EXECUTION COPY
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SHARE PURCHASE AGREEMENT
among
KEY COMPONENTS, INC.
KEY COMPONENTS, LLC
SGC PARTNERS II LLC
and
KEYHOLD, INC.
August 12, 1999
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TABLE OF CONTENTS
Introduction
ARTICLE I
AUTHORIZATION AND SALE OF THE SHARES
SECTION 1.1. PURCHASE AND SALE OF THE SHARES...............................1
SECTION 1.2. CLOSING.......................................................2
SECTION 1.3. CLOSING DELIVERIES............................................2
ARTICLE II
COMPANY AND PARENT REPRESENTATIONS AND WARRANTIES
SECTION 2.1. ORGANIZATION AND STANDING OF THE COMPANY.....................3
SECTION 2.2. AUTHORITY; VALID AND BINDING AGREEMENTS......................3
SECTION 2.3. CONFLICTS; CONSENTS..........................................3
SECTION 2.4. CAPITALIZATION...............................................4
SECTION 2.5. EQUITY INTERESTS.............................................5
SECTION 2.6. FINANCIAL INFORMATION........................................5
SECTION 2.7. UNDISCLOSED LIABILITIES......................................6
SECTION 2.8. TAXES........................................................6
SECTION 2.9. ASSETS OTHER THAN REAL PROPERTY..............................7
SECTION 2.10. OWNED AND LEASED REAL PROPERTY...............................7
SECTION 2.11. ENVIRONMENTAL MATTERS........................................9
SECTION 2.12. INTELLECTUAL PROPERTY, ETC...................................9
SECTION 2.13. PERMITS.....................................................10
SECTION 2.14. MATERIAL CONTRACTS..........................................10
SECTION 2.15. LITIGATION..................................................11
SECTION 2.16. ABSENCE OF CHANGES OR EVENTS................................11
SECTION 2.17. COMPLIANCE WITH APPLICABLE LAWS.............................12
SECTION 2.18. CERTAIN EMPLOYEE MATTERS....................................12
SECTION 2.19. BENEFIT PLANS...............................................13
SECTION 2.20. TRANSACTIONS WITH AFFILIATES................................14
SECTION 2.21. DISCLOSURE..................................................14
SECTION 2.22. BROKERS.....................................................15
SECTION 2.23. FOREIGN CORRUPT PRACTICES ACT...............................15
SECTION 2.24. YEAR 2000...................................................15
SECTION 2.25. INVESTMENT COMPANY..........................................15
SECTION 2.26. SMALLBUSINESS MATTERS.......................................15
SECTION 2.27. SOLVENCY....................................................15
SECTION 2.28. INSURANCE...................................................15
SECTION 2.29. BOOKS AND RECORDS...........................................16
SECTION 2.30. CUSTOMERS AND SUPPLIERS.....................................16
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ARTICLE III
THE INVESTOR'S AND SUB'S REPRESENTATIONS AND WARRANTIES
SECTION 3.1. ORGANIZATION AND AUTHORITY...................................16
SECTION 3.2. SECURITIES ACT...............................................17
SECTION 3.3. ACCREDITED INVESTOR..........................................17
SECTION 3.4. BROKERS......................................................17
SECTION 3.5. RESTRICTED SECURITIES........................................17
ARTICLE IV
CONDITIONS OF THE INVESTOR'S AND SUB'S OBLIGATIONS
SECTION 4.1. REPRESENTATIONS AND WARRANTIES; COVENANTS....................17
SECTION 4.2. CONSENTS AND APPROVALS.......................................17
SECTION 4.3. OPERATIVE AGREEMENTS.........................................18
SECTION 4.4. INJUNCTIONS, ETC.............................................18
SECTION 4.5. FINANCIAL STATEMENTS.........................................18
SECTION 4.6. MINORITY DRAG ALONG AGREEMENTS...............................18
SECTION 4.7. XXXX XXXXX XXXXXX............................................18
SECTION 4.8. CLOSING DOCUMENTS............................................18
SECTION 4.9. PROCEEDINGS..................................................19
ARTICLE V
CONDITIONS OF COMPANY'S OBLIGATIONS
SECTION 5.1. REPRESENTATIONS AND WARRANTIES...............................19
SECTION 5.2. OPERATIVE AGREEMENTS.........................................19
SECTION 5.3. INJUNCTIONS, ETC.............................................19
SECTION 5.4. CLOSING DOCUMENTS............................................20
SECTION 5.5. PURCHASE PRICE...............................................20
ARTICLE VI
COVENANTS
SECTION 6.1. USE OF PROCEEDS..............................................20
SECTION 6.2. SBA FORMS....................................................20
SECTION 6.3. CONDUCT OF BUSINESS..........................................20
SECTION 6.4. COOPERATION..................................................20
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NOTICES......................................................21
SECTION 7.2. INDEMNIFICATION..............................................22
SECTION 7.3. SURVIVAL OF AGREEMENT; TERMINATION...........................23
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SECTION 7.4. ASSIGNMENT..................................................23
SECTION 7.5. NO THIRD-PARTY BENEFICIARIES................................24
SECTION 7.6. EXPENSES....................................................24
SECTION 7.7. PUBLIC ANNOUNCEMENTS........................................24
SECTION 7.8. WAIVERS; AMENDMENT..........................................24
SECTION 7.9. ENTIRE AGREEMENT............................................25
SECTION 7.10. SEVERABILITY................................................25
SECTION 7.11. COUNTERPARTS................................................25
SECTION 7.12. HEADINGS, DEFINITIONS, INTERPRETATIONS......................25
SECTION 7.13. APPLICABLE LAW..............................................29
SECTION 7.14. CONSENT TO JURISDICTION.....................................29
SECTION 7.15. RESTRICTIVE LEGENDS.........................................29
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PURCHASE AGREEMENT, dated August 12, 1999, among KEY
COMPONENTS, LLC, a Delaware limited liability company (the
"Company"), Key Components, Inc., a New York corporation and
the sole existing member of the Company (the "Parent"), SGC
Partners II LLC, a Delaware limited liability company (the
"Investor"), and Keyhold, Inc., a Delaware corporation and a
wholly owned subsidiary of the Investor ("Sub").
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INTRODUCTION
The Investor desires to purchase from the Company, and the
Company desires to issue and sell to the Investor, an aggregate of up to 266,963
shares (the "Shares") of the Company. As a condition to the purchase and sale,
on the Closing Date, the Parent, the Company and Sub will become party to the
Company's Amended and Restated Limited Liability Company Operating Agreement,
substantially in the form attached as Exhibit A hereto (the "Operating
Agreement"), and the Registration Rights Agreement, substantially in the form
attached as Exhibit B hereto (the "Registration Rights Agreement"), and the
Investor, Sub, the Company, the Parent and the stockholders of the Parent (the
"Parent Stockholders") will become party to a Shareholders Agreement,
substantially in the form of Exhibit C hereto (the "Shareholders Agreement" and,
together with this Agreement, the Operating Agreement and the Registration
Rights Agreement, the Operative Agreements"). The Operative Agreements set forth
certain rights, options and other agreements among the parties.
Certain capitalized terms are defined in Section 7.12(b) of
this Agreement.
Accordingly, in consideration of the representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
AUTHORIZATION AND SALE OF THE SHARES
Section 1.1. Purchase and Sale of the Shares (a) Upon the
terms and subject to the conditions of this Agreement, at the Initial Closing,
the Company shall issue and sell to Sub, and Sub shall purchase from the
Company, 137,931 Shares (the "Initial Shares") for an aggregate purchase price
of $10,000,000 in cash (the "Purchase Price").
(b) Upon the terms and subject to the conditions of this
Agreement, at any time prior to the first anniversary of the date hereof, the
Company may require the Investor (through Sub) to purchase, up to 129,032
additional Shares (the "Additional Shares") for an aggregate purchase price of
$10,000,000 (the "Additional Investment"). The Company may require the Investor
(through Sub) to make the Additional Investment in one installment of
$10,000,000 or in not more than two installments of $5,000,000 each. If the
Investor (through Sub) makes the Additional Investment in one installment of
$10,000,000, the Company shall issue Sub 129,032 Additional Shares. If the
Investor (through Sub) makes the Additional Investment in one or more
installments of $5,000,000, upon the first such installment, the Company shall
issue Sub 64,516 of the Additional Shares, and on the second such installment,
if any, the Company shall issue Sub the other 64,516 Additional Shares;
provided,
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however, that prior to the first anniversary of the date hereof (a) no member of
the Company Group may obtain any Equity-Linked Financing from any Person other
than the Investor or Sub unless the Investor (through Sub) has made at least one
installment of the Additional Investment in the amount of $5,000,000, and (b) no
member of the Company Group may obtain any Equity-Linked Financing at a price
less than the equivalent of $93.00 per share of common stock of Parent or per
share of the Company from any Person other than the Investor or Sub unless the
Investor (through Sub) has made the maximum Additional Investment of
$10,000,000; and provided further that if the Company or Parent obtains
Equity-Linked Financing at a price equal to or greater than the equivalent of
$93.00 per share of Common Stock of the Parent or per share of the Company
before the Investor has made the maximum Additional Investment of $10,000,000,
the Investor shall have no further obligation to make the remainder of the
Additional Investment under this Section 1.1(b). The number of Additional Shares
to be issued pursuant to this Section 1.1(b) shall be adjusted equitably upon
any reclassification, share combination, share subdivision, share dividend,
share exchange, stock split, reverse stock split, or similar transaction or
event; and provided further that the Investor shall not be obligated to make the
second $5,000,000 installment of the Additional Investment unless the Company
intends to use the proceeds of such second installment to make an acquisition or
for a purpose the Investor reasonably agrees to be a growth initiative.
