture Industries, Inc., a
Pennsylvania corporation (the "Company"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, the Shares upon the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained in this Agreement, Seller and Buyer,
intending to be legally bound, agree as follows:
PURCHASE AND SALE OF SHARES
Sale of Shares.
At the Closing (as defined in Section 0), Seller shall sell, assign,
transfer and deliver to Buyer, and Buyer shall purchase and accept from Seller,
the Shares for the aggregate purchase price of $331,200,000 (the "Purchase
Price"), payable as provided in Section 0. The Purchase Price is subject to
adjustment as provided in Section 2.3.
Payment of Purchase Price.
-------------------------
The Purchase Price shall be paid by Buyer to Seller on the Closing
Date by wire transfer of same day immediately available funds.
CLOSING
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The Closing; Post-Closing Purchase Price Adjustment.
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The closing ("Closing") of the sale and purchase of the Shares
contemplated hereby shall take place at the offices of the legal counsel for
Buyer's lead lender described in the Financing Letters (as defined in Section
4.5) in New York, New York, at 10:00 a.m. local time on December 29, 1995 or, if
later, the date that is five business days following notice from Buyer to Seller
of the anticipated satisfaction of the condition set forth in Section 7.7, or on
such other date and such other place as the parties may agree, but in any event
not later than January 31, 1996 ("Termination Date"); provided, however, in the
event that any of the conditions set forth in Sections 6.4, 6.5, 7.4 and 7.5
shall not have been met or waived in writing by the Termination Date, such date
shall be extended to the first to occur of (i) the satisfaction or written
waiver of all such conditions or (ii) March 15, 1996. The day of Closing is
referred to hereinafter as the "Closing Date."
Stock Certificates.
------------------
At the Closing, Seller shall deliver to Buyer stock certificates
representing all of the Shares, duly endorsed in blank or accompanied by stock
powers executed in blank, in proper form for transfer, together with any
required transfer stamps.
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Post-Closing Purchase Price Adjustment.
--------------------------------------
Within 60 days after the Closing Date, Buyer will prepare and
deliver to Seller a consolidated balance sheet (the "Closing Date Balance
Sheet") for the Company and the Subsidiaries as of the close of business on the
Closing Date (determined on a pro forma basis as though the parties had not
consummated the transactions contemplated by this Agreement). The Closing Date
Balance Sheet will be audited by KPMG Peat Marwick ("Peat"), whose opinion will
be appended thereto. The Closing Date Balance Sheet will be prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the preparation of the Latest Balance Sheet (as defined in
Section 3.3. below); provided, however, that (i) inventories will be calculated
at cost (first-in, first-out) or market, whichever is lower, (ii) intercompany
receivables, intercompany payables and notes payable to affiliates will be
excluded, (iii) any asset or liability of the Company and the Subsidiaries
retained by Seller pursuant to this Agreement will be excluded and (iv) any
other adjustments shall be made which were made in the calculation of Target Net
Worth attached hereto as Schedule 2.3 (iv) (Subsections (i), (ii), (iii) and
(iv) hereof collectively referred to as the "Balance Sheet Adjustments").
Representatives from both Seller and Buyer shall be entitled to participate in
the taking of any physical inventories conducted with respect to the Company and
the Subsidiaries on or after the date of this Agreement. The fees and expenses
of Peat will be paid by Buyer.
On or prior to the date 20 business days after delivery to Seller
of the Closing Date Balance Sheet (the "Adjustment Date"), Seller and Buyer
shall mutually agree upon the "Adjusted Closing Net Worth". The "Adjusted
Closing Net Worth" shall mean the Shareholder's Equity of the Company and the
Subsidiaries reflected on the Closing Date Balance
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Sheet. In the event that Seller and Buyer are unable to agree on the Adjusted
Closing Net Worth within such 20 day period, Seller and Buyer shall submit the
dispute to Xxxxxx Xxxxxxxx & Co. (the "Arbiter"), for resolution. Promptly, but
no later than 20 days after its acceptance of its appointment as Arbiter, the
Arbiter shall determine, based solely on presentations by Seller and Buyer, and
not by independent review, only those issues in dispute and shall render a
report as to the dispute and the resulting computation of the Adjusted Closing
Net Worth which shall be conclusive and binding upon the parties. The fees,
costs and expenses of the Arbiter shall be borne by each party in proportion
that the aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by such party bears to the aggregate dollar amount of
the items submitted by the Arbiter.
To the extent the Adjusted Closing Net Worth is less than the
"Target Net Worth" in an amount that is greater than $2,000,000, Seller shall
pay the amount of such difference in excess of $2,000,000 to Buyer (plus
interest from the Adjustment Date through the date of payment at the prime
lending rate of Bankers Trust Company from time to time prevailing ), as an
adjustment to the Purchase Price, by wire transfer of immediately available
funds within two business days of the final determination of Adjusted Closing
Net Worth. The "Target Net Worth" shall mean $250,895,000, which is the
Shareholder's Equity reflected on the Latest Balance Sheet, adjusted to give
effect to the Balance Sheet Adjustments. In the event the Adjusted Closing Net
Worth is equal to or greater than $248,895,000, no adjustment to the Purchase
Price will be made.
Seller will make its books, records and personnel available to
Buyer and its accountants and other representatives, and Buyer will cause the
Company and the Subsidiaries
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to make their respective books, records and personnel and Peat's work papers and
back-up materials used in preparing and auditing the Closing Date Balance Sheet
available to Seller and its accountants and other representatives, at reasonable
times and upon reasonable notice at any time during (A) the preparation by Buyer
of the Closing Date Balance Sheet, (B) the review by Seller of the Closing Date
Balance Sheet and (C) the resolution by the parties and, if necessary, the
Arbiter of any disputes involving the Closing Date Balance Sheet.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer that the statements contained
in this Article 3 are correct as of the date of this Agreement, and will be
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this
Article 3).
Organization and Corporate Power.
--------------------------------
Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Vermont. Except as set forth in
Schedule 3.1, each of the Company and the Subsidiaries (as defined in Section
3.14) (i) is a corporation duly organized and validly existing in good standing
under the laws of its jurisdiction of incorporation and (ii) is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the properties owned or leased by it or
the nature of the business conducted therein requires it to be so qualified
except where the failure to qualify would have a material adverse effect on the
Company and the Subsidiaries, taken as a whole. Schedule 3.1 sets forth each
state in which the Company or the Subsidiaries are qualified to do business as a
foreign corporation. Seller has full corporate power and authority to execute,
deliver and
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perform this Agreement and to consummate the transactions contemplated hereby.
Each of the Company and the Subsidiaries has full power and authority to carry
on its business as conducted at the present time and to own and use the
properties owned and used by it.
Authorization.
-------------
This Agreement has been duly authorized, executed and delivered by
Seller and constitutes a valid and legally binding agreement of Seller,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Financial Statements.
--------------------
Delivered contemporaneously herewith to Buyer are the following
financial statements:
the (i) audited statements of income and cash flows for the years
ended December 31, 1992, December 31, 1993 and December 31, 1994 and (ii) the
audited consolidated balance sheet of the Company and the Subsidiaries as of
December 31, 1993, and December 31, 1994, together with the notes thereto and
the reports thereon of KMPG Peat Marwick; and
the unaudited consolidated balance sheet of the Company and the
Subsidiaries as of October 31, 1995 (the "Latest Balance Sheet") and the related
statement of income and cash flows for the ten-month period then ended.
Except as set forth on Schedule 3.3, each of the foregoing financial
statements (including in all cases the notes thereto, if any) fairly presents
the financial position of and the results of operations for the entities
reported on and is consistent with the books and records of
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the Company and the Subsidiaries and has been prepared in accordance with
generally accepted accounting principles, consistently applied, subject in the
case of the financial statements referred in (b) above to changes resulting from
normal year-end adjustments. The books and records upon which the foregoing
financial statements are based are true and complete.
Absence of Undisclosed Liabilities.
----------------------------------
Except as set forth on Schedule 3.4, neither the Company nor any of
the Subsidiaries has any material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due)
other than (a) liabilities set forth on the Latest Balance Sheet (including the
notes thereto), (b) liabilities and obligations which have arisen after the date
of the Latest Balance Sheet in the ordinary course of business , (c) obligations
not arising from a default under contracts or commitments described on any
Schedules hereto or not required to be described thereon because of the nature
and amount of such contracts or commitments, and (d) other liabilities and
obligations expressly disclosed in the other Schedules to this Agreement.
Absence of Certain Developments.
-------------------------------
There has not been any material adverse change in the financial
position or results of operation of the Company and the Subsidiaries since the
date of the Latest Balance Sheet; except, however, for changes (i) in the
furniture industry in general, (ii) in the economy in general, or (iii) as a
result of the seasonality of the business of the Company and the Subsidiaries,
or any of them. In addition, except as expressly contemplated by this Agreement
or as set forth on Schedule 3.5, since the date of the Latest Balance Sheet,
there has not occurred any of the following events without the prior written
consent of Buyer:
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the issuance of any notes, bonds or other debt securities or any
equity securities;
the borrowing of any amount of money or the incurring of or
becoming subject to any liabilities, except (i) current liabilities incurred in
the ordinary course of business, and (ii) liabilities under contracts entered
into in the ordinary course of business;
the discharge or satisfaction of any lien or encumbrance or the
payment of any obligation or liability, other than current liabilities paid in
the ordinary course of business;
the mortgage or pledge of any properties or assets or the
subjection of any property or asset to any lien, security interest, charge or
other encumbrance, except liens for current property taxes not yet due and
payable;
the cancellation of any debts or claims except in the ordinary
course of business;
the sale, assignment or transfer of (i) any tangible assets,
other than the sale of inventory in the ordinary course of business, or (ii) any
trademarks, service marks, trade names, copyrights, trade secrets or other
intangible assets;
any capital expenditures or commitments therefor that aggregate
in excess of $2.5 million per calendar quarter;
any loan or bonus payment to an officer, director, shareholder or
affiliate of the Company or any of the Subsidiaries;
the adoption or entering into, or the amendment, modification or
termination of, any collective bargaining agreement, Employee Benefit Plan, or
Employee Benefit Arrangement (as such terms are defined in Section 3.25 hereof),
or the granting of any
8
increase in compensation or the making of any other material change in
employment terms for any of its directors, officers or employees outside of the
ordinary course of business;
any loans or advances to, or guarantees for the benefit of, any
persons in excess of $150,000 in the aggregate, other than endorsements of
negotiable instruments made for collection;
any material charitable contributions or pledges;
any theft, damage, destruction or casualty loss exceeding in the
aggregate $500,000, whether or not covered by insurance;
any conduct of the business of the Company and the Subsidiaries
outside the ordinary course of business;
any new elections or change in any current election with respect
to Taxes (as defined in Section 3.22 hereof) affecting the Company or the
Subsidiaries; and
any commitment on the part of the Company and the Subsidiaries to
any of the foregoing.
Real Property.
-------------
Schedule 3.6 sets forth a complete list and summary description of all
real property, leases, subleases and other rights or interests of record in real
property and improvements thereon, wherever located, owned, leased, occupied or
used by the Company or any of the Subsidiaries (the "Real Property Interests"),
together with a description of the instruments or other documents by which the
same were acquired and the recording data applicable thereto. Within ten (10)
days of the execution of this Agreement by the parties hereto, Seller will
deliver to Buyer true and correct copies of all deeds, leases, subleases,
surveys,
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documents of title, title opinions and title insurance policies relating to the
Real Property Interests which are in the possession of Seller. Except as set
forth on Schedule 3.6 and except for: (a) liens for current ad valorem taxes not
yet delinquent, (b) covenants, conditions and restrictions of record which are
not violated by existing uses or improvements and which do not materially
interfere with the use of the Real Property Interests and do not adversely
affect the merchantability of the title to the Real Property Interests and (c)
statutory liens with respect to current obligations not yet delinquent (other
than for current ad valorem taxes not yet delinquent) and other title defects
which do not materially interfere with the existing use of the Real Property
Interests and do not materially adversely affect the merchantability of the
title thereto, the Company and the Subsidiaries have good and marketable title
to the Real Property Interests, free and clear of any mortgage, security
interest, lien, lease, encumbrance, option or agreement and there are no pending
or, the knowledge of Seller, threatened condemnation or eminent domain
proceedings, lawsuits or administrative actions, special assessments or changes
in assessed valuation (other than routine changes to assessed valuations and tax
rates) relating to the property affecting materially and adversely the current
use or occupancy . Except as set forth in Schedule 3.6, each of the Real
Property Interests listed and described in Schedule 3.6 is in full force and
effect, and there is no material default by the Company or any of the
Subsidiaries or, to the knowledge of Seller, by any other party under any such
Real Property Interests.
Tangible Personal Property.
--------------------------
The Company and the Subsidiaries have good and marketable title to all
of the equipment, machinery, motor vehicles, furniture and fixtures, inventory
and supplies and other tangible personal property owned or leased by the Company
and the Subsidiaries, free and clear
10
of any mortgage, liability, security interest, pledge, lien or encumbrance of
any kind or nature whatsoever except as set forth in Schedule 3.7 and except for
liens for current ad valorem taxes not yet delinquent. All such tangible
personal property used at present in the operations of the Company and the
Subsidiaries is in good operating condition and repair (subject to normal wear
and tear).
Inventories and Supplies.
------------------------
All of the inventories and supplies of each of the Company and the
Subsidiaries are reflected on the Latest Balance Sheet, at standard cost, or
latest purchase price when inventoried, whichever is lower, and all such
inventories and supplies, together with inventories and supplies acquired since
the date of the Latest Balance Sheet, are of sufficient quality and quantity for
the normal operation of the business of the Company and the Subsidiaries, and
are free and clear of any claim, security interest, pledge or lien or
encumbrance of any kind or nature whatsoever.
Intellectual Property Rights.
----------------------------
Schedule 3.9 sets forth a true and correct list of all of the patents
(including all reissues, divisions, continuations, continuations-in-part and
extensions thereof), applications for patents, patent disclosures docketed,
inventions, improvements, trademarks (including service marks), trademark
applications, trade names, copyrights and copyright registrations owned by the
Company or any of the Subsidiaries, and all licenses, franchises, permits,
authorizations, agreements and arrangements that concern the same or that
concern any intellectual property owned by others and used by the Company or any
of the Subsidiaries. True and correct and complete copies of all such
intellectual property, licenses, franchises, permits, authorizations,
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agreements and arrangements will be delivered by Seller to Buyer within ten (10)
days of the execution of this Agreement by the parties hereto. The use of such
intellectual property rights by the Company and the Subsidiaries does not
conflict with the rights of others, nor, to the knowledge of Seller, is any
third party infringing upon the intellectual property rights of the Company or
any Subsidiary. Each of the Company and the Subsidiaries owns or is the licensee
of all rights to all patents, patent applications, inventions, improvements,
trademarks, trademark applications, trade names, copyrights or other
intellectual property necessary to conduct its present business operations.
Accounts and Notes Receivable.
