Exhibit 2.
All exhibits and schedules to this exhibit have been omitted
except for Exhibit 4.6 and Schedule 2.1(ii). Katy Industries, Inc.
will furnish supplementally a copy of any omitted schedule to the
Commission upon request.
STOCK PURCHASE AGREEMENT
AMONG
PENTLAND U.S.A. INC., MEDALLION SHOE CORPORATION
AND
KATY INDUSTRIES, INC.
LOWENTHAL, LANDAU, XXXXXXX & BRING, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
TABLE OF CONTENTS
Page
SALE AND PURCHASE OF THE COMMON STOCK. . . . . . . . . . . . . .1
1. Sale of Stock . . . . . . . . . . . . . . . . . . . . . . .1
PURCHASE PRICE, PAYMENT AND OTHER CLOSING MATTERS. . . . . . . .1
2.1 Calculation and Allocation of Purchase Price . . . . .1
2.2 Letters of Credit; Service Support . . . . . . . . . .6
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . .6
3.2 Obligations of the Sellers at Closing. . . . . . . . .7
3.3 Obligations of the Purchaser at Closing. . . . . . . .8
REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . . . . . . . .8
4. Representations and Warranties of Sellers . . . . . . . . .8
4.1 Organization . . . . . . . . . . . . . . . . . . . . .8
4.2 Authorization and Enforceability . . . . . . . . . . .8
4.3 Conflicts. . . . . . . . . . . . . . . . . . . . . . .8
4.4 Consents . . . . . . . . . . . . . . . . . . . . . . .9
4.5 Capital Stock of Xxxxx Industries; Xxxxx Industries. .9
4.6 Balance Sheets . . . . . . . . . . . . . . . . . . . 10
4.7 Tax Matters. . . . . . . . . . . . . . . . . . . . . 10
4.8 Compliance with Laws . . . . . . . . . . . . . . . . 13
4.9 Actions and Proceedings. . . . . . . . . . . . . . . 13
4.10 Contracts and Other Agreements . . . . . . . . . . . 14
4.11 Leases . . . . . . . . . . . . . . . . . . . . . . . 14
4.12 Licenses and Patents . . . . . . . . . . . . . . . . 15
4.13 Accounts Receivable. . . . . . . . . . . . . . . . . 15
4.14 Property . . . . . . . . . . . . . . . . . . . . . . 15
4.15 Tangible and Intangible Property . . . . . . . . . . 15
4.16 Accounts Payable . . . . . . . . . . . . . . . . . . 16
4.17 Liabilities. . . . . . . . . . . . . . . . . . . . . 16
4.18 Employee Benefit Plans . . . . . . . . . . . . . . . 16
4.19 Insurance. . . . . . . . . . . . . . . . . . . . . . 17
4.20 Officers, Directors and Employees. . . . . . . . . . 18
4.21 Operations of Xxxxx Industries . . . . . . . . . . . 18
4.22 Transactions with Affiliates . . . . . . . . . . . . 19
4.23 Environmental Protection . . . . . . . . . . . . . . 19
4.24 Disclosure . . . . . . . . . . . . . . . . . . . . . 21
4.25 Brokerage. . . . . . . . . . . . . . . . . . . . . . 21
4.26 Knowledge. . . . . . . . . . . . . . . . . . . . . . 21
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . . . . 22
5. Representations and Warranties of the Purchaser. . . 22
5.1 Organization . . . . . . . . . . . . . . . . . . . . 22
5.2 Authorization and Enforceability . . . . . . . . . . 22
5.3 Conflicts. . . . . . . . . . . . . . . . . . . . . . 22
5.4 Pending Litigation or Proceedings. . . . . . . . . . 22
5.5 Consents . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Brokerage. . . . . . . . . . . . . . . . . . . . . . 23
THE SELLERS' COVENANTS . . . . . . . . . . . . . . . . . . . . 23
6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Agreements Not to Interfere With Business. . . . . . 23
6.2 Notification of Certain Matters. . . . . . . . . . . 23
6.3 Xxxxx Worldwide Limited. . . . . . . . . . . . . . . 23
6.4 Further Assurances . . . . . . . . . . . . . . . . . 24
THE PURCHASER'S COVENANTS. . . . . . . . . . . . . . . . . . . 24
7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Notification of Certain Matters. . . . . . . . . . . 24
THE PURCHASER'S CONDITIONS TO CLOSING. . . . . . . . . . . . . 24
8. Conditions Precedent to the Obligations of the
Purchaser . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Bringdown of Representations and Warranties. . . . . 24
8.2 Performance and Compliance . . . . . . . . . . . . . 24
8.3 Proceedings and Instruments Satisfactory . . . . . . 25
8.4 Assets and Business Intact . . . . . . . . . . . . . 25
8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 25
8.6 HSR Approval . . . . . . . . . . . . . . . . . . . . 25
THE SELLERS' CONDITIONS TO CLOSING . . . . . . . . . . . . . . 25
9. Conditions Precedent to the Obligations of the Sellers. . 25
9.1 Bringdown of Representations and Warranties. . . . . 25
9.2 Opinion of Counsel . . . . . . . . . . . . . . . . . 26
9.3 HSR Approval . . . . . . . . . . . . . . . . . . . . 26
ACTIONS PENDING CLOSING. . . . . . . . . . . . . . . . . . . . 26
10. Efforts . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.1 Sales and other Taxes. . . . . . . . . . . . . . . . 26
11.2 Fees of KBNA . . . . . . . . . . . . . . . . . . . . 27
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 27
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 27
12.1 Indemnification. . . . . . . . . . . . . . . . . . . 27
12.2 Indemnification Procedure. . . . . . . . . . . . . . 28
POST-CLOSING AND OTHER MATTERS . . . . . . . . . . . . . . . . 29
13.1 Post-Closing Matters . . . . . . . . . . . . . . . . 29
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 30
14.1 Survival. . . . . . . . . . . . . . . . . . . . . . 30
14.2 Limitations on Warranties . . . . . . . . . . . . . 30
14.3 Schedules . . . . . . . . . . . . . . . . . . . . . 30
14.4 Notices . . . . . . . . . . . . . . . . . . . . . . 31
14.5 Successors and Assigns. . . . . . . . . . . . . . . 32
14.6 Governing Law . . . . . . . . . . . . . . . . . . . 32
14.7 Non-Binding Mediation . . . . . . . . . . . . . . . 33
14.8 Confidential Nature of Information. . . . . . . . . 33
14.9 Publicity . . . . . . . . . . . . . . . . . . . . . 33
14.10 Headings. . . . . . . . . . . . . . . . . . . . . . 33
14.11 Entire Agreement. . . . . . . . . . . . . . . . . . 34
14.12 Disclosure. . . . . . . . . . . . . . . . . . . . . 34
14.13 Amendment . . . . . . . . . . . . . . . . . . . . . 34
14.14 No Waiver . . . . . . . . . . . . . . . . . . . . . 34
14.15 Counterparts. . . . . . . . . . . . . . . . . . . . 34
14.16 Further Assurance . . . . . . . . . . . . . . . . . 34
14.17 U.S. Dollars. . . . . . . . . . . . . . . . . . . . 34
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("the Agreement") dated December 2,
1996 by and between Pentland U.S.A. Inc., a Delaware corporation
("PUSA"), Medallion Shoe Corporation, a Delaware corporation
("Medallion", and together with PUSA, "Sellers"), and Katy
Industries, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, PUSA owns 72 shares of common stock, no par value,
(the "Common Stock") of Xxxxx Industries, Inc., a Delaware
corporation ("Xxxxx Industries");
WHEREAS, Medallion owns 8 shares of Common Stock of Xxxxx
Industries, which, together with the 72 shares owned by PUSA,
comprise all of the issued and outstanding shares of Common Stock
of Xxxxx Industries; and
WHEREAS, the Sellers desire to sell to the Purchaser and the
Purchaser desires to purchase from the Sellers all of the Common
Stock on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and subject to the terms and
conditions hereof, the parties hereby agree as follows:
SALE AND PURCHASE OF THE COMMON STOCK
1. Sale of Stock. Upon the terms, and subject to the
conditions herein set forth, the Sellers shall sell, assign,
transfer and deliver to Purchaser, and the Purchaser shall purchase
from Sellers, the Common Stock, free and clear of all liens,
claims, encumbrances, proxies, equities, purchase arrangements,
shareholders' agreements, restrictions (other than restrictions
upon transfer under applicable securities laws, if any), mortgages,
charges, security interests and pledges of any nature whatsoever
(collectively, "Claims").
PURCHASE PRICE, PAYMENT AND OTHER CLOSING MATTERS
2.1 Calculation and Allocation of Purchase Price.
(i) Purchase Price. As consideration for
the transfer of the Common Stock, the Purchaser shall pay, in cash,
Thirty-Eight Million One Hundred Thirty-Seven Thousand Dollars
($38,137,000.00) (the "Purchase Price"), subject to adjustments as
provided for herein.
(ii) Net Asset Adjustment. The Purchase
Price shall be increased or decreased as provided in this section.
The "Net Asset Adjustment" shall be equal to the difference between
(A) the Net Assets of Xxxxx Industries (as defined below) as of
June 30, 1996 (the "Base Net Assets") which the parties agree is
Fifty-Eight Million Four Hundred Forty-Seven Thousand Three Dollars
$58,447,003, as computed and set forth on Schedule 2.1(ii), and (B)
the Net Assets of Xxxxx Industries as of the Effective Date (the
"Closing Date Net Assets"). If the Closing Date Net Assets are
greater than the Base Net Assets, then the Purchase Price shall be
increased by the difference. If the Base Net Assets are greater
than the Closing Date Net Assets, then the Purchase Price will be
decreased by the difference. Notwithstanding anything contained
herein to the contrary, in no event shall the Net Asset Adjustment
made pursuant to this Section 2.1(ii), whether resulting in an
increase or a decrease in the Purchase Price, exceed Twenty-Five
Million Dollars ($25,000,000.00). For the purpose of this
computation, the "Net Assets of Xxxxx Industries" equals (i) the
sum of the assets of Xxxxx Industries categorized and detailed on
the Balance Sheet as cash and cash equivalents, accounts receivable
net, including Due from Xxxxx Worldwide (operating expenses)
inventories net (including inventories acquired with the proceeds
of drawn letters of credit, whether or not received and in the
physical possession of Xxxxx Industries), prepaid expenses/other
current assets, income tax (payable) receivable-state, property,
plant and equipment net of accumulated depreciation, cash surrender
value of life insurance, patents and trademarks, net, but
specifically does not include the assets of Xxxxx Industries
categorized and detailed as Deferred tax assets, receivable from
affiliates, organization costs and goodwill, less (ii) the sum of
liabilities of Xxxxx Industries categorized and detailed on the
Balance Sheet as accounts payable, capital leases payable, accrued
liabilities, accrued property and other taxes and other long term
liabilities, but specifically does not include the liabilities of
Xxxxx Industries categorized and detailed as Note Payable-Marine
Midland, amounts due affiliates, Asco Letters of Credit - in
transit and discounted, accrued interest, income taxes payable
(receivable, apart from state taxes) current and long term debts
due affiliates, liabilities under employment contracts payments in
respect whereof are required to be made under the terms of the
employment agreements after the Closing Date, where Net Assets of
Xxxxx Industries are determined in accordance with generally
accepted accounting principles applied on a basis consistent with
prior practice of Xxxxx and, further where the manner or
methodology utilized in determining value of any category of assets
included in the Closing Date Net Assets shall be the same manner or
methodology utilized to value the same category of assets included
in determining the Base Net Assets.