Section 1.2. Closing. The closing (the "Initial Closing") for
the purchase and sale of the Initial Shares shall be held at the offices of
Xxxxxx, Xxxxx & Xxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m. on August 31, 1999, or at such other time or on such other
date as may be agreed to by the Investor and the Company. The date on which the
Initial Closing shall occur is herein referred to as the "Initial Closing Date."
The closing or closings (each an "Additional Closing") for each Additional
Investment shall be held on the fifth business day after the Company gives
written notice that it requires Investor to make an investment in accordance
with Section 1.1 or at such time and on such date as may be agreed to by the
Investor and the Company. The date or dates on which the Company issues, and the
Investor purchases, any Additional Shares in accordance with the terms hereof,
are herein referred to as an "Additional Closing Date". Any such Additional
Closings shall be on the terms and subject to the conditions set forth in this
Agreement. Any references in this Agreement to the "Closing" or the "Closing
Date" without qualification as to "Initial" or "Additional" shall be deemed to
apply to the Initial Closing and any Additional Closings and the Initial Closing
Date and any Additional Closing Dates, as appropriate.
Section 1.3. Closing Deliveries. At the Initial Closing, (a)
the Investor shall deliver to the Company, by wire transfer of funds to the
Company's account, the Purchase Price and (b) the Company shall issue and
deliver to the Investor certificates representing the Initial Shares, registered
in the name of Sub and bearing the legends set forth in Section 7.15. At any
Additional Closings, (a) the Investor shall deliver to the Company, by wire
transfer of funds to the Company's account, the purchase price for the
Additional Shares purchased at such Additional Closing and (b) the Company shall
issue and deliver to the Investor certificates representing such Additional
Shares, registered in the name of Sub and bearing the legends set forth in
Section 7.15.
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ARTICLE II
COMPANY AND PARENT REPRESENTATIONS AND WARRANTIES
For purposes of Sections 2.7 and 2.9 through 2.30 references
to the Company shall include the Parent, the Company and the Company
Subsidiaries (as defined in Section 2.5) taken as a whole. Except as set forth
on the disclosure schedule provided to the Investor and attached hereto (the
"Disclosure Schedule"), the Parent and the Company jointly and severally
represent and warrant to the Investor and Sub that:
Section 2.1. Organization and Standing of the Company. Each of
the Parent, the Company and each Company Subsidiary is duly organized, validly
existing and in good standing under the laws of the state of its incorporation
or organization. Each of the Parent, the Company and each Company Subsidiary has
all requisite power and authority necessary to enable it to own and operate its
properties and assets and to conduct its business as presently conducted and
proposed to be conducted. Each of the Parent, the Company and each Company
Subsidiary is duly qualified to do business and in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
holding of its properties or assets requires qualification.
Section 2.2. Authority; Valid and Binding Agreements. The
Parent and the Company each have all requisite power and authority to (i)
execute and deliver the Operative Agreements and (ii) consummate the
transactions contemplated hereby and thereby, and the Company has the requisite
power and authority to issue and sell the Shares. The execution, delivery and
performance by the Parent and the Company of the Operative Agreements and all
documents to be executed by the Parent or the Company in connection therewith
and the authorization, issuance, sale and delivery of the Shares have been duly
authorized by all necessary action on the part of the Company and the Parent.
This Agreement has been duly executed and delivered by the Parent and the
Company and constitutes, and the other Operative Agreements when duly executed
and delivered will constitute, the legal, valid and binding obligations of the
Parent and the Company, enforceable against the Parent and the Company in
accordance with their terms except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and (ii)
the effect of rules or law governing the availability of equitable remedies.
Section 2.3. Conflicts; Consents. The execution and delivery
by the Parent and the Company of this Agreement does not, and the execution and
delivery of the other Operative Agreements by the Parent, the Company and the
Parent Stockholders, as the case may be, and the consummation of the
transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof will not, breach, conflict with, or result in any violation
of or default (with or without notice or lapse of time or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of any benefit under, or result in the creation or imposition of
any Lien of any nature whatsoever upon any of the properties or assets of the
Parent, the Company or any Company Subsidiary under, (i) any loan or credit
agreement, note, bond, mortgage, indenture, deed of trust, license, franchise,
lease, contract, commitment, Permit (as defined in Section 2.13), agreement,
understanding, instrument or obligation or other arrangement to which the
Parent, the Company or any Company Subsidiary is a party or by which the Parent,
the Company, any Company Subsidiary or any of their properties or assets may be
bound or affected, (ii) any provision of the Parent's, the Company's or any
Company Subsidiary's constitutive or governance documents, (iii) any
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judgment, order, writ, injunction or any decree, or any statute, law, ordinance,
rule or regulation applicable to the Parent, the Company, any Company Subsidiary
or any of their properties or assets. No consent, approval, order, license,
Permit or authorization of, or notification, registration, declaration or filing
with, any Governmental Authority or any other Person is required to be obtained
or made by or with respect to the Parent, the Company or any Company Subsidiary
in connection with the execution, delivery and performance by the Parent, the
Company and the Parent Stockholders, as the case may be, of any of the Operative
Agreements, the issuance and sale of the Shares, or the consummation of the
transactions contemplated hereby and thereby, other than any such breaches,
conflicts, violations, defaults, rights of termination, cancellation or
acceleration, loss of benefits or creation or imposition of Liens that
individually or in the aggregate could not reasonably be expected to (x) have a
Material Adverse Effect, (y) materially impair the ability of the Company or
Parent to perform their obligations under the Operative Agreements or (z)
prevent or materially delay the consummation of any of the transactions
contemplated the Operative Agreements.
Section 2.4. Capitalization. (a) The Company is authorized to
admit additional members, and upon the due execution of the Operating Agreement
by the parties thereto, the Company will be authorized to issue 5,000,000 shares
in respect of membership interests in the Company, of which 1,251,048 will be
validly issued and outstanding after giving effect to the transactions
contemplated hereby at the Initial Closing. The admission of Sub as a member of
the Company and the issuance of the Shares has been duly authorized and, when
issued in accordance with this Agreement, the Shares (i) will be validly issued,
fully paid, (ii) will have the rights, preferences and privileges described in
the Operative Agreements and (iii) will not have been issued in violation of,
and will not be subject to, any preemptive or subscription rights and will not
result in the antidilution provisions of any security of the Company becoming
applicable.
(b) The Shares, when issued and delivered in accordance with
this Agreement, will be free and clear of any Liens and Sub will have good title
thereto. The Shares, when issued as of the Initial Closing Date, will represent
11.02% of the total outstanding equity or membership interests of the Company
assuming no exercise of the options set forth on Schedule I of the Shareholders
Agreement.
(c) Except as set forth on Schedule 2.4(c), there are no
outstanding warrants, options, rights, other securities, agreements,
subscriptions or other commitments, arrangements or undertakings pursuant to
which the Parent, the Company or any Company Subsidiary is or may become
obligated to issue, deliver or sell, or cause to be issued, delivered or sold,
any additional shares or other equity membership or partnership interests, as
the case may be, of the Parent, the Company or any Company Subsidiary, or to
issue, grant, extend or enter into any such warrant, option, right, security,
agreement, subscription or other commitment, arrangement or undertaking. Except
for the rights of the Investor and Sub set forth herein and in the other
Operative Agreements, there are no outstanding options, rights, other
securities, agreements or other commitments, arrangements or undertakings
pursuant to which the Parent, the Company or any Company Subsidiary is or may
become obligated to redeem, repurchase or otherwise acquire or retire any shares
or other equity membership or partnership interests, as the case may be, of the
Parent, the Company or any Company Subsidiary which are presently outstanding or
may be issued in the future.
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(d) The Parent is the sole member of the Company and as of the
date hereof owns, and through the time immediately prior to the Initial Closing
will own, of record and beneficially 100% of the membership interests of the
Company, free and clear of all Liens or any other restriction on the right to
vote, sell or otherwise dispose of such interest. There are no bonds,
debentures, notes or other indebtedness or securities of the Parent, the Company
or any Company Subsidiary having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
the members of the Company may vote.
(e) Other than the rights granted to the Investor and Sub
pursuant to this Agreement and the other Operative Agreements, there are no
outstanding rights which permit the holder thereof to cause the Parent, the
Company or any Company Subsidiary to file a registration statement under the
Securities Act or which permit the holder thereof to include securities of such
entity in a registration statement filed by such entity under the Securities
Act, and there are no outstanding agreements or other commitments which
otherwise relate to the registration of any securities of the Parent, the
Company or any Company Subsidiary under the Securities Act.
(f) Assuming that the representations and warranties of the
Investor and Sub set forth in Section 3.2 and 3.3 are true and correct, the
offering, issuance and delivery of the Shares is and will be in full compliance
with the Securities Act and applicable state securities laws.