-----------------------------
The accounts and notes receivable reflected on the Latest Balance
Sheet are owned by the Company and the Subsidiaries free and clear of any
security interest, pledge or lien or encumbrance of any kind or nature
whatsoever except as set forth on Schedule 3.10 and, subject to the amounts
reflected in the Latest Balance Sheet for bad debts or doubtful accounts, are
collectible in the normal course of business. The accounts and notes receivable
of the Company and the Subsidiaries created from and after the date of the
Latest Balance Sheet to the Closing Date will be free and clear of any pledge,
security interest or lien or encumbrance of any kind or nature whatsoever except
as set forth on Schedule 3.10 and, subject to the amounts which are reflected in
the books and records of the Company and the Subsidiaries for bad debts or
doubtful accounts and which are consistent with the past practices of the
Company and the Subsidiaries with respect to the bad debts or doubtful accounts,
will be collectible in the normal course of business.
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Outstanding Capital Stock.
-------------------------
For each of the Company and the Subsidiaries, the title, par value,
number of authorized shares, number of issued and outstanding shares of each
class of capital stock and the persons owning beneficially and of record the
outstanding shares of each such class of capital stock are set forth on Schedule
3.11. No other class of capital stock of the Company or any Subsidiary is
authorized or outstanding. All of the issued and outstanding shares of each of
the Company and the Subsidiaries, including the Shares, are duly authorized and
are validly issued, fully paid and nonassessable and none of such shares have
been issued in violation of any preemptive rights of shareholders, the
provisions of the applicable Articles or Certificate of Incorporation or any
applicable law. The Shares constitute all of the issued and outstanding shares
of capital stock of the Company.
Options or Other Rights.
-----------------------
There is no outstanding right, subscription, warrant, call,
unsatisfied preemptive rights, option or other agreement of any kind to purchase
or otherwise to receive from the Company, any Subsidiary or Seller any shares of
the capital stock or any other security of the Company or any Subsidiary, and
there is no outstanding security of any kind convertible into such capital
stock.
Title to Shares.
---------------
Seller owns and holds beneficially and of record, free and clear of
any lien or other encumbrance, or owns of record and has full power and
authority to transfer and dispose of free and clear of any claim, suit,
proceeding, call, voting trust, proxy, restriction, security interest, lien or
other beneficial interest or encumbrance of any kind or nature whatsoever (other
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than created by Buyer), all of the Shares and, upon delivery of and payment for
such Shares as herein provided, Buyer will acquire good and valid title thereto,
free and clear of any claim, suit, proceeding, call, voting trust, proxy,
restriction, security interest, lien or other beneficial interest or encumbrance
of any kind or nature whatsoever.
Subsidiaries.
------------
The sole first tier subsidiary corporation of the Company is
Thomasville Enterprises, Inc., a Vermont corporation (the "First Tier
Subsidiary"). The sole subsidiary corporations of the First Tier Subsidiary are
as set forth on Schedule 3.14 (collectively, the "Second Tier Subsidiaries").
The First Tier Subsidiary and the Second Tier Subsidiaries are referred to
hereinafter collectively as the "Subsidiaries" and individually as a
"Subsidiary". Except as set forth on Schedule 3.14, neither the Company nor any
of the Subsidiaries owns, directly or indirectly, any shares of capital stock or
any other security or interest in any other corporation, partnership, entity or
person. The Company has good and valid title to all of the issued and
outstanding shares of stock of the First Tier Subsidiary, free and clear of any
claim, suit, proceeding, call, voting trust, proxy, restriction, security
interest, lien or other encumbrance of any kind or nature whatsoever, and the
First Tier Subsidiary has good and valid title to all of the issued and
outstanding shares of the stock of each of the Second Tier Subsidiaries, free
and clear of any claim, suit, proceeding, call, voting trust, proxy,
restriction, security interest, lien or other encumbrance of any kind or nature
whatsoever.
Compliance with Laws.
--------------------
The Company and the Subsidiaries have complied in all respects with
all laws, statutes, rules, regulations and orders of, and have secured all
necessary permits and
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authorizations and licenses issued by, federal, state, local and foreign
agencies and authorities, applicable to their business, properties and
operations. This Section 3.15 does not relate to matters with respect to labor
matters, tax matters, employee benefit plans or environmental matters, which are
the subjects of Sections 3.20, 3.22, 3.25 and 3.27, respectively.
No Breach.
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Except as disclosed on Schedule 3.16, the execution and delivery of
this Agreement by Seller, consummation of the transactions herein contemplated
and compliance with the terms of this Agreement do not conflict with or violate
any provision of the charter documents or bylaws of Seller, the Company or any
Subsidiary; nor do such actions (a) conflict with, (b) result in a breach of the
terms or conditions of, (c) constitute a default under, (d) result in the
creation of any lien, security interest or encumbrance upon any of the capital
stock or assets of the Company or any Subsidiary, (e) give any third party the
right to accelerate any obligations under, or (f) require any filing or the
consent or approval under any material agreement, contract, lease, license,
permit, instrument or other arrangement to which the Company or any Subsidiary
is party or by which any of them are bound or any of their assets are subject,
or any law, statute, rule or regulation to which Seller, the Company or any
Subsidiary is subject, or any order, judgment or decree to which Seller, the
Company or any Subsidiary is subject, or require Seller to make any filing with
or obtain the approval or consent of any foreign, federal, state, county, local
or other governmental or regulatory body, except for the filing with the Federal
Trade Commission and Antitrust Division of the Department of Justice of
Notification and Report Forms pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the rules promulgated
thereunder, and the expiration
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of the waiting period and any extension thereof required to expire under such
Act and rules; provided, however, Seller makes no representations with respect
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to the application to this Agreement and the transactions contemplated hereby of
antitrust laws or other laws or regulation dealing with competition or restraint
of trade.
Litigation.
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Except as disclosed in Schedule 3.17, there are no legal or
governmental proceedings, actions, suits or arbitrations pending or, to the best
of Seller's knowledge, threatened with respect to which the Company or any
Subsidiary is a party or to which any property of the Company or any Subsidiary
is subject. Neither the Company nor any of the Subsidiaries is in violation of
any order, decree or judgment of any court or arbitration tribunal or
governmental board, commission, instrumentality or agency.
Material and Affiliated Contracts.
---------------------------------
Schedule 3.18 sets forth all oral and written contracts, commitments,
or other agreements to which the Company or any Subsidiary is a party or to
which the Company's or any Subsidiary's assets or properties is bound or subject
(a) having an annual cost to the Company or any Subsidiary of $50,000 or more,
(b) under which the Company or any Subsidiary is entitled to receive $50,000 or
more annually, (c) covering indebtedness of the Company or any Subsidiary in the
principal amount of $50,000 or more, (d) covering the employment of any employee
of the Company or any Subsidiary where the annual salary required is $50,000 or
more or involving any obligation to pay severance to any employee (regardless of
amount), (e) covering any other matter material to the business of the Company
and any Subsidiary, (f) which obligates Seller, the Company or any Subsidiary to
act as a guarantor irrespective of the amount involved,
16
(g) involving any franchise, dealer, showroom, distributor or manufacturer's or
sales representative contract which is not terminable by the Company and its
Subsidiaries on six months (or less) notice without penalty, (h) restricting
competition on the part of any of the Company or any Subsidiary, (i) which is
terminable by the other party thereto upon a merger or change of control of the
Company and its Subsidiaries or (j) involving any purchase order which has an
annual cost to the Company and the Subsidiaries in excess of $250,000 and which
has a term of 6 months or more. Buyer acknowledges and agrees that, except for
purchase orders required to be disclosed in (j) above, no purchase order shall
be required to be disclosed on Schedule 3.18. There are no contracts,
agreements, purchase orders, commitments, leases, agreements, including loan
arrangements, between the Company or any Subsidiary and any of their officers,
directors or shareholders, or any related or affiliated person, corporation or
other entity, except as set forth on Schedule 3.18 (a true and correct and
complete copy of each such written document and a true and correct and complete
written description of each such oral relationship having heretofore been
delivered by Seller to Buyer), and none shall be entered into by the Company or
any Subsidiary from the date hereof through the Closing Date without the prior
written consent of Buyer. Each such contract, commitment or other agreement is
legal, valid, binding, enforceable obligation of the Company and/or the
Subsidiary or Subsidiaries which is a party thereto. Neither the Company nor any
of the Subsidiaries nor, to the knowledge of Seller, any other party thereto, is
in material breach or material default of any such contract, commitment or other
agreement nor has any event occurred which with notice or lapse of time would
constitute such a breach or default or permit termination, modification or
acceleration by any third party thereunder.
17
Licenses and Permits.
--------------------
The Company and the Subsidiaries have all licenses, permits and other
authorizations from federal, state, local and other governmental or
administrative authorities necessary for the conduct of their respective
businesses and all present business activities of the Company and the
Subsidiaries. Except as set forth in Schedule 3.19, (a) each of said permits,
licenses and other authorizations is in full force and effect, (b) the Company
and the Subsidiaries are in compliance with the terms, provisions and conditions
thereof, and (c) there are no outstanding violations, notices of noncompliance,
judgments, consent decrees, agreed orders or judicial or administrative
action(s) or proceeding(s) affecting any of said permits, licenses and other
authorizations. This Section 3.16 does not relate to matters with respect to
environmental matters, which are the subject of Section 3.27.
Labor Matters.
-------------
No union is certified as collective bargaining agent to represent any
employee of the Company or any Subsidiary. Except as set forth in Schedule
3.20, the Company and the Subsidiaries are in compliance with all applicable
laws pertaining to employment and employment practices, terms and conditions of
employment, and wages and hours. Except as set forth on Schedule 3.20, neither
the Company nor any Subsidiary (a) is a party to, involved in or threatened by
any labor dispute, work stoppage, unfair labor practice charge, labor
arbitration proceeding or grievance proceeding, (b) is currently negotiating any
collective bargaining agreement or (c) is aware of any threatened work stoppage,
strike or filing by any employee or employee group seeking recognition as a
collective bargaining representative or unit. This
18
Section 3.20 does not relate to matters with respect to employee benefit plans,
which are the subject of Section 3.25.
Charters and Bylaws.
-------------------
True and complete copies of the charter documents and bylaws of the
Company and the Subsidiaries (and all amendments thereto at any time prior to
the date of this Agreement), and the minute books thereof have been provided to
Buyer. The minute books of the Company and the Subsidiaries contain true and
complete originals or copies of all minutes of meetings of and actions by the
stockholders, Boards of Directors and all committees of the Boards of Directors
of the Company and the Subsidiaries. The aforesaid charter documents and bylaws
are true, correct and complete as of the date hereof, and there will be no
amendments or additions thereto prior to the Closing without the prior written
consent of Buyer.
Tax Matters.
-----------
Except as set forth on Schedule 3.22(d), the Company and the
Subsidiaries have properly prepared and filed, or have caused to be properly
prepared and filed, in a timely manner, all Returns required to be filed by them
on or prior to the date hereof, and have paid (or withheld and paid over) or
will pay all of such Taxes shown as due and payable on such Returns. All such
Returns that have been filed are true, complete and correct in all respects.
The Company and the Subsidiaries have properly accrued and reflected
on the Latest Balance Sheet, and have thereafter to the date hereof properly
accrued all liabilities for taxes and assessments, and will timely and properly
file all such federal, state, local and foreign Returns which it is required to
file for any taxable period ending on or before the Closing Date, either on its
own behalf or on behalf of its employees or other persons or entities, all such
19
Returns to be true and correct and complete in all respects, and will pay or
cause to be paid when due all Taxes which have become due and payable pursuant
to such Returns for all taxable periods ending on or before the Closing Date.
Member of Affiliated Group. Since 1988, the Company and the
--------------------------
Subsidiaries have been members of an affiliated group of corporations within the
meaning of section 1504 of the Code, with respect to which Parent is and at all
times has been the common parent, and have joined in or will join in the filing
of Parent's consolidated federal income tax returns for all its taxable periods
ending on or prior to the Closing Date. Since 1988, neither the Company nor any
of the Subsidiaries have been a member or any other affiliated group of
corporations within the meaning of section 1504 of the Code.
Statutes of Limitations. No waiver or extension of any statute
-----------------------
of limitations is in effect with respect to Taxes or Returns of the Company, the
Subsidiaries, Parent, Seller or any Tax Affiliate.
Tax Audits. The United States Internal Revenue Service has
----------
examined the consolidated federal Income Tax Returns of Parent which include the
Company and Subsidiaries for all years up to and including the year ended
December 31, 1992. The separate state, local and foreign Income Tax Returns of
the Company and the Subsidiaries for taxable periods ending on or after December
31, 1991 have been audited as set forth in Schedule 3.22(d). The combined state
and local income Returns in which the income of the Company and the Subsidiaries
are included for taxable periods ending on or after December 31, 1991 have been
audited as set forth in Schedule 3.22(d).
20
Except as set forth in Schedule 3.22(d), no audit is in process, or
pending with respect to the Company, the Subsidiaries', Parents', Seller's or
any Tax Affiliate's Returns, nor is any audit in process, or pending in which
issues have been raised specifically in connection with present or former assets
of the Company and the Subsidiaries. To the knowledge of Seller, no audit is
threatened with respect to the Company's, any Subsidiary's, Parent's, Seller's
or any Tax Affiliate's Returns nor is any audit threatened in which issues have
been raised specifically in connection with present or former assets of the
Company and the Subsidiaries. All such issues raised in connection with any
past audits have been fully resolved or finally settled and any deficiency in
Taxes associated with such issues has been satisfied.
Returns Furnished. Seller has furnished to Buyer or its counsel
-----------------
true and complete copies of (i) relevant portions of tax audit reports,
statements of deficiencies, closing or other agreements received by the Company,
the Subsidiaries, Parent or Seller on behalf of the Company or the Subsidiaries
relating to the assets or business of the Company or the Subsidiaries from the
Internal Revenue Service, or from any other taxing authority (sometimes
collectively referred to as a "Taxing Authority") and (ii) all pro forma
separate federal, state and local income Returns of Company and Subsidiaries and
the relevant portions of all pro forma separate federal, state, local and
foreign Income Tax Returns of any Tax Affiliate relating to the assets of
Company and Subsidiaries for the Company and the Subsidiaries taxable periods
ending on or after December 31, 1991.
Affiliated Group Allocation Agreement. The Company and the
-------------------------------------
Subsidiaries are parties to an unwritten affiliated group consolidated return
tax allocation agreement with Parent and its Tax Affiliates.
21
Foreign Taxes. None of the Company, the Subsidiaries, Parent or
-------------
Seller is liable for taxes to any foreign taxing authority. Except as provided
in Schedule 3.22(g), Company and Subsidiaries do not have and have not had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country, any
branch operation in a foreign county or any other taxable presence in a foreign
jurisdiction. The Company, each Subsidiary, Parent and Seller have evidence of
payment of all Taxes of a foreign country, if any, paid or accrued from the date
of formation of each of them, respectively.
