EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
AMERICAN ALLSAFE COMPANY,
The Sellers party hereto
and
KEDMAN COMPANY, INC.
Dated as of June 12, 1998
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.1. Definitions.............................................................1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Basic Transaction.......................................................6
2.2. Payment of Purchase Price...............................................6
2.3. The Closing.............................................................6
2.4. Closing Deliveries by Sellers...........................................7
2.5. Closing Deliveries by Buyer.............................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1. Authorization of Transaction............................................8
3.2. Noncontravention........................................................8
3.3. Brokers' Fees...........................................................8
3.4. Shares..................................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SELLERS
4.1. Organization, Qualification, and Corporate Power........................9
4.2. Capitalization..........................................................9
4.3. Noncontravention.......................................................10
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4.4. Brokers' Fees.........................................................10
4.5. Title to Assets.......................................................10
4.6. Subsidiaries..........................................................10
4.7. Financial Statements..................................................11
4.8. Events Subsequent to Latest Balance Sheet.............................11
4.9. Undisclosed Liabilities...............................................13
4.10. Legal Compliance......................................................13
4.11. Tax Matters...........................................................13
4.12. Real Property.........................................................15
4.13. Intellectual Property.................................................17
4.14. Tangible Assets.......................................................19
4.15. Inventory.............................................................19
4.16. Contracts.............................................................20
4.17. Notes and Accounts Receivable.........................................22
4.18. Powers of Attorney....................................................22
4.19. Insurance.............................................................22
4.20. Litigation............................................................23
4.21. Product Warranty......................................................23
4.22. Product Liability.....................................................23
4.23. Employees.............................................................23
4.24. Employee Benefits.....................................................24
4.25. Environmental Matters.................................................26
4.26. Permits. .............................................................28
4.27. Backlog...............................................................28
4.28. No Conflict of Interest...............................................28
4.29. Bank Accounts.........................................................28
4.30. Customers and Suppliers...............................................29
4.31. Claims Against Officers and Directors.................................29
4.32. Improper and Other Payments...........................................29
4.33. No Material Adverse Effect............................................30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1. Organization of the Buyer..............................................30
5.2. Authorization of Transaction...........................................30
5.3. Noncontravention.......................................................30
5.4. Brokers' Fees..........................................................31
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ARTICLE VI
COVENANTS
6.1. General................................................................31
6.2. Notices and Consents...................................................31
6.3. Operation of Business..................................................31
6.4. Full Access............................................................33
6.5. Exclusivity............................................................34
6.6. Efforts................................................................35
6.7. Maintenance of Insurance...............................................35
6.8. Notice and Supplemental Information....................................35
6.9. Consulting Agreements..................................................36
6.10. Announcements.........................................................36
6.11. Consistent Tax Reporting..............................................36
6.12. Termination of Shareholder Agreements.................................36
6.13. Resignation of Officers and Directors.................................36
6.14. Interim Financial Statements..........................................36
6.15. Transition............................................................36
6.16. Confidentiality.......................................................36
6.17. Noncompetition........................................................37
6.18. Post-Closing Covenants................................................38
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
7.1. Representations and Warranties True as of Closing Date.................39
7.2. Compliance with Covenants..............................................39
7.3. Actions or Proceedings.................................................39
7.4. Certificate...................................................... .....39
7.5. Financial Condition at Closing.........................................40
7.6. Opinion of Counsel.....................................................40
7.7. Resignations...........................................................40
7.8. Consulting Agreements..................................................41
7.9. FIRPTA Certificate.....................................................41
7.10. Termination of Certain Agreements.....................................41
7.11. Insurance.............................................................41
7.12. Contracts.............................................................41
7.13. Board Approval........................................................41
7.14. Due Diligence Review..................................................41
7.15. Government Approvals..................................................41
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7.16. No Material Adverse Effect............................................41
7.17. Real Property Agreement...............................................41
7.18. Documents.............................................................42
7.19. Accounts Payable to Buyer.............................................42
ARTICLE VIII
CONDITIONS TO OBLIGATION OF SELLERS
8.1. Representations and Warranties True as of Closing Date.................42
8.2. Compliance with Covenants..............................................42
8.3. Actions or Proceedings.................................................42
8.4. Certificate............................................................42
8.5. Opinion of Counsel.....................................................42
8.6. Government Approvals...................................................43
8.7. Real Property Agreement................................................43
8.8. Documents..............................................................43
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
9.1. Survival of Representations and Warranties; Limits on Indemnification..43
9.2. Indemnification by the Sellers.........................................44
9.3. Indemnification by the Buyer...........................................44
9.4. Third-Party Claims.....................................................45
9.5. Other Indemnification Provisions.......................................46
ARTICLE X
TAX MATTERS
10.1. Tax Matters...........................................................46
10.2. Tax Periods Ending on or Before the Closing Date......................46
10.3. Tax Periods Beginning Before and Ending After the Closing Date........47
10.4. Cooperation on Tax Matters............................................47
10.5. Tax Sharing Agreements................................................48
10.6. Certain Taxes.........................................................48
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ARTICLE XI
TERMINATION
11.1. Termination of Agreement..............................................48
11.2. Effect of Termination.................................................49
ARTICLE XII
MISCELLANEOUS
12.1. Expenses.............................................................49
12.2. Press Releases and Public Announcements...............................50
12.3. No Third-Party Beneficiaries..........................................50
12.4. Entire Agreement......................................................50
12.5. Succession and Assignment.............................................50
12.6. Counterparts..........................................................50
12.7. Headings..............................................................50
12.8. Notices...............................................................50
12.9. Governing Law.........................................................51
12.10. Amendments and Waivers...............................................51
12.11. Severability.........................................................52
12.12. Construction.........................................................52
12.13. Incorporation of Exhibits, Annexes, and Schedules....................52
12.14. Specific Performance.................................................52
12.15. Xxxxxxx Products, Inc. Guarantee.....................................52
12.16. Submission to Jurisdiction...........................................52
EXHIBITS
Exhibit A Form of Consulting Agreement
Exhibit B Form of Opinion of Seller's Counsel
Exhibit C Form of Opinion of Buyer's Counsel
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 12th
day of June, 1998, by and among American Allsafe Company, a Delaware corporation
(the "Buyer"), the selling stockholders party hereto (the "Sellers") and Kedman
Company, Inc., a Utah corporation ("Kedman").
W I T N E S S E T H:
WHEREAS, the Sellers own all of the outstanding capital stock of Kedman
(the "Shares");
WHEREAS, Kedman owns all of the outstanding capital stock of Tripoli
Investments, Inc. ("Tripoli"), a Utah corporation (Kedman and Tripoli are
collectively referred to herein as the "Companies");
WHEREAS, the Buyer desires to purchase, and the Sellers desire to sell
to the Buyer all of the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the covenants, agreements and
warranties herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the following
meanings for the purposes of this Agreement:
"Adjustment Amount" has the meaning specified in Section 7.5.
"Affiliate" means, with respect to any specified Person, a Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"Affiliated Group" means any affiliated group within the meaning of
Code ss. 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Agreement" shall mean this Agreement, including all the exhibits and
schedules hereto, as this Agreement may be amended from time to time.
"Authority" means any governmental, regulatory or administrative body,
agency or authority, any court or judicial authority, any public or industry
regulatory authority, whether Federal, state or local, or any Person lawfully
empowered by any of the foregoing to enforce or seek compliance with any
applicable law, statute, regulation, order or decree.
"Business" means the Companies' business of designing, manufacturing
and/or distributing (a) safety products used primarily for eye and face
protection, and (b) hand tools.
"Buyer" has the meaning set forth in the preface above.
"Buyer Indemnified Parties" shall have the meaning set forth in Section
9.2.
"Purchase Price" means $11,050,000 plus the Adjustment Amount (which
may only be a positive number).
"Closing" has the meaning set forth in Section 2.3 below.
"Closing Date" has the meaning set forth in Section 2.3 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" has the meaning set forth in the preamble. "Company" shall
mean any one of the Companies.
"Confidential Information" means any information relating to the
Business or affairs of one or both of the Companies that is not in the public
domain at the time of the disclosure of such information by one or both of the
Companies.
"Consulting Agreements" means the Consulting and Non-Compete
Agreements, in substantially the form attached hereto as Exhibit A, between the
Buyer and each of G. Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx.
"Contract" means any contract, lease, commitment, sales order, purchase
order, agreement, indenture, mortgage, note, bond, right, warrant, instrument,
plan or license, whether written or oral, which is legally binding and
enforceable.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental Laws" means all federal, state and local statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, and all common law
concerning public health and safety and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any Hazardous Substances, materials
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now in
effect, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Resource Conservation and Recovery Act of 1976, as amended, the
Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution
Control Act Amendments of 1972, the Clean Water Act of 1977, as amended, any
so-called "Superlien" law, and any other similar federal, state or local
statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" shall mean the following:
(a) the audited financial statements of Kedman for the 1995
and 1996 fiscal years, respectively (including all notes thereto),
which are included in Schedule 4.7 consisting of the balance sheet at
such dates and the related statements of earnings and cash flows for
the twelve month periods then ended;
(b) the unaudited financial statements of Kedman for the 1993
and 1994 fiscal years, respectively, which are included in Schedule 4.7
consisting of the balance sheet at such dates and the related
statements of earnings and cash flows for the twelve month periods then
ended;
(c) the unaudited financial statements of Kedman as of
February 28, 1998 (which shall include financial statements as of
February 28, 1997), which are included in Schedule 4.7, consisting of
the balance sheet at such date and the related statement of earnings
for the 8 month period then ended.
"Fiscal year" means the twelve month period from July 1 through June 30
(denominated as the year during which the fiscal year began; e.g., the 1996
fiscal year began July 1, 1996 and ended June 30, 1997).
"GAAP" means generally accepted accounting principles, as of the date
of the respective Financial Statements, in the United States.
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"Hazardous Substance" means any material or substance which (i)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by or pursuant to any Environmental Laws) or (ii) is regulated or
controlled as a hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to any
Environmental Laws.
"Indemnified Party" has the meaning set forth in Section 9.4 below.
"Indemnifying Party" has the meaning set forth in Section 9.4 below.
"Indemnification Period" has the meaning set forth in Section 9.1(a)
below.
"Intellectual Property" means (a) all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, and
all improvements thereto, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrights, and all applications, registrations, and renewals
in connection therewith, (d) all trade secrets and confidential business
information (including all inventions, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals)
eligible for trade secret status under applicable law or otherwise protectable
as confidential information under applicable law, and (f) all other proprietary
rights and intellectual property.
"Knowledge" or "to the Knowledge of the Sellers" means the present
actual knowledge of any of the Sellers and the directors or officers of Kedman
(for purposes of this definition, "present actual knowledge" means the
applicable individual is actually aware of the fact or matter at the applicable
time).
"Latest Balance Sheet" means the audited balance sheet of the Companies
dated as of June 30, 1997.
"Law" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree or governmental requirement enacted,
promulgated, entered into, agreed or imposed by any Authority.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
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"Lien" means any mortgage, lien (except for any lien for Taxes not yet
due and payable), charge, restriction, pledge, security interest, option, lease
or sublease, right of any third party, easement, encroachment or encumbrance.
"material" means any circumstance or state of facts which results in,
or would reasonably be expected to result in, (a) any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, injunction, judgment,
order, decree, ruling, damage, dues, penalty, fine, cost, amount paid in
settlement, Liability, obligation, Tax, lien, loss, expense, or fee, including
court costs and attorneys' fees and expenses, requiring the expenditure or
commitment of $100,000 or more, or (b) any substantial limitation or restriction
on the ability of the Buyer to conduct the Business.
"Material Adverse Effect" means any circumstances, developments or
matters whose effect on the Business, properties, assets, results, operations,
condition (financial and other), and prospects, either alone or in the
aggregate, on any of the Companies is or would reasonably be expected to be
materially adverse to such Company.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business of
the respective company consistent with past custom and practice (including with
respect to quantity and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 4.26 below.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" means $11,050,000 plus the Adjustment Amount pursuant
to Section 7.5.
"Real Property Agreement" means that certain Real Property Purchase
Agreement, dated of even date herewith, between the Sellers and the Buyer,
pursuant to which the Sellers will sell and the Buyer will purchase real
property owned by the Sellers and leased to Kedman for use in the Business.
