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STOCK PURCHASE AGREEMENT
EFFECTIVE JANUARY 1, 1998
BETWEEN
Q.E.P. HOLDING B.V.
AND
XXXXXXX BEHEER B.V.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") effective January 1,
1998, is between Q.E.P. HOLDING B.V. (the "Company") and XXXXXXX BEHEER B.V.
("Xxxxxxx").
WHEREAS, Xxxxxxx is engaged, through Xxxxxxx Xxxxxxx B.V. and its
subsidiaries (the "Holland Companies"), in the business of manufacturing and
distributing flooring tools and related products under the Xxxxxxx trade name in
select European countries (the "Holland Business"); and
WHEREAS, Xxxxxxx is the owner of 1,000 ordinary shares (the "Shares")
of Xxxxxxx Holland B.V. ("Holland"), which Shares constitute all of the
outstanding capital stock of Holland; and
WHEREAS, Xxxxxxx desires to sell, transfer and deliver to the Company,
and the Company desires to purchase and accept from Xxxxxxx, all of the Shares
on the terms and subject to the conditions set forth herein.
NOW THEREFORE in consideration of the premises and the representations,
warranted, covenants and agreements herein contained and intended to be legally
bound hereby, the Company and Xxxxxxx hereby agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.1. SPECIFIC DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meaning set forth below:
"Affiliate" shall mean with respect to any specified Person,
any other Person directly or indirectly controlling, controlled by or
under common control with such specified Person.
"Agreed Rate" shall mean the rate offered by ABN AMRO Bank
N.V. in the Netherlands on thirty (30) day dollar deposits at the
Closing Date and thereafter at thirty (30) day intervals.
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"Agreement" shall mean this Stock Purchase Agreement, together
with all exhibits and schedules hereto, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Applicable Laws" shall mean with respect to any Person, all
statutes, laws, ordinances, rules, orders and regulations of any
Governmental Authority applicable to such Person and its business,
properties and assets.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which banks located in New York City, New York and in
the Netherlands are authorized or required by law to close.
"Capital Stock" shall mean common stock, ordinary shares,
preferred stock, partnership interests, or other ownership interests
entitling the holder thereof to vote with respect to matters involving
the issuer thereof.
"Closing" shall mean the closing of the transactions
contemplated by this Agreement.
"Confidentiality Agreement" shall mean, collectively, (i) the
agreement, dated December 4, 1997, between the Company and Xxxxxxx, and
(ii) the letter agreement dated November 25, 1997, between the Company
and Holland.
"Employee Arrangements" shall mean all employment and
consulting agreements, and all bonus and other incentive compensation,
deferred compensation, disability, severance, stock award, stock
option, stock purchase, collective bargaining or workers' compensation
agreements, plans, programs, policies and arrangements with respect to
the employment or termination of employment of any employee, officer,
director or other Person who is or was employed by any of the Holland
Companies or primarily in the Holland Business.
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"Employee Benefit Plans" shall mean all "employee benefit
plans" which Holland or the Holland Companies maintain and in which any
employee or former employee employed by the Holland Companies or
primarily in the Holland Business participates.
"Encumbrances" shall mean any and all mortgages, security
interests, liens, claims, pledges, restrictions, leases, title
exceptions, rights of others, charges or other encumbrances.
"Environmental Law" shall mean any law, statute, ordinance,
rule, regulation, order, judgment or decree as in effect as of the date
of this Agreement relating to (i) the protection of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface or subsurface land) or (ii)
the exposure of Persons (other than persons employed by the Holland
Business or the Holland Companies) to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labelling,
protection, release or disposal of, Hazardous Substances, but excluding
any such law, statute, ordinance, rule, regulation, order, judgment or
decree, including common law, (x) governing protection of worker health
and safety or human health (other than exposure of Persons other than
Persons employed by the Holland Business or the Holland Companies to
Hazardous Substances), or (y) establishing the basis for a claim for
product liability.
"Equity" shall mean stockholders' equity of the Holland
Companies calculated in accordance with GAAP.
"Financial Statements" shall mean the audited financial
statements of the Holland Companies, prepared on a consolidated basis,
for the year ended December 31, 1996.
"GAAP" shall mean generally accepted accounting principles in
effect in the Netherlands.
"Governmental Authority" shall mean any foreign, federal,
state or local government, court, agency or commission or other
governmental or regulatory body or authority.
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"Guaranteed Equity" shall mean Equity as at December 31, 1997,
of not less than $900,000 at an exchange rate of NLG 2 (two Netherlands
guilders) = $1, calculated in accordance with GAAP applied on a
consistent basis with the Financial Statements.
"Holland Business" shall have the meaning set forth in the
recitals to this Agreement.
"Holland Companies" shall mean Holland and all of its direct
and indirect Subsidiaries.
"Knowledge" of Xxxxxxx or any Holland Company or any similar
phrase means the actual knowledge of those management employees of
Xxxxxxx or the Holland Companies identified in Section 1.1(a) of the
Xxxxxxx Disclosure Schedule, after reasonable inquiry.
"Legal Proceedings" shall mean any judicial, administrative or
arbitral actions, claims, suits, proceedings (public or private),
investigations or governmental proceedings.
"Material Adverse Effect" shall mean, with respect to any
Person, any change or effect that is materially adverse to the business
of such Person and its Subsidiaries taken as a whole; provided,
however, that Material Adverse Effect shall exclude any change or
effect due to (i) general economic or industry-wide conditions,
including, without limitation, devaluation, revaluation or decline in
value of any foreign currency against the U.S. dollar, (ii) any
continuation of an adverse trend disclosed to the Company on or prior
to the date hereof, and (iii) any condition described in the Xxxxxxx
Disclosure Schedule, following its acceptance by the Company.
"Person" or "person" shall mean and includes any individual
partnership, joint venture, corporation, association, joint stock
company, trust, unincorporated organization or similar entity.
"Xxxxxxx" shall have the meaning set forth in the recitals to
this Agreement.
"Shares" shall have the meaning set forth in the recitals to
this Agreement.
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"Subsidiary" shall mean, with respect to any Person, (i) each
corporation, partnership, joint venture or other legal entity of which
such Person owns, either directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or similar
governing body of such corporation, partnership, joint venture or other
legal entity and (ii) each partnership in which such Person or another
Subsidiary of such Person is the general partner or otherwise controls
such partnership.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all net
income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes,
customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax
or additional amounts imposed by any taxing authority and shall include
any transferee liability in respect of Taxes.
"Tax Returns" shall mean all reports, returns, declaration
forms and statements filed or required to be filed with respect to
Taxes.
SECTION 1.2. TERMS DEFINED ELSEWHERE IN THE AGREEMENT. For purposes of
this Agreement, the following terms have the meanings set forth in the sections
indicated:
TERM SECTION
---- -------
Agent......................................................... 2.2
Asserted Liability............................................ 5.5
Claim Notice.................................................. 5.5
Closing Date.................................................. 2.3
Closing Statement............................................. 2.6(a)
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TERM SECTION
---- -------
Company Disclosure Schedule................................... 4.3
Company Indemnified Parties................................... 5.5
CPA Firm...................................................... 2.6(b)
Environmental Claim........................................... 3.12(a)
Final Amount.................................................. 2.6(c)
Holland Companies Employees................................... 3.11(d)
Holland Employee Arrangements................................. 3.11(b)
Holland Employee Benefit Plans................................ 3.11(a)
Holland Intellectual Property Rights.......................... 3.14(a)
Holland Permits............................................... 3.10
Holland Securities............................................ 3.2(a)
License Agreement............................................. 3.14(c)
Losses........................................................ 5.5
Notice Period................................................. 5.5
Objection..................................................... 2.6(b)
Purchase Price................................................ 2.2
Xxxxxxx Disclosure Schedule................................... 3.1(a)
Xxxxxxx Indemnified Parties................................... 5.5
Supervisory Board............................................. 3.3
SECTION 1.3. OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
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(d) As used in this Agreement, accounting terms which are
specifically defined under GAAP and are not otherwise defined herein
shall have the respective meanings given to them under GAAP.