Accounting Methods. None of the Company, or the Subsidiaries nor
------------------
any Tax Affiliate is required to include in income any adjustment under
(S)481(a) of the Code by reason of a change in accounting method initiated by
the Company, the Subsidiaries or any Tax Affiliate and the Internal Revenue
Service has not proposed any such adjustment or change in accounting method.
Definitions. For purposes of this Agreement the following
-----------
definitions shall apply:
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and/or, where appropriate, its predecessor, the Internal Revenue
Code of 1954, as amended, or any successor thereto.
"Income Tax" shall mean (i) federal, state, local or foreign
income or franchise taxes or other taxes measured by income and all other
taxes reported on Returns which include federal, state or local income or
franchise taxes or other taxes measured by income, together with any
interest, penalties or additions to tax imposed
22
with respect thereto and (ii) any obligations under any agreements or
arrangements with respect to any Income Taxes described in clause (i)
above.
"Returns" shall mean all returns including without limitation all
returns, declarations, forms, reports, estimates, information statements,
schedules, any amendments thereto and returns relating to or required by
law to be filed by the Company or the Subsidiaries in connection with any
Taxes and, in the case of consolidated or combined tax returns, by Parent
on behalf of the Company or any Subsidiary, and all information returns
(e.g., Form W-2, Form 1099) and reports relating to Taxes of the Company or
any Subsidiary. Any one of the foregoing Returns shall be referred to
sometimes as a "Return."
"Tax Affiliate" shall mean, with respect to a company, any member
of an affiliated group as defined in section 1504 of the Code or member or
a combined or unitary group of which such company is or was a member (other
than such company).
"Taxes" shall mean (i) all taxes (whether federal, possession,
state, local or foreign or any governmental unit, agency or political
subdivision of the foregoing) based upon or measured by income and any
other tax whatsoever, including, without limitation, gross receipts,
profits, sales, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, employment, excise, real estate gains,
real estate transfer or property taxes, customs duties, levies or other
charges, and any other governmental charges of the same or similar nature
or in lieu thereof, together with any interest or penalties or additions to
tax imposed with respect thereto and (ii) any obligations under any
agreements or arrangements with respect to any Taxes described in
23
clause (i) above. Any Taxes, penalties or interest payable as a result of
an audit of any Return or any other adjustment with respect thereto shall
be deemed to have accrued in the period to which such Taxes, penalties or
interest are attributable.
Workers' Compensation
---------------------
The Company and the Subsidiaries have been self-insured or have
carried workers' compensation and employer liability insurance coverage as
required by applicable workers' compensation laws or regulations covering all
employees employed by the Company and the Subsidiaries.
Insurance.
---------
Schedule 3.24 sets forth: (i) each insurance policy under which the
Company and the Subsidiaries or their assets or properties is a direct or
indirect beneficiary; (ii) the name of the insurer with which such policy is or
was carried; (iii) the liabilities covered thereunder; (iv) the amount of
coverage thereunder; (v) the period of coverage thereunder; (vi) a designation
of which policies provide coverage on a "claims made" basis and which provide
coverage on an "occurrence basis"; and (vii) a designation of whether such
policy is carried by the Company and the Subsidiary, or by any other person.
Schedule 3.24 also contains a description of any program of self-insurance
maintained by Seller or by the Company or the Subsidiaries to cover claims
against or losses incurred by the Company or the Subsidiaries arising on or
prior to the Closing Date. All insurance policies and programs of self
insurance listed on Schedule 3.24 will be maintained or will be replaced with
substantially equivalent policies or programs and such coverage will not be
canceled or terminated prior to the Closing. Seller shall have no obligation to
continue any such insurance after the Closing.
24
Employee Benefit Plans.
----------------------
Whenever any of the terms set forth below is used in this
Agreement, it shall have the following meaning: (i) "COBRA" means any liability
or obligation to provide continued health care coverage under ERISA Section 601
or in Code Section 4980B; (ii) "Employee Benefit Arrangement" means any
employment, severance, or similar contract, arrangement, or policy (exclusive of
any such contract, arrangement or policy which is terminable within 30 days
without liability), or any plan or arrangement providing for severance benefits,
insurance coverage (including pursuant to any self-insured plan or arrangement),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, fringe benefits (other than retirement benefits, deferred
compensation, profit sharing and compensation benefits), sick leave, maternity,
paternity, family leave or other leave, bonuses, stock options, stock
appreciation rights, or other forms of incentive compensation or post-retirement
insurance or welfare benefits, any employment consulting, engagement or retainer
agreement, in each such case other than any Non-U.S. Employee Benefit
Arrangement; (iii) "Employee Benefit Plan" has the meaning set forth in ERISA
Section 3(3); (iv) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended; (v) "ERISA Affiliate" means any entity which would be treated
as a single employer together with the Company and any Subsidiary under Code
Section 414; (vi) "Multi-Employer Plan" has the meaning set forth in ERISA
Section 3(37) or ERISA Section 4001(a)(3); (vii) "Non-U.S. Employee Benefit
Arrangement" means any employment, severance, or similar contract arrangement,
or policy, whether or not considered legally binding, or any plan or arrangement
providing for severance benefits, insurance coverage (including pursuant to any
self-insured plan
25
or arrangement), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, fringe benefits, sick leave,
maternity, paternity, family leave or other leave, retirement benefits, deferred
compensation profit-sharing, bonuses, stock options, stock appreciation rights,
or other forms of incentive compensation or post-retirement insurance,
compensation, or benefits, any employment, consulting, engagement or retainer
agreement for the benefit of non-U.S. employees, non-U.S. former employees or
non-U.S. consultants; (viii) "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor agency ; (ix) "Prohibited Transaction" has the
meaning set forth in ERISA Section 406 in Code Section 4975; and (x) "Reportable
Event" has the meaning set forth in ERISA Section 4043.
Schedule 3.25(b) lists each Employee Benefit Plan covered by or
subject to ERISA that any of Parent, Seller, the Company, and/or any Subsidiary
maintains or administers, or to which any of them contributes, in each such case
covering any employee or former employee of the Company and/or any Subsidiary.
There are no retirement benefit, deferred compensation, profit sharing or
compensation benefit plans that any of Parent, Seller, the Company and/or the
Subsidiaries maintains or administers, or to which any of them contributes, in
each case covering any employee of the Company or former employee and/or any
Subsidiary, which is not an Employee Benefit Plan. There are no negotiations,
demands or proposals which are pending or threatened which concern matters now
covered, or that would be covered, by any Employee Benefit Plan.
Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation with the
applicable requirements of any and all statutes, orders or governmental rules or
regulations currently in effect, including but not
26
limited to ERISA, the Code, and other applicable laws. Parent, Seller, Company
and each of the Subsidiaries has performed all obligations required to be
performed by them under, and are not in default under or in violation of, the
terms or any of the Employee Benefit Plans.
All required notices, reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, Forms PBGC-1, and Summary Plan
Descriptions) have been filed or distributed where required with respect to each
such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Code Sec. 4980B as well as the applicable provisions of the
Social Security Act and the Public Health Service Act have been met with respect
to each such Employee Benefit Plan that is a group health plan (within the
meaning ERISA Sec. 601 and Code Sec. 4980B).
All contributions (including all employer contributions and
employee salary reduction contributions), premiums and administrative charges
which are due and payable with respect to any Employee Benefit Plan for all
periods ending prior to the Closing Date have been or will be made prior to the
Closing Date by Parent, Seller, the Company, and/or the Subsidiaries in
accordance with applicable law and the terms of each such Employee Benefit Plan.
Each such Employee Benefit Plan which is an employee pension
benefit plan and which is intended to meet the requirements of a qualified plan
under Code Sec. 401(a) has either (i) received a favorable determination letter
from the Internal Revenue Service covering such Employee Benefit Plan as amended
for the Tax Reform Act of 1986, the Unemployment Compensation Act of 1992, and
the Omnibus Budget Reconciliation Act of 1993 (and the related trust has been
determined to be exempt from taxation under (S)501(a) of the
27
Code), or (ii) timely applied to the Internal Revenue Service for a favorable
determination letter covering such Employee Benefit Plan. No amendment made (or
the failure of such amendment to be made) to any such Employee Benefit Plan
subsequent to the date of such determination letter has adversely affected the
qualified status of any such plan, and Seller knows of no fact or set of
circumstances that would adversely affect such qualification prior to the
Closing.
Seller has delivered to Buyer correct and complete copies of the
current plan document and summary plan description, the most recent favorable
determination letter received from the Internal Revenue Service, the most recent
Form 5500 Annual Report filed with the Internal Revenue Service, the three most
recent actuarial reports, and all related trust agreements, insurance contracts,
and other funding agreements which implement or evidence each such Employee
Benefit Plan, in each case as applicable to such Employee Benefit Plan. In
addition, to the extent applicable with respect to each Employee Benefit Plan,
Seller has delivered to Buyer (i) correct and complete copies of any Form 5310
and related filings with the PBGC; (ii) ruling letters and any outstanding
requests for ruling letters with respect to the tax exempt status of any VEBA
which is implementing any Employee Benefit Plan; and (iii) general notification
to employees of their rights under Code Section 4980B and form of letters
distributed upon the occurrence of a qualifying event described in Code Section
4980B, in the case of an Employee Benefit plan that is a "group health plan" as
defined in Code Section 162(i).
There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan (and there is no fact or circumstance which may lead
to the occurrence of any such Prohibited Transaction) and no plan fiduciary nor
any officer, director, or employee of Parent, Seller, the Company or any of the
Subsidiaries has any liability for breach of fiduciary
28
duty or any other failure to act or comply in connection with the administration
or investment of the assets of or otherwise involving any such Employee Benefit
Plan. No action, suit, arbitration, proceeding, hearing, claim, or investigation
with respect to the administration of or otherwise involving the assets of any
such Employee Benefit Plan (other than routine claims for benefits) is pending
or, to the knowledge of any facts which would or could give rise to any action,
suit, grievance, arbitration or other manner of litigation, or claim.
Schedule 3.25(i) lists any Employee Benefit Arrangement providing
medical, health, or life insurance or other welfare-type benefits for currently
(or future) retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980B) which any of Parent, Seller, the
Company and the Subsidiaries maintains or administers, or to which any of them
contributes, in each case covering any employee or former employee of any of the
Company and the Subsidiaries.
With respect to each Employee Benefit Plan which is an employee
pension benefit plan subject to Title IV of ERISA that any of the Parent,
Seller, the Company, the Subsidiaries, and their ERISA Affiliates maintains or
administers or ever has maintained or administered, or to which any of them
contributes, ever has contributed, or ever has been required to contribute, in
each such case since January 1, 1990:
No such employee pension benefit plan has been completely or
partially terminated or been the subject of a
Reportable Event as to which notices would be required
to be filed with the PBGC, and no proceeding by the
PBGC to
29
terminate any such employee pension benefit plan has
been instituted or threatened.
None of the Company, the Subsidiaries, and their respective
ERISA Affiliates has any liability to the PBGC (other
than for PBGC premium payments) or otherwise under
ERISA or under the Code (including any withdrawal
liability or any accumulated funding deficiency,
whether or not waived, within the meaning of ERISA
(S)302 or Code (S)412, or any termination liability
under ERISA (S)4062 or 4063).
Neither Parent, Seller, the Company, nor any of the Subsidiaries
contributes, ever has contributed, ever has been required to contribute, or has
ever been a participant in a Multiemployer Plan in each such case during the
period since January 1, 1985 and covering any employee or former employee of any
of the Company and the Subsidiaries.
Schedule 3.25(l) lists each Employee Benefit Arrangement other
than those described in Schedule 3.25(b) that has been entered into, maintained,
or administered, as the case may be, by any of Parent, Seller, the Company, and
the Subsidiaries and that currently covers any employee or former employee of
any of the Company and the Subsidiaries. Each such Employee Benefit Arrangement
and the administration thereof complies with its terms and with the requirements
of applicable statutes, orders, rules, and regulations.
Since January 1, 1990, neither Seller, the Company nor the
Subsidiaries has terminated or taken action to terminate any Employee Benefit
Plan covering any employee or former employee of the Company and the
Subsidiaries.
30
The statements of assets and liabilities of the Employee Benefit
Plans covering any employee or former employee of any of the Company and the
Subsidiaries as of the end of the most recent three fiscal years for which
information is available, and the statements of changes in fund balances,
financial position and net assets available for benefits under such Employee
Benefit Plans for such fiscal years, copies of which have been certified by
Seller and furnished to Buyer, fairly present the financial conditions of such
Employee Benefit Plans as of such date and the results of operations thereof for
the year ended on such date, all in accordance with GAAP applied on a consistent
basis. The actuarial assumptions used for funding purposes have not been changed
since the last written report of actuaries on such Employee Benefit Plans, which
written reports have been furnished to Buyer.
With respect to any Employee Benefit Plan covering any employee
or former employee of any of the Company and the Subsidiaries which is a welfare
plan as defined in Section 3(1) of ERISA; (i) each such welfare plan which is
intended to meet the requirements for tax-favored treatment under Subchapter B
of Chapter 1 of the Code meets such requirements; and (ii) there is no
disqualified benefit (as such term is defined in Code Section 4976(b)) which
would subject the Company or Buyer to a tax under Code Section 4976(a).
Each Employee Benefit Plan covering any employee or former
employee of any of the Company and the Subsidiaries and each Employee Benefit
Arrangement covering any employee or former employee of any of the Company and
the Subsidiaries may be amended or terminated by Parent, Seller, the Company or
the Subsidiaries or Buyer on or at any time after the Closing Date.
31
The Company and the Subsidiaries have no liability under ERISA or
the Code as a result of their being members of a group described in Code
Sections 414(b), (c), (m) or (o).
Neither Parent, Seller, the Company nor any Subsidiary
contributes, ever has contributed, ever has been required to contribute, has
ever been a participant in, or has any obligations or liabilities under any Non-
U.S. Employee Benefit Arrangement covering any employee or former employee of
the Company or any Subsidiary.
All expenses and liabilities relating to the Employee Benefit
Plans have been, and will on the Closing Date be fully and properly accrued on
the books and records of the Company and the Subsidiaries and the financial
statements of the Company and the Subsidiaries reflect all of such liabilities
in a manner satisfying the requirements of GAAP applied on a consistent basis.
Necessary Property.
------------------
The Company and the Subsidiaries own, lease, or have the valid and
enforceable right to use all rights, properties and assets, tangible or
intangible, which are presently used in the conduct of their respective
businesses as presently conducted and as presently proposed to be conducted
until the Closing Date and, to the knowledge of Seller, immediately following
the Closing Date the Company and the Subsidiaries will have the same rights with
respect to such rights, properties and assets.
Environmental Matters.