"Schedules" means the schedules accompanying this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Sellers" has the meaning set forth in the preamble above.
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"Shares" means the 53,799 shares of Common Stock, $1.00 par value per
share, of the Company.
"Subsidiary" means any corporation, partnership or limited liability
company with respect to which a specified Person (or a Subsidiary thereof) owns
a majority of the common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state or local income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9.4 below.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Basic Transaction. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and
the Sellers agree to sell, or cause to be sold, to the Buyer, all of the Shares
for the consideration specified herein. Concurrently with the execution of this
Agreement, the Sellers and the Buyer have entered into (i) the Real Property
Agreement, pursuant to which the Sellers will sell and the Buyer will purchase
the real property described in Schedule 2.1, and (ii) the Consulting Agreements.
SECTION 2.2. Payment of Purchase Price. On the Closing Date, in
consideration for the Shares and the Sellers' execution of the Consulting
Agreements, the Buyer shall pay the Purchase Price to the Sellers, in accordance
with their respective ownership percentages set forth on Schedule 4.2. The
Purchase Price shall be paid to the Sellers by means of wire transfers of
immediately available funds to an account or accounts designated by the Sellers.
SECTION 2.3. The Closing. The Closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Van Cott,
Xxxxxx, Cornwall & XxXxxxxx, Salt Lake City, Utah at 10:00 A.M. on the later of
(i) July 12, 1998, or (ii) five business days following the satisfaction or
waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the
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respective parties will take at the Closing itself) or (iii) such other date as
the parties may mutually determine, but in no event later than July 31, 1998
(the "Closing Date").
SECTION 2.4. Closing Deliveries by Sellers. To effect the transfer
referred to in Section 2.1 hereof and the delivery of the consideration
described in Section 2.2 hereof, the Sellers shall, on the Closing Date, deliver
the following:
(a) Sellers shall cause to be delivered to Buyer certificates
evidencing the Shares, free and clear of any and all Liens, duly
endorsed in blank for transfer or accompanied by stock powers duly
executed in blank;
(b) Sellers shall have delivered to Buyer all consents,
approvals, releases and waivers from governmental Authorities and other
third parties required or necessary for the Sellers to complete the
transactions contemplated hereby, reasonably satisfactory in form and
substance to Buyer and its counsel;
(c) Sellers shall have delivered all other documents required
to be delivered by the Sellers or the Companies pursuant to Article VII
hereof not specifically mentioned above in this Section; and
(d) All instruments and documents executed and delivered to
Buyer pursuant hereto shall be in form and substance, and shall be
executed in a manner, reasonably satisfactory to Buyer and its counsel.
SECTION 2.5. Closing Deliveries by Buyer. To effect the transfer
referred to in Section 2.1 hereof and the delivery of the consideration
described in Section 2.2 hereof, the Buyer shall, on the Closing Date, deliver
the following:
(a) Buyer shall have transferred to Sellers, and the Sellers
shall have received, the Purchase Price by wire transfer of immediately
available funds to such account or accounts of which Sellers shall have
given notice to Buyer hereunder not later than five (5) business days
prior to the Closing Date;
(b) Buyer shall have tendered all other documents required to
be delivered by the Buyer pursuant to Article VIII hereof not
specifically mentioned above in this Section; and
(c) All instruments and documents executed and delivered to
Sellers pursuant hereto shall be in form and substance, and shall be
executed in a manner, reasonably satisfactory to Sellers and their
counsel.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant, jointly and severally, to the Buyer
that, except as set forth in the Schedules hereto (as supplemented pursuant to
Section 6.8 below), the statements contained in this Article III are correct and
complete as of the date of this Agreement and will be correct and complete 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 III) with
respect to themselves.
SECTION 3.1. Authorization of Transaction. Each Seller has full power
and authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each Seller, enforceable in accordance with its terms and
conditions. To the Knowledge of the Sellers, except as disclosed in Schedule
3.1, the Sellers need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Authority in order to consummate
the transactions contemplated by this Agreement.
SECTION 3.2. Noncontravention. To the Knowledge of the Sellers, neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, Law,
injunction, ruling, charge or other restriction of any Authority to which any
Seller is subject, or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract, lease, license, instrument, or other arrangement to which any Seller
is a party or by which he is bound or to which any of his assets is subject,
except for violations, breaches, defaults or conflicts that, individually or in
the aggregate, would not be material to the Companies (taken as a whole), impair
the ability of any of the Sellers to perform his obligations under this
Agreement or prevent the consummation of any of the transactions contemplated
hereby.
SECTION 3.3. Brokers' Fees. The Sellers have no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
SECTION 3.4. Shares. Except as disclosed in Schedule 3.4, the Sellers
hold of record and own beneficially all of the Shares, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities Laws), Taxes, Liens, options, warrants, purchase rights,
Contracts, commitments, equities, claims, or demands. No Seller is a party to
any option, warrant, purchase right, or other Contract or commitment that could
require such Seller to sell, transfer, or otherwise dispose of any Shares (other
than this Agreement). Except as disclosed in Schedule 3.4, no Seller is a party
to any voting trust, proxy, or other agreement or understanding with respect to
the voting of any Shares.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SELLERS
The Companies and the Sellers, jointly and severally, hereby represent
and warrant to the Buyer that, except as set forth in the Schedules hereto, (as
supplemented pursuant to Section 6.8 below), the statements contained in this
Article IV are correct and complete as of the date of this Agreement and will be
correct and complete 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 IV). An item disclosed in any Schedule shall be deemed disclosed for
purposes of all Schedules, provided that cross references have been included in
such Schedules.
SECTION 4.1. Organization, Qualification, and Corporate Power. Each of
the Companies is a corporation duly organized, validly existing, and in good
standing under the Laws of the state of its incorporation. Each of the Companies
is duly authorized to conduct business where it is required by Law to be
qualified to conduct business and is in good standing under the Laws of each
jurisdiction except where the failure to be so qualified would not be material
to the Companies (taken as a whole). Each of the Companies has full corporate
power and authority and, to the Knowledge of the Sellers, all licenses, Permits,
and authorizations necessary to carry on the Business in which it is engaged and
to own and use the properties owned and used by it, except where the failure to
have or obtain such licenses, Permits or authorizations, individually or in the
aggregate, would not be material to the Companies (taken as a whole). The
Sellers have delivered to the Buyer correct and complete copies of the articles
of incorporation and bylaws of the Companies (as amended to date). The minute
books (containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
books, and the stock record books of the Companies are correct and complete in
all material respects. The Companies are not in default under or in violation of
any provision of their respective articles of incorporation or bylaws.
SECTION 4.2. Capitalization.
(a) The entire authorized capital stock of Kedman consists of
100,000 shares of common stock, $1 par value, of which 53,799 shares
are issued and outstanding. All of the issued and outstanding Shares
have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by the Sellers as set forth on
Schedule 4.2. Except as disclosed in Schedule 3.4. There are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
Contracts or commitments that could require Kedman to issue, sell, or
otherwise cause to become outstanding any of the Shares. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Shares. Except as
disclosed in Schedule 3.4. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the
Shares.
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(b) The assignments, endorsements, stock powers and other
instruments of transfer delivered by the Sellers to Buyer at the
Closing will be sufficient to transfer the Sellers' entire interest,
legal and beneficial, in the Shares. The Sellers have full power and
authority to convey good and marketable title to all of the Shares, and
upon transfer to Buyer of the certificates representing such Shares,
Buyer will receive good and marketable title to such Shares, free and
clear of all Liens.
SECTION 4.3. Noncontravention. To the Knowledge of the Sellers, neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, Law,
injunction, ruling, charge, or other restriction of any Authority to which any
of the Companies is subject or any provision of the articles of incorporation or
bylaws of any of the Companies except for any violations that, individually or
in the aggregate, would not be material to the Companies (taken as a whole), or
(ii) conflict with, result in a material breach of, constitute a material
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material Contract, lease, license, instrument, or other arrangement to which any
of the Companies is a party or by which it is bound or to which its assets are
subject (or result in the imposition of any Lien upon any of its assets). Except
as disclosed in Schedule 4.3, to the Knowledge of the Sellers, the Companies do
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Authority in order for the parties to
consummate the transactions contemplated by this Agreement, except for such
consents, approvals, orders, authorizations, registrations, declarations,
filings, notices or Permits the failure of which to be obtained or made would
not be material to the Companies (taken as a whole), impair the ability of any
of the Companies to perform its obligations under this Agreement or prevent the
consummation of any of the transactions contemplated thereby.
SECTION 4.4. Brokers' Fees. The Companies have no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to any of the transactions contemplated by this Agreement.
SECTION 4.5. Title to Assets. Except as disclosed in Schedule 4.5, each
of the Companies has good and marketable title to, or a valid leasehold interest
in, the material properties and assets used by it, located on its premises, or
shown on the Latest Balance Sheet or acquired after the date thereof, free and
clear of all Liens, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Latest Balance Sheet.
SECTION 4.6. Subsidiaries. Tripoli has no Subsidiaries. The only
Subsidiary of Kedman is Tripoli. The entire authorized capital stock of Tripoli
consists of 10,000 shares of common stock, $10 par value, of which 10,000 shares
are issued and outstanding. All of the issued and outstanding shares of capital
stock of Tripoli have been duly authorized and are validly issued, fully paid,
and non-assessable. All of the outstanding shares of capital stock of Tripoli
are held of record and owned beneficially by Kedman, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities Laws), Taxes, Liens, options, warrants, purchase rights,
Contracts, commitments, equities, claims, and demands. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other
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Contracts or commitments that could require Tripoli to sell, transfer, or
otherwise dispose of any shares of capital stock or that could require Tripoli
to issue, sell, or otherwise cause to become outstanding any of its own shares
of capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Tripoli.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any shares of capital stock of Tripoli. None of the
Companies controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of the Companies except for certain
marketable securities held by Tripoli.
SECTION 4.7. Financial Statements. The Financial Statements of Kedman
are set forth on Schedule 4.7. The audited Financial Statements have been
prepared in accordance with GAAP, consistently applied, and the Financial
Statements present fairly the financial position, assets and liabilities of
Kedman as of the dates thereof and the revenues, expenses, results of operations
and cash flows of Kedman for the periods covered thereby, and are consistent
with the books and records of Kedman.
SECTION 4.8. Events Subsequent to Latest Balance Sheet. Except as
disclosed in Section 4.2, since the date of the Latest Balance Sheet, there has
not been any change in the business, financial condition, operations, results of
operations, or, to the knowledge of the Sellers, future prospects of the
Company, or in any item set forth on any of the Schedules attached hereto, which
would have a Material Adverse Effect on any of the Companies. Without limiting
the generality of the foregoing, since that date:
(a) none of the Companies has sold, leased, transferred, or
assigned any of its material assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(b) none of the Companies has entered into any material
Contract (or series of related Contracts that, considered together, are
material) outside the Ordinary Course of Business;
(c) to the Knowledge of the Sellers, no party (including any
of the Companies) has accelerated, terminated, modified or canceled any
material Contract (or series of related Contracts that, considered
together, are material) to which any of the Companies is a party or by
which any of the Companies is bound;
(d) except as disclosed in Schedule 4.8(d), to the Knowledge
of the Sellers, none of the Companies has imposed any Lien upon any of
its assets, tangible or intangible out of the Ordinary Course of
Business;
(e) except as disclosed in Schedule 4.8(e), none of the
Companies has made any capital expenditure (or series of related
capital expenditures) in an amount in excess of $50,000 either
individually or in the aggregate;
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(f) Kedman has not, and, except as disclosed in Schedule
4.8(f), Tripoli has not, made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) outside
of the Ordinary Course of Business;
(g) none of the Companies has issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligations
involving more than $50,000 either individually or in the aggregate;
(h) none of the Companies has delayed or postponed the payment
of any material accounts payable or other Liabilities outside the
Ordinary Course of Business;
(i) none of the Companies has cancelled, compromised, waived,
or released any right or claim (or series of related rights and claims)
either involving more than $50,000 or outside the Ordinary Course of
Business;
(j) except as disclosed in Schedule 4.8(j), none of the
Companies has granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
(k) there has been no change made or authorized in the
articles of incorporation or bylaws of any of the Companies;
(l) none of the Companies has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(m) except as disclosed in Schedule 4.8(m), none of the
Companies has declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(n) none of the Companies has experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(o) none of the Companies has made any loan to, or entered
into any other transaction with, any of its directors, employees or
Affiliates;
(p) except as disclosed in Schedule 4.8(p), none of the
Companies has entered into any employment Contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such Contract or agreement;
(q) except as disclosed in Schedule 4.8(q), none of the
Companies has granted any increase in the base compensation of any of
its directors, officers, and employees or made any other change in
employment terms for any of its directors, officers, and employees or
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made any other change in employment terms for any of its directors,
officers, and employees, in each case, with respect to those directors,
officers and employees, whose annual compensation, including any
bonuses, equals or exceeds $50,000;
(r) none of the Companies has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, Contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan other than in the Ordinary Course of
Business);
(s) none of the Companies has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(t) except as disclosed in Schedule 4.8(t), to the Knowledge
of the Sellers there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of the Companies which would have a
Material Adverse Effect on the Business; and
(u) except as disclosed in Schedule 4.8(u), none of the
Companies has committed to any of the foregoing.
