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Exhibit 10.26
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made as of March 24,
1997, by O'Xxxx Xxxx & Xxxxxxxxxx Armoring Company, a Delaware corporation
("BUYER"), and Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxxxxx Xxxxx and Xxxxxxxxx
X. Xxxxx (collectively, "SELLERS").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "SHARES") of capital stock of International
Training Incorporated, a Virginia corporation (the "COMPANY"), for the
consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES"--the Company and its subsidiaries, including any
entity that owns assets used in the Company's training or interactive video
businesses.
"AUTOMOTIVE PRODUCTS"--nominal quantities of motor oil, transmission
fluid, radiator coolant and other automotive products used in the ordinary
course of the Company's business.
"BUYER"--as defined in the first paragraph of this Agreement.
"CASINGS"--bullets and other ammunition used in the ordinary course of
the Company's business.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing actually
takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES"--as defined in Section 5.2.
"DISCLOSURE SCHEDULE"--the disclosure schedule delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(ii).
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"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters,
groundwaters, drinking water supply, stream sediments, ambient air, plant and
animal life, and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions required by applicable Environmental Law or Occupational Safety and
Health Law and for any natural resource damages; or (d) any other compliance,
corrective, investigative, or remedial measures required under Environmental Law
or Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW"--any legal requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials, violations
of discharge limits, or other prohibitions and of the commencements of
activities that could have significant impact on the Environment; (b) preventing
or reducing to acceptable levels the release of pollutants or hazardous
substances or materials into the Environment; (c) reducing the quantities,
preventing the release, or minimizing the hazardous characteristics of wastes
that are generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of; (e) reducing to acceptable
levels the risks inherent in the transportation of hazardous substances,
pollutants, oil, or other potentially harmful substances; (f) cleaning up
pollutants that have been released, preventing the threat of release, or paying
the costs of such clean up or prevention; or (g) making responsible parties pay
private parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the public interest
to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles) currently
or formerly owned or operated by any Acquired Company.
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"FINANCIAL STATEMENTS"--as defined in Section 3.4.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
manufacturing, processing, production, release, storage, transportation,
treatment, or use of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act, business
or operation that increases the danger or poses an unreasonable risk of harm to
persons or property on or off the Facilities, or that may affect the value of
the Facilities or the Acquired Companies other than the use and storage of
Automotive Products and Casings on the Property.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"MARKET VALUE"--the average closing price of the TOG Shares on the
NASDAQ National Market as listed in the Wall Street Journal during the five
business days ending on the business day which is four business days prior to
the Closing Date.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any legal requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or governmental body.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
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"SUBORDINATED NOTES"--as defined in Section 2.4(b)(iii).
"TOG"--The O'Gara Company, an Ohio corporation.
"TOG SHARES"--as defined in Section 2.4(b)(i) of this Agreement.
2. SALE AND TRANSFER OF SHARES; CLOSING
------------------------------------
2.1 SHARES
------
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Sellers.
2.2 PURCHASE PRICE
--------------
The purchase price for the Shares will be $2,531,513, payable as set
forth in Section 2.4(b) below.
2.3 CLOSING
-------
The purchase and sale (the "CLOSING") provided for in this Agreement
will take place at the offices of the Company at 5:00 p.m. on March 24, 1997, or
at such other time and place as the parties may agree.
2.4 CLOSING OBLIGATIONS
-------------------
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for transfer
to Buyer;
(ii) employment agreements in the form of Exhibit 2.4(a)(ii),
executed by Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxxx
(collectively, "EMPLOYMENT AGREEMENTS"); and
(iii) the opinion of Xxxxxx and Xxxxxxxxx, P.C., counsel to
Sellers, in the form of Exhibit 2.4(a)(iii).
(b) Buyer will deliver to Sellers:
(i) that number of shares of the common stock of Buyer
("TOG SHARES") having an aggregate Market Value of Eight Hundred Thousand
Dollars ($800,000), allocable to Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx,
Xxxxxxxx Xxxxx and Xxxxxxxxx X. Xxxxx, respectively, in the following amounts:
$320,000.00, $320,000.00, $80,000.00 and $80,000.00;
(ii) Five Hundred Thousand Dollars ($500,000.00) by bank
cashier's or certified checks payable to the order of Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxx, Xxxxxxxx
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Xxxxx and Xxxxxxxxx X. Xxxxx, respectively, in the following amounts:
$200,000.00, $200,000.00, $50,000.00 and $50,000.00;
(iii) promissory notes in the aggregate principal amount of
$1,231,513.00, subordinated to the interest of The Fifth Third Bank and
guaranteed by TOG and payable to Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxxxxx
Xxxxx and Xxxxxxxxx X. Xxxxx, respectively, in the principal amounts of
$492,605.00, $492,605.00, $123,151.00 and $123,151.00, in the form of Exhibit
2.4(b)(iii) (the "SUBORDINATED NOTES");
(iv) the Employment Agreements, executed by Buyer; and
(v) the opinion of Xxxxx X. Xxxxxx, as General Counsel to
Buyer, in the form of Exhibit 2.4(b)(v).
2.5 INTERACTIVE VIDEO BUSINESS ASSETS
---------------------------------
Sellers hereby transfer, convey and assign to the Company all of their
right, title and interest in and to the interactive video business which they
have conceived and developed which will allow security training to be performed
by interactive video and/or CD ROM. Buyer shall pay Xxxxxx X. Xxxxxxx and Xxxxxx
X. Xxxxx a royalty for such interactive video in accordance with the letter
attached hereto as Exhibit 2.5 and incorporated herein.