SECTION 1.4. REFERENCES TO TIME. All references in this
Agreement to times of the day shall be to Netherlands time.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
SECTION 2.1. PURCHASE AND SALE OF THE SHARES. On the terms and subject
to the conditions set forth herein, Xxxxxxx hereby sells and agrees to transfer
and deliver to the Company, and the Company hereby purchases and agrees to
accept transfer and delivery from Xxxxxxx of, the Shares.
SECTION 2.2. PURCHASE PRICE. Upon the execution of this Agreement, the
Company shall pay to Xxxxx/van Os, in its capacity as notary and disbursement
agent (the "Agent"), and shall instruct the Agent to pay Xxxxxxx by certified
check or wire transfer of immediately available funds to bank account no.
00.00.00.000 held in the name of Xxxxxxx with ABN AMRO Bank N.V. at Sliedrecht,
the Netherlands (Swift Code: ABNANL 2 R), the sum of $900,000 in respect of the
Guaranteed Equity and the sum of $375,000 in respect of outstanding loans
extended by Xxxxxxx to Holland (such sums, collectively, the "Purchase Price").
SECTION 2.3. CLOSING. The Closing shall take place at the offices of
Xxxxx/van Os Notarissen, Xxxxxxxxxxxxxx 0, Xxxxxxxxx, on January 20, 1998, or
such other place or date as the parties hereto may agree, but no later than
January 31, 1998. The date on which the Closing occurs is called the "Closing
Date".
SECTION 2.4. DELIVERIES BY THE PARTIES. At the Closing, the parties
shall deliver to each other the certificates and other documents to be delivered
pursuant to Sections 6.2 and 6.3, as the case may be, and shall execute the
notarial deed of transfer of the Shares in the agreed form.
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SECTION 2.5. EFFECTIVE DATE OF PURCHASE. The parties agree that the
purchase of Holland shall be effective January 1, 1998. Therefore, the operation
of the Holland Business shall be deemed to have been for the account and risk of
the Company with effect from January 1, 1998.
SECTION 2.6. ADJUSTMENT TO PURCHASE PRICE.
(a) Within 90 Business Days following the Closing Date, the
Company shall, at its expense, prepare, or cause to be prepared, and
deliver to Xxxxxxx a statement (the "Closing Statement"), which shall
set forth in reasonable detail the amount of Equity as at December 31,
1997. The Closing Statement shall be prepared in accordance with GAAP
applied on a consistent basis with the Financial Statements. In the
event the Company elects to omit the preparation of the Closing
Statement and its submission to Xxxxxxx, such omission shall be deemed
conclusive evidence that the Company accepts the Equity being equal to
the Guaranteed Equity and the remainder of this Section 2.6 shall be
void and of no effect.
(b) Xxxxxxx shall have 20 Business Days to review the Closing
Statement and to inform the Company in writing of its disagreement (the
"Objection") with the Closing Statement, if any. If the Company does
not receive Xxxxxxx' Objection within such 20 Business Day period, the
amount of Equity set forth in the Closing Statement delivered pursuant
to Section 2.6(a) shall be deemed to have been accepted by Xxxxxxx and
shall become binding upon Xxxxxxx. If Xxxxxxx does deliver Xxxxxxx'
Objection to the Company, the Company shall then have 20 Business Days
to review and respond to Xxxxxxx' Objection. If the Company and Xxxxxxx
are unable to resolve all of their disagreements with respect to the
determination of Equity as at December 31, 1997, within ten Business
Days following the completion of the Company's review of Xxxxxxx'
Objection, they may refer, at the option of either party, their
differences to an internationally recognized firm of independent
registered accountants in the Netherlands selected jointly by the
Company and Xxxxxxx, who
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shall, acting as experts and not as arbitrators, determine only with
respect to the differences so submitted, whether and to what extent, if
any, the amount of Equity set forth in the Closing Statement requires
adjustment. If Xxxxxxx and the Company are unable to so select the
independent registered accountants within five Business Days of either
party requesting such referral, either the Company or Xxxxxxx may
thereafter request that the Chairman of the Netherlands Institute of
Registered Accounts make such selection (the firm selected by agreement
or by such Chairman is referred to as the "CPA Firm"). Xxxxxxx and the
Company shall direct the CPA Firm to use its best efforts to render its
determination within 30 Business Days. The CPA Firm's determination
shall be conclusive and binding upon Xxxxxxx and the Company. The fees
and disbursements of the CPA Firm shall be shared equally by Xxxxxxx
and the Company. Xxxxxxx and the Company shall make readily available
to the CPA Firm all relevant books and records relating to the Closing
Statement and all other items reasonably requested by the CPA Firm.
(c) If the sum of the amount of Equity as at December 31,
1997, determined in accordance with the procedures set forth in this
Section 2.6 (the "Final Amount") and converted from Netherlands
guilders into dollars at the same exchange rate as the exchange rate
applicable to the Guaranteed Equity, is less than the amount of the
Guaranteed Equity, Xxxxxxx shall, within ten Business Days following
the determination of the Final Amount, pay to the Company a dollar
amount in cash equal to such difference, with a maximum of $900,000.
(d) The amount payable by Xxxxxxx to the Company under this
Section 2.6 shall bear interest at the Agreed Rate as in effect from
time to time, computed from the date of execution of this Agreement to
the date of payment of such amount and shall be wire transferred to an
account designated by the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to the Company as of the date of
this Agreement and the Closing Date as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Section 3.1 of the Disclosure Schedule delivered by
Xxxxxxx to the Company in accordance with Section 5.1 (the "Xxxxxxx
Disclosure Schedule") identifies each subsidiary of Holland as of the
date hereof and its respective country or jurisdiction of incorporation
or organization, as the case may be. Except as set forth in Section 3.1
of the Xxxxxxx Disclosure Schedule, Holland does not have any interest
in any corporation, partnership, limited liability company, business
trust or other business entity. Each of the Holland Companies is duly
organized and validly existing under the laws of the jurisdiction of
its incorporation or organization and has all requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted. Xxxxxxx will provide as an Annex to
Section 3.1 of the Xxxxxxx Disclosure Schedule an accurate and complete
copy of the articles of association ("STATUTEN") of Holland, as
currently in effect.
(b) Each of the Holland Companies is duly qualified or
licensed to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed
would not have a Material Adverse Effect on the Holland Companies.
SECTION 3.2. CAPITALIZATION OF HOLLAND AND ITS SUBSIDIARIES.
(a) The authorized Capital Stock of Holland consists of 5,000
ordinary shares, of which, as of the date of this Agreement, 1,000
Shares were issued and outstanding. All of
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the outstanding Shares have been validly issued and are fully paid and
free of preemptive rights except as set forth in the articles of
association of Holland. Except as disclosed in Section 3.2 of the
Xxxxxxx Disclosure Schedule, between January 1, 1997 and the date
hereof, no shares of Holland's Capital Stock have been issued. Except
as set forth above, as of the date hereof and as of the Closing Date,
there are outstanding (i) no shares of Capital Stock or other voting
securities of Holland, (ii) no securities of the Holland Companies
convertible into or exchangeable for shares of Capital Stock or voting
securities of Holland, (iii) no options or other rights to acquire from
the Holland Companies, and no obligations of the Holland Companies to
issue, any Capital Stock, voting securities or securities convertible
into or exchangeable for Capital Stock or voting securities of Holland
and (iv) no equity equivalent interests or rights to acquire equity
equivalent interests in the ownership or earnings of the Holland
Companies or other similar rights (collectively "Holland Securities").