SECTION 4.9. Undisclosed Liabilities. Except as set forth in Schedule
4.9, none of the Companies has any material Liabilities (and to the Knowledge of
the Sellers, there is no basis for any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against it giving rise to any
material Liability), except for (i) Liabilities set forth on the Latest Balance
Sheet and (ii) Liabilities which have arisen after the date of the Latest
Balance Sheet in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
Contract, breach of warranty, tort, infringement, or violation of Law or arose
out of any charge, complaint, actions, suit, claim, proceeding or demand).
SECTION 4.10. Legal Compliance. Except as disclosed in Schedule 4.10,
to the Knowledge of the Sellers (a) the Companies have complied in all material
respects with all applicable Laws and (b) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice is currently pending
against any of them alleging any failure so to comply.
SECTION 4.11. Tax Matters.
(a) Each of the Companies has duly and timely filed (taking
into account all valid extensions of filing dates) all Tax Returns that
it has been required to file for all periods ending prior to or on the
Closing Date. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by any Company (whether or not shown
on any Tax Return) have been timely paid except for Taxes being
contested in good faith for which adequate reserves have been
established in accordance with GAAP. Except as disclosed on Schedule
4.11, none of the Companies currently is the beneficiary of any
extension of time within which to file any Tax Return. The Companies
have maintained adequate provision
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for all unpaid Liabilities for Taxes, whether or not disputed, that
have accrued with respect to or are applicable to the period ended on
and including the Closing Date or to any years and periods prior
thereto and for which the Company may be directly or contingently
liable in its own right or as a transferee of the assets of, or
successor to, any Person. To the Knowledge of the Sellers, the
Companies have not incurred any Tax Liabilities other than in the
Ordinary Course of Business for any taxable year for which the
applicable statute of limitations has not expired. To the Knowledge of
the Sellers, no claim has been made by an Authority in a jurisdiction
where the Companies do not pay Taxes or file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Liens on
any of the assets of the Companies that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) For the periods for which the applicable statute of
limitations has not expired, to the Knowledge of the Sellers, there are
no grounds for the assessment of any additional Taxes by any taxing
Authority with respect to the taxable years covered in such Tax
Returns. To the Knowledge of the Sellers, no issues have been raised in
any examination by any taxing Authority with respect to the businesses
and operations of any Company which reasonably could be expected to
result in a proposed adjustment to the Liability for Taxes for any
other period not so examined. Neither the Sellers nor the Companies
have received, or expect to receive, from any taxing Authority any
written notice of a proposed adjustment, deficiency, underpayment of
Taxes or any other such notice which has not been satisfied by payment
or been withdrawn, and no claims have been asserted relating to such
Taxes against any Company.
(c) Except as disclosed in Schedule 4.11, the Sellers have
made available for review by the Buyer all federal, state and local
income Tax Returns filed with respect to the Companies for taxable
periods for which the applicable statue of limitations has not expired.
Except as disclosed in Schedule 4.11, no such Tax Returns have been
audited or are currently the subject of audit. In addition, the Sellers
have made available to the Buyer correct and complete copies of all
examination reports and statements of deficiencies assessed against or
agreed to by any Company for taxable periods for which the applicable
statute of limitations has not expired.
(d) To the Knowledge of the Sellers, each of the Companies has
withheld and paid all Taxes required to have been withheld and paid,
including without limitation, sales and use taxes, and all Taxes in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(e) To the Knowledge of the Sellers, none of the Companies has
filed a consent to the application of Section 341(f) of the Code.
(f) To the Knowledge of the Sellers, none of the Companies
will be required, as a result of (i) a change in accounting method for
a Tax period beginning on or before the Closing Date, to include any
adjustment under Section 481(c) of the Code (or any
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corresponding provision of state or local Tax Law) in taxable income
for any Tax period beginning on or after the Closing Date, or (ii) any
"closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state or local Tax Law), to include any item
of income in or exclude any item of deduction from any Tax period
beginning on or after the Closing Date.
(g) To the Knowledge of the Sellers, each of the Companies has
disclosed on its income Tax Returns all positions taken therein that
could give rise to an accuracy-related penalty under Section 6662 of
the Code (or any corresponding provision of Tax Law).
(h) To the Knowledge of the Sellers, none of the Companies has
made any payments, are not obligated to make any payments and are not a
party to any agreement that under certain circumstances could obligate
either to make any "excess parachute payment" as defined in Section
280G of the Code or any payments that will not be deductible under
Section 162(m) of the Code.
(i) None of the Companies is a party to any Tax allocation or
sharing agreement. None of the Companies is subject to any joint
venture, partnership or other arrangement or Contract which is treated
as a partnership for federal income Tax purposes.
(j) To the Knowledge of the Sellers, none of the assets of the
Companies constitutes tax-exempt bond financed property or tax-exempt
use property within the meaning of Section 168 of the Code, and, to the
Knowledge of the Sellers, none of the assets reflected on the Financial
Statements is subject to a lease, safe harbor lease or other
arrangement as a result of which such Company is not treated as the
owner for federal income Tax purposes.
(k) To the Knowledge of the Sellers, the basis of all
depreciable or amortizable assets, and the methods used in determining
allowable depreciation or amortization (including cost recovery)
deductions of the Companies, are correct and in compliance with the
Code and the regulations thereunder in all material respects.
(l) No Seller is a "foreign person" as defined in Section
1445(f)(3) of the Code.
(m) Except for the relationship between Kedman and Tripoli, to
the Knowledge of the Sellers, none of the Companies (A) has been a
member of an Affiliated Group filing a consolidated federal income Tax
Return or (B) has any Liability for the Taxes of any Person (other than
such Company) under Treas. Reg. ss.1.1502-6 (or any similar provision
of state, local, or foreign Law), as a transferee or successor, by
Contract, or otherwise.
SECTION 4.12. Real Property.
(a) Schedule 4.12(a) lists and provides a legal description of
all real property that each of the Companies own (the "Owned
Property"). With respect to each such parcel of Owned Property:
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(i) the identified owner has fee simple title to the
parcel of Owned Property, subject only to current
taxes and assessments and easements, covenants,
restrictions or other matters affecting title that do
not interfere with the Company's occupancy or current
use of such real property;
(ii) except as disclosed in Schedule 4.12(a), to the
Knowledge of the Sellers there are no pending or
threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or
other matters affecting adversely the current use,
occupancy, or value thereof;
(iii) to the Knowledge of Sellers all facilities have
received all approvals of governmental Authorities
(including licenses and permits) required in
connection with the ownership or operation thereof
except where the failure to obtain such approvals
would not be material to the Companies (taken as a
whole) and to the Knowledge of Sellers, have been
operated and maintained in accordance with applicable
Laws in all material respects;
(iv) except as set forth as Schedule 4.12(a), there are no
leases, subleases, licenses, concessions, or other
Contracts, written or oral, to which the Sellers or
the Companies are a party granting to any party or
parties the right of use or occupancy of any portion
of the parcel of Owned Property;
(v) there are no outstanding options or rights of first
refusal to which the Sellers or the Companies are a
party to purchase the parcel of Owned Property, or
any portion thereof or interest therein;
(vi) there are no parties (other than the Companies) in
possession of the Owned Property, other than tenants
under any leases disclosed in Schedule 4.12(a) who
are in possession of space to which they are
entitled; and
(vii) all facilities located on the parcel of Owned
Property are supplied with utilities and other
services necessary for the operation of such
facilities, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer.
(b) Schedule 4.12(b) lists and describes briefly all real
property leased or subleased to any of the Companies (the "Leased
Property"). The Sellers have made available to the Buyer correct and
complete copies of the leases and subleases and other agreements for
occupancy, including all amendments, extensions and other modifications
thereto ("Leases") with respect to each Leased Property, as listed in
Schedule 4.12(b) (as amended to date). With respect to each Lease
listed in Schedule 4.12(b):
(i) the Lease is legal, valid, binding, enforceable and
in full force and effect;
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(ii) to the Knowledge of the Sellers, the Lease pertaining
to the Leased Property will terminate by merger upon
closing of this Agreement and the Real Property
Agreement;
(iii) the Company is not in breach or default, and, to the
Knowledge of the Sellers, no event has occurred
which, with notice or lapse of time, would constitute
a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the Lease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the Lease;
(vi) with respect to each sublease, to the Knowledge of
Sellers, the representations and warranties set forth
in subsections (i) through (v) above are true and
correct with respect to the underlying lease;
(vii) except for the Real Property Agreement, none of the
Companies has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(viii) to the Knowledge of the Sellers, all facilities
leased or subleased thereunder have received all
approvals of governmental Authorities (including
licenses and permits) required in connection with the
operation thereof except where the failure to obtain
such approvals would not be material to the Companies
(taken as a whole) and have been operated and
maintained in accordance with applicable Laws in all
material respects; and
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary
for the operation of said facilities.
SECTION 4.13. Intellectual Property.
(a) To the Knowledge of the Sellers, each of the Companies
owns or has the right to use pursuant to license, sublicense, Contract,
or permission all Intellectual Property necessary for the operation of
the Business as presently conducted. To the Knowledge of the Sellers,
each item of Intellectual Property owned or used by each of the
Companies in the Business immediately prior to the Closing hereunder
will be owned or available for use by such Company on identical terms
and conditions immediately subsequent to the Closing hereunder. To the
Knowledge of the Sellers, the Company has taken all necessary action to
maintain and protect each item of Intellectual Property which is
material to the Business in accordance with the customary practices of
the Business.
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(b) To the Knowledge of the Sellers and except as disclosed in
Schedule 4.13(b), (A) none of the Companies has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties, (B) neither of the
Companies has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation,
or violation (including any claim that any of the Companies must
license or refrain from using any Intellectual Property rights of any
third party), (C) no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of any of the Companies, and (D) there are no
interferences, infringements, misappropriations or violations of the
Intellectual Property rights of any person by the Company that would
reasonably be expected to materially adversely affect the Business as
it is presently conducted.
(c) To the Knowledge of the Sellers, Schedule 4.13(c)
identifies each patent or unexpired registration which has been issued
to each of the Companies with respect to any of its Intellectual
Property, identifies each pending patent application or application for
registration of trademark or copyright which each of the Companies has
made with respect to any of its Intellectual Property, and identifies
each license, Contract or other permission which each of the Companies
has granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Sellers have delivered to
the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, Contracts and permissions (as
amended to date) and, to the Knowledge of the Sellers, have made
available to the Buyer correct and complete copies of all assignments
conveying ownership of such patents to the applicable Company. Schedule
4.13(c) also identifies each trade name or unregistered trademark used
by the each of Companies in connection with its Business. With respect
to each item required to be identified in Schedule 4.13(c):
(i) except as disclosed in Schedule 4.13(c), to the
Knowledge of the Sellers, each of the Companies
possesses all right, title, and interest in and to
the item, free and clear of any Lien, license, or
other restriction;
(ii) except as disclosed in Schedule 4.13(c), the item is
not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to
the Knowledge of the Sellers, is threatened which
challenges the legality, validity, enforceability,
use, or ownership of the item.