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3. REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1 ORGANIZATION AND GOOD STANDING
------------------------------
(a) Section 3.1 of the Disclosure Schedule contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder and the number of
shares held by each). Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted and to own or use the properties and assets that it
purports to own or use. Each Acquired Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of the Employment Agreements (collectively,
the "Sellers' Closing Documents"), the Sellers' Closing Documents will
constitute the legal, valid, and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective terms. Sellers have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Sellers' Closing Documents and to perform their
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Section 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the transactions contemplated hereby will, directly or
indirectly (with or without notice or lapse of time);
(i) contravene, conflict with, or result in a violation or
breach of (A) any provision of the Organizational Documents of the Acquired
Companies, (B) any resolution adopted by the board of directors or the
shareholders of any Acquired Company, (C) any legal requirement or any order to
which any Acquired Company, any Seller, or any of the assets owned or used by
any Acquired Company, may be subject, (D) any governmental authorization that is
held by any Acquired Company or that otherwise relates to the business of, or
any of the assets owned or used by, any Acquired Company, or (E) any Contract to
which any Acquired Company is a party or by which any Acquired Company or its
assets is bound or affected;
(ii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired Company.
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Except as set forth in Section 3.2 of the Disclosure Schedule, no
Seller or Acquired Company is or will be required to give any notice to or
obtain any consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the transactions
contemplated hereby.
(c) Sellers acknowledge that neither the Subordinated Notes nor the TOG
Shares have been registered under the Securities Act, or under the securities
law of any state, and that the sale of the Subordinated Notes and the TOG Shares
is being made in reliance upon and in compliance with an exemption from
registration provided by the Act.
(d) Sellers have been provided with and have reviewed copies of the
Prospectus dated November 12, 1996, for TOG's initial public offering and
quarterly report on Form 10- Q for the period ended September 30, 1996. Sellers
have been supplied with such additional information concerning TOG, the
Subordinated Notes and the TOG Shares as Sellers have reasonably requested, and,
by reason of Sellers' business and financial experience, Sellers have the
capacity to evaluate the merits and risks of an investment in the TOG Shares and
the Subordinated Notes.
(e) Sellers are acquiring the TOG Shares and the Subordinated Notes for
their own account as an investment and not with a view to, or for resale in
connection with, any distribution or public offering, and Sellers have no
agreement, understanding or arrangement to sell, assign or transfer any portion
of the TOG Shares to any other person or entity.
(f) The TOG Shares are "restricted securities" as defined in Rule 144
under the Act. Sellers will not offer, sell, transfer, assign, exchange or
otherwise dispose of any of the TOG Shares at any time unless the TOG Shares are
(i) registered under the Act, or (ii) offered, sold or otherwise disposed of in
compliance with an exemption from the registration requirements of the Act (as
evidenced by an opinion of counsel satisfactory to TOG that such an exemption is
available to Sellers).
(g) Sellers understand and agree that the certificates for the TOG
Shares will bear a restrictive legend stating that transfer of the TOG Shares is
prohibited except in accordance with the provisions of this Agreement and that
TOG is entitled to refuse to register any transfer of the TOG Shares not made in
accordance with the provisions of this Agreement.
3.3 CAPITALIZATION
--------------
The authorized equity securities of the Company consist of 10,000
shares of common stock, $.01 par value, of which 100 shares are issued and
outstanding and constitute the Shares. Sellers are the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances. Xxxxxx X.
Xxxxxxx owns 40 of the Shares, Xxxxxx X. Xxxxx owns 40 of the Shares, Xxxxxxxx
Xxxxx owns 10 of the shares and Xxxxxxxxx X. Xxxxx owns 10 of the Shares. With
the exception of the Shares (which are owned by Sellers), all of the outstanding
equity securities and other securities of each Acquired Company are owned of
record and beneficially by one or more of the Acquired Companies, free and clear
of all Encumbrances. No legend or other reference to any purported Encumbrance
appears upon any certificate representing equity securities of any Acquired
Company. All of the outstanding equity securities of each Acquired Company have
been duly authorized and validly issued and are fully paid and nonassessable.
There
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are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other legal requirement. No Acquired
Company owns, or has any Contract to acquire, any equity securities or other
securities of any Person (other than Acquired Companies) or any direct or
indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
--------------------
(a) For purposes of this Agreement: "FINANCIAL STATEMENTS" shall mean
the unaudited balance sheet of the Company dated as of December 31, 1996, and
the related statements of income, stockholders' equity and cash flows for the
year then ended, and the income statement for the 12 months ended that date;
(b) The Financial Statements, which are incorporated herein by
reference, (i) have been prepared on a basis consistent with that of preceding
accounting periods, (ii) fully reflect all liabilities and contingent
liabilities of the Company required to be reflected therein on such basis as at
the date thereof, and (iii) fairly present the financial position of the Company
as of the respective dates of the balance sheets included in the Financial
Statements and the results of its operations for the respective periods
indicated.
3.5 BOOKS AND RECORDS
-----------------
Except as disclosed in Section 3.5 of the Disclosure Schedule, the
books of account and other records of the Acquired Companies, all of which have
been made available to Buyer, are complete and correct and have been maintained
in accordance with GAAP. Except as disclosed in Section 3.5 of the Disclosure
Schedule, the minute books of the Acquired Companies contain accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the Boards of Directors, and committees of the Boards of Directors
of the Acquired Companies. At the Closing, all of those books and records will
be in the possession of the Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
---------------------------------
Section 3.6 of the Disclosure Schedule contains a complete and accurate
list of all real property, leaseholds, or other interests therein owned by any
Acquired Company. Sellers have delivered or made available to Buyer copies of
the deeds and other instruments by which the Acquired Companies acquired such
real property and interests, and copies of all title insurance policies,
environmental audits, and surveys in the possession of Sellers or the Acquired
Companies and relating to such real property or interests. Section 3.6 of the
Disclosure Schedule also contains a complete and accurate list of all licensed
vehicles owned or leased by any Acquired Company and the fixed assets used in
the business of any Acquired Company and carried on its books for tax purposes.