---------------------
Except as disclosed in Schedule 3.27:
32
the Company and the Subsidiaries have obtained and hold all
Environmental Permits, each of which is listed on Schedule 3.27;
the Company and the Subsidiaries are in substantial compliance
with all terms, conditions and provisions of all (i) Environmental Permits and
(ii) applicable Environmental Laws;
there are no pending, or to the knowledge of the Company or the
Subsidiaries: (i) threatened Environmental Claims against the Company or the
Subsidiaries; and (ii) neither the Company nor the Subsidiaries are aware of any
facts or circumstances which are likely to form the basis for any Environmental
Claim against the Company or the Subsidiaries;
no Releases of Hazardous Materials (except in material compliance
with applicable Environmental Laws) have occurred at, from, in, to, on, or under
any Site during the time when the Company or the Subsidiaries owned, leased or
operated thereon and, no such releases of Hazardous Materials occurred prior to
the time that the Company or the Subsidiary owned, leased or operated thereon,
that could give rise to an Environmental Claim against the Company or the
Subsidiaries;
neither the Company nor the Subsidiaries (including any
predecessor thereof) nor any entity previously owned by the Company or the
Subsidiaries, during the time when the Company or the Subsidiaries owned such
entity and to the knowledge of the Company and the Subsidiaries prior to the
time the Company owned such entity, has transported or arranged for the
treatment, storage, handling, disposal, or transportation ofany Hazardous
Material to any off-Site location which is an Environmental Clean-up Site.
No Site is on the National Priority List or any state equivalent
list, or to the knowledge of Seller, a proposed Environmental Clean-up Site;
33
There are no liens arising under or pursuant to any Environmental
Law on any property currently owned, leased or operated by the Company or any
Subsidiary and, to the knowledge of Seller, there are no facts, circumstances,
or conditions that could reasonably be expected to restrict, encumber, or result
in the imposition of special conditions under any Environmental Law with respect
to the ownership, occupancy, development, use, or transferability of any such
property;
there are no underground storage tanks, polychlorinated biphenyl-
containing equipment or friable or damaged asbestos-containing material at any
property now owned, leased or operated by the Company or the Subsidiaries not in
substantial compliance with applicable Environmental Law; and
to the knowledge of Seller, the currently anticipated aggregate
expenditures, solely of equipment, of the Company and the Subsidiaries are not
in excess of $1,000,000 to comply with applicable Maximum Achievable Control
Technology ("MACT") standards, National Emissions Standards for Hazardous Air
Pollutants ("NESHAPs"), or Reasonably Available Control Technology (RACT) under
the existing Federal Clean Air Act and existing state laws regulating air
emissions.
Within 72 hours following the execution of this Agreement by the
parties hereto, Seller will deliver or make available to Buyer all environmental
investigations, studies, audits, tests, reviews or other analyses with respect
to any Site (including any properties owned, leased or operated by any
predecessors of the Company or the Subsidiaries or any entities previously owned
by the Company or Subsidiaries) ("Environmental Reports") conducted by, on
behalf of, and which are in possession of the Company, the Subsidiaries, Seller
or Parent.
34
For purposes of this Agreement, the following definitions shall apply:
"Environment" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"Environmental Claim" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
written communication, whether criminal or civil, pursuant to or relating to any
applicable Environmental Law by any person (including but not limited to any
Governmental or Regulatory Authority, private person and citizen's group) based
upon, alleging, asserting, or claiming any actual (i) violation of or liability
under any Environmental Law, (ii) violation of any Environmental Permit, or
(iii) liability for investigatory costs, cleanup costs, removal costs, remedial
costs, response costs, natural resource damages, property damage, personal
injury, fines, or penalties arising out of, based on, resulting from, or related
to the presence, Release, or threatened Release into the Environment, of any
Hazardous Materials at any location, including but not limited to any off-Site
location to which Hazardous Materials or materials containing Hazardous
Materials were sent for handling, storage, treatment, or disposal.
"Environmental Clean-up Site" means any location which is listed or
proposed for listing on the National Priorities List, or on any similar state
list of sites requiring investigation or cleanup, or which is currently the
subject of any pending or threatened action, suit, proceeding, or investigation
related to or arising from any alleged violation of any Environmental Law or
Release or threatened or suspected Release or a Hazardous Material.
"Environmental Law" means any and all current, federal, state, local,
provincial, and foreign, civil and criminal laws, statutes, ordinances, orders,
codes, rules, regulations,
35
Environmental Permits, judgments, decrees, injunctions, or agreements with any
Governmental or Regulatory Authority, relating to the protection of health and
the Environment, and/or governing the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, or Release of Hazardous Materials, now existing, including
but not limited to; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. (S) 1801 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. (S) 136 et seq.; the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. (S) 6901 et seq.; the
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. (S) 2701 et seq.; and the state analogies thereto, and any
common law doctrine, including but not limited to, negligence, nuisance,
trespass, personal injury, or property damage related to or arising out of the
presence, Release, or exposure to a Hazardous Material and, with respect to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. (S) 9601 et seq. ("CERCLA") any reauthorization, reenactment or
replacement thereof to the extent the same is no more stringent than the
provisions of CERCLA last in effect.
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consents or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.
36
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state,
country, city or other political subdivision.
"Hazardous Material" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, and any other chemicals, materials,
substances or wastes in any amount or concentration which are now defined as or
included in the definition of "hazardous substances", "hazardous materials",
"hazardous wastes", "extremely hazardous wastes", "restricted hazardous wastes",
"toxic substances", "toxic pollutants", "pollutants", "regulated substances",
"solid wastes", or "contaminants" or words of similar import under any
Environmental Law.
"Release" means any current or prior spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of a Hazardous Material into the Environment.
"Site" means any of the real properties currently or previously owned,
leased or operated by the Company (including any predecessors thereof) or the
Subsidiaries (including any predecessors thereof), including all soil, subsoil,
surface waters and groundwater thereat for purposes of this Section 3.27 of the
Agreement.
Full Disclosure.
---------------
No representation or warranty of Seller in this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
37
Limitation.
----------
NO REPRESENTATION OR WARRANTY WHATSOEVER, OTHER THAN THE EXPRESS
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3, IS MADE BY SELLER.
SELLER EXPRESSLY HEREBY DISCLAIMS ANY OTHER SUCH REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED.
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller that the statements contained
in this Article 4 are correct as of the date of this Agreement, and will be
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article 4).
Organization and Corporate Power.
--------------------------------
Buyer (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and (b) is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions where the failure so to qualify would have a material adverse
effect on Buyer. Buyer has full corporate power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
Authorization.
-------------
This Agreement has been duly authorized, executed and delivered by
Buyer and constitutes a valid and legally binding agreement of Buyer,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
38
No Breach.
---------
The execution and delivery of this Agreement by Buyer, consummation of
the transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or violate any provision of the Articles of
Incorporation or Certificate of Incorporation, as the case may be, or any bylaw
of Buyer; nor to the best knowledge of Buyer, do such actions constitute a
default of or require the consent or approval under any agreement or instrument
to which Buyer is a party or by which Buyer's assets are bound, or require Buyer
to obtain the approval or consent of any foreign, federal, state, county, local
or other governmental or regulatory body, except for the filing with the Federal
Trade Commission and Antitrust Division of the Department of Justice of
Notification and Report Forms pursuant to the HSR Act and the rules promulgated
thereunder, and the expiration of the waiting period and any extension thereof
required to expire under such Act and rules; nor will such actions materially
violate any applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
presently applicable to Buyer; provided, however, Buyer makes no representations
-------- -------
with respect to the application to this Agreement and the transactions
contemplated hereby of antitrust laws or other laws or regulation dealing with
competition or restraint of trade.
No Investigation.
----------------
There exists no investigation by any governmental or regulatory
authority, request for information or action by any third party or legal
proceeding, known to Buyer which seeks to prohibit or restrain the consummation
or performance of this Agreement or the transactions contemplated hereby.
39
Buyer's Financing.
-----------------
Buyer has provided to Seller copies of bank commitments and other
financing letters attached hereto as Schedule 4.5 (the "Financing Letters")
relating to the financing described in Section 7.7 below which have been
executed by Buyer and delivered by Buyer to the lenders named therein. The
Financing Letters have not been revoked or modified. Buyer does not presently
anticipate that it will not satisfy the conditions to the financing set forth in
the Financing Letters (other than any conditions that relate directly to the
Company and the Subsidiaries).
Securities Act of 1933.
----------------------
Buyer is acquiring the Shares solely for its own account and for the
purpose of investment only and not with a view to any distribution thereof.
Buyer acknowledges that the Shares are not registered under the Securities Act
of 1933, as amended, and that such Shares may not be transferred or sold except
pursuant to the registration provisions of such Act or pursuant to an applicable
exemption therefrom and pursuant to applicable state securities laws and
regulations.
COVENANTS AND AGREEMENTS
------------------------
Preservation of Business.
------------------------
From the date hereof through the Closing Date, Seller shall cause the
Company and the Subsidiaries to conduct their respective businesses in the
ordinary course of business consistent with past business practices, and shall
use its commercially reasonable efforts to cause the Company and the
Subsidiaries to preserve their business organizations intact, keep available
40
the services of their present employees, consultants and agents, maintain their
present suppliers and customers and preserve their goodwill.
Negative Covenants of Seller.
----------------------------
Seller covenants and agrees that from and after the date hereof,
neither the Company nor any Subsidiary will, except with the prior written
consent of Buyer:
Propose or effect a split or reclassification of its outstanding
capital stock or a recapitalization;
Mortgage, pledge or otherwise encumber any assets, or dispose of,
or make any agreement with respect to the disposition of, any assets except for
the sale of the same in the ordinary course of business;
Make any capital commitment or expenditure of more than $500,000
for any single commitment or $2,500,000 in the aggregate, or incur or become
liable for any other obligation or liability except current liabilities in the
ordinary course of business;
Adjust in any way, either directly or indirectly, the
compensation or benefits paid or payable to any shareholder, officer, director,
consultant, agent or employee of the Company or any Subsidiary except for such
adjustments as may be made in the ordinary course of business and except as
required under existing agreements described in one or more of the Schedules
hereto or enter into any employment or severance agreement with any of the
foregoing;
Take any action, or enter into contract commitment or other
agreement, which if taken or in effect on the date hereof, would be required to
be disclosed on any Schedule hereto.
41
Seller Tax Matters.
------------------
Federal Taxes for Periods Through the Closing Date. Subject to
--------------------------------------------------
Section 5.3(c) below, Seller will include the income of the Company and the
Subsidiaries (including any deferred income triggered into income by Treas. Reg.
(S) 1.1502-13 and Treas. Reg. (S) 1.1502-14 and any excess loss accounts taken
into income under Treas. Reg. (S) 1.1502-19) on its consolidated federal Income
Tax Returns for all periods through the Closing Date and pay any federal Income
Taxes attributable to such income. Buyer will cause the Company and the
Subsidiaries to furnish information to Seller for inclusion in Parent's
consolidated federal Income Tax Return for the period which includes the Closing
Date in accordance with Parent's past custom and practice. Seller will allow
Buyer an opportunity to review and comment upon such Income Tax Returns
(including any amended Returns) to the extent that they relate to the Company or
the Subsidiaries for taxable periods ending after the Closing Date. Subject to
Section 5.3(c) below, the income of the Company and the Subsidiaries will be
apportioned between the period up to and including the Closing Date and the
period after the Closing Date by closing the books of the Company and the
Subsidiaries as of the end of the Closing Date.
State, Local and Foreign Income Taxes. Seller shall be liable
-------------------------------------
for all state, local and foreign Income Taxes of the Company and the
Subsidiaries for all periods through the Closing Date. Seller shall file returns
for tax periods which end on or before the Closing Date. Seller shall file such
returns on a basis consistent with past practice except for differences in
filing that are required by the effect of the Section 338(h)(10) elections on
such returns. Buyer shall file returns for tax periods which end after the
Closing Date. If any such return filed by Buyer includes any period which begins
on or before the Closing Date, Seller shall be liable for
42
taxes attributable to income in such return arising on or before the Closing
Date. The income of the Company and the Subsidiaries will be apportioned between
the period up to and including the Closing Date and the period after the Closing
Date based upon closing the books of the Company and the Subsidiaries as
contemplated in Section 5.3(a) hereof. To the extent that the liability for such
Income Tax is reflected on a Return filed by Buyer, Seller shall pay to Buyer
its share of the tax shown on such Return as provided in Section 5.4 hereof.
Buyer Tax Matters.
-----------------
Except as otherwise provided in Sections 5.3(a) and 5.3(b), Buyer
shall be responsible for filing all Returns required to be filed by or on behalf
of Company and Subsidiaries, after the Closing Date.
With respect to any Income Tax Return required to be filed by
Buyer for a taxable period of Company and Subsidiaries which includes (but does
not close on) the Closing Date, Buyer shall provide Seller and its authorized
representatives with copies of such completed Income Tax Return and a statement
certifying the amount of Tax shown on such Income Tax Return that is allocable
to Seller pursuant to Section 5.3(b) hereof (the "Statement") at least 30
calendar days prior to the due date for the filing of such Income Tax Return,
and Seller and its authorized representatives shall have the right to review and
approve such Income Tax Return and Statement prior to the filing of such Income
Tax Return. Seller and Buyer agree to consult and resolve in good faith any
issues arising as a result of the review and approval of such Income Tax Return
and Statement by Seller or its authorized representatives and to mutually
consent to the filing of such Income Tax Return. No later than 5 business days
before the due date for payment of Taxes with respect to such Income Tax Return,
Seller shall pay to Buyer an amount
43
equal to the Taxes shown on the Statement as being allocable to Seller pursuant
to Section 5.3(b) hereof.
Other Tax Matters.
-----------------
338(h)(10). After the Closing, Buyer, Seller and Parent will
----------
make an election under Section 338(h)(10) of the Code, and any corresponding
elections under state, local, or foreign tax law (collectively a "Section
338(h)(10) Election"), with respect to the purchase and sale of the capital
stock of the Company and the Subsidiaries indicated on Schedule 5.5(a) hereto.
Seller will pay any Tax attributable to making the Section 338(h)(10) Election,
regardless of the taxable period in which such Tax is payable.
Allocation of Purchase Price. The parties agree that the
----------------------------
Purchase Price, the liabilities of the Company and the Subsidiaries, and any
adjustments thereto will be allocated among the assets of the Company and the
Subsidiaries in accordance with the provisions of a Schedule of Tax Allocations
(which will be prepared in accordance with the provisions of Tres. Reg. (S)
1.338(h)(10)-1(f)). Schedule 5.5(b) hereto sets forth Buyer and Seller's
preliminary estimate of such tax allocations as of the date hereof. The Schedule
of Tax Allocations as of the Closing Date shall be agreed to by Seller and Buyer
as soon as practicable after the Closing Date. If Buyer and Seller are unable to
agree on such Schedule, the Schedule of Tax Allocations shall be determined on
the basis of an appraisal prepared by KPMG Peat Marwick. In the event of an
adjustment to the Purchase Price in accordance with this Agreement by reason of
an indemnity payment or pursuant to Section 2.3 hereof, such adjustment shall be
made to the Purchase Price of the assets of the Company or the assets of the
particular Subsidiary to which the indemnity payment of Section 2.3 adjustment
relates or from which it arose. If such indemnity payment or
44
Section 2.3 adjustment cannot be allocated to the Company or a particular
Subsidiary, such adjustment shall be allocated to the assets of the Company. The
parties will file all Returns (including amended Returns and claims for refund)
and information reports in a manner consistent with such allocation.