(iii) Sellers' Estimate. On or before the third
(3rd) business day preceding the Closing Date, the Sellers shall
furnish to the Purchaser a pro forma calculation of Closing Date
Net Assets as of the Effective Date and a preliminary calculation
of the Net Asset Adjustment, each calculated as specified in
Section 2.1(ii) of this Agreement and prepared in good faith by the
Sellers (the "Sellers' Estimate"). The Sellers' Estimate, when
approved by Purchaser, whose approval will not be unreasonably
withheld, or as adjusted by the parties, will be utilized by the
parties to determine the amounts to be paid at the Closing.
(iv) Payment from Purchaser to Representative.
On the Closing Date, the Purchaser shall deliver to Lowenthal,
Landau, Xxxxxxx & Bring, P.C. as the representative of the Sellers
(the "Representative"), on behalf of Xxxxx Industries and the
Sellers, an amount equal to ninety (90%) percent of the Purchase
Price, as preliminarily adjusted under Section 2.1(ii) ("Adjusted
Purchase Price"), by wire transfer of immediately available funds
to an account or accounts designated by the Representative.
(v) Payment of Debt and Expenses. At the
Closing, the Representative shall apply the Adjusted Purchase Price
proceeds received by it to pay in full all principal of, interest
on, premium, if any, expenses, commissions and other amounts owing
on account of the indebtedness of Xxxxx Industries, including, but
not limited to, those obligations identified on Exhibit 2.1(v)
hereto, including, but not limited to, all amounts due and owing
to: (a) Marine Midland Bank, (b) acceptances, including amounts
due on drawn letters of credit, (c) Sellers, Asco Investments
Limited, a Bahamian corporation ("Asco"), or affiliates, net of
amounts due from Sellers, Asco or affiliates, (d) trust receipts;
but excludes undrawn letters of credit as such amounts are
outstanding on the Effective Date and as set forth in the payoff
and discharge letters from the lenders thereof delivered to the
Purchaser and Sellers at the Closing, and (e) all other obligations
of Xxxxx Industries except accounts payable, capital leases payable
and accrued expenses. The Sellers shall be liable to pay any of
the foregoing obligations to the extent not paid by the
Representative.
(vi) Net Purchase Price. The Adjusted Purchase
Price, less the amounts paid pursuant to Section 2.1(v) above, is
referred to herein as the "Net Purchase Price." At the Closing,
after paying or making arrangements, on behalf of Xxxxx Industries,
for paying the amounts set forth in Section 2.1(v), the
Representative shall pay the Net Purchase Price to the Sellers.
The Representative will deliver to the Sellers and Purchaser a
certificate setting forth (A) the Purchase Price and its
determination, (B) the amounts paid by the Representative pursuant
to Section 2.1(v), together with copies of the relevant payoff
letters, and (C) the amounts paid to the Sellers pursuant to this
Section 2.1(vi).
(vii) Closing Balance Sheet Procedures.
(A) On or before December 31, 1996,
Purchaser may, but shall not be obligated to, conduct and complete,
at its own expense, a physical count of the inventory of Xxxxx
Industries (the "Physical Inventory"), the results of which shall
be rolled back to the Effective Date. If Purchaser determines to
conduct a Physical Inventory it shall give Sellers at least ten
days prior written notice thereof. The Sellers shall be entitled
to have their representatives observe the Physical Inventory. In
addition, the Sellers and the Purchaser shall jointly retain the
Indianapolis and Denver offices of Price Waterhouse LLP (the
"Accountant") to (1) audit and deliver its report on a balance
sheet of Xxxxx Industries as of the Effective Date (the "Closing
Balance Sheet"), and (2) as derived from the information set forth
thereon and from the results of the Physical Inventory, if
conducted (or the records of Xxxxx Industries if a Physical
Inventory is not conducted), to determine the Closing Date Net
Assets and the Net Asset Adjustment (the "Accountant's
Calculations"). The Accountant shall make such determination in
accordance with the provisions of Section 2.1(ii) above. Both
offices of Accountant shall jointly participate in and agree upon
all aspects of the work, including jointly performing all field
work in connection with the Closing Balance Sheet determination.
Each party agrees to reasonably cooperate with the Accountant and
to provide access to personnel, financial records and such other
information of Xxxxx Industries as the Accountant may reasonably
request in order to report on the Closing Balance Sheet and the
Accountant's Calculations provided for herein. The Accountant
shall deliver its report on the Closing Balance Sheet and the
Accountant's Calculations for the approval of the parties within
sixty (60) days following the Closing Date. In the event that (a)
either or both of the parties disapproves of all or any portion of
the Closing Balance Sheet or all or any portion of the Accountant's
Calculations, as prepared or made by the Accountant, and (b) the
parties are not able to agree upon a mutually acceptable Closing
Balance Sheet and Accountant's Calculations within thirty (30) days
following the date that the Accountant delivers such items to the
parties as provided above (the "Deadline"), the parties agree to
submit the matter or matters in dispute to the Indianapolis office
of Ernst & Young for determination. Ernst & Young shall act as an
expert rather than an arbitrator with respect to such
determination. Ernst & Young shall be required to deliver its
determination with respect to the disputed matters within fifteen
(15) days after the disputed matters are submitted to it. The
determination of Ernst & Young shall, in the absence of manifest
error, be conclusive and binding on the parties and shall be deemed
final and not subject to mediation under Section 14.7 hereof or
litigation.
(B) The Purchase Price, and the amount
paid by the Purchaser in respect thereof, shall be adjusted as
provided in Sections 2.1(vii)(C) and (D) below.
(C) If the Purchase Price as adjusted by
the Net Asset Adjustment determined utilizing the amounts set forth
on the Closing Balance Sheet and the Accountant's Calculations
shall be less than the Adjusted Purchase Price, the amount of such
discrepancy (the "Overpayment") shall be refunded by the Sellers to
the Purchaser within five (5) days following the earlier of (i) the
date the parties agree upon the Net Asset Adjustment, (ii) the date
of resolution of any dispute among the parties with respect to the
Net Asset Adjustment or (iii) the Deadline, if no party objects to
the Closing Balance Sheet or Accountant's Calculations on or before
the Deadline.
(D) If the Purchase Price as adjusted by
the Net Asset Adjustment determined utilizing the amounts set forth
on the Closing Balance Sheet and the Accountant's Calculations
shall be greater than the Adjusted Purchase Price, the Purchaser
shall pay the amount of such discrepancy (the "Underpayment") to
the Sellers within five (5) days following the earlier of (i) the
date the parties agree upon the Net Asset Adjustment, (ii) the date
of resolution of any dispute among the parties with respect to the
Net Asset Adjustment or (iii) the Deadline, if no party objects to
the Closing Balance Sheet or Accountant's Calculations on or before
the Deadline.
(E) Any payments made by or on behalf of
the Sellers or the Purchaser on account of the Closing Balance
Sheet procedures set forth in this Section 2.1(vii) shall include
interest on the principal amount of such payment from the Closing
Date until the date of such payment calculated over such period at
a rate per annum equal to the rate announced in The Wall Street
Journal as the "Prime Rate" in effect from time to time.
(F) The fees and expenses of the
Accountant in performing the Closing Balance Sheet procedures
pursuant to this Section 2.1(vii) and the fees of Ernst & Young, if
applicable, shall be borne on a 50/50 basis equally by the
Purchaser, on the one hand, and the Sellers on the other hand.
(G) From the Effective Date through
December 31, 1996, Purchaser shall cause Xxxxx Industries to
maintain in effect all of the inventory control, shipping, billing
and other procedures associated therewith as of the Effective Date
so as to ensure that Xxxxx Industries' physical inventory is
properly protected, controlled and insured against all risks,
including, but not limited to, fire, flood and theft. At all times
until the completion of the Physical Inventory, Sellers shall be
entitled, at their cost, to have their representative(s) on the
premises of Xxxxx Industries, at all its facilities, to review the
inventory control, shipping, billing and other procedures
associated therewith as being carried out by Xxxxx Industries.
Sellers' representatives shall have the right, to give effect to
their responsibilities hereunder, to have access to all of Xxxxx
Industries' inventory control, shipping, billing and other records
relevant thereto provided that Sellers' representatives shall not
unreasonably interfere with the business operations of Xxxxx
Industries. Purchaser shall cause Xxxxx Industries' employees to
cooperate fully, properly and in a timely manner with Sellers
representatives.
2.2 Letters of Credit; Service Support.
(a) In addition to the payment of the Purchase
Price as provided in Section 2.1 above, the Purchaser shall and
does hereby indemnify and hold (i) the Sellers and Asco harmless
from each letter of credit issued for the account of Xxxxx
Industries and outstanding and undrawn on the Closing Date (the
"Xxxxx Industries L/C's") and deliver to Sellers and Asco a stand-by
letter of credit from a bank and on terms and conditions
acceptable to Sellers and Asco and (ii) the Sellers, Asco and Xxxxx
Worldwide Limited ("Xxxxx Worldwide") harmless from each letter of
credit issued for the account of Xxxxx Worldwide and outstanding
and undrawn on the Closing Date (the "Xxxxx Worldwide L/C's" and
together with the Xxxxx Industries L/C's, the "Letters of Credit").
(b) Exhibit 2.2 hereto sets forth a list of all
outstanding and undrawn Letters of Credit issued for the account of
Xxxxx Industries and Xxxxx Worldwide, which Exhibit 2.2 shall be
updated by Sellers within ten days following the Closing Date to
reflect Letters of Credit which may be drawn on within the several
days prior to the Closing Date.
(c) Sellers agree to cause Asco, Xxxxx Worldwide
and their affiliates, from and after the Effective Date, to
continue to process all underlying purchase orders relating to the
Letters of Credit, as agents for and on behalf of Purchaser;
provided, however that Sellers shall not be obligated to, or to
cause Asco, Xxxxx Worldwide or any of their affiliates to, render
any other services with respect to Letters of Credit or with regard
to the goods sourced thereunder.