Section 2.5. Equity Interests. A true and correct list of the
Company's Subsidiaries are set forth on Schedule 2.5 (the "Company
Subsidiaries"). Each of the Company Subsidiaries is directly or indirectly
wholly owned by the Company. Neither the Company nor the Parent has any other
Subsidiaries and, except for the Company's interest in Mastervolt BV, does not
directly or indirectly own any capital stock of or other equity interests in any
corporation, partnership, limited liability company or other Person. Neither the
Company, the Parent, nor any Subsidiary is a member of or participant in any
partnership, joint venture, limited liability company or similar entity (other
than, in the case of the Parent, the Company).
Section 2.6. Financial Information. (a) The Parent and the
Company have made available to the Investor complete and correct copies of (i)
the consolidated, audited balance sheet of the Parent and its Subsidiaries as of
December 31, 1998 (the "Balance Sheet"), and the related statements of
operations, cash flows for the year then ended December 31, 1998 (the "1998
Financials"), (ii) the consolidated, unaudited balance sheet of the Parent and
its Subsidiaries as of March 31, 1999, and the related statements of operations,
cash flows for the quarter then ended (the "First Quarter Financials"), and
(iii) the consolidated, unaudited monthly balance sheets of the Parent and its
Subsidiaries as of the end of each month after March 31, 1999 through June,
1999, and the related statements of operations, cash flows for the period then
ended, which statements are prepared in accordance with GAAP and attached hereto
as Schedule 2.6. (together with the First Quarter Financials, the "Unaudited
Financials" and, the Unaudited Financials together with the 1998 Financials,
being the "Financial Statements"). The forecasts and projections previously
delivered to the Investor by the Parent and the Company and attached hereto as
Schedule 2.6 have been prepared in good faith based on discussions with the
operational managers of the Company Group and the Company believes that such
projections are based on reasonable assumptions.
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(b) The Company has filed all required reports, forms and
other documents required to be filed under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), with the SEC since June 30, 1998 (the "Company
SEC Documents"). As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Exchange Act, and
the rules and regulations of the SEC promulgated thereunder applicable to such
documents, and none of the Company SEC Documents contained any untrue statements
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements included in the Company SEC Documents (including the 1998 Financials)
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, and the Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved and fairly present in
all material respects the consolidated financial position of the Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of Unaudited Financials, to normal and recurring year-end audit adjustments
not material in scope or amount).
Section 2.7. Undisclosed Liabilities. Except as set forth on
the Financial Statements or on Schedule 2.7, the Company does not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent,
unasserted or otherwise and whether due or to become due) except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice, and which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The reserves, if any, established by
the Company or the lack of reserves, if applicable, are reasonable based upon
facts and circumstances known by the Company on the date hereof and there are no
loss contingencies that are required to be accrued by Statement of Financial
Accounting Standard No. 5 of the Financial Accounting Standards Board which are
not provided for on the Balance Sheet.
Section 2.8. Taxes. The Parent, the Company and the Company
Subsidiaries have filed or will have filed or caused to be filed in a timely
manner (within any applicable extension periods) and in the appropriate
jurisdictions all returns, reports and forms ("Returns") required to be filed on
or before the Initial Closing Date with a Governmental Authority responsible for
the imposition of a Tax and such Returns are and will be true, correct and
complete in all material respects. The charges, accruals, and reserves for Taxes
with respect to the Parent, the Company and the Company Subsidiaries as
reflected on the Balance Sheet are adequate to cover Tax liabilities of the
Parent, the Company and the Company Subsidiaries accruing throughout the date
thereof. All Taxes due from and payable by the Parent, the Company and the
Company Subsidiaries on or prior to the Closing Date have been or will be fully
paid on a timely basis. No Liens have been filed and no claims are being
asserted by or against the Parent, the Company or the Company Subsidiaries, with
respect to any Taxes. For each taxable year since the inception of the Parent,
the Parent has maintained a valid election under Section 1362(a) of the Code (as
well as the equivalent provisions, if any, of all applicable state or local Tax
statutes) to be treated as an "S corporation" and no corporation qualifies as a
"predecessor corporation" of the Parent (for purposes of Section 1374(c) of the
Code). The Parent, the Company and the Company Subsidiaries have complied and
will comply with all applicable laws relating to the payment and withholding of
Taxes (including withholding and reporting requirements under Sections 1441
through 1464, 3401 through 3406, and 6041 and 6049 of the Code and similar
provisions under any other applicable laws) and, within the time and in the
manner prescribed by law,
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have withheld from wages, fees and other payments and paid over to the proper
governmental or regulatory authorities all amounts required. Neither the Parent,
the Company nor any of the Company Subsidiaries has received a notice of
assessment or proposed assessment of any Taxes claimed to be owed by it or any
other Person on its behalf. Except for the audit of Valley Forge Corporation and
its subsidiaries for the year ended December 31, 1995, no Returns filed by or on
behalf of the Parent, the Company or any of the Company Subsidiaries with
respect to Taxes are currently being audited or examined. Neither the Parent,
the Company, nor any Company Subsidiary has any notice of any such audit or
examination. Neither the Parent, the Company nor any of the Company Subsidiaries
is required to include in income any adjustment pursuant to Section 481(a) of
the Code by reason of a voluntary change in accounting method initiated by the
Parent, the Company or any of the Company Subsidiaries, and no Governmental
Authority has proposed an adjustment or change in accounting method. To the
knowledge of the Company with respect to Valley Forge Corporation, all
transactions or methods of accounting that could give rise to an understatement
of Federal income tax have been adequately disclosed on either the Parent's, the
Company's or any relevant Company Subsidiary's tax returns in accordance with
Section 6662(d)(2)(B). Neither the Parent, the Company nor any Company
Subsidiary is a party to any Tax-sharing or Tax indemnity agreement or any other
agreement of a similar nature that remains in effect. Neither the Parent, the
Company nor any Company Subsidiary has consented to any waiver of the statute of
limitations for the assessment of any Taxes and has not requested any extension
of time for the payment of any Taxes. The Company has been a single-member LLC
at all times since its inception. For Federal income tax purposes, all income
and assets of the Company are treated as income and assets of Parent.
Section 2.9. Assets Other than Real Property. Except as
disclosed on Schedule 2.9, the Company has good title to, or a valid leasehold
interest in, as applicable, all tangible assets reflected on the Balance Sheet
or acquired after the date thereof, free and clear of all Liens except statutory
liens for the payment of current taxes that are not yet delinquent and security
interests which arise in the ordinary course of business and which do not affect
the properties or assets of the Company in any material respect. With respect to
the property and assets it leases, the Company is in compliance with such leases
in all material respects. To the knowledge of the Company, (i) the tangible
assets owned by the Company are in all material respects in good operating
condition and repair, ordinary wear and tear excepted, and (ii) all tangible
assets leased by the Company are in all material respects in the condition
required by the terms of the lease applicable thereto during the term of such
lease and upon the expiration thereof. Such assets, together with the assets
referred to in Schedule 2.10 and Schedule 2.13, constitute all of the material
properties, interests, assets and rights held for use or used in connection with
the business and operations of the Company and constitute all those necessary to
continue to operate the business of the Company consistent with current and
historical practice and as presently contemplated to be conducted. Except as
indicated in the preceding sentence, this Section 2.9 does not relate to (i)
real property or interests in real property or (ii) intellectual property of the
Company; such items are covered under Sections 2.10 and 2.11 and Section 2.12,
respectively.
Section 2.10. Owned and Leased Real Property. (a) The address
of each parcel of real property and any interest therein owned by the Company is
set forth on Schedule 2.10(a) hereto (each such property or interest, together
with any structures, improvements, easements and other rights on or appurtenant
thereto, an "Owned Property").
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(b) Each parcel of real property and any interest therein that
the Company occupies, uses or otherwise has rights to pursuant to a lease,
license, occupancy agreement or other agreement (each such agreement, together
with all amendments, modifications, extensions and supplements thereto, a
"Lease"), is referred to as "Leased Property". The Owned Properties and the
Leased Properties are referred to collectively as the "Company Properties". Each
Lease is in full force and effect and constitutes the valid and binding
obligation of the Company, as applicable, enforceable against the Company in
accordance with its terms. There exists no default, or any event which upon the
giving of notice or the passage of time, or both, would give rise to any
default, in the performance by the Company (or, to the knowledge of the Company,
the lessor thereunder), of any of its obligations under any Lease, except for
such defaults that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(c) Except as described on Schedule 2.10(c), the Parent, the
Company or one of the Company Subsidiaries is the sole owner and holder of (i)
good and marketable fee title to each Owned Property, and (ii) a good, valid and
existing leasehold estate, as tenant (or such other rights as described in such
Schedule), in each Leased Property, in each case free and clear of all Liens and
other encumbrances, restrictions and matters affecting title to or the use and
occupancy of such Company Property, except as disclosed on Schedule 2.10(c)
hereto ("Permitted Encumbrances"). No Company Property violates the terms or
conditions of any Permitted Encumbrance, except for such violations that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(d) To the knowledge of the Company, each Company Property is
in good repair and no condition exists which would interfere with the Company's
customary use and operation thereof, and no part of any Company Property is
subject to any building or use restrictions that would restrict or prevent the
current use and operation of such Company Property, except for such conditions
or restrictions that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect. To the knowledge of the Company, each Company
Property is zoned for its current use, and such current use is in all respects a
conforming use. No Governmental Authority having jurisdiction over any Company
Property has issued or, to the knowledge of the Company, has threatened to
issue, any notice or order that adversely affects the use or operation of any
Company Property, or requires, as of the date hereof or a specified date in the
future, any repairs, alterations, additions or improvements thereto, or the
payment or dedication of any money, fee, exaction or property. There are neither
any actual, nor, to the knowledge of the Company, any threatened or contemplated
condemnation or eminent domain proceedings that affect any Company Property or
any part thereof, and the Company has received no written notice of the
intention of any Governmental Authority or other Person to take or use all or
any part thereof. The Company has no knowledge of any actual or pending
imposition of any assessments for public improvements with respect to any
Company Property and, to the knowledge of the Company, no such improvements have
been constructed or planned that would be paid for by means of assessments upon
any Company Property. To the Company's knowledge, no improvements constituting a
part of any Company Property encroach on real property not owned or leased by
the Company. The Company has not received any written notice from any insurance
company which has issued an insurance policy with respect to any Company
Property requesting performance of any structural or other repairs or
alterations to such Company Property. Each Company Property consists of
sufficient land, parking areas, sidewalks, driveways and other improvements to
permit the continued use of such Company Property in the manner and for the
purposes to which it is presently devoted.