Except as set forth on Section 3.6 of the Disclosure Schedule, the Acquired
Companies own (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets located in the facilities owned or operated by the
Acquired Companies or reflected as owned in the books and records of the
Acquired Companies, including all of the properties and assets reflected in the
Financial Statements. All material properties and assets reflected in the
Financial Statements are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances,
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reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) liens for current taxes not yet due, and (b) with
respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of any
Acquired Company, and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
-----------------------------------
To the knowledge of Sellers, the buildings, vehicles, and equipment of
the Acquired Companies are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, vehicles or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. To the knowledge of Sellers and the Acquired Companies, the
buildings, vehicles and equipment of the Acquired Companies are sufficient for
the continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
-------------------
All accounts receivable of the Acquired Companies that are reflected on
the Financial Statements or on the accounts receivable ledger of the Acquired
Companies as of the Closing Date (collectively, the "Accounts Receivable")
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. The Accounts Receivable
are current and collectible. As of the date of this Agreement, there has been no
contest or claim, nor is there any right of set-off under any Contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Section 3.8 of the Disclosure Schedule contains a complete
and accurate list of all accounts receivable of the Acquired Companies as of
March 17, 1997, which list sets forth the aging of such accounts receivable.
3.9 [RESERVED]
----------
3.10 NO UNDISCLOSED LIABILITIES
--------------------------
Except as set forth in Section 3.10 of the Disclosure Schedule, the
Acquired Companies have no liabilities or obligations of any nature (whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Financial Statements and
current liabilities incurred in the ordinary course of business since the
respective dates thereof.
3.11 TAXES
-----
The Acquired Companies have properly and timely filed all federal,
state and local tax returns and have paid all taxes, assessments and penalties
due and payable. All such tax returns were correct in all respects as filed, and
no claims have been assessed with respect to such returns. The provisions made
for taxes on the balance sheets of the Acquired Companies included in the
Financial Statements are sufficient in all respects for the payment of all taxes
whether disputed or not that are due or are hereafter found to have been due
with respect to the conduct of the business of the Acquired Companies up to and
through the date of such Financial Statements. There are no present disputes as
to
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taxes of any nature payable by the Acquired Companies, nor any tax liens whether
existing or inchoate on any of the assets of the Acquired Companies, except for
current year taxes not presently due and payable. The federal income tax returns
of the Acquired Companies have never been audited. No IRS or foreign, state,
county or local tax audit is currently in progress. The Acquired Companies have
not waived the expiration of the statute of limitations with respect to any
taxes.
3.12 NO MATERIAL ADVERSE CHANGE
--------------------------
Since December 31, 1996, to the knowledge of Sellers, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of any Acquired Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 EMPLOYEE BENEFITS
-----------------
(a) Except as set forth in Section 3.13 of the Disclosure
Schedule, none of the Acquired Companies nor any corporation or business which
is now or at the relevant time was a member of a controlled group of companies
or trades or businesses including any of the Acquired Companies, within the
meaning of section 414 of the IRC ("Related Company"), maintains, contributes to
or has any liability under, or at any time maintained, contributed to or had any
liability under, nor do the employees of any of the Acquired Companies or any
Related Company receive or expect to receive as a condition of employment (A)
any non-qualified deferred compensation or retirement plans or arrangements; (B)
any defined contribution retirement plans or arrangements; (C) any qualified
defined benefit pension plan; (D) any other plan, program, agreement or
arrangement under which former employees of any of the Acquired Companies or
their beneficiaries are entitled, or current employees of the Acquired Companies
will be entitled following termination of employment, to medical, health or life
insurance or other benefits other than pursuant to benefit continuation rights
granted by state or federal law; or (E) any other employee benefit, health,
welfare, medical, disability, life insurance, severance pay, stock, stock
purchase or stock option plan, program, agreement, arrangement or policy. All
such plans shall be referred to collectively as "Plans," and any such plans
which are employee pension benefit plans within the meaning of section 3(2) of
ERISA shall be referred to as "Pension Plans" and any such plans which are
employee welfare benefit plans within the meaning of section 3(1) of ERISA shall
be referred to as "Welfare Plans."
(b) Sellers have furnished to the Buyer true and complete
copies of (A) the Plan documents and any related trusts or funding vehicles,
policies or contracts and the related summary plan descriptions with respect to
each Plan; and (B) copies of all corporate resolutions or other documents
pertaining to the adoption of the Plans or any amendments thereto or to the
appointment of any fiduciaries thereunder.
(c) Each Plan complies in all material respects with ERISA,
the IRC, and all other applicable laws and administrative or government rules or
regulations. All required reports, notices and descriptions with respect to the
Plans have been appropriately filed or distributed. The cost of administering
the Plans, including fees for the trustees and other service providers which are
customarily paid by the Acquired Companies, have been paid prior to the date
hereof. No plan is maintained in connection with any trust described in section
501(c)(9) of the IRC. There are no actions, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Plan. No
prohibited transactions described in section 406 of ERISA or section 4975 of the
Code have occurred. Each Plan has been operated in compliance with its terms.