(d) Each Xxxxx Worldwide L/C has been issued with
respect to a particular customer purchase order and has a "back-to-back"
letter of credit issued on behalf of a customer. Sellers
will cause Asco and its affiliates to remit to Xxxxx Industries the
excess proceeds received on each back-to-back letter of credit over
amounts paid on each such Xxxxx Worldwide L/C within five days
after receipt of such proceeds.
CLOSING
3.1 Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at 10:00 A.M.,
local time, on December 2, 1996 (the "Closing Date"), at the
offices of Lowenthal, Landau, Xxxxxxx & Bring, P.C., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other time and place as
the Sellers and the Purchaser may agree in writing). Effective
upon Closing, the transactions contemplated hereby shall be deemed
to have been consummated as of close of business on November 30,
1996 (the "Effective Date").
3.2 Obligations of the Seller at Closing. At the
Closing, the Sellers shall deliver to the Purchaser:
(a) certificates representing all of the Common
Stock duly endorsed by the Sellers, transferring such Common Stock
to the Purchaser;
(b) such other instruments of conveyance,
assignment and transfer, in form and substance reasonably
satisfactory to the Purchaser's counsel, as shall be effective to
transfer to the Purchaser all of the Sellers' right, title and
interest in and to the Common Stock, as the Purchaser's counsel may
reasonably request;
(c) resignations of all directors and officers of
Xxxxx Industries. Xxxxx Industries shall, as of the Closing Date,
release each such director and officer from all claims and
liabilities to or in respect of Xxxxx Industries arising in
connection with such person's service as a director or officer,
other than claims and liabilities arising out of malfeasance, gross
negligence, intentional misconduct or a knowing violation of law;
(d) all such consents, assignments or other
documents as may be required to enable Purchaser to assume
liability for, and the benefit of, letters of credit issued to
third parties for the benefit of Xxxxx Industries and guaranteed by
either Seller or the lenders, and all such other consents as may be
required so as to waive conflicts set forth on Schedule 4.3(b);
(e) all stock minute books, records and other
properties of Xxxxx Industries in the possession or control of
Sellers and not already located at Xxxxx Industries;
(f) a noncompetition agreement in the form of
Exhibit 3.2(f) executed by PUSA;
(g) lease estoppels in the form of Exhibit 3.2(g)
executed by the respective landlords shown therein;
(h) an option to purchase Xxxxx Industries'
Mooresville, Indiana facility in the form of Exhibit 3.2(h)
executed by PUSA; and
(i) all other documents required to be delivered on
or before the Closing by the Sellers to the Purchaser hereunder (to
the extent not previously so delivered) or as may otherwise be
reasonably required by the Purchaser's counsel in connection
therewith.
3.3 Obligations of the Purchaser at Closing. At the
Closing, the Purchaser shall:
(a) pay the Adjusted Purchase Price to the
Representative;
(b) deliver to the Sellers all such consents,
assignments or other documents as may be required to give effect to
the provisions of paragraph 2.2; and
(c) execute and deliver to the Sellers all
documents required to be delivered on or before the Closing by the
Purchaser to the Sellers hereunder (to the extent not previously so
delivered) or as may otherwise be reasonably required by the
Sellers' counsel in connection herewith.
REPRESENTATIONS AND WARRANTIES OF SELLERS
4. Representations and Warranties of Sellers. Each Seller
jointly and severally represents and warrants to the Purchaser as
follows:
4.1 Organization. Each Seller is a corporation duly
organized and validly existing and in good standing under the laws
of Delaware. Each Seller has full corporate power and authority to
enter into this Agreement and carry out the transactions
contemplated hereby.
4.2 Authorization and Enforceability. The execution,
delivery and performance of this Agreement have been duly
authorized by all required corporate proceedings taken on the part
of each Seller. This Agreement, and the other instruments to be
executed and delivered by Sellers, upon execution and delivery,
will have been duly authorized, executed and delivered by Sellers
and constitute the legal, valid and binding obligations of each
Seller, enforceable against each Seller in accordance with their
respective terms.
4.3 Conflicts. Neither the execution and delivery of
this Agreement and the instruments or documents to be delivered by
Sellers pursuant to this Agreement, nor the consummation of the
transactions contemplated by this Agreement or the compliance with
the terms, conditions and provisions of this Agreement by Sellers
will (a) contravene any provision of the Certificate of
Incorporation or By-Laws of either Seller; (b) except as set forth
in Schedule 4.3(b), conflict with or result in a breach of or
constitute a default (or an event which might, with the passage of
time or the giving of notice or both, constitute a default) under
any of the terms, conditions or provisions of any indenture,
mortgage, loan or credit agreement or any other agreement or
instrument to which either Seller or Xxxxx Industries is a party or
by which either Seller or Xxxxx Industries, or any of either
Seller's assets or Xxxxx Industries' assets may be bound or
affected, or any judgment or order of any court or governmental
department, commission, board, agency or instrumentality, domestic
or foreign to which either Seller or Xxxxx Industries is a party,
or to the best of each Seller's knowledge, any applicable law, rule
or regulation; or (c) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of
the assets or stock of Xxxxx Industries or give to others any
interests or rights therein.
4.4 Consents. Except for the unconditional approval
("HSR Approval") required from the Federal Trade Commission and/or
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, (the "Xxxx-Xxxxx-Xxxxxx Act")
no consent, approval or authorization of, or registration or filing
with, any person, including any financial institutions,
governmental authorities or other regulatory agencies is required
in connection with the execution and delivery by either Seller of
this Agreement or the consummation of the transactions contemplated
hereby.
4.5 Capital Stock of Xxxxx Industries; Xxxxx Industries.
(a) The authorized capital stock of Xxxxx
Industries consists of 2,500 shares of common stock, no par value,
of which 80 shares are duly and validly issued and outstanding,
fully paid and nonassessable and 20 shares are held in treasury.
None of the Common Stock has been issued in violation of any laws
pertaining to the issuance of securities or is subject to any
preemptive or subscription rights. There are no outstanding
options, warrants, calls, rights, agreements or commitments
relating to the issuance, sale, delivery or transfer (including any
right of conversion or exchange under any outstanding security or
other instrument) of the capital stock of Xxxxx Industries and
there are no pledges, security interests, liens, charges,
encumbrances, equity claims or options of whatever nature relating
to or valued by the shares of capital stock of Xxxxx Industries,
including, but not limited to, phantom stock rights, SARs or any
other profit participation rights. PUSA owns, and at Closing shall
transfer to Purchaser, good, marketable and indefeasible title to
72 shares of Common Stock, free and clear of all Claims and
Medallion owns, and at Closing shall transfer to Purchaser, good,
marketable and indefeasible title to 8 shares of Common Stock, free
and clear of all Claims.
(b) Xxxxx Industries is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Delaware, with all requisite corporate power to own,
lease and operate its properties and to carry on its business as
now being conducted. Xxxxx Industries is duly qualified to do
business and in good standing in each jurisdiction where the
conduct of its business or ownership of its properties requires
such qualification, except where the failure to qualify could not
reasonably be expected to result in any liability or adversely
affect its operations. The Common Stock constitutes all the issued
and outstanding capital stock of Xxxxx Industries. Set forth on
Schedule 4.5(b) is a true and complete list of the incumbent
directors and officers of Xxxxx Industries. Xxxxx Industries has
no subsidiaries. In the course of its business, Xxxxx Industries
does not export any goods other than to Canada, Mexico, Central
America and South America.
(c) The books of account, minute books, stock
record books, and other records of Xxxxx Industries, all of which
have been made available to Purchaser, are complete and have been
maintained in accordance with sound business practices. The minute
books of Xxxxx Industries contain accurate and complete records of
all formal meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board
of Directors of Xxxxx Industries. At the Closing, all of those
books and records will be in the possession of Xxxxx Industries.
4.6 Balance Sheets. The balance sheets of Xxxxx
Industries as at December 31, 1995, and June 30, 1996 and the
accompanying statements of operations for the periods ended
December 31, 1995 and June 30, 1996 are complete and accurate in
all material respects and fairly present the financial condition
and results of operations of Xxxxx Industries as at such dates or
for such periods, as the case may be, in accordance with United
States generally accepted accounting principles consistently
applied in all material respects. Such balance sheet as of June
30, 1996, a copy of which is attached hereto as Exhibit 4.6, is
sometimes herein called the "Balance Sheet" and June 30, 1996 is
sometimes herein called the "Balance Sheet Date".
4.7 Tax Matters.
(a) Except as described in Schedule 4.7, Xxxxx
Industries has timely filed all Returns (as defined in Section
4.7(g)(i) below) required to be filed prior to the date hereof,
which Returns are all complete and accurate in all material
respects, and has paid, or adequately reserved against, all
federal, state, county, local, foreign and other taxes, including,
without limitation, income taxes, estimated taxes, excise taxes,
sales taxes, use taxes, franchise taxes, employment and payroll
related taxes, property taxes and import and export duties
(hereinafter "Taxes" or, individually, a "Tax"), required to be
paid by it through the date hereof, and all deficiencies or other
additions to tax, interest and penalties owed by it, in connection
with any such Taxes, and will adequately reserve against all Taxes
accruing through the Effective Date. Except as described in
Schedule 4.7, neither Xxxxx Industries nor Seller has received
notice of: (i) any audit or examination of any return of Xxxxx
Industries by any Federal, state, local or foreign tax authority;
or (ii) any adjustment proposed by the Internal Revenue Service
("IRS") or any other agency of any liability for Taxes. Xxxxx
Industries has not executed any waiver of any statute of
limitations applicable to any such return. To the extent that
Xxxxx Industries is a party to any tax sharing agreement, the
parties agree that such tax sharing agreement shall be terminated
before the Closing Date and as of the Closing Date Xxxxx Industries
shall have no further rights, benefits, liabilities or obligations
thereunder.
(b) (i) Purchaser and Sellers agree to treat the
Effective Date as the last day of Xxxxx Industries' taxable period
for federal tax purposes.
(ii) Any Taxes for a taxable period beginning
before the Effective Date and ending after the Effective Date with
respect to Xxxxx Industries shall be apportioned between Sellers,
on the one hand, and Purchaser, on the other hand, based on (A) in
the case of all real and personal property Taxes, on a per diem
basis and (B) in the case of all other Taxes, on the actual
operations of Xxxxx Industries as determined from the books and
records of Xxxxx Industries during the portion of such period
ending on the Effective Date (the "Pre-Closing Period") and the
portion of such period beginning on the day following the Effective
Date, and, for purposes of Subsection 4.7(c), each portion of such
period shall be deemed to be a taxable period (whether or not it is
in fact a taxable period).
(c) (i) Sellers shall be entitled to any refunds
or credits of Taxes attributable to or arising in taxable periods
ending on or before the Effective Date.