As of the date hereof, there are no outstanding obligations of the
Holland Companies to repurchase, redeem or otherwise acquire any
Holland Securities. There are no stockholder agreements, voting trusts
or other agreements or understandings to which Holland is a party or by
which it is bound relating to the voting or registration of any shares
of Capital Stock of Holland.
(b) All of the outstanding Capital Stock of Holland's
subsidiaries is owned by Holland, directly or indirectly, free and
clear of any Encumbrances or any other limitation or restriction
(including any restriction on the right to vote or sell the same except
as may be provided as a matter of law or under the organizational
documents of Holland's subsidiaries). There are no securities of the
Holland Companies convertible into or exchangeable for, no options or
other rights to acquire from the Holland Companies and no other
contract, understanding, arrangement or obligation (whether or not
contingent)
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providing for, the issuance or sale, directly or indirectly, of any
Capital Stock or other ownership interests in or any other securities
of any subsidiary of Holland. There are no outstanding contractual
obligations of the Holland Companies to repurchase, redeem or otherwise
acquire any outstanding shares of Capital Stock or other ownership
interests in any subsidiary of Holland.
(c) All of the Shares are owned by Xxxxxxx and constitute all
of the outstanding Capital Stock of Holland. The Shares are owned by
Xxxxxxx, free and clear of any Encumbrances.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. Xxxxxxx and Holland
have all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the supervisory
board of Xxxxxxx (the "Supervisory Board") and have been approved by the works
council of Holland. No other corporate proceedings on the part of Xxxxxxx or
Holland are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Xxxxxxx and constitutes a valid, legal and binding
agreement of Xxxxxxx enforceable against Xxxxxxx in accordance with its terms.
SECTION 3.4. FINANCIAL STATEMENTS. None of Holland's Financial
Statements or schedules included or incorporated by reference therein, contained
when prepared or as of the date hereof any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference 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 of the Holland Companies fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Holland and its consolidated
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subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended, all in
accordance with Title 9, Book 2 of the Netherlands Civil Code (the "NCC").
SECTION 3.5. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Xxxxxxx or Holland to the Company will, at the time of
execution hereof and at the time the purchase of the Shares is closed, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
SECTION 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under
Netherlands or other Applicable Laws, including the filing and recordation of
the notarial deed of transfer of the Shares, no filing with or notice to and no
permit, authorization, consent or approval of any court or tribunal or
Governmental Authority is necessary for the execution and delivery by Xxxxxxx of
this Agreement or the consummation by Xxxxxxx or Holland of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on Holland. Neither the
execution, delivery and performance of this Agreement by Xxxxxxx nor the
consummation by Xxxxxxx of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Articles of Incorporation or similar governing documents of Xxxxxxx or the
Holland Companies, (ii) except as set forth in Section 3.6 of the Xxxxxxx
Disclosure Schedule, result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration of any Encumbrance
or the creation thereof) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to
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which Holland or any of its subsidiaries is a party or by which any of them or
any of their respective properties or assets may be bound or (iii) except as set
forth in Section 3.6 of the Xxxxxxx Disclosure Schedule, violate any order,
writ, injunction, decree or the Applicable Laws with respect to the Holland
Companies or any of their respective properties or assets except, in the case of
(ii) or (iii), for violations, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on Holland.
SECTION 3.7. NO DEFAULT.
(a) Except as set forth in Section 3.7(a) of the Xxxxxxx
Disclosure Schedule, none of the Holland Companies is in breach,
default or violation (and to the knowledge of Xxxxxxx or Holland no
event has occurred which with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition or
provision of (i) its Articles of Incorporation or similar governing
documents, (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which any of
the Holland Companies is now a party or by which any of them or any of
their respective properties or assets may be bound or (iii) any order,
writ, injunction, decree, law, statute, rule or regulation applicable
to the Holland Companies or any of their respective properties or
assets except, in the case of (ii) or (iii), for violations, breaches
or defaults that would not, individually or in the aggregate, have a
Material Adverse Effect on Holland.
(b) Section 3.7(b) of the Xxxxxxx Disclosure Schedule
identifies each contract, agreement, lease or license with a monetary
value of more than 100,000 Netherlands guilders which will remain in
effect or require payment or performance by Holland or the Holland
Companies from and after the Closing Date, excluding inter-company
transactions conducted in the normal course of business.
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SECTION 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES. Except as
and to the extent disclosed in the Holland Financial Statements, or as otherwise
set forth in Section 3.8 of the Xxxxxxx Disclosure Schedule, none of the Holland
Companies has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet of Holland (including the notes thereto), other
than liabilities incurred in the ordinary course of business since December 31,
1996, which, individually or in the aggregate, would have a Material Adverse
Effect on Holland. Except as set forth in Section 3.8 of the Xxxxxxx Disclosure
Schedule, since December 31, 1996, there have been no events, changes or effects
with respect to any of the Holland Companies having or which reasonably could be
expected, individually or in the aggregate, to have a Material Adverse Effect on
Holland.
SECTION 3.9. LITIGATION. Except as set forth in Section 3.9 of the
Xxxxxxx Disclosure Schedule, there are no Legal Proceedings pending or, to the
Knowledge of Xxxxxxx or Holland, threatened against any of the Holland Companies
or any of their respective properties or assets before any Governmental
Authority which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect on Holland or could reasonably be expected to
prevent or delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in Section 3.9 of the Xxxxxxx Disclosure
Schedule, none of the Holland Companies is subject to any outstanding order,
writ, injunction or decree which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Holland or could
reasonably be expected to prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 3.10. COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Section 3.10 of the Xxxxxxx Disclosure Schedule, the Holland Companies hold all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities necessary for the lawful conduct of their respective
businesses (the "Holland Permits") except for failures to hold such permits,
licenses,
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variances, exemptions, orders and approvals which, individually or in the
aggregate, would not have a Material Adverse Effect on Holland. The Holland
Companies are in compliance with the terms of the Holland Permits except where
the failure so to comply would not have a Material Adverse Effect on Holland.
Except as set forth in Section 3.10 of the Xxxxxxx Disclosure Schedule, the
business of the Holland Companies is not being conducted in violation of all
Applicable Laws of the country of incorporation or organization of each Holland
Company or any foreign country or any political subdivision thereof or of any
Governmental Authority, except (i) that no representation or warranty is made in
this Section 3.10 with respect to Environmental Law and (ii) for violations or
possible violations of any laws, ordinances or regulations which do not, and
insofar as reasonably can be foreseen in the future, will not result in any
charges, assessments, levies, fines or other liabilities being imposed upon or
incurred by any of the Holland Companies that will equal 100,000 Netherlands
guilders for any single violation or 200,000 Netherlands guilders in the
aggregate. Except as set forth in Section 3.10 to the Xxxxxxx Disclosure
Schedule, no investigation or review by any Governmental Authority with respect
to any of the Holland Companies is pending or, to the Knowledge of Xxxxxxx or
Xxxxxxx, threatened nor, to the Knowledge of Xxxxxxx or Holland, has any
Governmental Authority indicated an intention to conduct the same, other than
such investigations or reviews as would not, individually or in the aggregate,
have a Material Adverse Effect on Holland.