Information. Upon Buyer's reasonable request, from time to time,
-----------
Seller shall deliver or make available to Buyer all information (including,
without limitation, all work papers, schedules, memoranda and other information
prepared by Parent, Seller or its affiliates, subsidiaries and agents, relating
to the assets of the Company and the Subsidiaries) reasonably available to
Seller or Parent and necessary to the preparation of Company and Subsidiaries'
Returns for periods ending after the Closing Date. Seller shall also provide to
Buyer, upon Buyer's written request and after they become available to Seller or
Parent, copies of the Company and the Subsidiaries' separate pro forma federal
income and state Income Tax Returns for all tax years of Company and
Subsidiaries ending on or after December 31, 1988, together with any data or
schedules reasonably necessary to support the computations and information shown
on such returns. In the event of an audit of Buyer, the Company or the
Subsidiaries by a taxing authority with respect to any Return for any taxable
period or periods ending subsequent to the Closing Date, Seller shall provide
Buyer with such information which Seller or Parent possesses as Buyer may
reasonably request, in writing, with respect to the Company and the Subsidiaries
and shall otherwise provide such assistance as Buyer may reasonably request in
connection with such audit. Seller and Parent shall maintain and preserve their
respective tax records with respect to the Company or the Subsidiaries for at
least seven years from the Closing Date. Upon Seller's reasonable request,
Buyer shall deliver or make available to Seller all
45
information reasonably available to Buyer and necessary to the preparation of
Seller's Returns for periods ending on or before Closing Date. In the event of
an audit of Seller, the Company or any of the Subsidiaries by a taxing authority
with respect to any Return of the Company or a Subsidiary for any taxable period
or periods ending prior to the Closing Date, Buyer shall cause the Company and
the Subsidiaries to provide Seller with such information which the Company or
the Subsidiaries possess as Seller may reasonably request, in writing, with
respect to the Company and Subsidiaries and shall otherwise provide such
assistance as Seller may reasonably request in connection with such audit. Buyer
shall cause Company and Subsidiaries to maintain and preserve their tax records
with respect to the Company or the Subsidiaries for at least seven years from
the Closing Date.
Tax Audit. Buyer will allow Seller and its counsel to
---------
participate at Seller's expense in any outside tax audit of the Company's or the
Subsidiaries' state and local Tax Returns to the extent that such audits relate
to a tax or tax period for which the Seller has any liability hereunder. Seller
shall not settle, resolve, compromise or otherwise resolve any state or local
tax audit of the Company or any Subsidiary on or before the Closing Date without
the prior written consent of Buyer, which consent will not be unreasonably
withheld.
Participation. Seller will allow Buyer and its counsel to
-------------
participate at Buyer's own expense in any outside tax audits of Parent's
consolidated federal Income Tax Returns to the extent that such audits relate to
a tax or tax period for which the Company and the Subsidiaries have liability
hereunder.
46
Termination of Existing Tax Sharing Agreements. All tax-sharing
----------------------------------------------
agreements or similar agreements, whether written or not, with respect to or
involving the Company or the Subsidiaries shall be terminated prior to the
Closing Date.
Tax Elections. No new elections with respect to Taxes or any
-------------
changes in current elections with respect to Taxes affecting the Company or the
Subsidiaries shall be made by Seller or Parent after the date of this Agreement
without the prior written consent of Buyer.
Transfer Taxes. Seller shall pay all transfer taxes imposed in
--------------
respect of the transactions contemplated by this Agreement.
Intercompany Accounts.
---------------------
On the Closing Date, all intercompany account balances between the
Company and the Subsidiaries, on the one hand, and Seller, Parent and their
respective subsidiaries and affiliates, on the other hand, will be canceled and
marked to zero without any payment by the Company and the Subsidiaries or
Seller, as the case may be.
Notice of Developments.
----------------------
Each of Buyer and Seller shall give prompt notice (written upon
reasonable request) to the other of (i) to the extent known by Buyer or Seller,
as the case may be, the existence of any state of facts, the occurrence or
failure to occur of any event, the existence, occurrence or failure of which to
occur would be likely to cause (1) any representation or warranty contained in
this Agreement to be untrue or inaccurate at any time from the date hereof to
the Closing Date, (2) any condition set forth in Article 6 or Article 7 to not
be satisfied (ii) any failure of the notifying party or its officers, directors,
employees, or agents to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by it under this
47
Agreement, and (iii) in the case of Seller, any known material claims, actions,
proceedings, or investigations commenced or threatened, involving or affecting
any of the properties or assets of the Company and the Subsidiaries; provided,
however, that no such notification or failure to notify shall affect the
representations, warranties, covenants or indemnification obligations of the
parties or the conditions to the obligations to the parties hereunder.
Reasonable Efforts and Certain Filings.
--------------------------------------
Subject to the terms and conditions of this Agreement, Buyer and
Seller each will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable to consummate the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Articles 6 and 7 below including those relating to Buyer's financing). Buyer
and Seller shall cooperate with one another and use their respective best
efforts in preparing and filing the necessary notification and report forms
under the HSR Act by November 22, 1995. Without limiting the generality of the
foregoing, Seller will take, or cause to be taken, all actions and do, or cause
to be done, all things necessary and desirable to obtain all material consents
required for the consummation of the transactions contemplated by this
Agreement, including without limitation consents required under the High Point
Showroom Lease, the Appomatox Town Center Lease and the Industrial Revenue Bonds
issued by the Industrial Development Authority of Fluvanna County, Virginia
(collectively the "IRB").
Employees and Employee Benefits.
-------------------------------
Continuation of Benefits. With respect to any individuals who
------------------------
after the Closing Date continue to be employees of the Company and the
Subsidiaries and who were
48
covered by an employee welfare benefit plan and/or qualified defined
contribution pension plan maintained by Seller, Buyer will, effective as of the
Closing Date (i) establish a similar plan providing comparable benefits as well
as comparable pre-existing condition, waiting period, co-insurance, and
deductible provisions (collectively "eligibility provisions"), or (ii) provide
benefits comparable to the benefits afforded similarly situated employees of
Buyer. For purposes of satisfying any eligibility provisions under such plans,
Buyer will credit such employees with all past service with Seller, the Company
and the Subsidiaries. Buyer shall waive any pre-existing condition limitation
under any such group health plan and the amount of any expenses incurred before
the Closing Date by employees of the Company or any Subsidiaries before the
Closing Date shall be taken into account for purposes of satisfying the
applicable deductible, coinsurance and maximum out-of-pocket and lifetime
maximum provisions of such group health plan.
Certain Statutory Requirements. As of the Closing Date Buyer will
------------------------------
assume and be solely responsible for any liability or obligation that any of
Seller and its affiliates may have for providing continued health care coverage
under COBRA with respect to all individuals who are COBRA beneficiaries of the
Company or any Subsidiary as of the Closing Date under any health plan that
covers employees of the Company and the Subsidiaries, to the extent that the
Company and the Subsidiaries, in accordance with past custom and practice, were
responsible for such liability or obligation prior to the Closing Date.
Employee Pension Benefit Plans. As soon as practicable after the
------------------------------
Closing Date, and after giving and receiving appropriate governmental
notifications and approvals, the Parties shall take the following actions with
regard to those Employee Benefit Plans listed on
49
Schedule 3.25(b) (or shall cause the following actions to be taken by the
trustees, custodians, and, where appropriate, actuaries and other professionals
retained by such plans) in which any participant was an employee of, was
terminated with a deferred vested benefit from, or was a retiree from any of the
Company and the Subsidiaries (or their respective predecessors) prior to the
Closing Date (such participants, together with their beneficiaries, are referred
to collectively herein as "Company Participants"):
With respect to those Employee Benefit Plans (indicated by
an "A" in parentheses alongside its listing in Schedule
3.25(b)) which are non-qualified defined benefit plans,
non-qualified defined contribution plans, qualified
defined benefit plans, deferred compensation plans or
employee stock option plans, Parent, Seller, the
Company, and the Subsidiaries shall amend the Employee
Benefit Plans to provide, effective as of the Closing
Date, that each employee of the Company and the
Subsidiaries who is a participant in any such Employee
Benefit Plan shall have a fully vested and
nonforteitable right to any benefit or account accrued
in his or her name, in each case as of the Closing
Date. Effective as of the Closing Date, the Company and
the Subsidiaries shall cease sponsorship of and
participation in such Employee Benefit Plans and such
Employee Benefit Plans shall be sponsored solely by
50
Seller. Parent, Seller and the Company and the
Subsidiaries shall take all actions necessary to
terminate the sponsorship and participation of the
Company and the Subsidiaries in such Employee Benefit
Plans and to ensure that Seller sponsors such plans as
of the Closing Date, and Seller shall be solely
responsible for all liabilities and obligations with
respect to such plans following the Closing. With
respect to those Employee Benefit Plans which are
qualified or non-qualified defined benefit plans,
Seller shall take all actions necessary to amend such
plans to provide that for purposes of determining
participants' eligibility for early retirement
benefits, service will include service with Buyer and
retirement from employment with Buyer shall be treated
as retirement from active employment with Seller.
With respect to each Employee Benefit Plan (indicated by a
"B" in parentheses alongside its listing on Schedule
3.25(b)) which is a tax-qualified defined contribution
pension plan (other than an employee stock ownership
plan) and which covers Company Participants as well as
other participants ("Non-Company Participants"), Seller
shall direct to Buyer's successor plan and trustee a
transfer, in cash,
51
securities (other than securities of Seller or any
affiliate), other property, or any combination thereof
as agreed upon by the Parties pursuant to good faith
bargaining (or in particular investments (other than
securities of Seller or any affiliate) if such plan
permitted participant directed investments and both
such plan and Buyer's successor plan and trustee will
permit such transfer of particular investments) of that
portion of such plan's assets (including all
outstanding Company Participant loans, if any, and
including allocable earnings and losses of such plan
or, in the case of participant-directed investments,
including earnings and losses of the individual Company
Participant accounts), valued as of the date of such
transfer, allocable to those Company Participants with
a benefit or account (whether or not vested) under such
plan (other than benefits or accounts which have been
distributed in the normal course as of the date of such
transfer). Thereafter Buyer shall assume (or the
applicable Company or Subsidiary shall retain) all
liabilities and responsibilities relating to such
Company Participant benefits and accounts and the
assets so transferred. With respect to all such
directions for transfer, Buyer shall provide to Seller
an opinion of
52
counsel, in the form attached hereto as Exhibit A, to
the effect that each and every successor plan and trust
to which transfer is requested is (A) tax-qualified
under applicable provisions of Code Secs. 401(a) and
501(a) and (B) complies in all applicable respects with
Code Sec. 414(l). With respect to all benefits accrued
as of the date of the transfer of assets, Buyer shall
preserve under all such successor plans all optional
forms of benefits which are protected under Code Sec.
411(d)(6). From and after each such transfer of assets
with respect to each such Employee Benefit Plan, Seller
shall cease to have any liability or responsibility for
all liabilities and responsibilities that Buyer has
assumed (or that the Company and the Subsidiaries has
retained) with respect to such plans, their assets, and
the Company Participants.
Seller will make available any and all necessary records for
the purpose of computing or establishing all employee
benefits, and such other employee benefits information
or records as to provide for a smooth and orderly
transition, including but not limited to statements of
accrued benefits as of the Closing Date under the
defined benefit pension plans and
53
statements of account balances as of the Closing Date
under the defined contribution plans.
Other Employee Plans. Except as otherwise provided in
--------------------
subsections (e) 4and (f) below, Buyer shall be responsible for any liabilities
or obligations with respect to events which occurred and claims incurred prior
to the Closing (including liabilities and obligations for incurred but not
reported claims outstanding as of the Closing Date, for disabilities or periods
of sickness commencing prior to the Closing Date, and for workers' compensation
claims arising prior to the Closing Date) with respect to Employee Benefit
Arrangements covering individuals who were employees (including any employees on
leave) of, or terminated or retired from, the Company and the Subsidiaries prior
to the Closing Date.
Post Employment Obligations. With respect to employees of any of
---------------------------
the Company and the Subsidiaries who terminated employment with the Company and
the Subsidiaries prior to the Closing Date, Buyer shall (except as provided in
Sections 5.9(c)(i) and 5.9(f)) be solely responsible for any and all liabilities
and obligations reflected as FAS 106 and 112 liabilities on the Closing Date
Balance Sheet and Seller shall (except as provided in Section 5.9(c)(ii)) be
solely responsible for any and all other post employment liabilities and
obligations arising under the Employee Benefit Plans and the Employee Benefit
Arrangements.
Thomasville Group Insurance Plan. Seller shall be solely
--------------------------------
responsible for any liabilities or obligations with respect to events which
============
occurred and claims incurred prior to the Closing Date (including liabilities
and obligations for incurred but not reported claims outstanding as of the
Closing Date, and for disabilities or periods of sickness commencing prior to
the Closing Date) by individuals who were employees (including any employees on
leave) of,
54
or terminated or retired from, the Company and the Subsidiaries and their
dependents with respect to the Group Insurance Plan for Employees of Thomasville
Furniture Industries, Inc. in accordance with the terms thereof, which plan
encompasses the Group Life Insurance Program for Hourly Employees of Thomasville
Furniture Industries, Inc., the Group Life Insurance Program for Salaried
Employees and Marketing Representatives of Thomasville Furniture Industries,
Inc., the Group Long Term Disability Insurance for Salaried and Commissioned
Employees of Thomasville Furniture Industries, Inc., the Group Dental Assistance
Plan for Employees of Thomasville Furniture Industries, Inc., and the Group
Medical Care Benefits for Employees of Thomasville Furniture Industries, Inc.
Liabilities Triggered in Connection with the Transaction. To the
--------------------------------------------------------
extent that either the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby (i) results in any payment
(including, without limitation, severance, unemployment compensation, deferred
compensation, golden parachute or otherwise) becoming due to any officer,
director, employee or other person from the Company or any of the Subsidiaries
under any Employee Benefit Plan, Employee Benefit Arrangement or otherwise, (ii)
increases any benefits otherwise payable under any Employment Benefit Plan or
Employee Benefit Arrangement, or (iii) results in the acceleration of the time
of payment or vesting of any such benefits, Seller shall be solely responsible
and liable for such payment, increased benefits or acceleration of benefits.
No Third Party Beneficiaries. Nothing contained in this Section
----------------------------
5.9 or elsewhere in this Agreement shall grant or create in any person not a
party hereto any right to be offered, or to continue, employment or to receive
any benefit as an employee or former
55
employee. Without limiting the generality of the foregoing, after the Closing
neither Buyer, the Company nor any of the Subsidiaries shall have any obligation
arising out of this Agreement to continue the employment of or provide any
benefit to any person who was or is employed by the Company or the Subsidiaries,
and neither Buyer, the Company nor the Subsidiaries assumes any liability or
obligation under any Employee Benefit Plan established or maintained by Seller
except as set forth in this Agreement.
Exclusivity.