(ii) Purchaser or Xxxxx Industries, as the
case may be, shall be entitled to any refunds or credits of Taxes
attributable to or arising in taxable periods beginning on or after
the Effective Date; provided, however, that if Purchaser or Xxxxx
Industries carries back an item of loss, deduction or credit back
to a taxable period prior to the Effective Date (a "Subsequent
Loss") and either Seller suffers an actual increase in Taxes or a
reduction in a tax attribute as a result of the carryback of such
Subsequent Loss (a "Tax Detriment"), Purchaser shall make such
Seller whole for the full amount of such Tax Detriment.
(iii) Purchaser shall cause Xxxxx Industries
promptly to forward to Sellers or to reimburse Sellers for any
refunds or credits due Sellers (pursuant to the terms of this
Section 4.7) after receipt thereof, and Sellers shall promptly
forward to Purchaser (pursuant to the terms of this Section 4.7) or
reimburse Purchaser for any refunds or credits due Purchaser after
receipt thereof.
(d) Sellers shall prepare and file all Returns
relating in whole or in part to taxable periods ending on or before
or including the Effective Date that are required to be filed after
the Effective Date. Purchaser and Sellers and their respective
affiliates shall cooperate in the preparation of all such Returns.
Such cooperation shall include, but not be limited to, furnishing
prior years' Returns or return preparation packages illustrating
previous reporting practices or containing historical information
relevant to the preparation of such Returns. In the case of any
state, local or foreign joint, consolidated, combined, unitary or
group relief system Returns, such cooperation shall also relate to
any other taxable periods in which one party could reasonably
require the assistance of the other party in obtaining any
necessary information.
(e) Sellers shall at their own expense, control any
audit or examination by any Taxing Authority ("Tax Audit") and
initiate any claim for refunds, contest, resolve and defend any
assessment, notice of deficiency or other adjustment or proposed
adjustment relating to any and all Taxes for taxable periods ending
on or before the Effective Date. Purchaser shall give prompt
notice to Sellers of any such Tax Audit and cooperate with Sellers
and their counsel with respect to the resolution of any issues in
connection with any Tax Audit.
(f) Prior to the Closing, Sellers shall make a
capital contribution of any indebtedness owed to them from Xxxxx
Industries that will be treated as though Xxxxx Industries
satisfied such indebtedness with an amount of money equal to the
Sellers' adjusted basis in the indebtedness pursuant to Section
108(e)(6) of the Internal Revenue Code of 1986 (the "Code"). No
additional shares of stock of Xxxxx Industries will be issued in
connection with such capital contribution. Sellers shall use their
best efforts to ensure that Xxxxx Industries and Purchaser are not
subject to a reduction of tax attributes pursuant to the provisions
of Section 108(b) as a result of any capital contribution or
forgiveness of indebtedness owed by Xxxxx to Sellers or their
affiliates.
(i) Purchaser and Sellers agree that no
election will be made pursuant to Section 338 of the Code.
(ii) Sellers agree that Xxxxx Industries shall
not directly or indirectly accelerate or defer income or deductions
of Xxxxx Industries (e.g., through the timing of the payment or
settlement of claims or expenses or the making of tax elections)
for the purpose of benefiting Sellers and disadvantaging Purchaser.
(iv) Purchaser shall notify Sellers prior to
the due date of filing of a return relating to taxes for the
taxable period ending on or before the Effective Date of the
existence of the amount, if any, of net operating loss of Xxxxx
Industries that Purchaser is unable to utilize so that Seller may
elect to reattribute the net operating loss pursuant to Treas. Reg.
1.1502-20(g).
(g) For purposes of this Section 4.7, the following
terms shall have the meanings ascribed to them below:
(i) "Returns means returns, reports and forms
required to be filed with any domestic or foreign taxing authority.
(ii) "Tax Laws" means the Internal Revenue
Code of 1986 (as amended) and federal, state, county, local, or
foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
(iii) "Taxing Authority" means any governmental
authority, domestic or foreign, having jurisdiction over the
assessment, determination, collection, or other imposition of Tax.
4.8 Compliance with Laws. Except as may be described in
Schedule 4.8, Sellers (in respect of the business of Xxxxx
Industries) and Xxxxx Industries are not in violation of (i) any
applicable order, judgment, injunction, award or decree, or (ii)
any federal, state, local or foreign law, ordinance or regulation
or any other requirement of any governmental or regulatory body,
court or arbitrator applicable to the business of Xxxxx Industries
and would not be in violation of any such law, ordinance,
regulation or other requirement that has been enacted or adopted
but is not yet effective if it were effective at the date hereof,
the violation of which would have an adverse effect on the business
of Xxxxx Industries. Xxxxx Industries has all licenses, permits,
orders or approvals of any federal, state, local or foreign
governmental or regulatory body (collectively "Permits") that are
material to or necessary for the conduct of the business of Xxxxx
Industries and such permits are in full force and effect and listed
on Schedule 4.8. Neither Xxxxx Industries nor either Seller has
received any written notice of any unresolved violation or alleged
violation by Xxxxx Industries of any zoning, building, occupational
health and safety, fire, labor, health, safety or other applicable
law, whether or not material, except as disclosed on Schedule 4.8.
4.9 Actions and Proceedings. Except as described in
Schedule 4.9, there are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving Xxxxx
Industries or either Seller (in respect of the business of Xxxxx
Industries) and, except as described in Schedule 4.9, there are no
actions, suits or claims or legal, administrative or arbitral
proceedings or investigations pending, including all claims in
excess of Five Thousand Dollars ($5,000.00) for which notice has
been received by either Seller or Xxxxx Industries and for which
time to file a lawsuit is still open under applicable statutes of
limitation, or, to the best of Sellers' knowledge, threatened
(whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against or involving Xxxxx
Industries or either Seller (in respect of the business of Xxxxx
Industries) or any of their properties or assets. There is no
litigation or proceeding in which Xxxxx Industries is a plaintiff
or claimant, except as described in Schedule 4.9.
4.10 Contracts and Other Agreements. Schedule 4.10 sets
forth any contract and other agreement (other than sales or
purchase orders entered into in the ordinary course of Xxxxx
Industries' business) and any amendment, supplement or modification
thereof to which Xxxxx Industries is a party, or by or to which it
or its assets or properties are bound or subject with a value of
One Hundred Thousand Dollars ($100,000.00) or more, has a duration
of one (1) year or more or which restricts the right of Xxxxx
Industries from engaging in business freely anywhere in the world,
or which is otherwise material to Xxxxx Industries. True and
complete copies of all such contracts and other agreements as set
forth on Schedule 4.10 or on any other Schedule have been delivered
or made available to the Purchaser. Each such contract or
agreement is in full force and effect, is valid and enforceable in
accordance with its terms, was entered into in the ordinary course
of business, and was not, at the time of entering, at other than
market rate. Neither Xxxxx Industries nor any other party to such
contracts or agreements is in receipt of any claim of breach nor
does Xxxxx Industries have knowledge of any breach or default by a
party thereunder or any condition which, including the transactions
contemplated hereby, with the giving of notice or passage of time,
or both, could constitute a default thereunder. Except as set
forth on Schedule 4.22, no such contract or agreement is with an
affiliated or related party.
4.11 Leases. Schedule 4.11 sets forth a list of all
leases, subleases or other agreements under which Xxxxx Industries
is lessor or lessee of any real property. Such leases, subleases
and other agreements are current in payment, in full force and
effect, valid and enforceable in accordance with their respective
terms and Xxxxx Industries has not received any notice of any
default thereunder and to the best of Sellers' and Xxxxx
Industries' knowledge, Xxxxx Industries is not in default
thereunder and no event has occurred which, with the giving of
notice or the passage of time or both, would constitute a breach or
default. The leasehold interests of Xxxxx Industries are subject
to no lien or encumbrance and Xxxxx Industries enjoys a right of
quiet possession against any lien or encumbrance on the property,
except as otherwise provided in such leases, subleases and
agreements and as set forth on Schedule 4.11. Prior to Closing,
Sellers shall obtain any consents required in order to maintain
each such lease in good standing after consummation of the
transactions contemplated herein. Except as set forth on Schedule
4.22, no such lease is with an affiliated or related party.
4.12 Licenses and Patents. Schedule 4.12 sets forth a
complete and correct list of all licenses and agreements to which
Xxxxx Industries is a party and which pertain to trademarks.
Schedule 4.12 sets forth a complete list of trademark registrations
and pending applications owned by Xxxxx Industries (hereinafter
"Trademarks"). Schedule 4.12 sets forth a complete list of patents
and pending applications owned by Xxxxx Industries (hereinafter
"Patents"). The Trademarks and Patents have been duly maintained
in force by filing appropriate renewals or related maintenance
filings and all products made, used or sold thereunder have been
marked with proper notice. The Trademarks and Patents
registrations and pending applications are valid. Except as set
forth in Schedule 4.12, (a) no claim adverse to the interests of
Xxxxx Industries in the Trademarks and Patents is pending or, to
the best of Sellers' knowledge, has been threatened, (b) neither
Xxxxx Industries nor either Seller has received notice nor is
otherwise aware of any infringement or other violation of Xxxxx
Industries' right in any of the Trademarks and Patents and (c) no
litigation is pending wherein the Trademarks and Patents are
alleged to infringe or violate the right of another. To the extent
that any of the currently registered Trademarks and Patents and
pending applications are not in the name of Xxxxx Industries,
Sellers will prior to Closing transfer such Trademarks and Patents
to Xxxxx Industries. Xxxxx Industries does not own or use any
Patents or design Patents or Trademarks except as set forth on
Schedule 4.12.
4.13 Accounts Receivable. Except as set forth in
Schedule 4.13, any accounts receivable owing to Xxxxx Industries as
at the Closing Date were created in the ordinary and normal course
of the business of Xxxxx Industries, represent valid, bona fide
claims and are accurate and legally enforceable. All reserves for
the allowance for doubtful accounts will be adequate as of the
Closing Date. Nothing contained herein shall be deemed a
representation or guaranty as to the collectibility of any of such
accounts receivable. No account debtor has a right of offset or
counterclaim against Xxxxx Industries.
4.14 Property. The property of Xxxxx Industries
(including that reflected on the Balance Sheet) has been accurately
and completely reflected on the Balance Sheet and carried on the
books of account of Xxxxx Industries in accordance with United
States generally accepted accounting principles consistently
applied.
4.15 Tangible and Intangible Property. Except as set
forth in Schedule 4.15, Xxxxx Industries owns the entire right,
title and interest to all tangible property (including, without
limitation, furniture, leasehold improvements, equipment, fixed
assets and fixtures) and intangible property used in its business
including, without limitation, all of the tangible and intangible
property reflected on the Balance Sheet, in each case, free and
clear of any liens or encumbrances, except for property (other than
Trademarks or Patents) disposed of in the ordinary course of
business and consistent with past practices since the Balance Sheet
Date. Xxxxx Industries may not dispose of any Trademarks or
Patents prior to the Closing.