(iv) except as disclosed in Schedule 4.13(c), to the
Knowledge of the Sellers, none of the Companies is
presently obligated to indemnify any Person for or
against any interference, infringement,
misappropriation, or other conflict with respect to
the item.
(d) Schedule 4.13(d) identifies each material item of
Intellectual Property that any third party owns and that any of the
Companies uses pursuant to a license, sublicense,
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Contract or permission granted to the Companies. The Sellers have made
available to the Buyer correct and complete copies of all such
licenses, sublicenses, Contracts and permissions (as amended to date).
With respect to each item required to be identified in Schedule
4.13(d), except as disclosed in Schedule 4.13(d), to the Knowledge of
the Sellers:
(i) the license, sublicense, Contract or permission is
legal, valid, binding, enforceable, and in full force
and effect in all material respects;
(ii) the license, sublicense, Contract or permission will
continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms
following the consummation of the transactions
contemplated hereby;
(iii) no party to the license, sublicense, Contract or
permission is in breach or default in any material
respect, and no event has occurred which with notice
or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration
thereunder;
(iv) no party to the license, sublicense, or permission
has repudiated any material provision thereof;
(v) the item of Intellectual Property under the license,
sublicense or permission is not subject to any
outstanding injunction, judgment, order, decree,
ruling, or charge;
(vi) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or is
threatened which challenges the legality, validity,
or enforceability of the item of Intellectual
Property under the license, sublicense or permission;
and
(vii) none of the Companies has granted any sublicense or
similar right with respect to the license,
sublicense, or permission.
SECTION 4.14. Tangible Assets. The Companies own or lease all
buildings, machinery, equipment and other tangible assets necessary for the
conduct of the Business as presently conducted. To the Knowledge of the Sellers,
except as disclosed in Schedule 4.14, each such tangible asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used and
presently is proposed to be used. The assets of the Companies at the Closing
will be sufficient to permit the Buyer to operate the Business as presently
conducted.
SECTION 4.15. Inventory. The inventory of each of the Companies
consists of raw materials and supplies, manufactured and processed parts, work
in process, and finished goods (the "Inventory"), all of which is merchantable
and fit for the purpose for which it was procured or
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manufactured, and none of which is slow-moving, obsolete, damaged, or defective,
subject only to the reserve for inventory writedown set forth on Schedule 4.15
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of each of the Companies. The
reserve set forth on Schedule 4.15 shall not exceed 4 % of the total value of
all Inventory.
SECTION 4.16. Contracts. Schedule 4.16 lists the following Contracts
and other agreements to which either of the Companies is a party:
(a) any written Contract (or group of related written
Contracts) for the lease of personal property to or from any Person
providing for lease payments in excess of $100,000 per annum;
(b) any written Contract (or group of related written
Contracts) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a
period of more than one year or involve consideration in excess of
$100,000;
(c) any capitalized lease, pledge, conditional sale or title
retention agreement involving the payment of more than $100,000 in the
aggregate;
(d) any material written Contract concerning a partnership or
joint venture;
(e) any material written Contract with a sales representative,
manufacturer's representative, distributor, dealer, broker, sales
agency, advertising agency or other Person engaged in sales,
distributing or promotional activities, or any agreement to act as one
of the foregoing on behalf of any Person;
(f) any material written Contract (or group of related written
Contracts) under which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, or under which it has imposed a mortgage, trust deed,
security interest or other monetary lien on any of its assets, tangible
or intangible;
(g) any material written Contract pursuant to which any of the
Companies has made or will make loans or advances, or has or will have
incurred debts or become a guarantor or surety or pledged its credit on
or otherwise become responsible with respect to any undertaking of
another Person (except for the negotiation or collection of negotiable
instruments in transactions in the Ordinary Course of Business);
(h) any mortgage, indenture, note, bond or other agreement
relating to indebtedness incurred or provided by any of the Companies;
(i) any material written Contract concerning confidentiality
or noncompetition or otherwise prohibiting any of the Companies from
freely engaging in any business;
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(j) any material written Contract with any Seller;
(k) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(l) any material license, royalty or other written Contract
relating to Intellectual Property not otherwise delivered to the Buyer
pursuant to Section 4.13(d);
(m) any material written Contract between any of the Companies
and a governmental body;
(n) any collective bargaining agreement to which any of the
Companies is a party;
(o) any written Contract for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing severance benefits;
(p) any material written Contract, except Contracts which have
been fully performed, relating to any acquisition or disposition of any
of the Companies or any predecessor in interest or any acquisition or
disposition of any subsidiary, division, line of business, or real
property;
(q) any material written Contract under which it has advanced
or loaned any amount to any of its directors, officers, and employees
which remains unpaid;
(r) any written Contract under which the consequences of a
default or termination could have a Material Adverse Effect on any of
the Companies;
(s) any other written Contract (or group of related written
Contracts) the performance of which involves consideration in excess of
$100,000.
Each of the foregoing Contracts has been made available for review by the Buyer.
In the case of any material Contract described above which is not written, the
Sellers have provided to the Buyer a brief written description of such Contract.
With respect to each such Contract, except as disclosed in Schedule 4.16, to the
Knowledge of the Sellers: (A) the Contract is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (B) the
Contract will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) no party is in material breach or default,
and no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the Contract; and (D) no party has repudiated any material provision of the
Contract.
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SECTION 4.17. Notes and Accounts Receivable. Except as disclosed in
Schedule 4.17, to the Knowledge of the Sellers, all notes and accounts
receivable of each of the Companies are reflected properly on their books and
records, are valid receivables subject to no set-offs or counterclaims (other
than customary 2% discounts for prompt payment), are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the Latest Balance Sheet
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practices of each of the Companies.
SECTION 4.18. Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of the Companies.
SECTION 4.19. Insurance. Schedule 4.19 sets forth the following
information with respect to each insurance policy (including policies providing
property, casualty, Liability, and workers' compensation coverage and bond and
surety arrangements) to which either of the Companies has been a party, a named
insured, or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured; and
(c) the policy number and the period of coverage; and
(d) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
Except as disclosed in Schedule 4.19, to the Knowledge of the Sellers, with
respect to each such insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (B) the
policy will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the transactions
contemplated hereby; (C) neither the Company nor any other party to the policy
is in material breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any material provision thereof. During the last
five years, each of the Companies has been covered by insurance in scope and
amount consistent with the coverages now in place, subject to changes in the
amount of coverage based upon recommendations of the Companies' insurance
advisors. Schedule 4.19 describes any self-insurance arrangements affecting any
of the Companies. Schedule 4.19 sets forth known outstanding claims, if any,
made against any of the Companies that are covered by insurance. Such claims
have been disclosed to and accepted by the appropriate insurance companies and
are being defended by such appropriate insurance companies. Except as set forth
on Schedule 4.19, no claims have been denied coverage during the last five
years.
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SECTION 4.20. Litigation. Schedule 4.20 sets forth each instance in
which any of the Companies (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Sellers, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 4.20 would reasonably be
expected to result in a Material Adverse Effect. To the Knowledge of the
Sellers, neither the Sellers nor any of the Companies have any Liability with
respect to any claims or threatened claims by third parties relating to any sale
or proposed sale of any of the Companies (whether structured as a sale of stock,
a sale of assets, a merger or otherwise) or any division of any of the
Companies. Neither the Sellers nor any of the Companies are a party to any
litigation relating to such claims and, to the Knowledge of the Sellers, no such
litigation is threatened.
SECTION 4.21. Product Warranty. Except for product liability claims
that have been fully settled or resolved or as disclosed in Schedule 4.21, to
the Knowledge of the Sellers, each product manufactured, sold, leased, or
delivered by each of the Companies has been in conformity in all material
respects with all applicable contractual commitments and all express and implied
warranties. The Liability of the Companies for replacement or repair thereof or
other damages in connection therewith for products manufactured, sold, leased,
or delivered by the Companies in any fiscal year will not exceed the reserve for
product warranty claims set forth in Schedule 4.21 for such fiscal year. The
reserve set forth on Schedule 4.21 shall be 2% of the aggregate revenue of the
Companies for the fiscal year in which the subject product(s) was/were
manufactured, sold, leased, and delivered. To the Knowledge of the Sellers, no
product manufactured, sold, leased, and delivered by the Companies is subject to
any express guaranty, warranty or other indemnity beyond the applicable standard
terms and conditions of sale or lease. Schedule 4.21 includes copies of the
standard terms and conditions of sale or lease for each of the Companies
(containing applicable guaranty, warranty, and indemnity provisions).
SECTION 4.22. Product Liability. Except as disclosed in Schedule 4.22,
to the Knowledge of the Sellers, none of the Companies has any material
Liability arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased, or
delivered by any of the Companies .
SECTION 4.23. Employees. Schedule 4.23 contains a true, complete and
accurate list of the names, titles, annual compensation and all bonuses and
similar payments made for the current and the four (4) preceding fiscal years
for all directors, officers and employees of the Company whose annual
compensation, including any bonuses, equals or exceeds $50,000. Except for the
Sellers and as disclosed in Schedule 4.23, to the Knowledge of the Sellers, (a)
no executive, key employee or material group of employees other than the Sellers
has any plans to terminate employment with any Companies, (b) none of the
Companies is a party to or bound by any collective bargaining agreement, nor has
any of the Companies in the five (5) preceding fiscal years experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes, (c) to the Knowledge of Sellers, none of the Companies has
committed any unfair labor practice, (d) to the Knowledge of Sellers, there is
no organizational effort presently being made or
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threatened by or on behalf of any labor union with respect to employees of any
of the Companies, and (e) none of the Companies has engaged in any plant closing
or employee layoff activities that would violate or require notification
pursuant to, the Worker Adjustment Retraining and Notification Act of 1988, as
amended, or any similar state or local plant closing or mass layoff statute,
rule or regulation.
SECTION 4.24. Employee Benefits.
(a) General. Except as set forth on Schedule 4.24, none of the
Companies is a party to, participates in or has any Liability or contingent
Liability with respect to:
(i) any Employee Welfare Benefit Plan or Employee Pension Benefit
Plan other than a Multiemployer Plan;
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe
benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an employee benefit plan (as defined in section
3(3) of ERISA); or
(iii) any employment agreement.
(b) Plan Documents and Reports. The Sellers have made available for
review by the Buyer copies of each of the plans, arrangements, and agreements
relating to employee benefits of the Companies (referred to hereinafter as
"Employee Benefit Plans"), and all Contracts relating thereto, or to the funding
thereof, including, without limitation, all trust agreements, insurance
Contracts, administration Contracts, investment management agreements,
subscription and participation agreements, and record keeping agreements, each
as in effect on the date hereof. In the case of any Employee Benefit Plan which
is not in written form, the Buyer has been supplied with an accurate description
of such Employee Benefit Plan as in effect on the date hereof. A true and
correct copy of the most recent annual report, actuarial report, accountant's
opinion of the plan's financial statements, summary plan description and
Internal Revenue Service determination letter with respect to each Employee
Benefit Plan, to the extent applicable, and a current schedule of assets (and
the fair market value thereof assuming liquidation of any asset which is not
readily tradable) held with respect to any funded Employee Benefit Plan has been
supplied to the Buyer, and, to the Knowledge of the Sellers, there have been no
material changes in the financial condition in the respective plans from that
stated in the annual reports and actuarial reports supplied.
(1) Compliance with Employee Benefit Laws; Liabilities. As to all
Employee Benefit Plans:
(i) All Employee Benefit Plans comply and have been administered
in form and in operation in all material respects with all
applicable requirements of law, and, to the
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Knowledge of the Sellers and the directors and officers (and
employees with responsibility for employment matters) of the
Companies, no event has occurred which will or could cause any
such Employee Benefit Plan to fail to comply in all material
respects with such requirements and no notice has been issued
by any governmental authority questioning or challenging such
compliance.
(ii) All Employee Benefit Plans which are employee pension benefit
plans comply in all material respects in form and in operation
with all applicable requirements of sections 401(a) and 501(a)
of the Code; there have been no amendments to such plans which
are not the subject of a favorable determination letter issued
with respect thereto by the Internal Revenue Service; and, to
the Knowledge of the Sellers, no event has occurred which will
or could give rise to disqualification of any such plan under
such sections or to a tax under section 511 of the Code.