-----------
Seller and Parent will not, and shall use their respective best
efforts to cause their investment bankers, attorneys, accountants and other
agents retained by Seller or Parent not to, solicit, initiate, or encourage,
directly or indirectly, the submission of any proposal or offer from any third
party or engage in negotiations or discussions with, or furnish any information
or data to, any third party, relating to the acquisition of any capital stock or
all or substantially all of the assets of any of the Company and the
Subsidiaries (including any such acquisition structured as a merger,
consolidation, or share exchange), or respond to or discuss such a proposal or
offer if made.
Non-Hire.
--------
With respect to any person who is an executive, management or
supervisory employee of the Company and the Subsidiaries on the date hereof, for
a period of 18 months following the Closing, neither Parent (or any division or
subsidiary of Parent) nor Seller will, without the prior written consent of
Buyer, hire such person or solicit, encourage, entice or induce such person to
terminate his or her employment by the Company and the Subsidiaries.
56
Noncompetition.
--------------
As an inducement for Buyer to enter into this Agreement, Seller and
Parent agree that for a period of three years following the Closing Date (the
"Non-Competition Period"), neither of them (nor any division or subsidiary of
Parent) shall directly or indirectly own, manage, operate, assist, join, control
or participate in the ownership, management, operation or control of, or be
connected as a partner, consultant or otherwise with, any third party that
directly or indirectly competes with, or is about to compete with, the business
of the Company and the Subsidiaries as it shall exist on the Closing Date. In
recognition that the business of the Company and the Subsidiaries is currently
conducted throughout the world, the restrictions set forth in the foregoing
sentence shall have no geographic limits. In the event the restrictions set
forth in this subsection (5.12) shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending over too great a
period of time or over too great a geographical area or by reason of its being
too extensive in any other respect, it shall be interpreted to extend only over
the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. Nothing contained in this subsection
(5.12) shall restrict Seller, Parent or Parent's pension plan from owning 5% or
less of the corporate securities of any third party which securities are listed
on any national securities exchange or authorized for quotation on the Automated
Quotation System of the National Association of Securities Dealers, Inc., if
none of them has any other connection or relationship, direct or indirect, with
such third party, nor
57
prevent Parent or any division or subsidiary of Parent from conducting their
business as currently being conducted.
Pre- and Post-Closing Cooperation.
---------------------------------
Prior to, at and, at Buyer's sole out-of-pocket cost and expense, for
a reasonable period subsequent to the Closing, Seller and Parent shall cooperate
with Buyer in connection with (i) the initiation by Buyer of administrative,
legal and management functions previously provided by Seller, Parent or their
affiliates with respect to the businesses of the Company and the Subsidiaries,
(ii) the efforts by Buyer to complete its financing with respect to this
transaction (including the provision of information and access to Parent's
accountants and auditors and the reasonable assistance of management of the
Company and the Subsidiaries), (iii) the making of future filings with the
Securities and Exchange Commission, including the assistance and cooperation of
Parent and its auditors in the preparation of financial statements for such
filings and the provision of any necessary consents in connection therewith and
(iv) Buyer's handling following the Closing of any liabilities and obligations
of the Company and the Subsidiaries with respect to which Seller has no
responsibility pursuant to Section 8.1 or otherwise. Such cooperation shall
include, but not be limited to, the provision by Seller and Parent of any
documents (or copies thereof) reasonably requested by Buyer.
Insurance.
---------
Seller, at its sole cost and expense, shall obtain and maintain
following the Closing for a period of 4 years general liability insurance
providing coverage on substantially the same terms as the general liability
policy maintained by the Parent on behalf of the Company and Subsidiaries prior
to Closing (the "GLI Policy") naming Seller as an insured and naming the
58
Company and the Subsidiaries as additional insureds and loss payees (as their
interests may appear) in respect of any insured events under the GLI Policy
arising out of occurrences occurring prior to the Closing Date ("GLI Claims").
With respect to GLI Claims which are not covered by the GLI Policy, Seller will
remain liable for, and will indemnify and hold Buyer, the Company and the
Subsidiaries harmless from and against, all such Claims incurred on or prior to
the Closing Date. Notwithstanding any other provision of this Agreement to the
contrary, Buyer acknowledges and agrees that except as explicitly provided in
the immediately preceding sentences of this Section 5.14, with respect to any
and all occurrences arising after the Closing Date and any and all other claims
made after the Closing Date, Buyer shall have sole liability therefor (without
regard to when the occurrence or occurrences giving rise to such claims arose).
In this regard, without limiting the provisions of the immediately preceding
sentence, Buyer shall have sole liability for worker's compensation claims which
are made on or after the Closing Date.
Notwithstanding the foregoing, from and after the Closing, Seller
shall make claims and receive recoveries for the benefit of the Company and the
Subsidiaries under any "occurrence basis" insurance policies maintained
(including, automobile insurance) at any time prior to the Closing by Seller
(collectively, the "Pre-Closing Insurance Policies"), in respect of any insured
events of the Company and the Subsidiaries that relate to or arise out of
occurrences prior to the Closing Date (an "Insurance Claim"); provided, however,
that any recoveries received by Seller in respect of such insured events shall
be promptly paid by Seller to or as directed by Buyer, and Seller will have no
right or interest therein. The Company and the Subsidiaries will have the sole
and exclusive right, in their own names, to make directly any
59
Insurance Claims with respect to insured events under any Pre-Closing Insurance
Policies maintained at any time prior to, on or after Closing by the Company and
the Subsidiaries and to receive directly any recoveries thereunder, and other
than with respect to matters for which Seller has retained responsibility
pursuant to this Agreement, Seller and its affiliates will have no right or
interest therein.
In order to implement Section 5.14(a), Seller shall (i) cooperate
fully and cause its affiliates to cooperate fully with Buyer and the Company and
the Subsidiaries in submitting good faith Insurance Claims and GLI Claims on
behalf of the Company and the Subsidiaries under the Pre-Closing Insurance
Policies or the GLI Policy, as the case may be, and (ii) pay promptly over to
or as directed by Buyer any and all amounts received by Seller or its affiliates
under the Pre-Closing Insurance Policies and the GLI Policy with respect to
Insurance Claims and GLI Claims, as the case may be.
Effective as of the Closing Date, except as expressly provided
herein, Seller will cause the Company and the Subsidiaries to be removed from
any insurance policies or self insurance programs maintained prior to the
Closing by, and Buyer and the Company and the Subsidiaries will be solely liable
for asserted claims as provided herein.
Confidentiality.
---------------
Parent and Seller acknowledge that the Confidential Information (as
defined below) of the Company and the Subsidiaries is valuable and proprietary
to the business of the Company and the Subsidiaries and agree not to (and to
cause their affiliates not to), directly or indirectly, use, publish,
disseminate, describe or otherwise disclose any Confidential Information of the
Company and the Subsidiaries without the prior written consent of Buyer. For
purposes of
60
this Agreement, "Confidential Information" shall mean with respect to the
Company and the Subsidiaries all confidential information of the Company and the
Subsidiaries existing on or prior to the Closing Date that is not otherwise
publicly disclosed or generally available, including information delivered in
confidence by others to the Company and the Subsidiaries. Without limiting the
generality of the foregoing, Confidential Information shall include: (i)
customer lists, lists of potential customers and details of agreements with
customers; (ii) acquisition, expansion, marketing, financial and other business
information and plans; (iii) research and development performed exclusively by
or for the benefit of the Company and/or the Subsidiaries; (iv) computer
programs and computer software; (v) sources of supply; (vi) identity of
specialized consultants and contractors; (vii) purchasing, operating and other
cost data; (viii) special customer needs, cost and pricing data; and (ix)
employee information. Confidential Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, drawings, designs,
formula books, specifications, computer programs and records, whether or not
legended or otherwise identified as Confidential Information, as well as
information that is the subject of meetings and discussions and not so recorded.
Seller shall also fully exercise all of its rights, contractual or otherwise, to
retrieve from third parties all Confidential Information (which for this purpose
shall be deemed to include all information subject to applicable confidentiality
agreements) of the Company and the Subsidiaries which has been delivered to such
third parties, whether in connection with the contemplated sale by Seller of the
Company and the Subsidiaries or otherwise.
61
Industrial Revenue Bonds.
------------------------
Buyer shall use its best efforts (and Seller shall cooperate with
Buyer) from and after the date hereof to cause Sovran Bank, N.A., as Trustee
under that certain Indenture of Trust dated as of November 1, 1986, pursuant to
which the IRB was issued (the "Trustee"), to permit the substitution by Buyer of
(i) a letter of credit to be issued by a lender which is chosen by Buyer and
which is satisfactory to the Trustee (the "Substitute LOC"), for (ii) that
certain Irrevocable Letter of Credit issued by Union Bank of Switzerland, New
York Branch (the "Bank") in favor of the Trustee (the "Union LOC") relative to
the IRB. In the event the Substitute LOC has not been issued on the Closing
Date, Buyer, from and after the Closing Date, shall (i) indemnify and hold
Parent harmless from and against any and all liabilities, obligations, losses,
claims, and expenses (including attorney's fees and costs of suit) incurred by
Parent and arising under or in connection with that certain Guarantee dated
November 1, 1986, made by Parent in favor of the Bank and (ii) as security for
the foregoing indemnity of Buyer, cause to be issued and maintained in effect
until the first to occur of the expiration of the term of the Union LOC or the
issuance of the Substitute LOC an irrevocable letter of credit in favor of
Parent (the "Indemnity LOC") by Bankers Trust Company, Nations Bank or such
other lender which is chosen by Buyer and which is satisfactory to Parent in the
exercise of its sole discretion and the Indemnity LOC shall be in an amount and
for a term equal to the Union LOC and contain such other terms as are
satisfactory to Parent. Notwithstanding the provisions of the first sentence of
this Section 5.16, in the event the substitution of the Substitute LOC for the
Union LOC would, by itself, adversely impair the tax exemption of interest on
the IRB or cause the IRB to not remain outstanding after the Closing Date in
accordance with the terms of the IRB, Buyer's sole
62
obligation under this Section 5.16 shall be to provide to Parent the indemnity
and Indemnity LOC contemplated by the second sentence of this Section. In the
event Buyer is unable to cause the substitution of the Substitute LOC for the
Union LOC and the term of the Union LOC expires prior to end of the term of the
IRB, Parent shall use its reasonable commercial efforts to renew the Union LOC
or assist Buyer in obtaining a Substitute LOC so that the IRB remains
outstanding until the expiration of its term.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
-------------------------------------------------
The obligations of Seller hereunder are subject to the
fulfillment of the following conditions, any of which may be waived by Seller:
Representations and Covenants.
-----------------------------
All representations and warranties of Buyer contained herein shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date. Buyer shall
have performed and complied in all material respects with all covenants and
agreements contained herein and required to be performed or complied with by it
on or prior to the Closing Date.
Closing Certificate.
-------------------
Buyer shall have delivered to Seller a certificate signed by its
President or any Vice President, dated as of the Closing Date, to the effect set
forth in Section 0.
Legal Opinion.
-------------
Seller shall have received an opinion of Xxxxx Xxxx LLP, counsel for
the Buyer, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit B.
63
Injunction.
----------
There shall not be any pending action, suit, or other judicial
proceeding brought by the United States Federal Trade Commission or by the
Antitrust Division of the United States Department of Justice against any of the
parties hereto with respect to any of the transactions contemplated by this
Agreement, and no order or decree prohibiting or restraining the consummation of
this Agreement shall have been issued by any court or governmental or regulatory
body.
Governmental Authority.
----------------------
The parties shall have filed with the Federal Trade Commission and the
Antitrust Division of the Department of Justice notification and report forms
with respect to the transactions contemplated hereby pursuant to the HSR Act and
the rules promulgated thereunder, and the waiting period required to expire
under such Act and rules, including any extension thereof, shall have expired
prior to the Closing Date.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
------------------------------------------------
The obligation of Buyer to enter into and complete the Closing is
subject to the fulfillment of the following conditions, any of which may be
waived by Buyer:
Representations and Covenants.
-----------------------------
All representations and warranties of Seller contained herein shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date. Seller
shall have performed and complied in all material respects with all covenants
and agreements contained herein and required to be performed or complied with by
it on or prior to the Closing Date.
64
Closing Certificate.
-------------------
Seller shall have delivered to Buyer a certificate signed by its
President or any Vice President, dated as of the Closing Date, to the effect set
forth in Section .
Legal Opinion.
-------------
Buyer shall have received an opinion of Xxxxxxxx Ingersoll
Professional Corporation, counsel for Seller, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit C.
Injunction.
----------
There shall not be any pending or threatened action, suit, or other
judicial proceeding brought by the United States Federal Trade Commission or by
the Antitrust Division of the United States Department of Justice against any of
the parties hereto with respect to any of the transactions contemplated by this
Agreement, and no order or decree prohibiting or restraining the consummation of
this Agreement or imposing any conditions to the consummation of this Agreement
which are burdensome in any material respect to Buyer shall have been issued by
any court or governmental or regulatory body.
Governmental Authority.
----------------------
The parties shall have filed with the Federal Trade Commission and the
Antitrust Division of the Department of Justice notification and report forms
with respect to the transactions contemplated hereby pursuant to the HSR Act and
the rules promulgated thereunder, and the waiting period required to expire
under such Act and rules, including any extension thereof, shall have expired
prior to the Closing Date.
65
No Loss.
-------
Since the date of the Latest Balance Sheet, the Company and the
Subsidiaries shall not have suffered any loss on account of fire, flood,
accident, strike or other calamity which has had or may have a material adverse
effect on the financial condition or assets of the Company and the Subsidiaries,
taken as a whole, whether or not such loss shall have been covered by insurance.
Financing.
---------
Buyer shall have closed on financing for the purchase of all of the
Shares and consummation of the related transactions contemplated in the
Financing Letters.
Resignations.
------------
Buyer shall have received resignations from each member of the Board
of Directors of each of the Company and the Subsidiaries, who is not otherwise
an employee of the Company or the Subsidiaries.
Trademark License.
-----------------
Parent shall have executed and delivered to Buyer a Trademark License
Agreement, in a form mutually agreeable to Parent and Buyer , pursuant to which
Parent shall grant to the Company and the Subsidiaries a royalty free license to
use the "Xxxxxxxxx" name solely in connection with the business operations of
the Company and the Subsidiaries for a period not to exceed eighteen (18) months
following the Closing Date.
Consents.
--------
Buyer shall have received the consents and approvals set forth on
Schedule 7.10.
66
Environmental Reports.
---------------------
Buyer shall have received the final Phase One Study described in
Section 9.3, from an environmental consultant selected by Buyer and agreed to in
writing by Seller, such agreement not to be unreasonably withheld, with respect
--------
to the properties currently owned or operated by the Company and the
Subsidiaries which does not reveal environmental remediation costs and
compliance costs (exclusive of Known Environmental Losses, as hereinafter
defined) which are reasonably likely to exceed $20,000,000. This condition
shall be deemed satisfied on December 29, 1995 (effective as of the Closing
Date), unless on or before such date Buyer notifies Seller in writing that this
condition is not satisfied.