The Acquired Companies have complied
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in all material respects with the health care continuation requirements of part
6 of Title I of ERISA.
(d) With respect to all other Plans, all required or
recommended (in accordance with plan terms and past practice) payments,
premiums, contributions, reimbursements or accruals for all periods ending prior
to or as of the date hereof have been made or properly accrued on the financial
statements. All of the Welfare Plans are fully insured.
(e) None of the Acquired Companies nor any Related Company
contributes or in the past six years has contributed to a "multi-employer plan"
(as defined in section 3(37) or 4001(a)(2) of ERISA or section 414(f) of the
IRC).
3.14 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
-------------------------------------------------
(a) Except as set forth in Section 3.14 of the Disclosure Schedule, the
Acquired Companies are in compliance with all laws, regulations, orders,
ordinances, judgments and decrees affecting the business or operations of the
Acquired Companies, including, without limitation, federal, state and local: (i)
Environmental Laws; (ii) Occupational Safety and Health Laws; and (iii)
securities laws, rules and regulations. None of the Acquired Companies has been
charged with violating, nor to the knowledge of Sellers, threatened with a
charge of violating, nor, to the knowledge of Sellers, are any of the Acquired
Companies under investigation with respect to a possible violation of, any
provision of any federal, state or local law, order or administrative ruling or
regulation relating to any of their assets or properties or any aspect of their
business.
(b) Section 3.14 of the Disclosure Schedule contains a complete and
accurate list of each governmental authorization, license or permit that is held
by any Acquired Company or that otherwise relates to the business of, or to any
of the assets owned or used by, any Acquired Company. Each governmental
authorization listed or required to be listed in Section 3.14 of the Disclosure
Schedule is valid and in full force and effect.
3.15 LEGAL PROCEEDINGS
-----------------
(a) Except as set forth in Section 3.15 of the Disclosure Schedule, to
the knowledge of Sellers, there is no pending claim, action, investigation,
arbitration, litigation or other proceeding ("PROCEEDING"):
(i) that has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereby.
To the knowledge of Sellers and the Acquired Companies, (1) no such
Proceeding has been threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. Sellers have made available to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Section 3.15 of the Disclosure Schedule. The Proceedings listed in Section 3.15
of the Disclosure Schedule will not have a material adverse effect on the
business, operations, assets, condition, or prospects of any Acquired Company.
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3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
-------------------------------------
Except as set forth in Section 3.16 of the Disclosure Schedule, since
December 31, 1996, the Acquired Companies have conducted their businesses only
in the ordinary course of business and there has not been any:
(a) declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the ordinary course of business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(c) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(d) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(e) entry into, termination of, or receipt of notice of termination of
any Contract or transaction involving a total remaining commitment by or to any
Acquired Company of at least $5,000;
(f) sale, lease, or other disposition of any asset or property of any
Acquired Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of any Acquired Company;
(g) cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $5,000;
(h) material change in the accounting methods used by any Acquired
Company; or
(i) agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
----------------------
(a) Section 3.17(a) of the Disclosure Schedule contains a complete and
accurate list, and Sellers have delivered to Buyer true and complete copies, of:
(i) each Contract that involves performance of services or
delivery of goods or materials by one or more Acquired Companies of an amount or
value in excess of $5,000;
(ii) each Contract that involves performance of services or
delivery of goods or materials to one or more Acquired Companies of an amount or
value in excess of $5,000;
(iii) each lease, license, and other Contract affecting any
leasehold or other interest in, any real or personal property;
13
(iv) each licensing agreement or other Contract with respect
to patents, trademarks, copyrights, trade secrets or other intellectual
property, including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any
intellectual property;
(v) each collective bargaining agreement and other Contract to
or with any labor union or other employee representative of a group of
employees;
(vi) each joint venture, partnership, and other Contract
involving a sharing of profits, losses, costs, or liabilities by any Acquired
Company with any other Person;
(vii) each Contract containing covenants that in any way
purport to restrict the business activity of any Acquired Company or any Seller
or limit the freedom of any Acquired Company or any Seller to engage in any line
of business or to compete with any Person;
(viii) each power of attorney that is currently effective and
outstanding; and
(ix) each Contract for capital expenditures in excess of
$10,000.
(b) Except as set forth in Section 3.17(b) of the Disclosure Schedule,
no Seller has or may acquire any rights under, and no Seller has or may become
subject to any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, any Acquired Company; and
(c) Except as set forth in Section 3.17(c) of the Disclosure Schedule,
to the knowledge of Sellers, each Contract identified or required to be
identified in Section 3.17(a) of the Disclosure Schedule is in full force and
effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Section 3.17(d) of the Disclosure Schedule:
(i) to the knowledge of Sellers, each Acquired Company is in
full compliance with all applicable terms and requirements of each Contract
under which such Acquired Company has or had any obligation or liability or by
which such Acquired Company or any of the assets owned or used by such Acquired
Company is or was bound;
(ii) to the knowledge of Sellers and the Acquired Companies,
each other person that has or had any obligation or liability under any Contract
under which an Acquired Company has or had any rights is in full compliance with
all applicable terms and requirements of such Contract; and
(iii) no event has occurred or, to the knowledge of Sellers,
circumstance exists that (with or without notice or lapse of time) may result in
a violation or breach of any Contract.