4.16 Accounts Payable. Xxxxx Industries' accounts
payable as set forth on the Balance Sheet represent a true and
accurate record of all unpaid vendor transactions of Xxxxx
Industries as of the Balance Sheet Date, and thereafter were, and
will continue to be, recorded and paid until the Closing Date in
accordance with Xxxxx Industries' normal accounting and payment
practices, which comply with United States generally accepted
accounting principles consistently applied in all material
respects.
4.17 Liabilities. As at the Balance Sheet Date, Xxxxx
Industries did not have any direct or indirect liabilities or
obligations (whether accrued, unaccrued, liquidated, contingent,
known or unknown or otherwise), including Taxes ("Liabilities"),
except those which (i) were reflected or reserved against on the
Balance Sheet, (ii) are disclosed on the Schedules hereto or (iii)
are contracts or other agreements entered into in the ordinary
course of business with unaffiliated parties under which there are
no defaults which contracts or agreements are not disclosed on the
Schedules because they do not meet the criteria set forth in
Section 4.10 of this Agreement for disclosure on the Schedules (the
"Small Contracts"). Except as set forth in this Agreement, the
Schedules attached hereto or the Small Contracts, on the Closing
Date Xxxxx Industries will not have any Liabilities, other than
Liabilities incurred in the ordinary course of business consistent
with past practices for accounts payable, capital leases payable
and accrued expenses.
4.18 Employee Benefit Plans. Except as set forth in
Schedule 4.18, Xxxxx Industries maintains no employee benefit plan
or fringe benefit arrangement which does not constitute an employee
benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). To
the extent there are such plans or arrangements, they are in
compliance in form and operation with all applicable requirements
of law and regulation, including the filing of all tax or audit
information returns related thereto. All such employee benefit
plans which are employee pension benefit plans, as defined in
Section 3(2) of ERISA ("Employee Pension Benefit Plans"), which
purport to comply with Section 401(a) of the Code, have been
determined to be so qualified by the IRS, and nothing has occurred,
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination. All
group health plans, as defined under Code Section 5000(b)(1),
maintained by or for Xxxxx Industries comply in form and operation
in all material respects with the COBRA health continuation
coverage requirements under Section 4980B of the Code. There have
been no "prohibited transactions" (as described in Section 406 of
ERISA or Section 4975 of the Code) with respect to any employee
benefit plan. There have been no "reportable events" (as described
in Section 4043 of ERISA) with respect to any employee benefit plan
subject to Title IV of ERISA, for which notice to the PBGC has not
been waived, and no steps have been taken to terminate any such
plan under a distress termination. None of the employee benefit
plans or fringe benefit arrangements is the subject of any lawsuit,
arbitration or other proceeding concerning any benefit claim (other
than routine claims for benefits and qualified domestic relations
orders) or any other matter, whether brought by or against a
participant or beneficiary, a trustee, a plan administrator, Xxxxx
Industries, or any director, officer or employee thereof. Except
as set forth on Schedule 4.18, (i) no employee benefit plans
provide medical or death benefits (whether or not insured) with
respect to any current or former employee of Xxxxx Industries which
continue beyond their retirement or other termination of service
(other than (1) coverage mandated by law or (2) death benefits or
disability benefits under any employee benefit plan), and (ii) with
respect to any severance pay agreement, the consummation of the
transactions contemplated by this Agreement will not accelerate the
time of payment, vesting or increase the amount of compensation due
to any individual covered by a severance pay agreement.
4.19 Insurance. Schedule 4.19 sets forth a list and
brief description of all policies of insurance held by or on behalf
of Xxxxx Industries (specifying the insurer and the policy number
or covering note number, with respect to binders, describing each
pending claim thereunder which is still open under applicable
statutes of limitation of more than $5,000.00, setting forth the
aggregate amounts paid out under each such policy through the date
hereof and the aggregate limit, if any, of the insurer's liability
thereunder). Such policies (and binders, if any), are valid and
enforceable in accordance with their terms, are in full force and
effect, have had all premiums paid and insure against risks and
liabilities, but not including Hazardous Substances, to the extent
and in the manner deemed appropriate and sufficient by Xxxxx
Industries and comparable to others in the industry. Xxxxx
Industries has not received (i) any refusal of coverage or any
notice that a defense will be afforded with reservation of rights,
or (ii) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not
be renewed or that the issuer of any policy is not willing or able
to perform its obligations thereunder.
4.20 Officers, Directors and Employees. Schedule 4.20
sets forth (a) the name and total annual compensation of each
officer and director and of each employee of Xxxxx Industries
earning in excess of Eighty Thousand Dollars ($80,000.00) per annum
as of the date hereof; and (b) any contract, commitment or other
agreement with respect to any officer, director or employee of
Xxxxx Industries dealing with compensation, benefits or any other
aspect of their relationship, either directly or through
affiliates, with Xxxxx Industries. Xxxxx Industries is not a party
to any collective bargaining agreement or currently negotiating any
such agreement. Except as set forth on Schedule 4.9, no complaint
against Xxxxx Industries is pending before the NLRB, the EEOC or
any comparable state agency.
4.21 Operations of Xxxxx Industries. Except as set forth
in Schedule 4.21, since the Balance Sheet Date, Xxxxx Industries
has not:
(i) amended its Certificate of Incorporation
or By-Laws or merged with or into or consolidated with any other
entity, subdivided or in any way reclassified any shares of its
capital stock or changed or agreed to change in any manner the
rights of its outstanding capital stock or the character of its
business;
(ii) issued or sold or purchased, or issued
warrants, options or rights to subscribe to, or entered into any
contracts or commitments to issue or sell or purchase, any shares
of its capital stock or securities convertible into or exchangeable
for its capital stock;
(iii) paid any dividend or made any
distribution with respect to its capital stock;
(iv) incurred any indebtedness for borrowed
money;
(v) waived any right of material value to its
business;
(vi) made any change in its accounting methods
or practices with respect to financial reporting or Taxes or made
any change in depreciation or amortization policies or rates
adopted by it;
(vii) except in the ordinary course of
business, entered into any lease (as lessor or lessee); sold,
abandoned or made any other disposition of any of its tangible
assets (no intangible assets have been sold, abandoned or
disposed); granted or suffered any lien or other encumbrance on any
of its assets or properties, entered into or amended any contract
or other agreement to which it is a party, or by or to which it or
its assets or properties are bound or subject, or pursuant to which
it agrees to indemnify any party or to refrain from competing with
any party;
(viii) except for property or equipment
acquired in the ordinary course of business, made any acquisition
of all or any part of the assets, properties, capital stock or
business of any other entity;
(ix) entered into any other material contract
or other agreement or other material transaction and any contract,
agreement, or other transaction (whether or not material) not in
the ordinary course of business;
(x) been advised that any of its existing
contracts for the performance of services is to be terminated or
substantially modified;
(xi) suffered any material adverse change in
its financial condition taken as a whole;
(xii) suffered any loss of or damage to any of
its properties that impairs its ability to conduct its business;
(xiii) received notice from any material
supplier, distributor or customer, and Sellers are not otherwise
aware, that any such material supplier, distributor or customer
intends to discontinue or materially and adversely change its
relationship; or
(xiv) suffered any strike, work stoppage,
slowdown, or any threat of the foregoing by its employees.
4.22 Transactions with Affiliates. Except as set forth
in Schedule 4.22 and except for any transactions contemplated by
this Agreement or any of the other documents executed in connection
with the transactions contemplated hereby, to the best of the
Sellers' knowledge, there are no loans, leases, royalty agreements
or other continuing transactions between Xxxxx Industries, on the
one hand, and, directly or indirectly through affiliated or related
entities, any officer or director of Xxxxx Industries or any person
or entity owning five percent or more of any class of capital stock
of Xxxxx Industries, on the other hand. Any management agreement
between Xxxxx Industries and either Seller will be terminated as of
the Effective Date. PUSA will cause Asco and Xxxxx Worldwide to
fully and in a timely fashion process the Letters of Credit
pursuant to Section 2.2 hereof.
4.23 Environmental Protection. Except as set forth on
Schedule 4.23 or except as set forth on the environmental reports
described in Paragraphs 1 and 2 of Schedule 4.23 (collectively, the
"Environmental Reports"), copies of which have been delivered to
and reviewed by Purchaser, with respect to such premises
("Premises") as are occupied by Xxxxx Industries;
(i) To the best of the Sellers' knowledge, Xxxxx
Industries has not caused or allowed, nor has Xxxxx Industries
contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any
Hazardous Substances (as defined below) in connection with the
operation of its business in violation of any applicable law.
(ii) To the best of Sellers' knowledge, Xxxxx
Industries, the operation of its business, and the Premises
are in compliance with all applicable Environmental Laws (as
defined below) and orders or directives of any governmental
authorities having jurisdiction under such Environmental Laws,
including, without limitation, any Environmental Laws or
orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous
Substances.
(iii) Xxxxx Industries has not received any written
notices of any proceedings, administrative actions, claims
made since March 1993 or lawsuits, from any person, entity or
governmental authority arising under any Environmental Laws
out of the ownership or occupation of the Premises or the
conduct of its operations, nor does Xxxxx Industries know of
any basis therefor.
(iv) Xxxxx Industries has obtained and is
maintaining in full force and effect all necessary permits,
licenses and approvals required to be obtained by it under any
Environmental Laws applicable to the Premises and the business
operations conducted by Xxxxx Industries thereon, all of which
are listed on Schedule 4.23 and to the best of Sellers'
knowledge, Xxxxx Industries is in compliance with all such
permits, licenses and approvals.
(v) To the best of the Sellers' knowledge, Xxxxx
Industries has not caused or allowed a release, or a threat of
release, of any Hazardous Substance.
(vi) To the best of Sellers' knowledge, no
Hazardous Substances are in, on, or migrating from any portion
of the soils, surface or ground water at the Premises. Xxxxx
Industries has filed no notice with any governmental entity,
and no such notice has been filed on behalf of Xxxxx
Industries or any other person, reporting a release of any
Hazardous Substances into the environment related to or
arising out of the Premises.
(vii) To the best of the Sellers' knowledge, the
Premises are not and have not been listed or proposed for
listing on the Comprehensive Environmental Response,
Compensation, Liability Act, 42 U.S.C. 6901 et seq., as
amended, and are not and have not been the subject or
contemplated subject of federal, state or local enforcement
action or investigation.
(viii) There has been no past, and there is no
pending or contemplated, claim by either Seller relating to
environmental matters based on the actions of others that may
have impacted the Premises. Xxxxx Industries has not entered
into any agreement with any person regarding any Environmental
Laws or environmental matter.