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Section 2.11. Environmental Matters. (a) To the knowledge of
the Company, no conditions exist at, on or under any Company Property which,
with the passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Law.
(b) To the knowledge of the Company, there have been no past,
and there are no pending or threatened (i) claims or written complaints, notices
or requests for information received by the Company with respect to any alleged
violation of any Environmental Law, or (ii) written complaints, notices or
inquiries to the Company regarding potential liability under any Environmental
Law.
(c) To the knowledge of the Company, there have been no
Releases of Hazardous Materials at, on or from any Company Property.
(d) To the knowledge of the Company, each Company Property is
in compliance with all Environmental Laws in all material respects. The Company
has been issued and is in compliance with all Permits, certificates, approvals,
licenses and other authorizations relating to environmental matters and
necessary or desirable for their respective businesses.
(e) No Company Property is listed or proposed for listing on
the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar federal or state list of sites requiring investigation or clean-up.
(f) (i) to the knowledge of the Company, there are no
underground storage tanks, active or abandoned, including petroleum storage
tanks, landfills, lagoons, surface impoundments, disposal areas or disposal
ponds, on or under any Company Property, and
(ii) to the knowledge of the Company, there are no
polychlorinated biphenyls or friable asbestos present at any Company
Property.
(g) The Company has not directly transported or directly
arranged for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar federal or state list or which is the
subject of any federal, state or local enforcement actions or other
investigations which may lead to claims against the Company for any remedial
work, damage to natural resources or personal injury, including claims under
CERCLA. To the knowledge of the Company, no generation, manufacture, storage,
treatment, transportation or disposal of Hazardous Material has occurred or is
occurring on or from any Company Property.
Section 2.12. Intellectual Property, etc. Except as set forth
on Schedule 2.12, the Company owns or has the right to use, without payment to
any other Person, all patents, trademarks, trade names, service marks,
copyrights and other intellectual property rights used in its business as
presently conducted and to be used in its business as proposed to be conducted.
Except as otherwise indicated on Schedule 2.12, all patents, trademarks, trade
names and service marks of the Company the loss of which could reasonably be
expected to have a Material Adverse Effect on the Company have
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been duly registered and filed in or issued by each appropriate Governmental
Authority in the jurisdictions indicated, all necessary affidavits of continuing
use have been filed, and all necessary maintenance fees have been paid to
continue all such rights in effect. As used in the business of the Company, to
the Company's knowledge, no such patent, trademark, trade name, service xxxx,
copyright, application therefore, trade secret or other intellectual property
right infringes any rights owned or held by any other person. There is no
pending, and the Company has no notice or knowledge of any threatened,
litigation, objection or claim being asserted by any Person with respect to the
ownership, validity, enforceability or use of any such patents, trademarks,
trade names, service marks, copyrights, applications therefor, trade secrets or
other intellectual property rights or challenging or questioning the validity or
effectiveness of any license relating to any such right. To the knowledge of the
Company, no person is infringing the rights of the Company in such patent,
trademark, trade name, service xxxx, copyright, application therefore, trade
secret or other intellectual property right.
Section 2.13. Permits. The Company has obtained each permit,
license and other authorization or approval necessary or useful for the Company
to own, lease or use any of its properties or assets, including the Company
Properties except for such licenses, certificates, permits, and rights the
absence of which would not individually or in the aggregate have a Material
Adverse Effect (each, a "Permit"). Each such Permit was duly issued and
obtained, currently is in full force and effect, and shall remain in full force
and effect for its respective term. To the knowledge of the Company, no default
or violation, or event which with the passage of time or giving of notice or
both would become a default or violation, has occurred in the due observance of
any Permit, and the consummation of the transactions contemplated in this
Agreement will not result in the non-renewal, revocation or termination of any
such or Permit.
Section 2.14. Material Contracts. Schedule 2.14 contains a
true and complete list or description of all written or oral contracts,
agreements and other instruments ("Contracts") to which the Company is a party
(other than purchase orders entered into in the ordinary course of business by
the Company) (A) relating to indebtedness for money borrowed or capital leases,
(B) relating to commitments in excess of $100,000 in any given year, (C)
relating to the employment or compensation of any director, officer, member or
stockholder of the Company, or any Affiliate of such Person, (D) relating to the
employment or compensation of any consultant, independent contractor or other
agent of the Company, or, to the knowledge of the Company, any Affiliate of such
Person, relating to the payment in excess of $100,000 in any given year, (E)
relating to the sale or other disposition of any assets, properties or rights
(other than the sale of inventory), (F) relating to the distribution of the
Company's Products or services and which require the payment of money in excess
of $100,000, (G) which restricts the Company's ability to do business in any
geographic area or grants to any Person exclusive or similar rights in any line
of business or in any geographic area, (H) which restricts the Company's ability
to solicit employees of another Person or restricts another Person's ability to
solicit the Company's employees, (I) to which any member or Affiliate of any
member is a party, or (J) that is otherwise material to the results of
operations, financial condition or prospects of the Company or entered into
other than in the ordinary course of business. Except as set forth on Schedule
2.14, all Contracts are valid, binding and in full force and effect as to the
Company, and to the knowledge of the Company, there is no material default, or
any event which upon notice or the passage of time, or both, would give rise to
any material default, in the performance of the Company nor, to the Company's
knowledge, in the performance of any other party to any such Contracts in any
material respect.
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Section 2.15. Litigation. There are no material suits,
actions, claims, judgments, arbitrations or other legal, administrative or
regulatory proceedings or, to the knowledge of the Company, investigations,
whether at law or in equity, or before or by any Federal, foreign, state or
municipal or other governmental department, commission, board, bureau, agency or
instrumentality (a) pending or, to the knowledge of the Company, threatened by
or against or affecting the Company or any of its properties or assets or (b) to
the knowledge of the Company, pending or threatened by or against any of the
officers or employees of the Company which relate to or involve the termination
by such Person of his employment with any of such Person's former employers.
Except as set forth on Schedule 2.15 hereto, to the knowledge of the Company,
there is no basis for any such lawsuit, claim, arbitration or other proceeding
or investigation. There is no outstanding judgment, order or decree of any
Governmental Authority or arbitrator applicable to the Company or any of its
properties, assets or business.
Section 2.16. Absence of Changes or Events. Except as set
forth on Schedule 2.16 or in the Company SEC Documents filed with the SEC prior
to the date hereof, since December 31, 1998, the business of the Company has
been conducted in the ordinary course consistent with past practice and there
has not been:
(a) any event, violation or other matter that could,
individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect;
(b) any obligation or liability (whether absolute, accrued,
contingent or otherwise, and whether due or to become due) incurred by
the Company, in excess of $100,000 in the singular or the aggregate,
other than obligations under customer contracts, current obligations and
liabilities incurred in the ordinary course of business and consistent
with past practice;
(c) any payment, discharge, satisfaction or settlement of any
claim or obligation of the Company, except in the ordinary course of
business and consistent with past practice;
(d) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of the Company (except
in respect of taxes payable by the Parent Stockholders as permitted by
the Indenture of the Company and Key Components Finance Corp., dated May
28, 1998 (the "Indenture") or any direct or indirect redemption, purchase
or other acquisition of any such shares;
(e) except for (i) this Agreement, (ii) the Additional
Investment and the rights of the Investor and Sub set forth in the other
Operative Agreements and (iii) issuances of equity interests set forth on
Schedule 2.4(c), any issuance or sale, or any contract entered into for
the issuance or sale, of any shares of the Company or securities
convertible into or exercisable for an equity interest in the Company;
(f) any sale, assignment, pledge, encumbrance, transfer or
other disposition of any tangible asset of the Company (other than sales
or the licensing of its Products to customers in the ordinary course of
business consistent with past practice), or any sale, assignment,
transfer or other disposition of any Intellectual Property (other than
licensing of Products of the Company in the ordinary course of business
and on a non-exclusive basis);
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(g) any creation of any Lien on any property of the Company
except statutory liens for the payment of current taxes that are not yet
delinquent and security interests which arise in the ordinary course of
business and which do not affect the properties or assets of the Company
in any material respect;
(h) any write-down of the value of any asset of the Company or
any write-off as uncollectible of any accounts or notes receivable or any
portion thereof except in the ordinary course of business and in a
magnitude consistent with historical practice;
(i) any cancellation of any debts or claims or any amendment,
termination or waiver of any rights of the Company except in the ordinary
course of business consistent with past practice;
(j) any general increase in the compensation of employees of
the Company (including any increase pursuant to any written bonus,
pension, profit-sharing or other benefit or compensation plan, policy or
arrangement or commitment), any increase in fees or payments made or due
to Millbrook Capital Management, Inc., or any increase in any such
compensation or bonus payable to any officer, member, director,
consultant or agent of the Company having an annual salary or
remuneration in excess of $100,000;
(k) any damage, destruction or loss (whether or not covered by
insurance) affecting any asset or property of the Company resulting in
liability or loss in excess of $100,000;
(l) any change in the independent public accountants of the
Company or any material change in the accounting methods or accounting
practices followed by the Company or any material change in depreciation
or amortization policies or rates; or
(m) any agreement, whether in writing or otherwise, to take
any of the actions specified in the foregoing items (a) through (l).