INDEMNIFICATION
---------------
Indemnity of Seller.
-------------------
Seller shall indemnify Buyer, its affiliates, the Company and the
Subsidiaries and their respective directors, officers, shareholders, employees,
agents, representatives, successors and assigns (collectively, the "Buyer
Indemnitees") against any and all claims, losses, liabilities, damages,
expenses, including reasonable attorney's fees and costs of suit ("Losses"),
resulting from or related to: (i) any breach of Seller's covenants, warranties
and representations contained in this Agreement and (ii) any item disclosed on
Schedule 3.27 (exclusive of Known Environmental Losses, as hereinafter defined)
("Other Environmental Losses"); provided, however, that with respect to breaches
-------- -------
of the representations and warranties of Seller set forth in Article 3 (other
than with respect to breaches of representations and warranties set forth in
Sections 3.2, 3.11, 3.12, 3.13, 3.14 and 3.22) and including Other Environmental
Losses, (i) the Buyer Indemnitees will not be entitled to indemnification until
the aggregate of all such claims
67
exceeds the sum of $2,500,000, and then only to the extent of any amount in
excess of $2,500,000 and (ii) Seller's aggregate liability to indemnify the
Buyer Indemnitees shall not exceed $30,000,000 (the "Seller's Indemnity Cap").
Buyer and Seller acknowledge and agree that, notwithstanding the foregoing
provision of this Section 8.1, in the event the Phase One Study described in
Section 9.3 discloses environmental remediation costs (exclusive of Known
Environmental Losses, as hereinafter defined) and compliance costs which are in
excess of $5,000,000, then the Seller's Indemnity Cap shall be increased by an
amount equal to the amount of such environmental remediation costs and
compliance costs in excess of $5,000,000 but in no event shall such increase
exceed $15,000,000 ("Excess Environmental Indemnity").
Indemnity of Buyer.
------------------
Buyer shall indemnify Seller and its affiliates, directors, officers,
shareholders, employees, agents, representatives, successors and assigns
(collectively, the "Seller Indemnitees") against any and all claims, and
losses, liabilities, damages, expenses, including reasonable attorney's fees and
costs of suit, to Seller (i) resulting from or related to any breach of Buyer's
covenants, warranties and representations contained in this Agreement and (ii)
resulting from, relating to or in connection with the operations of the Company
and the Subsidiaries subsequent to the Closing Date, including without
limitation, the sale of products by the Company and the Subsidiaries under the
"Xxxxxxxxx" brand name subsequent to the Closing Date (other than with respect
to infringement actions by third parties relative to the use of the "Xxxxxxxxx"
brand name).
68
Mitigation.
----------
Every person seeking indemnification hereunder shall correct or
mitigate, to the extent commercially reasonable, any loss suffered by such
person for which indemnification is claimed hereunder, and the indemnifying
party shall be liable only for the amount thereof which is net of any insurance
proceeds and other amounts paid by, or offset against any amount owed to, any
person not a party to this Agreement (including any costs or expenses incurred
to so correct or mitigate); provided, however, with respect to matters,
including without limitation, known Environmental Losses, Other Environmental
Losses, and Environmental Warranty Losses, for which Seller is required to
indemnify Buyer pursuant to this Agreement, Seller shall indemnify and hold
harmless Buyer with respect to such matters upon receipt of notice of such claim
notwithstanding the existence of a pending claim for recovery of insurance
proceeds (including any proceeds from any applicable state underground storage
tank fund). In the event Buyer recovers insurance proceeds with respect to
matters that Seller provided indemnity pursuant to this Agreement, Buyer shall
reimburse Seller for its expenditures in an amount equal to the funds recovered
by Buyer from such insurer. If a person which has a right of indemnification
under this Article 8 reasonably can, by expenditure of money, mitigate or
otherwise reduce or eliminate any loss for which indemnification would otherwise
be claimed, such person shall take such action and shall be entitled to
reimbursement for such expenditures and all related expenses. The parties
acknowledge and agree that, except as provided in Sections 8.5, 8.7, 9.2, 9.11
and 9.21, the indemnification provided under this Article 8 shall be the sole
and exclusive remedy of the parties with respect to the breach of any covenant,
representation or warranty contained herein. Notwithstanding the foregoing,
nothing in this Agreement shall
69
relieve Seller or Buyer from any liability arising from an intentional breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
Matters Involving Third Parties.
-------------------------------
If any third party (including any governmental agency or
authority) shall notify any Buyer Indemnitee or Seller Indemnitee, as the case
may be (the "Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against either Buyer
or Seller, as the case may be (the "Indemnifying Party") under this Article 8,
then the Indemnified Party shall promptly notify the Indemnifying Party thereof
in writing.
The Indemnifying Party shall, within 30 days after receipt of the
notice described in Section 8.4(a), assume and thereafter conduct the defense of
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party at the sole expense of the Indemnifying Party; provided,
however, that the Indemnified Party may participate in such settlement or
defense through counsel chosen by such Indemnified Party, provided that the fees
and expenses of such counsel shall be borne by such Indemnified Party; and
provided, further, that the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages by the Indemnifying Party and does not impose an
injunction or any other equitable relief upon the Indemnified Party.
Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 8.4(b) above, however, the
Indemnified Party may defend
70
against the Third Party Claim in any manner it reasonably may deem appropriate,
but shall not thereby waive any right to indemnify therefor pursuant to this
Agreement; provided, however, that the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld unreasonably).
The specific provisions of Sections 5.5(c), 5.5(d), 8.5 and
8.7 will govern in the event of any conflict with the general provisions of this
Section 8.4.
Tax Indemnification.
-------------------
In addition to any other indemnification granted herein and
notwithstanding the survivability or limits, if any, of any representation
contained herein or the absence of any representation herein, Seller agrees to
indemnify, defend and hold harmless the Buyer Indemnitees from and against all
loss, liability including the Company and the Subsidiaries' liability for its
own Taxes or its liability, if any (for example, by reason of transferee
liability or application of Treas. Reg. Section 1.1502-6) for Taxes of others,
including, but not limited to, Seller or any Tax Affiliate or any majority-
controlled foreign affiliate, damage or reasonable expense (including but not
limited to reasonable attorneys' fees and expenses) (collectively, "Costs")
payable with respect to Taxes claimed or assessed against the Company and the
Subsidiaries (i) for any taxable period ending on or before the Closing Date or
(ii) for any taxable period resulting from a breach of any of the
representations or warranties contained in Section 3.22 hereof
71
Indemnification Payment.
-----------------------
With respect to any indemnity payment under this Article 8, the
parties agree to treat, to the extent permitted by law, all such payments as an
adjustment to the consideration paid for the sale and transfer of the stock of
the Company and the Subsidiaries, to be allocated to the Company or the
Subsidiary in respect of which the adjustment arose, and if the source of any
such adjustment cannot reasonably be determined, such adjustment shall be
allocated to the Company.
Environmental Indemnification.
-----------------------------
Identified Properties. Seller agrees to indemnify, defend and
---------------------
hold harmless the Buyer Indemnitees from and against all existing and future
claims, losses, liabilities, damages and expenses, including, without
limitation, claims, losses, liabilities, damages and expenses for personal
injury, property damage, reasonable costs of investigation, attorneys' fees and
costs of suit and reasonable consultant fees, resulting from or related to (i)
the direct or indirect disposal by the Company or any of its Subsidiaries of
wastes or other materials in the Buckingham County, Virginia landfill site
("Buckingham") and (ii) the former Pleasant Garden, North Carolina facility of
the Company heretofore sold to Hooker Furniture Corporation pursuant to an
agreement dated February 17, 1993 (including but not limited to releases of
volatile organic compounds) ("Pleasant Garden") (hereinafter Buckingham and
Pleasant Garden referred to together as the "Identified Properties") ("Known
Environmental Losses"); provided however (i) with respect to the first
$4,000,000 of Known Environmental Losses relating to the Identified Properties,
Seller and Buyer shall each pay fifty percent (50%) of such $4,000,000 of such
Known Environmental Losses and (ii) thereafter, the Buyer Indemnities will be
entitled to
72
indemnification for additional Known Environmental Losses with respect to the
Identified Properties up to an aggregate amount, including such $4,000,000, not
to exceed $30,000,000. Thereafter, Seller shall have no further obligation to
Buyer or any other person relating to the Identified Properties. This Section
8.7(a) sets forth Buyer Indemnitees' sole and exclusive rights of
indemnification for Known Environmental Losses.
Period of Indemnity. Seller's Indemnification obligations in
-------------------
Section 8.7 (a) herein shall apply only to Known Environmental Losses actually
incurred by the Buyer Indemnities before the tenth anniversary of the Closing
Date. Thereafter Seller shall have no further obligation to indemnify Buyer or
any other person for Known Environmental Losses.
Lowest Cost Response. Notwithstanding anything in this Agreement
--------------------
to the contrary, Seller's indemnity obligation for breach of any warranty in
Section 3.27(a)-(h) ("Environmental Warranty Losses"), Other Environmental
Losses and Known Environmental Losses (collectively "Environmental Losses") for
which Seller has an indemnity obligation pursuant to this Agreement shall be
satisfied by implementation or indemnification for implementation of the Lowest
Cost Response. The Lowest Cost Response shall mean any compliance activity or
any investigation, cleanup, remediation, removal action or other response
activity that (1) satisfies applicable Environmental Laws that are in existence
at the time of the contemplated activity, (2) is acceptable to Governmental
Authorities having jurisdiction over the site, (3) is consistent with the
operations being conducted at the site, and (4) can be achieved for the lowest
financial cost as compared with other potential response activities.
Limitation. Notwithstanding anything in this Agreement to the
----------
contrary, Seller's indemnity obligation for Environmental
73
Losses shall be limited solely to Environmental Losses arising out of or
resulting from (1) investigative or remedial action required by Environmental
Law or Governmental Authorities, (2) third-party claims, or (3) the discovery of
the presence or Release of a Hazardous Material as a result of: (i) a facility
expansion or renovation (ii) in the ordinary course of operations, including
pursuant to a corporate environmental compliance program (except for findings
resulting from soil or ground water sampling pursuant to such programs), (iii)
an investigation done in connection with a bona fide offer received after the
---- ----
Closing Date to purchase or lease any of the real property currently owned or
leased by the Company or the Subsidiaries and in particular to the Xxxxxxxxx
Furniture Division of the Company ("AFD"), a bona fide offer to purchase or a
---- ----
board approved organized sale, disposition or bidding process to sell all or
substantially all of the assets of AFD (which for purposes hereof the real
property shall only include the real property listed on Schedule 8.7(d)(3)(iii)
hereto) (the "Assets") or the stock of a subsidiary of the Company owning
directly or indirectly no real property other than the Assets, or (iv) an
investigation or remedial action which in the reasonable business judgment of
Buyer is required to protect human health or safety. For purposes of Article 8,
no indemnification is provided by Seller for asbestos removal costs solely
associated with renovation of any property currently owned, leased, or operated
by the Company or any Subsidiary.
Confidentiality. Buyer shall use its best efforts to maintain in
---------------
strict confidence, the existence and terms of Seller's indemnity obligation with
respect to the Identified Properties set forth in Section 8.7(a) provided,
however, Buyer may disclose the terms and existence of such indemnity obligation
(1) to any financial institution that is considering or actually provides
financing to Buyer, and (2) to the extent required by law. In the event Buyer
74
discloses the existence or terms of Seller's indemnity obligation pursuant to
Section 8.7(a) to a financial institution, Buyer shall take reasonable and
appropriate measures to ensure that such financial institution is familiar with
the confidentiality requirement set forth herein and agrees to comply with its
terms.
Procedures Relating to Environmental Indemnity by Seller.
--------------------------------------------------------
Subject to the provisions of Section 8.7 (a) and (b), the
continued defense, settlement or compromise of the claims giving rise to Known
Environmental Losses shall continue with existing counsel or other counsel
selected by Seller and reasonably acceptable to Buyer under the direction of
Seller; provided, however, Buyer Indemnitees shall have the right to retain, at
their own expense counsel and consultants of their own choosing to work with
Seller's current defense counsel and consultants.
As a condition of the indemnity for Environmental Warranty Losses
and Other Environmental Losses Buyer shall, promptly after becoming aware of
facts that will likely result in such Environmental Warranty Losses or Other
Environmental Losses being incurred for which Buyer Indemnitees are entitled to
indemnity hereunder ("Environmental Losses Claim"), submit to Seller a written
notice thereof within four years of the Closing Date, which notice shall
describe in reasonable detail the date when and circumstance by which Buyer
became aware of the Environmental Losses Claim; the nature of the Environmental
Losses Claim, and the basis for the alleged liability. Seller shall have no
obligation to Buyer for any Environmental Warranty Losses or Other Environmental
Losses for which a notice as described above is not received before the fourth
anniversary of the Closing Date.