3.18 INSURANCE
---------
Section 3.18 of the Disclosure Schedule sets forth the premium payments
and describes all the insurance policies of the Acquired Companies, which
policies are now in full force and effect in accordance with their terms and
expire on the dates shown on such Schedule. There has been no default in the
payment of premiums on any of such policies, and, to the knowledge of Sellers,
there is no ground for cancellation or avoidance of any
14
such policies, or any increase in the premiums thereof, or for reduction of the
coverage provided thereby. Such policies insure the Acquired Companies in
amounts and against losses and risks normal and sufficient for businesses
similar to that of the Acquired Companies, and, to the knowledge of Sellers,
such policies shall continue in full force and effect up to the expiration dates
shown in Section 3.18 of the Disclosure Schedule. True and correct copies of all
insurance policies listed in Section 3.18 have been previously furnished to
Buyer.
3.19 ENVIRONMENTAL MATTERS
---------------------
Except as set forth in part 3.19 of the Disclosure Schedule:
(a) To the knowledge of Sellers, each Acquired Company is, and at all
times has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. No Seller or Acquired
Company has any basis to expect, nor has any of them or, to the knowledge of
Sellers, any other Person for whose conduct they are or may be held to be
responsible received, any actual or threatened order, notice, or other
communication from (i) any governmental body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets in which Sellers or
any Acquired Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
transferred, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible.
(b) There are no pending or, to the knowledge of Sellers and the
Acquired Companies, threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets in which Sellers or any
Acquired Company has or had an interest.
(c) No Seller or Acquired Company has knowledge of any basis to expect,
nor has any of them or, to the knowledge of Sellers, any other Person for whose
conduct they are or may be held responsible, received, any inquiry, notice,
order, or other communication that relates to Hazardous Activity, Hazardous
Materials, or any violation or failure to comply with any Environmental Law, or
of any obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets in which Sellers or any Acquired Company had an interest,
or with respect to any property or facility to which Hazardous Materials
generated, manufactured, transferred, used, or processed by Sellers, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, or handled.
(d) To the knowledge of Sellers, no Seller or Acquired Company, or any
other Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets in which Sellers or any Acquired
Company (or any predecessor), has or had an interest, or at any property
adjoining the Facilities or any such other property or assets.
(e) To the knowledge of Sellers, there are no Hazardous Materials
present on or in the Environment at the Facilities other than Automotive
Products and Casings. No Seller,
15
Acquired Company, to the knowledge of Sellers, any other Person for whose
conduct they are or may be held responsible, or to the knowledge of Sellers and
the Acquired Companies, any other Person, has permitted or conducted, or is
aware of, any Hazardous Activity conducted with respect to the Facilities or any
other properties or assets in which Sellers or any Acquired Company has or had
an interest except in full compliance with all applicable Environmental Laws.
(f) To the knowledge of Sellers, other than through the use of Casings,
there has been no release or, to the knowledge of Sellers and the Acquired
Companies, threat of release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, transferred, produced, used, or processed from or by
the Facilities, or from or by any other properties and assets in which Sellers
or any Acquired Company has or had an interest, or to the knowledge of Sellers
and the Acquired Companies any adjoining property, whether by Sellers, any
Acquired Company, or any other Person. the Company has taken reasonable measures
to collect used Casings.
(g) Sellers are not aware of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or any Acquired Company pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance by Sellers, any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES
---------
(a) Section 3.20 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Acquired
Companies: name; job title; current compensation; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under any
Acquired Company's pension, or other employee benefit plan of any nature.
(b) No employee or director of any Acquired Company is a party to, or
is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person that in any way adversely affects or
will affect (i) the performance of his duties as an employee, officer, or
director of the Acquired Companies, or (ii) the ability of any Acquired Company
to conduct its business. To Sellers' knowledge, no director, officer, or other
key employee of any Acquired Company intends to terminate his employment with
such Acquired Company.
3.21 LABOR RELATIONS
---------------
No Acquired Company has been or is a party to any collective bargaining
or other labor Contract. There has not been, there is not presently pending or
existing, and to Sellers' knowledge there is not threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
proceeding against or affecting any Acquired Company relating to the alleged
violation of any legal requirement pertaining to labor relations or employment
matters, organizational activity, or other labor or employment dispute against
or affecting any of the Acquired Companies or their premises.
3.22 INTELLECTUAL PROPERTY
---------------------
(a) INTELLECTUAL PROPERTY ASSETS--The term "Intellectual Property
Assets" includes: (i) the name "International Training," all fictional business
names, trading names, registered
16
and unregistered trademarks, service marks, and applications (collectively,
"MARKS"); (ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "PATENTS"); (iii) all copyrights in both
published works and unpublished works, including training manuals and videos
(collectively, "COPYRIGHTS"); and (iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, plans,
drawings, and blue prints (collectively, "TRADE SECRETS"); owned, used, or
licensed by any Acquired Company as licensee or licensor.
(b) AGREEMENTS--Section 3.22(b) of the Disclosure Schedule contains a
complete and accurate list and summary description, including any royalties paid
or received by the Acquired Companies, of all Contracts relating to the
Intellectual Property Assets to which any Acquired Company is a party or by
which any Acquired Company is bound.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS--The Intellectual Property
Assets are all those necessary for the operation of the Acquired Companies'
businesses as they are currently conducted. One or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Encumbrances and has the
right to use without payment to a third party all of the Intellectual Property
Assets.
(d) TRADEMARKS--(i) Section 3.22(d) of Disclosure Schedule contains a
complete and accurate list of all Marks; (ii) one or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Marks, free and clear of all Encumbrances; (iii) all Marks that have been
registered with the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements and are valid and enforceable;
(iv) no Xxxx is infringed or, to Sellers' knowledge, has been challenged or
threatened in any way. None of the Marks used by any Acquired Company infringes
or is alleged to infringe any trade name, trademark, or service xxxx of any
third party.