(iii) None of the assets of any Employee Benefit Plan is invested in
employer securities or employer real property.
(iv) There have been no "prohibited transactions" (as described in
section 406 of ERISA or section 4975 of the Code) with respect
to any Employee Benefit Plan and none of the Companies has
engaged in any prohibited transaction.
(v) There have been no acts or omissions which have given rise to
or may give rise to fines, penalties, taxes or related charges
under section 502 of ERISA or Chapters 43, 47, 68 or 100 of
the Code for which any of the Companies may be liable.
(vi) None of the payments contemplated by the Employee Benefit
Plans would, in the aggregate, constitute excess parachute
payments (as defined in section 280G of the Code (without
regard to subsection (b)(4) thereof)).
(vii) There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the Knowledge of the
Sellers, threatened involving any Employee Benefit Plan or the
assets thereof and nothing has come to the attention of the
Sellers that would give rise to any such actions, suits or
claims (other than routine claims for benefits).
(viii) With respect to each Employee Benefit Plan that is subject to
Title IV of ERISA:
(1) there has been no reportable event (as described in
section 4043 of ERISA) which has not been reported
and for which notice is not waived under applicable
regulations;
(2) no steps have been taken to terminate any such plan;
(3) there has been no withdrawal (within the meaning of
section 4063 of ERISA) of a "substantial employer"
(as defined in section 4001(a)(2) of ERISA);
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(4) no event or condition has occurred which would
constitute grounds under section 4042 of ERISA for
the termination of or the appointment of a trustee to
administer any such plan; and
(5) except as disclosed on actuarial reports supplied to
the Buyer, if each such plan were terminated
immediately after the Closing, there would be no
unfunded liabilities with respect to any such plan,
its participants or beneficiaries or the PBGC.
(ix) Each Employee Benefit Plan which constitutes a "group health
plan" (as defined in section 607(1) of ERISA or section
4980B(g)(2) of the Code), including any plans of current and
former affiliates which must be taken into account under
sections 4980B and 414(t) of the Code or section 601 of ERISA,
has been operated in compliance in all material respects with
applicable law, including coverage requirements of section
4980B of the Code and section 601 of ERISA to the extent such
requirements are applicable.
(x) Except as disclosed on Schedule 4.24, none of the Companies
has any liability or contingent liability for providing, under
any Employee Benefit Plan or otherwise, any post-retirement
medical or life insurance benefits, other than statutory
liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and section 4980B of
the Code.
(xi) Actuarially adequate accruals for all obligations under the
Employee Benefit Plans are reflected in the financial
statements of each of the Companies and such obligations
include a pro rata amount of the contributions and PBGC
premiums which would otherwise have been made in accordance
with past practices and applicable law for the plan years
which include the Closing Date.
(xii) There has been no act or omission by any of the Companies that
would impair the ability of such Company (or any successor
thereto) to unilaterally amend or terminate (in compliance
with and subject to applicable laws) any Employee Benefit
Plan.
(c) Multiemployer Plans. None of the Companies contributes to, has
contributed to, or has any Liability or contingent Liability with respect to any
Multiemployer Plan.
SECTION 4.25. Environmental Matters. Except as disclosed in Schedule
4.25, to the Knowledge of the Sellers:
(a) Each of the Companies:
(i) has complied and is in compliance in all material
respects with all Environmental Laws (and no action, suit,
proceeding, hearing, investigation, charge,
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complaint, claim, demand or notice has been filed or commenced
against any of them alleging any such failure to comply); and
(ii) has obtained and complied in all material
respect with, and is in compliance in all material respects
with, all Permits, licenses and other authoriza tions that are
required pursuant to Environmental Laws.
(b) None of the Companies has received any written or oral
notice, report or other information regarding (i) any actual or alleged
violation of Environmental Laws, or (ii) any Liabilities or potential
Liabilities arising under Environmental Laws relating to the Companies
or their facilities, including any investigatory, remedial or
corrective obligations.
(c) The Company has no material Liability, and none of the
Companies has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that has given or would give rise to any
material Liability for damage to any site, location or body of water
(surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental
Law.
(d) Except as disclosed on Schedule 4.25(d), none of the
properties or equipment used by the Companies contain, or have
contained, asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans or other Hazardous
Substances.
(e) Except as disclosed on Schedule 4.25(d), none of the
following exists at any property or facility owned or operated by any
of the Companies: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills,
subsurface impoundments, or hazardous material disposal areas.
(f) None of the Companies has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any Hazardous
Substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner
that has given or would give rise to material Liability, including any
material Liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney
fees, or any investigative, corrective or remedial obligations,
pursuant to Environmental Laws.
(g) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
material obligations for site investigation or cleanup, or notification
to or consent of government agencies or third parties, pursuant to any
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so-called "transaction-triggered" or "responsible property transfer"
laws under the laws of the State of Utah.
(h) None of the Companies has either expressly assumed or
undertaken any Liability of any other Person relating to Environmental
Laws, including without limitation any obligation for corrective or
remedial action.
(i) Nothing has come to the attention of the Sellers that
would cause them to believe that either of the Companies will be
prevented, hindered or limited from continued compliance with
Environmental Laws, or will be subject to any material investigatory,
remedial or corrective obligations pursuant to Environmental Laws, or
will be subject to any other material Liabilities pursuant to
Environmental Laws, including without limitation any relating to onsite
or offsite releases or threatened releases of Hazardous Substances or
wastes, personal injury, property damage or natural resources damage.
SECTION 4.26. Permits. Schedule 4.26 is a true and accurate list of all
material licenses, certificates, permits, franchises, rights, code approvals and
private product approvals (collectively, "Permits") held by each of the
Companies. The Sellers have made each such Permit available for review by the
Buyer. To the Knowledge of the Sellers, there are no Permits that the Companies
do not have, whether federal, state, local or foreign, which are necessary for
the lawful operation of the Business of each of the Companies as presently
conducted.
SECTION 4.27. Backlog. Sellers have made available for review by the
Buyer and its representatives an accurate accounting of all customer orders of
the Company which constitute backlog ("Backlog") and the dollar amount
represented by such orders as of the date of this Agreement. Except as set forth
on Schedule 4.27, none of the Backlog orders have been canceled and, to the
Knowledge of the Sellers, there are no threats of cancellation with respect to
the Backlog orders.
SECTION 4.28. No Conflict of Interest. Except as disclosed in Schedule
4.28, neither any Seller nor any Affiliate thereof has or claims to have any
direct or indirect interest in any tangible or intangible property used in the
Business of any of the Companies except as a holder of Shares. None of the
Sellers has any direct or indirect interest in any other Person which conducts a
business similar to, has any Contract or arrangement with, or does business or
is involved in any way with, any of the Companies, except for the ownership of
less than 1% of the outstanding stock of any publicly held corporation.
SECTION 4.29. Bank Accounts. Schedule 4.29 sets forth the names and
locations of each bank or other financial institution at which each of the
Companies has accounts (giving the account numbers) or safe deposit box and the
names of all Persons authorized to draw thereon or have access thereto, and the
names of all Persons, if any, now holding powers of attorney or comparable
delegation of authority from such Company and a summary statement of such powers
of attorney or delegation of authority.
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SECTION 4.30. Customers and Suppliers.
(a) Schedule 4.30 sets forth:
(i) a list of the 10 largest customers of each of the
Companies, in terms of revenue during each of the 1995 and
1996 fiscal years and the 1997 fiscal year to date
(collectively, the "Major Customers"), showing the total
revenue received in each such period from each such customer;
(ii) a list of the 10 largest suppliers of each of
the Companies in terms of purchases during the 1995 and 1996
fiscal years and the 1997 fiscal year to date (collectively,
the "Major Suppliers"), and showing the approximate total
purchases in each such period from each such supplier; and
(iii) a list of the 10 products with the largest
sales volume sold by each of the Companies in terms of revenue
during each of the 1995 and 1996 fiscal years and the 1997
fiscal year to date (collectively, the "Major Products"),
showing the approximate total revenue received in each such
period with respect to each such product.
(b) Other than changes in relationships with Xxxxxxx Products,
Inc. and its affiliates, since the date of the Latest Balance Sheet,
there has not been any material change in the business relationship,
and there has been no material dispute, between any of the Companies
and any Major Customer or Major Supplier, and, to the Knowledge of the
Sellers, no Major Customer or Major Supplier has stated that it intends
to reduce its purchases from, or sales to, any of the Companies. Since
the date of the Latest Balance Sheet, there have been no material
decreases in the profit margins on any Major Product. To the Knowledge
of the Sellers, no Major Customer or Major Supplier intends to
terminate its business relationship with any of the Companies as a
result of the transactions contemplated by this Agreement.
SECTION 4.31. Claims Against Officers and Directors. Schedule 4.31 sets
forth each pending or, to the Knowledge of the Sellers, threatened claims
against any director, officer, employee or agent of the Companies or any other
Person which could give rise to any claim for indemnification against the
Companies.
SECTION 4.32. Improper and Other Payments.. To the Knowledge of the
Sellers:
(a) Neither the Company, any director, officer, employee,
agent or representative of the Company, any Seller, their respective
Affiliates nor any Person acting on behalf of any of them, has made,
paid or received any bribes, kickbacks or other similar payments to or
from any Person, whether lawful or unlawful;
(b) no unlawful contributions have been made, directly or
indirectly, to a domestic or foreign political party or candidate by
the Companies or the Sellers; and
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(c) no improper foreign payment (as defined in the Foreign
Corrupt Practices Act of 1977, as amended) has been made by the
Companies or the Sellers.
SECTION 4.33. No Material Adverse Effect. Except as disclosed in
Schedule 4.33, to the Knowledge of the Sellers, since the date of the most
recently audited Financial Statements until the date hereof, (a) each of the
Companies has conducted its Business in the Ordinary Course of Business in all
material respects, (b) as of the date hereof there has not been any Material
Adverse Effect, and (c) no event has occurred or circumstance exists that would
reasonably be expected to result in a Material Adverse Effect to the Companies.
SECTION 4.34. Availability of Due Diligence. As of the Closing Date,
the Sellers shall have given the Buyer reasonable access to the items requested
on the due diligence request list attached as Schedule 4.34 (the "Request
List"). As of the Closing Date, to the Knowledge of Sellers, no items identified
on the Request List have not been made available to the Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements
contained in this Article V are correct and complete as of the date of this
Agreement and will be correct and complete 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 V).
SECTION 5.1. Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. The Buyer is not in default under or in violation of any provision of
its articles of incorporation or bylaws.
SECTION 5.2. Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any Authority in order to consummate the transactions contemplated by this
Agreement.
SECTION 5.3. Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any Law, injunction, ruling, charge, or other restriction of
any Authority to which the Buyer is subject or any provision of its charter or
bylaws or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice or consent under any
Contract, lease, license, instrument, or other arrangement to which the Buyer is
a party or by which it is bound or to
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which any of its assets is subject except for any violations or conflicts that,
individually or in the aggregate, would not (x) have a Material Adverse Effect
on the Buyer, (y) impair the ability of the Buyer to perform its obligations
under this Agreement or (z) prevent the consummation of any of the transactions
contemplated hereby.
SECTION 5.4. Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any of the Sellers could
become liable or obligated.
ARTICLE VI
COVENANTS
SECTION 6.1. General. Each of the parties will use his or its best
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Articles
VII and VIII below).
SECTION 6.2. Notices and Consents. Schedule 6.2 lists all Contracts
that will require any third party consents pursuant to the execution of this
Agreement. The Sellers will cause each of the Companies to give any notices to
third parties, and will use their best efforts to obtain any third party
consents, that the Buyer may reasonably request. Each of the parties will (and
the Sellers will cause each of the Companies to) give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies in connection with the
matters referred to in Sections 4.3 and 5.3 above. The Buyer shall bear the
costs of any filing fees and other costs or expenses of such notices, filings
consents and approvals of governments, and governmental agencies, and the Buyer
and the Sellers shall share equally the costs or expenses of any notices,
filings consents or approvals of any third party.