SECTION 3.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) The Annex to Section 3.11 of the Xxxxxxx Disclosure
Schedule contains a complete list of all full-time and part-time
employees in the service of the Holland Companies, including the
managing directors ("Holland Companies Employees"), setting out the
date of entry into service, gross monthly salary, function, date of
birth, emoluments and bonuses. Except as indicated in Section 3.11 of
the Xxxxxxx Disclosure Schedule, there are no disputes outstanding with
any of the Holland Companies Employees in relation to their
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employment with the Holland Companies. Apart from the Holland Companies
Employees, no person can claim to have a full-time or part-time
employment agreement with the Holland Companies, whether oral or in
writing. Except as set forth in Section 3.11(a) of the Xxxxxxx
Disclosure Schedule, there are no employee bonus, stock, option, stock
purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar fringe or employee benefit plans, programs
or arrangements and any current or former employment or executive
compensation or severance agreements written or otherwise maintained or
contributed to for the benefit of or relating to any employee of
Holland and its subsidiaries, any trade or business (whether or not
incorporated) which is a member of a controlled group including Holland
or which is under common control with Holland, nor any plan with
respect to which any of the Holland Companies could incur liability if
such plan has been or were terminated (together the "Holland Employee
Benefit Plans"), excluding former agreements under which the Holland
Companies have no remaining obligations. No event has occurred and, to
the Knowledge of Xxxxxxx or Xxxxxxx, there currently exists no
condition or set of circumstances in connection with which any of the
Holland Companies could be subject to any liability under the terms of
any Holland Employee Benefit Plans, or any other applicable law, which
would have a Material Adverse Effect on Holland.
(b) Except as otherwise indicated in Section 3.11 of the
Xxxxxxx Disclosure Schedule, the pensions of Holland Companies
Employees are and can continue to be insured through AEGON
Levensverzekering N.V. The obligations of the Holland Companies
relating to this pension insurance have been fulfilled.
(c) There are no controversies pending or, to the Knowledge of
Xxxxxxx or Xxxxxxx, threatened between the Holland Companies and any of
the Holland Companies Employees which controversies have or may
reasonably be expected to have a Material
18
Adverse Effect on Holland. None of the Holland Companies is a party to
any collective bargaining agreement or other labor union contract
applicable to Holland Companies Employees except as disclosed in
Section 3.11(c) of the Xxxxxxx Disclosure Schedule nor does Xxxxxxx or
Holland know of any activities or proceedings of any labor union to
organize any Holland Companies Employees. Neither Xxxxxxx nor Xxxxxxx
has any Knowledge of any strikes, slowdowns, work stoppages, lockouts
or threats thereof by or with respect to any Holland Companies
Employees. For the purpose of this Agreement, "Holland Companies
Employees" shall mean all persons employed, whether full or part-time,
by any of the Holland Companies.
SECTION 3.12. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as set forth in Section 3.12 of the Xxxxxxx
Disclosure Schedule, (i) each of the Holland Companies is in material
compliance with each applicable Environmental Law except for
non-compliance that would not have a Material Adverse Effect on
Holland, which compliance includes, but is not limited to, the
possession by the Holland Companies of all Holland Permits and other
governmental authorizations required under applicable Environmental Law
and compliance with the terms and conditions thereof; (ii) none of the
Holland Companies has received written notice of or, to the Knowledge
of Xxxxxxx or Xxxxxxx, is the subject of any Legal Proceedings or
notice by any person or entity alleging liability under or
non-compliance with any Environmental Law (an "Environmental Claim")
that could reasonably be expected to have a Material Adverse Effect on
Holland; and (iii) to the Knowledge of Xxxxxxx and Xxxxxxx, there are
no circumstances that are reasonably likely to prevent or interfere
with such material compliance in the future.
(b) There are no Environmental Claims which could reasonably
be expected to have a Material Adverse Effect on Holland that are
pending or, to the Knowledge of Xxxxxxx
19
or Holland, threatened against any of the Holland Companies or, to the
Knowledge of Xxxxxxx or Xxxxxxx, against any person or entity whose
liability for any Environmental Claim any of the Holland Companies has
or may have retained or assumed either contractually or by operation of
law.
SECTION 3.13. TAXES.
(a) Except as set forth in Section 3.13(a) of the Xxxxxxx
Disclosure Schedule, the Holland Companies have accurately prepared and
timely filed all Tax Returns they are required to have filed. Such Tax
Returns are accurate and correct in all material respects and do not
contain a disclosure statement of any prior inaccuracy in any material
respect.
(b) The Holland Companies have paid or adequately provided for
all Taxes (whether or not shown on any Tax Return) they are required to
have paid or to pay.
(c) Except as set forth in Section 3.13(c) of the Xxxxxxx
Disclosure Schedule, no audit or material claim for assessment or
collection of Taxes is presently being conducted or asserted against
any of the Holland Companies and none of the Holland Companies is a
party to any Legal Proceeding by any governmental taxing authority nor
does either Xxxxxxx or Xxxxxxx have Knowledge of any such threatened
audit, action, proceeding or investigation.
(d) Except as set forth in Section 3.13(d) of the Xxxxxxx
Disclosure Schedule, none of the Holland Companies is a party to any
agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in connection with this
Agreement or any change of control of Holland or the Holland Companies,
in the payment or accrual of any Taxes.
20
SECTION 3.14. INTELLECTUAL PROPERTY.
(a) Each of the Holland Companies owns or possesses adequate
licenses or other valid rights to use all existing patents, trademarks,
trade names, service marks, copyrights, trade secrets and applications
therefor (the "Holland Intellectual Property Rights"), except where the
failure to own or possess valid rights to use such Holland Intellectual
Property Rights would not have a Material Adverse Effect on Holland.
Schedule 3.14(a) of the Xxxxxxx Disclosure Schedule identifies the
Holland Intellectual Property Rights.
(b) Except for any of the following which would not reasonably
be expected to have a Material Adverse Effect on Holland, (i) the
validity of the Holland Intellectual Property Rights and the title
thereto of Holland or any subsidiary, as the case may be, is not being
questioned in any litigation to which any of the Holland Companies is a
party, and (ii) except as set forth in Section 3.14(b) of the Xxxxxxx
Disclosure Schedule, the conduct of the business of the Holland
Companies as now conducted does not, to the Knowledge of Xxxxxxx or
Holland, infringe any valid patents, trademarks, trade names, service
marks, or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any
Holland Intellectual Property Rights.
(c) As set forth on Schedule 3.14(a) of the Xxxxxxx Disclosure
Schedule, there is currently in effect a License and Distribution
Agreement dated March 12, 1992, among Xxxxxxx Consolidated Industries,
Inc. and the Xxxxxxx Europe Group as defined therein (the "License
Agreement"). The parties acknowledge that the License Agreement is the
subject of a separate purchase agreement by and between the sole
stockholder of the Company and Xxxxxxx and that, accordingly, any
rights under the License Agreement shall not be transferred by this
Agreement to the Company. The Company hereby disclaims any rights in
and to the intellectual property covered under the License Agreement.
21
SECTION 3.15. CERTAIN BUSINESS PRACTICES. None of Xxxxxxx or the
Holland Companies has, or to the Knowledge of Xxxxxxx and Xxxxxxx, has any
member of the Supervisory Board, or the officers, agents or employees of Xxxxxxx
or the Holland Companies (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or (iii) made
any other unlawful payment.
SECTION 3.16. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Holland by Xxxxxxx or any of the Holland Companies.