Section 2.17. Compliance with Applicable Laws. (a) The Company
and its properties, assets, operations and business are in compliance in all
material respects with all applicable statutes, laws, ordinances, rules and
regulations of any Governmental Authority and any filing requirements relating
thereto, including laws and regulations relating to environmental requirements
and occupational safety and health and all building, fire, zoning, setback, and
subdivision laws (collectively, "Legal Requirements"), and, except as otherwise
disclosed on Schedule 2.17 hereto, no written notes or notices of violation of
any Legal Requirements have been issued by any Governmental Authority.
Section 2.18. Certain Employee Matters. (a) In the last five
years, the Company has not experienced any labor disputes, union organization
attempts or work stoppage due to labor disagreements. There is no unfair labor
practice charge or complaint against the Company pending, or to the knowledge of
the Company, threatened before the National Labor Relations Board or any
comparable state agency or authority and there are no existing or prior facts,
circumstances or conditions that could reasonably be expected to form the basis
therefor. There is no written or oral contract, commitment, agreement,
understanding or other arrangement with any labor organization, nor
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work rules or practices agreed to with any labor organization or employee
association, applicable to employees of the Company, nor is the Company a party
to or bound by any collective bargaining or similar agreement; there is, and in
the last five years, there has been, no representation of the employees of the
Company by any labor organization and, to the knowledge of the Company, there
are no union organizing activities among the employees of the Company, nor to
the knowledge of the Company, has any question concerning representation been
raised or is threatened respecting the employees of the Company.
(b) Except as set forth in Schedule 2.18, the Company does not
have any unsatisfied liability to any previously terminated employee or
independent contractor. The Company has made available all written employee
handbooks, policies, programs and arrangements to the Investor. To the knowledge
of the Company, no key employee or group of employees has any plans to terminate
their employment with the Company as a result of the transactions contemplated
hereby or otherwise.
Section 2.19. Benefit Plans. (a) Except as set forth in
Section 2.19(a), the Company has made available to the Investor true and
complete copies of (A) each pension, retirement, savings, deferred compensation,
and profit-sharing plan and each stock option, stock appreciation, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health, group insurance or other welfare plan, or other similar plan and any
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), under which the
Company has any material current or future obligation or liability or any
potential, contingent or secondary liability under Title IV of ERISA or under
which any employee or former employee (or beneficiary of any employee or former
employee) of the Company has or may have any current or future right to benefits
(the term "plan" shall include any contract, agreement, policy or understanding,
each such plan being hereinafter referred to in this Agreement individually as a
"Benefit Plan"), (B) the summary plan description for each Benefit Plan, (C) the
latest annual report, if any, which has been filed with the IRS for each Benefit
Plan, (D) the most recent IRS determination letter for each Benefit Plan that is
a pension plan (as defined in ERISA) intended to be qualified under Section
401(a) of the Code and (E) copies of any existing reports for the most recent
Benefit Plan year showing compliance with discrimination rules under those of
Sections 401(a), 401(k), 401(m), 419, 419A, 505, 501(c)(9), 105(h), 125 or 129
of the Code applicable to such Benefit Plan. Each Benefit Plan intended to be
tax qualified under Sections 401(a) and 501(a) of the Code is and has been
determined by the IRS to be tax qualified under Sections 401(a) and 501(a) of
the Code and, since such determination, no amendment to or failure to amend any
such Benefit Plan and no other event or circumstance has occurred that could
reasonably be expected to adversely affect its tax qualified status. There has
been no prohibited transaction within the meaning of Section 4975 of the Code
and Section 406 of Title I of ERISA with respect to any Benefit Plan.
(b) There are no actions, claims, lawsuits or arbitrations
pending, or, to the knowledge of the Company, threatened, with respect to any
Benefit Plan or the assets of any Benefit Plan. To the knowledge of the Company,
each Benefit Plan has been administered in all material respects in accordance
with its terms and with all applicable laws (including, without limitation,
ERISA). Except as set forth on Schedule 2.19(b), the Company has satisfied all
material funding, compliance and reporting requirements for all Benefit Plans.
With respect to each Benefit Plan, if applicable, the Company has paid all
contributions (including employee salary reduction contributions) and all
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insurance premiums that have become due and any such expense accrued but not yet
due has been properly reflected in the Financial Statements.
(c) The consummation of the transactions contemplated by this
Agreement will not (1) entitle any employee or independent contractor of the
Company to severance pay or termination benefits, (2) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or former employee or independent contractor or (3) obligate the
Company or any of its Affiliates, to pay or otherwise be liable for any
compensation, vacation days, pension contribution or other benefits to any
employee, consultant, agent or independent contractor of the Company for periods
before the Closing Date.
(d) Except as set forth on Schedule 2.19(b), no Benefit Plan
is subject to the provisions of Section 412 of the Code or Part 3 of Subtitle B
of Title I of ERISA. No Benefit Plan is subject to Title IV of ERISA. Since
inception, neither the Company nor any business or entity treated as a single
employer with the Company for purposes of Title IV of ERISA contributed to or
was obliged to contribute to a pension plan that was at any time subject to
Title IV of ERISA.
(e) No Benefit Plan provides or is required to provide, now or
in the future, health, medical, dental, accident, disability, death or survivor
benefits to or in respect of any Person beyond termination of employment, except
to the extent required under any state insurance law or under Part 6 of Subtitle
B of Title I of ERISA and under Section 4980(B) of the Code. No Benefit Plan
covers any individual that is not an employee of the Company, other than spouses
and dependents of employees under health and child care policies listed in
Schedule 2.19(a), true and complete copies of which have been made available to
the Investor.
Section 2.20. Transactions with Affiliates. Except as set
forth in Schedule 2.20, no current or former partner, director, officer,
stockholder or member of the Company or any associate or Affiliate thereof, or
any relative with a relationship no more remote than first cousin of any of the
foregoing, is presently, or during the 12-month period ending on the date hereof
has been, (i) a party to any transaction with the Company (including any
contract, agreement or other arrangement providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
payments to, any such director, officer or member or such associate or affiliate
or relative) or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor,
supplier or customer of the Company (except for a passive investment (direct or
indirect) in less than 5% of the common stock of a company whose securities are
traded on or quoted through a national securities exchange or on the NASDAQ
National Market System), nor does any such Person receive income from any source
other than the Company which relates to the Company's business or should
properly accrue to the Company.
Section 2.21. Disclosure. No statement by the Company
contained in this Agreement and the exhibits and schedules attached hereto or in
any certificate or schedule furnished or to be furnished by or on behalf of the
Company to the Investor or any of its representatives in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements contained
herein or therein not misleading.
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Section 2.22. Brokers. Except as set forth in Section 16 of
the Shareholders Agreement, no agent, broker, investment banker, Person or firm
acting on behalf of the Company or any member of the Company or under the
authority of the Company is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions contemplated hereby.
Section 2.23. Foreign Corrupt Practices Act. The Company and,
to the knowledge of the Company, its employees are in compliance in all material
respects with the U.S. Foreign Corrupt Practices Act, as amended, including
without limitation the books and records provisions thereof.
Section 2.24. Year 2000. On or before September 30, 1999, all
of the Internal MIS Systems of the Company will be Year 2000 Compliant. The
Company has furnished the Investor with true, correct and complete copies of any
customer agreements and other materials and correspondence in which Company has
furnished (or could be deemed to have furnished) assurances as to the
performance and/or functionality of the Company's Products or Services on or
after January 1, 2000. The Company has furnished the Investor with a true,
correct and complete copy of any internal investigations, memoranda, budget
plans, forecasts or reports principally concerning the Year 2000 Compliant
status of the Products, services, operations, systems, supplies and Facilities
of the Company and its vendors.
Section 2.25. Investment Company. Neither the Company nor any
Person Controlling the Company is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
Section 2.26. Small Business Matters. The Company acknowledges
that the Investor is a federally licensed SBIC under the SBIC Act. The Company,
together with its "affiliates" (as that term is defined in 13 CFR ss.121.103),
is a "small business concern" within the meaning of the SBIC Regulations
including 13 CFR ss.121.103. For a period of one year following the date hereof,
neither the Company nor any of its Subsidiaries will change its business
activity if such change would render the Company ineligible to receive financial
assistance from an SBIC under the SBA Act and the regulations thereunder (within
the meanings of 13 CFR xx.xx. 107.720 and 107.760(b)).
Section 2.27. Solvency. As of the date hereof and the Closing
Date, (i) the fair market value of the Company's assets is in excess of the
total amount of its liabilities (including, without limitation, contingent
liabilities); (ii) the present fair saleable value of the Company's assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; and (iii) the Company is able to pay its debts (including,
without limitation, contingent debts and other commitments) as they mature.