SECTION 6.3. Operation of Business. From the date of this Agreement
until the Closing Date, each of the Companies shall be operated in the Ordinary
Course of Business and shall use commercially reasonable efforts to preserve
intact the present business organization and personnel of each of the Companies,
preserve the business relationships of each of the Companies with other Persons
material to the operation of each of the Companies, and not knowingly permit,
without the exercise of commercially reasonable efforts to prevent, any action
or omission which would cause any of the representations or warranties of the
Companies contained herein to become inaccurate or any of the covenants of the
Companies to be breached. Without limiting the generality of the foregoing,
except within the Ordinary Course of Business or as set forth in Schedule 6.3,
prior to the Closing the Companies will not, without the prior written consent
of the Buyer (which consent shall not be unreasonably withheld):
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(a) incur any obligation or enter into any Contract which
either (i) requires a payment by any party in excess of, or a series of
payments which in the aggregate exceed, $50,000, or (ii) has a term of,
or requires the performance of any obligations by any Company over a
period in excess of six months;
(b) take any action, or enter into or authorize any Contract
or transaction, other than in the Ordinary Course of Business and
consistent with past practice and other than any transactions
contemplated by this Agreement;
(c) sell, transfer, convey, assign or otherwise dispose of any
of their material assets or properties; provided that the Sellers may
sell or otherwise convert all of the Companies' cash equivalents and
all of the marketable securities of Tripoli to cash prior to the
Closing.
(d) waive, release or cancel any claims against third parties,
any other rights which have any value or any debts owing to either of
the Companies;
(e) make any changes in their respective accounting systems,
policies, principles or practices;
(f) enter into, authorize, or permit any transaction with any
Seller or any Affiliate thereof, or enter into any Contract relating to
compensation or benefits with any Person, or modify any compensation
amounts or levels of any officer or employee;
(g) except as required for the transactions contemplated in
this Agreement, change or amend their respective articles of
incorporation or by-laws;
(h) authorize for issuance, issue, sell, deliver, encumber or
agree or commit to issue, sell, deliver or encumber (whether through
the issuance or granting of options, warrants, convertible or
exchangeable securities, commitments, subscriptions, rights to purchase
or otherwise) any shares of capital stock or any other securities of
any of the Companies, or amend any of the terms of any such capital
stock or other securities, except as required for the transactions
contemplated in this Agreement;
(i) except as required for the transactions contemplated in
this Agreement and except as disclosed on Schedule 6.3(i), split,
combine, or reclassify any shares of their capital stock, declare, set
aside or pay any dividend or other distribution in property other than
cash in respect of its capital stock or redeem or otherwise acquire any
capital stock or other securities of any of the Companies;
(j) make any borrowings, incur any debt, or assume, guarantee,
endorse (except for the negotiation or collection of negotiable
instruments) or otherwise knowingly become liable (whether directly,
contingently or otherwise) for the obligations of any other Person, or
make any payment or repayment in respect of any indebtedness (other
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than trade payables and accrued expenses in the Ordinary Course of
Business and consistent with past practice);
(k) make any loans, advances or capital contributions to, or
investments in, any other Person;
(l) enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit
or welfare of any director, manager, officer or employee, or increase
in any manner the compensation or fringe benefits of any director,
manager, officer or employee or pay any benefit not required by any
existing plan and arrangement or enter into any Contract, commitment or
arrangement to do any of the foregoing;
(m) acquire, lease or encumber any assets which are material
to any of the Companies;
(n) authorize or make any capital expenditures which
individually or in the aggregate are in excess of $50,000;
(o) make any Tax election or settle or compromise any federal,
state, local or foreign income Tax liability, or waive or extend the
statute of limitations in respect of any such Taxes;
(p) pay any amount, perform any obligation or agree to pay any
amount or perform any obligation, in settlement or compromise of any
suits or claims of liability against the Companies or any of their
respective directors, managers, officers, employees or agents; or
(q) terminate, modify, amend or otherwise alter or change any
of the terms or provisions of any material Contract, or pay any amount
not required by Law or by any Contract; or
(r) other than overnight deposits or money market instruments
and investments existing on the date hereof, make any investments with
cash or the proceeds of existing investments.
SECTION 6.4. Full Access.
(a) Subject to the terms and conditions set forth in Sections
6.4(b) and 6.4(c) below, the Sellers shall permit and shall cause the
Companies to permit, representatives of the Buyer to have access to the
premises, properties, personnel, books, records (including Tax
records), Contracts, and documents of or pertaining to each of the
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Companies and shall make the officers and employees of each of the
Companies available to the Buyer and its representatives.
(b) The Buyer shall notify Sellers at least two business days
in advance of any on-site visits by it or its representatives to any
facilities of the Companies, and shall use all reasonable efforts not
to take, and neither the Sellers nor either of the Companies shall be
required to take, any actions that would disrupt the Business or
violate the terms of any agreement to which any of the Companies is
bound or any applicable Law. If at any time the Sellers notify the
Buyer that the Buyer's actions (or the actions of its representatives)
are disrupting the Business or causing a violation of the terms of any
agreement or applicable Law, (i) the Buyer shall thereupon immediately
cease such action, and (ii) as soon as practicable thereafter, the
Sellers and the Buyer shall, in good faith, negotiate reasonable
alternative access for the Buyer and its representatives.
(c) The Buyer will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and, in the event
this Agreement is terminated, for any reason whatsoever, deliver
promptly to the Companies or destroy, at the request and option of the
Sellers, all tangible embodiments (and all copies) of the Confidential
Information which are in the possession of the Buyer and/or its
representatives. In the event that the Buyer is requested or required
(by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the Buyer
will notify the Sellers promptly of the request or requirement so that
the Companies may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.4(c). If, in the
absence of a protective order or the receipt of a waiver hereunder, a
party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, the Buyer may disclose the Confidential Information to the
tribunal; provided, however, that the Buyer shall use its best efforts
to obtain, at the request of the Sellers, an order or other assurance
that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Sellers shall
designate. The foregoing provisions shall not apply to any information
(i) which, at the time of disclosure, is available publicly, through no
fault of the Buyer, (ii) which, after disclosure, becomes available
publicly through no fault of the Buyer, or (iii) which the Buyer knew
or to which the Buyer had access prior to disclosure.
SECTION 6.5. Exclusivity. Prior to the Closing or termination of this
Agreement, the Sellers will not (and the Sellers will not cause or permit any of
the Companies to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
any of the Companies (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. Prior to the Closing or termination
of
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this Agreement, the Sellers will not vote their Shares in favor of any such
acquisition structured as a merger, consolidation, or share exchange. The
Sellers will notify the Buyer immediately if any Person makes any proposal or
offer with respect to any of the foregoing.
SECTION 6.6. Efforts.
(a) Subject to the terms and conditions hereof, each party
hereto shall use all reasonable efforts to consummate the transactions
contemplated hereby as promptly as practicable. An undertaking of a
Person under this Agreement to use such Person's best efforts shall not
require such Person to incur unreasonable expenses or obligations in
order to satisfy such undertaking.
(b) The Companies and the Buyer will, as promptly as
practicable (i) make the required filings with, and use their
respective best efforts to obtain all required authorizations,
approvals, consents and other actions of, governmental Authorities and
(ii) use their respective best efforts to obtain all other required
consents of other Persons with respect to the transactions contemplated
hereby. The Sellers, as promptly as is reasonably practicable, will
cooperate in and participate in such efforts as reasonably requested by
the Buyer.
SECTION 6.7. Maintenance of Insurance. Each of the Companies will
continue to carry its existing insurance through the Closing Date, and shall not
allow any material breach, default or cancellation (other than expiration and
replacement of policies in the Ordinary Course of Business) of such insurance
policies or agreements to occur or exist. For 90 days following the Closing
Date, the Buyer will keep in full force and effect, without modification, all
products liability insurance for which the Companies have paid premiums prior to
the Closing Date.
SECTION 6.8. Notice and Supplemental Information. The Sellers, each of
the Companies and the Buyer shall each give prompt notice to the other parties
of any adverse development causing a breach of any of its own representations
and warranties in Articles III, IV and V respectively. In addition, the Sellers
and each of the Companies will, from time to time, as necessary, prior to five
days preceding the Closing, by notice in accordance with the terms of this
Agreement, supplement or amend the Schedules, including one or more supplements
or amendments to correct any matter which otherwise would constitute a breach of
any representation, warranty, agreement or covenant contained herein. Any
information provided to the Buyer pursuant to this Section shall be deemed to
cure any breach of any representation, warranty, agreement or covenant made in
this Agreement; provided, however, if within 5 days of receipt of such
information, the Buyer notifies the Sellers in writing that it deems such
information to be unacceptable, the Buyer shall have the right to terminate this
Agreement in accordance with Article XI as if such information constituted a
breach of a representation, warranty, agreement or covenant. The Sellers hereby
acknowledge and agree that Buyer shall have until June 18, 1998 to review and
accept the items identified in the draft Schedules provided to Buyer on June 5,
1998.
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SECTION 6.9. Consulting Agreements. The Buyer shall enter into the
Consulting Agreements.
SECTION 6.10. Announcements. The Sellers, the Companies and the Buyer
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement and no party shall, without the prior written consent of the
others, issue any such press release or make any such public statement, except
as may be required by applicable Law.
SECTION 6.11. Consistent Tax Reporting. The parties hereto shall not
take any actions or positions inconsistent with the obligations set forth
herein.
SECTION 6.12. Termination of Shareholder Agreements. Prior to or at the
Closing each of the Companies shall cause the termination, and render void and
of no effect, (i) any existing shareholder agreements between or among holders
of Shares and any Company effecting the ownership or disposition of the capital
stock of any Company and (ii) any options or warrants to purchase or rights to
subscribe for, any capital stock of any Company to which such Company is a party
and which has not been previously exercised, canceled or redeemed.
SECTION 6.13. Resignation of Officers and Directors. The Sellers shall
cause each officer and member of the Board of Directors of, and each trustee or
fiduciary of any plan or arrangement involving employee benefits of, each of the
Companies, if so requested by Buyer, to tender his or her resignation from such
position effective as of the Closing.
SECTION 6.14. Interim Financial Statements. Kedman agrees to provide to
the Buyer as soon as practicable after the end of each calendar month financial
statements of each of the Companies, consisting of a balance sheet as of the end
of such month and an income statement for that month and for the portion of the
year then ended.
SECTION 6.15. Transition. The Sellers will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the Companies from
maintaining the same business relationships with such Company after the Closing
as it maintained with such Company prior to the Closing. For three years after
the Closing, the Sellers will refer all customer inquiries relating to the
Business of each of the Companies to the Buyer from and after the Closing.
SECTION 6.16. Confidentiality. The Sellers will treat and hold as such
all of the confidential information of the Buyer, refrain from using any of the
confidential information of the Buyer except in connection with this Agreement,
and, in the event of a Closing, deliver promptly to the Buyer or destroy, at the
request and option of the Buyer, all tangible embodiments (and all copies) of
the confidential information of the Buyer which are in their possession. In the
event that any Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any confidential
information of the Buyer, such Seller
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will notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the provisions
of this Section 6.16. If, in the absence of a protective order or the receipt of
a waiver hereunder, a party is, on the advice of counsel, compelled to disclose
any confidential information of the Buyer to any tribunal or else stand liable
for contempt, such Seller may disclose the confidential information to the Buyer
to the tribunal; provided, however, that such Seller shall use his or its best
efforts to obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the confidential
information of the Buyer required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any information (i) which, at the
time of disclosure, is available publicly, through no fault of the Sellers, or
(ii) which, after disclosure, becomes available publicly through no fault of the
Sellers.
SECTION 6.17. Noncompetition.
(a) The Sellers acknowledge that they have a special knowledge
of the Business and the proprietary and Confidential Information
included in the Business, and that the Buyer is making a considerable
investment in the Business from which the Sellers have benefitted. In
consideration of this Agreement and such investment and benefit, and as
an inducement to the Buyer to enter into this Agreement and consummate
the transactions contemplated herein, each of the Sellers agrees that,
for a period of five years after the Closing Date, he will not,
directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as
an officer, employee, partner, director or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of,
any business that directly or indirectly designs, manufactures and/or
distributes (i) safety products used primarily for eye and face
protection, or (ii) hand tools (a "Competitive Business"); provided,
however, that any Seller may own less than 1% of any outstanding class
of securities registered pursuant to the Securities Exchange Act of
1934, as amended, of an issuer that is a Competitive Business.