SECTION 3.17. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for
representations and warranties contained in this Article III, neither Xxxxxxx
nor any of the Holland Companies makes any other express or implied
representation or warranty on behalf of Xxxxxxx or any of the Holland Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Xxxxxxx as follows:
SECTION 4.1. ORGANIZATION.
(a) The Company is duly organized and validly existing under
the laws of its jurisdiction of incorporation, and has all requisite
power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted.
(b) The Company is duly qualified or licensed to do business
in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions
22
where the failure to be so duly qualified or licensed would not have a
Material Adverse Effect on the Company.
SECTION 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the supervisory board of the
Company and by the sole stockholder of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a valid,
legal and binding agreement of the Company enforceable against it in accordance
with its terms.
SECTION 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Section 4.3 of the Disclosure Schedule delivered by the Company to Xxxxxxx in
accordance with Section 5.1 (the "Company Disclosure Schedule"), no filing with
or notice to, and no permit, authorization, consent or approval of any
Governmental Authority is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on the Company. Neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Articles of Incorporation or bylaws (or similar governing documents) of the
Company, (ii) except as disclosed in Section 4.3 of the Company Disclosure
Schedule, result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or
23
acceleration of an Encumbrance) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company is a party or by which it or
its properties or assets may be bound, (iii) except as set forth in Schedule 4.3
of the Company Disclosure Schedule, violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to the Company or its properties or
assets except, in the case of (ii) or (iii), for violations, breaches or
defaults which would not have a Material Adverse Effect on the Company, or (iv)
materially impair or delay the ability of the Company to perform its obligations
under this Agreement or consummate the transactions contemplated hereby.
SECTION 4.4. NO DEFAULT. The Company is not in breach, default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a breach, default or violation) of any term, condition or
provision of (i) its Articles of Incorporation or bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company is now a party
or by which it or its properties or assets may be bound, (iii) any Applicable
Laws relating to the Company or its properties or assets except, in the case of
(ii) or (iii), for violations, breaches or defaults that would not have a
Material Adverse Effect on the Company, or (iv) materially impair or delay the
ability of the Company to perform its obligations under this Agreement or
consummate the transactions contemplated hereby.
SECTION 4.5. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 4.6. NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, the
Company has neither incurred any obligation or liability nor
24
engaged in any business or activity of any type or kind whatsoever or entered
into any agreement or arrangement with any person.
SECTION 4.7. PURCHASE FOR INVESTMENT. The Company is acquiring the
Shares for investment and has no intention to transfer, resell or distribute the
Shares within one year of the date of purchase.
SECTION 4.8. FINANCIAL CAPABILITY. The Company will have on or prior to
the Closing Date sufficient funds to purchase the Shares and consummate the
transactions contemplated by this Agreement.
SECTION 4.9. NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article IV, the Company makes
no other express or implied representation or warranty.
ARTICLE V
COVENANTS
SECTION 5.1. DISSOLUTION OF AND DISTRIBUTIONS FROM XXXXXXX. Xxxxxxx and
its stockholders will not undertake an actual, constructive or deemed
distribution (whether in cash, stock or property or any combination thereof) or
otherwise make payments to the Xxxxxxx stockholders in their capacity as such
until the later of completion of the procedure set forth in Section 2.6 or 110
days from the Closing Date. Thereafter, distributions by Xxxxxxx will be
permitted, provided that the net assets of Xxxxxxx do not fall below 10% of the
Purchase Price for a two-year period from the Closing Date. During such two-year
period, Xxxxxxx will not adopt or put into effect a plan of complete or partial
liquidation, dissolution or other reorganization which has the effect of
diminishing or decreasing the assets of Xxxxxxx available to satisfy any claims
by the Company related hereto; provided, however, that Xxxxxxx may undertake any
of the foregoing with the prior written consent of the Company and provided
that, if there is such a liquidation, dissolution or other reorganization,
25
the shareholders of Xxxxxxx execute an agreement in form acceptable to the
Company under which they will bear their proportionate responsibility for any
claims made as a result of violations of covenants under this Agreement and any
claims for Losses.
SECTION 5.2. COMFORT LETTER. Holland shall cause BDO CampsObers to
deliver a letter dated not more than ten (10) days after the Closing Date
addressed to Xxxxxxx and Xxxxxxx and their respective supervisory boards in form
and substance reasonably satisfactory to the Company and customary in scope and
substance for agreed-upon procedures letters delivered by independent registered
accountants.
SECTION 5.3. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take or cause to be taken all action and to do or
cause to be done all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperating in the preparation and filing of any documents required by any
Governmental Authority; (ii) obtaining consents of all third parties and
Governmental Authorities necessary, proper or advisable for the consummation of
the transactions contemplated by this Agreement; (iii) contesting any Legal
Proceeding relating hereto; and (iv) executing any additional instruments
necessary to consummate the transactions contemplated hereby. If at any time
after the Closing Date any further action is necessary to carry out the purposes
of this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 5.4. PUBLIC ANNOUNCEMENTS. Upon execution hereof and
immediately following the Closing, the parties may issue one or more press
releases or otherwise make public statements with respect to the transactions
contemplated by this Agreement. Each party shall furnish the other party a copy
of any press release issued.
26
SECTION 5.5. INDEMNIFICATION.
(a) Subject to the conditions set forth below, Xxxxxxx agrees
to indemnify and hold harmless the Company and its supervisory board
members, stockholders, officers, directors, partners, employees and
agents (the "Company Indemnified Parties") against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 5.5, but not be limited to, attorneys'
fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) including, but not limited to,
deficiencies, Taxes, interest, penalties, consequential damages,
exemplary, special and punitive damages and lost profits (collectively
"Losses") as and when incurred arising out of, based upon, or in
connection with (i) any untrue statement or alleged untrue statement,
or the omission thereof, by Xxxxxxx of a material fact contained in
this Agreement or the Xxxxxxx Disclosure Schedule, (ii) any breach of
any representation, warranty, covenant, or agreement of Xxxxxxx
contained in this Agreement, and (iii) subject to and in accordance
with Section 2.6 hereof, the amount of Equity as at December 31, 1997,
in the event such Equity is less than the amount of the Guaranteed
Equity.
Xxxxxxx shall not be liable to the Company Indemnified Parties
for any Losses as referred to above, unless the aggregate amount of the
Losses exceed an amount equal to 1% of the Purchase Price, as and if
adjusted pursuant to Section 2.6 hereof (the "Threshold"), and then
only up to an aggregate amount of such Losses equivalent to 10% of the
Purchase Price, as and if adjusted pursuant to Section 2.6 hereof (the
"Maximum Indemnification"), but excluding from such Maximum
Indemnification any claims related to or arising from Xxxxxxx S.A.R.L.,
a wholly-owned French subsidiary of Xxxxxxx Holland, which have been
disclosed to the Company in the Xxxxxxx Disclosure Schedule; provided,
however, that the Maximum Indemnification shall not apply to (x) Losses
for claims under Section 2.6 hereof, which shall
27
be subject to the maximum indemnification provided for in paragraph (c)
of Section 2.6, and (y) Losses for claims under Section 3.13 hereof
(Taxes), for which the obligation to indemnify shall be without
limitation.
(b) The Company agrees to indemnify and holds harmless Xxxxxxx
and the Supervisory Board, stockholders, officers, directors, partners,
employees and agents (the "Xxxxxxx Indemnified Parties") to the same
extent as the foregoing indemnity from Xxxxxxx to the Company in
Section 5.5(a), but only with respect to an untrue statement or alleged
untrue statement, or the omission thereof, by the Company in this
Agreement or the Company Disclosure Schedule or any breach of a
representation, warranty, covenant of the Company in this Agreement.