Section 2.28. Insurance. All insurance policies ("Insurance
Policies") that are currently held by the Company are in the name of the
Company, outstanding and in full force and effect and all premiums due with
respect to such policies are currently paid. The Company has not received notice
of cancellation or termination of any Insurance Policy, nor has it been denied
or had revoked or rescinded any policy of insurance, nor has it borrowed against
any Insurance Policy. Except as set forth on Schedule 2.28, to the knowledge of
the Company, there are no claims in the last five years for which an insurance
carrier has denied or threatened to deny coverage. The Company carries, or is
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covered by, insurance with companies that are financially sound and reputable in
such amounts with such deductibles and against such risks and losses as the
Company believes are reasonable for the business and assets of the Company.
Section 2.29. Books and Records. Except as set forth on
Schedule 2.29, the books of account, ledgers, order books, records and documents
of the Company reflect in all material respects, all material information
relating to the business of the Company, the nature, acquisition, maintenance,
location and collection of each of its material assets, and the nature of all
transactions giving rise to material obligations or accounts receivable of the
Company.
Section 2.30. Customers and Suppliers. Schedule 2.30 contains
true and correct information regarding the Company's customers and suppliers.
Except as set forth in Schedule 2.30, there exists no actual or, to the
knowledge of the Company, threatened termination, cancellation or material
limitation of, or any modification or change in, the business relationship of
the Company with any of the Company's ten largest customers or group of
customers or that are otherwise material to the operations of the Company, or
with any of the Company's ten largest suppliers or group of suppliers or that
are otherwise material to the operations of the Company, and no member of the
senior management team of the Company or Parent has received any report or other
information from any employee, sales representative or other person employed or
otherwise engaged by the Company regarding the existence of any present or
future condition or state of facts or circumstances involving customers,
suppliers or sales representatives (including the consummation of the
transactions contemplated in this Agreement) which would have a Material Adverse
Effect on the Company or could reasonably be expected to prevent the conduct of
the Company's business after the consummation of the transactions contemplated
in this Agreement on substantially the same terms as such business has been
conducted immediately prior to the date hereof.
ARTICLE III
THE INVESTOR'S AND SUB'S REPRESENTATIONS AND WARRANTIES
The Investor and Sub hereby represent and warrant to the
Company as follows:
Section 3.1. Organization and Authority. The Investor is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Investor and Sub have all requisite power and authority to enter into the
Operative Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Investor and Sub of the Operative
Agreements and the consummation by the Investor and Sub of the transactions
contemplated thereby has been duly authorized by all necessary action on the
part of the Investor and Sub. When duly executed and delivered by the Investor
and Sub, the Operative Agreements will constitute valid and binding obligations
of the Investor and Sub, enforceable against the Investor and Sub in accordance
with their terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.
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Section 3.2. Securities Act. The Investor (through Sub) is
acquiring the Shares for investment only for its own account and not with a view
to any public distribution of all or any portion thereof.
Section 3.3. Accredited Investor. The Investor is an
"accredited investor" as such term is defined in Rule 501(a) promulgated under
the Securities Act.
Section 3.4. Brokers. No agent, broker, investment banker,
Person or firm acting on behalf of the Investor or under the authority of the
Investor is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly from any of the parties hereto
in connection with any of the transactions contemplated hereby.
Section 3.5. Restricted Securities. The Investor and Sub
acknowledge that, because they have not been registered under the Securities Act
or any state securities laws, the Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available. The Investor and Sub are familiar with the
provisions of Rule 144 promulgated under the Securities Act and the resale
limitations imposed thereby and by the Securities Act. The Investor and Sub
understand that no public market now exists for the Shares and that it is
uncertain whether a public market will ever exist for the Shares.
ARTICLE IV
CONDITIONS OF THE INVESTOR'S AND SUB'S OBLIGATIONS
The obligation of the Investor and Sub to purchase the Initial
Shares at the Initial Closing is subject to the satisfaction (or waiver by the
Investor) as of the Initial Closing Date of the following conditions other than
the condition set forth in Section 4.7. The obligation of the Investor and Sub
to purchase any Additional Shares at any Additional Closing is subject to the
satisfaction (or waiver by the Investor) as of the applicable Additional Closing
Dates of the conditions set forth in Sections 4.4. 4.5, 4.7, and 4.8(d), (i) and
(j).
Section 4.1. Representations and Warranties; Covenants. The
representations and warranties of the Parent and the Company made in this
Agreement (i) shall be true and correct in all material respects, or to the
extent already qualified with respect to materiality shall be true and correct,
and (ii) taken as a whole, and without giving effect to any materiality
qualifiers therein, shall be true and correct in all material respects, in each
case, as of the date of this Agreement and as of the Closing Date with the same
effect as if made at and as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier time. The Parent
and the Company shall have performed each of the covenants and agreements of the
Parent or the Company contained in the Operative Agreements required to be
performed at or prior to the Closing.
Section 4.2. Consents and Approvals. The Company shall have
obtained or made all consents, approvals, orders, licenses, Permits and
authorizations of, and registrations, declarations and filings with, any
Governmental Authority or any other Person listed on Schedule 4.2.
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Section 4.3. Operative Agreements. The Parent, the Company,
the Investor, Sub and the Parent Stockholders, as the case may be, shall have
entered into each of the Operative Agreements, and each Operative Agreement
shall be in full force and effect.
Section 4.4. Injunctions, etc. No injunction or order of any
Governmental Authority shall be in effect as of the Closing, and no lawsuit,
claim, proceeding or investigation shall be pending or threatened by or before
any Governmental Authority as of the Closing, which would restrain or prohibit
the issuance and sale of the Shares or the consummation of any of the other
transactions contemplated by the Operative Agreements or invalidate or suspend
any provision of the Operative Agreements.
Section 4.5. Financial Statements. The Company shall have
filed its quarterly report on Form 10-Q for the three months ended June 30,
1999, or, in the case of any Additional Closings, any reports due to have been
filed on or prior to such Additional Closing Date, and in each case, the Company
Group shall not from the date hereof through such Initial Closing Date or
Additional Closing Date, as the case may be, have suffered a Material Adverse
Effect.
Section 4.6. Minority Drag Along Agreements. The Company shall
have requested that each of the shareholders of the Company who is not a party
to the Shareholders Agreement execute agreements providing the Company and SG
with "drag along" rights.
Section 4.7. Xxxx Xxxxx Xxxxxx. Any applicable waiting period
under the Xxxx Xxxxx Xxxxxx Anti-Trust Improvements Act of 1976, as amended
shall have expired or been terminated.
Section 4.8. Closing Documents. The Company shall have
delivered to the Investor the following:
(a) a certificate of the chief executive officer and president
of the Company, dated the Closing Date, to the effect that the
conditions specified in Section 4.1, 4.2 and 4.5 have been satisfied;
(b) incumbency certificates dated the Closing Date for the
officers of the Company executing any of the Operative Agreements and
any documents delivered in connection with the Operative Agreements and
the Closing;
(c) a certificate of the Secretary or an Assistant Secretary
of the Company, dated the Closing Date, certifying the attached copies
of the Certificate, Original Operating Agreement and resolutions
adopted by the Board of Directors of the Company authorizing the
consummation by the Company of the transactions contemplated hereby;
(d) a certificate of the Secretary of State of the State of
Delaware, dated a recent date, certifying that the Company is in good
standing in the State of Delaware and that all annual reports, if any,
have been filed as required and that all fees have been paid in
connection therewith;
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(e) an opinion dated the Closing Date of Xxxxx Xxxx Xxxxx
Constant & Xxxxxxxx, counsel to the Company, in the form attached
hereto as Exhibit D;
(f) a written certification from the Company regarding its
intended use of the proceeds of the Financing;
(g) evidence that the Indenture has been duly amended to
permit the Company to make distributions for the payment of Taxes in as
required by the Operating Agreement;
(h) evidence of the consent of the Company's senior lenders to
the consummation of the transactions contemplated hereby and by the
other Operative Agreements including consent of the Company's senior
lenders that the Purchase Price and any Additional Purchase Price may
be used to repay monies borrowed under the Existing Revolver;
(i) a certificate or certificates representing the number of
Shares being purchased at the applicable Closing; and
(j) such other certificates or documents as the Investor or
its counsel may reasonably request relating to the transactions
contemplated hereby.
Section 4.9. Proceedings. All proceedings taken by the Company
in connection with the transactions contemplated by the Operative Agreements and
all documents and papers relating to such transactions shall be reasonably
satisfactory in form and substance to the Investor and its counsel, and the
Investor shall have received all such certified or other copies of all such
documents as it shall have reasonably requested.
ARTICLE V
CONDITIONS OF COMPANY'S OBLIGATIONS
The obligation of the Company to issue and sell the Initial
Shares at the Initial Closing and any Additional Shares at any Additional
Closing to the Investor (through Sub) is subject to the satisfaction (or waiver
by the Company) as of the applicable Closing Date of the following conditions:
Section 5.1. Representations and Warranties. The
representations and warranties of the Investor and Sub made in this Agreement
shall be true and correct in all material respects (or as already qualified with
respect to materiality) as of the date of this Agreement and as of the Closing
Date with the same effect as if made at and as of the Closing Date, except to
the extent such representations and warranties expressly relate to an earlier
time.