(b) For a period of five years following the Closing Date,
each of the Sellers covenants that he will not, without the express
prior written approval of the Board of Directors of the Buyer, (A)
directly or indirectly recruit, solicit or otherwise induce or
influence any sales agent, joint venturer, lessor, supplier, agent,
representative or any other person that has or had during the one year
period initially preceding the Closing Date a business relationship
with any of the Companies, to discontinue, reduce or adversely modify
such employment, agency or business relationship with the Buyer or such
Company as it relates to the Business as conducted by the Buyer or such
Company after the Closing Date, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person
or agent who is employed or retained by the Buyer or any of the
Companies. Notwithstanding the foregoing, nothing herein shall prevent
a Seller from providing a letter of recommendation to an employee or
sales agent with respect to a future employment opportunity.
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(c) For a period of five years following the Closing Date,
none of the Sellers will without the express prior written approval of
the Board of Directors of the Buyer, directly or indirectly, recruit,
solicit or otherwise induce or influence any customer of the Buyer or
any of the Companies to discontinue, reduce or modify such business
relationship with the Buyer or such Company.
(d) Each of the Sellers agrees that the violation or
threatened violation of any of the provisions of this Section 6.17
shall cause immediate and irreparable harm to the Buyer and that the
damage to the Buyer will be difficult or impossible to calculate with
precision. Therefore, in the event any Seller violates this Section
6.17, an injunction restraining such Seller from such violation may be
entered against such Seller in addition to any other relief available
to the Buyer.
(e) If, at the time of enforcement of any provision of this
Section 6.17, a court shall hold that the duration, scope or other
restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or other
restrictions reasonable under such circumstances shall be substituted
for the stated duration, scope or other restrictions and that the court
shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and other restrictions permitted by law.
SECTION 6.18. Post-Closing Covenants. The Sellers, the Company and the
Buyer agree as follows with respect to the period following the Closing:
(a) In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as
any other party hereto reasonably may request, all at the sole cost and
expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Article IX). From and after
the Closing, both parties will be entitled to access all documents,
books, records, agreements, and financial data of any sort relating to
the Company and its business prior to and through the Closing Date. The
Buyer shall maintain all of the documents, books, records, agreements,
and financial data of the Companies for the periods required under
applicable law. In addition, the Buyer shall use its best efforts to
retain any tax reporting records of the Companies for so long as the
Buyer reasonably expects such material would be useful to the Sellers
or the Company.
(b) In the event and for so long as any party hereto actively
is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on
or prior to the Closing Date involving the Company, each of the other
parties hereto will cooperate with him or it and his or its counsel in
the contest or defense, make available their personnel,
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and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party (unless
the contesting or defending party is entitled to indemnification
therefor under Article IX).
(c) Following the Closing Date, the Buyer, the Sellers, and
the Companies shall continue to use their best efforts to obtain all of
the consents specified in Sections 4.3 and 6.2 that have not previously
been obtained (subject to the expense sharing provisions of Section
6.2).
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
The obligation of the Buyer to effect the transactions contemplated by
this Agreement are subject to the satisfaction or waiver by the Buyer of the
following conditions on or before the Closing Date:
SECTION 7.1. Representations and Warranties True as of Closing Date.
The representations and warranties set forth in Articles III and IV shall have
been accurate, true and correct on and as of the date of this Agreement and
shall also be accurate, true and correct on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
SECTION 7.2. Compliance with Covenants. The Sellers and each of the
Companies shall have performed and complied with all of the covenants hereunder
in all material respects through the Closing.
SECTION 7.3. Actions or Proceedings. No action, suit, or proceeding
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state or local jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect adversely the right
of the Buyer to own the Shares and to control any of the Companies, or (D)
affect adversely the right of any of the Companies to own its assets and to
operate its Business (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect).
SECTION 7.4. Certificate. The Sellers shall have delivered to the Buyer
a certificate to the effect that, to the Knowledge of the Sellers, each of the
conditions specified above in Sections 7.1 through 7.3 is satisfied in all
material respects.
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SECTION 7.5. Financial Condition at Closing. All of the following
financial conditions shall exist at Closing:
(a) Kedman shall not have any outstanding indebtedness at the
Closing Date. For purposes of this Section 7.5, the term indebtedness
shall include notes payable and the short-term and long-term portions
of any and all indebtedness for borrowed money or other obligations,
including capitalized lease obligations, including accrued interest,
fees and prepayment penalties with respect thereto, but shall not
include accounts payable that are payable other than to the Sellers or
their Affiliates or other indebtedness incurred in the Ordinary Course
of Business, all as determined in accordance with GAAP in a manner
consistent with the past two years;
(b) the minimum level of working capital of Kedman shall be at
least $1.7 million. The term "working capital" shall be defined as
accounts receivable plus inventory less current liabilities excluding
any year end adjustments for current liabilities (to the extent not
included in Section 7.5(a));
(c) the total of all cash and cash equivalents of the
Companies shall be not less than $2.3 million at the Closing Date;
(d) the mix of assets and liabilities of the Companies shall
be substantially the same as at October 31, 1997;
(e) Kedman shall have delivered to the Buyer a balance sheet
as of a date not more than 5 days preceding the Closing Date (the
"Preliminary Closing Balance Sheet") containing the information
required by this Section 7.5 together with a certificate of the Chief
Financial Officer of Kedman stating that the Preliminary Closing
Balance Sheet was prepared so as to present fairly in all material
respects the combined financial position of the Companies on a basis
consistent with the Financial Statements.
(f) Kedman shall deliver to the Buyer a cash balance sheet as
of the Closing Date consistent with the books and records of the
Companies
Provided, however, that the Purchase Price payable to the Sellers by the Buyer
shall be increased by the amount of any cash in excess of $2.3 million that is
owned by the Companies at Closing (the "Adjustment Amount").
SECTION 7.6. Opinion of Counsel. The Buyer shall have received from
counsel to the Sellers an opinion in form and substance substantially as set
forth in Exhibit B attached hereto, addressed to the Buyer, and dated as of the
Closing Date.
SECTION 7.7. Resignations. The Buyer shall have received the
resignations, effective as of the Closing, of each director and officer of the
Company other than those whom the Buyer shall have specified in writing at least
five business days prior to the Closing.
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SECTION 7.8. Consulting Agreements. The Sellers shall have entered into
the Consulting Agreements.
SECTION 7.9. FIRPTA Certificate. The Buyer shall have received from
each Seller a duly executed certificate in the form specified by Treasury
Regulation ss. 1.1445-2(b)(2).
SECTION 7.10. Termination of Certain Agreements. The Sellers shall
have, and the Sellers shall have caused the Companies to, and that each of the
Companies shall have, effective as of the Closing, without any cost to any of
the Companies, terminated, rescinded, canceled and rendered void and of no
effect any and all Contracts between the Company on the one hand and any Seller
or any of such Seller's Affiliates on the other hand, except for the lease of
the Leased Property. The Sellers agree that effective as of the Closing, all
rights of any Seller to indemnification by the Companies (whether by Contract,
Law or otherwise) are terminated, void, of no effect and unenforceable by them
except as may arise pursuant to this Agreement.
SECTION 7.11. Insurance. Buyer shall be reasonably satisfied as to the
availability and cost of adequate and reasonable insurance covering the Business
and assets of the Companies.
SECTION 7.12. Contracts. None of the material Contracts entered into by
any of the Companies shall be breached or subject to termination, modification
or change as a result of the transactions contemplated by this Agreement, and
none of the Major Customers of any of the Companies shall have stated or
indicated their determination or intention to reduce or otherwise adversely
change their orders or business.
SECTION 7.13. Reserved.
SECTION 7.14. Due Diligence Review. Buyer shall have completed and
shall be reasonably satisfied with the results of its due diligence
investigation, including a review of the condition of title to all real
properties owned by the Companies or transferred pursuant to this Agreement.
SECTION 7.15. Government Approvals. The Companies shall have received
all authorizations, consents and approvals of governments, governmental agencies
and regulatory agencies referred to in Section 4.3 and Section 4.11 above
reasonably satisfactorily in form and substance to the Buyer.
SECTION 7.16. No Material Adverse Effect. Since the date of this
Agreement, no event has occurred which would reasonably be expected to have a
Material Adverse Effect on the Companies.
SECTION 7.17. Real Property Agreement. Concurrently with the Closing,
the Sellers and the Buyer shall close on the Buyer's purchase of real property
pursuant to the terms of the Real Property Agreement.
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SECTION 7.18. Documents. All actions to be taken by the Sellers in
connection with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
SECTION 7.19. Accounts Payable to Buyer. The Companies shall not be
delinquent on any amounts owed and due to Xxxxxxx Products, Inc. or any
affiliate thereof on the Closing Date, in accordance with the terms of their
respective sales agreements.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF SELLERS
The obligation of the Sellers to effect the transactions contemplated
by this Agreement are subject to the satisfaction of the following conditions
precedent on or before the Closing Date:
SECTION 8.1. Representations and Warranties True as of Closing Date.
The representations and warranties set forth in Article V shall have been
accurate, true and correct on and as of the date of this Agreement and shall
also be accurate, true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
SECTION 8.2. Compliance with Covenants. The Buyer shall have performed
and complied with all of its covenants hereunder in all material respects
through the Closing.
SECTION 8.3. Actions or Proceedings. No action, suit, or proceeding
shall be pending before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect).
SECTION 8.4. Certificate. The Buyer shall have delivered to the Sellers
a certificate to the effect that each of the conditions specified above in
Sections 8.1 through 8.3 is satisfied in all material respects.
SECTION 8.5. Opinion of Counsel. The Seller shall have received from
counsel to the Buyer an opinion in form and substance substantially as set forth
in Exhibit C attached hereto, addressed to the Sellers, and dated as of the
Closing Date.
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SECTION 8.6. Government Approvals. The Buyer shall have received all
authorizations, consents and approvals of governments, governmental agencies and
regulatory agencies referred to in Section 5.2 above satisfactorily in form and
substance to the Sellers.
SECTION 8.7. Real Property Agreement. Concurrently with the Closing,
the Sellers and the Buyer shall close on the Buyer's purchase of real property
pursuant to the terms of the Real Property Agreement.
SECTION 8.8. Documents. All actions to be taken by the Buyer in
connection with the consummation of the transactions contemplated hereby and all
certificates, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers.
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
SECTION 9.1. Survival of Representations and Warranties; Limits on
Indemnification.
(a) Subject to the limitations set forth in this Article IX,
all of the terms and conditions of this Agreement, together with the
warranties, representations, agreements and covenants contained herein
or in any instrument or document delivered or to be delivered pursuant
to this Agreement, shall survive the execution of this Agreement and
the Closing Date. Unless otherwise expressly stated in this Agreement,
the agreements and covenants set forth in this Agreement shall survive
and continue only until the obligations set forth therein shall have
been performed and satisfied. Notwithstanding the foregoing, all of the
representations and warranties of the Sellers, the Companies and the
Buyer, and the related agreements of the Sellers and the Buyer to
indemnify each other as set forth in this Article IX, shall survive and
continue for, and all indemnification claims with respect thereto shall
be made prior to the end of, 18 months after the Closing Date (the
"Indemnification Period"), except the specific indemnities for which an
indemnification claim shall be pending 18 months after the Closing Date
shall survive until the final disposition thereof.
(b) Notwithstanding any other provision of this Agreement,
neither the Sellers nor the Buyer shall be required to indemnify the
other with respect to any claim for indemnification pursuant to this
Article IX:
(i) unless and until the aggregate amount of all
claims against such Person pursuant to this Article IX shall
exceed $250,000 and then only to the extent such aggregate
amount exceeds $250,000, and
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(ii) to the extent the aggregate amount of all claims
against such Person pursuant to this Article IX shall exceed
fifty percent (50%) of the Purchase Price (such that the
obligations of the parties pursuant to this Article IX shall
be limited to and shall not exceed, under any circumstances,
fifty percent (50%) of the Purchase Price); provided, that the
limitations set forth in Sections 9.1(b)(i) and (ii) shall not
apply to a breach by the Sellers of the representations set
forth in Section 3.4.