(e) COPYRIGHTS--(i) Section 3.22(e) of the Disclosure Schedule contains
a complete and accurate list of all Copyrights; (ii) one or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Copyrights, free and clear of all Encumbrances; (iii) all the Copyrights have
been registered and are currently in compliance with formal legal requirements,
and are valid and enforceable; (iv) no Copyright is infringed or, to Sellers'
knowledge, has been challenged or threatened in any way; (v) none of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party; and (vi) all works encompassed by the Copyrights have been marked
with the proper copyright notice.
(f) TRADE SECRETS--(i) Sellers and the Acquired Companies have taken
all reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets; and (ii) to the knowledge of Sellers, one or more of the
Acquired Companies has good title and an absolute right to use the Trade
Secrets. The Trade Secrets, to Sellers' knowledge, have not been used, divulged,
or appropriated either for the benefit of any Person (other than one or more of
the Acquired Companies) or to the detriment of the Acquired Companies. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in
any way.
(g) USE OF INTELLECTUAL PROPERTY ASSETS -- Xxxxxx X. Xxxxxxx and Xxxxxx
X. Xxxxx shall be entitled to use those of the Intellectual Property Assets that
they have contributed to the Company, other than the name of the Company, upon
the termination of any confidentiality or non-competition agreements contained
in the Employment Agreements. The preceding shall not impair at any time the
rights of the Company to utilize such Intellectual Property Rights
17
3.23 CERTAIN PAYMENTS
----------------
No Acquired Company or director, officer, agent, or employee of any
Acquired Company, or to Sellers' knowledge any other Person associated with or
acting for or on behalf of any Acquired Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person, private or public, regardless of form, whether
in money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any Acquired Company or any affiliate of an Acquired Company, or
(iv) in violation of any legal requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Acquired Companies.
3.24 DISCLOSURE
----------
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to any Seller that has specific application
to any Seller or any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as any Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Acquired Companies (on a
consolidated basis) that has not been set forth in this Agreement or the
Disclosure Schedule.
3.25 RELATIONSHIPS WITH RELATED PERSONS
----------------------------------
Except as set forth in Section 3.25 of the Disclosure Schedule, no
Seller, nor any officer, director or employee of any Acquired Company, nor any
spouse or child of any of them ("RELATED PERSON") has any interest in any
property used in or pertaining to the Acquired Companies' businesses. No Seller
or any Related Person has owned an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings with any
Acquired Company, or (ii) engaged in competition with any Acquired Company.
Except as set forth in Section 3.25 of the Disclosure Schedule, no Seller or any
Related Person is a party to any Contract with, or has any claim or right
against, any Acquired Company.
3.26 BROKERS OR FINDERS
------------------
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
3.27 DEPOSIT ACCOUNTS
----------------
Section 3.27 of the Disclosure Schedule contains a complete and
accurate list of (a) the name of each financial institution in which any
Acquired Company has an account or safe deposit box, (b) the names in which each
account or box is held, (c) the type account, and (d) the name of each person
authorized to draw on or have access to each account or box.
18
3.28 CUSTOMER RELATIONSHIPS
----------------------
To the knowledge of Sellers, there are no facts or circumstances that
are likely to result in the loss of any customer of the Acquired Companies or a
material change in the relationship of the Acquired Companies with such a
customer.
4.0 REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
------------------------------
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreements and the
Subordinated Notes (collectively, the "Buyer's Closing Documents"), the Buyer's
Closing Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
(b) Except for the consent of The Fifth Third Bank, neither the
execution and delivery of this Agreement by Buyer nor the consummation or
performance by Buyer of any of the transactions contemplated hereby will give
any Person the right to prevent, delay, or consent to any of the transactions
contemplated hereby pursuant to: (i) any provision of Buyer's Organizational
Documents; (ii) any resolution adopted by the board of directors or the
shareholders of Buyer; (iii) any legal requirement or order to which Buyer may
be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
4.3 TOG SHARES
----------
The TOG Shares delivered to Sellers at the Closing have been duly
authorized, and upon issuance of such shares as provided in the Agreement, will
be validly issued, fully paid and nonassessable.
4.4 PIGGYBACK RIGHTS
----------------
If TOG registers any additional shares of its common stock for sale
subsequent to the Closing, pursuant to the Act, and if (i) any shares of the
current shareholders of TOG ("CURRENT SHAREHOLDERS") which are then restricted
as to holding period, or volume of sale under the U.S. Securities and Exchange
Commission Rule 144 are included in the registration, and (ii) the resale of the
TOG Shares by any of the Sellers is then restricted as to holding period, or
volume of sale under U.S. Securities and Exchange Act Rule 144, then TOG will
accord to each of the Sellers the opportunity, on a pro rata basis with the
other Current Shareholders, to include in such registration statement shares of
TOG, on the same terms and conditions and subject to the same limitations as
shall apply to the Current Shareholders. Notwithstanding the foregoing, the
number of shares that any of the of the Sellers shall be entitled to register
shall not exceed the greatest number of shares registered by any of the Current
Shareholders.
19
4.5 BROKERS OR FINDERS
------------------
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement except
for fees payable to G. Xxxxxxx Xxxxxxx and Company.