For purposes of this Section, the term "Environmental
Laws" shall mean any United States federal, state or local law,
ordinance or regulation pertaining to the protection of human
health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sections 9601, et seq., the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq.,
and the Resource Conservation and Recovery Act, 42 U.S.C. Sections
6901, et seq. For purposes of this Section, the term "Hazardous
Substances" shall include oil and petroleum products, asbestos,
polychlorinated biphenyls and urea formaldehyde, and any other
materials classified as hazardous or toxic under any Environmental
Laws.
4.24 Disclosure. Neither this Agreement nor any
schedule, exhibit, statement, list or other written information
furnished or to be furnished by Sellers or Xxxxx Industries
pursuant to this Agreement contains or will contain any untrue
statement of a material fact or will omit to state a material fact
necessary to make the statements made, in light of the
circumstances in which they were made, not misleading.
4.25 Brokerage. The Sellers will jointly and severally
indemnify and hold Purchaser and Xxxxx Industries harmless against
any agreement or other action by the Sellers or Xxxxx Industries
which might cause anyone, including, but not limited to, Kleinwort
Xxxxxx North America, Inc. ("KBNA"), to become entitled to a
brokers fee or commission from Xxxxx Industries or the Sellers as
a result of the transactions hereunder.
4.26 Knowledge. Whenever and wherever a representation
or warranty is made "to the knowledge of" or "to the best of their
knowledge," such representation or warranty shall include the
knowledge of a particular fact or other matter if any individual
who is serving as a director, chief executive officer, president or
any vice president of either Seller or Xxxxx Industries has, or at
any time had, knowledge of such fact or other matter. An
individual will be deemed to have "knowledge" of a particular fact
or other matter only if such individual is actually aware of such
fact or other matter.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5. Representations and Warranties of the Purchaser.
Purchaser represents and warrants to the Sellers that:
5.1 Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby.
5.2 Authorization and Enforceability. The execution,
delivery and performance of this Agreement have been duly
authorized by all required corporate proceedings taken on the part
of the Purchaser. This Agreement constitutes, and the other
instruments to be executed and delivered by the Purchaser, upon
execution and delivery, will have been duly authorized, executed
and delivered by the Purchaser and constitute the legal, valid and
binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms.
5.3 Conflicts. The execution and delivery of this
Agreement and the instruments or documents to be delivered by the
Purchaser pursuant to this Agreement, the consummation of the
transactions contemplated by this Agreement and compliance with the
terms, conditions and provisions of this Agreement by the Purchaser
will not (a) contravene any provisions of the Purchaser's
certificate of incorporation or bylaws; (b) conflict with or result
in a breach of or constitute a default (or an event which might,
with the passage of time or the giving of notice or both,
constitute a default) under any of the terms, conditions or
provisions of any indenture, mortgage, loan or credit agreement or
any other agreement or instrument to which the Purchaser is a party
or by which it or its assets may be bound or affected, or any
judgment or order of any court or governmental department,
commission, board, agency or instrumentality, domestic or foreign,
or any applicable law, rule or regulation; or (c) result in the
creation or imposition of any lien, charge or encumbrance of any
nature,whatsoever upon any of the Purchaser's assets or give to
others any interests or rights therein.
5.4 Pending Litigation or Proceedings. There are no
actions, suits, investigations or proceedings pending or threatened
against or affecting the Purchaser at law or in equity by or before
any court or governmental department, agency or instrumentality
that would prevent the Purchaser from consummating the transactions
contemplated hereby.
5.5 Consents. Except for HSR Approval, no consent,
approval or authorization of, or registration or filing with, any
person, including any financial institutions, governmental
authorities or other regulatory agencies, is required in connection
with the execution and delivery of this Agreement by the Purchaser
or the consummation by the Purchaser of the transactions
contemplated hereunder.
5.6 Brokerage. The Purchaser will indemnify and hold
the Sellers harmless against any agreement or other action by the
Purchaser which might cause anyone to become entitled to a broker's
fee or commission from the Sellers as a result of the transactions
contemplated hereunder.
THE SELLERS' COVENANTS
6. Covenants. Each Seller covenants and agrees as follows:
6.1 Agreements Not to Interfere With Business. From and
after the Closing Date and for a period of two years thereafter,
such Seller shall not take any action, whether directly or
indirectly, except with prior written approval of Purchaser, to
solicit or hire any present or future employees of Xxxxx
Industries.
6.2 Notification of Certain Matters. Prior to the
Closing Date, such Seller shall promptly notify Purchaser in
writing of any breach or inaccuracy of any representation or
warranty of Purchaser of which such Seller becomes aware; provided,
however, that neither such notification, nor any knowledge by such
Seller of such breach or inaccuracy, shall diminish or obviate any
representation or warranty made by Purchaser under this Agreement,
nor shall such notification or knowledge impair or limit the
ability of the Seller to rely on such representation and warranty.
6.3 Xxxxx Worldwide Limited. On the Closing Date, PUSA
shall cause Asco and Xxxxx Worldwide to transfer to the Purchaser
all of such parties' right, title and interest in and to the name
"Xxxxx Worldwide", and any and all combinations, variations and
derivations thereof, as well as all good will and going concern
value associated therewith. In addition, on the Closing Date and
at all times thereafter, the Sellers shall, and shall cause Asco
and Xxxxx Worldwide to, cease to use, in any manner whatsoever, the
name "Xxxxx Worldwide", or any combination, variation or derivation
thereof, or any other name that is similar thereto except in
connection with Letters of Credit. On the Closing Date, the Seller
shall cause Asco and Xxxxx Worldwide to deliver to the Purchaser
all documents and filings as may be necessary to effect a
cancellation of such parties' rights to such name, such documents
and filings to be fully executed and in form acceptable for filing
by the Purchaser, and thereafter shall cooperate fully with the
Purchaser in securing for the Purchaser full rights to and use of
the name "Xxxxx Worldwide".
6.4 Further Assurances. From and after the Closing
Date, the Sellers will execute and deliver such further
instruments, furnish such further information and do such other
acts and things as the Purchaser may reasonably request to convey
and transfer all of the shares of Common Stock sold to the
Purchaser and to carry out the intent of this Agreement so that
Purchaser succeeds to full ownership of Xxxxx Industries.
THE PURCHASER'S COVENANTS
7. Covenants. The Purchaser covenants and agrees as
follows:
7.1 Notification of Certain Matters. Prior to the
Closing Date, the Purchaser shall promptly notify the Sellers in
writing of any breach or inaccuracy of any representation or
warranty of the Sellers of which the Purchaser becomes aware;
provided, however, that neither such notification, nor any
knowledge by the Purchaser of such breach or inaccuracy, shall
diminish or obviate any representation or warranty made by the
Sellers under this Agreement, nor shall such notification or
knowledge impair or limit the ability of Purchaser to rely on such
representation and warranty.
THE PURCHASER'S CONDITIONS TO CLOSING
8. Conditions Precedent to the Obligations of the Purchaser.
The obligation of the Purchaser to consummate the sale hereunder is
subject to the fulfillment prior to or at the Closing of the
following conditions (any one or more of which may be waived in
whole or in part by written instrument at the option of the
Purchaser):
8.1 Bringdown of Representations and Warranties. Except
for representations and warranties expressly made and intended to
be as of the date of this Agreement, the representations and
warranties of the Sellers contained in this Agreement shall be true
and correct, in all material respects, when made and on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the
Closing Date. The Sellers shall deliver to the Purchaser a
certificate to such effect signed by the President or Chief
Executive Officer or Chief Financial Officer of each Seller.
8.2 Performance and Compliance. The Sellers shall have
performed all of the covenants and complied with all of the
provisions required by this Agreement to be performed or complied
with by it on or before the Closing, and the Sellers shall have
delivered to the Purchaser a certificate to such effect signed by
the Chief Executive Officer or Chief Financial Officer of each
Seller.
8.3 Proceedings and Instruments Satisfactory. All
actions, corporate or other, to be taken by the Sellers in
connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be reasonably satisfactory
in form and substance to the Purchaser. The Sellers shall have
complied with all applicable statutory requirements for the valid
consummation by the Sellers of the transactions contemplated by
this Agreement.
8.4 Assets and Business Intact. Between the date hereof
and the Closing, there shall not have been (a) a taking or
condemnation for any public or quasi-public purpose or use by any
competent authority or by any right of eminent domain of all or any
material portion of the assets of Xxxxx Industries, or (b) any
damage, destruction or loss of any kind (whether or not covered by
insurance) from any cause of all or any material portion of the
assets of Xxxxx Industries which will materially impair the
Purchaser's ability to conduct the business after the Closing. In
the event of a taking, condemnation, damage or destruction which
does not result in an impairment of the Purchaser's ability to
conduct the business, the Purchaser shall be entitled by way of a
reduction in the Purchase Price to receive the fair market value of
the assets of Xxxxx Industries of which it has been deprived, or
the cost to repair, restore or replace the same, whichever is
greater. The Sellers shall be entitled to keep all condemnation or
insurance proceeds relating to such event.
8.5 Opinion of Counsel. The Purchaser shall have
received from counsel for the Sellers an opinion dated the Closing
Date in the form of Exhibit 8.5.
8.6 HSR Approval. Receipt of unconditional HSR Approval
or the applicable waiting period under the Xxxx Xxxxx Xxxxxx Act
shall have expired or been terminated.
THE SELLERS' CONDITIONS TO CLOSING
9. Conditions Precedent to the Obligations of the Sellers.
The obligations of the Sellers to consummate the sale hereunder are
subject to the fulfillment prior to or at the Closing of the
following conditions (any one or more of which may be waived in
whole or in part by written instrument at the option of the
Sellers):
9.1 Bringdown of Representations and Warranties. The
representations and warranties of the Purchaser contained in this
Agreement shall be true and correct, in all material respects, when
made and on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been made
on and as of the Closing Date, and the Purchaser shall have
delivered to the Sellers a certificate signed by its Chief
Executive Officer to such effect.
9.2 Opinion of Counsel. The Sellers shall have received
from counsel for the Purchaser, an opinion dated the Closing Date
in the form of Exhibit 9.2.
9.3 HSR Approval. Receipt of unconditional HSR Approval
or the applicable waiting period under the Xxxx Xxxxx Xxxxxx Act
shall have expired or been terminated.