Section 5.2. Operative Agreements. The Parent, the Company,
the Investor, Sub and the Parent Stockholders, as the case may be, shall have
entered into each of the Operative Agreements, and each Operative Agreement
shall be in full force and effect.
Section 5.3. Injunctions, etc. No injunction or order of any
Governmental Authority shall be in effect as of the Closing, and no lawsuit,
claim, proceeding or investigation shall be pending or threatened by or before
any Governmental Authority as of the Closing, which would restrain or
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prohibit the issuance and sale to the Investor (through Sub) of the Shares or
the consummation of any of the other transactions contemplated by the Operative
Agreements or invalidate or suspend any provision of the Operative Agreements.
Section 5.4. Closing Documents. The Investor shall have
delivered to the Company a certificate to the effect that the condition
specified in Section 5.1 has been satisfied or waived.
Section 5.5. Purchase Price. The Company shall have received
payment from the Investor for the Shares, net, in the case of the Initial
Closing, of the amount payable by the Company to the Investor in respect of the
Investor's expenses in accordance with Section 7.6 hereof.
ARTICLE VI
COVENANTS
The Company and Parent covenant and agree that, unless the Investor
otherwise consents in writing:
Section 6.1. Use of Proceeds. The proceeds of the sale of the
Shares shall be used to repay existing indebtedness and for working capital for
purposes of conducting the business of the Company; provided, however, that the
parties acknowledge and agree that the Company may draw on its available credit
at some later date to finance certain acquisitions (although no definitive
agreements for acquisitions have been entered into), but that such acquisitions
are not conditioned upon the consummation of the transactions contemplated
hereby and the consummation of the transactions contemplated hereby is not
conditioned on the actual or planned consummation of such acquisitions.
Section 6.2. SBA Forms. As promptly as practicable following
the Closing, the Company and Parent shall assist the SBIC Holder in preparing
SBA Form 480, Form 652 and Parts A and B of Form 1031 (or successor forms). The
information regarding the Company and its Affiliates furnished by the Company
and Parent to the SBIC Holder to be set forth in SBA Form 480, Form 652 and
Parts A and B of Form 1031 (or successor forms) will be accurate and complete.
Section 6.3. Conduct of Business. (a) From the date hereof
until the Closing Date, except as may be required to satisfy a condition to
Closing and except as otherwise consented to by the Investor in writing, the
Parent and the Company shall operate the business of the Company only in the
ordinary course of business consistent with past practice.
(b) Without limiting the generality of the foregoing, neither
the Company nor the Parent shall, without the prior written consent of the
Investor, directly or indirectly, cause any part of Section 2.16 not to be true
and correct at the Closing.
Section 6.4. Cooperation. The Company and the Parent shall
consult with the Investor, and provide the Investor with a reasonable
opportunity to review and comment, on the Indenture amendment and on the terms
of Internal Reorganization (as defined in Section 2.5 of the Disclosure
Schedule).
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ARTICLE VII
MISCELLANEOUS
Section 7.1. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party, as follows:
(a) if to the Investor or Sub,
SGC Partners II LLC
c/o SG Capital Partners LLC
15th Floor
1221 Avenue of the Americas
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to the Company,
Key Components, LLC
000 Xxxxx Xxxxxx Xxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopier: (000) 000-0000
All notices and other communications given to either party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or overnight courier
service or sent by telex, graphic scanning or other telegraphic
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communications equipment of the sender, in each case delivered or sent (properly
addressed) to such party as provided in this Section 7.1 or in accordance with
the latest unrevised direction from such party given in accordance with this
Section 7.1.
Section 7.2. Indemnification. (a) The Parent and the Company
agree to jointly and severally indemnify, defend and hold harmless the Investor,
Sub and the respective successors and assigns and each of their respective
officers, managers, members, partners, directors, Affiliates, employees,
attorneys, representatives and agents (all such Persons and entities being
collectively referred to as "Indemnified Parties") from and against any and all
Losses incurred or sustained by any Indemnified Party as a result of or arising
from or in connection with any inaccuracy or breach of any representation,
warranty or covenant made by the Company pursuant to this Agreement. Section 7.2
is the exclusive remedy of the Indemnified Parties for such Losses, except that
nothing contained in this Section 7.2 shall limit in any manner any remedy at
law or in equity to which an Indemnified Party shall be entitled against Parent
or the Company as a result of fraud.
(b) The Investor agrees to indemnify, defend and hold harmless
the Company and Parent and the respective successors and assigns and each of
their respective officers, managers, members, partners, directors, Affiliates,
employees, attorneys, representatives and agents (all such Persons and entities
being also collectively referred to as "Indemnified Parties") from and against
any and all Losses incurred or sustained by any Indemnified Party as a result of
or arising from or in connection with any breach by the Investor of its
obligation to make all or part the Additional Investment in accordance with the
terms of Section 1.1(b) of this Agreement.
(c) The indemnification obligations of the parties hereunder
shall be satisfied by the delivering to the Indemnified Party by wire transfer
of immediately available funds the amount of any indemnity payment due
hereunder.
(d) The obligations and liabilities of the parties hereunder
with respect to their indemnities pursuant to this Section 7.2 shall be subject
to the following terms and conditions:
(i) If any third party shall notify any 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 Section 7.2, 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.
(ii) Any Indemnifying Party will have the right to
assume the defense of the Third Party Claim with counsel of his or its choice
reasonably satisfactory to the Indemnified Party at any time within 15 days
after the Indemnified Party has given notice of the Third Party Claim; provided,
however, that the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has assumed
and is conducting the defense of the Third Party Claim in accordance with
Section 7.2(d)(ii) above, (A) the Indemnifying
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Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of money damages by one or more of
the Indemnifying Parties and does not impose an injunction or other equitable
relief upon the Indemnified Party and (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 prior written consent of the Indemnifying Party (not
to be withheld unreasonably).
(iv) In the event none of the Indemnifying Parties
assumes and conducts the defense of the Third Party Claim in accordance with
Section 7.2(d)(ii) above, 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 he or it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith) and (B) the
Indemnifying Parties will remain responsible for any Losses the Indemnified
Party may suffer resulting from, arising out of, relating to, in nature of, or
caused by the Third Party Claim to the fullest extent provided in this Section
7.2.
(e) The Company's and Parent's obligations under
Section 7.2(a) shall not exceed the sum of (x) the Purchase Price paid for the
Initial Shares and (y) the amount of any Additional Investment and the
Investor's indemnification obligations under Section 7.2(b) shall not exceed
$10,000,000.
(f) No party shall be entitled to indemnification
pursuant to this Section 7.2 with respect to any claim for indemnification
unless the aggregate amount of all Losses to the Indemnified Party under this
Agreement exceeds in the aggregate $100,000, whereupon the Indemnifying Party
shall be obligated to pay in full the aggregate amount of such Losses (including
such first $100,000).
Section 7.3. Survival of Agreement; Termination. All
covenants, agreements, representations and warranties made by Parent and the
Company herein and in the certificates or other documents prepared or delivered
in connection with the applicable Closing shall be considered to have been
relied upon by the Investor and shall survive the execution and delivery of this
Agreement or such certificate or other document, the sale and purchase of the
Shares and any disposition thereof, regardless of any investigation made by the
Investor or on its behalf and shall remain in full force as follows:
representations and warranties set forth in Sections 2.1 through 2.5 survive
without limitation, representations and warranties set forth in Section 2.8 and
2.19 shall survive until the expiration of the statutes of limitation relevant
to claims arising thereunder and all other representations and warranties
survive until the first anniversary of the date hereof.
Section 7.4. Assignment. This Agreement and the rights
hereunder shall not be assignable or transferable by either party (except by
operation of law in connection with a merger, consolidation or sale of
substantially all the assets of such party) without the prior written consent of
the other party hereto; provided that the Investor and Sub may assign, in their
sole discretion, any or all of their respective rights, interests and
obligations under this Agreement to any of its Affiliates or to any transferee
of Shares who is a member of the Investor's Shareholder Group (as defined in the
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Shareholders Agreement), other than a transferee who shall acquire such Shares
in a public offering pursuant to a registration statement declared effective
under the Securities Act or pursuant to Rule 144 thereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns.
Section 7.5. No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give to any
Person, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
Section 7.6. Expenses. (a) Each party shall bear its own costs
and expenses incurred in connection with this Agreement and the transactions
contemplated, except as otherwise provided in this Agreement; provided, however,
that the Company shall, at the Closing, reimburse the Investor for all of its
reasonable and documented fees and expenses, including the fees and expenses of
Xxxxxx, Xxxxx & Xxxxx LLP, special counsel to the Investor, and Deloitte &
Touche LLP, the Investor's accountants; provided that such fees and expenses
shall not exceed $350,000. In the event the transactions contemplated hereby are
consummated, the Company agrees to pay stamp and other transfer taxes which may
be payable in respect of the execution and delivery of this Agreement or the
issuance of the Shares. The Company further agrees that it shall indemnify the
Investor and Sub from and hold them harmless against any documentary taxes,
assessments or charges made by any Governmental Authority solely by reason of
the issuance of the Shares.
(b) The provisions of this Section 7.6 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement or the consummation of the transactions contemplated hereby, the
invalidity or unenforceability of any term or provision of this Agreement or the
other Operative Agreements or any investigation made by or on behalf of the
Investor. All amounts due under this Section 7.6 shall be payable on written
demand therefor. Nothing contained in this Section 7.6 shall limit in any manner
any remedy at law or in equity to which the Investor shall otherwise be
entitled.