5.0 INDEMNIFICATION; REMEDIES
-------------------------
5.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
------------------------------------------------------------
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired by Buyer
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
-------------------------------------------------
Sellers, jointly and severally, will indemnify and hold harmless Buyer,
the Acquired Companies, and their respective representatives, stockholders,
controlling persons, and affiliates (collectively, the "INDEMNIFIED PERSONS")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"DAMAGES"), arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in
this Agreement, the Disclosure Schedule, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation of such
Seller in this Agreement or in the Employment Agreements;
(c) the operation of the business of any Acquired Company prior to the
Closing Date;
(d) (i) the issuance by the Company and the acquisition by the Company
or any of the Sellers of the preferred shares of stock of the Company, (ii) any
failure by the Company to pay any dividends on the preferred shares of stock of
the Company, (iii) the failure to acquire and retire all of the outstanding
preferred shares of stock of the company on or prior to the Closing Date (the
rights of the Buyer under this subparagraph shall not be impaired for any
reason, including, but not limited to Buyer closing on the acquisition of the
Acquired Companies with the knowledge that all of the outstanding preferred
shares of stock have not been retired); and
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any
20
such Person with any Seller or any Acquired Company in connection with the
transactions contemplated hereby.
The remedies provided in this Section 5.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other Indemnified
Persons.
5.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--ENVIRONMENTAL
----------------------------------------------------------------
MATTERS
-------
In addition to the provisions of Section 5.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyer, the Acquired Companies, and
the other Indemnified Persons for, and will pay to Buyer, the Acquired
Companies, and the other Indemnified Persons the amount of, any Damages arising,
directly or indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out of or
relating to: (i) any Hazardous Materials or other contaminants, wherever
located, that were, or were allegedly, generated, transported, stored, treated,
released, or otherwise handled by Sellers or any Acquired Company or by any
other Person for whose conduct they are or may be held responsible at any time
on or prior to the Closing Date, or (ii) any Hazardous Activities that were, or
were allegedly, conducted by Sellers or any Acquired Company or by any other
Person for whose conduct they are or may be held responsible; or
(b) any bodily injury, personal injury, property damage, or other
damage of or to any Person, in any way arising from or allegedly arising from
any Hazardous Activity conducted or allegedly conducted by Sellers or any
Acquired Company or by any other Person for whose conduct they are or may be
held responsible with respect to the Facilities or the operation of the Acquired
Companies prior to the Closing Date, or from Hazardous Material that was
released or allegedly released by Sellers or any Acquired Company or any other
Person for whose conduct they are or may be held responsible, at any time on or
prior to the Closing Date.
5.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
-----------------------------------------------
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages arising, directly or indirectly, from or in connection
with (a) any breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer in connection with the
transactions contemplated hereby.
5.5 RIGHT OF SET-OFF
----------------
Upon notice to Sellers specifying in reasonable detail the basis for
such set-off, Buyer may set off any amount to which it may be entitled under
this Section 5 against principal payments otherwise payable under the
Subordinated Notes. The exercise of such right of set-off by Buyer in good
faith, whether or not ultimately determined to be justified, will not constitute
an event of default under the Subordinated Notes; provided, however, that if it
is ultimately determined that set-off was not justified, then within five (5)
business days of such determination, Buyer shall pay the requisite amount
together with interest as set forth in the Subordinated Notes. Neither the
exercise of nor the failure to exercise such right of set-off will constitute an
election of remedies or limit Buyer in any manner in the
21
enforcement of any other remedies that may be available to it. If Buyer
exercises such right of set-off, (a) the amounts set-off will be deemed to
reduce the principal amount of the Subordinated Notes as of the Closing and will
be applied to reduce the principal installments due in the order in which they
are due, (b) the interest due on the Subordinated Notes will be retroactively
recalculated based on such set-off, and (c) Buyer may further set-off any
previous overpayment of interest as a result of such recalculation against
future payments of interest under the Subordinated Notes.
5.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
-------------------------------------------------
Promptly after receipt by an indemnified party of notice of the
commencement of any proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice.
5.7 NOTICE OF OTHER CLAIMS
----------------------
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
6.0 GENERAL PROVISIONS
------------------
6.1 EXPENSES
--------
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement, including all fees
and expenses of agents, representatives, counsel, and accountants. Sellers will
cause the Acquired Companies not to incur any out-of-pocket expenses in
connection with this Agreement.
6.2 PUBLIC ANNOUNCEMENTS
--------------------
Unless required by law or by the NASDAQ National Market, any public
announcement or similar publicity with respect to this Agreement, the Closing,
or the transactions contemplated hereby will be issued, if at all, at such time
and in such manner as Buyer determines with the concurrence of the Company.
Unless disclosure is consented to by Buyer in advance or required by law,
Sellers shall, and shall cause the Acquired Companies to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Buyer will consult with each other concerning the means by
which the Acquired Companies' employees, customers, and suppliers and others
having dealings with the Acquired Companies will be informed of this Agreement,
the Closing and the transactions contemplated hereby, and Buyer may at its
option be present for any such communication.
6.3 NOTICES
-------
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by fax (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when
22
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and fax
numbers set forth below (or to such other addresses and fax numbers as a party
may designate by notice to the other parties):
Sellers: International Training, Incorporated
West Point Municipal Airport
X.X. Xxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
with a copy to: B. Xxxxxxx Xxxxxxxxx, Esq.
Xxxxxx and Xxxxxxxxx , P.C.
000 Xxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Fax No: (000) 000-0000
Buyer: O'Xxxx Xxxx & Xxxxxxxxxx Armoring Company
0000 Xx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxx
Fax No.: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx
Vice President & General Counsel
The O'Gara Company
0000 Xx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
6.4 JURISDICTION; SERVICE OF PROCESS
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Ohio, County of Xxxxxxxx, or, the United
States District Court for the Southern District of Ohio, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein.
6.5 FURTHER ASSURANCES
------------------
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
23
6.6 WAIVER
------
Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege.