ACTIONS PENDING CLOSING
10. Efforts. Subject to the terms and conditions hereof,
each party hereto shall use all commercially reasonable efforts to
consummate the transactions contemplated hereby as promptly as
practicable. In furtherance of the foregoing:
(i) The Sellers and the Purchaser will as promptly as
practicable prepare and file with the Federal Trade
Commission/the Department of Justice the notification and
report forms required for the transactions contemplated hereby
and any supplemental information that may be reasonably
requested in connection therewith pursuant to the Xxxx Xxxxx
Xxxxxx Act, which notification and report forms and
supplemental information will comply in all material respects
with the requirements of the Xxxx Xxxxx Xxxxxx Act. The
Purchaser shall pay all filing fees required with respect to
the notification, report and other requirements of the Xxxx
Xxxxx Xxxxxx Act.
(ii) The Sellers and the Purchaser will, as promptly as
practicable, (A) make the required filings with, and take all
reasonable actions to obtain the required authorizations,
approvals, consents and other actions of, governmental
authorities and (B) take all reasonable actions (not including
the expenditure of money or the payment or delivery of other
consideration) to obtain the required consents of other
persons with respect to the transactions contemplated hereby.
EXPENSES
11.1 Sales and other Taxes. All sales, use, transfer,
intangible and other similar taxes or fees which may be due or
payable in connection with the consummation of the transactions
contemplated hereby, shall be paid by the party whom such tax or
fee statute or ordinance places responsibility therefor.
11.2 Fees of KBNA. To the extent paid by Xxxxx
Industries, Sellers will reimburse Xxxxx Industries for all KBNA
fees and expenses paid pursuant to the engagement letter between
Xxxxx Industries and KBNA. Sellers shall pay at Closing any such
remaining fees and expenses.
11.3 Expenses. Except as otherwise provided in this
Agreement, each party will pay all expenses incurred by such party
(and Xxxxx Industries, with respect to Sellers) in connection with
this Agreement and the transactions contemplated hereby, including
all accounting, legal and appraisal fees.
INDEMNIFICATION
12.1 Indemnification. Subject to Section 12.2(c),
Sellers jointly and severally agree to indemnify, defend and hold
harmless the Purchaser against and in respect of (a) any loss,
liability, claim, obligation, damage or deficiency arising out of
or resulting from any breach of the Sellers' representations,
warranties, covenants or agreements contained in this Agreement or
in any statement or certificate furnished or to be furnished to the
Purchaser pursuant hereto, (b) any Taxes and any interest or
penalties in connection therewith with respect to Xxxxx Industries,
Sellers, Asco, Xxxxx Worldwide, their affiliates or their
respective operations arising out of or with respect to any Pre-Closing
Period, (c) any loss, liability, claim, obligation, damage
or deficiency arising out of or resulting from any contract or
agreement with Industries Corelmex S.A. de C.V. ("Corelmex") or any
relationship with Corelmex known to either Seller, (d) any loss,
liability, claim, obligation, damage or deficiency arising out of
or resulting from any defect in any Series 414 Surge Suppressor
product if such product was shipped to a customer prior to the
Effective Date or in the inventory of Xxxxx Industries at the
Effective Date and (e) any actions, judgments, costs and expenses
(including reasonable attorneys' fees) incident to any of the
foregoing. The Purchaser hereby agrees to indemnify, defend and
hold harmless the Sellers against and in respect of (A) any loss,
liability, claim, obligation, damage or deficiency and any actions,
judgments, costs and expenses (including reasonable attorneys'
fees) incident thereto arising out of or resulting from any breach
of the Purchaser's representations, warranties, covenants or
agreements contained in this Agreement or in any statement or
certificate furnished or to be furnished to the Seller in
connection with the transactions contemplated hereby, and (B) any
actions, judgments, costs and expenses (including reasonable
attorneys' fees) incident to any of the foregoing. Any claim, the
subject of this Section 12.1, shall be calculated net of (1) any
insurance proceeds received by Xxxxx Industries and/or the
Indemnified Party (as defined in Section 12.2), and (2) the actual
realized tax benefit to Xxxxx Industries and/or the Indemnified
Party resulting from the claim which is the subject of the
indemnity (taking into account any actual realized tax cost to
Xxxxx Industries and/or the Indemnified Party resulting from the
claim which is the subject of the indemnity). The right to
indemnification, payment of damages or other remedy based on such
representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will
not affect the right to indemnification, payment of damages, or
other remedy based on such representations, warranties, covenants,
and obligations.
12.2 Indemnification Procedure.
(a) Any party entitled to indemnification under Section 12.1
("Indemnified Party") shall give written notice, within 30 days of
becoming aware of a claim, to the other party from whom indemnity
may be sought ("Indemnifying Party") of the occurrence of any item
or incident, the assertion of any claim, or the commencement of any
suit, action or proceeding which would give rise to a right of
indemnification. Notwithstanding the foregoing, the failure to
promptly give such notice shall not relieve the party of its
indemnification obligation hereunder except to the extent such
party is prejudiced thereby.
(b) Upon notice, subject to the rights or duties of any
insurer or other person having liability therefor, the Indemnifying
Party may, with counsel reasonably satisfactory to such Indemnified
Party, assume the defense of any such suit, action or proceeding,
including its compromise or settlement, in which the outcome would
give rise to a claim for indemnification, and the Indemnifying
Party shall pay all costs and expenses thereof and shall be fully
responsible for the outcome thereof. The Indemnifying Party shall
give notice to the Indemnified Party as to its intention to assume
the defense of the foregoing within ten (10) days after the date of
the Indemnified Party's notice referred to in the preceding
sentence. If an Indemnifying Party assumes the defense of such a
suit, action or proceeding, (i) no compromise or settlement thereof
may be effected by the Indemnifying Party without the Indemnified
Party's consent (which shall not be unreasonably withheld) unless
the sole relief is monetary damages that are paid in full by the
Indemnifying Party and (ii) the Indemnified Party shall have no
liability with respect to any compromise or settlement thereof
effected without its consent (which shall not be unreasonably
withheld).
(c) The Indemnified Party shall fully cooperate with the
Indemnifying Party and make available to it, at the Indemnifying
Party's expense, all pertinent information within the control of
the Indemnified Party which the Indemnifying Party reasonably
requires in connection with its handling of such suit, action or
proceeding. Each party's sole and exclusive remedy for money
damages resulting from the breach of any representation, warranty,
covenant or agreement made by the other party in this Agreement or
in any Schedule or Exhibit attached hereto, shall be a claim for
indemnity under Section 12. The provisions for indemnity under
Section 12.1 shall be effective only when the aggregate amount of
all claims made by the Sellers against the Purchaser or by the
Purchaser against Sellers for which such other party has an
indemnification obligation under such Sections, together with
attendant costs, exceeds One Hundred Fifty Thousand Dollars
($150,000.00) in which case Sellers or the Purchaser, as the case
may be, shall be liable for all such amounts; except that any
claims, with respect to the payment of KBNA's fees or Sellers'
payments pursuant to Section 2.1(v) shall not be subject to such
One Hundred Fifty Thousand Dollar ($150,000.00) floor. In addition
to the foregoing, notwithstanding anything contained herein to the
contrary, the indemnification obligations of each of the parties
pursuant to Section 12.1 shall in no event exceed, in the
aggregate, Five Million Dollars ($5,000,000.00); provided, however,
that the foregoing limitation shall not apply to any claim for
indemnification made by the Purchaser (i) arising out of any
failure of the Sellers to deliver to the Purchaser good and
marketable title in and to the Common Stock, free and clear of any
Claims and (ii) under Section 12.1(b) of this Agreement.
POST-CLOSING AND OTHER MATTERS
13.1 Post-Closing Matters. The Purchaser will, after the
Closing Date, afford the Sellers and its representatives reasonable
access during normal business hours to the offices, facilities,
books, records, officers and employees of Xxxxx Industries to the
extent reasonably requested by the Sellers and related to periods
prior to the Effective Date. Without limiting the generality of
the foregoing, the Purchaser will, and will cause Xxxxx Industries,
to cooperate with the Sellers in the defense of any litigation
(including, without limitation, making personnel available for
purposes of trial preparation and testimony) and providing
information requested by Sellers for the preparation of any tax
returns.
MISCELLANEOUS
14.1 Survival. The representations, warranties,
covenants and agreements contained in this Agreement, including the
Schedules or Exhibits hereto, shall survive the Closing for a
period of twenty-four (24) months; provided, however, (a) the
representations and warranties of Seller set forth in Section 4.7
shall survive the Closing for any periods of applicable statutes of
limitations for tax claims; and (b) the representations and
warranties of Seller set forth in Sections 4.1, 4.2, 4.3, 4.4 and
4.5 shall survive the Closing forever. The expiration of any
representation or warranty, covenant or agreement shall not affect
any claim made with respect thereto prior to the date of such
expiration, but shall extinguish a party's rights under claims not
made prior to such date whether or not such claims were known or
unknown as of the date of expiration.
14.2 Limitations on Warranties. The Sellers make no
representations or warranties with respect to any projections,
forecasts or forward-looking information provided to the Purchaser.
There is no assurance that any projected or forecasted results will
be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE
REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, THE SELLERS
DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR
IMPLIED, AS TO ANY OTHER INFORMATION OR MATTERS. THIS DISCLAIMER
DOES NOT DISCLAIM ANY SECURITIES FRAUD WHICH PURCHASER MAY RAISE
UNDER COMMON LAW OR UNDER ANY FEDERAL OR STATE SECURITIES STATUTE.
The Purchaser acknowledges that neither Xxxxx Industries nor either
Seller nor any other person or entity has made any representation
or warranty, express or implied, as to the accuracy or completeness
of any information which is not included in this Agreement or the
Schedules and neither Sellers nor any other person or entity will
have or be subject to any liability to the Purchaser, any affiliate
thereof or any other person or entity resulting from the
distribution of any such information to, or use of any such
information by, the Purchaser, any affiliate thereof or any of
their agents, consultants, accountants, counsel or other
representatives. Without limitation of the foregoing, to the
extent that any offering memoranda or summaries prepared by the
Sellers, Xxxxx Industries or by any of their respective advisors or
representatives are or have been provided to the Purchaser, the
Purchaser acknowledges and agrees that no representation or
warranty is made as to the completeness or accuracy of such
memoranda or summaries.
14.3 Schedules. Any fact or item in any portion of any
Schedule shall be deemed to be disclosed with respect to any other
relevant schedule, whether or not an explicit cross-reference
appears. No representation or warranty hereunder shall be deemed
to be inaccurate if the actual situation is disclosed in any
Schedule. Neither the specification of any dollar amount in any
representation, warranty or covenant contained in this Agreement
nor the inclusion of any specific item in any Schedule hereto is
intended to imply that such amount, or higher or lower amounts, or
the item so included or other items, are or are not material, and
no party shall use the fact of the setting forth of any such amount
or the inclusion of any such item in any dispute or controversy
between the parties as to whether any obligation, item or matter
not described herein or included in any Schedule is or is not
material for purposes of this Agreement.