(c) Any obligation for indemnification pursuant to this
Article IX (i) shall be reduced by any insurance proceeds realized by
and paid to the indemnified party in respect of the applicable claim
(net of any increased premiums or similar costs arising out of the
making of insurance claims), and (ii) shall be (A) reduced by an amount
equal to any Tax benefits attributable to such claim and (B) increased
by an amount equal to any Taxes attributable to the receipt of such
payment, but only to the extent that such Tax benefits or Taxes are
reasonably calculable. The indemnified party shall use reasonable
efforts to make insurance claims relating to any claim for which such
Person is seeking indemnification.
SECTION 9.2. Indemnification by the Sellers. Subject to the provisions
of this Article IX and provided the Buyer makes a written claim of the Sellers
prior to the conclusion of the Indemnification Period, the Sellers, jointly and
severally, shall indemnify the Buyer and its Affiliates, directors, officers,
employees, stockholders, representatives and agents (collectively the "Buyer
Indemnified Parties") for all costs, losses and expenses the Buyer Indemnified
Parties actually suffer (both through and after the date of the claim for
indemnification) for any of the following:
(a) a breach of any of the representations or warranties made
by, or any breach of or failure to perform any covenant, agreement or
obligation of, the Company or any Seller in this Agreement;
(b) any Liabilities under Environmental Laws relating to the
Business and activities or the ownership, operation or lease by the
Company of facilities (including for remediation, clean-up or similar
obligations or costs) resulting from the operation of the Business
prior to the Closing Date; and
(c) any Taxes of the Company and any predecessor entities
owned by or affiliated with the Company with respect to any Tax year or
portion thereof for which Tax Returns were filed before the Closing
Date, to the extent such Taxes are not reflected in the reserve for Tax
Liability and the reserve for deferred Taxes shown on the Latest
Balance Sheet.
SECTION 9.3. Indemnification by the Buyer. Subject to the provisions of
this Article IX, and provided that the Sellers make a written claim for
indemnification against the Buyer prior to the conclusion of the Indemnification
Period, the Buyer agrees to indemnify the Sellers
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and their Affiliates against, and agrees to hold them harmless from, any and all
costs, losses and expenses actually suffered by them arising out of, resulting
from or caused by (i) any breach of or any inaccuracy in any representation or
warranty made by the Buyer pursuant to this Agreement or delivered pursuant
thereto; (ii) any breach of or failure by the Buyer to perform any agreement,
covenant or obligation of the Buyer set out in this Agreement; and (iii) any
obligations and Liabilities in respect of the Company from and after the Closing
Date.
SECTION 9.4. Third-Party Claims.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Article IX, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof
in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the full amount of Indemnifying Party's obligations
pursuant to this Article IX, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of
the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense
of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 9.4(b)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (B) 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), and (C) 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).
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(d) In the event any of the conditions in Section 9.4(b) above
is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including attorneys' fees and expenses),
and (C) the Indemnifying Parties will remain responsible for the full
amount of the Indemnifying Party's obligations subject to this Article
IX.
SECTION 9.5. Other Indemnification Provisions.
(a) After the Closing Date, the foregoing indemnification
provisions constitute the sole and exclusive remedy of the parties
hereto with respect to any claims against each other.
(b) Each Seller hereby agrees that he will not make any claim
for indemnification against any of the Companies by reason of the fact
that he was a director, manager, officer, employee, or agent of any
such entity or was serving at the request of any such entity as a
partner, member, trustee, director, manager, officer, employee, or
agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise) with respect to any action,
suit, proceeding, complaint, claim, or demand brought by the Buyer
against the Seller (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable Law, or
otherwise).
ARTICLE X
TAX MATTERS
SECTION 10.1. Tax Matters. The following provisions shall govern the
allocation of responsibility as between Buyer and Sellers for certain tax
matters following the Closing Date:
SECTION 10.2. Tax Periods Ending on or Before the Closing Date. The
Sellers shall prepare or cause to be prepared and file or cause to be filed all
Tax Returns for each of the Companies for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. The Sellers shall permit
the Buyer to review and comment on each such Tax Return described in the
preceding sentence prior to filing. The Sellers shall reimburse Buyer for Taxes
of the Companies with respect to such periods within fifteen (15) days after
payment by Buyer or the Companies of such Taxes to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to
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reflect timing differences between book and Tax income) shown on the face of the
Latest Balance Sheet. Notwithstanding the foregoing, the Sellers agree to be
responsible for all taxes for fiscal year 1998 ending June 30, 1998 and any
period beyond that to the date of the Closing should it extend beyond June 30,
1998, provided, however, that the Sellers will not be responsible for any
portion of such taxes which have been paid by the Companies prior to the
Closing.
SECTION 10.3. Tax Periods Beginning Before and Ending After the Closing
Date.
(a) Buyer shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Companies for Tax periods
which begin before the Closing Date and end after the Closing Date. The
Sellers shall pay to Buyer within fifteen (15) days after the date on
which Taxes are paid with respect to such periods an amount equal to
the portion of such Taxes which relates to the portion of such Tax
period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) shown on the face of the Latest Balance Sheet. For
purposes of this Section, in the case of any Taxes that are imposed on
a periodic basis and are payable for a Tax period that includes (but
does not end on) the Closing Date, the portion of such Tax which
relates to the portion of such Tax period ending on the Closing Date
shall (x) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such Tax
for the entire Tax period multiplied by a fraction the numerator of
which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire
Tax period, and (y) in the case of any Tax based upon or related to
income or receipts be deemed equal to the amount which would be payable
if the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing
Date shall be taken into account as though the relevant Tax period
ended on the Closing Date. All determinations necessary to give effect
to the foregoing allocations shall be made in a manner consistent with
prior practice of each of the Companies.
(b) Notwithstanding any provision of this Article X to the
contrary, in the event the Buyer makes any election pursuant to Section
338 of the Internal Revenue Code, liquidates the Companies (or either
of them), or enters into any other transaction which results in the
recognition by the Companies (or either of them) of income or gain
which would not otherwise be recognized by the Companies (or either of
them), the Buyer shall be responsible for the payment of all Taxes
resulting therefrom or pertaining thereto.
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SECTION 10.4. Cooperation on Tax Matters.
(a) Buyer, the Companies and Sellers shall cooperate fully, as
and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Article X
and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Companies and the Sellers agree (A) to retain all books
and records with respect to Tax matters pertinent to the Companies
relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent
notified by Buyer or Sellers, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements
entered into with any taxing Authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so
requests, the Companies or Sellers, as the case may be, shall allow the
other party to take possession of such books and records.
(b) Buyer and Sellers further agree, upon request, to use
their reasonable efforts to obtain any certificate or other document
from any Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(c) Buyer and Sellers further agree, upon request, to provide
the other party with all information that either party may be required
to report pursuant to Section 6043(c) of the Code and all Treasury
Department Regulations promulgated thereunder.
SECTION 10.5. Tax Sharing Agreements. All Tax sharing agreements or
similar agreements with respect to or involving the Companies shall be
terminated as of the Closing Date and, after the Closing Date, none of the
Companies shall be bound thereby or have any Liability thereunder.
SECTION 10.6. Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees of the State of Utah
(including any penalties and interest) incurred in connection with this
Agreement, shall be paid equally by Sellers and Buyer when due, and Sellers
will, at their own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by Utah Law, Buyer will,
and will cause its affiliates to, join in the execution of any such Utah Tax
Returns and other documentation.
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ARTICLE XI
TERMINATION
SECTION 11.1. Termination of Agreement. Certain of the parties may
terminate this Agreement as provided below:
(a) the Buyer and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Sellers on or before the 30th day following the date of
this Agreement, but prior to the Closing, if the Buyer is not
reasonably satisfied with the results of its continuing business,
legal, environmental, and accounting due diligence regarding any of the
Companies;
(c) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (i) in the event
any Seller has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer
has notified the Sellers of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach, or
(ii) if the Closing shall not have occurred on or before July 31, 1998
by reason of the failure of any condition precedent under Article VII
hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(d) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (i) in the event
the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Sellers have notified the Buyer of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach or (ii) if the Closing shall not have occurred on or before July
31, 1998, by reason of the failure of any condition precedent under
Article VIII hereof (unless the failure results primarily from any
Seller breaching any representation, warranty, or covenant contained in
this Agreement).
SECTION 11.2. Effect of Termination. If any party terminates this
Agreement pursuant to Section 11.1 above, all rights, obligations and remedies
of the parties hereunder shall terminate other than those set forth in Sections
6.4 and 6.16, without any Liability of any party to any other party.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Expenses. Each party hereto shall bear its own expenses
(including legal fees and expenses) with respect to this Agreement and the
transactions contemplated hereby. The Sellers agree that from and after March 1,
1998 the Companies have not borne or will not bear any of the Sellers' costs or
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
SECTION 12.2. Press Releases and Public Announcements. No party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Buyer and the
Sellers.
SECTION 12.3. No Third-Party Beneficiaries. Subject to the provisions
of Section 12.5, this Agreement shall not confer any rights or remedies upon any
Person other than the parties and their respective successors and permitted
assigns.
SECTION 12.4. Entire Agreement. This Agreement (including the documents
referred to herein), the Confidentiality Agreement dated December 4, 1998, the
Real Property Agreement and the Consulting Agreement constitute the entire
agreement among the parties and supersede any prior understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
are related in any way to the subject matter hereof.
SECTION 12.5. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written approval of the Buyer and the Sellers; provided,
however, that the Buyer may, upon prior written notice (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates, (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder) and (iii) grant a security
interest in respect of its rights hereunder to its lenders.
SECTION 12.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 12.7. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 12.8. Notices. Any notice, request, instruction or other
communication to be given hereunder by a party hereto shall be in writing and
shall be deemed to have been given, (a)
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when received if given in person or by courier or a courier service, (b) on the
date of transmission if sent by telex, facsimile or other wire transmission or
(c) three Business Days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
(a) If to the Sellers, to the addresses set forth on Schedule 4.2,
with a copy to:
Van Cott, Xxxxxx, Cornwall & XxXxxxxx
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(b) If to the Buyer, addressed as follows:
American Allsafe Company
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
SECTION 12.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic Laws of the State of Utah without
giving effect to any choice or
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conflict of Law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of Utah.
SECTION 12.10. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and Sellers. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
SECTION 12.11. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
SECTION 12.12. Construction. Any reference to any federal, state,
local, or foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
SECTION 12.13. Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
SECTION 12.14. Specific Performance. Each of the parties acknowledges
and agrees that the other parties would be damaged irreparably in the event any
of the provisions of Sections 6.4, 6.5, 6.10, 6.16, 6.17 and 6.18 of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties agrees that the other parties
shall be entitled to an injunction or injunctions to prevent breaches of the
aforementioned provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which such party may
be entitled, at law or in equity.
SECTION 12.15. Xxxxxxx Products, Inc. Guarantee. Xxxxxxx Products, Inc.
hereby unconditionally guarantees the payment and performance by the Buyer of
its obligations under this Agreement and the other agreements executed and
delivered by the Buyer to the Sellers in connection herewith.
SECTION 12.16. Submission to Jurisdiction. Each of the parties submits
to the jurisdiction of the federal district court sitting in Denver, Colorado in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding shall be heard and
determined in such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in
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any other court. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought. Service of process must
be in accordance with federal law. Nothing in this Section 12.16, however, shall
affect the right of any party to bring any action or proceeding arising out of
or relating to this Agreement in any other court or to serve legal process in
any other manner permitted by law or at equity. Each party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
AMERICAN ALLSAFE COMPANY
By:___________________________
Name: Xxxxxx X. Xxxxx
Title: Chairman
XXXXXXX PRODUCTS, INC.
Solely for purposes of Section 12.15.
By:___________________________
Name: Xxxxxx X. Xxxxx
Title: Chairman
KEDMAN COMPANY, INC.
By:___________________________
Name:
Title:
SELLERS
___________________________
G. Xxxxxxx Xxxxxxx
___________________________
Xxxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
G.M.E. ASSOCIATES, LTD.
___________________________
By: G. Xxxxxxx Xxxxxxx
Its:
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Exhibit A
Form of Consulting Agreement
Exhibit B
Form of Opinion of Seller's Counsel
Exhibit C
Form of Opinion of Buyer's Counsel