Section 7.7. Public Announcements. The Company and the
Investor shall consult with each other before issuing any press release or
otherwise making any public statements (including as may be required by
applicable law) with respect to the transactions contemplated herein, and shall
not issue any such press release or make any such public statement that uses the
name of Investor (except as may be required by applicable law), or any of its
Affiliates without the prior written consent of the Investor, which shall not be
unreasonably withheld.
Section 7.8. Waivers; Amendment. (a) No failure or delay of
the Investor, Sub, the Parent or the Company in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Investor, Sub, the Parent and the Company hereunder are cumulative and are
not exclusive of any rights or remedies which the Investor, Sub, the Parent or
the Company would otherwise have. No waiver of any provision of this Agreement
or consent to any departure by the Company therefrom shall in any event be
effective unless the same shall be effected in accordance with Section 7.8(b),
and then such waiver or consent shall be effective
-24-
only in the specific instance and for the purpose for which given. No notice or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Company and the Investor.
Section 7.9. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) and the other Operative Agreements constitute the
entire agreement between the parties relative to the subject matter hereof. Any
previous agreement among the parties, including the term sheet and the letter of
intent, each dated May 28, 1999, between the Company and SG Capital Partners
LLC, with respect to the subject matter hereof is superseded by this Agreement.
Section 7.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
Section 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
Section 7.12. Headings, Definitions, Interpretations. (a)
Article and Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
(b) As used in this Agreement, the following terms shall have
the meanings specified below:
"Affiliate" means, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
Person specified.
A Person shall be deemed the "beneficial owner" of, and shall
be deemed to "beneficially own", any Securities (a) which such Person or any of
its Affiliates is deemed to "beneficially own" within the meaning of Rule 13d-3
under the Exchange Act or (b) which such Person or any of its Affiliates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of any right of conversion or exchange, warrant, option or
otherwise.
"Business Days" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
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"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Group" means the Company, the Parent and each of the
Subsidiaries of the Company as of the date hereof and any other Affiliated
entities created or acquired after the date hereof.
"Control" (including, with its correlative meanings,
"controlled by", "controlling" and "under common control with") means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public health
and safety and the protection of the environment.
"Equity-Linked Financing" means any financing which any Person
receives as consideration for its investment in any member of the Company Group
any security that consists of, is convertible into or exchangeable or
exercisable for, or is based on the value of, any equity security or equity
interest in any member of the Company Group, including, without limitation,
common stock, preferred stock, stock options, stock appreciation rights and
performance units; it being understood that such term does not include a
transaction approved in accordance with Section 5(c) of the Shareholders
Agreement in which any such equity security or equity interest is issued in
consideration for the acquisition of a trade or business or an interest in a
trade or business.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Facilities" means any facilities or equipment used by the
Parent, the Company or any Company Subsidiary in any location, including HVAC
systems, mechanical systems, elevators, security systems, fire suppression
systems, telecommunications systems, fax machines, copy machines, and equipment,
whether or not owned by the Parent, the Company, or any Company Subsidiary.
"Financing" means the purchase of the Shares by the SBIC
Holder hereunder.
"Governmental Authority" means any court, administrative
agency or commission or other governmental agency or instrumentality, domestic
or foreign, of competent jurisdiction.
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"Hazardous Materials" means (a) any "hazardous substance" as
defined by CERCLA; (b) any "hazardous waste" or "petroleum," as defined by the
Resource Conservation and Recovery Act, as amended; (c) any petroleum product;
(d) any pollutant or contaminant or hazardous, dangerous or toxic chemical,
material or substance within the meaning of any other Environmental Law, as
amended or hereafter amended; or (e) any radioactive material, including any
source, special nuclear or by-product material as defined at 42 U.S.C. ss. 2011
et seq., as amended or hereafter amended.
"Internal MIS Systems" means any computer software and systems
(including hardware, firmware, operating system software, utilities, and
applications software) used in the ordinary course of business by or on behalf
of the Parent, the Company or any Company Subsidiary, including the payroll,
accounting, billing/receivables, inventory, asset tracking, customer service,
human resources, and e-mail systems.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, charge, security interest, easement, covenant,
right of way, restriction, equity or encumbrance of any nature whatsoever in or
on such asset, (b) the interest of a vendor or a lessor under conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Losses" means any loss (including any diminution in value of
the Shares or other securities of the Company or its Affiliates hereafter
acquired by the Investor or Sub under this Agreement or the other Operative
Documents), judgments, claims, settlements, demand, action, cause of action,
assessment, damage, liability, cost or expense, including without limitation,
interest, penalties, fines, fees (including attorney's and other experts' fees
and disbursements), deficiencies, claims of damage, liens, Taxes, penalties
obligations and expenses.
Any reference to any event, change or effect being "material"
with respect to a Person means an event, change or effect which is or, insofar
as reasonably can be foreseen, in the future will be, material to the financial
condition, properties, businesses or operations of such Person taken as a whole.
"Material Adverse Effect" means any change in or effect on the
Parent, the Company or any Company Subsidiary or any of their businesses or
operations that is or could reasonably be expected to be materially adverse to
the business, operations, properties, financial condition or results of
operations of the Parent, the Company and the Company Subsidiaries taken as a
whole.
"Person" means any individual, firm, corporation, partnership,
trust, joint venture, Governmental Authority or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Products" means any products offered or furnished by the
Parent, the Company, or any Company Subsidiary or any of their predecessors in
interest, currently or at any time in the past, including without limitation
each item of componentry sold or leased by such entities, any system, equipment,
or products consisting of or containing one or more thereof, and any and all
customizations, modifications, and maintenance thereto.
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"Release" means a "release," as such term is defined in
CERCLA.
"SBA" means the United States Small Business Administration,
and any successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Company licensed by
an SBA under the SBIC Act.
"SBIC Act" means the Small Business Investment Act of 1958, as
amended.
"SBIC Holder" means the Investor and Sub.
"SBIC Regulations" means the SBIC Act and the regulations
issued by the SBA thereunder, codified at Title 13 of the Code of Federal
Regulations ("13 CFR"), Parts 107 and 121.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Subsidiary" of any Person means a corporation, company or
other entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or securities (as
may be the case in a partnership, joint venture or unincorporated association),
but more than 50% of whose ownership interest representing the right to make
decisions for such other entity is, now or hereafter owned or controlled,
directly or indirectly, by such Person, but such corporation, company or other
entity shall be deemed to be a Subsidiary only so long as such ownership or
control exists.
"Tax" or "Taxes" means all (i) Federal, state, local and
foreign taxes, assessments and other governmental charges, including, without
limitation, (a) taxes based upon or measured by gross receipts, income, profits,
sales, use or occupation, and (b) value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, or property taxes, together with (ii)
(a) all interest, penalties and additions imposed with respect to such amounts
and (b) any obligations under any agreements or arrangements with any other
Person with respect to such amounts.
"Year 2000 Compliant" means that (1) the items at issue
accurately process, provide and/or receive all date/time data (including
calculating, comparing, sequencing, processing and outputting) within, from,
into, and between centuries (including the twentieth and twenty-first centuries
and the years 1999 and 2000), including leap year calculations, and (2) neither
the performance nor the functionality nor the Parent's, the Company's or any
Subsidiary's provision of the products, services, and other item(s) at issue
will be affected by any dates/times prior to, on, after, or spanning January 1,
2000.
Terms Generally. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with generally
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accepted accounting principles, as in effect from time to time. The terms and
conditions of this Agreement shall be deemed to apply to the Parent and any
Company Subsidiary as though such entity were the Company, except where such
application would be manifestly inappropriate.
(c) Representations and warranties or other statements to the
Company's knowledge shall be deemed to be to the knowledge of Xxxx Xxxxxx,
Xxxxxx Xxx and Xxxx Xxxxxxxxxx after due inquiry into the subject matter of such
representation, warranty or other statement.
Section 7.13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
Section 7.14. CONSENT TO JURISDICTION . EACH OF THE PARTIES
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF (i) THE SUPREME COURT OF
THE STATE OF NEW YORK, NEW YORK COUNTY AND (ii) THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY. EACH PARTY FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE
OR DOCUMENTS BY UNITED STATES REGISTERED MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS
FOR NOTICES SET FORTH IN SECTION 7.14 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR
ANY ACTION, SUIT OR PROCEEDING IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH
IT HAS SUBMITTED TO JURISDICTION IN THIS SECTION 7.14. EACH PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN (a) THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK
COUNTY AND (b) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 7.15. Restrictive Legends. The certificates evidencing
the Shares to the extent applicable will bear legends reading substantially as
follows (unless and until such legend is no longer required):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS, AMENDED, AND MAY NOT
BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR IN A
TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THAT ACT
PROMULGATED AND THE RULES AND REGULATIONS THEREUNDER.
-29-
IN WITNESS WHEREOF, the parties have duly executed this Share
Purchase Agreement as of the day and year first above written.
KEY COMPONENTS, LLC
By:
Name: /s/ Xxxx Xxxxxx
--------------------------------
Title:
KEY COMPONENTS, INC.
By: /s/ Xxxx Xxxxxx
--------------------------------
Name:
Title:
SGC PARTNERS II LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title:
KEYHOLD, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: President