14.4 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered or telefaxed or, if
mailed, three days after mailing by United States first--class
certified or registered mail, postage prepaid, to the other party
at the following addresses (or at such other address as shall be
given in writing by any party to the other):
If to Seller:
Pentland U.S.A. Inc. or Medallion Shoe Corporation
0000 Xxx Xxxx Xxxx Xxxx
Xxx Xxxx Xxxx, Xxx Xxxx
Attention: Xxxxx X. Shar
FAX #: (000) 000-0000
With copies to:
Lowenthal, Landau, Xxxxxxx & Bring, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
FAX #: (000) 000-0000
and
Pentland Group plc
The Pentland Center
Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxx X00XX
Attention: Xxxxx X. Xxxxx, Esq.
FAX #: 000 000 000 000 0000
If to Purchaser:
Katy Industries, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
FAX #: (000) 000-0000
With a copy to:
Xxxxxx & Coff
00 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
FAX #: (000) 000-0000
or to such other addresses as to which notice has been duly given.
14.5 Successors and Assigns. This Agreement, and all
rights and powers granted hereby, will bind and inure to the
benefit of the parties hereto and their respective successors,
assigns and personal representatives but shall not be construed to
confer any right or benefit upon any other party. This Agreement
may not be assigned by either Seller or the Purchaser without the
prior written consent of the other; except that the Purchaser may
assign this Agreement to a wholly-owned subsidiary of the
Purchaser, provided the Purchaser guarantees in writing the full
payment and performance of all of the obligations of the Purchaser
hereunder.
14.6 Governing Law. Except as otherwise provided herein
or in any document delivered pursuant hereto, this Agreement has
been made, executed and delivered in and is to be governed and
construed in accordance with the laws of the State of Indiana
without reference to principles of conflicts of laws. Any judicial
proceeding brought against any party hereto with respect to this
Agreement or any transaction contemplated hereby shall be brought
in the courts of the State of Indiana having situs in Xxxxxx
County, Indiana or in the United States District Court for the
Southern District of Indiana, and, by execution and delivery of
this Agreement, each of the parties hereto (i) accepts, generally
and unconditionally, the exclusive jurisdiction of such court and
any related appellate court, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement,
subject, in each case, to all rights to appeal such decisions to
the extent available to the parties and (ii) irrevocably waives any
objection it may now or hereafter have as to the venue of any such
suit, action or proceeding brought in such court or that such court
is an inconvenient forum. Each party hereto hereby waives personal
service of process and consents that service of process upon it may
be made by delivery or by certified or registered mail, return
receipt requested, at its last known address and service so made
shall be deemed completed on the date of delivery or on the fifth
business day after such service is deposited in the mail, as the
case may be. Nothing herein shall affect the right to serve
process in any other manner permitted by law. Each party hereby
waives trial by jury in any judicial proceedings involving,
directly or indirectly, any matter in any way arising out of,
related to or connected with this Agreement whether sounding in
contract, tort or otherwise.
14.7 Non-Binding Mediation. Any controversy or claim
arising out of or relating to this Agreement, its interpretation,
the breach or the consummation thereof, or the closing contemplated
thereunder, or the respective rights or obligations of the parties,
shall be first subject to non-binding mediation administered by the
American Arbitration Association (the "Mediator"). In the event
that such controversy or claim cannot be resolved pursuant to
mediation within thirty (30) days after such matter is submitted to
the Mediator as provided above such controversy or claim may be
settled by arbitration upon the written arbitration agreement made
at that time of all parties, and failing such arbitration
agreement, by litigation.
14.8 Confidential Nature of Information. Each of the
parties hereto shall treat in confidence all documents, materials
and other information which it shall have obtained regarding the
other during the course of the negotiations leading to the
execution of this Agreement, in the investigation of the other, and
in the preparation of agreements and other documents relating to
the consummation of such transaction, and shall, upon request,
return all originals and copies of non-public documents and
materials which have been furnished in connection therewith, except
documents, materials and other information (a) ascertainable or
obtained from public or published information, (b) received from a
third party not known to the party receiving such information to be
under an obligation to any other party hereto to keep such
information confidential, (c) which is or becomes known to the
public (other than through a breach of this Agreement), (d) which
the party in possession of such information can demonstrate was in
its possession prior to disclosure thereof to such party in
connection with this Agreement, or (e) which the party in
possession of such information independently developed.
14.9 Publicity. Until the Closing Date, both parties
hereto agree not to issue any press release or to otherwise make
any public statement with respect to the transactions contemplated
hereby except as may be required by law, the London Stock Exchange
or the New York Stock Exchange, in which event such press release
or public statement shall be made only after consultation with the
other party hereto; then and thereafter, no such public
announcement shall be made without the consent, which shall not be
unreasonably withheld, of both parties.
14.10 Headings. The headings preceding the text of
the paragraphs and subparagraphs hereof are inserted solely for
convenience of reference and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or
effect.
14.11 Entire Agreement. This Agreement and the
Schedules and Exhibits hereto, each of which is hereby incorporated
herein, set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, inducements or conditions, express or implied, oral
or written.
14.12 Disclosure. Any matter disclosed in this
Agreement or in any Schedule hereto shall be deemed disclosed with
respect to all other representations or warranties or Schedules to
which such disclosure would be applicable.
14.13 Amendment. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or
discharge is sought.
14.14 No Waiver. No waiver of any breach or default
hereunder shall be considered valid unless in writing, and no such
waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
14.15 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all
of which together constitute one and the same agreement.
14.16 Further Assurance. The parties hereto agree
that they will, without further consideration, from time to time
hereafter, execute and deliver such other documents, and take such
other action, as may reasonably be requested by the other in order
to more effectively consummate the transactions contemplated
hereby, and, with respect to each Seller, to confirm and assure to
the Purchaser title to all of the Common Stock.
14.17 U.S. Dollars. Unless otherwise specifically
stated, all dollar figures set forth herein are in United States
dollars, and all financial calculations and amounts called for or
referred to herein shall be made in or shall be deemed to refer to
United States dollars. For purposes of this Agreement, all
translations from foreign currencies to United States dollars shall
be made using the exchange rates prevailing on the effective date
of such calculation.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
PENTLAND U.S.A. INC.
By: Xxxxx X. Shar
President
MEDALLION SHOE CORPORATION
By: Xxxxx X. Shar
Assistant Secretary
KATY INDUSTRIES, INC.
By: Xxxxx X. Xxxxxxxx
Executive Vice President
EXHIBITS
2.1(v) Indebtedness of Xxxxx Industries
2.2 Outstanding Undrawn Letters of Credit
3.2(f) Noncompetition Agreement
3.2(g) Lease Estoppels
3.2(h) Mooresville Option
4.6 Balance Sheet
8.5 Sellers' Counsel's Opinion
9.2 Purchaser's Counsel's Opinion
SCHEDULES
2.1(ii) Base Net Assets
4.3(b) Conflicts, Breaches or Defaults
4.5(b) Incumbent Directors and Officers
4.7 Tax Matters
4.8 Compliance with Laws; Permits
4.9 Actions and Proceedings
4.10 Contracts and Other Agreements
4.11 Leases
4.12 Licenses and Patents
4.13 Accounts Receivable
4.15 Tangible and Intangible Property
4.18 Employee Benefit Plans
4.19 Insurance
4.20 Officers, Directors and Employees names and total
compensation in excess of $80,000.
4.21 Operations
4.22 Transactions with Affiliates
4.23 Environmental Protection
Exhibit 4.6
Xxxxx Industries, Inc.
Balance Sheet
June 30, 1996
30-Jun-96
Offering
Memorandum
----------
Assets to Be Sold
Cash and Cash Equivalents (1,157,820)
Accounts Receivable, Net 23,493,000
Inventories, Net 35,731,636
Prepaid Expenses and Other Current Assets 475,633
Income Tax Receivable (Payable)
Property, Plant and Equipment
Cost 21,457,674
Accumulated Depreciation (8,133,897)
----------
Net Property, Plant and Equipment 13,323,777
Cash Surrender Value of Life Insurance 164,352
Patents and Trademarks, Net 426,166
Total Assets to Be Sold 72,456,744
Assets Excluded From Sale
Deferred Tax Assets
Receivable from Affiliates
Organizational Costs
Goodwill 3,952,183
Total Assets Excluded From Sale 3,952,183
Total Assets 76,408,927
Liabilities to Be Assumed By Buyer
Accounts Payable 7,963,073
Capital Leases Payable 295,255
Accrued Liabilities 4,326,109
Accrued Property and Other Taxes 629,632
Other Long Term Liabilities 795,672
Total Liabilities to be Assumed by Buyer 14,009,741
Liabilities Not to Be Assumed by Buyer
Notes Payable, Marine Midland Bank 2,382,000
Amounts Due Affiliates 96,749
Asco Letters of Credit Payable - Intransit 1,934,721
Asco Letters of Credit Payable - Discounted 6,238,051
Accrued Interest 130,158
Income Taxes Payable (Receivable) (1,089,904)
Debt - Affiliates, Short Term 29,445,000
Debt - Affiliates, Long Term 25,000,000
Total Liabilities Not to Be Assumed By Buyer 64,136,775
Total Liabilities 78,146,516
Shareholders' Equity (1,737,589)
Total Liabilities and Stockholders Equity 76,408,927
Schedule 2.1(ii)
Xxxxx Industries, Inc.
Estimate of Net Asset Adjustment
November 27, 1996
Offering
Memorandum Projected
30-Jun-96 30-Nov-96
---------- ---------
Assets
------
Cash and Cash Equivalents (1,157,820) (500,000)
Accounts Receivable (Trade) 22,173,105 35,321,000
Accounts Receivable (Other) 1,998,823 1,300,000
Accounts Receivable Reserve (678,928) (850,000)
---------- ----------
Accounts Receivable (Net) 23,493,000 35,771,000
Inventories, Net 35,731,636 36,000,000
Prepaid Expenses and Other Current Assets 475,633 500,000
Income Tax (Payable) Receivable - State 141,371
Property, Plant and Equipment at Cost 21,457,674 22,588,382
Accumulated Depreciation (8,133,897) (9,427,368)
---------- ----------
Property, Plant and Equipment, Net 13,323,777 13,161,014
Cash Surrender Value of Life Insurance 164,352 100,000
Patents and Trademarks, Net 426,166 400,000
Total Assets 72,456,744 85,573,385
Liabilities
-----------
Accounts payable 7,963,073 10,000,000
Capital Leases Payable 295,255 244,000
Accrued Liabilities, Accrued
Property and Other Taxes 4,326,109 6,751,000
Accrued Property and Other Taxes 629,632 370,000
Other Long Term Liabilities 795,672 1,114,000
Total Liabilities 14,009,741 18,479,000
Net Assets 58,447,003 67,094,385
Increase from June 30, 1996 8,647,382