75
With regard to any Environmental Losses Claim, Seller may, at its
option, defend such Environmental Losses Claim with counsel or consultants
selected by Seller reasonably acceptable to the Buyer Indemnitees. If Seller
does not elect to defend any such Environmental Losses Claim, the Buyer
Indemnitees shall defend such Claim with counsel or consultants selected by the
Buyer Indemnitees reasonably acceptable to Seller. Seller shall provide Buyer
with copies of all correspondence, reports and other documentation, including
but not limited to settlement communications or documents (excluding matters
subject to confidentiality) (draft or final) relating to any Other Environmental
Losses or Environmental Warranty Claims, excepting such documents as are
routinely filed. If Seller elects to defend such Environmental Losses Claim,
Seller shall retain control of the defense, compromise or settlement (including
without limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the making of
any admissions against interest; the making of any decision whether work should
be performed voluntarily by the Buyer Indemnitees or their contractors,
consultants or engineers or, alternatively, by an authorized governmental
entity; and the making of any decision whether to enter into any consent decree,
consent order or consent agreement and the terms of such decree, order or
agreement) thereof; provided, however, that if Buyer reasonably determines that
-------- -------
the defense, compromise or settlement of an Environmental Losses Claim may
reasonably be expected to materially and adversely affect the business or
operations of the Buyer Indemnitees, the Buyer Indemnitees shall have the right
to approve, such approval not to be unreasonably withheld, the defense,
compromise or settlement of such Environmental Losses Claim. If the Buyer
Indemnitees are conducting the defense, compromise or settlement of such
Environmental Losses Claim, the
76
Buyer Indemnitees shall have control over the defense, compromise or settlement;
provided, however, that Seller shall have the right to approve the defense,
-------- -------
compromise or settlement (including without limitation the nature and scope of
any work to be performed; the contractors, consultants or engineers to be
performing any work; the making of any admissions against interest; the making
of any decision whether work should be performed voluntarily by the Buyer
Indemnitees or their contractors, consultants or engineers or, alternatively, by
an authorized governmental entity; and the making of any decision whether to
enter into any consent decree, consent order or consent agreement and the terms
of such decree, order or agreement) if the Environmental Losses Claim may
reasonably be expected to exceed $250,000 in Environmental Warranty Losses or
Other Environmental Losses in any one or more years. The party conducting the
defense, compromise or settlement of an Environmental Losses Claim shall inform
the other party in a timely manner of any material information concerning the
Environmental Losses Claim or the defense, compromise or settlement thereof and
provide copies of correspondence, reports and other documentation (draft or
final) relating thereto.. If at any xxxx Xxxxxx is not satisfied with the
defense being provided by the Buyer Indemnitees with regard to any Environmental
Losses Claim that may reasonably be expected to exceed $250,000 in Environmental
Losses Losses in any one or more years, Seller shall have the right, at its
option, to assume control of the defense, compromise or settlement of such
Environmental Losses Claim, including without limitation the appointment of new
counsel or consultants if Seller so elects; provided, however, if Buyer
-------- -------
reasonably determines that the defense, compromise or settlement (including
without limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the making of
any admissions
77
against interest; the making of any decision whether work should be performed
voluntarily by the Buyer Indemnitees or their contractors, consultants or
engineers or, alternatively, by an authorized governmental entity; and the
making of any decision whether to enter into any consent decree, consent order
or consent agreement and the terms of such decree, order or agreement) of such
Environmental Losses Claim may reasonably be expected to materially and
adversely affect the business or operations of the Buyer Indemnitees or result
in not insignificant Environmental Warranty Losses or Other Environmental Losses
to the Buyer Indemnitees, the Buyer Indemnitees shall have the right to approve
the defense, compromise or settlement of such Environmental Losses Claim, such
approval not to be unreasonably withheld. Regardless of the party conducting the
defense of any Environmental Losses Claim, the parties agree to cooperate in the
defense, compromise or settlement of such claim. Where Seller decides that the
taking of any action to test, investigate, remove, remediate or restore any
environmental conditions with regard to a property owned or operated by the
Buyer Indemnitees is necessary to protect Seller's interests under this
Agreement, Seller shall provide advance written notification to the Buyer
Indemnitees of the nature of and reasons for such action. The Buyer Indemnitees
shall allow Seller to perform all or part of any such action at Seller's option,
using Seller's own counsel, consultants, contractors and/or engineers reasonably
acceptable to the Buyer Indemnitees. Seller and the Buyer Indemnitees will
cooperate in attempting to minimize any disruption of operations of the Buyer
Indemnitees caused by such actions. In connection with the obligations of Seller
pursuant to this subsection 8.8(c) the Buyer Indemnitees shall cause the Company
and its Subsidiaries to deliver to Seller copies of all documents reasonably
necessary to Seller pertaining
78
to environmental or other state or federal regulatory matters with respect to
which Seller may be required to indemnify the Buyer Indemnitees hereunder.
MISCELLANEOUS
-------------
Fees and Expenses.
-----------------
Each party to this Agreement shall pay its own expenses (including,
without limitation, the fees and expenses of their respective agents,
representatives, counsel and accountants) incidental to the preparation,
negotiation, and consummation of this Agreement and the transactions
contemplated hereby. All filing fees required to be paid under the HSR Act and
the rules promulgated thereunder shall be paid by Buyer.
Brokers.
-------
Buyer has not employed a finder or broker or other person entitled to
a brokerage commission or fee in respect of this Agreement and the transaction
contemplated hereby. Seller has engaged Xxxxxxx, Xxxxx & Co. to act as its
financial advisor in connection with the transactions contemplated hereby and
shall be solely responsible for the payment of such firm's fees for such
services.
Access to the Company's Properties.
----------------------------------
Seller will, and will cause the Company to accord Buyer and its
authorized representatives reasonable access to all of the books, records,
personnel and properties of or pertaining to the Company and the Subsidiaries
commencing not later than the date of this Agreement. Such access shall
include, but not be limited to, the right to conduct, at Buyer's sole expense,
an environmental investigation (which shall not include performance of soil,
groundwater, surface water and air sampling and analysis without the prior
written consent of
79
Seller), at any of the properties currently owned or operated by the Company and
the Subsidiaries; provided however, that Buyer acknowledges that such
environmental investigation and report issued thereon (the "Phase One Study")
contains confidential information of the Seller with respect to the Company and
the Subsidiaries, and Buyer agrees to not directly or indirectly use, publish,
disseminate, describe or otherwise disclose the Phase One Study to any person
other than its attorneys, accountants, financial institutions or other advisors
directly involved in the transaction contemplated by this Agreement without the
prior written consent of Seller. Buyer agrees to cause any person to whom it
discloses such Phase One Study to be bound by the confidentiality provisions
contained herein. Prior to finalizing any Phase One Study, including any
estimation of environmental remediation or compliance costs, Buyer shall provide
Seller with an oral and an executive summary of the proposed Phase One Study on
or before December 8, 1995 and shall provide a copy of such Phase One Study to
Seller for meaningful review and comment by no later than December 27, 1995.
Buyer shall have the right to make copies of any such records, files, tax
returns and other materials as it may deem advisable. Seller will cause the
respective personnel of Seller and the Company to assist Buyer in making such
investigation, and will make its counsel, accountants and other representatives
available for such purposes. All stock record books and all minute books of the
Company and the Subsidiaries will be delivered to Buyer at the Closing. All
other books and records of the Company and the Subsidiaries in the possession of
Seller will be delivered to Buyer at the Closing.
Books and Records.
-----------------
Seller (as it reasonably requires) and any taxing authority in the
United States shall have access for a period of six (6) years after the Closing
Date, during normal business
80
hours, to personnel of the Company and the Subsidiaries and to all books,
records, files, documents and other data relating to the business of the Company
and the Subsidiaries conducted prior to the Closing Date in connection with any
proceedings with any governmental authority.
Notices.
-------
All notices or other communications given under this Agreement shall
be in writing and transmitted by registered or certified mail, postage prepaid,
or by telegram. Any such notice or communication given hereunder shall be sent
as follows:
If to Seller:
Xxxxxxxxx Enterprises, Inc.
c/o Armstrong World Industries, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Senior Vice President
and General Counsel
Fax: 000-000-0000
Copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to Buyer:
INTERCO INCORPORATED
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attn: Chairman of the Board
Telecopy No.: 000-000-0000
81
Copy to:
INTERCO INCORPORATED
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attn: General Counsel
Telecopy No.: 000-000-0000
Any party may send notice or other communication hereunder using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received. Any party may change the address to which notices and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. This Agreement
or any part thereof, may not be assigned without the prior written consent of
the other party, which consent may be withheld in the sole discretion of the
other party; provided, however, that Buyer may (i) assign any or all of its
rights and interests hereunder (but not delegate any or all of its duties
hereunder) to one or more of its affiliates and (ii) designate one or more of
its affiliates to perform its obligations hereunder (in any or all of which
cases in subparagraphs (i) and (ii) Buyer nonetheless shall remain responsible
for the performance of all of its obligations hereunder). References to Buyer
and Seller shall include their respective successors and permitted assigns.
82
Entire Agreement and Modification.
---------------------------------
This Agreement supersedes all prior agreements and understandings
between the parties or any of their respective affiliates (written or oral)
relating to the subject matter (except for that certain Confidentiality
Agreement between the parties dated June 30, 1995), and is intended to be the
entire and complete statement of the terms of the agreement between the parties,
and may be amended or modified only by a written instrument executed by the
parties. The waiver by one party of any breach of this Agreement by the other
party shall not be considered to be a waiver of any succeeding breach (whether
of a similar or a dissimilar nature) of any such provision or other provision or
a waiver of any such provision itself. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
Notwithstanding anything to the contrary contained herein, any matter set forth
or referred to or disclosed on any Schedule hereto shall be deemed also to be
set forth, referred to and disclosed on all schedules, and deemed to be the
disclosure under all Sections and provisions of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto.
Termination By Buyer.
--------------------
Buyer may, without liability, terminate this Agreement by written
notice to Seller as follows:
If Seller fails to comply with Section or to satisfy at or prior
to Closing in all material respects any of the conditions to Closing specified
in Article 7 which are required to be performed or satisfied by Seller at or
prior to Closing, and if any such failure either is not waived in writing by
Buyer or cured by Seller within twenty days after written notice thereof by
Buyer; or
83
If the Phase One Study prepared pursuant to Section 9.3 discloses
environmental remediation costs and compliance costs which are in excess of
$20,000,000, Buyer may, without liability, terminate this Agreement by written
notice to Seller on or before December 29, 1995.
Termination By Seller.
---------------------
Seller may, without liability, terminate this Agreement by written
notice to Buyer as follows:
If Buyer fails to comply with Section or to satisfy at or prior
to Closing in all material respects any of the conditions to Closing specified
in Article 6 which are required to be performed or satisfied by Buyer at or
prior to Closing, and if any such failure either is not waived in writing by
Seller or cured by Buyer within twenty days after written notice thereof by
Seller;
If Buyer fails to obtain financing as required by Section 7.7 on
or before January 16, 1996 and Buyer does not waive the condition set forth in
Section 7.7 thereon or before such date; or
If the Phase One Study prepared pursuant to Section 9.3 discloses
environmental remediation costs and compliance costs which are in excess of
$20,000,000, and Buyer provides the notice set forth in Section 7.11, Seller
may, without liability, terminate this Agreement by written notice to Buyer on
or before January 3, 1996.
Other Termination.
-----------------
If no Closing occurs by March 15, 1996, and the failure to close is
not the result of Seller's or Buyer's failure to satisfy in all material
respects any of the conditions to Closing
84
specified in Articles 6 and 7 at or prior to Closing, each of Buyer and Seller
shall have the right to terminate this Agreement upon written notice to the
other.
Effect of Termination.
---------------------
If this Agreement is terminated pursuant to Sections 9.8, 9.9 or 9.10
above, all rights and obligations of the parties hereunder shall terminate
without any liability of any party to the other party under or with respect to
this Agreement; provided, however, that nothing in this Section 9.11 or
elsewhere in this Agreement shall impair or restrict the rights of any party to
any and all remedies at law or in equity in the event of a breach of or default
under this Agreement by the other party. If this Agreement is terminated as
provided herein all filings, applications and other submissions made pursuant to
this Agreement shall, to the extent practicable, be withdrawn from the agency or
other persons to which they were made.
Survival of Representations, Covenants and Warranties.
-----------------------------------------------------
The representations and warranties made by Seller and Buyer herein
shall survive the Closing for a period of two years; provided, however, that the
representations and warranties made by Seller in Section 3.27(a)-(h) above shall
survive the Closing and continue in full force and effect for a period of four
years; those contained in Sections 3.2, 3.11, 3.12, 3.13 and 3.14 above shall
survive the Closing and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations); and those contained in
Section 3.27 (i) shall not survive the Closing. The covenants and agreements
set forth in the Agreement shall survive Closing, each in accordance with its
terms.
In the case of any representation or warranty of Seller in Section
3.22 and any other representation or warranty relating to or affecting the
Company or the Subsidiaries'
85
liability for Taxes (the "Surviving Representations") whether the Company's or
the Subsidiaries' Taxes or their liability, if any (for example, by reason of
transferee liability or application of Treas. Reg. Section 1.1502-6) for the
Taxes of others including, but not limited to Seller or any former or present
affiliate or subsidiary thereof, the same shall survive until the later of the
final resolution of any judicial or administrative proceeding involving any such
Tax or expiration of any statute of limitations (including any suspensions,
tollings or extensions thereof).
Section and Other Headings.
--------------------------
The Section and other headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Governing Law.
-------------
This Agreement shall be interpreted and governed by the laws of the
Commonwealth of Pennsylvania without giving effect to any choice or conflict of
law provision.
Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and such counterparts shall together
constitute one and the same instrument.
Further Assurances.
------------------
Each of the parties shall execute such documents and other papers and
take such further actions as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby. Each party shall
use its reasonable efforts to fulfill or obtain the fulfillment of the
conditions to the Closing.
86
Severability.
------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition and unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Confidentiality.
---------------
Seller and Buyer agree to keep the terms of this Agreement and any
amendments to it or transactions arising from it confidential except as required
by law or as otherwise agreed by the parties. The parties hereto agree that
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby, the content of any such
disclosure shall be communicated between the parties and agreed to prior to the
release thereof, except as required by applicable law or government regulation.
No Third Party Beneficiaries.
----------------------------
Neither this Agreement nor any provision hereof is intended to confer
upon any person (other than the parties hereto and their respective successors
and permitted assigns ) any rights or remedies hereunder.
Jurisdiction.
-------------
Each party agrees to bring all judicial proceedings against the other
arising out of or relating to this Agreement or any of the Delaware or the
appropriate state court located in New Castle County, Delaware. In addition,
each party accepts, generally and unconditionally, the exclusive jurisdiction of
such courts and waives, to the fullest extent permitted by law, any
87
objection (including any objection that jurisdiction, situs, or venue is
inconvenient or improper) which it may now have or may hereafter have to the
laying of venue or the convenience of the forum of any action with respect to
bringing, prosecution or defense of any such judicial proceeding in any such
court.
Specific Performance.
--------------------
Buyer and Seller acknowledge and agree that failure by the other to
perform its obligations under this Agreement would cause such party or parties
to be materially and irreparably injured and to suffer material loss; and that
such injury and loss cannot be fully or adequately compensated by the payment of
money or by an award of damages and each shall be entitled to the specific
performance of this Agreement, in addition to all other remedies that each might
have, and that each of them will not object to and will not hinder or delay the
entry of a decree of specific performance against it in any action or suit
brought under or in respect of this Agreement.
Intercompany Relationships.
--------------------------
All leases, licenses, contracts, and other agreements between any of
the Company and the Subsidiaries on one hand and any of Seller or any of its
affiliates on the other hand shall be deemed terminated as of the Closing and
will have no further force or effect.
Parent Guarantee.
----------------
Parent hereby unconditionally and irrevocably guarantees the full and
prompt performance by Seller of all of its obligations under this Agreement.
Definition of Knowledge.
-----------------------
As used herein, the phrase "knowledge of Seller" shall have the
meaning, and be limited to the persons, as set forth on Schedule 9.24.
88
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PARENT:
ATTEST: XXXXXXXXX WORLD INDUSTRIES, INC.
/s/ X. X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxx
________________________________ By:__________________________________
X. X. Xxxxxxxxx, Secretary Title: Chairman & CEO
SELLER:
ATTEST: XXXXXXXXX ENTERPRISES, INC.
/s/ X. X. Xxxxxx /s/ X. X. Xxxxxxxxx
________________________________ By:__________________________________
X. X. Xxxxxx, Secretary Title: Vice President
BUYER:
ATTEST: INTERCO INCORPORATED
/s/ X. X. Xxxxxxxxx /s/ X. X. Xxxxx
________________________________ By:__________________________________
X. X. Xxxxxxxxx, Secretary Title: Chairman of the Board
89
Schedules to Stock Purchase Agreement
Pursuant to (S) 229.601(b)(2) of Regulation S-K of the Securities Act of 1933,
the Registrant has omitted the schedules to the Stock Purchase Agreement. The
Registrant hereby agrees to furnish supplementary a copy of any omitted schedule
to the Commission upon request.