6.7 ENTIRE AGREEMENT AND MODIFICATION
---------------------------------
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including any correspondence between Buyer and
Sellers) and constitutes (along with the documents referred to in this
Agreement) the entire agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
6.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
--------------------------------------------------
Neither party may assign any of its rights under this Agreement without
the prior written consent of the other parties except that Buyer may assign any
of its rights, but not its obligations, under this Agreement to any subsidiary
or affiliate of Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement.
6.9 SEVERABILITY
------------
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part will remain in full force and effect to the extent
not held invalid or unenforceable.
6.10 SECTION HEADINGS, CONSTRUCTION
------------------------------
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
6.11 GOVERNING LAW
-------------
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of law principles, except that Virginia law shall
govern all corporate organizational and governance issues with respect to the
Company.
6.12 COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: Sellers:
O'XXXX XXXX & XXXXXXXXXX
ARMORING COMPANY
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------- --------------------------------
Xxxxxx X. Xxxxxxx
Title: Vice President and General Counsel
---------------------------------- /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxxx Xxxxx
--------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxxxxxxx X. Xxxxx
--------------------------------
Xxxxxxxxx X. Xxxxx
25
EXHIBITS
--------
2.4(a)(ii) Form of Employment Agreement
2.4(a)(iii) Opinion of Sellers' counsel
2.4(b)(iii) Form of Subordinated Notes
2.4(b)(v) Opinion of Buyer's counsel
26
EXHIBIT 2.4(a)(iii)
Opinion of Counsel to Sellers
1. The Agreement, the Employment Agreements, and the Noncompetition
Agreements are valid, binding and enforceable against the Sellers in
accordance with the respective terms of such Agreements.
2. The authorized capital stock of the Company consists of ____
shares of common stock, _____ par value, of which __________ shares are
outstanding. Sellers own all of the outstanding Shares of record and
beneficially, free and clear of all liens, claims or encumbrances. As a result
of the delivery of certificates to Buyer and the payment to Sellers being made
at the Closing, Buyer is acquiring ownership of all of the outstanding Shares,
free and clear of all liens, claims or encumbrances.
3. Each Acquired Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation as set forth in Section 3.1 of the Disclosure Schedule, with
full corporate power and authority to own its properties and to engage in its
business as presently conducted or contemplated, and is duly qualified and in
good standing as a foreign corporation under the laws of each other
jurisdiction in which it is authorized to do business as set forth in Section
3.1 of the Disclosure Schedule. All of the outstanding capital stock of each
subsidiary of the Company is owned of record and beneficially by the Company,
free and clear of all adverse claims. All of the outstanding shares of capital
stock of each Acquired Company have been duly authorized and validly issued
and are fully paid and nonassessable and were not issued in violation of the
preemptive rights of any Person.
4. Neither the execution and delivery of the Agreement, the
Employment Agreements, and the Noncompetition Agreements, nor the consummation
of any or all of the transactions contemplated thereby: (a) breaches or
constitutes a default (or an event that, with notice or lapse of time or both,
would constitute a default) under any agreement or commitment known to me to
which any Seller is party or (b) violates any statute, law, regulation or
rule, or any judgment, decree or order of any court or other governmental body
known to me to be applicable to any Seller.
5. Neither the execution and delivery of the Agreement nor the
consummation of any or all of the transactions contemplated thereby (a)
violates any provision of the certificate of incorporation or code of
regulations of any Acquired Company, (b) breaches or constitutes a default (or
an event that, with notice or lapse of time or both, would constitute a
default) under, or results in the termination of, or accelerates the
performance required by, or excuses performance by any Person of any of its
obligations under, or causes the acceleration of the maturity of any debt or
obligation pursuant to, or results in the creation or imposition of any lien,
claim or encumbrance upon any property or assets of any Acquired Company
under, any agreement or commitment known to me to which any Acquired Company
is a party or by which any of their respective properties or assets are bound,
or to which any of the properties or assets of any Acquired Company are
subject, or (c) violates any statute, law, regulation, or rule, or any
judgment, decree or order of any court or other governmental body known to me
to be applicable to any Acquired Company.
6. No consent, approval or authorization of, or declaration, filing
or registration with, any governmental body is required in connection with the
execution, delivery and
27
performance of the Agreement or the consummation of the transactions
contemplated thereby.
7. Except as set forth in Section 3.15 of the Disclosure Schedule,
there is no Proceeding by or before any court or governmental body pending or
threatened against or involving any Acquired Company or that questions or
challenges the validity of the Agreement or any action taken or to be taken by
any Acquired Company pursuant to the Agreement or in connection with the
transactions contemplated thereby, and none of the Acquired Companies is
subject to any judgment, order or decree having prospective effect.
28
EXHIBIT 2.4(b)(v)
Opinion of Counsel to Buyer
1. The Agreement, the Employment Agreements, the Subordinated Notes
and the Noncompetition Agreements are valid, binding and enforceable against
Buyer in accordance with the respective terms of such agreements.
2. Neither the execution and delivery of the Agreement, the
Subordinated Notes, the Employment Agreements and the Noncompetition
Agreements, nor the performance of Buyer's obligations thereunder: (a)
violates any provision of the articles of incorporation or code of regulations
of Buyer, (b) breaches or constitutes a default (or an event that, with notice
or lapse of time or both, would constitute a default) under any agreement or
commitment known to me to which Buyer is party or (c) violates any statute,
law, regulation or rule, or any judgment, decree or order of any court or
governmental body known to me to be applicable to Buyer.
3. The ________ TOG Shares that are being issued pursuant to the
Agreement have been duly authorized and validly issued and are fully paid and
non-assessable.