(c) Subject to Section 8.1, all claims for indemnification
under this Section 5.5 shall be asserted and resolved as follows:
(i) In the event that any claim or demand, or other
circumstance or state of facts which could give rise to any
claim or demand, for which an Indemnifying Party may be liable
to an Indemnified Party hereunder is asserted against or
sought to be collected by a third party (an "Asserted
Liability"), the Indemnified Party shall as soon as reasonably
possible notify the Indemnifying Party in writing of such
Asserted Liability, specifying the nature of such Asserted
Liability (the "Claim Notice"); provided, that no delay on the
part of the Indemnified Party in giving any such Claim Notice
shall relieve the Indemnifying Party of any indemnification
obligation hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such delay. The
Indemnifying Party shall have 60 Business Days (or less if the
nature of the Asserted Liability requires) from its receipt of
the Claim Notice (the "Notice Period") to notify the
Indemnified Party whether or not the Indemnifying Party
desires, at the Indemnifying Party's sole cost and expense and
by
28
counsel of its own choosing to defend against such Asserted
Liability; provided, that if, under applicable standards of
professional conduct a conflict on any significant issue
between the Indemnifying Party and any Indemnified Party
exists in respect of such Asserted Liability, then the
Indemnifying Party shall reimburse the Indemnified Party for
the reasonable fees and expenses of one additional counsel
(who shall be reasonably acceptable to the Indemnifying
Party). The Indemnifying Party shall not, without the prior
written consent of the Indemnified Party (which consent shall
not be unreasonably withheld), consent to any settlement
unless such settlement (i) includes a complete release of the
Indemnified Party and (ii) does not require the Indemnified
Party to make any payment or forego or taken any action.
Notwithstanding the foregoing, the Indemnified Party shall
have the right to control, pay or settle any Asserted
Liability which the Indemnifying Party shall have undertaken
to defend so long as the Indemnified Party shall also waive
any right to indemnification therefor by the Indemnifying
Party. If the Indemnifying Party undertakes to defend against
such Asserted Liability, the Indemnified Party shall cooperate
fully with the Indemnifying Party and its counsel in the
investigation, defense and settlement thereof, but the
Indemnifying Party shall control the investigation, defense
and settlement thereof. If the Indemnified Party desires to
participate in any such defense it may do so at its sole cost
and expense. If the Indemnifying Party elects not to defend
against such Asserted Liability, then the Indemnifying Party
shall have the right to participate in any such defense at its
sole cost and expense, but the Indemnified Party shall control
the investigation, defense and settlement thereof at the
reasonable cost and expense of the Indemnifying Party. The
Indemnifying Party shall not be liable for any settlement of
any Asserted Liability
29
effected without its prior written consent (which consent
shall not be unreasonably withheld).
(ii) In the event that an Indemnified Party should
have a claim against the Indemnifying Party hereunder which
does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to
such claim to the Indemnifying Party. The Indemnifying Party
shall have 60 Business Days from the date such Claim Notice is
delivered during which to notify the Indemnified Party in
writing of any good faith objections it has to be the
Indemnified Party's Claim Notice or claims for
indemnification, setting forth in reasonable detail each of
the Indemnifying Party's objections thereto. If the
Indemnifying Party does deliver such written notice of
objection within such 60 Business Day period, the Indemnifying
Party and the Indemnified Party shall attempt in good faith to
resolve any such dispute within 60 days of the delivery by the
Indemnifying Party of such written notice of objection.
(d) All amounts paid by the Company or Xxxxxxx, as the case
may be, under this Section 5.5 shall be treated as adjustments to the
Purchase Price for all Tax purposes.
(e) The amount of any Losses for which indemnification is
provided under this Section 5.5 shall be reduced by (x) any related Tax
benefits if and when actually realized or received (but only after
taking into account any Tax benefits (including, without limitation,
any net operating losses or other deductions and any carryovers or
carrybacks) to which the Indemnified Party would be entitled without
regard to such item), except to the extent such recovery has already
been taken into account in determining the amount of any such Losses,
and (y) any insurance recovery if and when actually realized or
received, in each case in respect of such Losses. Any such recovery
shall be promptly repaid by the Indemnified Party
30
to the Indemnifying Party following the time at which such recovery is
realized or received pursuant to the previous sentence, minus all
reasonably allocable costs, charges and expenses incurred by the
Indemnified Party in obtaining such recovery. Notwithstanding the
foregoing, if (x) the amount of Indemnifiable Losses for which the
Indemnifying Party is obligated to indemnify the Indemnified Party is
reduced by any Tax benefit or insurance recovery in accordance with the
provisions of the previous sentence, and (y) the Indemnified Party
subsequently is required to repay the amount of any such Tax benefit or
insurance recovery or such Tax benefit or insurance recovery is
disallowed, then the obligation of the Indemnifying Party to indemnify
with respect to such amounts shall be reinstated immediately and such
amounts shall be paid promptly to the Indemnified Party in accordance
with the provisions of this Agreement.
SECTION 5.6. TAX MATTERS.
Xxxxxxx shall include the Holland Companies or cause the
Holland Companies to be included in, and shall timely file or cause to
be timely filed, Tax Returns of Xxxxxxx or its Affiliates for the
taxable periods of the Holland Companies ending on or prior to December
31, 1997, and shall pay any and all Taxes due with respect to the
returns and shall be entitled to any and all Tax benefits, including
any tax loss carry-forward arising therefrom. The Tax Returns referred
to in this section shall be prepared in a manner consistent with the
prior practice of the Holland Companies unless otherwise required by a
change in applicable Tax laws, rules or regulations. Xxxxxxx shall
provide the Company with copies of such Tax Returns prior to the filing
thereof. The Company shall have the right to review and comment on such
Tax Returns for 15 days following receipt thereof. Nothing contained in
the foregoing shall in any manner terminate, limit or adversely affect
any right of Company
31
Indemnified Parties or Xxxxxxx Indemnified Parties to receive
indemnification pursuant to any provision in this Agreement.
In addition to the Tax Returns referred to above, Xxxxxxx
shall prepare all other Tax Returns of, or which include, any of the
Holland Companies for taxable periods that end on, end prior to or
which include December 31, 1997. To the extent any such Tax Returns are
required to be filed (taking into account any extensions) on or prior
to the Closing Date, Xxxxxxx shall timely file or shall cause the
Holland Companies to timely file such Tax Returns and shall pay any and
all Taxes due with respect to such Tax Returns.
For income tax purposes, the taxable year of the Holland
Companies shall end as of December 31, 1997. Neither Xxxxxxx nor the
Company shall take any position inconsistent with the preceding
sentence on any Tax Return.
The Company and Xxxxxxx shall retain in their possession, and
shall provide each other reasonable access to (including the right to
make copies of), such supporting books and records and any other
materials with respect to Tax matters. After expiration of the
applicable statute of limitations, the Company or Xxxxxxx, as the case
may be, may dispose of such material.
If any taxing authority asserts a claim, makes an assessment
or otherwise disputes or affects the Tax reporting position of the
Holland Companies for taxable periods ending on or prior to December
31, 1997, the Company shall, promptly upon receipt by the Company or
any of the Holland Companies of notice thereof, inform Xxxxxxx thereof.
Xxxxxxx shall be responsible for representing the interests of
the Holland Companies in any Tax audit or administrative or court
proceeding relating to taxable periods of the Holland Companies which
end on or before December 31, 1997 and to employ counsel of its choice
at its expense. The Company agrees that it will cooperate fully with
Xxxxxxx and
32
its counsel in the defense against or compromise of any claim in any
said proceeding. Xxxxxxx agrees that it will not settle any such
proceeding in a manner that has a Material Adverse Effect on the
Company for any taxable period that ends after December 31, 1997.
Xxxxxxx agrees that it will keep the Company fully informed as to the
status and resolution of any such proceeding.
The Company shall have the sole right to represent the
interests of the Holland Companies in any Tax audit or administrative
or court proceeding relating to taxable periods of the Holland
Companies which begin after December 31, 1997 and to employ counsel of
its choice at its expense. The Company agrees that it will not settle
any such proceeding in a manner which has a Material Adverse Effect on
Xxxxxxx for any taxable period that ends on, ends prior to or which
includes December 31, 1997.
Xxxxxxx shall not take any position on any Tax Return, Tax
refund claim or in any Tax audit or administrative or court proceeding
that is inconsistent with this Agreement, unless otherwise required by
applicable Tax laws, rules or regulations.
Xxxxxxx shall not file any amended Tax Return or file or apply
for any Tax refund with respect to any Holland Company without the
consent of the Company, which consent shall not be unreasonably
withheld, it being understood and agreed that the foregoing shall not
apply to the utilization of any loss arising on the sale of the Shares.
To the extent any determination of Tax liability of the Holland
Companies results in any refund of Taxes paid with respect to (i) any
period which ends on or before December 31, 1997 or (ii) any period
which includes December 31, 1997 but does not begin or end on that day,
any such refund shall belong to Xxxxxxx, provided that any Tax refund
described in clause (i) or (ii) of this section that is attributable to
a carryback with respect to income Taxes arising after December 31,
1997 shall belong to the Company to the extent that the Company is not
33
permitted under the applicable state or local law to elect to carry
forward the relevant tax attribute and provided further that in the
case of any Tax refund described in clause (ii) of this section the
portion of such Tax refund which shall belong to Xxxxxxx shall be that
portion that is attributable to the portion of that period which ends
on December 31, 1997 (determined on the basis of an interim closing of
the books as of December 31, 1997), and the Company shall promptly pay
any such refund that belongs to Xxxxxxx, and the interest actually
received thereon, to Xxxxxxx upon receipt thereof by the Company. Any
payments made under this section shall be net of any Taxes payable with
respect to such refund, credit or interest thereon (taking into account
any actual reduction in Tax liability realized upon the payment
pursuant to this section).
SECTION 5.7. COVENANTS OF HOLLAND COMPANIES. Except as otherwise
expressly provided in this Agreement, any and all covenants or agreements of the
Holland Companies set forth in this Agreement shall be the covenants or
agreements, as the case may be, of Xxxxxxx as the sole stockholder of the
Holland Companies and as a party to this Agreement.
SECTION 5.8. XXXXXXX DISCLOSURE SCHEDULE.
(a) Xxxxxxx shall have delivered the Xxxxxxx Disclosure
Schedule no later than 25 days after the scheduled Closing Date. The
matters set forth therein shall not, individually or in the aggregate,
have or describe a Material Adverse Effect with respect to the Holland
Companies, except to the extent such matters having or describing any
Material Adverse Effect have already been set forth in the most recent
draft of the Xxxxxxx Disclosure Schedule delivered by Xxxxxxx to the
Company prior to the Closing. Xxxxxxx represents that any matters added
to the Xxxxxxx Disclosure Schedule subsequent to the Closing shall not
have a Material Adverse Effect on the Holland Companies.
34
(b) If Xxxxxxx or Holland has updated, amended or supplemented
the Xxxxxxx Disclosure Schedule, the matters included in such updates,
amendments or supplements shall not, individually or in the aggregate,
have or describe a Material Adverse Effect with respect to the Holland
Companies. Such update, amendment or supplement shall not include any
information that constitutes a Material Adverse Effect with respect to
the Holland Companies.
(c) If any matters set forth in the Xxxxxxx Disclosure
Schedule pursuant to Section 5.8(a) or 5.8(b) have or describe a
Material Adverse Effect with respect to the Holland Companies, the
financial effect of such Material Adverse Effect shall be addressed by
the parties through the procedure described in Section 2.6 hereof.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CLOSE. The
respective obligations of each party hereto to close are subject to the
satisfaction at or prior to the Closing Date of the following: No statute,rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or enforced by any governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the transaction
described herein.
SECTION 6.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to close is subject to the satisfaction or waiver at
or prior to the Closing of the following conditions:
(a) Each of the representations of Xxxxxxx contained in this
Agreement or in any other document delivered pursuant hereto shall be
true and correct in all material respects at 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 specifically related to an earlier
date, in which case
35
such representations shall be true and correct as of such earlier date)
and, at the Closing, Xxxxxxx shall have delivered to the Company a
certificate to that effect;
(b) Each of the covenants and obligations of Xxxxxxx to be
performed at or before the Closing pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Closing and, at the Closing, Xxxxxxx shall have delivered to
the Company a certificate to that effect;
(c) The Company shall have received the opinion of Xxxxx
Dutilh as to the matters set forth in Exhibit A not later than three
business days from the date of execution hereof;
(d) Holland shall have obtained the consent or approval of
each person whose consent or approval shall be required in connection
with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of the Company,
individually or in the aggregate, have a Material Adverse Effect on the
Company; and
(e) There shall have been no events, changes or effects with
respect to the Holland Companies having or which could reasonably be
expected to have a Material Adverse Effect on Holland.
SECTION 6.3. CONDITIONS TO THE OBLIGATIONS OF XXXXXXX. The obligations
of Xxxxxxx to close are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions:
(a) Each of the representations of the Company contained in
this Agreement or in any other document delivered pursuant hereto shall
be true and correct in all material respects at 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 specifically related to an
earlier date,
36
in which case such representations shall be true and correct as of such
earlier date) and, at the Closing, the Company shall have delivered to
Xxxxxxx a certificate to that effect;
(b) Each of the covenants and obligations of the Company to be
performed at or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Closing Date and, at the Closing, the Company shall have
delivered to Xxxxxxx a certificate to that effect; and
(c) Xxxxxxx shall have received the opinion of legal counsel
to the Company as to the matters set forth in Exhibit B.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) By mutual written consent of Xxxxxxx and the Company;
(b) By either Xxxxxxx or the Company if (i) any court of
competent jurisdiction in the Netherlands or other Netherlands
Governmental Authority shall have issued a final order, decree or
ruling or taken any other final Legal Proceeding restraining, enjoining
or otherwise prohibiting the purchase of the Shares and such order,
decree, ruling or other action is or shall have become nonappealable or
(ii) the purchase of the Shares has not been consummated by January 31,
1998; provided that no party may terminate this Agreement pursuant to
this clause (ii) if such party's failure to fulfill any of its
obligations under this Agreement shall have been the reason that the
Closing shall not have occurred on or before said date;
37
(c) By the Company if
(i) There shall have been a breach of any
representation or warranty on the part of Xxxxxxx set forth in
this Agreement or if any representation or warranty of Xxxxxxx
shall have become untrue, and such breach shall not have been
cured or such representation or warranty shall not have been
made true within ten Business Days after written notice by
Company thereof, provided that the Company has not breached
any of its obligations hereunder; or
(ii) There shall have been a breach by Xxxxxxx of its
covenants or agreements hereunder having a Material Adverse
Effect on the Holland Companies or materially adversely
affecting (or materially delaying) the consummation of the
purchase of the Shares, and Xxxxxxx has not cured such breach
within ten Business Days after written notice by the Company
thereof, provided that the Company has not breached any of its
obligations hereunder.
(d) By Xxxxxxx if
(i) There shall have been a breach of any
representation or warranty on the part of the Company set
forth in this agreement or if any representation or warranty
of the Company shall have become untrue, and such breach shall
not have been cured or such representation or warranty shall
not have been made true within ten Business Days after written
notice by Xxxxxxx thereof, provided that Xxxxxxx has not
breached any of its obligations hereunder; or
(ii) There shall have been a breach by the Company of
its covenants or agreements hereunder having a Material
Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the
purchase of the Shares, and the Company has not cured such
breach within ten Business Days after
38
written notice by Xxxxxxx thereof, provided that Xxxxxxx has
not breached any of its obligations hereunder.
SECTION 7.2. EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its Affiliates, supervisory board members, directors,
officers or stockholders other than the provisions of this Section 7.2 and
Section 7.3 hereof. Nothing contained in this Section 7.2 shall relieve any
party from liability for any breach of this Agreement.
SECTION 7.3. FEES AND EXPENSES. Except as otherwise provided in this
Agreement, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
SECTION 7.4. AMENDMENT. This Agreement may be amended by action taken
by the Company and Xxxxxxx at any time prior to the Closing. This Agreement
(including the Xxxxxxx Disclosure Schedule and the Company Disclosure Schedule)
may be amended only by an instrument in writing signed on behalf of the parties
hereto.
SECTION 7.5. EXTENSION; WAIVER. At any time prior to the Closing,
Xxxxxxx on the one hand, and the Company, on the other, may (i) extend the time
for the performance of any of the obligations or other acts of the other party,
(ii) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document certificate or writing delivered
pursuant hereto or (iii) waive compliance by the other party with any of the
agreements or conditions contained herein. Any agreement on the part of any
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument, in writing, signed on behalf of such party. The failure of any
party hereto to assert any of its rights hereunder shall not constitute a waiver
of such rights.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Company and Xxxxxxx contained in this
Agreement and all claims and causes of action with respect thereto shall
terminate upon the second anniversary of the Closing Date. In the event notice
of a claim for indemnification under this Agreement is given within the
applicable survival period, the representations and warranties that are the
subject of such indemnification claim shall survive with respect to such claim
until such time as such claim is fully resolved. This Section 8.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Closing.
SECTION 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Xxxxxxx Disclosure Schedule and the Company Disclosure Schedule) (a)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings both written and oral between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
SECTION 8.3. VALIDITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 8.4. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
to each other party as follows:
40
If to the Company: Q.E.P. Holding B.V.
c/o Q.E.P. Company, Inc.
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
Attention: Xxxxx Xxxxx, President
Xxxx Xxxxxxxxx, Chief Financial Officer
With a copy to: Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000 (fax)
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Xxxxxxx or Holland: Xxxxxxx Xxxxxxx B.V.
X.X. Xxx 00, Xxxxxxxxxxx
0000 XX Xxxxxxxxxx
Xxx Xxxxxxxxxxx
(31) (0) 000-000000 (fax)
Attention: Xxxxxxx Xxxxxxxx
With a copy to: Xxxxx Dutilh
Xxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxx XX0X 00X
Xxxxxx Xxxxxxx
(44) (0) (000) 000 0000 (fax)
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 8.5. GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the Netherlands. Any
dispute arising in connection with this Agreement or any further agreement
resulting from or concluded in connection with this Agreement shall be brought
before a competent court in Rotterdam, the Netherlands.
SECTION 8.6. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
41
SECTION 8.7. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as provided in Section 8.2, nothing in this
Agreement express or implied is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 8.8. PERSONAL LIABILITY. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company, Xxxxxxx or Holland or any
supervisory board member, officer, director, employee, agent, representative or
investor of any party hereto.
SECTION 8.9. SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the Closing of the purchase of the Shares, will cause irreparable injury
to the other parties, for which damages, even if available, will not be an
adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder.
SECTION 8.10. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
SECTION 8.11. WAIVER OF RESCISSION. The parties hereto waive their
rights under Articles 6:265 ET SEQ. of the NCC to claim rescission
("ONTBINDING") of this Agreement except if such rescission is claimed pursuant
to Section 7.1 hereof.
42
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf to be effective as of the day and year first above
written.
Q.E.P. HOLDING B.V.
By:______________________________________
XXXXXXX BEHEER B.V.
By:______________________________________
43
EXHIBIT A
MATTERS TO BE COVERED BY OPINION
OF LEGAL COUNSEL TO XXXXXXX
(i) The execution and delivery of the Agreement by Xxxxxxx and the
consummation of the transactions contemplated thereby have been duly and validly
authorized by Xxxxxxx, the Supervisory Board and the holder of the outstanding
Shares and no other corporate proceedings on the part of Xxxxxxx are necessary
to authorize the Agreement or to consummate the transactions contemplated
thereby;
(ii) Xxxxxxx has all requisite corporate power and authority to execute
and deliver the Agreement and to consummate the transactions contemplated
thereby;
(iii) The Agreement has been duly and validly executed and delivered by
Xxxxxxx and constitutes a valid and binding agreement of Xxxxxxx, enforceable
against Xxxxxxx in accordance with its terms;
(iv) Based on the representations of the management board and the
assumption that the shareholder register has been complete since 1994 upon
payment of the Purchase Price, and upon execution and filing of the notarial
deed of transfer, the Shares will be owned by the Company, free and clear of any
encumbrances;
(v) The descriptions in the Agreement and the Xxxxxxx Disclosure
Schedule of legal and governmental proceedings, contracts and other documents
are accurate and fairly present the information required to be shown, and such
counsel does not know of any legal or governmental proceedings required to be
described in the Agreement or the Xxxxxxx Disclosure Schedule thereto which is
not described therein as required, or of any contracts or documents of a
character required to be described in the Agreement or the Xxxxxxx Disclosure
Schedule that are not described or included as required.
(vi) Neither the execution, delivery and performance of the Agreement
by Xxxxxxx nor the consummation by Xxxxxxx of the transactions contemplated
thereby will conflict with or result in any breach of any provision of the
respective articles of association or bylaws (or similar governing documents) of
Holland or any of its subsidiaries;
(vii) No filing with or notice to and no permit, authorization, consent
or approval of any Governmental Authority is necessary for the execution and
delivery by Xxxxxxx of this Agreement or the consummation by Xxxxxxx of the
transactions contemplated hereby, except (a) for such filings, notifications,
permits, authorizations, consent or approvals as have already been made, given
or obtained, or (b) where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not have
a Material Adverse Effect on Holland.
44
EXHIBIT B
MATTERS TO BE COVERED BY LEGAL COUNSEL
TO THE COMPANY
(i) The execution and delivery of the Agreement by the Company and the
consummation of the transactions contemplated thereby have been duly and validly
authorized by the Company and the Supervisory Board and no other corporate
proceedings on the part of Xxxxxxx are necessary to authorize the Agreement or
to consummate the transactions contemplated thereby;
(ii) The Company has all requisite corporate power and authority to
execute and deliver the Agreement and to consummate the transactions
contemplated thereby;
(iii) The Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms;
(iv) The descriptions in the Agreement and the Company Disclosure
Schedule of legal and governmental proceedings, contracts and other documents
are accurate and fairly present the information required to be shown, and such
counsel does not know of any legal or governmental proceedings required to be
described in the Agreement or the Company Disclosure Schedule thereto which is
not described therein as required, or of any contracts or documents of a
character required to be described in the Agreement or the Company Disclosure
Schedule that are not described or included as required.
45
